PROVIDIAN LIFE & HEALTH INSURANCE CO SEPARATE ACCOUNT V, 485APOS, 1998-06-03

PROVIDIAN LIFE & HEALTH INSURANCE CO SEPARATE ACCOUNT V
485APOS, 1998-06-03

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As Filed With The Securities And Exchange Commission On June 3, 1998

Registration No. 33-80958

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.

Post-Effective Amendment No. 9

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 20

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
SEPARATE ACCOUNT V

(Exact Name of Registrant)
PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

(Name of Depositor)

20 Moores Road
Frazer, Pennsylvania 19355
(Address of Depositor's Principal Executive Office)

Depositor's Telephone Number (800) 523-7900

Gregory E. Miller-Breetz, Esquire
Providian Life and Health Insurance Company
400 West Market Street
P.O. Box 32830
Louisville, Kentucky 40232
(Name and Address of Agent for Service)

Copies to:
Michael Berenson, Esquire
Ann B. Furman
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Suite 400 East
Washington, D.C. 20007-0805

Approximate Date of Proposed Offering:
As soon as practicable after the effective date of this Registration Statement.

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

[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485.

[_] On ________________, pursuant to paragraph (b)(1)(v) of Rule 485.

[X] 60 Days after filing pursuant to paragraph (a)(1) of Rule 485.

[_] On ________________, pursuant to paragraph (a)(1) of Rule 485.

If appropriate, check the following box:

[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

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PURSUANT TO RULE 481

Showing Location in Part A (Prospectus) and Part B
(Statement of Additional Information) of Registration
Statement of Information Required by Form N-4
For the Advisor's Edge Select

<TABLE>
<CAPTION>
PART A

Item of Applicable Contract
Form N-4 Prospectus Caption
- -------- ------------------

<S> <C>
1. Cover Page................................................ Cover Page
2. Definitions............................................... GLOSSARY
3. Synopsis.................................................. HIGHLIGHTS; FEE TABLE; Performance Measures
4. Condensed Financial Information........................... Condensed Financial Information
5. General Description of Registrant, Depositor, and
Portfolio Companies....................................... Providian Life and Health Insurance Company,
Providian Life and Health Insurance Company
Separate Account V; The Portfolios; Voting Rights
6. Deductions................................................ Charges and Deductions; FEDERAL TAX CONSIDERATIONS;
FEE TABLE
7. General Description of Variable Annuity Contracts......... CONTRACT FEATURES; Distribution-at-Death Rules;
Voting Rights; Allocation of Purchase Payments;
Exchanges Among the Portfolios; Additions,
Deletions, or Substitutions of Investments
8. Annuity Period............................................ Annuity Payment Options
9. Death Benefit............................................. Death of Annuitant Prior to Annuity Date

10. Purchases and Contract Value.............................. Contract Purchase and Purchase Payments;
Accumulated Value
11. Redemptions............................................... Full and Partial Withdrawals; Annuity Payment
Options; Right to Cancel Period
12. Taxes..................................................... FEDERAL TAX CONSIDERATIONS
13. Legal Proceedings......................................... Part B: Legal Proceedings

14. Table of Contents of the Statement of Additional
Information............................................... Table of Contents of Advisor's Edge Select
Statement of Additional Information

PART B

Item of Statement of Additional
Form N-4 Information Caption
- -------- ------------------------
15. Cover Page................................................ Cover Page
16. Table of Contents......................................... Table of Contents
17. General Information and History........................... THE COMPANY
18. Services.................................................. Part A: Auditors; Part B: SAFEKEEPING OF
ACCOUNT ASSETS; DISTRIBUTION OF THE CONTRACTS
19. Purchase of Securities Being Offered...................... DISTRIBUTION OF THE CONTRACTS; Exchanges
20. Underwriters.............................................. DISTRIBUTION OF THE CONTRACTS
21. Calculation of Performance Data........................... PERFORMANCE INFORMATION
22. Annuity Payments.......................................... Computations of Annuity Income Payments
23. Financial Statements...................................... FINANCIAL STATEMENTS
</TABLE>

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This Amendment to the Registration Statement on Form N-4 (the "Registration
Statement") is being filed pursuant to Rule 485(a) under the Securities Act of
1933, as amended, to supplement the Registration Statement with another
prospectus, statement of additional information, and related exhibits,
describing a particular form of the flexible premium variable annuity policy.
This Amendment relates only to the prospectus, statement of additional
information, and exhibits included in this Amendment and does not otherwise
delete, amend, or supersede any information contained in the Registration
Statement.

<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY SEPARATE ACCOUNT V
PROSPECTUS
FOR THE

ADVISOR'S EDGE SELECT VARIABLE ANNUITY
OFFERED BY
PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
(A MISSOURI STOCK COMPANY)
ADMINISTRATIVE OFFICES

4333 EDGEWOOD ROAD N.E.

CEDAR RAPIDS, IOWA 52499

The Advisor's Edge Select variable annuity contract (the "Contract"), offered
through Providian Life and Health Insurance Company (the "Company", "us", "we"
or "our"), provides a vehicle for investing on a tax-deferred basis in 17
investment company Portfolios and our General Account. The Contract is an
individual variable annuity contract and is intended for retirement savings or
other long-term investment purposes.

The minimum initial Purchase Payment for Non-Qualified Contracts is $25,000.
The minimum initial purchase payment for Qualified Contracts is $1,000 (or $50
monthly by payroll deduction). The Contract is a flexible-premium deferred
variable annuity that provides for a Right to Cancel Period of 10 days (30
days or more in some instances) plus a 5 day grace period to allow for mail
delivery during which you may cancel your investment in the Contract.

You may allocate your Net Purchase Payments for the Contract among 17
Subaccounts of Providian Life and Health Insurance Company's Separate Account
V and four fixed options available under the Company's General Account. Assets
of each Subaccount are invested in one of the following Portfolios (which are
contained within seven open-end, diversified investment companies):

.DREYFUS SMALL CAP VALUE .MONTGOMERY EMERGING MARKETS PORTFOLIO
PORTFOLIO .STEIN ROE SPECIAL VENTURE FUND,
.ENDEAVOR ENHANCED INDEX VARIABLE SERIES
PORTFOLIO .STRONG INTERNATIONAL STOCK FUND II
.FEDERATED AMERICAN LEADERS .STRONG SCHAFER VALUE FUND II
FUND II .T. ROWE PRICE INTERNATIONAL STOCK
.FEDERATED UTILITY FUND II PORTFOLIO
.FEDERATED PRIME MONEY FUND .WANGER U.S. SMALL CAP ADVISOR
II .WANGER INTERNATIONAL SMALL CAP ADVISOR
.FEDERATED HIGH INCOME BOND .WARBURG PINCUS INTERNATIONAL EQUITY
FUND II PORTFOLIO
.FEDERATED FUND FOR U.S. .WARBURG PINCUS SMALL COMPANY GROWTH
GOVERNMENT SECURITIES II PORTFOLIO
.MONTGOMERY GROWTH PORTFOLIO

Depending upon the state of issue and provisions of your Contract, your
initial Net Purchase Payment(s) will, when your Contract is issued, either be
(i) invested in the Federated Prime Money Fund II during your Right to Cancel
Period and/or invested immediately in your chosen Guaranteed Rate Options or
(ii) invested immediately in your chosen Portfolios and fixed options (other
than the Guaranteed Equity Option).

The Contract's Accumulated Value varies with the investment performance of the
Portfolios you select. You bear all investment risk associated with the
Portfolios. Investment results for your Contract are not guaranteed except to
the extent you have allocated a portion of the Accumulated Value to the
General Account.

The Contract offers a number of ways of withdrawing monies at a future date,
including a lump sum payment and several Annuity Payment Options. You may make
full or partial withdrawals of the Contract's Surrender Value at any time,
although in many instances withdrawals made prior to age 59 1/2 are subject to
a 10% penalty tax (and a portion may be subject to ordinary income taxes). If
you elect an Annuity Payment Option, Annuity Payments may be received on a
fixed and/or variable basis. You also have significant flexibility in choosing
the Annuity Date on which Annuity Payments begin.

This Prospectus sets forth the information you should know before investing in
the Contract. It must be accompanied by a current Prospectus for each Fund.
Please read the Prospectuses carefully and retain them for future reference. A
Statement of Additional Information for the Contract Prospectus, which has the
same date as this Prospectus, has also been filed with the Securities and
Exchange Commission, is incorporated herein by reference and is available free
by calling our Administrative Offices at 1-800-866-6007. The Table of Contents
of the Statement of Additional Information is included at the end of this
Prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

The Contract is not available in all States.

THIS PROSPECTS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION WHERE IT
WOULD BE UNLAWFUL TO MAKE AN OFFERING LIKE THIS. WE HAVE NOT AUTHORIZED ANYONE
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS ABOUT THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS. YOU SHOULD NOT RELY ON ANY OTHER
INFORMATION OR REPRESENTATIONS.

The date of this Prospectus is , 1998.

FM-0989
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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
GLOSSARY................................................................... 3
HIGHLIGHTS................................................................. 6
FEE TABLE.................................................................. 8
Financial Statements....................................................... 10
Performance Measures....................................................... 10
Additional Performance Measures............................................ 11
Yield and Effective Yield.................................................. 11
The Company and the Separate Account....................................... 12
Endeavor Series Trust...................................................... 12
The Federated Insurance Series............................................. 13
The Montgomery Funds III................................................... 13
SteinRoe Variable Investment Trust......................................... 13
Strong Variable Insurance Funds, Inc. ..................................... 13
Wanger Advisors Trust...................................................... 13
Warburg Pincus Trust....................................................... 13
The Portfolios............................................................. 13
CONTRACT FEATURES.......................................................... 16
Contract Purchase and Purchase Payments.................................. 16
Purchasing by Wire....................................................... 17
Right to Cancel Period................................................... 17
Allocation of Purchase Payments.......................................... 17
Exchanges Among the Portfolios........................................... 18
Asset Rebalancing........................................................ 18
Dollar Cost Averaging Options............................................ 18
Accumulated Value........................................................ 19
Charges and Deductions................................................... 19
Minimum Balance Requirement.............................................. 21
DISTRIBUTIONS UNDER THE CONTRACT........................................... 21
Full and Partial Withdrawals............................................. 21
Lump Sum Payment Option.................................................. 22
Systematic Withdrawal Option............................................. 22
Annuity Date............................................................. 22
Annuity Payment Options.................................................. 23
Death Benefit............................................................ 24
Deferment of Payment..................................................... 26
FEDERAL TAX CONSIDERATIONS................................................. 26
GENERAL INFORMATION........................................................ 31
APPENDIX A--The General Account............................................ A-1
</TABLE>

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GLOSSARY

Accumulation Unit - A measure of your ownership interest in the Contract prior
to the Annuity Date.

Accumulation Unit Value - The value of each Accumulation Unit which is
calculated each Valuation Period.

Accumulated Value - The value of all amounts accumulated under the Contract
prior to the Annuity Date.

Adjusted Death Benefit - The sum of all Net Purchase Payments made during the
first six Contract Years, less any partial withdrawals taken. During each
subsequent six-year period beginning before age 81, the Adjusted Death Benefit
will be the Death Benefit on the last day of the previous six-year period plus
any Net Purchase Payments made, less any partial withdrawals taken during the
current six-year period. For any six-year period after the one in which the
Annuitant attains age 81, the Adjusted Death Benefit will be equal to the
Death Benefit on the last day of the six-year period before age 81 occurs plus
any Net Purchase Payments subsequently made, less any partial withdrawals
subsequently taken.

Annuitant - The person whose life is used to determine the duration of any
Annuity Payments and upon whose death, prior to the Annuity Date, benefits
under the Contract are paid.

Annuitant's Beneficiary - The person(s) to whom any benefits are due upon the
Annuitant's death prior to the Annuity Date.

Annuity Date - The date on which Annuity Payments begin. The Annuity Date is
always the first day of the month you specify.

Annuity Payment - One of a series of payments made under an Annuity Payment
Option.

Annuity Payment Option - One of several ways in which the Accumulated Value of
this Contract can be paid. Under a Fixed Annuity Option (see "Annuity Payment
Options," page 23), the dollar amount of each Annuity Payment does not change
over time. Under a Variable Annuity Option (see "Annuity Payment Options,"
page 23), the dollar amount of each Annuity Payment may change over time,
depending upon the investment experience of the Portfolio or Portfolios you
choose. Annuity Payments are based on the Contract's Accumulated Value as of
10 Business Days prior to the Annuity Date less any applicable Premium Tax.

Annuity Unit - Unit of measure used to calculate Variable Annuity Payments
(see "Annuity Payment Options," page 23).

Annuity Unit Value - The value for each Annuity Unit.

Business Day - A day when the New York Stock Exchange is open for trading.

Code -- The Internal Revenue Code of 1986, as amended.

Company ("we", "us", "our") - Providian Life and Health Insurance Company, a
Missouri stock company.

Contract Anniversary - Any anniversary of the Contract Date.

Contract Date - The date of issue of this Contract.

Contract Owner ("you", "your") - The person or persons designated as the
Contract Owner in the Contract. The term shall also include any person named
as Joint Owner. A Joint Owner shares ownership in all respects with the
Contract Owner. Prior to the Annuity Date, the Contract Owner has the right to
assign ownership, designate beneficiaries, make permitted withdrawals and
Exchanges among Subaccounts and Guaranteed Rate Options.

Contract Year - A period of 12 months starting with the Contract Date or any
Contract Anniversary.

Death Benefit - The greater of the Contract's Accumulated Value on the date
the Company receives due Proof of Death of the Annuitant or the Adjusted Death
Benefit. If any portion of the Contract's Accumulated Value on the date

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we receive proof of the Annuitant's death is derived from the Multi-Year
Guaranteed Rate Option, that portion of the Accumulated Value will be adjusted
by a positive Market Value Adjustment Factor (see "Multi-Year Guaranteed Rate
Option," at Appendix A), if applicable.

Exchange - One Exchange will be deemed to occur with each voluntary transfer
from any Subaccount or General Account Guaranteed Option.

Funds - Each of (i) Endeavor Series Trust (advised by Endeavor Investment
Advisers), (ii) Federated Insurance Series (advised by Federated Advisers),
(iii) The Montgomery Funds III (advised by Montgomery Asset Management, L.P.),
(iv) SteinRoe Variable Investment Trust (advised by Stein Roe & Farnham,
Incorporated), (v) Strong Variable Insurance Funds, Inc. (advised by Strong
Capital Management, Inc.), (vi) Wanger Advisors Trust (advised by Wanger Asset
Management, L.P.) and (vii) Warburg Pincus Trust (advised by Warburg Pincus
Asset Management, Inc.).

General Account - The account which contains all of our assets other than
those held in our separate accounts.

General Account Guaranteed Option - Any of the following four General Account
options offered by your Contract and to which you may allocate your Net
Purchase Payments: the Dollar Cost Averaging Fixed Account Option, the Dollar
Cost Averaging Fixed Account Option, the One-Year Guaranteed Rate Option, the
Multi-Year Guaranteed Rate Option, and the Guaranteed Equity Option. The
General Account Guaranteed Options are available for sale in most, but not
all, states. (See "The General Account," at Appendix A.)

Guaranteed Rate Options - The One-Year Guaranteed Rate Option and the Multi-
Year Guaranteed Rate Option.

Market Value Adjustment Factor - The formula applied to the Accumulated Value
in order to determine the net amount of any transfer or surrender under the
Multi-Year Guaranteed Rate Option (see "Multi-Year Guaranteed Rate Option," at
Appendix A).

Net Purchase Payment - Any Purchase Payment less the applicable Premium Tax,
if any.

Non-Qualified Contract - Any Contract other than those described under the
Qualified Contract reference in this Glossary.

Owner - The purchaser of the Contract. Any Joint Owner shares ownership in all
respects with the Owner. The Owner has the right to assign ownership to a
person or party other than himself or herself.

Owner's Designated Beneficiary - The person to whom ownership of this Contract
passes upon the Contract Owner's death, unless the Contract Owner was also the
Annuitant--in which case the Annuitant's Beneficiary is entitled to the Death
Benefit. (Note: this transfer of ownership to the Owner's Designated
Beneficiary will generally not be subject to probate, but will be subject to
estate and inheritance taxes. Consult with your tax and estate adviser to be
sure which rules will apply to you.)

Payee - The Contract Owner, Annuitant, Annuitant's Beneficiary, Owner's
Designated Beneficiary, or any other person, estate, or legal entity to whom
benefits are to be paid.

Portfolio - A separate investment series of the Funds. The Funds currently
offer 17 Portfolios in the Advisor's Edge Select: Dreyfus Small Cap Value
Portfolio ("Dreyfus Small Cap Value Portfolio"), Endeavor Enhanced Index
Portfolio ("Endeavor Enhanced Index Portfolio") and T. Rowe Price
International Stock Portfolio ("T. Rowe Price International Stock Portfolio")
of Endeavor Series Trust; Federated American Leaders Fund II ("Federated
American Leaders Portfolio"), Federated Utility Fund II ("Federated Utility
Portfolio"), Federated Prime Money Fund II ("Federated Prime Money
Portfolio"), Federated Fund for U.S. Government Securities II ("Federated U.S.
Government Securities Portfolio") and Federated High Income Bond Fund II
("Federated High Income Bond Portfolio") of Federated Insurance Series; the
Montgomery Variable Series: Growth Fund (the "Montgomery Growth Portfolio")
and the Montgomery Variable Series: Emerging Markets Fund (the "Montgomery
Emerging Markets Portfolio") of The Montgomery Funds III; the Stein Roe
Special Venture Fund, Variable Series (the "Stein Roe Special Venture
Portfolio") of the SteinRoe Variable Investment Trust; the Strong
International Stock Fund II (the "Strong International Stock Portfolio") and
Strong Schafer Value Fund II ("Strong Schafer Value Portfolio") of the Strong
Variable Insurance Funds, Inc.; the Wanger U.S. Small Cap Advisor (the "Wanger
U.S. Small Cap Advisor Portfolio"), the Wanger International Small Cap Advisor
(the

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"Wanger International Small Cap Advisor Portfolio") of Wanger Advisors Trust;
and the Warburg Pincus International Equity Portfolio (the "Warburg Pincus
International Equity Portfolio") and the Warburg Pincus Small Company Growth
Portfolio (the "Warburg Pincus Small Company Growth Portfolio") of the Warburg
Pincus Trust; (each, a "Portfolio" and collectively, the "Portfolios"). In
this Prospectus, Portfolio will also be used to refer to the Subaccount that
invests in the corresponding Portfolio.

Premium Tax - A regulatory tax that may be assessed by certain states on the
Purchase Payments you make to this Contract. The amount which we must pay as
Premium Tax will be deducted from each Purchase Payment or from your
Accumulated Value as it is incurred by us.

Proof of Death - (a) A certified death certificate; (b) a certified decree of
a court of competent jurisdiction as to the finding of death; (c) a written
statement by a medical doctor who attended the deceased; or (d) any other
proof of death satisfactory to the Company.

Purchase Payment - Any premium payment. The minimum initial Purchase Payment
is $25,000 for Non-Qualified Contracts and $1,000 for Qualified Contracts (or
$50 monthly by payroll deduction for Qualified Contracts); each additional
Purchase Payment must be at least $500 for Non-Qualified Contracts or $50 for
Qualified Contracts. Purchase Payments may be made at any time prior to the
Annuity Date as long as the Annuitant is living.

Qualified Contract - An annuity contract as defined under Sections 401(a),
403(b), 408(b), and 408A of the Code.

Right to Cancel Period - The period during which the Contract can be canceled
and treated as void from the Contract Date.

Separate Account - That portion of Providian Life and Health Insurance
Company's Separate Account V dedicated to the Contract. The Separate Account
consists of assets that are segregated by Providian Life and Health Insurance
Company and, for Contract Owners, invested in the Portfolios. The Separate
Account is independent of the general assets of the Company. The Separate
Account invests in the Portfolios.

Subaccount - That portion of the Separate Account that invests in shares of
the Funds' Portfolios. Each Subaccount will only invest in a single Portfolio.
The investment performance of each Subaccount is linked directly to the
investment performance of one of the 17 Portfolios.

Surrender Value - The Accumulated Value, adjusted to reflect any applicable
Market Value Adjustment (see "Multi-Year Guaranteed Rate Option," at Appendix
A) for amounts allocated to the Multi-Year Guaranteed Rate Option, less any
early withdrawal charges for amounts allocated to the One-Year Guaranteed Rate
Option, less any amount allocated to the Guaranteed Equity Option, less any
Premium Taxes incurred but not yet deducted.

Valuation Period - The relative performance of your Contract is measured by
the Accumulation Unit Value. This value is calculated each Valuation Period. A
Valuation Period is defined as the period of time between the close of
business on one Business Day and the close of business on the following
Business Day.

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HIGHLIGHTS

YOU CAN FIND DEFINITIONS OF IMPORTANT TERMS IN THE GLOSSARY (PAGE 3).

THE ADVISOR'S EDGE SELECT

The Contract provides a vehicle for investing on a tax-deferred basis in 17
investment company Portfolios offered by the Funds and four General Account
Guaranteed Options offered by the Company. You may subsequently withdraw
monies from the Contract either as a lump sum or as annuity income as
permitted under the Contract. Accumulated Values and Annuity Payments depend
on the investment experience of the selected Portfolios and/or the guarantees
of the General Account Guaranteed Options. The investment performance of the
Portfolios is not guaranteed. Thus, you bear all investment risk for monies
invested under the Contract except to the extent of the portion of your
Accumulated Value allocated to the General Account. The General Account
Guaranteed Options are available for sale in most, but not all, states.

WHO SHOULD INVEST

The Contract is designed for investors seeking long term, tax-deferred
accumulation of funds, generally for retirement but also for other long-term
investment purposes. The tax-deferred feature of the Contract is most
attractive to investors in high federal and state marginal income tax
brackets. The Contract is offered as both a Qualified Contract and a Non-
Qualified Contract. Both Qualified and Non-Qualified Contracts offer tax-
deferral on increases in the Contract's value prior to withdrawal or
distribution; however, Purchase Payments made by Contract Owners of Qualified
Contracts may be excludible or deductible from gross income in the year such
payments are made, subject to certain statutory restrictions and limitations.
(See "Federal Tax Considerations," page 26).............................Page 26

INVESTMENT CHOICES

Your investment in the Contract may be allocated among 17 Subaccounts of the
Separate Account and/or the General Account Guaranteed Options. The
Subaccounts in turn invest exclusively in the following 17 Portfolios offered
by the Funds: the Dreyfus Small Cap Value Portfolio, the Endeavor Enhanced
Index Portfolio, the Federated American Leaders Portfolio, the Federated
Utility Portfolio, the Federated Prime Money Portfolio, the Federated U.S.
Government Securities Portfolio, the Federated High Income Bond Portfolio, the
Montgomery Growth Portfolio, the Montgomery Emerging Markets Portfolio, the
Stein Roe Special Venture Portfolio, the Strong International Stock Portfolio,
the Strong Schafer Value Portfolio, the T. Rowe Price International Stock
Portfolio, the Wanger U.S. Small Cap Advisor Portfolio, the Wanger
International Small Cap Advisor Portfolio, the Warburg Pincus International
Equity Portfolio and the Warburg Pincus Small Company Growth Portfolio. The
assets of each Portfolio are separate, and each Portfolio has distinct
investment objectives and policies as described in the corresponding Fund
Prospectus. The General Account Guaranteed Options are available for sale in
most, but not all, states..........................................Page 13

HOW TO INVEST

To invest in the Contract, please consult your advisor, who will provide the
necessary information to us in a customer order form. You will need to select
an Annuitant. The Annuitant may not be older than age 75. The minimum initial
Purchase Payment is $25,000 for Non-Qualified Contracts, and $1,000 for
Qualified Contracts (or $50 monthly by payroll deduction for Qualified
Contracts); subsequent Purchase Payments must be at least $500 for Non-
Qualified Contracts or $50 for Qualified Contracts. You may make subsequent
Purchase Payments at any time before the Contract's Annuity Date, as long as
the Annuitant specified in the Contract is living..................Page 16

ALLOCATION OF PURCHASE PAYMENTS

If the state of issue of your Contract is GA, ID, LA, MI, MO, NE, NH, NC, OK,
OR, SC, UT, VA or WV, then your initial Net Purchase Payment(s) will, when
your Contract is issued, be invested in the Federated Prime Money Portfolio
until the expiration of the Right to Cancel Period of 10 to 30 days, or more
in some instances as specified in your contract when issued (plus a 5 day
grace period to allow for mail delivery) and then invested according to your
initial allocation instructions (except that any accrued interest will remain
in the Federated Prime Money Portfolio if it is selected as an initial
allocation option), provided that portions of your initial Net Purchase
Payment(s) allocated to the Guaranteed

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Rate Options will be invested immediately upon our receipt thereof in order to
lock in the rates then applicable to such options. (Please note that immediate
investment is not applicable with respect to any amounts allocated to the
Guaranteed Equity Option.)

If the state of issue of your Contract is any other state, your initial Net
Purchase Payment(s) will, unless you indicate otherwise, be invested in your
Portfolios and Guaranteed Rate Options immediately upon our receipt thereof,
IN WHICH CASE YOU WILL BEAR FULL INVESTMENT RISK FOR ANY AMOUNTS ALLOCATED TO
THE PORTFOLIOS DURING THE RIGHT TO CANCEL PERIOD. (Please note that immediate
investment is not available with respect to any amounts allocated to THE
GUARANTEED EQUITY OPTION, WHICH IS ILLIQUID FOR THE GUARANTEE PERIOD.) You
must fill out and send us the appropriate form or comply with other designated
Company procedures if you would like to change how subsequent Net Purchase
Payments are allocated.............................................Page 17

RIGHT TO CANCEL PERIOD

The Contract provides for a Right to Cancel Period of 10 days (30 or more days
in some instances as specified in your Contract) plus a 5 day grace period to
allow for mail delivery, during which you may cancel your investment in the
Contract. To cancel your investment, please return your Contract to us or to
the advisor from whom you purchased the Contract. When we receive the
Contract, (1) if the state of issue of your Contract is GA, ID, LA, MI, MO,
NE, NH, NC, OK, OR, SC, UT, VA or WV, then for any amount of your initial
Purchase Payment(s) invested in Federated's Prime Money Portfolio, we will
return the Accumulated Value of the amount of your Purchase Payment(s) so
invested, or if greater, the amount of your Purchase Payment(s) so invested,
(2) for any amount of your initial Purchase Payment(s) invested in the
Portfolios immediately following receipt by us, we will return the Accumulated
Value of your Purchase Payment(s) so invested plus any fees and/or Premium
Taxes that may have been subtracted from such amount, and (3) for any amount
of your initial Purchase Payment(s) invested in the Guaranteed Rate Options
immediately following receipt by us, we will refund the Accumulated Value of
your Purchase Payment(s) so invested...............................Page 17

EXCHANGES

You may make unlimited Exchanges among Portfolios or into the General Account
Guaranteed Options, provided that you maintain a minimum balance of $250 in
each Subaccount or $1,000 in each General Account Guaranteed Option (except
the Dollar Cost Averaging Fixed Account), respectively, to which you have
allocated a portion of your Accumulated Value. However, prior to the Annuity
Date, no Exchanges (except through Dollar Cost Averaging) will be allowed from
the Dollar Cost Averaging Fixed Account. No fee is currently imposed for such
Exchanges; however, we reserve the right to charge a $15 fee for Exchanges in
excess of 12 per Contract Year. Exchanges must not reduce the value of any
allocation to any Subaccount or General Account Guaranteed Option (except the
Dollar Cost Averaging Fixed Account Option) below $250 or $1,000,
respectively, or that remaining amount will be transferred to your other
Subaccounts or General Account Guaranteed Options on a pro rata basis. The
Guaranteed Equity Option is illiquid for the entire guarantee period, and
transfers from the Guaranteed Rate Options (where permitted) may be subject to
additional limitations and charges. (See also "Charges and Deductions," page
20, and "The General Account," at Appendix A.).....................Page 18

DEATH BENEFIT

If the Annuitant specified in your Contract dies prior to the Annuity Date,
your named Annuitant's Beneficiary will receive the Death Benefit under the
Contract. The Death Benefit is the greater of your Accumulated Value (plus any
positive Market Value Adjustment applicable under the Multi-Year Guaranteed
Rate Option) or the Adjusted Death Benefit on the date we receive due proof of
the Annuitant's death. During the first six Contract Years, the Adjusted Death
Benefit will be the sum of all Net Purchase Payments made, less any partial
withdrawals taken. During each subsequent six-year period beginning before age
81, the Adjusted Death Benefit will be the Death Benefit on the last day of
the previous six-year period plus any Net Purchase Payments made, less any
partial withdrawals taken during the current six-year period. For any six-year
period after the one in which the Annuitant attains age 81, the Adjusted Death
Benefit will be equal to the Death Benefit on the last day of the six-year
period before age 81 occurs plus any Net Purchase Payments subsequently made,
less any partial withdrawals subsequently taken. The Annuitant's Beneficiary
may elect to receive these proceeds as a lump sum or as Annuity Payments. If
the Annuitant dies on or after the Annuity Date, any unpaid payments certain
will be paid, generally to the Annuitant's Beneficiary, in accordance with the
Contract...........................................................Page 24

7
<PAGE>

ANNUITY PAYMENT OPTIONS

In addition to the full and partial withdrawal privileges, you may also choose
to create an income stream by requesting an annuity income from us. As the
Contract Owner, you may elect one of several Annuity Payment Options. By
electing an Annuity Payment Option, you are asking us to systematically
liquidate your Contract. We provide you with a variety of payment options. At
your discretion, payments may be either fixed or variable or both. Fixed
payouts are guaranteed for a designated period or for life (either single or
joint). Variable payments will vary depending on the performance of the
underlying Portfolio or Portfolios selected.............................Page 23

CONTRACT AND POLICYHOLDER INFORMATION

If you have questions about your Contract, please telephone our Administrative
Offices at 1-800-866-6007 between the hours of 7:30 A.M. to 5:30 P.M. Central
time. Please have the Contract number and the Contract Owner's name ready when
you call. As Contract Owner you will receive periodic statements confirming
any financial transactions that take place, as well as quarterly statements
and an annual statement.

CHARGES AND DEDUCTIONS UNDER THE CONTRACT

The Contract has no sales charges and has an annual mortality and expense risk
charge of 1.35%. Contract Owners may withdraw up to 100% of the Accumulated
Value without incurring a surrender charge. The Contract also includes
administrative charges which pay for administering the Contract, and
management, advisory and other fees, which reflect the costs of the
Funds..............................................................Page 19

FULL AND PARTIAL WITHDRAWALS

You may withdraw all or part of the Surrender Value of the Contract before the
earlier of the Annuity Date or the Annuitant's death. Withdrawals made prior
to age 59 1/2 may be subject to a 10% penalty tax (and a portion thereof may
be subject to ordinary income taxes)...............................Page 21

FEE TABLE

The following table estimates all expenses (except for Premium Taxes that may
be assessed by your state) that you would incur as an owner of a Contract (see
page 19). The purpose of this table is to assist you in understanding the
various costs and expenses that you would bear directly or indirectly as a
purchaser of the Contract. The fee table reflects all expenses for both the
Separate Account and the Funds. For a complete discussion of Contract costs
and expenses, including charges applicable to General Account Guaranteed
Options, see "Charges and Deductions," page 19.

<TABLE>
<CAPTION>
CONTRACTOWNER TRANSACTION EXPENSES
<S> <C>
Sales Load Imposed on Purchases........................................ None
Contingent Deferred Sales Load (surrender charge)...................... None
Exchange Fees.......................................................... None
ANNUAL CONTRACT FEE.................................................... None
<CAPTION>
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of assets in the
Separate Account)
<S> <C>
Mortality and Expense Risk Charge...................................... 1.35%
Administrative Charge.................................................. .15%
-----
Total Annual Separate Account Expenses................................. 1.50%*
</TABLE>
*Separate Account Annual Expenses are not charged against the General
Account Guaranteed Options.

8
<PAGE>

PORTFOLIO ANNUAL EXPENSES

Except as may be indicated, the figures below are based on actual expenses for
fiscal year 1997 (as a percentage of each Portfolio's average net assets after
fee waiver and/or expense reimbursement, if applicable).

<TABLE>
<CAPTION>
TOTAL
MANAGEMENT PORTFOLIO
AND ADVISORY OTHER ANNUAL
EXPENSES EXPENSES EXPENSES
------------ -------- ---------
<S> <C> <C> <C>
Dreyfus Small Cap Value Portfolio/1/........... 0.80% 0.11% 0.91%
Endeavor Enhanced Index Portfolio/2/........... 0.75% 0.55% 1.30%
Federated American Leaders Portfolio/3/........ 0.66% 0.19% 0.85%
Federated Utility Portfolio/3/................. 0.48% 0.37% 0.85%
Federated Prime Money Portfolio/3/............. 0.30% 0.50% 0.80%
Federated U.S. Government Securities
Portfolio/3/.................................. 0.15% 0.65% 0.80%
Federated High Income Bond Portfolio/3/........ 0.51% 0.29% 0.80%
Montgomery Growth Portfolio/4/................. 0.00% 0.34% 0.34%
Montgomery Emerging Markets Portfolio/4/....... 1.25% 0.50% 1.75%
Stein Roe Special Venture Portfolio/5/......... 0.50% 0.23% 0.73%
Strong International Stock Portfolio/6/........ 1.00% 0.51% 1.51%
Strong Schafer Value Portfolio/7/.............. 1.00% 0.20% 1.20%
T. Rowe Price International Stock Portfolio/8/. 0.90% 0.17% 1.07%
Wanger U.S. Small Cap Advisor Portfolio/9/..... 0.97% 0.09% 1.06%
Wanger International Small Cap Advisor
Portfolio/9/.................................. 1.28% 0.32% 1.60%
Warburg Pincus International Equity
Portfolio/1//0/............................... 1.00% 0.36% 1.36%
Warburg Pincus Small Company Growth
Portfolio/1//0/............................... 0.90% 0.24% 1.14%
</TABLE>

/1/Endeavor Investment Advisers has agreed, until terminated by Endeavor
Investment Advisers, to assume expenses of the Dreyfus Small Cap Value
Portfolio that exceed 1.30%.

/2/Endeavor Investment Advisers has agreed, until terminated by Endeavor
Investment Advisers, to assume expenses of the Endeavor Enhanced Index
Portfolio that exceed 1.30%. Total Portfolio Annual Expenses before waiver
or reimbursement of fees by Endeavor Investment Advisers and custody fee
credits for the period ended December 31, 1997 amounted to 1.56%.

/3/The expense figures shown reflect actual expenses for fiscal year 1997
including voluntary waivers of a portion of the management fees and/or
assumption of expenses. The maximum Management and Advisory Expenses and
Total Portfolio Annual Expenses absent the voluntary waivers would have
been as follows: 0.75% and 0.94%, respectively, for the Federated American
Leaders Portfolio; 0.75% and 1.12%, respectively, for the Federated Utility
Portfolio; 0.50% and 1.00%, respectively, for the Federated Prime Money
Portfolio; and 0.60% and 1.26%, respectively, for the Federated U.S.
Government Securities Portfolio; and 0.60% and 0.89%, respectively, for the
Federated High Income Bond Portfolio.

/4/The figures above are based on actual expenses for fiscal year 1997 (as
a percentage of each Portfolio's average net assets after deferment of fees
and/or expense reimbursement). The expense figures shown reflect voluntary
deferment of a portion of the management fees and/or assumption of
expenses. Absent the voluntary deferment, the maximum Management and
Advisory Expenses, Other Expenses, and Total Portfolio Annual Expenses
would have been as follows: 1.00%, 0.97%, and 1.97%, respectively, for the
Montgomery Growth Portfolio and 1.25%, 0.56%, and 1.81%, respectively, for
the Montgomery Emerging Markets Portfolio. For the Montgomery Growth
Portfolio, the applicable expense limitation for the current year is 1.25%,
and Total Portfolio Annual Expenses are expected to be 1.25%.

/5/The figures shown reflect actual expenses for fiscal year 1997. The
advisor has voluntarily agreed until April 30, 1998 to reimburse all
expenses, including management and administrative fees, incurred by Stein
Roe Special Venture Portfolio in excess of 0.80% of average net assets.

/6/The figures shown reflect actual expenses for fiscal year 1997.

/7/The expense figures shown reflect actual expenses for fiscal year 1997
(as a percentage of the Portfolio's average net assets after fee waiver
and/or expense reimbursement). The expense figures shown reflect voluntary
waivers of a portion of the management fees and/or assumption of expenses.
In the absence of these voluntary waivers, the Management and Advisory
Expenses, Other Expenses, and Total Portfolio Annual Expenses are estimated
to be as follows: 1.00%, 0.54%, and 1.54%, respectively.

9
<PAGE>

/8/Endeavor Investment Advisers has agreed, until terminated by Endeavor
Investment Advisers, to assume expenses of the T. Rowe Price International
Stock Portfolio that exceed 1.53%. Total Portfolio Annual Expenses before
credits allowed by the custodian for the year ended December 31, 1997
amounted to 1.12%.

/9/As required by the Securities and Exchange Commission rules, "Other
Expenses" reflects gross custodian fees. Net of custodian fees paid
indirectly, Other Expenses would have been 0.07% for U.S. Small Cap Advisor
Portfolio and 0.31% for International Small Cap Advisor Portfolio; Total
Portfolio Annual Expenses would have been 1.04% and 1.59%, respectively.

/1//0/Management and Advisory Expenses, Other Expenses and Total Portfolio
Annual Expenses are based on actual expenses for the fiscal year ended
December 31, 1997, net of any fee waivers or expense reimbursements.
Without such waivers or reimbursements, Management and Advisory Expenses
would have equaled 1.00% and 0.90%, Other Expenses would have equaled 0.40%
and 0.25% and Total Portfolio Annual Expenses would have equaled 1.40% and
1.15% for the Warburg Pincus International Equity and Small Company Growth
Portfolios, respectively. The investment adviser and co-administrator have
undertaken to limit Total Portfolio Annual Expenses to the limits shown in
the table above through December 31, 1998.

The following example illustrates the expenses that you would incur on a
$1,000 Purchase Payment over various periods, assuming (1) a 5% annual rate of
return and (2) redemption at the end of each period. As noted in the table
above, the Contract imposes no surrender or withdrawal charges of any kind.
Your expenses are identical whether you continue the Contract or withdraw the
entire value of your Contract at the end of the applicable period as a lump
sum or under one of the Contract's Annuity Payment Options. In some states,
the Company will deduct Premium Taxes as incurred by the Company.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Dreyfus Small Cap Value Portfolio......................... $24.41 $ 75.15
Endeavor Enhanced Index Portfolio......................... $28.31 $ 86.81
Federated American Leaders Portfolio...................... $23.81 $ 73.34
Federated Utility Portfolio............................... $23.81 $ 73.34
Federated Prime Money Portfolio........................... $23.31 $ 71.84
Federated U.S. Government Securities Portfolio............ $23.31 $ 71.84
Federated High Income Bond Portfolio...................... $23.31 $ 71.84
Montgomery Growth Portfolio............................... $18.69 $ 57.86
Montgomery Emerging Markets Portfolio..................... $32.78 $100.08
Stein Roe Special Venture Portfolio....................... $22.61 $ 69.72
Strong International Stock Portfolio...................... $30.40 $ 93.03
Strong Schafer Value Portfolio............................ $27.31 $ 83.83
T. Rowe Price International Stock Portfolio............... $26.01 $ 79.95
Wanger U.S. Small Cap Advisor Portfolio................... $25.91 $ 79.65
Wanger International Small Cap Advisor Portfolio.......... $31.29 $ 95.68
Warburg Pincus International Equity Portfolio............. $28.91 $ 88.59
Warburg Pincus Small Company Growth Portfolio............. $26.71 $ 82.04
</TABLE>

This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be higher or lower than those
shown, subject to the guarantees in the Contract.

FINANCIAL STATEMENTS

The audited statutory-basis financial statements of the Company (as well as
the Independent Auditors' Report thereon) are included in the Statement of
Additional Information. No financial statements are included for the Separate
Account because, as of the date of this Prospectus, the Subaccounts that
invest in the Portfolios offered by the Advisor's Edge Select variable annuity
had not commenced operations with respect to the Portfolios and consequently
had no assets or liabilities.

PERFORMANCE MEASURES

Performance for the Subaccounts of the Separate Account, including the yield
and effective yield of Federated's Prime Money Portfolio, the yield of the
other Subaccounts, and the total return of all Subaccounts may appear in
reports and promotional literature to current or prospective Contract Owners.

10
<PAGE>

Please refer to the discussion below and to the Statement of Additional
Information for a more detailed description of the method used to calculate a
Portfolio's yield and total return, and a list of the indexes and other
benchmarks used in evaluating a Portfolio's performance.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

When advertising performance of the Subaccounts, the Company will show the
Standardized Average Annual Total Return for a Subaccount which, as prescribed
by the rules of the Securities and Exchange Commission ("SEC"), is the
effective annual compounded rate of return that would have produced the cash
redemption value over the stated period had the performance remained constant
throughout. The Standardized Average Annual Total Return assumes a single
$1,000 payment made at the beginning of the period and full redemption at the
end of the period. It reflects the deduction of all Portfolio, Separate
Account and Contract level charges except Premium Taxes, if any.

ADDITIONAL PERFORMANCE MEASURES

NON-STANDARDIZED ACTUAL TOTAL RETURN

The Company may show actual Total Return (i.e., the percentage change in the
value of an Accumulation Unit) for one or more Subaccounts with respect to one
or more periods, including Total Return Year-to-Date ("YTD") with respect to
certain periods. Because the value of an Accumulation Unit reflects the
Separate Account and Portfolio expenses (see "Fee Table"), the actual Total
Return also reflects these expenses. These percentages, however, do not
reflect Premium Taxes (if any) which, if included, would reduce the
percentages reported.

NON-STANDARDIZED HYPOTHETICAL TOTAL RETURN AND NON-STANDARDIZED HYPOTHETICAL
AVERAGE ANNUAL TOTAL RETURN

The Company may show Non-Standardized Hypothetical Total Return and Non-
Standardized Hypothetical Average Annual Total Return, calculated on the basis
of the historical performance of the Portfolios, and may assume the Contract
was in existence prior to its inception date (which it was not). After the
Contract's inception date, the calculations will reflect actual Accumulation
Unit Values. These returns are based on specified premium patterns which
produce the resulting Accumulated Values. They reflect a deduction for the
Separate Account expenses and Portfolio expenses. They do not include Premium
Taxes (if any) which, if included, would reduce the percentages reported.

The Non-Standardized Annual Total Return for a Subaccount is the effective
annual rate of return that would have produced the ending Accumulated Value of
the stated one-year period.

The Non-Standardized Average Annual Total Return for a Subaccount is the
effective annual compounded rate of return that would have produced the ending
Accumulated Value over the stated period had the performance remained constant
throughout.

YIELD AND EFFECTIVE YIELD

The Company may also show yield and effective yield figures for the Subaccount
investing in shares of the Federated Prime Money Portfolio. "Yield" refers to
the income generated by an investment in the Federated Prime Money Portfolio
over a seven-day period, which is then "annualized." That is, the amount of
income generated by the investment during that week is assumed to be generated
each week 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 Federated Prime Money
Portfolio is assumed to be reinvested. Therefore the effective yield will be
slightly higher than the yield because of the compounding effect of this
assumed reinvestment. These figures do not reflect Premium Taxes (if any)
which, if included, would reduce the yields reported.

From time to time a Portfolio of a Fund may advertise its yield and total
return investment performance. For each Subaccount other than the Federated
Prime Money Market for which the Company advertises yield, the Company shall
furnish a yield quotation referring to the Portfolio computed in the following
manner: the net investment income per Accumulation Unit earned during a recent
one month period is divided by the Accumulation Unit Value on the last day of
the period.

Please refer to the Statement of Additional Information for a description of
the method used to calculate a Portfolio's yield and total return, and a list
of the indexes and other benchmarks used in evaluating a Portfolio's
performance.

11
<PAGE>

The performance measures discussed above reflect results of the Portfolios and
are not intended to indicate or predict future performance. For more detailed
information, see the Statement of Additional Information.

Performance information for the Subaccounts may be contrasted with other
comparable variable annuity separate accounts or other investment products
surveyed by Lipper Analytical Services, a nationally recognized independent
reporting service which ranks mutual funds and other investment companies by
overall performance, investment objectives and assets. Performance may also be
tracked by other ratings services, companies, publications or persons who rank
separate accounts or other investment products on overall performance or other
criteria. Performance figures will be calculated in accordance with
standardized methods established by each reporting service.

THE COMPANY AND THE SEPARATE ACCOUNT

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

The Company is a stock life insurance company incorporated under the laws of
Missouri on August 6, 1920. The Company is principally engaged in offering
life insurance, annuity contracts, and accident and health insurance and is
admitted to do business in all states except for New York, as well as the
District of Columbia and Puerto Rico. As of December 31, 1997, the Company had
assets of approximately $11 billion. The Company is a wholly owned indirect
subsidiary of AEGON USA, Inc., which conducts substantially all of its
operations through subsidiary companies engaged in the insurance business or
in providing non-insurance financial services. All of the stock of AEGON USA,
Inc. is indirectly owned by AEGON n.v. of the Netherlands. AEGON n.v., a
holding company, conducts its business through subsidiary companies engaged
primarily in the insurance business.

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY SEPARATE ACCOUNT V

The Separate Account was established by the Company as a separate account
under the laws of Missouri on February 14, 1992, pursuant to a resolution of
the Company's Board of Directors. The Separate Account is a unit investment
trust registered with the SEC under the Investment Company Act of 1940 (the
"1940 Act"). Such registration does not signify that the SEC supervises the
management or the investment practices or policies of the Separate Account.
The Separate Account meets the definition of a "separate account" under the
federal securities laws.

The assets of the Separate Account are owned by the Company and the
obligations under the Contract are obligations of the Company. These assets
are held separately from the other assets of the Company and are not
chargeable with liabilities incurred in any other business operation of the
Company (except to the extent that assets in the Separate Account exceed the
reserves and other liabilities of the Separate Account). Income, gains and
losses incurred on the assets in the Separate Account, whether or not
realized, are credited to or charged against the Separate Account without
regard to other income, gains or losses of the Company. Therefore, the
investment performance of the Separate Account is entirely independent of the
investment performance of the General Account assets or any other separate
account maintained by the Company.

The Separate Account has dedicated 17 Subaccounts to the Contract, each of
which invests solely in a corresponding Portfolio of the Funds. Additional
Subaccounts may be established at the discretion of the Company. The Separate
Account also includes other subaccounts which are not available under the
Contract.

ENDEAVOR SERIES TRUST (ADVISED BY ENDEAVOR INVESTMENT ADVISERS)

Endeavor Series Trust is a diversified, open-end management investment company
that offers a selection of managed investment portfolios. Each portfolio
constitutes a separate mutual fund with its own investment objectives and
policies. The Fund is organized as a Massachusetts business trust and is
registered under the 1940 Act. The Fund currently issues shares of eleven
portfolios, of which the T. Rowe Price International Stock Portfolio, the
Dreyfus Small Cap Value Portfolio, and the Endeavor Enhanced Index Portfolio
are available as part of the Advisor's Edge Select. Endeavor Investment
Advisers serves as the Fund's investment adviser. Rowe Price-Fleming
International, Inc. serves as the subadviser to the T. Rowe Price
International Stock Portfolio. The Dreyfus Corporation serves as the
subadviser to the Dreyfus Small Cap Value Portfolio. J.P. Morgan Investment
Management Inc. serves as the subadviser to the Endeavor Enhanced Index
Portfolio.

12
<PAGE>

THE FEDERATED INSURANCE SERIES (ADVISED BY FEDERATED ADVISERS)

The Federated Insurance Series is an open-end management investment company
organized as a Massachusetts business trust and registered under the 1940 Act.
The Fund consists of eight investment portfolios, five of which are available
as part of the Advisor's Edge Select: Federated American Leaders Portfolio,
the Federated Utility Portfolio, the Federated Prime Money Portfolio, the
Federated U.S. Government Securities Portfolio and the Federated High Income
Bond Portfolio. Federated Advisers serves as this Fund's investment adviser.

THE MONTGOMERY FUNDS III (ADVISED BY MONTGOMERY ASSET MANAGEMENT, LLC)

The Montgomery Funds III, an open-end management investment company, was
organized as a Delaware business trust in 1994 and is registered under the
1940 Act. The Fund consists of three professionally managed investment
portfolios, two of which are available as part of the Advisor's Edge Select:
the Montgomery Growth Portfolio and the Montgomery Emerging Markets Portfolio.
Montgomery Asset Management, LLC ("MAM") was organized as a Delaware limited
liability company in 1997 and is the Fund's investment advisor. On July 31,
1997, Montgomery Asset Management, L.P., formed in 1990, completed the sale of
substantially all of its assets to MAM.

STEINROE VARIABLE INVESTMENT TRUST (ADVISED BY STEIN ROE & FARNHAM
INCORPORATED)

The SteinRoe Variable Investment Trust is an open-end, diversified management
investment company organized as a Massachusetts business trust and registered
under the 1940 Act. The Fund currently consists of five investment portfolios,
including the Stein Roe Special Venture Portfolio, which is the only portfolio
available as part of the Advisor's Edge Select. Stein Roe & Farnham
Incorporated serves as the Fund's investment adviser.

STRONG VARIABLE INSURANCE FUNDS, INC. (ADVISED BY STRONG CAPITAL MANAGEMENT,
INC.)

Strong Variable Insurance Funds, Inc. is an open-end management investment
company organized under Wisconsin law and is registered under the 1940 Act.
The two series issued by the Fund are available as part of the Advisor's Edge
Select: the Strong International Stock Portfolio and the Strong Schafer Value
Portfolio. Strong Capital Management, Inc. serves as the Fund's investment
adviser. Schafer Capital Management serves as the subadviser to the Strong
Schafer Value Portfolio.

WANGER ADVISORS TRUST (ADVISED BY WANGER ASSET MANAGEMENT, L.P.)

Wanger Advisors Trust, an open-end management investment company, was
organized as a Massachusetts business trust in 1994 and is registered under
the 1940 Act. The Fund consists of two series available as part of the
Advisor's Edge Select: the Wanger U.S. Small Cap Advisor Portfolio and the
Wanger International Small Cap Advisor Portfolio. Wanger Asset Management,
L.P., a limited partnership managed by its general partner, Wanger Asset
Management, Ltd., serves as this Fund's investment adviser.

WARBURG PINCUS TRUST (ADVISED BY WARBURG PINCUS ASSET MANAGEMENT, INC.)

Warburg Pincus Trust, an open-end management investment company, was organized
as a Massachusetts business trust in 1995 and is registered under the 1940
Act. The Fund currently offers four investment portfolios, two of which are
available as part of the Advisor's Edge Select: the Warburg Pincus
International Equity Portfolio and the Warburg Pincus Small Company Growth
Portfolio. Warburg Pincus Asset Management, Inc. serves as the Fund's
investment adviser.

THE PORTFOLIOS (SEE ACCOMPANYING PROSPECTUSES)

For more information concerning the risks associated with each Portfolio's
investments, please refer to the applicable underlying Fund prospectus.

DREYFUS SMALL CAP VALUE PORTFOLIO ("DREYFUS SMALL CAP VALUE PORTFOLIO")

The investment objective of the Dreyfus Small Cap Value Portfolio (formerly
known as the Value Small Cap Portfolio) is capital appreciation through
investment in a diversified portfolio of equity securities of companies with a
median

13
<PAGE>

market capitalization of approximately $750 million, provided that under
normal market conditions at least 75% of the Portfolio's investments will be
in equity securities of companies with capitalizations at the time of purchase
between $150 million and $1.5 billion.

ENDEAVOR ENHANCED INDEX PORTFOLIO ("ENDEAVOR ENHANCED INDEX PORTFOLIO")

The investment objective of the Endeavor Enhanced Index Portfolio is to earn a
return modestly in excess of the total return performance of the S&P 500
Composite Stock Price Index (including the reinvestment of dividends) ("S&P
500 Index") while maintaining a volatility of return similar to the S&P 500
Index.

FEDERATED AMERICAN LEADERS FUND II ("FEDERATED AMERICAN LEADERS PORTFOLIO")

The primary investment objective of the Federated American Leaders Portfolio
is to achieve long-term growth of capital. The Portfolio's secondary objective
is to provide income. The Portfolio pursues its investment objectives by
investing, under normal circumstances, at least 65% of its total assets in
common stock of "blue-chip" companies. This Portfolio was formerly known as
the Federated Equity Growth & Income Portfolio.

FEDERATED UTILITY FUND II ("FEDERATED UTILITY PORTFOLIO")

The investment objective of the Federated Utility Portfolio is to achieve high
current income and moderate capital appreciation. The Portfolio endeavors to
achieve its objective by investing primarily in a professional managed and
diversified portfolio of equity and debt securities of utility companies.

FEDERATED PRIME MONEY FUND II ("FEDERATED PRIME MONEY PORTFOLIO")

The investment objective of the Federated Prime Money Portfolio is to provide
current income consistent with stability of principal and liquidity. The
Portfolio pursues its investment objective by investing exclusively in a
portfolio of money market instruments maturing in 397 days or less.

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II ("FEDERATED U.S. GOVERNMENT
SECURITIES PORTFOLIO")

The investment objective of the Federated U.S. Government Securities Portfolio
is to provide current income. Under normal circumstances, the Portfolio
pursues its investment objective by investing at least 65% of the value of its
total assets in securities issued or guaranteed as to payment of principal and
interest by the U.S. government, its agencies or instrumentalities. This
Portfolio was formerly known as the Federated U.S. Government Bond Portfolio.

FEDERATED HIGH INCOME BOND FUND II ("FEDERATED HIGH INCOME BOND PORTFOLIO")

The investment objective of the Federated High Income Bond Portfolio is to
seek high current income. The Portfolio endeavors to achieve its investment
objective by investing primarily in a diversified portfolio of professionally
managed fixed income securities. The fixed income securities in which the
Portfolio intends to invest are lower-rated corporate debt obligations, which
are commonly referred to as "junk-bonds." Some of these fixed income
securities may involve equity features. Capital growth will be considered, but
only when consistent with the investment objective of high current income.
This Portfolio was formerly known as the Federated Corporate Bond Portfolio.

MONTGOMERY VARIABLE SERIES: GROWTH FUND ("MONTGOMERY GROWTH PORTFOLIO")

The investment objective of the Montgomery Growth Portfolio is capital
appreciation, which, under normal conditions it seeks by investing at least
65% of its total assets in the equity securities of domestic companies. The
Portfolio emphasizes investments in common stocks but also invests in other
types of equity securities. In addition to capital appreciation, the Portfolio
emphasizes value.

MONTGOMERY VARIABLE SERIES: EMERGING MARKETS FUND ("MONTGOMERY EMERGING
MARKETS PORTFOLIO")

The investment objective of the Montgomery Emerging Markets Portfolio is
capital appreciation, which, under normal conditions it seeks by investing at
least 65% of its total assets in equity securities of companies in countries
having

14
<PAGE>

emerging markets. For these purposes, the Portfolio defines an emerging market
country as having an economy that is or would be considered by the World Bank
or the United Nations to be emerging or developing. The Portfolio invests
primarily in common stock but may also invest in other types of equity
securities, and in certain types of debt securities issued by the governments
of emerging market countries that are or may be eligible for conversion into
investments in emerging market companies under debt conversion programs
sponsored by such governments.

STEIN ROE SPECIAL VENTURE FUND, VARIABLE SERIES ("STEIN ROE SPECIAL VENTURE
PORTFOLIO")

The investment objective of the Stein Roe Special Venture Portfolio is to
achieve growth of capital. This Portfolio seeks to achieve its investment
objective by investing primarily in common stocks, securities convertible into
common stocks and securities having common stock characteristics, including
rights and warrants, selected primarily for prospective capital growth. The
Portfolio invests in both domestic and foreign companies.

STRONG INTERNATIONAL STOCK FUND II ("STRONG INTERNATIONAL STOCK PORTFOLIO")

The investment objective of the Strong International Stock Portfolio is to
achieve capital growth. This Portfolio seeks to achieve its investment
objective by investing primarily in the equity securities of issuers located
outside the United States. This Portfolio will invest at least 65% of its
total assets in foreign equity securities, including common stocks, preferred
stocks, and securities that are convertible into common or preferred stocks,
such as warrants and convertible bonds, that are issued by companies whose
principal headquarters are located outside the United States. Under normal
market conditions, this Portfolio expects to invest at least 90% of its net
assets in foreign equity securities. This Portfolio will normally invest in
securities of issuers located in at least three different countries.

STRONG SCHAFER VALUE FUND II ("STRONG SCHAFER VALUE PORTFOLIO")

The primary objective of the Strong Schafer Value Portfolio is long-term
capital appreciation. The Portfolio seeks to achieve its objective by
investing in stocks that offer attractive growth potential but which, for a
variety of reasons, are either undervalued or have gone unnoticed by the
market. The Fund is managed with a long-term perspective, and stocks are
typically held for two or more years, giving the Fund the ability to take full
advantage of a company's growth potential.

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO ("T. ROWE PRICE INTERNATIONAL
STOCK PORTFOLIO")

The investment objective of the T. Rowe Price International Stock Portfolio is
long-term growth of capital through investments primarily in common stocks and
other equity-related securities of established non-U.S. companies.

WANGER U.S. SMALL CAP ADVISOR ("WANGER U.S. SMALL CAP ADVISOR PORTFOLIO")

The investment objective of the Wanger U.S. Small Cap Advisor Portfolio is to
seek long-term growth of capital. The Portfolio pursues its investment
objective by investing primarily in stocks of small and medium size United
States companies. The Portfolio may also invest in debt securities, including
lower-rated debt securities, which may be regarded as having speculative
characteristics and are commonly referred to as "junk bonds."

WANGER INTERNATIONAL SMALL CAP ADVISOR ("WANGER INTERNATIONAL SMALL CAP
ADVISOR PORTFOLIO")

The investment objective of the Wanger International Small Cap Advisor
Portfolio is to seek long-term growth of capital. The Portfolio pursues its
investment objective by investing primarily in stocks of small and medium size
foreign companies. The Portfolio may also invest in debt securities, including
lower-rated debt securities, which may be regarded as having speculative
characteristics and are commonly referred to as "junk bonds."

WARBURG PINCUS INTERNATIONAL EQUITY PORTFOLIO ("WARBURG PINCUS INTERNATIONAL
EQUITY PORTFOLIO")

The investment objective of the Warburg Pincus International Equity Portfolio
is to achieve long-term capital appreciation. This Portfolio seeks to achieve
its investment objective by investing primarily in equity securities of
companies, wherever organized, that in the judgment of the Portfolio's
adviser, have their principal business activities and interests outside of the
United States. This Portfolio will ordinarily invest substantially all its
assets--but no less

15
<PAGE>

than 65% of its total assets--in common stocks, warrants and securities
convertible into or exchangeable for common stocks. Generally this Portfolio
will hold no less than 65% of its total assets in at least three countries
other than the United States. Investment may be made in equity securities of
companies of any size, whether traded on or off a national securities
exchange.

WARBURG PINCUS SMALL COMPANY GROWTH PORTFOLIO ("WARBURG PINCUS SMALL COMPANY
GROWTH PORTFOLIO")

The investment objective of the Warburg Pincus Small Company Growth Portfolio
is to achieve capital growth. This Portfolio seeks to achieve its investment
objective by investing in a portfolio of equity securities of small-sized
domestic companies. This Portfolio will ordinarily invest at least 65% of its
total assets in common stocks or warrants of small companies that present
attractive opportunities for capital growth. The Portfolio considers a "small"
company to be one that has a market capitalization, measured at the time the
Portfolio purchases a security of that company, within the range of
capitalizations of companies represented in the Russell 2000 Index. (As of
January 31, 1998, the Russell 2000 Index included companies with market
capitalizations between $23.7 million and $2.7 billion.) It is anticipated
that this Portfolio will invest primarily in companies whose securities are
traded on domestic stock exchanges or in the over-the-counter market. This
Portfolio's investment will be made on the basis of equity characteristics and
securities ratings generally will not be a factor in the selection process.

OTHER PORTFOLIO INFORMATION

There is no assurance that a Portfolio will achieve its stated investment
objective.

Additional information concerning the investment objectives and policies of
the Portfolios and the investment advisory services, total expenses and
charges can be found in the current prospectuses for the corresponding Funds.
THE FUNDS' PROSPECTUSES SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
CONCERNING THE ALLOCATION OF NET PURCHASE PAYMENTS TO A PORTFOLIO.

The Portfolios may be made available to registered separate accounts offering
variable annuity and variable life products of the Company as well as other
insurance companies or to a person or plan, including a pension or retirement
plan receiving favorable tax treatment under the Code, that qualifies to
purchase shares of the Funds under Section 817(h) of the Code. Although we
believe it is unlikely, a material conflict could arise among the interests of
the Separate Account and one or more of the other participating separate
accounts and other qualified persons or plans. In the event of a material
conflict, the affected insurance companies agree to take any necessary steps,
including removing their separate accounts from the Funds if required by law,
to resolve the matter.

CONTRACT FEATURES

The rights and benefits under the Contract are described below; however, the
description of the Contract contained in this Prospectus is qualified in its
entirety by the Contract itself, including any endorsements to it, a copy of
which is available from the Company. The Company reserves the right to make
any modification to conform the Contract to, or give the Contract Owner the
benefit of, any federal or state statute or any rule or regulation of the
United States Treasury Department.

CONTRACT PURCHASE AND PURCHASE PAYMENTS

If you wish to purchase a Contract, you should consult your advisor, who will
provide the necessary information to the Company in a customer order form and
forward the initial Purchase Payment to such address as the Company may from
time to time designate. If you wish to make personal delivery by hand or
courier to the Company of the initial Purchase Payment (rather than through
the mail), you must do so at our Administrative Offices at 4333 Edgewood Road
N.E., Cedar Rapids, IA 52499. The initial Purchase Payment for a Non-Qualified
Contract must be equal to at least the $25,000 minimum investment requirement.
The Initial Purchase Payment for a Qualified Contract must be equal to at
least $1,000 (or you may establish a payment schedule of $50 a month by
payroll deduction).

The Contract will be issued and the initial Purchase Payment less any Premium
Taxes will be credited within two Business Days after receipt of the customer
order form and the initial Purchase Payment in good order. The Company
reserves the right to reject any customer order form or initial Purchase
Payment. The Company will then mail the

16
<PAGE>

Contract to you along with a Contract acknowledgement form, which you should
complete, sign and return in accordance with its instructions. Please note
that until the Company receives the acknowledgement form signed by the Owner
and any Joint Owner, the Owner and any Joint Owner must obtain a signature
guarantee on their written signed request in order to exercise any rights
under the Contract.

If the initial Purchase Payment cannot be credited because the customer order
form is incomplete, we will contact the applicant, explain the reason for the
delay and refund the initial Purchase Payment within five Business Days,
unless the applicant instructs us to retain the initial Purchase Payment and
credit it as soon as the necessary requirements are fulfilled.

You may make Additional Purchase Payments at any time before the Annuity Date,
as long as the Annuitant is living. Additional Purchase Payments must be for
at least $500 for Non-Qualified Contracts, or $50 for Qualified Contracts.
Additional Purchase Payments received prior to the close of the New York Stock
Exchange (generally 4:00 P.M. Eastern time) are credited to the Accumulated
Value at the close of business that same day. Additional Purchase Payments
received after the close of the New York Stock Exchange are processed the next
Business Day.

Total Purchase Payments may not exceed $1,000,000 without our prior approval.

The Company reserves the right to refuse to issue this Contract in cases
involving an exchange for another Contract. In cases where a Contract Owner or
former Contract Owner requests the Company to reverse a surrender or
withdrawal transaction, whether full or partial, the Company reserves the
right to refuse such requests or grant such requests on condition that the
Contracts' Accumulated Value be adjusted to reflect appropriate investment
results, administrative costs or loss of interest during the relevant period.

PURCHASING BY WIRE

For wiring instructions please contact our Administrative Offices at 1-800-
866-6007.

RIGHT TO CANCEL PERIOD

A Right to Cancel Period exists for a minimum of 10 days after you receive the
Contract (30 or more days in some instances as set forth in your Contract)
plus a 5 day grace period to allow for mail delivery. The Contract permits you
to cancel the Contract during the Right to Cancel Period by returning the
Contract to our Administrative Offices, 4333 Edgewood Road N.E., Cedar Rapids,
Iowa 52499 or to the advisor from whom you purchased the Contract. Upon
cancellation, the Contract is treated as void from the Contract Date and when
we receive the Contract, (1) if the state of issue of your Contract is GA, ID,
LA, MI, MO, NE, NH, NC, OK, OR, SC, UT, VA or WV, then for any amount of your
initial Purchase Payment(s) invested in the Federated Prime Money Portfolio,
we will return the Accumulated Value of the amount of your Purchase Payment(s)
so invested, or if greater, the amount of your Purchase Payment(s) so
invested, (2) for any amount of your initial Purchase Payment(s) invested in
the Portfolios immediately following receipt by us, we will return the
Accumulated Value of your Purchase Payment(s) so invested plus any fees and/or
Premium Taxes that may have been subtracted from such amount, and (3) for any
amount of your initial Purchase Payment(s) invested in the Guaranteed Rate
Options immediately following receipt by us, we will refund the Accumulated
Value of your Purchase Payment(s) so invested.

ALLOCATION OF PURCHASE PAYMENTS

You instruct your advisor how your Net Purchase Payments will be allocated.
You may allocate each Net Purchase Payment to one or more of the Portfolios or
General Account Guaranteed Options as long as such portions are whole number
percentages provided that each allocation to a General Account Guaranteed
Option is at least $1,000 and that no Portfolio or General Account Guaranteed
Option may contain a balance of less than $250 and $1,000, respectively
(except the Dollar Cost Averaging Fixed Account Option). You may choose not to
allocate any monies to a particular Portfolio. You may change allocation
instructions for future Net Purchase Payments by sending us the appropriate
Company form or by complying with other designated Company procedures. The
General Account Guaranteed Options are available for sale in most, but not
all, states.

17
<PAGE>

to your initial allocation instructions (except that any accrued interest will
remain in the Federated Prime Money Portfolio if it is selected as an initial
allocation option), provided that portions of your initial Net Purchase
Payment(s) allocated to the Guaranteed Rate Options will be invested
immediately upon our receipt thereof in order to lock in the rates then
applicable to such options. (Please note that immediate investment is not
applicable to amounts allocated to the Guaranteed Equity Option.)

EXCHANGES AMONG THE PORTFOLIOS

Should your investment goals change, you may exchange Accumulated Value among
the Portfolios of the Funds and, as permitted, the General Account Guaranteed
Options. Requests for Exchanges, received by mail or by telephone, prior to
the close of the New York Stock Exchange (generally 4:00 P.M. Eastern time)
are processed at the close of business that same day. Requests received after
the close of the New York Stock Exchange are processed the next Business Day.
If you experience difficulty in making a telephone Exchange, your Exchange
request may be made by regular or express mail. It will be processed on the
date received.

To take advantage of the privilege of initiating transactions by telephone,
you must first elect the privilege by completing the appropriate section of
the Contract acknowledgement form, which you will receive with your Contract.
You may also complete a separate telephone authorization form at a later date.
To take advantage of the privilege of authorizing a third party to initiate
transactions by telephone, you must first complete a third party authorization
form or the appropriate section of the Contract acknowledgement form.

The Company will undertake reasonable procedures to confirm that instructions
communicated by telephone are genuine. Prior to the acceptance of any request,
a customer service representative will ask the caller for his or her Contract
number and social security number. In addition, telephone communications from
a third party authorized to transact in an account will undergo reasonable
procedures to confirm that instructions are genuine. The third party caller
will be asked for his or her name, company affiliation (if appropriate), the
Contract number to which he or she is referring, and the social security
number of the Contract Owner. All calls will be recorded, and this information
will be verified with the Contract Owner's records prior to processing a
transaction. Furthermore, all transactions performed by a customer service
representative will be verified with the Contract Owner through a written
confirmation statement. Neither the Company nor the Funds shall be liable for
any loss, cost or expense for action on telephone instructions that are
believed to be genuine in accordance with these procedures.

For information concerning Exchanges to and from the General Account
Guaranteed Options, see "The General Account," at Appendix A.

ASSET REBALANCING

Prior to the Annuity Date, you may instruct us to automatically exchange
amounts among the Portfolios to maintain a desired allocation of the
Accumulated Value among those Portfolios. Rebalancing will occur monthly,
quarterly, semi-annually, or annually, beginning on the date you select. You
must select the percentage of the Accumulated Value you desire in each of the
various Portfolios offered (totaling 100%). Rebalancing can be started,
stopped or changed at any time, except that rebalancing will not be available
when Dollar Cost Averaging is in effect or when any other Exchange is
requested.

DOLLAR COST AVERAGING OPTIONS

DOLLAR COST AVERAGING MONEY MARKET OPTION

If you have at least $5,000 of Accumulated Value in the Federated Prime Money
Portfolio, you may choose to have a specified dollar amount transferred from
this Portfolio to other Portfolios in the Separate Account or to the General

18
<PAGE>

Account Guaranteed Options on a monthly basis. The main objective of Dollar
Cost Averaging is to shield your investment from short term price
fluctuations. Since the same dollar amount is transferred to other Portfolios
each month, more units are purchased in a Portfolio if the value per unit is
low and less units are purchased if the value per unit is high. Therefore, a
lower average cost per unit may be achieved over the long term. This plan of
investing allows investors to take advantage of market fluctuations but does
not assure a profit or protect against a loss in declining markets.

This Dollar Cost Averaging Option may be elected on the customer order form or
at a later date. The minimum amount that may be transferred each month into
any Portfolio or General Account Guaranteed Option is $250. The maximum amount
which may be transferred is equal to the Accumulated Value in the Federated
Prime Money Portfolio when elected, divided by 12.

The transfer date will be the same calendar day each month as the Contract
Date. The dollar amount will be allocated to the Portfolios in the proportions
you specify on the appropriate Company form, or, if none are specified, in
accordance with your original investment allocation. If, on any transfer date,
the Accumulated Value is equal to or less than the amount you have elected to
have transferred, the entire amount will be transferred and the option will
end. You may change the transfer amount once each Contract Year, or cancel
this option, by sending the appropriate Company form to our Administrative
Offices which must be received at least seven days before the next transfer
date.

DOLLAR COST AVERAGING FIXED ACCOUNT OPTION

For information about the Dollar Cost Averaging Fixed Account Option, see
Appendix A.

ACCUMULATED VALUE

At the commencement of the Contract, the Accumulated Value equals the initial
Net Purchase Payment. Thereafter, the Accumulated Value equals the Accumulated
Value from the previous Business Day increased by: (i) any additional Net
Purchase Payments received by the Company and (ii) any increase in the
Accumulated Value due to investment results of the selected Portfolio(s) and
the interest credited to the General Account Guaranteed Options during the
Valuation Period: and reduced by: (i) any decrease in the Accumulated Value
due to investment results of the selected Portfolio(s), (ii) a daily charge to
cover the mortality and expense risks assumed by the Company, (iii) any charge
to cover the cost of administering the Contract, (iv) any partial withdrawals,
(v) any Market Value Adjustment or other deduction due to early Exchanges from
the Guaranteed Rate Options and (vi) if exercised by the Company, any charges
for any Exchanges made after the first 12 in any Contract Year.

CHARGES AND DEDUCTIONS

There are no sales charges for the Contracts (although certain charges or
restrictions may apply to your Contract's General Account Guaranteed Options).

MORTALITY AND EXPENSE RISK CHARGE

We impose a charge as compensation for bearing certain mortality and expense
risks under the Contracts. The annual charge is assessed daily based on the
net asset value of the Separate Account. The annual mortality and expense risk
charge is 1.35% of the net asset value of the Separate Account.

We guarantee that this annual charge will never increase. If this charge is
insufficient to cover actual costs and assumed risks, the loss will fall on
us. Conversely, if the charge proves more than sufficient, any excess will be
added to the Company surplus and will be used for any lawful purpose,
including any shortfall on the costs of distributing the Contracts.

The mortality risk borne by us under the Contracts, where one of the life
Annuity Payment Options is selected, is to make monthly Annuity Payments
(determined in accordance with the annuity tables and other provisions
contained in the Contract) regardless of how long all Annuitants may live. We
also assume mortality risk as a result of our guarantee of a Death Benefit in
the event the Annuitant dies prior to the Annuity Date.

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<PAGE>

The expense risk borne by us under the Contracts is the risk that the charges
for administrative expenses which are guaranteed for the life of the Contract
may be insufficient to cover the actual costs of issuing and administering the
Contract.

ADMINISTRATIVE CHARGE

An administrative charge equal to .15% annually of the net asset value of the
Separate Account is assessed daily. This deduction represents reimbursement
for the costs expected to be incurred over the life of the Contract for
issuing and maintaining each Contract and the Separate Account.

EXCHANGE FEE

Each Contract Year you may make an unlimited number of Exchanges between
Portfolios and/or General Account Guaranteed Options, provided that after an
Exchange no Portfolio or General Account Guaranteed Option may contain a
balance less than $250 or $1,000, respectively (except the Dollar Cost
Averaging Fixed Account Option). No fee is currently imposed for such
Exchanges; however, we reserve the right to charge a $15 fee for Exchanges in
excess of 12 per Contract Year.

TAXES

We will, where such taxes are imposed on the Company by state law, deduct
Premium Taxes that currently range up to 3.5%. These taxes will be deducted
from the Accumulated Value or Purchase Payments in accordance with applicable
law.

As of the date of this Prospectus, the following state assesses a Premium Tax
on all initial and additional Purchase Payments on Non-Qualified Contracts:

<TABLE>
<CAPTION>
PERCENTAGE
----------
<S> <C>
South Dakota................................ 1.25%
</TABLE>

In addition, a number of states currently impose Premium Taxes at the time an
Annuity Payment Option (other than a Lump Sum Payment Option) is selected. As
of the date of this Prospectus, the following states assess a Premium Tax
against the Accumulated Value if the Contract Owner chooses an Annuity Payment
Option instead of receiving a lump sum distribution:

<TABLE>
<CAPTION>
NON-
QUALIFIED QUALIFIED
--------- ---------
<S> <C> <C>
California.................................................. .50% 2.35%
District of Columbia........................................ 2.25% 2.25%
Kentucky.................................................... 2.00% 2.00%
Maine....................................................... 0% 2.00%
Nevada...................................................... 0% 3.50%
West Virginia............................................... 1.00% 1.00%
Wyoming..................................................... 0% 1.00%
</TABLE>

Under present laws, the Company will incur state or local taxes (in addition
to the Premium Taxes described above) in several states. At present, the
Company does not charge the Contract Owner for these taxes. If there is a
change in state or local tax laws, charges for such taxes may be made. The
Company does not expect to incur any federal income tax liability attributable
to investment income or capital gains retained as part of the reserves under
the Contracts. (See "Federal Tax Considerations," page 26.) Based upon these
expectations, no charge is currently being made to the Separate Account for
corporate federal income taxes that may be attributable to the Separate
Account.

The Company will periodically review the question of a charge to the Separate
Account for federal income taxes related to the Separate Account. Such a
charge may be made in future years for any federal income taxes incurred by
the Company. This might become necessary if the tax treatment of the Company
is ultimately determined to be other than what the Company currently believes
it to be, if there are changes made in the federal income tax treatment of
annuities at the corporate level, or if there is a change in the Company's tax
status. In the event that the Company

20
<PAGE>

should incur federal income taxes attributable to investment income or capital
gains retained as part of the reserves under the Contracts, the Accumulated
Value of the Contract would be correspondingly adjusted by any provision or
charge for such taxes.

PORTFOLIO EXPENSES

The value of the assets in the Separate Account reflect the fees and expenses
paid by the Portfolios. A complete description of these expenses is found in
the "Fee Table" section of this Prospectus and in each Fund's Prospectus and
Statement of Additional Information.

EXCEPTIONS TO CHARGES AND TO TRANSACTION OR BALANCE REQUIREMENTS

The administrative charges may be reduced for sales of Contracts to a trustee,
employer or similar entity representing a group where the Company determines
that such sales result in savings of administrative expenses. In addition,
directors, officers and bona fide full-time employees (and their spouses and
minor children) of the Company, its ultimate parent company, and certain of
their affiliates are permitted to purchase Contracts with substantial
reduction of administrative charges or with a waiver or modification of
certain minimum or maximum purchase and transaction amounts or balance
requirements. Contracts so purchased are for investment purposes only and may
not be resold except to the Company.

In no event will reduction or elimination of charges or waiver or modification
of transaction or balance requirements be permitted where such reduction,
elimination, waiver or modification will be unfairly discriminatory to any
person. Additional information about reductions in charges is contained in the
Statement of Additional Information.

MINIMUM BALANCE REQUIREMENT

We will transfer the balance in any Portfolio that falls below $250 (or $1,000
in the case of any General Account Guaranteed Option balance, except the
Dollar Cost Averaging Fixed Account Option), due to a partial withdrawal or
Exchange, to the remaining Portfolios held under that Contract on a pro rata
basis. In the event that the Accumulated Value of the Contract falls below
$1,000, the Company reserves the right to terminate the Contract and pay you
the Accumulated Value. You will be notified that the Accumulated Value of your
account is below the Contract's minimum requirement. You would then be allowed
60 days to make an additional investment before the account is liquidated.
Proceeds would be promptly paid to the Contract Owner. The full proceeds would
be taxable as a withdrawal. We will not exercise this right with respect to
Qualified Contracts.

DISTRIBUTIONS UNDER THE CONTRACT

FULL AND PARTIAL WITHDRAWALS

At any time before the Annuity Date and while the Annuitant is living, you may
make a partial or full withdrawal of the Contract to receive all or part of
the Surrender Value by sending a written request to our Administrative
Offices. Full or partial withdrawals may only be made before the Annuity Date
and all partial withdrawal requests must be for at least $500. The amount
available for full or partial withdrawal is the Surrender Value at the end of
the Valuation Period during which the written request for withdrawal is
received. The Surrender Value is an amount equal to the Accumulated Value,
adjusted to reflect any applicable Market Value Adjustment for amounts
allocated to the Multi-Year Guaranteed Rate Option, less any early withdrawal
charges for amounts allocated to the One-Year Guaranteed Index Rate Option,
less any amount allocated to the Guaranteed Equity Option less any Premium
Taxes incurred but not yet deducted. The withdrawal amount may be paid in a
lump sum to you, or if elected, all or any part may be paid out under an
Annuity Payment Option. (See "Annuity Payment Options," page 23.)

You can make a withdrawal by sending the appropriate Company form to our
Administrative Offices. You may not make any full or partial withdrawals from
the Guaranteed Equity Option before the end of the guarantee period. Your
proceeds will normally be processed and mailed to you within two Business Days
after the receipt of the request but in no event will it be later than seven
calendar days, subject to postponement in certain circumstances. (See
"Deferment of Payment," page 26.)

21
<PAGE>

Partial withdrawals from the Dollar Cost Averaging Fixed Account Option are
made on a first-in, first-out basis, so that amounts put into the Dollar Cost
Averaging Fixed Account Option first will be withdrawn first. For federal
income tax purposes, however, partial withdrawals are generally taken out of
earnings first and then purchase payments. (See "Federal Tax Considerations,"
page 26.)

Payments under the Contract of any amounts derived from premiums paid by check
may be delayed until the check has cleared your bank. If, at the time the
Contract Owner requests a full or partial withdrawal, he has not provided the
Company with a written election not to have federal income taxes withheld, the
Company must by law withhold 10% from the taxable portion of any full or
partial withdrawal and remit that amount to the federal government. Moreover,
the Code provides that a 10% penalty tax may be imposed on certain early
withdrawals. (See "Federal Tax Considerations," page 26.)

Since the Contract Owner assumes the investment risk with respect to amounts
allocated to the Separate Account, the total amount paid upon withdrawal of
the Contract (taking into account any prior withdrawals) may be more or less
than the total Net Purchase Payments made.

LUMP SUM PAYMENT OPTION

You may surrender the Contract at any time while the Annuitant is living and
before the Annuity Date. The Surrender Value is equal to the Accumulated
Value, adjusted for any Market Value Adjustment or other deductions applicable
to amounts allocated to a General Account Guaranteed Option, less any amount
allocated to the Guaranteed Equity Option, less any Premium Taxes incurred but
not yet deducted.

SYSTEMATIC WITHDRAWAL OPTION

You may choose to have a specified dollar amount provided to you on a regular
basis from the portion of your Contract's Accumulated Value that is allocated
to the Portfolios. By electing the Systematic Withdrawal Option, withdrawals
may be made on a monthly, quarterly, semi-annual or annual basis. The minimum
amount for each withdrawal is $100.

This option may be elected by completing the Systematic Withdrawal Request
Form. This form must be received by us at least 30 days prior to the date
systematic withdrawals will begin. Each withdrawal will be processed on the
day and at the frequency indicated on the Systematic Withdrawal Request Form.
The start date for the systematic withdrawals must be between the first and
twenty-eighth day of the month. You may discontinue the Systematic Withdrawal
Option at any time by notifying us in writing at least 30 days prior to your
next scheduled withdrawal date. We will forward the withdrawal amount to you
within 10 Business Days of the process date.

Like any other partial withdrawal, each systematic withdrawal is subject to
taxes on earnings. If the owner has not provided the Company with a written
election not to have federal income taxes withheld, the Company must by law
withhold 10% from the taxable portion of the systematic withdrawal and remit
that amount to the federal government. Moreover, the Code provides that a 10%
penalty tax may be imposed on certain early withdrawals. (See "Federal Tax
Considerations," page 26.) You may wish to consult a tax advisor regarding any
tax consequences that might result prior to electing the Systematic Withdrawal
Option.

We reserve the right to discontinue offering the Systematic Withdrawal Option
upon 30 days' written notice.

ANNUITY DATE

You may specify an Annuity Date, which can be no later than the first day of
the month after the Annuitant's 85th birthday, without the Company's prior
approval. The Annuity Date is the date that Annuity Payments are scheduled to
commence under the Contract unless the Contract has been surrendered or an
amount has been paid as proceeds to the designated Annuitant's Beneficiary
prior to that date.

You may advance or defer the Annuity Date. However, except as otherwise
permitted by us, a new Annuity Date must be a date which is: (1) at least
thirty days after the date on which notice of the change is received by us and
(2) not later than the last day of the month starting after the Annuitant's
85th birthday. In no event will an Annuity Date be permitted to be later than
the last day of the month following the month of the Annuitant's 95th
birthday. The Annuity

22
<PAGE>

Date may also be changed by the Annuitant's Beneficiary's election of an
Annuity Option after the Annuitant's death. The Annuity Date may be changed
only by written request during the Annuitant's lifetime and must be made at
least 30 days before the then-scheduled Annuity Date. The Annuity Date and the
Annuity Payment options available for Qualified Contracts may also be
controlled by endorsements, the plan or applicable law.

On the Annuity Date, the proceeds to be applied under a Payment Option will be
equal to the Contract's Accumulated Value 10 Business Days prior to the
Annuity Date less any applicable Premium Tax. Any Accumulated Value
attributable to General Account Guaranteed Options will become a portion of
the proceeds to be applied under a Payment Option. No market value adjustment
or interest penalty will apply on the Annuity Date.

Once proceeds become payable and an Annuity Payment Option has been selected,
the Company will issue a Supplementary Contract in exchange for the Contract
setting forth the terms of the Annuity Payment Option selected. The
Supplementary Contract will name the Payee(s) and will describe the payment
schedule.

ANNUITY PAYMENT OPTIONS

All Annuity Payment Options (except for the Designated Period Annuity Option)
are offered as "Variable Annuity Options." This means that Annuity Payments,
after the initial payment, will reflect the investment experience of the
Portfolio or Portfolios you have chosen. All Annuity Payment Options are also
offered as "Fixed Annuity Options." This means that the amount of each payment
will be set on the Annuity Date and will not change. The following Annuity
Payment Options are available under the Contract:

Life Annuity--Annuity Payments are paid for the life of an Annuitant, ceasing
with the last Annuity Payment due prior to the Annuitant's death.

Joint and Last Survivor Annuity--Annuity Payments are paid for the life of two
Annuitants and thereafter for the life of the survivor, ceasing with the last
Annuity Payment due prior to the survivor's death. Payments to be made
following the death of one of the Annuitants may be the same amount or may be
reduced to a percentage of the original Annuity Payment. Such percentage must
be chosen at the time you selected a Payment Option.

Joint and Last Survivor Life with 60, 120, 180 or 240 Monthly Payments
Certain--Monthly Annuity Payments are paid as long as either the Annuitant or
the Joint Annuitant is living. If both the Annuitant and the Joint Annuitant
die prior to the end of the certain period elected, payments will continue for
the remainder of the 60, 120, 180 or 240 months.

Life Annuity with 60, 120, 180 or 240 Monthly Payments Certain--Monthly
Annuity Payments are paid for the life of an Annuitant, or if the Annuitant
dies prior to the end of the certain period elected, payments will continue
for the remainder of the 60, 120, 180, or 240 months.

Installment or Unit Refund Life Annuity--Available as either a Fixed
(Installment Refund) or Variable (Unit Refund) Annuity Option. Annuity
Payments are paid for the life of an Annuitant, with a Period Certain
determined by dividing the Accumulated Value by the first Annuity Payment.

Designated Period Annuity--Only available as a Fixed Annuity Option. Annuity
Payments are paid for a Period Certain as elected, which may be from 10 to 30
years.

Before the Annuity Date and while the Annuitant is living, you may change the
Annuity Payment Option by written request. The request for change must be made
at least 30 days prior to the Annuity Date and is subject to the approval of
the Company. If an Annuity Payment Option is chosen that depends on the
continuation of the life of the Annuitant, proof of birth date may be required
before Annuity Payments begin. For Annuity Payment Options involving life
income, the actual age of the Annuitant will affect the amount of each
payment. Since payments to older Annuitants are expected to be fewer in
number, the amount of each Annuity Payment will generally be greater.

All or part of the Accumulated Value may be placed under one or more Annuity
Payment Options. If Annuity Payments are to be paid under more than one
option, the Company must be told what part of the Accumulated Value is to be
paid under each option.

Annuity Payments are made monthly, quarterly, semi-annually or annually
starting on the Annuity Date. We may require all monthly and quarterly
payments to be made by Electronic Funds Transfer.

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If at the time of any Annuity Payment you have not provided the Company with a
written election not to have federal income taxes withheld, the Company must
by law withhold such taxes from the taxable portions of such Annuity Payment
and remit that amount to the federal government.

In the event that an Annuity Payment Option is not selected, the Company will
make monthly Annuity Payments that will go on for as long as the Annuitant
lives (120 payments guaranteed) in accordance with the Life Annuity with 120
Monthly Payments Certain Option and the annuity benefit sections of the
Contract. That portion of the Accumulated Value that has been held in a
Portfolio prior to the Annuity Date will be applied under a Variable Annuity
Option based on the performance of that Portfolio. Subject to approval by the
Company, you may select any other Annuity Payment Option then being offered by
the Company. All Fixed Annuity Payments and the initial Variable Annuity
Payment are guaranteed to be not less than as provided by the Annuity Tables
and the Annuity Payment Option elected by the Contract Owner. The minimum
payment, however, is $100. If the Accumulated Value is less than $2,000, the
Company has the right to pay that amount in a lump sum. From time to time, the
Company may require proof that the Annuitant or Contract Owner is living.
Annuity Payment Options are not available to: (1) an assignee; or (2) any
other than a natural person, except with the consent of the Company.

We may, at the time of election of an Annuity Payment Option, offer more
favorable rates in lieu of the guaranteed rates specified in the Annuity
Tables found in the Contract for Fixed Annuity Payments.

The value of Variable Annuity Payments will reflect the investment experience
of the chosen Portfolio. Only one Variable Annuity Option may be chosen from
among those made available by the Company for each Portfolio. The Annuity
Tables, which are contained in the Contract and are used to calculate the
value of the initial Variable Annuity Payment, are based on an assumed
interest rate of 4%. If the actual net investment experience exactly equals
the assumed interest rate, then the Variable Annuity Payments will remain the
same (equal to the first Annuity Payment). However, if actual investment
experience exceeds the assumed interest rate, the Variable Annuity Payments
will increase; conversely, they will decrease if the actual experience is
lower. The method of computation of Variable Annuity Payments is described in
more detail in the Statement of Additional Information.

You may exchange all or part of the value of Variable Annuity Units to Fixed
Annuity Payments. If you exchange Variable Annuity Units to Fixed Annuity
Payment, the Fixed Annuity Payments will be a continuation of the benefit
option under which your Variable Annuity Payments were being made.

You may exchange between Portfolios while receiving Variable Annuity Payments.
We reserve the right to limit Exchanges to no more than 12 in any one Contract
Year. Any Exchanges in excess of 12 per Contract Year may be charged a $15 fee
per Exchange.

The value of all payments, both fixed and variable, will be greater for
shorter guaranteed periods than for longer guaranteed periods, and greater for
life annuities than for joint and survivor annuities, because they are
expected to be made for a shorter period.

After the Annuity Date, you may change the Portfolio funding the Variable
Annuity Payments on the appropriate Company form or by calling our
Administrative Offices at 1-800-866-6007.

If you choose an Annuity Payment Option and the postal or other delivery
service is unable to deliver checks to the Payee's address of record, no
interest will accrue on amounts represented by uncashed Annuity Payment
checks. It is the Payee's responsibility to keep the Company informed of the
Payee's current address of record.

DEATH BENEFIT

Generally, federal tax law requires that if any Contract Owner is a natural
person and dies before the Annuity Date, then the entire value of the Contract
must be distributed within five years of the date of death of the Contract
Owner. If the Contract Owner is not a natural person, the death of the Primary
Annuitant triggers the same distribution requirement. Special rules may apply
to a surviving spouse.

DEATH OF ANNUITANT BEFORE ANNUITY DATE

If the Annuitant dies prior to the Annuity Date, an amount will be paid as
proceeds to the Annuitant's Beneficiary. The Death Benefit is calculated and
is payable upon receipt of due Proof of Death of the Annuitant as well as
proof that

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the Annuitant died prior to the Annuity Date. Upon receipt of this proof, the
Death Benefit will be paid within seven days, or as soon thereafter as the
Company has sufficient information about the Annuitant's Beneficiary to make
the payment. The Annuitant's Beneficiary may receive the amount payable in a
lump sum cash benefit or under one of the Annuity Payment Options.

The Death Benefit is the greater of:

(1) The Accumulated Value on the date we receive due Proof of Death; or

(2) The Adjusted Death Benefit.

During the first six Contract Years, the Adjusted Death Benefit will be the
sum of all Net Purchase Payments made, less any partial withdrawals taken.
During each subsequent six-year period beginning before age 81, the Adjusted
Death Benefit will be the Death Benefit on the last day of the previous six-
year period plus any Net Purchase Payments made, less any partial withdrawals
taken during the current six-year period. For any six-year period after the
one in which the Annuitant attains age 81, the Adjusted Death Benefit will be
equal to the Death Benefit on the last day of the six-year period before age
81 occurs plus any Net Purchase Payments subsequently made, less any partial
withdrawals subsequently taken.

DEATH OF ANNUITANT ON OR AFTER ANNUITY DATE

The Death Benefit, if any, payable if the Annuitant dies on or after the
Annuity Date depends on the Annuity Payment Option selected. Upon the
Annuitant's death, the remaining portion of the value of the Contract will be
distributed to the Annuitant's Beneficiary at least as rapidly as under the
method of distribution being used on the date of the Annuitant's death.

DESIGNATION OF AN ANNUITANT'S BENEFICIARY

The Contract Owner may select one or more Annuitant's Beneficiaries and name
them in the customer order form. Thereafter, while the Annuitant is living,
the Contract Owner may change the Annuitant's Beneficiary by sending us the
appropriate Company form. Such change will take effect on the date such form
is signed by the Contract Owner but will not affect any payment made or other
action taken before the Company acknowledges such form. You may also make the
designation of Annuitant's Beneficiary irrevocable by sending us the
appropriate Company form and obtaining approval from the Company. Changes in
the Annuitant's Beneficiary may then be made only with the consent of the
designated irrevocable Annuitant's Beneficiary.

If the Annuitant dies prior to the Annuity Date, the following will apply
unless the Contract Owner has made other provisions.

(a) If there is more than one Annuitant's Beneficiary, each will share in
the Death Benefits equally;

(b) If one or two or more Annuitant's Beneficiaries have already died, that
share of the Death Benefit will be paid equally to the survivor(s);

(d) If an Annuitant's Beneficiary dies at the same time as the Annuitant,
the proceeds will be paid as though the Annuitant's Beneficiary had
died first. If an Annuitant's Beneficiary dies with 15 days after the
Annuitant's death and before the Company receives due proof of the
Annuitant's death, proceeds will be paid as though the Annuitant's
Beneficiary had died first.

If an Annuitant's Beneficiary who is receiving Annuity Payments dies, any
remaining payments certain will be paid to that Annuitant's Beneficiary's
named beneficiary(ies) when due. If no Annuitant's Beneficiary survives the
Annuitant, the right to any amount payable will pass to the Contract Owner. If
the Contract Owner is the Annuitant, this right will pass to his or her
estate. If a Life Annuity with 60, 120, 180 or 240 Monthly Payments Certain
option was elected, and if the Annuitant dies on or after the Annuity Date,
any unpaid payments certain will be paid to the Annuitant's Beneficiary or
your designated Payee.

DEATH OF CONTRACT OWNER

DEATH OF CONTRACT OWNER BEFORE ANNUITY DATE. With two exceptions, federal tax
law requires that when either the Contract Owner or the Joint Owner (if any)
dies before the Annuity Date, the entire value of the Contract must be

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distributed within five years of the date of death. First exception: If the
entire interest is to be distributed to the Owner's Designated Beneficiary,
who is a natural person, he or she may elect to have it paid as an annuity
over his or her life or over a period certain not to exceed his or her life
expectancy as long as the payments begin within one year of the date of death.
Second exception: If the Owner's Designated Beneficiary is the spouse of the
Contract Owner (or Joint Owner), the spouse may elect to continue the Contract
in his or her name as Contract Owner indefinitely and to continue deferring
tax on the accrued and future income under the Contract. If the Contract Owner
and the Annuitant are the same person, then upon that person's death the
Annuitant's Beneficiary is entitled to the Death Benefit. In this regard, see
"Death of Annuitant Before Annuity Date," page 25.

DEATH OF CONTRACT OWNER ON OR AFTER ANNUITY DATE. Federal tax law requires
that when either the Contract Owner or the Joint Owner (if any) dies on or
after the Annuity Date, the remaining portions of the value of the Contract
must be distributed at least as rapidly as under the method of distribution
being used on the date of death.

NON-NATURAL PERSON AS CONTRACT OWNER. Where the Contract Owner is not a
natural person, the death of the "primary Annuitant" is treated as the death
of the Contract Owner for purposes of federal tax law. (The Code defines a
primary Annuitant as the individual who is of primary importance in affecting
the timing or the amount of payout under a Contract.) In addition, where the
Contract Owner is not a natural person, a change in the identity of the
primary Annuitant is also treated as the death of the Contract Owner for
purposes of federal tax law.

DEFERMENT OF PAYMENT

Payment of any cash withdrawal or lump sum Death Benefit due from the Separate
Account will occur within seven days from the date the election becomes
effective except that the Company may be permitted to defer such payment if:
(1) the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the New York Stock Exchange is otherwise restricted;
or (2) an emergency exists as defined by the SEC, or the SEC requires that
trading be restricted; or (3) the SEC permits a delay for the protection of
Contract Owners.

As to amounts allocated to the General Account, we may, at any time, defer
payment of the Surrender Value for up to six months after we receive a request
for it. We will allow interest of at least 4% annually on any Surrender Value
payment derived from the General Account that we defer 30 days or more.

FEDERAL TAX CONSIDERATIONS

INTRODUCTION

The ultimate effect of federal income taxes on the amounts paid for the
Contract, on the investment return on assets held under a Contract, on Annuity
Payments, and on the economic benefits to the Contract Owner, Annuitant or
Annuitant's Beneficiary, depends on the terms of the Contract, the Company's
tax status and upon the tax status of the individuals concerned. The following
discussion is general in nature and is not intended as tax advice. You should
consult a tax adviser regarding the tax consequences of purchasing a Contract.
No attempt is made to consider any applicable state or other tax laws.
Moreover, the discussion is based upon the Company's understanding of the
federal income tax laws as they are currently interpreted. No representation
is made regarding the likelihood of continuation of the federal income tax
laws, the Treasury regulations or the current interpretations by the Internal
Revenue Service. We reserve the right to make uniform changes in the Contract
to the extent necessary to continue to qualify the Contract as an annuity. For
a discussion of federal income taxes as they relate to the Funds, please see
the accompanying Prospectuses for the Funds.

TAXATION OF ANNUITIES IN GENERAL

GENERAL RULE OF TAX DEFERRAL

Section 72 of the Code governs taxation of annuities. In general, a Contract
Owner is not taxed on increases in value under a Contract until some form of
withdrawal or distribution is made under it. However, under certain
circumstances, the increase in value may be subject to current federal income
tax. (See "Annuity Contracts Owned by Non-Natural Persons," page 28 and
"Diversification Standards," page 29.)

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TAXATION OF FULL OR PARTIAL WITHDRAWALS

Section 72 provides that the proceeds of a full or partial withdrawal from a
Contract prior to the Annuity Date will be treated as taxable income to the
extent the amounts held under the Contract exceed the "investment in the
Contract," as that term is defined in the Code. The "investment in the
Contract" can generally be described as the cost of the Contract, and
generally constitutes all Purchase Payments paid for the Contract less any
amounts received under the Contract that are excluded from the individual's
gross income. The taxable portion is taxed at ordinary income tax rates. For
purposes of this rule, a pledge or assignment of a Contract is treated as a
payment received on account of a partial withdrawal of a Contract.

Upon receipt of a full or partial withdrawal or an Annuity Payment under the
Contract, you will be taxed if the value of the Contract exceeds the
investment in the Contract. Generally, the taxable portion of such payments
will be taxed at ordinary income tax rates. Partial withdrawals are generally
taken out of earnings first and then investment in the Contract.

TAXATION OF ANNUITY PAYMENTS

For Fixed Annuity Payments, in general, the taxable portion of each payment is
determined by using a formula known as the "exclusion ratio," which
establishes the ratio that the investment in the Contract bears to the total
expected amount of Annuity Payments for the term of the Contract. That ratio
is then applied to each payment to determine the non-taxable portion of the
payment. The remaining portion of each payment is taxed at ordinary income tax
rates. For Variable Annuity Payments, in general, the taxable portion is
determined by a formula that establishes a specific dollar amount of each
payment that is not taxed. The dollar amount is determined by dividing the
investment in the Contract by the total number of expected periodic payments.
The remaining portion of each payment is taxed at ordinary income tax rates.
Once the excludible portion of Annuity Payments to date equals the investment
in the Contract, the balance of the Annuity Payments will be fully taxable.

Generally, the entire amount distributed from a Qualified Contract is taxable
to the Contract Owner. In the case of Qualified Contracts with after tax
contributions, the Contract Owner is entitled to exclude the portion of each
withdrawal or annuity payment constituting a return of after tax
contributions. Once all of your after tax contributions have been returned to
you on a non-taxable basis, subsequent withdrawals or annuity payments are
fully taxable as ordinary income. Since the Company has no knowledge of the
amount of after tax contributions you have made, you will need to make the
computation in the preparation of your federal income tax return.

TAX WITHHOLDING

Withholding of federal income taxes on all distributions is required unless
the recipient elects not to have any amounts withheld and properly notifies
the Company of that election. In certain situations, taxes will be withheld on
distributions to non-resident aliens at a 30% flat rate unless an exemption
from withholding applies under the applicable tax treaty.

PENALTY TAXES

With respect to amounts withdrawn or distributed before the taxpayer reaches
age 59 1/2, a penalty tax is imposed equal to 10% of the taxable portion of
amounts withdrawn or distributed. However, the penalty tax will not apply to
withdrawals (i) made on or after the death of the Contract Owner or, where the
Contract Owner is not an individual, the death of the Annuitant, who is
defined as the individual the events in whose life are of primary importance
in affecting the timing and payment under the Contracts; (ii) attributable to
the taxpayer's becoming disabled within the meaning of Code Section 72(m)(7);
(iii) that are part of a series of substantially equal periodic payments made
at least annually for the life (or life expectancy) of the taxpayer, or joint
lives (or joint life expectancies) of the taxpayer and his or her beneficiary;
(iv) from a qualified plan (note, however, other penalties may apply); (v)
under a qualified funding asset (as defined in Code Section 130(d)); (vi)
under an immediate annuity contract as defined in Section 72(u)(4); (vii)
allocable to the investment in the contract prior to August 14, 1982; or
(viii) that are purchased by an employer on termination of certain types of
qualified plans and that are held by the employer until the employee separates
from service. Other tax penalties may apply to certain distributions as well
as to certain contributions and other transactions under Qualified Contracts.

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If the penalty tax does not apply to a withdrawal as a result of the
application of item (iii) above, and the series of payments are subsequently
modified (other than by reason of death or disability), the tax for the year
in which the modification occurs will be increased by an amount (as determined
under Treasury Regulations) equal to the penalty tax that would have been
imposed but for item (iii) above, plus interest for the deferral period. The
foregoing rule applies if the modification takes place (a) before the close of
the period that is five years from the date of the first payment and after the
taxpayer attains age 59 1/2, or (b) before the taxpayer reaches age 59 1/2.
The tax penalty may also not apply to distributions from Qualified Contracts
issued under Section 408(b) or 408A of the Code used to pay qualified higher
education expenses or the acquisition costs (up to $10,000) involved in the
purchase of a principal residence by a first-time homebuyer.

ANNUITY CONTRACTS OWNED BY NON-NATURAL PERSONS

Where the Contract is held by a non-natural person (for example, a
corporation), the Contract is generally not treated as an annuity contract for
federal income tax purposes, and the income on that Contract (generally the
increase in the net Accumulated Value less the payments) is includible in
taxable income each year. The rule does not apply where the non-natural person
is only a nominal owner such as a trust or other entity acting as an agent for
a natural person. If an employer is the nominal owner of a Qualified Contract,
and the beneficial owners are employees, then the Contract is not treated as
being held by a non-natural person. The rule also does not apply where the
Qualified Contract is acquired by the estate of a decedent, where the Contract
is a qualified funding asset for structured settlements, where the Contract is
purchased by an employer on behalf of an employee upon termination of a
qualified plan, and in the case of an immediate annuity, as defined under
Section 72(u)(4) of the Code.

MULTIPLE-CONTRACTS RULE

All non-qualified annuity contracts issued by the same company (or affiliate)
to the same Contract Owner during any calendar year are to be aggregated and
treated as one contract for purposes of determining the amount includible in
the taxpayer's gross income. Thus, any amount received under any Contract
prior to the Contract's Annuity Date, such as a partial withdrawal, will be
taxable (and possibly subject to the 10% federal penalty tax) to the extent of
the combined income in all such contracts. The Treasury Department has
specific authority to issue regulations that prevent the avoidance of Code
Section 72(e) through the serial purchase of annuity contracts or otherwise.
In addition, there may be other situations in which the Treasury Department
may conclude that it would be appropriate to aggregate two or more Contracts
purchased by the same Contract Owner. The aggregation rules do not apply to
immediate annuities as defined under Section 72(u)(4) of the Code.
Accordingly, a Contract Owner should consult a tax advisor before purchasing
more than one Contract or other annuity contracts.

TRANSFERS OF ANNUITY CONTRACTS

Any transfer of a Non-Qualified Contract prior to the Annuity Date for less
than full and adequate consideration will generally trigger income tax (and
possibly the 10% federal penalty tax) on the gain in the Contract to the
Contract Owner at the time of such transfer. The investment in the Contract of
the transferee will be increased by any amount included in the Contract
Owner's income. This provision, however, does not apply to those transfers
between spouses or former spouses incident to a divorce which are governed by
Code Section 1041(a).

ASSIGNMENTS OF ANNUITY CONTRACTS

A transfer of ownership of a Contract, a collateral assignment or the
designation of an Annuitant or other beneficiary who is not also the Contract
Owner may result in tax consequences to the Contract Owner, Annuitant or
beneficiary that are not discussed herein. A Contract Owner contemplating such
a transfer or assignment of a Contract should contact a tax advisor with
respect to the potential tax effects of such a transaction.

THE COMPANY'S TAX STATUS

The Company is taxed as a life insurance company under Part I of Subchapter L
of the Code. Since the Separate Account is not a separate entity from the
Company and its operations form a part of the Company, it will not be taxed
separately as a "regulated investment company" under Subchapter M of the Code.

Investment income and realized capital gains on the assets of the Separate
Account are reinvested and taken into account in determining the Accumulated
Value. Under existing federal income tax law, the Separate Account's
investment income, including realized net capital gains, is not taxed to the
Company. The Company reserves the right to make a deduction for taxes should
they be imposed with respect to such items in the future.

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DIVERSIFICATION STANDARDS

To comply with certain diversification regulations (the "Regulations") under
Code Section 817(h), after a start up period, each Subaccount of the Separate
Account will be required to diversify its investments. The Regulations
generally require that on the last day of each quarter of a calendar year, no
more than 55% of the value of each Subaccount is represented by any one
investment, no more than 70% is represented by any two investments, no more
than 80% is represented by any three investments, and no more than 90% is
represented by any four investments. A "look-through" rule applies that
suggests that each Subaccount of the Separate Account will be tested for
compliance with the percentage limitations by looking through to the assets of
the Portfolios in which each such Subaccount invests. All securities of the
same issuer are treated as a single investment. Each government agency or
instrumentality will be treated as a separate issuer for purposes of those
limitations.

In connection with the issuance of temporary diversification regulations in
1986, the Treasury Department announced that such regulations did not provide
guidance concerning the extent to which Contract Owners may direct their
investments to particular divisions of a separate account. It is possible that
regulations or revenue rulings may be issued in this area at some time in the
future. It is not clear, at this time, what these regulations or rulings would
provide. It is possible that when the regulations or ruling are issued, the
Contracts may need to be modified in order to remain in compliance. For these
reasons, the Company reserves the right to modify the Contracts, as necessary,
to prevent the Contract Owner from being considered the owner of assets of the
Separate Account.

We intend to comply with the Regulations to assure that the Contracts continue
to be treated as annuity contracts for federal income tax purposes.

403(B) CONTRACTS

Contracts will be offered in connection with retirement plans adopted by
public school systems and certain tax-exempt organizations (Code Section
501(c)(3) organizations) for their employees under Section 403(b) of the Code
except, as discussed below and subject to any conditions in an employer's
plan, a Contract used in connection with a Section 403(b) Plan offers the same
benefits and is subject to the same charges described in this Prospectus.

The Code imposes a maximum limit on annual Purchase Payments which may be
excluded from your gross income. Such limit must be calculated in accordance
with Sections 403(b), 415 and 402(g) of the Code. In addition, Purchase
Payments will be excluded from your gross income only if the 403(b) Plan meets
certain Code non-discrimination requirements.

The Code imposes restrictions on full or partial surrenders from 403(b)
individual accounts attributable to Purchase Payments under a salary reduction
agreement and to any earnings on the entire 403(b) individual account credited
on and after January 1, 1989. Surrenders of these amounts are allowed only if
the Contract Owner (a) has died, (b) has become disabled, as defined in the
Code, (c) has attained age 59 1/2, or (d) has separated from service.
Surrenders are also allowed if the Contract Owner can show "hardship," as
defined by the Internal Revenue Service, but the surrender is limited to the
lesser of Purchase Payments made on or after January 1, 1989 or the amount
necessary to relieve the hardship. Even if a surrender is permitted under
these provisions, a 10% federal tax penalty may be assessed on the withdrawn
amount if it does not otherwise meet the exceptions to the penalty tax
provisions. (See "Taxation of Annuities in General," page 26.)

Under the Code, you may request a full or partial surrender of an amount equal
to the individual account cash value as of December 31, 1988 (the
"grandfathered" amount), subject to the terms of the 403(b) Plan. Although the
Code surrender restrictions do not apply to this amount, a 10% federal penalty
tax may be assessed on the withdrawn amount if it does not otherwise meet the
exceptions to the penalty tax provisions. (See "Taxation of Annuities in
General," page 26.)

The Company believes that the Code surrender restrictions do not apply to tax-
free transfers pursuant to Revenue Ruling 90-24. The Company further believes
that the surrender restrictions will not apply to any "grandfathered" amount
transferred pursuant to Revenue Ruling 90-24 into another 403(b) Contract.

LOANS UNDER 403(B) CONTRACTS

Under your 403(b) Contract, you may borrow against your Contract's Surrender
Value after the first Contract Year. No additional loans will be extended
until prior loan balances are paid in full. The loan amount must be at least
$1,000

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and your Contract must have a minimum vested Accumulated Value of $2,000. The
loan amount may not exceed the lesser of (a) or (b), where (a) is 50% of the
Contract's vested Accumulated Value on the date on which the loan is made, and
(b) is $50,000 reduced by the excess, if any, of the highest outstanding
balance of loans during the one-year period ending on the day before the
current loan is made over the outstanding balance of loans on the date the
current loan is made. If you are married, your spouse must consent in writing
to a loan request. This consent must be given within the 90-day period before
the loan is to be made.

On the first Business Day of each calendar month, the Company will determine a
loan interest rate. The loan interest rate for the calendar month in which the
loan is effective will apply for one year from the loan effective date.
Annually on the anniversary of the loan effective date, the rate will be
adjusted to equal the loan interest rate determined for the month in which the
loan anniversary occurs.

Principal and interest on loans must be repaid in substantially level
payments, not less frequently than quarterly, over a five year term except for
certain loans for the purchase of a principal residence. If the loan interest
rate is adjusted,
future payments will be adjusted so that the outstanding loan balance is
amortized in equal quarterly installments over the remaining term. A $40
processing fee is charged for each loan. The remainder of each repayment will
be credited to the individual account.

If a loan payment is not made when due, interest will continue to accrue. The
defaulted payment plus accrued interest will be deducted from any future
distributions under the Contract and paid to us. Any loan payment which is not
made when due, plus interest, will be treated as a distribution, as permitted
by law. The loan payment may be taxable to the borrower, and may be subject to
the early withdrawal tax penalty. When a loan is made, unless instructed to
the contrary by the Annuitant, the number of Accumulation Units equal to the
loan amount will be withdrawn from the individual account and placed in the
Collateral Fixed Account. Accumulation Units taken from the individual account
to provide a loan do not participate in the investment experience of the
related Portfolios or the guarantees of the General Account Guaranteed
Options. The loan amount will be withdrawn on a pro rata basis first from the
Portfolios to which Accumulated Value has been allocated, and if that amount
is insufficient, collateral will then be transferred from the General Account
Guaranteed Options--except the Guaranteed Equity Option. As with any
withdrawal, Market Value Adjustments or other deductions applicable to amounts
allocated to General Account Guaranteed Options may be applied and no amounts
may be withdrawn from the Guaranteed Equity Option. Until the loan is repaid
in full, that portion of the Collateral Fixed Account shall be credited with
interest at a rate of 2% less than the loan interest rate applicable to the
loan--however, the interest rate credited will never be less than the General
Account Guaranteed Option's guaranteed rate of 3%.

A bill in the amount of the quarterly principal and interest will be mailed
directly to you in advance of the payment due date. The initial quarterly
repayment will be due three months from the loan date. The loan date will be
the date that the Company receives the loan request form in good order.
Payment is due within 30 calendar days after the due date. Subsequent
quarterly installments are based on the first due date.

When repayment of principal is made, Accumulation Units will be reallocated on
a current value basis among the same investment Portfolios and/or General
Account Guaranteed Options and in the same proportion as when the loan was
initially made, unless the Annuitant specifies otherwise. If a repayment in
excess of a billed amount is received, the excess will be applied towards the
principal portion of the outstanding loan. Payments received which are less
than the billed amount will not be accepted and will be returned to you.

If a partial surrender is taken from your individual account due to nonpayment
of a billed quarterly installment, the date of the surrender will be the first
Business Day following the 30 calendar day period in which the repayment was
due.

Prepayment of the entire loan is allowed. At the time of prepayment, the
Company will bill you for any accrued interest. The Company will consider the
loan paid when the loan balance and accrued interest are paid.

If the individual account is surrendered or if the Annuitant dies with an
outstanding loan balance, the outstanding loan balance and accrued interest
will be deducted from the Surrender Value or the Death Benefit, respectively.
If the individual account is surrendered, with an outstanding loan balance,
due to the Contract Owner's death or the election of an Annuity Payment
Option, the outstanding loan balance and accrued interest will be deducted.

30
<PAGE>

The Company may require that any outstanding loan be paid if the individual
account value falls below an amount equal to 25% of total loans outstanding.

The Code requires the aggregation of all loans made to an individual employee
under a single employer-sponsored 403(b) Plan. However, since the Company has
no information concerning the outstanding loans that you may have with other
companies, if will only use the information available under Contracts issued
by the Company.

GENERAL INFORMATION

ADDITIONS, DELETIONS, OR SUBSTITUTIONS OF INVESTMENTS

The Company retains the right, subject to any applicable law, to make certain
changes. The Company reserves the right to eliminate the shares of any of the
Portfolios (or Subaccounts) and to substitute shares of another Portfolio of
the Funds (or Subaccount), or of another registered, open-end management
investment company, if the shares of the Portfolios are no longer available
for investment, or, if in the Company's judgment, investment in any Portfolio
would be inappropriate in view of the purposes of the Separate Account. To the
extent required by the 1940 Act, substitutions of shares attributable to a
Contract Owner's interest in a Portfolio will not be made until SEC approval
has been obtained and the Contract Owner has been notified of the change.

New Portfolios (or Subaccounts) may be established at the discretion of the
Company. Any new Portfolios (or Subaccounts) will be made available to
existing Contract Owners on a basis to be determined by the Company. The
Company may also eliminate one or more Portfolios (or Subaccounts) if
marketing, tax, investment or other conditions so warrant.

In the event of any such substitution or change, the Company may, by
appropriate endorsement, make such changes in the Contracts as may be
necessary or appropriate to reflect such substitution or change. Furthermore,
if deemed to be in the best interests of persons having voting rights under
the Contracts, the Separate Account may be operated as a management company
under the 1940 Act or any other form permitted by law, may be deregistered
under the 1940 Act in the event such registration is no longer required, or
may be combined with one or more other separate accounts.

We reserve the right to manage the Separate Account under the direction of a
committee at any time. We also reserve the right to exchange assets of the
Separate Account, which we determine to be associated with the class of
policies to which this Contract belongs to another separate account. If this
type of exchange is made, the term "Separate Account", as used in this
Prospectus, shall mean the separate account to which the assets were
exchanged.

VOTING RIGHTS

The Funds do not hold regular meetings of shareholders. The Directors/Trustees
of each Fund may call special meetings of shareholders as may be required by
the 1940 Act or other applicable law. To the extent required by law, the
Portfolio shares held in the Separate Account will be voted by the Company at
shareholder meetings of each Fund in accordance with instructions received
from persons having voting interests in the corresponding Portfolio. Fund
shares as to which no timely instructions are received or shares held by the
Company as to which Contract Owners have no beneficial interest will be voted
in proportion to the voting instructions that are received with respect to all
Contracts participating in that Portfolio. 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.

The number of votes that are available to a Contract Owner will be calculated
separately for each Portfolio. That number will be determined by applying his
or her percentage interest, if any, in a particular Portfolio to the total
number of votes attributable to the Portfolio.

Prior to the Annuity Date, a Contract Owner holds a voting interest in each
Portfolio to which the Accumulated Value is allocated. The number of votes
which are available to a Contract Owner will be determined by dividing the
Accumulated Value attributable to a Portfolio by the net asset value per share
of the applicable Portfolio. After the Annuity Date, the person receiving
Annuity Payments has the voting interest. The number of votes after the
Annuity Date will be determined by dividing the reserve for such Contract
allocated to the Portfolio by the net asset value per share of the
corresponding Portfolio. After the Annuity Date, the votes attributable to a
Contract decrease as the reserves allocated to the Portfolio decrease. In
determining the number of votes, fractional shares will be recognized.

31
<PAGE>

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

YEAR 2000 MATTERS

In March 1997, the Company adopted and currently has in place a Year 2000
Assessment and Planning Project (the "Plan") to review and analyze existing
hardware and software systems, as well as voice and data communications
systems, to determine if they are Year 2000 compatible. The Plan provides for
a management process that ensures that when a particular system, or software
application, is determined to be "non-compliant" the proper steps are in place
to either remedy the "non-compliance" or cease using the particular system or
software. The Plan also provides that the Chief Information Officer report to
the Board of Directors as to the status of the efforts under the Plan on a
regular and routine basis. The Company has engaged the services of a third-
party provider that is specialized in Year 2000 issues to work on the project.

The Plan has four specific objectives: (1) to develop an inventory of all
applications; (2) to evaluate all applications in the inventory to determine
the most prudent manner to move them to Year 2000 compliance, if required; (3)
to estimate budgets, resources and schedules for the migration of the
"affected" applications to Year 2000 compliance; and (4) to define testing and
development requirements to successfully manage validation and re-deployment
of any changed code. It is anticipated that all compliance issues will be
resolved by December 1998.

As of the date of this Prospectus, the Company has identified and made
available what it believes are the appropriate resources of hardware, people,
and dollars, including the engagement of outside third parties, to ensure that
the Plan will be completed.

The Year 2000 computer problem, and its resolution, is complex and
multifaceted, and the success of a response plan cannot be conclusively known
until the Year 2000 is reached (or an earlier date to the extent that the
systems or equipment addresses Year 2000 data prior to the Year 2000). Even
with appropriate and diligent pursuit of a well conceived response plan,
including testing procedures, there is no certainty that any company will
achieve complete success. Further, notwithstanding its efforts or results, the
Company's ability to function unaffected to and through the Year 2000 may be
adversely affected by actions (or failures to act) of third parties beyond its
knowledge or control.

AUDITORS

Ernst & Young LLP serves as independent auditors for the Separate Account and
the Company and will audit their financial statements annually.

LEGAL MATTERS

Jorden Burt Boros Cicchetti Berenson & Johnson LLP of Washington, D.C. has
provided legal advice relating to the federal securities laws applicable to
the issue and sale of the Contracts. All matters of Missouri law pertaining to
the validity of the Contract and the Company's right to issue such Contracts
have been passed upon by Gregory E. Miller-Breetz, Esquire, on behalf of the
Company.

32
<PAGE>

TABLE OF CONTENTS FOR THE ADVISOR'S EDGE SELECT VARIABLE ANNUITY

STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
PAGE
<S> <C>
THE CONTRACT.............................................................. 2
Computation of Variable Annuity Income Payments......................... 2
Exchanges............................................................... 3
Exceptions to Charges and to Transaction or Balance Requirements........ 3
GENERAL MATTERS........................................................... 3
Non-Participating....................................................... 3
Misstatement of Age or Sex.............................................. 3
Assignment.............................................................. 4
Annuity Data............................................................ 4
Annual Statement........................................................ 4
Incontestability........................................................ 4
Ownership............................................................... 4
PERFORMANCE INFORMATION................................................... 5
Federated Prime Money and Money Market Portfolio Yields................. 5
30-Day Yield for Non-Money Market Subaccounts........................... 5
Standardized Average Annual Total Return for Subaccounts................ 5
ADDITIONAL PERFORMANCE MEASURES........................................... 7
Non-Standardized Actual Total Return and Non-Standardized Actual Average
Annual Total Return.................................................... 7
Non-Standardized Total Return Year-to-Date.............................. 8
Non-Standardized One Year Return........................................ 9
Non-Standardized Hypothetical Total Return and Non-Standardized
Hypothetical Average Annual Total Return............................... 9
Individualized Computer Generated Illustrations......................... 10
PERFORMANCE COMPARISONS................................................... 10
SAFEKEEPING OF ACCOUNT ASSETS............................................. 12
THE COMPANY............................................................... 12
STATE REGULATION.......................................................... 12
RECORDS AND REPORTS....................................................... 13
DISTRIBUTION OF THE CONTRACTS............................................. 13
LEGAL PROCEEDINGS......................................................... 13
OTHER INFORMATION......................................................... 13
FINANCIAL STATEMENTS...................................................... 13
Audited Financial Statements............................................ 13
</TABLE>

33
<PAGE>

APPENDIX A

THE GENERAL ACCOUNT

Because of applicable exemptive and exclusionary provisions, interests in the
General Account have not been registered under the Securities Act of 1933
("1933 Act"), nor under the 1940 Act. Thus, neither our General Account, nor
any interest therein are generally subject to regulation under the provisions
of the 1933 Act or the 1940 Act. Accordingly, the Company has been advised
that the staff of the SEC has not reviewed the disclosure in this Appendix
relating to the General Account. These disclosures regarding the General
Account may, however, be subject to certain generally applicable provisions of
the federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.

Note: The General Account Guaranteed Options, or certain of them, are
currently available for sale in most, but not all, states. Please check with
your sales representative for details of the availability of these features
before purchasing.

The General Account contains all of the assets of the Company other than those
in the separate accounts we establish. The Company has sole discretion to
invest the assets of the General Account, subject to applicable law.
Allocation of any amounts to the General Account does not entitle you to share
directly in the investment experience of these assets.

There are four fixed options under the General Account: the Dollar Cost
Averaging Fixed Account Option, the One-Year Guaranteed Rate Option, the
Multi-Year Guaranteed Rate Option, and the Guaranteed Equity Option, each
described below:

The Dollar Cost Averaging Fixed Account Option

The Dollar Cost Averaging Fixed Account Option may not be available in all
states. Please see your sales representative for details of the availability
of this option before purchasing.

The Dollar Cost Averaging Fixed Account Option has a one-year interest rate
guarantee. The current interest rate the Company credits may vary on different
portions of the Dollar Cost Averaging Fixed Account Option. The credited
interest rate will never be less than the minimum effective annual interest
rate of 3%.

If prior to the Annuity Date you have at least $5,000 in the Dollar Cost
Averaging Fixed Account, you may choose to have a specified dollar amount
transferred from this Account to any Portfolios in the Separate Account on a
monthly basis. The automatic transfer will occur monthly on a first-in, first-
out basis, so that amounts put into the Account first will be transferred out
of the Account first.

The main objective of Dollar Cost Averaging is to shield your investment from
short-term price fluctuations. Since the same dollar amount is transferred to
Portfolios each month, more units are purchased in a Portfolio if the value
per unit is low and fewer units are purchased if the value per unit is high.
Therefore, a lower average cost per unit may be achieved over the long term.
This plan of investing allows investors to take advantage of market
fluctuations but does not assure a profit or protect against a loss in
declining markets.

This Dollar Cost Averaging Option may be elected on the customer order form or
at a later date. The minimum amount that may be transferred each month into
any Portfolio is $250. The maximum amount that may be transferred is equal to
the Accumulated Value in the Dollar Cost Averaging Fixed Account Option when
elected, divided by 12.

If the Company receives a Dollar Cost Averaging Fixed Account Option request
prior to the 28th day of any month, the first transfer from the Dollar Cost
Averaging Fixed Account Option will occur on the 28th day of that month. If
the Company receives a Dollar Cost Averaging Fixed Account Option request on
or after the 28th day of any month, the first transfer will occur on the 28th
day of the following month. The dollar amount will be allocated to the
Portfolios in the proportions you specify (in whole percentages only) on the
appropriate Company form. If, on any transfer date, the

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<PAGE>

Accumulated Value is equal to or less than the amount you have elected to have
transferred, the entire amount will be transferred and the option will end.
You may change the transfer amount once each Contract Year. You may change the
choice of Portfolios to which transfers are allocated at any time. The Company
must receive notice of any change on the appropriate Company form or by
telephone at least seven days before the next transfer date. Transfers must be
scheduled for at least six, but not more than twenty-four, months each time
the Dollar Cost Averaging Fixed Account Option is elected.

Prior to the Annuity Date, no Exchanges (except through Dollar Cost Averaging)
will be allowed from the Dollar Cost Averaging Fixed Account. On the Annuity
Date, any funds remaining in the Dollar Cost Averaging Fixed Account will be
applied to the Annuity Payment Option selected.

You may discontinue automatic transfers from the Dollar Cost Averaging Fixed
Account Option after satisfying the minimum number of required transfers by
contacting the Company by phone or by written notice at least seven days
before the next transfer date. If for any reason you terminate automatic
transfers from the Dollar Cost Averaging Fixed Account, any remaining value
attributable to the Dollar Cost Averaging Fixed Account will remain in the
Dollar Cost Averaging Fixed Account and will continue to earn interest until
such time as you either restart automatic transfers or make a full withdrawal
of the funds. If you wish to restart automatic transfers but have less than
$5,000 in the Dollar Cost Averaging Fixed Account, an exception will be made
and automatic transfers will continue until the value in the Dollar Cost
Averaging Fixed Account is depleted. After such a resumption of automatic
transfers, you will not be able to discontinue the automatic transfers until
the value in the Dollar Cost Averaging Fixed Account is depleted.

The Company may defer payment of a partial or full withdrawal from the Dollar
Cost Averaging Fixed Account Option for up to six months from its receipt of
written notice.

One-Year Guaranteed Rate Option

You may allocate your Accumulated Value to this option at any time. Any
allocations you make to the one-year guarantee period must be at least $1,000
and you must maintain a minimum balance of $1,000 in each one-year guarantee
period. The Accumulated Value you allocate under this option earns interest at
a rate declared by the Company at the time your allocation is made with a
guarantee that the Accumulated Value in this General Account Guaranteed Option
will not be less than the amounts allocated, plus 3% annually.

You may allocate any or all of your Accumulated Value from this General
Account Guaranteed Option to any of the Subaccounts or other General Account
Guaranteed Options at any time before the end of the one-year guarantee
period. However, for any amounts so transferred and for full and partial
withdrawals of amounts allocated to this General Account Guaranteed Option
prior to the end of the one-year guarantee period, we will deduct an amount
equal to the interest earned on the amount transferred or withdrawn during the
previous 90 days at the applicable one-year rate, subject to a guarantee that
any amounts allocated to this General Account Guaranteed Option will earn
interest of at least 3% annually.

If you have more than one allocation in this option, you may choose which
allocation or allocations any exchanges or surrenders are to be made from. If
you do not specify which allocation or allocations to take the exchanges or
surrenders from, we will first take from the allocation with the shortest time
remaining until the end of its guarantee period and then from the allocation
or allocations with the next shortest time remaining until the amount of the
exchange or withdrawal is reached.

At the end of the one-year guarantee period, you may, without loss of
interest, elect to transfer all or part of your Accumulated Value under this
option to any of the Subaccounts or transfer to another General Account
Guaranteed Option or renew your participation in this option. Notice of such
an election must be provided to the Company by phone or in writing no later
than 10 days after the end of the one-year guarantee period (and each
subsequent one-year guarantee period). If no such election is made, your
Accumulated Value will automatically be renewed under this option for the next
one-year guarantee period.

Multi-Year Guaranteed Rate Option

You may allocate your Accumulated Value to this option at any time. You may
select any guarantee period then offered. The Company currently expects to
offer guarantee periods of two to ten years, inclusive but reserves the right
to change such offerings in its discretion. Any allocations you make to a
guarantee period must be at least $1,000 and you must maintain a minimum
balance of $1,000 in each guarantee period. The Accumulated Value you allocate
under

A-2
<PAGE>

this option earns interest at a rate declared by the Company applicable to the
guarantee period you select at the time your allocation is made with a
guarantee that the Accumulated Value in this General Account Guaranteed Option
will not be less than the amount initially allocated, plus 3%, compounded
annually.

You may allocate any or all of your Accumulated Value from this General
Account Guaranteed Option to any of the Subaccounts or other General Account
Guaranteed Options at any time before the end of the selected guarantee
period. However, for any amounts so transferred we will apply a Market Value
Adjustment (as described below) against such amounts. For full and partial
withdrawals of amounts allocated to this General Account Guaranteed Option
prior to the end of the selected guarantee period, we will apply a Market
Value Adjustment (as described below) against such amounts withdrawn.

The Market Value Adjustment ("MVA") Factor for the Multi-Year Guaranteed Rate
Option will be as follows:

N X (B--E)
12

where N=the number of months left in the guarantee period at the time of the
transfer or surrender (including any partial months which will count as
full months for purposes of this calculation).

B=the interest rate in effect for the applicable guarantee period which was
declared on the date of the applicable allocation.

E=the constant maturity Treasury rate for the duration equal to that of the
applicable guarantee period (or, if not published, the published constant
maturity rate of the next longest maturity).

The MVA is applied to the Accumulated Value in order to determine the net
amount of the transfer or surrender under this option. Generally, if the
declared interest rate at the beginning of the guarantee period is lower than
the applicable constant maturity Treasury rate prevailing at the time of the
transfer or surrender, then the application of the MVA will result in a lower
payment upon transfer or surrender. Similarly, if the declared rate at the
beginning of the guarantee period is higher than the prevailing applicable
constant maturity Treasury rate at the time of transfer or surrender, then the
application of the MVA will result in a higher payment upon transfer or
surrender.

The following is an example of how your Accumulated Value under the Multi-Year
Guaranteed Rate Option with a five-year guarantee period is affected by a
positive Market Value Adjustment:

Assume an initial allocation of $100,000 when the declared interest rate of a
five-year guarantee period is 8%. At the end of 12 months, your Accumulated
Value is $108,000. Assume also you surrender at the end of one year with 48
months of the guarantee period remaining and the five-year constant maturity
Treasury rate is 7%.

Accumulated Value = $108,000

MVA Factor = 48 X (.08 - .07) = 4 X .01 = .04
12

Adjustment = $108,000 x .04 = $4,320

= $108,000 + $4,320 = $112,320 = Net amount of transfer or
surrender

The following is an example of how your Accumulated Value under the Multi-Year
Guaranteed Rate Option with a five year guarantee period is affected by a
negative Market Value Adjustment:

Assume an initial allocation of $100,000 when the declared interest rate for a
five-year guarantee period is 8%. At the end of 12 months, your Accumulated
Value is $108,000. Assume also you surrender at the end of one year with 48
months remaining in the guarantee period and the five-year constant maturity
Treasury rate is 9%.

Accumulated Value = $108,000

MVA Factor = 48 X (.08 - .09) = 4 X -.01 = -.04
12

Adjustment = $108,000 x -.04 = -$4,320

= $108,000 - $4,320 = $103,680 = Net amount of transfer or
surrender

Notwithstanding application of a negative Market Value Adjustment, any Net
Purchase Payments allocated to this General Account Guaranteed Option will
earn interest of at least 3%, compounded annually.

A-3
<PAGE>

At the end of the selected guarantee period and within a ten-day period
starting on the first day of any automatic renewal (as described below), you
may, without loss of interest, elect to transfer any or all of your
Accumulated Value under this option to any of the Subaccounts or transfer to
another General Account Guaranteed Option or renew your participation in this
option for any guarantee period then available whose ending date is not later
than the Annuity Date at a rate the Company declares at the time of renewal.
Such election may also be provided in writing to the Company before the end of
the guarantee period (and each subsequent guarantee period). If no election is
made, your Accumulated Value will automatically be renewed under this option
for another guarantee period of the same duration as the one just ended at a
rate we declare at the time of the renewal. In cases where such a renewal
would result in a guarantee period whose ending date is later than the Annuity
Date, we will transfer the value of that allocation to the Federated Money
Market Portfolio.

Guaranteed Equity Option

You may allocate your Accumulated Value to this option as of the first
business day of each month. Any allocations you make must be at least $1,000.

On the date you make an allocation to this option the Company will declare:
(a) the duration of the guarantee period applicable to the allocation; (b) the
duration of the Averaging Period and (c) the Participation Rate. (The
Averaging Period and the Participation Rate are described below.) Each
allocation will have its own guarantee period, Averaging Period and
Participation Rate.

During the guarantee period applicable to Accumulated Value allocated to this
option, the Company will credit interest at a guaranteed annual effective rate
of 3%, compounded annually. At the end of the guarantee period we will credit
additional interest in an amount equal to the amount by which (x) exceeds (y),
where (x) equals a declared portion of the percentage change in the S&P 500
Composite Stock Price Index ("S&P 500 Index") from its value on the date
Accumulated Value is allocated to a value determined at the end of the
guarantee period multiplied by the amount allocated (all calculated as
described below); and (y) equals the total amount of interest credited during
the guarantee period.

The amount (x) in the preceding paragraph is equal to the amount allocated to
the applicable guarantee period multiplied by the following factor:

PR x [(EV/SV)-1]

where PR = the Participation Rate;

EV = the average closing values of the S&P 500 Index on the last business
day of each month during the Averaging Period; and

SV = the closing value of the S&P 500 Index on the date Accumulated Value
is allocated to this option.

The "Participation Rate" is the rate at which you participate in the
percentage change of the S&P 500 Index for an allocation as used in the
calculation above. It will be declared by the Company with respect to each
allocation to this option. In no event will the Participation Rate be less
than 0%.

The "Averaging Period" is the number of months prior to the end of an
allocation's guarantee period that we will use to determine the ending value
of the S&P 500 Index for that allocation's guarantee period for purposes of
this option as used in the calculation above. It will be declared by the
Company with respect to each allocation to this option. In no event will the
Averaging Period be less than one.

("S&P" is a trademark of The McGraw-Hill Companies, Inc. and has been licensed
for use by the Company.)

THIS OPTION IS ILLIQUID FOR THE ENTIRE GUARANTEE PERIOD AND, ACCORDINGLY, DOES
NOT PERMIT ANY EXCHANGES OR REALLOCATIONS OF ACCUMULATED VALUE TO THE
SUBACCOUNTS OR OTHER GENERAL ACCOUNT GUARANTEED OPTIONS OR FULL OR PARTIAL
WITHDRAWALS DURING SUCH GUARANTEE PERIOD. However, during such guarantee
period, the Accumulated Value allocated under this option may be annuitized
under any of the Annuity Payment Options.

(The S&P 500 Index is a stock price index. Its composition and calculation
does not include dividends, if any, paid upon component stocks of the index
nor reinvestment, if any, or such dividends.)

At the end of the guarantee period, you may, without loss of earnings, elect
to transfer all or part of your Accumulated Value under this option to any of
the Subaccounts, transfer into another General Account Guaranteed Option or
renew your participation in this option. Such election must be received by the
Company no later than 30 days prior to the end of the guarantee period. If no
election is received, your Accumulated Value will automatically be transferred
to the Federated Prime Money Portfolio. This option may not be available at
all times.

A-4
<PAGE>

DISCLAIMER REGARDING STANDARD & POOR'S 500 INDEX

The Guaranteed Equity Option (the "GEO") is not sponsored, endorsed, sold or
promoted by Standard & Poor's Corporation ("S&P"). S&P makes no representation
or warranty, express or implied, to investors in the GEO or any member of the
public regarding the advisability of investing in securities generally or in
the GEO particularly or the ability of the S&P 500 Index to track general
stock market performance. S&P's only relationship to Providian Life and Health
Insurance Company is the licensing of certain trademarks and trade names of
S&P and the S&P 500 Index which is determined, composed and calculated by S&P
without regard to Providian Life and Health Insurance Company or the GEO. S&P
has no obligation to take the needs of Providian Life and Health Insurance
Company or the Investors in the GEO into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for and has
not participated in the determination of the timing of the issuance or sale of
the GEO or in the determination or calculation of the equation by which the
GEO is to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing or trading of the GEO.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY PROVIDIAN LIFE AND HEALTH INSURANCE
COMPANY, INVESTORS IN THE GEO, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF
THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX
OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO
EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.

A-5
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
SEPARATE ACCOUNT V
STATEMENT OF ADDITIONAL INFORMATION
FOR THE
ADVISOR'S EDGE SELECT VARIABLE ANNUITY
OFFERED BY
PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
(A MISSOURI STOCK COMPANY)
ADMINISTRATIVE OFFICES
4333 EDGEWOOD ROAD, N.E.
CEDAR RAPIDS, IOWA 52449

This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the Advisor's Edge Select variable annuity contract (the
"Contract") offered by Providian Life and Health Insurance Company (the
"Company"). You may obtain a copy of the Prospectus dated , 1998, by
calling 1-800-866-6007 or by writing to our Administrative Offices, 4333
Edgewood Road, N.E., Cedar Rapids, Iowa 52449. Terms used in the current
Prospectus for the Contract are incorporated in this Statement.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT.

, 1998

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
THE CONTRACT.............................................................. 2
Computation of Variable Annuity Income Payments......................... 2
Exchanges............................................................... 3
Exceptions to Charges and to Transaction or Balance Requirements........ 3
GENERAL MATTERS........................................................... 3
Non-Participating....................................................... 3
Misstatement of Age or Sex.............................................. 3
Assignment.............................................................. 4
Annuity Data............................................................ 4
Annual Statement........................................................ 4
Incontestability........................................................ 4
Ownership............................................................... 4
PERFORMANCE INFORMATION................................................... 5
Federated Prime Money Yield............................................. 5
30-Day Yield for Non-Money Market Subaccounts........................... 5
Standardized Average Annual Total Return for Subaccounts................ 5
ADDITIONAL PERFORMANCE MEASURES........................................... 7
Non-Standardized Actual Total Return and Non-Standardized Actual Average
Annual Total Return.................................................... 7
Non-Standardized Total Return Year-to-Date.............................. 8
Non-Standardized One Year Return........................................ 9
Non-Standardized Hypothetical Total Return and Non-Standardized
Hypothetical Average Annual Total Return............................... 9
Individualized Computer Generated Illustrations......................... 10
PERFORMANCE COMPARISONS................................................... 10
SAFEKEEPING OF ACCOUNT ASSETS............................................. 12
THE COMPANY............................................................... 12
STATE REGULATION.......................................................... 12
RECORDS AND REPORTS....................................................... 13
DISTRIBUTION OF THE CONTRACT.............................................. 13
LEGAL PROCEEDINGS......................................................... 13
OTHER INFORMATION......................................................... 13
FINANCIAL STATEMENTS...................................................... 13
</TABLE>
<PAGE>

THE CONTRACT

In order to supplement the description in the Prospectus and Appendix A thereto,
the following provides additional information about the Contract which may be of
interest to Contract Owners.

COMPUTATION OF VARIABLE ANNUITY INCOME PAYMENTS

Variable annuity income payments are computed as follows. First, the Accumulated
Value (or the portion of the Accumulated Value used to provide variable
payments) is applied under the Annuity Tables for Payment Options Applied on a
Variable Basis contained in your Contract corresponding to the Annuity Payment
Option elected by the Contract Owner and based on an assumed interest rate of
4%. This will produce a dollar amount which is the first monthly payment. The
Company may, at the time annuity income payments are computed, offer more
favorable rates in lieu of the guaranteed rates specified in the Annuity
Tables.

The amount of each Annuity Payment after the first is determined by means of
Annuity Units. The number of Annuity Units is determined by dividing the first
Annuity Payment by the Annuity Unit Value for the selected Subaccount ten
Business Days prior to the Annuity Date. The number of Annuity Units for the
Subaccount then remains fixed, unless an Exchange of Annuity Units (as set
forth below) is made. After the first Annuity Payment, the dollar amount of
each subsequent Annuity Payment is equal to the number of Annuity Units
multiplied by the Annuity Unit Value for the Subaccount ten Business Days
before the due date of the Annuity Payment.

The Annuity Unit Value for each Subaccount was initially established at $10.00
on the date money was first deposited in that Subaccount. The Annuity Unit
Value for any subsequent Business Day is equal to (a) times (b) times (c),
where

(a) = the Annuity Unit Value for the immediately preceding Business Day;

(b) = the Net Investment Factor for the day;

(c) = the investment result adjustment factor (.99989255 per day), which
recognizes an assumed interest rate of 4% per year used in determining
the Annuity Payment amounts.

The Net Investment Factor is a factor applied to a Subaccount that reflects
daily changes in the value of the Subaccount due to:

(a) = any increase or decrease in the value of the Subaccount due to
investment results;

(b) = a daily charge assessed at an annual rate of 1.35% for the mortality and
expense risks assumed by the Company;

(c) = a daily charge for the cost of administering the Contract corresponding
to an annual charge of .15% of the value of the Subaccount;

(d) = a daily change or credit for any taxes reserved for, which the Company
determines to have resulted from the investment operations of the
Subaccount.

The Annuity Tables for Payment Options Applied on a Variable Basis contained in
the Contracts are based on the 1983 Table "A" Mortality Table projected for
mortality improvement to the year 2000 using Projection Scale G and an interest
rate of 4% a year;

2
<PAGE>

except that in Massachusetts and Montana, the Annuity Tables contained in the
Contract are based on a 60% female/40% male blending of the above for all
annuitants of either gender.

EXCHANGES

After the Annuity Date you may, by making a written request, exchange the
current value of an existing Subaccount to Annuity Units of any other
Subaccount(s) then available. The written request for an Exchange must be
received by us, however, at least 10 Business Days prior to the first payment
date on which the Exchange is to take effect. This Exchange shall result in the
same dollar amount as that of the Annuity Payment on the date of Exchange (the
"Exchange Date"). Each year you may make an unlimited number of free Exchanges
between Subaccounts. The Company reserves the right to impose a $15 fee for
Exchanges in excess of twelve per Contract Year.

Exchanges will be made using the Annuity Unit Value for the Subaccounts on the
date the written request for Exchange is received. On the Exchange Date, the
Company will establish a value for the current Subaccounts by multiplying the
Annuity Unit Value by the number of Annuity Units in the existing Subaccounts
and compute the number of Annuity Units for the new Subaccounts by dividing the
Annuity Unit Value of the new Subaccounts into the value previously calculated
for the existing Subaccounts.

EXCEPTIONS TO CHARGES AND TO TRANSACTION OR BALANCE REQUIREMENTS

The Company may impose reduced administrative charges, risk charges, or other
deductions from Purchase Payments in certain situations where the Company
expects to realize significant economies of scale or other economic benefits
with respect to the sale of Contracts. This is possible because sales costs do
not increase in proportion to the dollar amount of the Contracts sold. For
example, the per-dollar transaction cost for a sale of a Contract equal to
$5,000 is generally much higher than the per-dollar cost for a sale of a
Contract equal to $1,000,000. As a result, the applicable sales charge declines
as a percentage of the dollar amount of Contracts sold as the dollar amount
increases.

The Company may also impose reduced administrative charges and fees on sales to
directors, officers and bona fide full-time employees (and their spouses and
minor children) of the Company, its ultimate parent company, and their
affiliates and certain sales representatives for the Contract. The Company may
also grant waivers or modifications of certain minimum or maximum purchase or
transaction amounts or balance requirements in these circumstances.

Notwithstanding the above, any variations in the administrative charges, risk
charges, or other deductions from Purchase Payments or in the minimum or maximum
transaction or balance requirements shall reflect differences in costs or
services and shall not be unfairly discriminatory against any person.

GENERAL MATTERS

NON-PARTICIPATING

The Contracts are non-participating. No dividends are payable and the Contracts
will not share in the profits or surplus earnings of the Company.

MISSTATEMENT OF AGE OR SEX

The Company may require proof of age and sex before making Annuity Payments. If
the Annuitant's stated age, sex or both in the Contract are incorrect, the
Company will change the annuity benefits payable to those benefits which the
Purchase Payments would have purchased for the correct age and

<PAGE>

sex. In the case of correction of the stated age and/or sex after payments have
commenced, the Company will (1) in the case of underpayment, pay the full amount
due with the next payment; (2) in the case of overpayment, deduct the amount due
from one or more future payments.

ASSIGNMENT

Any Non-Qualified Contract may be assigned by you prior to the Annuity Date and
during the Annuitant's lifetime. The Company is not responsible for the validity
of any assignment. No assignment will be recognized until the Company receives
the appropriate Company form notifying the Company of such assignment. The
interest of any beneficiary which the assignor has the right to change shall be
subordinate to the interest of an assignee. Any amount paid to the assignee
shall be paid in one sum notwithstanding any settlement agreement in effect at
the time assignment was executed. The Company shall not be liable as to any
payment or other settlement made by the Company before receipt of the
appropriate Company form.

ANNUITY DATA

The Company will not be liable for obligations which depend on receiving
information from a Payee until such information is received in a form
satisfactory to the Company.

ANNUAL STATEMENT

Once each Contract Year, the Company will send you an annual statement of the
current Accumulated Value allocated to each Subaccount and/or the General
Account Guaranteed Options; and any Purchase Payments, charges, Exchanges or
withdrawals during the year. This report will also give you any other
information required by law or regulation. You may ask for an annual statement
like this at any time. We will also send you quarterly statements. However, we
reserve the right to discontinue quarterly statements at any time.

INCONTESTABILITY

This Contract is incontestable from the Contract Date, subject to the
"Misstatement of Age or Sex" provision.

OWNERSHIP

The Contract Owner on the Contract Date is the Annuitant, unless otherwise
specified in the application. The Contract Owner may specify a new Contract
Owner by sending us the appropriate Company form at any time thereafter. The
term Contract Owner also includes any person named as a Joint Owner. A Joint
Owner shares ownership in all respects with the Contract Owner. During the
Annuitant's lifetime, all rights and privileges under this Contract may be
exercised solely by the Contract Owner. Upon the death of the Contract Owner,
ownership is retained by the surviving Joint Owner or passes to the Owner's
Designated Beneficiary, if one has been designated by the Contract Owner. If no
Owner's Designated Beneficiary has been selected or if no Owner's Designated
Beneficiary is living, then the Owner's Designated Beneficiary is the Contract
Owner's estate. From time to time the Company may require proof that the
Contract Owner is still living.

<PAGE>

PERFORMANCE INFORMATION

Performance information for the Subaccounts including the yield and effective
yield of the Federated Prime Money Subaccount, the yield of the remaining
Subaccounts, and the total return of all Subaccounts, may appear in reports or
promotional literature to current or prospective Contract Owners.

Where applicable in calculating performance information, the Annual Contract Fee
is reflected as a percentage equal to the total amount of fees collected during
a calendar year divided by the total average net assets of the Portfolios during
the same calendar year. The fee is assumed to remain the same in each year of
the applicable period. (With respect to partial year periods, if any, in the
examples, the Annual Contract Fee is pro-rated to reflect only the applicable
portion of the partial year period.)

As of the date of this Statement of Additional Information, the Subaccounts had
not commenced operations. Therefore, there was no Subaccount performance
available to calculate.

Where applicable, the following Fund inception dates are used in the calculation
of performance figures: 11/21/94 for Federated Prime Money Portfolio; 2/10/94
for Federated American Leaders Portfolio; 2/10/94 for Federated Utility
Portfolio; 3/28/94 for Federated U.S. Government Securities Portfolio; 2/2/94
for Federated High Income Bond Portfolio; 2/12/96 for Montgomery Growth
Portfolio; 2/5/96 for Montgomery Emerging Markets Portfolio; 5/3/95 for Wanger
U.S. Small Cap Advisor Portfolio; 5/3/95 for Wanger International Small Cap
Advisor Portfolio; 10/31/95 for Strong International Stock Portfolio; 6/30/95
for Warburg Pincus International Equity Portfolio; 6/30/95 for Warburg Pincus
Small Company Growth Portfolio; 10/31/97 for Strong Schafer Value Portfolio;
4/8/91 for T. Rowe Price International Stock Portfolio; 5/4/93 for Dreyfus Small
Cap Value Portfolio; and 5/1/97 for Endeavor Enhanced Index Portfolio.

FEDERATED PRIME MONEY PORTFOLIO SUBACCOUNT YIELDS

Current yield for the Federated Prime Money Subaccount will be based on the
change in the value of a hypothetical investment (exclusive of capital changes)
over a particular 7-day period, less a pro-rata share of Subaccount expenses
accrued over that period (the "base period"), and stated as a percentage of the
investment at the start of the base period (the "base period return"). The base
period return is then annualized by multiplying by 365/7, with the resulting
yield figure carried to at least the nearest hundredth of one percent.

Calculation of "effective yield" begins with the same "base period return" used
in the calculation of yield, which is then annualized to reflect weekly
compounding pursuant to the following formula:

Effective Yield = [((Base Period Return)+1)/365/7/] - 1

30-DAY YIELD FOR NON-MONEY MARKET SUBACCOUNTS

Quotations of yield for the remaining Subaccounts will be based on all
investment income per Unit earned during a particular 30-day period, less
expenses accrued during the period ("net investment income"), and will be
computed by dividing net investment income by the value of a Unit on the last
day of the period, according to the following formula:

a - b
YIELD = 2[(----- + 1)/6/ - 1]
cd

Where:

[a] equals the net investment income earned during the period by the
Portfolio attributable to shares owned by a Subaccount

[b] equals the expenses accrued for the period (net of reimbursement)

[c] equals the average daily number of Units outstanding during the period

[d] equals the maximum offering price per Accumulation Unit on the last
day of the period

Yield on the Subaccount is earned from the increase in net asset value of
shares of the Portfolio in which the Subaccount invests and from dividends
declared and paid by the Portfolio, which are automatically reinvested in
shares of the Portfolio.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR SUBACCOUNTS

When advertising performance of the Subaccounts, the Company will show the
"Standardized Average Annual Total Return," calculated as prescribed by the
rules of the SEC, for each Subaccount. The Standardized Average Annual Total
Return is the effective annual compounded rate of return that would have
produced the cash redemption value over the stated period had the performance
remained constant throughout. The calculation assumes a single $1,000 payment
made at the beginning of the period and full redemption at the end of the
period. It reflects the deduction of all applicable sales loads

5
<PAGE>

(including the contingent deferred sales load), the Annual Contract Fee and all
other Portfolio, Separate Account and Contract level charges except Premium
Taxes, if any.

Quotations of average annual total return for any Subaccount will be expressed
in terms of the average annual compounded rate of return of a hypothetical
investment in a Contract over a period of one, five and ten years (or, if less,
up to the life of the Subaccount), calculated pursuant to the formula:

P(1 + T)/n/ = ERV

Where:
(1) [P] equals a hypothetical initial Purchase Payment of $1,000

(2) [T] equals an average annual total return

(3) [n] equals the number of years

(4) [ERV] equals the ending redeemable value of a hypothetical $1,000
Purchase Payment made at the beginning of the period (or fractional
portion thereof)

The following table shows the Standardized Average Annual Total Return for the
Subaccounts for the period beginning at the inception of each Subaccount and
ending on December 31, 1997.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING 12/31/97
<TABLE>
<CAPTION>
Subaccount One Year Since Portfolio Inception*
---------- -------- -------------------------
<S> <C> <C>
Federated Prime Money N/A N/A
Federated American Leaders N/A N/A
Federated US Govt Securities N/A N/A
Federated Utility N/A N/A
Federated High Income Bond N/A N/A
Wanger Intl Smll Cap N/A N/A
Wanger US Smll Cap N/A N/A
Montgomery Emerg Mkt N/A N/A
Montgomery Growth N/A N/A
Strong Internatl Stk N/A N/A
Warburg Pincus Intl Equity N/A N/A
Warburg Pincus Smll Co Growth N/A N/A
Dreyfus Small Cap Value N/A N/A
Endeavor Enchanced Index N/A N/A
Strong Schafer Value N/A N/A
T. Rowe Price Int'l N/A N/A
</TABLE>
* As of 12/31/97, the Portfolios had not commenced operations.

6
<PAGE>

ADDITIONAL PERFORMANCE MEASURES
- -------------------------------

NON-STANDARDIZED ACTUAL TOTAL RETURN AND NON-STANDARDIZED ACTUAL AVERAGE
ANNUAL TOTAL RETURN

The Company may show Non-Standardized Actual Total Return (i.e., the
percentage change in the value of an Accumulation Unit) for one or more
Subaccounts with respect to one or more periods. The Company may also show
Non-Standardized Actual Average Annual Total Return (i.e., the average annual
change in Accumulation Unit Value) with respect to one or more periods. For
one year, the Non-Standardized Actual Total Return and the Non-Standardized
Actual Average Annual Total Return are effective annual rates of return and
are equal. For periods greater than one year, the Non-Standardized Actual
Average Annual Total Return is the effective annual compounded rate of return
for the periods stated. Because the value of an Accumulation Unit reflects the
Separate Account and Portfolio expenses (See Fee Table in the Prospectus), the
Non-Standardized Actual Total Return and Non-Standardized Actual Average
Annual Total Return also reflect these expenses. However, these percentages do
not reflect the Annual Contract Fee, any sales loads or Premium Taxes (if
any), which if included would reduce the percentages reported by the Company.

NON-STANDARDIZED ACTUAL TOTAL RETURN FOR PERIOD ENDING 12/31/97
<TABLE>
<CAPTION>
Since Portfolio
Subaccount One Year Inception*
---------- -------- ---------------
<S> <C> <C>
Federated Prime Money N/A N/A
Federated American Leaders N/A N/A
Federated US Govt Security N/A N/A
Federated Utility N/A N/A
Federated High Income Bond N/A N/A
Wanger Intl Smll Cap N/A N/A
Wanger US Smll Cap N/A N/A
Montgomery Emerg Mkt N/A N/A
Montgomery Growth N/A N/A
Strong Internatl Stock N/A N/A
Warburg Pincus Intl Equity N/A N/A
Warburg Pincus Smll Co Growth N/A N/A
Dreyfus Small Cap Value N/A N/A
Endeavor Enhanced Index N/A N/A
Strong Schafer Value N/A N/A
T. Rowe Price Int'l N/A N/A
</TABLE>
* As of 12/31/97, the Portfolios had not commenced operations.

7
<PAGE>

NON-STANDARDIZED ACTUAL AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING 12/31/97
<TABLE>
<CAPTION>
Subaccount One Year Since Portfolio Inception*
---------- -------- -------------------------
<S> <C> <C>
Federated Prime Money N/A N/A
Federated American Leaders N/A N/A
Federated US Govt Securities N/A N/A
Federated Utility N/A N/A
Federated High Income Bond N/A N/A
Wanger Intl Smll Cap N/A N/A
Wanger US Smll Cap N/A N/A
Montgomery Emerg Mkt N/A N/A
Montgomery Growth N/A N/A
Strong Internatl Stock N/A N/A
Warburg Pincus Intl Equity N/A N/A
Warburg Pincus Smll Co Growth N/A N/A
Dreyfus Small Cap Value N/A N/A
Endeavor Enhanced Index N/A N/A
Strong Schafer Value N/A N/A
T. Rowe Price Int'l N/A N/A
</TABLE>
* As of 12/31/97, the Portfolios had not commenced operations.

NON-STANDARDIZED TOTAL RETURN YEAR-TO-DATE

The Company may show Non-Standardized Total Return Year-to-Date as of a
particular date, or simply Total Return YTD, for one or more Subaccounts with
respect to one or more non-standardized base periods commencing at the beginning
of a calendar year. Total Return YTD figures reflect the percentage change in
actual Accumulation Unit Values during the relevant period. These percentages
reflect a deduction for the Separate Account and Portfolio expenses, but do not
include the Annual Contract Fee, any sales loads or Premium Taxes (if any),
which if included would reduce the percentages reported by the Company.

<TABLE>
<CAPTION>
Total Return
Subaccount as of 12/31/97*
---------- --------------
<S> <C>
Federated Prime Money N/A
Federated American Leaders N/A
Federated US Govt Securities N/A
Federated Utility N/A
Federated High Income Bond N/A
Wanger Intl Smll Cap N/A
Wanger US Smll Cap N/A
Montgomery Emerg Mkt N/A
Montgomery Growth N/A
Stein Roe Special Venture N/A
Strong Internatl Stock N/A
Warburg Pincus Intl Equity N/A
Warburg Pincus Smll Co Growth N/A
Dreyfus Small Cap Value N/A
Endeavor Enhanced Index N/A
Strong Schafer Value N/A
T. Rowe Price Int'l N/A
</TABLE>

* As of 12/31/97, the Portfolios had not commenced operations.

8
<PAGE>

NON-STANDARDIZED ONE YEAR RETURN

The Company may show Non-Standardized One Year Return for one or more
Subaccounts with respect to one or more non-standardized base periods commencing
at the beginning of a calendar year (or date of Portfolio inception, if during
the relevant year) and ending at the end of such calendar year. One Year Return
figures reflect the historical performance of the Portfolios as if the Contract
were in existence before its inception date (which it was not). After the
Contract's inception date, the figures reflect the percentage change in actual
accumulation Unit Values during the relevant period. These percentages reflect a
deduction for the Separate Account and Portfolio expenses but do not include the
Annual Contract Fee, any sales loads or Premium Taxes (if any), which if
included would reduce the percentages reported by the Company.

<TABLE>
<CAPTION>
Subaccount 1997 1996 1995
- ---------- ---- ---- ----
<S> <C> <C> <C>
Federated Prime Money 3.37% 3.20% 3.64%
Federated American Leaders 30.39% 19.77% 31.75%
Federated US Govt Securities 6.97% 2.25% 7.29%
Federated Utility 24.77% 9.91% 22.36%
Federated High Income Bond 12.14% 12.63% 18.62%
Wanger Int'l Small Cap -5.16% 29.75% N/A
Wanger U.S. Small Cap 24.59% 44.18% N/A
Montgomery Emerging Markets -2.06% N/A N/A
Montgomery Growth 26.68% N/A N/A
Strong Int'l Stock -14.97% 8.76% N/A
Warburg Pincus Int'l Equity -4.06% 8.31% N/A
Warburg Pincus Small Co. Growth 13.96% 12.24% N/A
Dreyfus Small Cap Value 23.62% 23.84% 12.37%
Endeavor Enhanced Value N/A N/A N/A
Strong Schafer Value N/A N/A N/A
T. Rowe Price Int'l 1.10% 13.52% 8.93%
</TABLE>

NON-STANDARDIZED HYPOTHETICAL TOTAL RETURN AND NON-STANDARDIZED HYPOTHETICAL
AVERAGE ANNUAL TOTAL RETURN

The Company may show Non-Standardized Hypothetical Total Return and Non-
Standardized Hypothetical Average Annual Total Return, calculated on the basis
of the historical performance of the Portfolios (calculated beginning from the
end of the year of inception for each Portfolio) and may assume the Contract
was in existence prior to its inception date (which it was not). After the
Contract's inception date, the actual Accumulation Unit Values. These returns
are based on specified premium patterns which produce the resulting Accumulated
Values are used for the calculations. However, they reflect a deduction for the
Separate Account expenses and Portfolio expenses. They do not include the Annual
Contract Fee, any sales loads or Premium Taxes (if any), which if included would
reduce the percentages reported.

The Non-Standardized Hypothetical Total Return for a Subaccount is the effective
annual rate of return that would have produced the ending Accumulated Value of
the stated one-year period.

9
<PAGE>

The Non-Standardized Hypothetical Average Annual Total Return for a Subaccount
is the effective annual compounded rate of return that would have produced the
ending Accumulated Value over the stated period had the performance remained
constant throughout.

HYPOTHETICAL TOTAL RETURNS FOR PERIODS ENDING 12/31/97
(BASED ON SINGLE INITIAL PURCHASE)

<TABLE>
<CAPTION>
Total
Since Fund
Subaccount One-Year Three-Year Inception Year-End
---------- ------- --------- ------------------
<S> <C> <C> <C>
Federated Prime Money 3.37% 10.56% 10.90%
Federated American Leaders 30.39% 105.76% 99.16%
Federated U.S. Gov't Securities 6.97% 17.35% 19.42%
Federated Utility 24.77% 67.81% 60.10%
Federated High Income Bond 12.14% 49.82% 41.30%
Wanger Int'l Small Cap -5.16% N/A 63.93%
Wanger U.S. Small Cap 24.59% N/A 106.35%
Montgomery Emerging Markets -2.06% N/A 31.19%
Montgomery Growth 26.68% N/A 59.07%
Strong Int'l Stock -14.97% N/A -6.18%
Warburg Pincus Int'l Equity -4.06% N/A 10.66%
Warburg Pincus Small Co. Growth 13.96% N/A 58.87%
Dreyfus Small Cap Value 23.62% 72.03% 84.27%
Endeavor Enhanced Index N/A N/A 21.69%
Strong Schafer Value N/A N/A 0.48%
T. Rowe Price Int'l 1.10% 25.01% 33.75%
</TABLE>

HYPOTHETICAL AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/97
(BASED ON SINGLE INITIAL PURCHASE)

<TABLE>
<CAPTION>
Total
Since Fund
Subaccount One-Year Three-Year Inception Year-End
---------- ------- --------- ------------------
<S> <C> <C> <C>
Federated Prime Money 3.37% 3.40% 3.38%
Federated American Leaders 30.39% 27.19% 19.39%
Federated U.S. Gov't Securities 6.97% 5.48% 4.83%
Federated Utility 24.77% 18.83% 12.87%
Federated High Income Bond 12.14% 14.43% 9.24%
Wanger Int'l Small Cap -5.16% N/A 20.39%
Wanger U.S. Small Cap 24.59% N/A 31.25%
Montgomery Emerging Markets -2.06% N/A 1.66%
Montgomery Growth 26.68% N/A 27.94%
Strong Int'l Stock -14.97% N/A -2.90%
Warburg Pincus Int'l Equity -4.06% N/A 4.13%
Warburg Pincus Small Co. Growth 13.96% N/A 20.30%
Dreyfus Small Cap Value 23.62% 19.82% 14.02%
Endeavor Enhanced Index N/A N/A 21.69%
Strong Schafer Value N/A N/A 0.48%
T. Rowe Price Int'l 1.10% 7.72% 4.41%
</TABLE>

Note: Advertisements and other sales literature for the Portfolios may quote
total returns that are calculated on non-standardized base periods. These total
returns also represent historical change in the value of an investment in the
Portfolios based on monthly reinvestment of dividends over a specific period of
time.

FEDERATED PRIME MONEY PORTFOLIO FEDERATED PRIME MONEY PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1994
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
------------------------ ------------------ ------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- ---- -------- ------ ------ ------ ---- -------- ----- ------ ------ ------
12/31/94 $2,000 N/A N/A N/A 12/31/94 $50,000 N/A N/A N/A N/A
12/31/95 $4,000 $2,073 3.64% 3.64% 12/31/95 $50,000 $51,820 3.64% 3.64% 3.64%
12/31/96 $6,000 $4,203 3.20% 3.35% 12/31/96 $50,000 $53,476 3.20% 3.42% 6.95%
12/31/97 $8,000 $6,412 3.37% 3.36% 12/31/97 $50,000 $55,279 3.37% 3.40% 10.56%

FEDERATED AMERICAN LEADERS PORTFOLIO FEDERATED AMERICAN LEADERS PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1994
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
------------------------ ------------------ ------------------------- -------------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- ---- -------- ----- ------ ------ ---- -------- ----- ------ ------ ------
12/31/94 $2,000 N/A N/A N/A 12/31/94 $50,000 N/A N/A N/A N/A
12/31/95 $4,000 $2,635 31.75% 31.75% 12/31/95 $50,000 $65,875 31.75% 31.75% 31.75%
12/31/96 $6,000 $5,552 19.77% 23.95% 12/31/96 $50,000 $78,901 19.77% 25.62% 57.80%
12/31/97 $8,000 $9,846 30.39% 26.90% 12/31/97 $50,000 $102,879 30.395 27.19% 105.76%

FEDERATED U.S. GOV'T SECURITIES PORTFOLIO FEDERATED U.S. GOV'T SECURITIES PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1994
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
------------------------ ------------------ ------------------------- -------------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- ---- -------- ----- ------ ------ ---- -------- ----- ------ ------ ------
12/31/94 $2,000 N/A N/A N/A 12/31/94 $50,000 N/A N/A N/A N/A
12/31/95 $4,000 $2,146 7.29% 7.29% 12/31/95 $50,000 $53,646 7.29% 7.29% 7.29%
12/31/96 $6,000 $4,239 2.25% 3.93% 12/31/96 $50,000 $54,852 2.25% 4.74% 9.70%
12/31/97 $8,000 $6,674 6.97% 5.42% 12/31/97 $50,000 $58,675 6.97% 5.48% 17.35%

FEDERATED UTILITY PORTFOLIO FEDERATED UTILITY PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1994
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
------------------------ ------------------ ----------------------- -------------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- ---- -------- ----- ------ ------ ---- -------- ----- ------ ------ ------
12/31/94 $2,000 N/A N/A N/A 12/31/94 $50,000 N/A N/A N/A N/A
12/31/95 $4,000 $2,447 22.36% 22.36% 12/31/95 $50,000 $61,182 22.36% 22.36% 22.36%
12/31/96 $6,000 $4,888 9.91% 14.13% 12/31/96 $50,000 $67,246 9.91% 15.97% 34.49%
12/31/97 $8,000 $8,594 24.77% 19.08% 12/31/97 $50,000 $83,903 24.77% 18.83% 67.81%

FEDERATED HIGH INCOME BOND PORTFOLIO FEDERATED HIGH INCOME BOND PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1994
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
------------------------ ------------------ ------------------------- -------------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- ---- -------- ----- ------ ------ ---- -------- ----- ------ ------ ------
12/31/94 $2,000 N/A N/A N/A 12/31/94 $50,000 N/A N/A N/A N/A
12/31/95 $4,000 $2,372 18.62% 18.62% 12/31/95 $50,000 $59,308 18.62% 18.62% 18.62%
12/31/96 $6,000 $4,924 12.63% 14.68% 12/31/96 $50,000 $66,798 12.63% 15.58% 33.60%
12/31/97 $8,000 $7,765 12.14% 13.465 12/31/97 $50,000 $74,910 12.14% 14.43% 49.82%

WANGER INT'L SMALL CAP PORTFOLIO WANGER INT'L SMALL CAP PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

WANGER U.S. SMALL CAP PORTFOLIO WANGER U.S. SMALL CAP PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1993 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1993
AND YEARLY DECEMBER 31ST THEREAFTER

MONTGOMERY EMERGING MARKETS PORTFOLIO MONTGOMERY EMERGING MARKETS PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1996 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1996
AND YEARLY DECEMBER 31ST THEREAFTER

MONTGOMERY GROWTH PORTFOLIO MONTGOMERY GROWTH PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1996 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1996
AND YEARLY DECEMBER 31ST THEREAFTER

STRONG INT'L STOCK PORTFOLIO STRONG INT'L STOCK PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

WARBURG PINCUS INT'L EQUITY PORTFOLIO WARBURG PINCUS INT'L EQUITY PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

WARBURG PINCUS SMALL CO. GROWTH PORTFOLIO WARBURG PINCUS SMALL CO. GROWTH PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

DREYFUS SMALL CAP VALUE PORTFOLIO DREYFUS SMALL CAP VALUE PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1993 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1993
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
------------------------ ------------------ ------------------------- -------------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- ---- -------- ----- ------ ------ ---- -------- ----- ------ ------ ------
12/31/93 $2,000 N/A N/A N/A 12/31/93 $50,000 N/A N/A N/A N/A
12/31/94 $4,000 $1,936 -3.21% -3.21% 12/31/94 $50,000 $48,394 -3.21% -3.21% -3.21%
12/31/95 $6,000 $4,423 12.37% 6.89% 12/31/95 $50,000 $54,379 12.37% 4.29% 8.76%
12/31/96 $8,000 $7,954 23.84% 14.77% 12/31/96 $50,000 $67,345 23.84% 10.44% 34.69%
12/31/97 $10,000 $12,305 23.62% 17.99% 12/31/97 $50,000 $83,250 23.62% 13.59% 66.50%

ENDEAVOR ENHANCED INDEX PORTFOLIO ENDEAVOR ENHANCED INDEX PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1997 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1997
AND YEARLY DECEMBER 31ST THEREAFTER

STRONG SCHAFER VALUE PORTFOLIO STRONG SCHAFER VALUE PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1997 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1997
AND YEARLY DECEMBER 31ST THEREAFTER

T. ROWE PRICE INT'L PORTFOLIO T. ROWE PRICE INT'L PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1991 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1991
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
------------------------ ----------------- ------------------------ -----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- ---- -------- ----- ------ ------ ---- -------- ----- ------ ------ ------
12/31/91 $2,000 N/A N/A N/A 12/31/91 $50,000 N/A N/A N/A N/A
12/31/92 $4,000 $1,899 -5.04% -5.04% 12/31/92 $50,000 $47,481 -5.04% -5.04% -5.04%
12/31/93 $6,000 $4,551 16.73% 8.92% 12/31/93 $50,000 $55,423 16.73% 5.28% 10.85%
12/31/94 $8,000 $6,078 -7.23% 0.065% 12/31/94 $50,000 $51,417 -7.23% 0.94% 2.83%
12/31/95 $10,000 $8,799 8.93% 3.84% 12/31/95 $50,000 $56,009 8.93% 2.88% 12.02%
12/31/96 $12,000 $12,259 13.52% 6.87% 12/31/96 $50,000 $63,579 13.52% 4.92% 27.16%
12/31/97 $14,000 $14,415 1.10% 5.26% 12/31/97 $50,000 $64,276 1.10% 4.27% 28.55%
</TABLE>

INDIVIDUALIZED COMPUTER GENERATED ILLUSTRATIONS

The Company may from time to time use computer-based software available through
Morningstar, CDA/Wiesenberger and/or other firms to provide registered
representatives and existing and/or potential owners of Contracts with
individualized hypothetical performance illustrations for some or all of the
Portfolios. Such illustrations may include, without limitation, graphs, bar
charts and other types of formats presenting the following information: (i) the
historical results of a hypothetical investment in a single Portfolio; (ii) the
historical fluctuation of the value of a single Portfolio (actual and
hypothetical); (iii) the historical results of a hypothetical investment in
more than one Portfolio; (iv) the historical performance of two or more market
indices in relation to one another and/or one or more Portfolios; (v) the
historical performance of two or more market indices in comparison to a single
Portfolio or a group of Portfolios; (vi) a market risk/reward scatter chart
showing the historical risk/reward relationship of one or more mutual funds or
Portfolios to one or more indices and a broad category of similar anonymous
variable annuity subaccounts; and (vii) Portfolio data sheets showing various
information about one or more Portfolios (such as information concerning total
return for various periods, fees and expenses, standard deviation, alpha and
beta, investment objective, inception date and net assets).

PERFORMANCE COMPARISONS

Performance information for any Subaccount reflects only the performance of a
hypothetical Contract under which Accumulation Value is allocated to a
Subaccount during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the Portfolio in which
the Subaccount invests, and the market conditions during the given period, and
should not be considered as a representation of what may be achieved in the
future.

Reports and marketing materials may, from time to time, include information
concerning the rating of Providian Life and Health Insurance Company as
determined by one or more of the ratings services listed below, or other
recognized rating services. Reports and promotional literature may also contain
other information including (i) the ranking of any Subaccount derived from
rankings of variable annuity separate accounts or other investment products
tracked by Lipper Analytical Services or by other rating services, companies,
publications, or other person who rank separate accounts or other investment
products on overall performance or other criteria, and (ii) the effect of tax-
deferred compounding on a Subaccount's investment returns, or returns in
general, which may be illustrated by graphs, charts, or otherwise, and which
may include a comparison, at various points in time, of the return from an
investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis.

Each Subaccount's performance depends on, among other things, the performance
of the underlying Portfolio which, in turn, depends upon such variables as:

. quality of underlying investments;

. average maturity of underlying investments;

. type of instruments in which the Portfolio is invested;

. changes in interest rates and market value of underlying investments;

. changes in Portfolio expenses; and

10
<PAGE>

. the relative amount of the Portfolio's cash flow.

From time to time, we may advertise the performance of the Subaccounts and the
underlying Portfolios as compared to similar funds or portfolios using certain
indexes, reporting services and financial publications, and we may advertise
rankings or ratings issued by certain services and/or other institutions. These
may include, but are not limited to, the following:

. DOW JONES INDUSTRIAL AVERAGE ("DJIA"), an unmanaged index representing
share prices of major industrial corporations, public utilities, and
transportation companies. Produced by the Dow Jones & Company, it is
cited as a principal indicator of market conditions.

. STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industrial, transportation, and
financial and public utility companies, which can be used to compare to
the total returns of funds whose portfolios are invested primarily in
common stocks. In addition, the Standard & Poor's index assumes
reinvestments of all dividends paid by stocks listed on its index. Taxes
due on any of these distributions are not included, nor are brokerage or
other fees calculated into the Standard & Poor's figures.

. LIPPER ANALYTICAL SERVICES, INC., a reporting service that ranks funds in
various fund categories by making comparative calculations using total
return. Total return assumes the reinvestment of all income dividends and
capital gains distributions, if any. From time to time, we may quote the
Portfolios' Lipper rankings in various fund categories in advertising and
sales literature.

. BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, a financial
reporting service which publishes weekly average rates of 50 leading bank
and thrift institution money market deposit accounts. The rates published
in the index are an average of the personal account rates offered on the
Wednesday prior to the date of publication by ten of the largest banks
and thrifts in each of the five largest Standard Metropolitan Statistical
Areas. Account minimums range upward from $2,500 in each institution, and
compounding methods vary. If more than one rate is offered, the lowest
rate is used. Rates are subject to change at any time specified by the
institution.

. SHEARSON LEHMAN GOVERNMENT/CORPORATE (TOTAL) INDEX, an index comprised of
approximately 5,000 issues which include: non-convertible bonds publicly
issued by the U.S. government or its agencies; corporate bonds guaranteed
by the U.S. government and quasi-federal corporations; and publicly
issued, fixed-rate, non-convertible domestic bonds of companies in
industry, public utilities and finance. The average maturity of these
bonds approximates nine years. Tracked by Shearson Lehman, Inc., the
index calculates total returns for one month, three month, twelve month,
and ten year periods and year-to-date.

. SHEARSON LEHMAN GOVERNMENT/CORPORATE (LONG-TERM) INDEX, an index composed
of the same types of issues as defined above. However, the average
maturity of the bonds included in this index approximates 22 years.

. SHEARSON LEHMAN GOVERNMENT INDEX, an unmanaged index comprised of all
publicly issued, non-convertible domestic debt of the U.S. government, or
any agency thereof, or any quasi-federal corporation and of corporate
debt guaranteed by the U.S. government. Only notes and bonds with a
minimum outstanding principal of $1 million and a minimum maturity of one
year are included.

. MORNINGSTAR, INC., an independent rating service that publishes the bi-
weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types,

<PAGE>

according to their risk-adjusted returns. The maximum rating is five stars,
and ratings are effective for two weeks.

. MONEY, a monthly magazine that regularly ranks money market funds in
various categories based on the latest available seven-day compound
(effective) yield. From time to time, the Fund will quote its Money
ranking in advertising and sales literature.

. STANDARD & POOR'S UTILITY INDEX, an unmanaged index of common stocks from
forty different utilities. This index indicates daily changes in the
price of the stocks. The index also provides figures for changes in price
from the beginning of the year to date, and for a twelve month period.

. DOW JONES UTILITY INDEX, an unmanaged index comprised of fifteen utility
stocks that tracks changes in price daily and over a six month period.
The index also provides the highs and lows for each of the past five
years.

. THE CONSUMER PRICE INDEX, a measure for determining inflation.

Investors may use such indexes (or reporting services) in addition to the
Funds' Prospectuses to obtain a more complete view of each Portfolio's
performance before investing. Of course, when comparing each Portfolio's
performance to any index, conditions such as composition of the index and
prevailing market conditions should be considered in assessing the significance
of such companies. Unmanaged indexes may assume the reinvestment of dividends
but generally do not reflect deductions for administrative and management costs
and expenses.

When comparing funds using reporting services, or total return and yield, or
effective yield, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price.

SAFEKEEPING OF ACCOUNT ASSETS

Title to assets of the Separate Account is held by the Company. The Assets are
kept physically segregated and held separate and apart from the Company's
General Account assets. The General Account contains all of the assets of the
Company. Records are maintained of all purchases and redemptions of eligible
Portfolio shares held by each of the Subaccounts and the General Account.

THE COMPANY

Commonwealth General Corporation owns a 3.7% interest in the Company and 61%,
15.3% and 20% interests, respectively, are held by Commonwealth Life Insurance
Company, Peoples Security Life Insurance Company, and Capital Liberty, L.P.
Commonwealth Life Insurance Company and Peoples Security Life Insurance Company
are each wholly owned by Capital General Development Corporation, which in turn
is wholly owned by Commonwealth General Corporation. A 1% interest in Capital
Liberty, L.P. is owned by Commonwealth General Corporation, which is the general
partner, and 79.2% and 19.8% interests, respectively, are held by two limited
partners, Commonwealth Life Insurance Company and Peoples Security Life
Insurance Company.

Commonwealth General Corporation is wholly owned by AEGON USA, Inc., which in
turn is wholly owned by AEGON U.S. Holding Corporation, a wholly owned
subsidiary of AEGON International n.v. AEGON International n.v. is a wholly
owned subsidiary of AEGON n.v. Vereniging AEGON (a Netherlands membership
association) has a 53.63% interest in AEGON n.v.

STATE REGULATION

The Company is a stock life insurance company organized under the laws of
Missouri, and is subject to regulation by the Missouri State Department of
Insurance. An annual statement is filed with the Missouri Commissioner of
Insurance on or before March 1st of each year covering the operations and
reporting on

<PAGE>

the financial condition of the Company as of December 31st of the preceding
calendar year. Periodically, the Missouri Commissioner of Insurance examines the
financial condition of the Company, including the liabilities and reserves of
the Separate Account.

In addition, the Company is subject to the insurance laws and regulations of
all the states where it is licensed to operate. The availability of certain
contract rights and provisions depends on state approval and/or filing and
review processes. Where required by state law or regulation, the Contracts will
be modified accordingly.

RECORDS AND REPORTS

All records and accounts relating to the Separate Account will be maintained by
the Company or by its Administrator. As presently required by the Investment
Company Act of 1940 and regulations promulgated thereunder, the Company will
mail to all Contract Owners at their last known address of record, at least
semi-annually, reports containing such information as may be required under
that Act or by any other applicable law or regulation.

DISTRIBUTION OF THE CONTRACTS

AFSG Securities Corporation ("AFSG"), formerly Providian Securities Corporation,
the principal underwriter of the Contracts, is ultimately a wholly owned
subsidiary of AEGON n.v. AFSG 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.

The Contracts are offered to the public through persons or entities licensed
under the federal securities laws and state insurance laws that have generally
entered into agreements with AFSG. The offering of the Contracts is continuous
and AFSG does not anticipate discontinuing the offering of the Contracts.
However, AFSG does reserve the right to discontinue the offering of the
Contracts.

LEGAL PROCEEDINGS

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

OTHER INFORMATION

A Registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
Contracts discussed in this Statement of Additional Information. Not all of the
information set forth in the Registration Statement, amendments and exhibits
thereto has been included in this Statement of Additional Information.
Statements contained in this Statement of Additional Information concerning the
content of the Contracts and other legal instruments are intended to be
summaries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the Securities and Exchange
Commission.

FINANCIAL STATEMENTS

The Subaccounts described in the contract prospectus had not yet commenced
operations as of the year ended December 31, 1997, and consequently had no
assets or liabilities. Accordingly, no financial statements are included for the
Separate Account for the years ended December 31, 1996 and December 31, 1997.

The audited statutory-basis financial statements of the Company for the years
ended December 31, 1997 and 1996, including the Reports of Independent Auditors
thereon, which are also included in this Statement of Additional Information,
should be distinguished from the financial statements of the Separate Account
and should be considered only as bearing on the ability of the Company to meet
its obligations under the Contracts. They should not be considered as bearing on
the investment performance of the assets held in the Separate Account.

<PAGE>

STATUTORY- BASIS FINANCIAL STATEMENTS

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

YEARS ENDED DECEMBER 31, 1997 AND 1996
WITH REPORT OF INDEPENDENT AUDITORS

<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

STATUTORY-BASIS FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1997 AND 1996

CONTENTS

<TABLE>
<S> <C>
Report of Independent Auditors.............................................. 1
Audited Financial Statements
Balance Sheets (Statutory-Basis).......................................... 2
Statements of Operations (Statutory-Basis)................................ 3
Statements of Changes in Capital and Surplus (Statutory-Basis)............ 4
Statements of Cash Flows (Statutory-Basis)................................ 5
Notes to Financial Statements............................................. 6
</TABLE>
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Providian Life and Health Insurance Company

We have audited the accompanying statutory-basis balance sheets of Providian
Life and Health Insurance Company as of December 31, 1997 and 1996, and the
related statutory-basis statements of operations, changes in capital and sur-
plus, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to ex-
press an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.

As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Missouri Department of Insurance, which practices differ from
generally accepted accounting principles. The variances between such practices
and generally accepted accounting principles are also described in Note 1. The
effects on the financial statements of these variances are not reasonably de-
terminable but are presumed to be material.

In our opinion, because of the effects of the matter described in the pre-
ceding paragraph, the financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the fi-
nancial position of Providian Life and Health Insurance Company at December
31, 1997 and 1996, or the results of its operations or its cash flows for the
years then ended.

However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Providian Life and
Health Insurance Company at December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended, in conformity with ac-
counting practices prescribed or permitted by the Missouri Department of In-
surance.

/s/ Ernst & Young LLP
Louisville, Kentucky
April 24, 1998

1
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

BALANCE SHEETS (STATUTORY-BASIS)

<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1997 1996
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
ADMITTED ASSETS
Cash and invested assets:
Bonds................................................. $ 4,363,420 $ 4,249,252
Preferred stocks...................................... 31,519 30,658
Common stocks......................................... 487,831 438,067
Mortgage loans........................................ 2,269,507 2,651,611
Real estate........................................... 8,759 6,653
Policy loans.......................................... 155,430 158,186
Cash and short-term investments....................... 45,122 139,705
Other invested assets................................. 216,266 168,430
----------- -----------
Total cash and invested assets......................... 7,577,854 7,842,562
Deferred and uncollected premiums...................... 46,428 49,186
Accrued investment income.............................. 91,639 89,539
Other receivables...................................... 15,150 38,556
Amounts due from affiliates............................ 17,480 7,687
Federal income taxes recoverable from parent........... 230 5,840
Other admitted assets.................................. 32 1,385
Separate account assets................................ 3,573,052 2,427,504
----------- -----------
TOTAL ADMITTED ASSETS.............................. $11,321,865 $10,462,259
=========== ===========
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Aggregate policy reserves............................. $ 4,573,048 $ 4,736,127
Policy and contract claims............................ 49,145 43,006
Policyholder contract deposits........................ 1,770,902 1,961,549
Other policy or contract liabilities.................. 460,461 366,441
Amounts due to affiliates............................. 18,429 12,719
Asset valuation reserve............................... 109,465 97,169
Accrued expenses and other liabilities................ 165,840 212,433
Separate account liabilities.......................... 3,544,304 2,427,504
----------- -----------
Total liabilities...................................... 10,691,594 9,856,948
Capital and surplus:
Common stock, $11 par value; 1,145,000 shares
authorized, issued and outstanding................... 12,595 12,595
Preferred stock, $11 par value; 2,290,000 shares
authorized, issued and outstanding................... 25,190 25,190
Paid-in surplus....................................... 2,583 2,583
Unassigned surplus.................................... 589,903 564,943
----------- -----------
Total capital and surplus.............................. 630,271 605,311
----------- -----------
TOTAL LIABILITIES AND CAPITAL AND SURPLUS.......... $11,321,865 $10,462,259
=========== ===========
</TABLE>

See accompanying notes.

2
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

STATEMENTS OF OPERATIONS (STATUTORY-BASIS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31
----------------------
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Revenues:
Premiums earned:
Life and annuity..................................... $ 406,561 $ 343,086
Accident and health.................................. 144,713 154,993
Annuity fund deposits................................. 995,014 1,073,366
Net investment income................................. 559,656 569,860
Commissions and expense allowances on reinsurance
ceded................................................ 2,323 1,123
Amortization of interest maintenance reserve.......... 6,333 3,109
Other income.......................................... 7,770 10,196
---------- ----------
2,122,370 2,155,733
Benefits and expenses:
Accident and health, life and other benefits.......... 1,474,430 1,417,390
Decrease in aggregate policy reserves................. (381,758) (111,769)
Interest on policyholder contract deposits............ 122,478 102,631
Commissions and expense allowances on reinsurance
assumed.............................................. 41,990 39,533
General insurance and other expenses.................. 129,266 122,906
Reinsurance recapture fee............................. 553 2,320
Net transfers to separate accounts.................... 599,633 425,800
---------- ----------
1,986,592 1,998,811
---------- ----------
Net gain from operations before federal income taxes... 135,778 156,922
Federal income tax expense............................. 54,615 50,639
---------- ----------
Net gain from operations............................... 81,163 106,283
Net realized capital gains, net of income taxes (1997--
$9,506; 1996--$1,402) and excluding gains transferred
to the interest maintenance reserve (1997--$10,093;
1996--$2,921)......................................... 24,702 3,394
---------- ----------
Net income............................................. $ 105,865 $ 109,677
========== ==========
</TABLE>

See accompanying notes.

3
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS (STATUTORY-BASIS)

<TABLE>
<CAPTION>
COMMON PREFERRED PAID-IN UNASSIGNED
STOCK STOCK SURPLUS SURPLUS
------- --------- ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balances, January 1, 1996................. $12,595 $25,190 $2,583 $536,126
Net income................................ -- -- -- 109,677
Change in net unrealized gains on
investments.............................. -- -- -- 40,540
Dividends to shareholders................. -- -- -- (125,000)
Prior year federal income tax adjustment.. -- -- -- 6,546
Decrease in nonadmitted assets............ -- -- -- 4,737
Increase in asset valuation reserve....... -- -- -- (7,683)
------- ------- ------ --------
Balances, December 31, 1996............... $12,595 $25,190 $2,583 $564,943
Net income................................ -- -- -- 105,865
Change in net unrealized gains on
investments.............................. -- -- -- 45,907
Dividends to shareholders................. -- -- -- (120,000)
Prior year federal income tax adjustment.. -- -- -- 4,719
Decrease in nonadmitted assets............ -- -- -- 341
Increase in asset valuation reserve....... -- -- -- (12,296)
Change in surplus in separate accounts.... -- -- -- 424
------- ------- ------ --------
Balances, December 31, 1997............... $12,595 $25,190 $2,583 $589,903
======= ======= ====== ========
</TABLE>

See accompanying notes.

4
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

STATEMENTS OF CASH FLOWS (STATUTORY-BASIS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31
----------------------
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Cash and short-term investments provided
Operations:
Premiums and annuity fund deposits................... $1,549,498 $1,573,203
Net investment income received....................... 544,108 574,079
Allowances and reserve adjustments received on
reinsurance ceded................................... 2,323 1,125
Other income received.................................. 5,906 10,182
---------- ----------
2,101,835 2,158,589
Benefits paid........................................ 1,468,102 1,412,797
General insurance and other expenses................. 170,488 169,580
Federal income taxes paid............................ 53,792 56,121
Net increase (decrease) in policy loans and premium
notes............................................... (2,745) 3,520
Paid reinsurance reserves and other items............ 18 293
Net transfers to separate accounts................... 602,788 412,252
---------- ----------
2,292,443 2,054,563
---------- ----------
Total cash provided (applied) by operations........... (190,608) 104,026
Investments sold, matured or repaid................... 5,059,887 3,688,955
Other cash provided:
Increase in amounts due to affiliates................ 5,709 7,826
Net increase in broker receivables................... 891 31,112
Other items.......................................... 15,014 40,047
---------- ----------
Total other cash provided............................. 21,614 78,985
---------- ----------
Total cash and short-term investments provided......... 4,890,893 3,871,966
Cash and short-term investments applied:
Investments acquired.................................. 4,783,450 3,717,511
Other cash applied:
Dividends paid to shareholders....................... 120,000 125,000
Decrease in amounts due to affiliates................ 9,770 6,162
Net decrease in broker payables...................... 22,505 --
Net cash and short-term investments transferred on
reinsurance recaptured.............................. 650 78,980
Capital contribution to separate account............. 26,362 --
Other items.......................................... 22,739 9,874
---------- ----------
Total other cash applied.............................. 202,026 220,016
---------- ----------
Total cash and short-term investments applied.......... 4,985,476 3,937,527
---------- ----------
Decrease in cash and short-term investments............ (94,583) (65,561)
Cash and short-term investments:
Beginning of year..................................... 139,705 205,266
---------- ----------
End of year........................................... $ 45,122 $ 139,705
========== ==========
</TABLE>

See accompanying notes.

5
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. ORGANIZATION, NATURE OF OPERATIONS AND ACCOUNTING POLICIES

Organization

Providian Life and Health Insurance Company (PLH) is a life and health in-
surance company domiciled in Missouri. Prior to June 10, 1997, PLH was an in-
direct, wholly owned subsidiary of Providian Corporation (Providian). On June
10, 1997, Providian's insurance operations, including the operations of PLH,
were merged with an indirect, wholly owned subsidiary of AEGON N.V., an inter-
national insurance organization headquartered in The Hague, The Netherlands.
Providian was the surviving corporation in the merger. Effective October 15,
1997, Providian's name was changed to Commonwealth General Corporation (Com-
monwealth). Effective December 31, 1997, ownership of Commonwealth was trans-
ferred to AEGON USA, Inc., an indirect, wholly owned subsidiary of AEGON N.V.

PLH is directly owned by Commonwealth Life Insurance Company (CLICO) 61%,
Capital Liberty, L.P. (CLLP) 20%, Peoples Security Life Insurance Company
(PSI) 15%, and Commonwealth 4%. Commonwealth is the ultimate parent of CLICO,
CLLP, and PSI. PLH wholly owns an insurance subsidiary, Veterans Life Insur-
ance Company (VLIC), which wholly owns an insurance subsidiary, First
Providian Life and Health Insurance Company (FPLH), and a non-insurance sub-
sidiary.

Nature of Operations

PLH sells and services life and accident and health insurance products, pri-
marily utilizing direct response methods, such as television, telephone, mail
and third-party programs to reach low to middle-income households nationwide.
PLH also sells and services group and individual accumulation products, pri-
marily utilizing brokers, fund managers, financial planners, stock brokerage
firms and a mutual fund.

Management's Estimates

The preparation of financial statements of insurance companies requires man-
agement to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Such estimates and assump-
tions could change in the future as more information becomes known, which
could impact the amounts reported and disclosed herein.

Basis of Presentation

The accompanying financial statements of PLH have been prepared in accor-
dance with the accounting practices prescribed or permitted by the Missouri
Department of Insurance. Such practices vary from generally accepted account-
ing principles (GAAP). The more significant variances from GAAP are as fol-
lows:

Investments

Investments in bonds and mandatorily redeemable preferred stocks are re-
ported at amortized cost or fair value based on their National Association
of Insurance Commissioners (NAIC) rating; for GAAP, such fixed maturity in-
vestments are designated at purchase as held-to-maturity, trading or avail-
able-for-sale. Held-to-maturity fixed investments are reported at amortized
cost, and the remaining fixed maturity investments are reported at fair
value with unrealized holding gains and losses reported in operations for
those designated as trading and as a separate component of shareholders'
equity for those designated as available-for-sale.

6
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Fair values of investments in bonds and stocks are generally based on
values specified by the Securities Valuation Office (SVO) of the NAIC,
rather than on values provided by outside broker confirmations or inter-
nally calculated estimates. However, for certain investments, the NAIC does
not provide a value and PLH uses either admitted asset investment amounts
(i.e., statement values) as allowed by the NAIC, quoted fair values pro-
vided by outside broker confirmations or internally calculated estimates.
Investments in real estate are reported net of related obligations rather
than on a gross basis. Real estate owned and occupied by PLH is included in
investments rather than reported as an operating asset, and investment in-
come and operating expenses include amounts representing rent for PLH's oc-
cupancy of such real estate. Changes between cost and admitted asset in-
vestment amounts are credited or charged directly to unassigned surplus
rather than to a separate surplus account.

Valuation allowances are established for mortgage loans based on the dif-
ference between the unpaid loan balance and the estimated fair value of the
underlying real estate when such loans are determined to be in default as
to scheduled payments. Under GAAP, valuation allowances would be estab-
lished when PLH determines it is probable that it will be unable to collect
all amounts due (both principal and interest) according to the contractual
terms of the loan agreement. Such allowances are generally based on the es-
timated fair value of the underlying real estate (collateral). The initial
valuation allowance and subsequent changes in the allowance for mortgage
loans are charged or credited directly to unassigned surplus, rather than
being included as a component of earnings as would be required under GAAP.

Under a formula prescribed by the NAIC, PLH defers the portion of real-
ized capital gains and losses attributable to changes in the general level
of interest rates on sales of certain liabilities and fixed income invest-
ments, principally bonds and mortgage loans, and amortizes such deferrals
into income on a straight-line basis over the remaining period to maturity
based on groupings of individual liabilities or investments sold. The net
accumulated unamortized balance of such deferrals is reported as an "inter-
est maintenance reserve" (IMR). Realized capital gains and losses are re-
ported in income net of federal income tax and transfers to the IMR. At De-
cember 31, 1997 and 1996, the IMR balance was in an asset position of
$7,002,000 and $10,762,000, respectively, and was non-admitted for statu-
tory accounting purposes. The "asset valuation reserve" (AVR) is also de-
termined by a NAIC prescribed formula and is reported as a liability rather
than a valuation allowance. The AVR represents a provision for possible
fluctuations in the value of bonds, equity securities, mortgage loans, real
estate and other invested assets. Changes to the AVR are charged or cred-
ited directly to unassigned surplus. Under GAAP, realized capital gains and
losses are reported in the income statement on a pretax basis in the period
that the asset giving rise to the gain or loss is sold and direct write-
downs are recorded (or valuation allowances are provided, where appropriate
under GAAP) when there has been a decline in value deemed to be other than
temporary, in which case, write-downs (or provisions) for such declines are
charged to income.

Subsidiaries

The accounts and operations of PLH's subsidiaries are not consolidated
with the accounts and operations of PLH as would be required under GAAP.

Policy Acquisition Costs

Costs of acquiring and renewing business are expensed when incurred. Un-
der GAAP, acquisition costs related to traditional life insurance, to the
extent recoverable from future policy revenues, are deferred and amortized
over the premium-paying period of the related policies using assumptions
consistent with those used in computing policy benefit reserves. For uni-
versal life insurance and investmenttype contracts, to the extent recover-
able from future gross profits, deferred policy acquisition costs are amor-
tized generally in

7
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

proportion to the present value of expected gross profits from surrender
charges and investment, mortality and expense margins.

Nonadmitted Assets

Certain assets designated as "nonadmitted," principally agents' debit
balances and furniture and equipment, are excluded from the accompanying
balance sheets and are charged directly to unassigned surplus.

Premiums

Revenues for universal life policies and investment-type contracts con-
sist of the entire premium received and benefits incurred represent the to-
tal of death benefits paid, surrenders and the change in policy reserves.
Under GAAP, premiums received in excess of policy charges are not recog-
nized as premium revenue and benefits represent the excess of benefits paid
over the policy account value and interest credited to the account values.

Benefit Reserves

Certain policy reserves are calculated using prescribed interest and mor-
tality assumptions rather than on expected experience and actual account
balances as would be required under GAAP.

Reinsurance

Policy and contract liabilities ceded to reinsurers have been reported as
reductions of the related reserves rather than as assets as would be re-
quired under GAAP.

Commissions allowed by reinsurers on business ceded are reported as in-
come when received rather than being deferred and amortized with deferred
policy acquisition costs.

Federal Income Taxes

Deferred federal income taxes are not provided for differences between
the financial statement amounts and the tax bases of assets and liabili-
ties.

Statements of Cash Flows

Cash and short term investments in the statements of cash flows represent
cash balances and investments with initial maturities of one year or less.
Under GAAP, the corresponding captions of cash and cash equivalents include
cash balances and investments with initial maturities of three months or
less.

The effects of the foregoing variances from GAAP on the accompanying statu-
tory-basis financial statements have not been determined, but are presumed to
be material.

Other significant accounting policies followed in preparing the accompanying
statutory-basis financial statements are as follows:

Investments

Bonds, preferred stocks, common stocks, mortgage loans, real estate, pol-
icy loans, short-term investments, other invested assets and derivative fi-
nancial instruments are stated at values prescribed by the NAIC, as fol-
lows:

Bonds not backed by other loans are stated at amortized cost using
the constant effective yield method.

8
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Loan-backed bonds and structured securities are valued at amortized
cost using the constant effective yield method. Anticipated prepayments
are considered when determining the amortization of related discounts
or premiums. Prepayment assumptions are obtained from dealer survey
values or internal estimates and are consistent with the current inter-
est rate and economic environment. The retrospective adjustment method
is used to value such securities.

Preferred stocks are carried at cost. In addition, certain bonds and
preferred stocks are carried at the lower of cost (or amortized cost)
or the NAIC designated fair value.

Common stocks are carried at the NAIC designated fair value, except
that investments in unconsolidated subsidiaries and affiliates in which
PLH has an interest of 20 percent or more are carried on the equity ba-
sis.

Mortgage loans in good standing are carried at unpaid principal bal-
ances while statutorily delinquent mortgages are carried at their un-
paid principal balance less the related valuation allowance.

Real estate is carried at the lower of cost (less depreciation for
occupied and investment real estate, generally calculated using the
straight-line method) or net realizable value, and is net of related
obligations, if any.

Policy loans are carried at the aggregate unpaid principal balance.

Short-term investments include investments with maturities of less
than one year at the date of acquisition. Short-term investments are
carried at amortized cost.

Other invested assets are comprised of limited partnership invest-
ments and are valued using the equity method of accounting.

Derivative financial instruments, consisting primarily of interest
rate swap agreements, including basis swaps, and futures, are valued
consistently with the hedged item. Hedges of fixed income assets and/or
liabilities are valued at amortized cost. Hedges of items carried at
fair value are valued at fair value. Derivatives which cease to be ef-
fective hedges are valued at fair value.

Bond and other loan interest is credited to income as it accrues. Divi-
dends on preferred and common stocks are credited to income on exdividend
dates. For securities, PLH follows the guidelines of the NAIC for each se-
curity on an individual basis in determining the admitted or nonadmitted
status of accrued income amounts. There was no interest on securities ex-
cluded from investment income at December 31, 1997 and 1996. For mortgage
loans, PLH's policy is to exclude from investment income interest in excess
of three months past due. At December 31, 1997 and 1996, the total amount
excluded from accrued investment income for delinquent mortgage loans was
approximately $308,000 and $504,000, respectively. The amounts to be paid
or received as a result of derivative instruments are recognized in the
statements of operations as an adjustment to investment income. Realized
capital gains and losses on derivative instruments are recognized currently
in earnings. If the item being hedged is subject to the IMR, the gain or
loss on the hedging derivative instrument is subject to the IMR upon termi-
nation.

Net income includes realized capital gains and losses on investments
sold, net of federal income tax and transfers to the IMR. The cost of in-
vestments sold is determined on a first-in, first-out basis.

Separate Accounts

Separate account assets and liabilities reported in the accompanying
statutory-basis financial statements represent funds that are separately
administered, principally for annuity contracts, and for which the contract
holder, rather than PLH, bears the investment risk. Separate account con-
tract holders have no claim against the assets of the general account of
PLH. Separate account assets are reported at estimated fair value. Separate
account liabilities are also reported at estimated fair value and are ex-
clusive of capital contributions

9
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

made by PLH. The operations of the separate accounts are not included in
the accompanying statutory-basis financial statements. Fees charged on sep-
arate account policyholder deposits are included in net transfers to sepa-
rate accounts in the accompanying statements of operations.

Policy Reserves

Unearned premiums represent the portion of premiums written which are ap-
plicable to the unexpired terms of accident and health policies in force,
calculated principally by the application of monthly pro rata fractions.
Liabilities for unearned premiums are included in aggregate policy re-
serves.

PLH waives deduction of deferred fractional premiums upon death of
insureds. PLH's policy is to return any portion of the final premium beyond
the date of death. Surrender values on direct business are not promised in
excess of the legally computed reserves. Additional premiums are charged
for policies issued on substandard lives according to underwriting classi-
fication. Mean reserves are determined by computing the regular mean re-
serve for the plan at the issued age and holding, in addition, onehalf of
the extra premium charged for the year.

The tabular interest has been determined from the basic data for the cal-
culation of policy reserves. The tabular less actual reserve released and
the tabular cost have been determined by formula as described in the NAIC
instructions.

Policy reserves also include single premium and flexible premium annuity
contracts and structured settlement contracts. The single premium and flex-
ible premium contracts contain surrender charges for the first six to seven
years of the contract. These contract reserves are held at the contract
value that accrues to the policyholder. Structured settlement contracts
contain no surrender charge as the contracts are not surrenderable. Policy
reserves on these contracts are determined based on the expected future
cash flows discounted at the applicable statutorily defined mortality and
interest rates. Annual effective rates credited to these annuity contracts
ranged from 4.0 percent to 8.0 percent during 1997 and 1996.

Liabilities for Policy and Contract Claims

Liabilities for policy and contract claims, principally related to acci-
dent and health policies, include amounts determined in accordance with
standard actuarial practice and statutory regulation. These estimates are
subject to the effects of trends in claim severity and frequency. Although
considerable variability is inherent in such estimates, management believes
that the liabilities for policy and contract claims are adequate. The meth-
ods of making such estimates and establishing the resulting liabilities are
continually reviewed and updated, and any adjustments resulting therefrom
are reflected in current earnings.

Policyholder Contract Deposits

Policyholder contract deposits are comprised primarily of guaranteed in-
vestment contracts (GICs). The GICs consist of three types. One type is
guaranteed as to principal along with interest guarantees based upon prede-
termined indices. The second type guarantees principal and interest, but
also includes a penalty if the contract is surrendered early. The third
type guarantees principal and interest and is non-surrenderable before the
fixed maturity date. Policy reserves on the GICs are determined following
the retrospective deposit method and consist of contract values that accrue
to the benefit of the policyholder. Annual effective rates credited to
these GICs ranged from 5.5 percent to 6.6 percent and from 5.2 percent to
6.6 percent during 1997 and 1996, respectively.

Premiums, Benefits and Expenses

For individual and most group life policies, premiums are reported as
earned on the policy/certificate anniversary. For individual and group an-
nuities, premiums and annuity fund deposits are recorded as earned when
collected. For individual and group accident and health policies, premiums
are recorded as earned on

10
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

a pro rata basis over the coverage period for which the premiums were col-
lected or due. Benefit claims (including an estimated provision for claims
incurred but not reported), policy reserve changes and expenses are charged
to income as incurred.

Reinsurance

Reinsurance premiums, benefits and expenses are accounted for in a manner
consistent with that used in accounting for original policies issued and
the terms of the reinsurance contracts. Premiums, benefits, expenses and
the reserves for policy and contract liabilities and unearned premiums are
recorded net of reinsured amounts.

Guaranty Fund Assessments

Periodically, PLH is assessed by various state guaranty funds as part of
those funds' activities to collect funds from solvent insurance companies
to cover certain losses to policyholders that resulted from the insolvency
or rehabilitation of other insurance companies. Each state guaranty fund
operates independently of any other state guaranty fund; as such, the meth-
ods by which assessments are levied against PLH vary from state to state.
Also, some states permit guaranty fund assessments to be partially recov-
ered through reductions in future premium taxes. At December 31, 1997 and
1996, PLH has established an estimated liability for guaranty fund assess-
ments for those insolvencies or rehabilitations that have actually occurred
prior to that date. The estimated liability is determined using preliminary
information received from the various state guaranty funds and the National
Organization of Life and Health Insurance Guaranty Associations. Because
there are many uncertainties regarding the ultimate assessments that will
be assessed against PLH, the ultimate assessments for those insolvencies or
rehabilitations that occurred prior to December 31, 1997 may vary from the
estimated liability included in the accompanying financial statements. The
estimated liability for guaranty fund assessments recorded at December 31,
1997 and 1996 was $12,354,000 and $11,525,000, respectively.

Permitted Statutory Accounting Practices

PLH's statutory-basis financial statements are prepared in accordance
with accounting practices prescribed or permitted by the Missouri Depart-
ment of Insurance. Currently, "prescribed" statutory accounting practices
include state insurance laws, regulations, and general administrative
rules, as well as a variety of publications of the NAIC, including the
NAIC's Accounting Practices and Procedures Manual. "Permitted" statutory
accounting practices encompass all accounting practices that are not pre-
scribed; such practices may differ from state to state, may differ from
company to company within a state, and may change in the future.

The NAIC is in the process of codifying statutory accounting practices
(Codification). Codification will likely change, to some extent, prescribed
statutory accounting practices and may result in changes to the accounting
practices that PLH uses to prepare its statutory-basis financial state-
ments. Codification, which is expected to be approved by the NAIC in 1998,
will require adoption by the various states before it becomes the pre-
scribed statutory basis of accounting for insurance companies domesticated
within those states. Accordingly, before Codification becomes effective for
PLH, Missouri must adopt Codification as the prescribed basis of accounting
on which domestic insurers must report their statutory-basis results to the
Department of Insurance. At this time it is unclear whether Missouri will
adopt Codification. However, based on current draft guidance, management
believes that the impact of codification will not be material to PLH's
statutory-basis financial statements.

11
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Reclassifications

Certain reclassifications have been made to the prior year financial state-
ments to conform with the current year presentation.

2. INVESTMENTS

The tables below contain amortized cost (carrying value or statement value)
and fair value information on bonds.

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1997
U.S. government obligations......... $ 133,391 $ 931 $ 229 $ 134,093
States and political subdivisions... 19,464 1,217 -- 20,681
Foreign government obligations*..... 29,293 227 67 29,453
Corporate and other................. 2,595,091 95,032 4,976 2,685,147
Foreign corporate*.................. 384,898 14,292 10,739 388,451
Asset-backed........................ 541,542 434 -- 541,976
Mortgage-backed..................... 659,741 -- -- 659,741
---------- -------- ------- ----------
$4,363,420 $112,133 $16,011 $4,459,542
========== ======== ======= ==========
</TABLE>

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1996
U.S. government obligations......... $ 170,990 $ 576 $ 3,340 $ 168,226
States and political subdivisions... 33,765 526 994 33,297
Foreign government obligations*..... 39,483 301 432 39,352
Corporate and other................. 2,730,863 43,960 23,430 2,751,393
Foreign corporate*.................. 218,306 5,868 679 223,495
Asset-backed........................ 519,149 -- -- 519,149
Mortgage-backed..................... 536,696 -- -- 536,696
---------- ------- ------- ----------
$4,249,252 $51,231 $28,875 $4,271,608
========== ======= ======= ==========
</TABLE>
- --------
* Substantially all are U.S. dollar denominated.

12
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The amortized cost and fair value of bonds at December 31, 1997, by contrac-
tual maturity, are shown below. Actual maturities may differ from contractual
maturities because certain borrowers may have the right to call or prepay ob-
ligations, sometimes without call or prepayment penalties.

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less............................ $ 123,776 $ 123,553
Due after one year through five years.............. 524,363 525,913
Due after five years through ten years............. 886,610 895,178
Due after ten years................................ 1,627,388 1,713,181
---------- ----------
3,162,137 3,257,825
Asset-backed securities............................ 541,542 541,976
Mortgage-backed securities......................... 659,741 659,741
---------- ----------
$4,363,420 $4,459,542
========== ==========
</TABLE>

Proceeds during 1997 and 1996 from sales, maturities and calls of bonds were
$4,006,319,000 and $2,992,250,000, respectively. Gross gains of $43,227,000
and $36,104,000 and gross losses of $29,488,000 and $28,403,000 in 1997 and
1996, respectively, were realized on those sales.

The cost of preferred stocks of unaffiliated companies was $31,519,000 and
$30,886,000 at December 31, 1997 and 1996, respectively, and the related fair
value was $31,640,000 and $30,681,000 at December 31, 1997 and 1996, respec-
tively. There was no difference between cost and statement value of preferred
stocks at December 31, 1997. The difference between cost and statement value
of $228,000 at December 31, 1996 was credited directly to unassigned surplus
as of that date and did not affect net income.

The change in unrealized gains and losses on investments in common stocks
and on investments in subsidiaries is credited or charged directly to unas-
signed surplus and does not affect net income. The cost and fair value of
those investments at December 31, 1997 and 1996 were as follows:

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------- ---------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1997
Common stocks........................... $ 34,723 $ 1,527 $3,455 $ 32,795
Subsidiaries............................ 202,606 252,430 -- 455,036
-------- -------- ------ --------
$237,329 $253,957 $3,455 $487,831
======== ======== ====== ========
DECEMBER 31, 1996
Common stocks........................... $ 28,991 $ 655 $1,083 $ 28,563
Subsidiaries............................ 202,606 206,898 -- 409,504
-------- -------- ------ --------
$231,597 $207,553 $1,083 $438,067
======== ======== ====== ========
</TABLE>

The fair value of investments in subsidiaries presented above represents
PLH's equity interest in the net assets of the subsidiary.

Included in investments are securities having statement values of $3,966,000
at December 31, 1997 which were on deposit with various state insurance de-
partments to satisfy regulatory requirements.

13
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The carrying value of mortgage loans is net of an allowance for loan losses
of $868,000 and $2,526,000 at December 31, 1997 and 1996, respectively. The
maximum and minimum lending rates for commercial mortgage loans made during
1997 were 8.8 percent and 6.9 percent, respectively; the maximum and minimum
lending rates for residential mortgage loans made during 1997 were 9.0 percent
and 4.3 percent, respectively; and the maximum and minimum lending rates for
farm mortgage loans made during 1997 were 8.5 percent and 7.8 percent, respec-
tively. The maximum percentage of any one loan to the value of collateral at
the time of the loan, exclusive of insured, guaranteed or purchase money mort-
gages, was 80 percent. Hazard insurance is required on all properties covered
by mortgage loans at least equal to the excess of the loan over the maximum
loan which would be permitted by law on the land without buildings. As of De-
cember 31, 1997, PLH held $1,059,000 of mortgages with interest more than one
year overdue amounting to $137,000. As of December 31, 1997, there were no
taxes, assessments, or other amounts advanced by PLH on account of mortgage
loans which were not included in mortgage loan totals. During 1997, $440,000
of taxes and maintenance expenses were paid by PLH on property acquired
through foreclosure. During 1997, PLH did not reduce interest rates on any
outstanding mortgages.

3. FINANCIAL INSTRUMENTS

PLH utilizes a variety of financial instruments in its asset/liability man-
agement process and to meet its customers' financing needs. The
asset/liability management process focuses on the management of a variety of
risks, including interest rate, market and credit risks. Effective management
of these risks is an important determinant of profitability. Instruments used
in this process and to meet the customers' financing and investing needs in-
clude derivative financial instruments, primarily interest rate swap agree-
ments and futures contracts, and commitments to extend credit. Other deriva-
tives, such as forwards, are used to a much lesser extent in the
asset/liability management process. All of these instruments involve (to vary-
ing degrees) elements of market and credit risks in excess of the amounts rec-
ognized in the accompanying financial statements at a given point in time. The
contract or notional values of all of these instruments reflect the extent of
involvement in the various types of financial instruments.

PLH's exposure to market risk (including interest rate risk) is the risk of
market volatility and potential disruptions in the market which may result in
certain instruments being less valuable. PLH monitors and controls its expo-
sure to this risk primarily through the use of cash flow stress testing, total
portfolio analysis of net duration levels, a monthly mark-to-market process
and ongoing monitoring of interest rate movements.

PLH's exposure to credit risk (including interest rate risk) is the risk of
loss from a counterparty failing to perform according to the terms of the con-
tract. This exposure includes settlement risk (risk that the counterparty de-
faults after PLH has delivered funds or securities under the terms of the con-
tract) which results in an accounting loss and replacement cost risk (cost to
replace the contract at current market rates should the counterparty default
prior to the settlement date). There is no off-balance sheet exposure to
credit risk that would result in an immediate accounting loss (settlement
risk) associated with counterparty non-performance on interest rate swap
agreements and futures. Interest rate swap agreements are subject to replace-
ment cost risk, which equals the cost to replace those contracts in a net gain
position should a counterparty default. Default by a counterparty would not
result in an immediate accounting loss. These instruments, as well as futures
and forwards, are subject to market risk, which is the possibility that future
changes in market prices may make the instruments less valuable. Credit loss
exposure resulting from non-performance by a counterparty for commitments to
extend credit is represented by the contractual amounts of the instruments.

The credit risk on all financial instruments, whether on- or off-balance
sheet, is controlled through an ongoing credit review, approval and monitoring
process. PLH determines, on an individual counterparty basis, the need for
collateral or other security to support financial instruments with credit
risk, and establishes individual

14
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

and aggregate counterparty exposure limits. In order to limit exposure associ-
ated with counterparty nonperformance on interest rate swap agreements, PLH
enters into master netting agreements with its counterparties. These master
netting agreements provide that, upon default of either party, contracts in
gain positions will be offset with contracts in loss positions and the net
gain or loss will be received or paid, respectively. Assuming every
counterparty defaulted, the cost of replacing those interest rate contracts in
a net gain position, after consideration of the aforementioned master netting
agreements, was $20,344,000 and $22,188,000 at December 31, 1997 and 1996, re-
spectively.

PLH manages interest rate risk through the use of duration analysis. Dura-
tion is a key portfolio management tool and is measured for both assets and
liabilities. For the simplest forms of assets or liabilities, duration is pro-
portional to their weighted average life, with weights equal to the discounted
present value of estimated cash flows. This methodology causes near-term cash
flows to have a greater proportional weight than cash flows further in the fu-
ture. For more complex assets and liabilities with optional cash flows, for
example, callable bonds, mortgage-backed securities, or traditional insurance
liabilities, additional adjustments are made in estimating an effective dura-
tion number. PLH uses derivatives as a less costly and less burdensome alter-
native to restructuring the underlying cash instruments to manage interest
rate risk based upon the aggregate net duration level of its aggregate portfo-
lio. Information is provided below for each significant derivative product
type.

Interest rate swap agreements generally involve the exchange of fixed and
floating rate interest payments, without an exchange of the underlying princi-
pal amount. PLH also enters into basis swap agreements where amounts received
are based primarily upon three month LIBOR or less and pays amounts based on
either a short-term Treasury or Prime Rate. The amounts to be paid or received
as a result of these agreements are accrued and recognized in the accompanying
statements of operations through net investment income. Gains or losses real-
ized on closed or terminated agreements are deferred and amortized as a compo-
nent of the IMR.

Futures are contracts which call for the delayed delivery of securities in
which the seller agrees to deliver on a specified future date, a specified in-
strument at a specified price. The daily change in fair value for futures used
as accounting hedges both for products that provide a return based on the mar-
ket performance of a designated index and for investments in common stocks are
recognized in the accompanying statement of operations through net realized
investment gains and losses. Margin requirements on futures contracts, equal
to the change in fair value, are usually settled on a daily basis.

The following table summarizes the activity by notional or contract value in
derivative products for 1997 and 1996:

<TABLE>
<CAPTION>
RECEIVE PAY FIXED/
FIXED/PAY RECEIVE
FLOATING FLOATING BASIS FUTURES FORWARDS
---------- ---------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1995.... $1,320,962 $ -- $ 65,198 $ 50,106 $250,000
Additions.................... 107,473 10,000 100,000 314,271 --
Maturities................... 109,268 -- 4,558 -- --
Terminations................. 396,400 -- -- 293,594 --
---------- ------- -------- -------- --------
Balances, December 31, 1996.... 922,767 10,000 160,640 70,783 250,000
Additions.................... 266,290 25,958 -- 319,168 --
Maturities................... 194,567 -- 22,002 314,449 --
Terminations................. 5,000 -- -- -- --
---------- ------- -------- -------- --------
Balances, December 31, 1997.... $ 989,490 $35,958 $138,638 $ 75,502 $250,000
========== ======= ======== ======== ========
</TABLE>

15
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

During 1997 and 1996, PLH terminated or closed certain interest rate swap
agreements which were
accounted for as hedges. The net deferred gains on these agreements during
1997 and 1996 were $71,000 and $1,279,000, respectively, and are being amor-
tized to investment income over a period of one to six years, the expected re-
maining life of the related investments, as a component of the IMR.

Commitments

Commitments to extend credit consist of agreements to lend to a customer at
some future time, subject to established contractual conditions. Since it is
likely some commitments may expire or be withdrawn without being fully drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements. PLH evaluates individually each customer's creditworthiness.
Collateral may be obtained, if deemed necessary, based on a credit evaluation
of the counterparty. The collateral may include commercial, residential and/or
farm real estate. At December 31, 1997 and 1996, commitments to extend credit
were $155,185,000 and $136,317,000, respectively. Additionally, at December
31, 1997, PLH has agreed to fund additional investments through the year 2002
in an amount not to exceed $75,313,000.

Concentrations of Credit Risk

PLH limits credit risk by diversifying its investment portfolio among common
and preferred stocks, public bonds, private placement securities, and commer-
cial and residential mortgage loans. It further diversifies these portfolios
between and within industry sectors, by geography and by property type. Credit
risk is also limited by maintaining stringent underwriting standards and pur-
chasing insurance protection in certain cases. In addition, PLH establishes
credit approval processes, credit limits and monitoring procedures on an indi-
vidual counterparty basis. As a result, management believes that significant
concentrations of credit risk do not exist.

4. FEDERAL INCOME TAXES

PLH and its subsidiaries file a life-nonlife consolidated federal income tax
return. Under a written agreement, PLH and its affiliates allocate the federal
income tax liability among the members of the consolidated return group in the
ratio that each member's separate return tax liability, or benefit from a net
operating loss, for the year bears to the consolidated tax liability. The fi-
nal settlement under this agreement is made after the annual filing of the
consolidated U.S. Corporate Income Tax Return.

Reported income tax expense differs from income tax expense that would re-
sult from applying statutory rates to pretax income primarily due to differ-
ences in the statutory and tax treatment of certain statutory investments, de-
ferred policy acquisition costs, bad debts, and differences in policy and con-
tract liabilities.

Included in the statements of changes in capital and surplus are certain ad-
justments increasing surplus by $4,719,000 and $6,546,000 at December 31, 1997
and 1996, respectively, relating to tax accrual adjustments applicable to
prior tax years.

At December 31, 1997, accumulated earnings of PLH for federal income tax
purposes included a "Policyholders' Surplus" account balance of $17,425,000, a
special memorandum tax account. This is a special memorandum account balance
which has not been currently taxed, but income taxes computed at current rates
will become payable if this surplus is distributed. Provisions of the Deficit
Reduction Act of 1984 (the Act) do not permit further additions to the Policy-
holders' Surplus account. The "Shareholders' Surplus" account is also a spe-
cial memorandum tax account, and generally represents an accumulation of tax-
able income (net of tax thereon) plus the dividends received deduction, tax-
exempt interest, and certain other special deductions as provided by the Act.
At December 31, 1997, the balance in the Shareholders' Surplus account
amounted to approximately $611,347,000. There is no present intention to make
distributions in excess of the Shareholders' Surplus account.

16
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. RELATED PARTY TRANSACTIONS

Reinsurance Assumed from Affiliates

PLH entered into two indemnity reinsurance agreements with CLICO in 1987
whereby PLH assumes 100 percent of the risks reinsured on all structured set-
tlement policies issued during 1987 by CLICO. The agreements were amended in
1988 whereby PLH also assumes 100 percent of the risks reinsured on all struc-
tured settlement, pension buyout, and single premium immediate annuities is-
sued subsequent to 1987 by CLICO. The agreements were also amended in 1988 to
change the agreements from indemnity reinsurance to coinsurance. The agree-
ments were further amended in 1992 whereby CLICO recaptured structured settle-
ments issued in 1991 and in the first five months of 1992.

PLH entered into a reinsurance agreement with CLICO in 1990 on a coinsurance
basis whereby PLH assumes 100 percent of the risk on certain guaranteed in-
vestment contracts issued by CLICO. The agreement was amended in 1996 to pro-
vide CLICO with profit sharing on the assumed business of up to 20 basis
points per year of the account value. The amount of profit sharing paid to
CLICO in 1997 and 1996 was $1,986,000 and $1,733,000, respectively. In addi-
tion, the agreement was amended to provide CLICO with reimbursement of ex-
traordinary expenses related to the assumed policies, including guaranty fund
assessment payments. There were no expense reimbursements made to CLICO in
1997 or 1996.

PLH entered into indemnity reinsurance agreements with PSI in 1987 whereby
PLH assumes 100 percent of the risks reinsured on all structured settlement
contracts issued during 1987. The agreements were amended in 1988 whereby PLH
also assumed 100 percent of the risks reinsured on all structured settlement,
pension buyout and single premium immediate annuities issued subsequent to
1987. The agreements were also amended in 1988 to change the agreements from
indemnity reinsurance to coinsurance.

PLH entered into a reinsurance agreement with PSI in 1996 on a coinsurance
basis whereby PLH assumes 100 percent of the risk on certain guaranteed in-
vestment contracts issued by PSI. The agreement provides PSI with profit shar-
ing on the assumed business of up to 20 basis points of account value. The
amount of profit sharing paid to PSI in 1997 and 1996 was $984,000 and
$164,000, respectively.

Effective June 30, 1995, PLH entered into a coinsurance agreement with PSI
whereby PLH assumed 100 percent of the risk of business reinsured by PSI from
Manufacturers Life Insurance Company of North America (MLIC), formerly North
American Security Life. This agreement coinsured existing deposits of MLIC's
fixed account portion of their variable annuity product business. In addition,
this agreement included prospective coinsurance of future sales of MLIC's
fixed account portion of their variable annuity product. This agreement also
contained a provision which provided PSI with profit sharing on the assumed
business of up to 10 basis points of account value. The profit sharing amount
paid by PLH to PSI in 1996 was $574,000. Under the initial agreement, PLH re-
ceived cash and invested assets in exchange for its coinsurance of
$724,700,000 of fixed annuity deposits. As of November 1, 1996, the coinsur-
ance agreement was amended whereby PSI recaptured the fixed annuity deposits
from PLH. The recapture resulted in PLH transferring to PSI liabilities previ-
ously reinsured related to the business of $575,450,000 and assets of
$577,000,000 as of December 31, 1996. The $1,550,000 difference represented
the net expense incurred by PLH as of December 31, 1996.

17
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The following table summarizes the amounts reflected in the statements of
operations from reinsurance assumed by PLH from CLICO and PSI:

<TABLE>
<CAPTION>
EXPENSE (REVENUE) FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------
ASSUMED FROM
------------------------------------------------------------------
CLICO CLICO PSI PSI PSI TOTAL
ITEM ASSUMED (ANNUITIES) (GIC'S) (ANNUITIES) (GIC'S) (MLIC) ASSUMED
- ------------ ----------- --------- ----------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Premium income.......... $(173,892) $ (2,555) $(1,982) $(100,941) $ -- $(279,370)
Life, annuity and other
benefits............... 79,100 353,690 10,116 84,908 -- 527,814
Commissions and
expenses............... 6,995 -- 19 -- -- 7,014
Change in reserves or
policyholder contract
deposits............... 178,450 (269,172) 56 45,651 -- (45,015)
<CAPTION>
EXPENSE (REVENUE) FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------------------------------------
ASSUMED FROM
------------------------------------------------------------------
CLICO CLICO PSI PSI PSI TOTAL
ITEM ASSUMED (ANNUITIES) (GIC'S) (ANNUITIES) (GIC'S) (MLIC) ASSUMED
- ------------ ----------- --------- ----------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Premium income.......... $(105,397) $(105,319) $ (307) $(244,197) $(126,736) $(581,956)
Life, annuity and other
benefits............... 62,884 152,409 9,871 5,120 306,302 536,586
Commissions and
expenses............... 4,304 -- 3 -- (2,338) 1,969
Change in reserves or
policyholder contract
deposits............... 112,743 38,934 (789) 243,558 (149,236) 245,210
</TABLE>

PLH entered into two separate reinsurance agreements with two affiliates,
Academy Life Insurance Company (ALIC) and Pension Life Insurance Company of
America (PLIC), in 1992, both on a coinsurance funds withheld basis. On April
1, 1993, the reinsurance agreements were amended from a coinsurance funds
withheld basis to a coinsurance nonfunds withheld basis. The following table
summarizes the amounts reflected in the statements of operations from these
reinsurance agreements:

<TABLE>
<CAPTION>
EXPENSE (REVENUE)
FOR THE YEAR
ENDED DECEMBER 31
------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Premium income assumed............................... $(46,442) $(49,974)
Life, accident and health and other benefit assumed.. 32,957 32,048
Commissions and expense allowances on reinsurance
assumed............................................. 9,143 11,547
Change in policy reserves assumed.................... 2,788 3,983
Other income assumed................................. (167) (165)
</TABLE>

18
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Other Agreements and Transactions with Related Parties

PLH has entered into agreements with its affiliates whereby PLH performs ad-
ministrative services, management support services, and marketing services for
its affiliates. PLH, as compensation, receives an amount equal to the actual
cost of providing such services. This cost is allocated on a pro rata basis to
each affiliate receiving these services. Amounts received were $63,000,000 and
$70,000,000 in 1997 and 1996, respectively. Such amounts are classified as re-
ductions of general insurance and other expenses in the accompanying state-
ments of operations.

PLH entered into a revolving credit note with Commonwealth on April 8, 1996,
whereby PLH can borrow from Commonwealth up to $35,000,000. Interest is com-
puted monthly at a rate designated in the note. At December 31, 1997 and 1996,
there was no outstanding balance. During 1997, PLH paid $24,000 in interest
expense related to this note. No such interest expense was incurred or paid
during 1996.

PLH participates in various benefit plans sponsored by Commonwealth and the
related costs allocated to PLH are not significant.

PLH has 2,290,000 shares of redeemable preferred stock outstanding, all of
which are owned by CLLP. The preferred stock has a par value of $11 per share
and a liquidation value of $240 per share. CLLP is entitled to receive a cumu-
lative dividend equal to 8 1/2 percent per annum of the liquidation value of
the preferred stock. PLH may redeem all or any portion of the preferred stock
at the liquidation value commencing December 18, 2008.

During 1997, PLH paid ordinary cash dividends of $35,154,000 and paid an ex-
traordinary cash dividend of $84,846,000 ($46,716,000 to CLLP and $73,284,000
to its common stock shareholders). During 1996, PLH paid ordinary cash divi-
dends of $53,871,000 ($46,716,000 to CLLP and $7,155,000 to its common stock
shareholders). Also during 1996, PLH paid an extraordinary cash dividend of
$71,129,000 to its common stock shareholders.

On December 23, 1996, PLH made a capital contribution of its home office
data center with a book value of $4,657,000 to VLIC.

Commonwealth provides general management, advisory, legal and other general
services to PLH. Diversified Financial Products, Inc., (DFP), formerly
Providian Capital Management, Inc., an affiliate, provides investment manage-
ment services to PLH along with marketing and administrative services for
PLH's accumulation business.

6. REINSURANCE

Certain premiums and benefits are assumed from and ceded to nonaffiliated
insurance companies under various reinsurance agreements. The ceded reinsur-
ance agreements provide PLH with increased capacity to write larger risks and
maintain its exposure to loss within its capital resources.

19
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

PLH's assumed and ceded reinsurance agreements with affiliated and
nonaffiliated insurance companies reduced (increased) certain items in the ac-
companying financial statements by the following amounts:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
ASSUMED:
Policy and contract liabilities*...................... $3,006,401 $3,040,667
Claim reserves*....................................... 14,169 13,796
Advance premiums*..................................... 908 928
Unearned premium reserves*............................ 6,697 7,273
CEDED:
Benefits paid or provided............................. 743 1,512
Commissions and expense allowances on reinsurance
ceded................................................ (2,323) (1,123)
Other income-reserves on ceded business............... 17 39
Policy and contract liabilities*...................... 1,408 1,412
Claim reserves*....................................... 682 392
Advance premiums*..................................... 9 10
Unearned premium reserves*............................ 43 35
</TABLE>
- --------
* At year end.

For all long-duration contracts, the effect of reinsurance on life and annu-
ity premiums earned in 1997 and 1996 was as follows:

<TABLE>
<CAPTION>
1997 1996
PREMIUMS PREMIUMS
EARNED EARNED
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Direct................................................. $168,988 $162,087
Assumed................................................ 238,181 180,812
Ceded.................................................. (608) 187
-------- --------
Net.................................................... $406,561 $343,086
======== ========
</TABLE>

For all short-duration contracts, the effect of all reinsurance agreements
on accident and health premiums written and earned in 1997 and 1996 was as
follows:

<TABLE>
<CAPTION>
1997 PREMIUMS 1996 PREMIUMS
------------------ ------------------
WRITTEN EARNED WRITTEN EARNED
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Direct.................................. $ 84,959 $ 84,959 $ 92,721 $ 92,721
Assumed................................. 61,427 61,427 63,960 63,960
Ceded................................... (1,673) (1,673) (1,688) (1,688)
-------- -------- -------- --------
Net..................................... $144,713 $144,713 $154,993 $154,993
======== ======== ======== ========
</TABLE>

Amounts payable or recoverable for reinsurance on paid or unpaid life and
health claims are not subject to periodic or maximum limits. At December 31,
1997, PLH reinsurance recoverables are not material and no individual rein-
surer owed PLH an amount equal to or greater than 3% of PLH's surplus.

PLH remains obligated for amounts ceded in the event that the reinsurers do
not meet their obligations.

20
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

7. LIFE AND ANNUITY RESERVES AND DEPOSIT FUND LIABILITIES

The withdrawal provisions of PLH's annuity reserves and deposit fund liabil-
ities at December 31, 1997 are summarized as follows:

<TABLE>
<CAPTION>
AMOUNT PERCENT
---------- -------
(IN THOUSANDS)
<S> <C> <C>
Subject to discretionary
withdrawal (with
adjustment):
With market value
adjustment............. $1,360,368 15.0%
At book value less
surrender charge....... 385,683 4.2%
At market value......... 3,519,863 38.7%
---------- -----
5,265,914 57.9%
Subject to discretionary
withdrawal (without
adjustment)
at book value with
minimal or no charge or
adjustment............... 1,691,979 18.6%
Not subject to
discretionary withdrawal. 2,134,391 23.5%
---------- -----
Total annuity reserves and
deposit fund liabilities
before reinsurance....... 9,092,284 100.0%
=====
Less reinsurance.......... --
----------
Net annuity reserves and
deposit fund
liabilities*............. $9,092,284
==========
</TABLE>
- --------
* Includes $3,521,516,000 of annuities reported in PLH's separate account li-
abilities. The remaining balance, $5,570,768,000 is included in aggregate
policy reserves and policyholder contract deposits in the accompanying bal-
ance sheet.

The above amount subject to discretionary withdrawal with market value ad-
justment includes approximately $862,931,000 at December 31, 1997 of floating
rate GIC liabilities with credited rates that vary in response to changes in
stipulated indexes and which self-adjust in response to market changes making
their market value and book value essentially equal.

As of December 31, 1997, PLH had $114,171,000 of insurance in force, and re-
lated policy reserves of $559,000, for which the gross premiums were less than
the net premiums according to the standard of valuation set by the state of
Missouri.

8. SEPARATE ACCOUNTS

Separate accounts held by PLH represent funds held for individual policy-
holders. The separate accounts do not have any minimum guarantees and the in-
vestment risks associated with market value changes are borne entirely by the
policyholder. The assets in the separate accounts, carried at estimated fair
value, consist of common stocks, mortgage loans, long-term bonds and cash.
During 1997, PLH made a capital contribution of $26,362,000 to the separate
accounts. At December 31, 1997, the fair value of this capital contribution
was $28,748,000 which is included in the separate account assets but is ex-
cluded from the corresponding liabilities. No such capital contributions were
made during 1996.

21
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Information regarding the separate accounts of PLH as of and for the year
ended December 31, 1997 is as follows:

<TABLE>
<CAPTION>
NONINDEXED
GUARANTEED NON-
MORE THAN 4% GUARANTEED TOTAL
------------ ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Premiums, deposits and other
considerations......................... $ 3,481 $ 781,075 $ 784,556
======== ========== ==========
Separate account liabilities*........... $166,241 $3,376,067 $3,542,308
======== ========== ==========
Reserves for separate accounts by
withdrawal characteristics:
Subject to discretionary withdrawal
(with adjustment):
With market value adjustment........ $166,241 $ -- $ 166,241
At market value..................... -- 3,376,067 3,376,067
-------- ---------- ----------
Total separate account liabilities...... $166,241 $3,376,067 $3,542,308
======== ========== ==========
</TABLE>
- --------
* Separate account liabilities are exclusive of $1,996,000 which represents
amounts due to the general account net of other amounts payable as of De-
cember 31, 1997.

A reconciliation of the amounts transferred to and from PLH's separate ac-
counts for the year ended December 31, 1997 is presented below (in thousands):

<TABLE>
<S> <C>
Transfers as reported in the Summary of Operations of
PLH's Separate Accounts Annual Statement:
Transfers to separate accounts................................ $784,931
Transfers from separate accounts.............................. (189,627)
--------
Net transfers to separate accounts.............................. 595,304
--------
Reconciling adjustments:
Fees paid to external fund manager............................ 2,311
Transfers to modified separate account........................ 2,018
--------
4,329
--------
Transfers as reported in the Summary of Operations
of PLH's Life, Accident & Health Annual Statement.............. $599,633
========
</TABLE>

9. DEFERRED AND UNCOLLECTED PREMIUMS

Deferred and uncollected accident and health and life insurance premiums and
annuity considerations as of December 31, 1997 were as follows:

<TABLE>
<CAPTION>
NET OF
TYPE GROSS LOADING LOADING
---- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Ordinary new...................................... $ 2,975 $ 2,161 $ 814
Ordinary renewal.................................. 18,330 5,589 12,741
------- ------- -------
Total ordinary.................................... 21,305 7,750 13,555
------- ------- -------
Group new business................................ 2,399 1,440 959
Group renewal..................................... 39,231 10,013 29,218
------- ------- -------
Total group....................................... 41,630 11,453 30,177
------- ------- -------
Total Life and annuity............................ 62,935 19,203 43,732
Accident and health............................... 2,696 -- 2,696
------- ------- -------
Total............................................. $65,631 $19,203 $46,428
======= ======= =======
</TABLE>

22
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

10. CAPITAL AND SURPLUS AND STATUTORY RESTRICTIONS ON DIVIDENDS

Life/Health insurance companies are subject to certain Risk-Based Capital
(RBC) requirements as specified by the NAIC. Under those requirements, the
amount of capital and surplus maintained by a life/health insurance company is
to be determined based on the various risk factors related to it. At December
31, 1997, PLH meets the RBC requirements.

PLH is subject to limitations, imposed by the state of Missouri, on the pay-
ment of dividends to its parent company. Generally, dividends during any year
may not be paid, without prior regulatory approval, in excess of the greater
of (1) 10 percent of PLH's statutory capital and surplus as of the preceding
December 31, or (2) PLH's statutory net income for the preceding year. Subject
to availability of unassigned surplus at the time of such dividend, the maxi-
mum payment which may be made in 1998, without prior regulatory approval, is
$105,866,000.

11. CONTINGENCIES

In the ordinary course of business, PLH is a defendant in litigation princi-
pally involving insurance policy claims for damages, including compensatory
and punitive damages. In the opinion of management, the outcome of such liti-
gation will not result in a loss which would be material to PLH's financial
position or results of operations.

12. FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by PLH in estimating fair
value disclosures for financial instruments in the accompanying financial
statements and notes thereto:

Bonds, Preferred Stocks and Common Stocks

The fair values of bonds, preferred stocks and common stocks are gener-
ally based on published quotations of the SVO of the NAIC. However, for
certain investments, the SVO does not provide a value and PLH uses either
admitted asset investment amounts (i.e., statement values) as allowed by
the NAIC, values provided by outside broker confirmations or internally
calculated estimates. The fair values of PLH's investments in bonds, pre-
ferred stocks and common stocks are disclosed in Note 2.

Mortgage Loans

The fair values of commercial, residential and farm mortgage loans are
estimated utilizing discounted cash flow calculations, using current market
interest rates for loans with similar terms to borrowers of similar credit
quality.

Policy Loans

The carrying values of policy loans reported in the accompanying balance
sheets approximate their fair values.

Cash, Short-Term Investments, Other Invested Assets and Deferred and
Uncollected Premiums

The carrying values of cash, short-term investments, other invested as-
sets and deferred and uncollected premiums reported in the accompanying
balance sheets approximate their fair values.

Investment Contracts

The fair values of floating rate guaranteed investment contracts approxi-
mate their carrying values. The fair values of fixed rate guaranteed in-
vestment contracts and investmenttype fixed annuity contracts are

23
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

estimated using discounted cash flow calculations, based on current inter-
est rates for similar contracts. The fair values of variable annuity con-
tracts are equal to their carrying values.

Derivative Financial Instruments

The fair values for derivative financial instruments are based on pricing
models or formulas using current assumptions.

The carrying values and fair values of PLH's investments in commercial, res-
idential and farm mortgage loans are summarized as follows:

<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
DECEMBER 31, 1997
Commercial mortgages................................ $1,376,289 $1,423,046
Residential mortgages............................... 797,525 806,891
Farm mortgages...................................... 95,693 99,515
---------- ----------
$2,269,507 $2,329,452
========== ==========
DECEMBER 31, 1996
Commercial mortgages................................ $1,565,534 $1,584,662
Residential mortgages............................... 1,035,648 1,043,983
Farm mortgages...................................... 50,429 49,055
---------- ----------
$2,651,611 $2,677,700
========== ==========
</TABLE>

The carrying values and fair values of PLH's interest rate swap and forward-
rate agreements are summarized as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
-------- -------
(IN THOUSANDS)
<S> <C> <C>
DECEMBER 31, 1997
Interest rate swaps...................................... $ -- $18,417
Forwards................................................. 1,927 1,927
------ -------
$1,927 $20,344
====== =======
DECEMBER 31, 1996
Interest rate swaps...................................... $ -- $21,178
Forwards................................................. 210 210
------ -------
$ 210 $21,388
====== =======
</TABLE>

24
<PAGE>

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The carrying values and fair values of PLH's liabilities for investment-type
contracts are summarized as follows:

<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
DECEMBER 31, 1997
Fixed annuity contracts........................... $2,922,910 $2,968,539
Guaranteed investment contracts................... 1,770,902 1,781,897
Variable annuity contracts *...................... 3,542,308 3,542,308
---------- ----------
$8,236,120 $8,292,744
========== ==========
DECEMBER 31, 1996
Fixed annuity contracts........................... $3,050,018 $3,097,631
Guaranteed investment contracts................... 1,961,549 2,034,047
Variable annuity contracts *...................... 2,430,508 2,430,508
---------- ----------
$7,442,075 $7,562,186
========== ==========
</TABLE>
- --------
*Included in PLH's separate account liabilities.

The fair values for PLH's insurance contracts other than investment con-
tracts are not required to be disclosed. However, the fair values of liabili-
ties under all insurance contracts are taken into consideration in PLH's over-
all management of interest rate risk, such that PLH's exposure to changing in-
terest rates is minimized through the matching of investment maturities with
amounts due under insurance contracts.

13. YEAR 2000 (UNAUDITED)

Commonwealth's parent has adopted and has in place a Year 2000 Assessment
and Planning Project (the Project) to review and analyze its information tech-
nology and systems to determine if they are Year 2000 compatible. Commonwealth
and PLH have begun to convert or modify, where necessary, critical data
processing systems. It is contemplated that the Project will be substantially
completed by early 1999. Commonwealth and PLH do not expect this Project to
have a significant effect on operations. However, to mitigate the effect of
outside influences upon the success of the Project, Commonwealth and PLH have
undertaken communications with their significant customers, suppliers and
other third parties to determine their Year 2000 compatibility and readiness.
Management believes that the issues associated with the Year 2000 will be re-
solved with no material financial impact on Commonwealth and PLH.

Since the Year 2000 computer problem, and its resolution, is complex and
multifaceted, the success of a response plan cannot be conclusively known un-
til the Year 2000 is reached (or an earlier date to the extent that systems or
equipment addresses Year 2000 date data prior to the Year 2000). Even with ap-
propriate and diligent pursuit of a well-conceived project, including testing
procedures, there is no certainty that any company will achieve complete suc-
cess. Notwithstanding the efforts or results of Commonwealth and PLH, their
ability to function unaffected to and through the Year 2000 may be adversely
affected by actions (or failure to act) of third parties beyond their knowl-
edge or control.

25
<PAGE>

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Part A. None
Part B. All financial statements required to be filed are included in
Part B.
Part C. None
(b) Exhibits.

(1) Resolution of the Board of Directors of National Home Life Assurance
Company ("National Home") authorizing establishment of the
Separate Account./1/
(2) Not Applicable.
(3) Distribution Agreement.
(a) Form of Selling Agreement./5/
(4) (a) Form of variable annuity contract (A Unit)./6/
(b) Form of variable annuity contract (B Unit)./6/
(c) Form of variable annuity contract (Advisor's Edge Select)/14/
(5) (a) Form of Application./7/
(b) 403(b) Rider./5/
(c) Individual Retirement Annuity Rider./5/

(6) (a) Articles of Incorporation of National Home./1/
(b) Amendment to Articles of Incorporation of National Home./1/
(c) Amended and Restated Articles of Incorporation of National
Home./1/
(d) Amended and Restated Articles of Incorporation of Providian
Life and Health Insurance Company./11/
(7) Not Applicable.
(8) (a) Form of Participation Agreement for the Funds./6/
(b) Participation Agreement Among DFA Investment Dimensions Group,
Inc., Dimensional Fund Advisors, Inc., DFA Securities Inc. and
National Home Life Assurance Company dated as of June 29,
1994./8/
(c) Participation Agreement Among Insurance Management Series,
Federated Advisors, Federated Securities Corp. and National
Home Life Assurance Company dated as of May 17, 1994./8/
(d) Participation Agreement Among Insurance Investment Products
Trust, SEI Financial Services Company and National Home Life
Assurance Company dated as of January 1, 1995./10/
(e) Participation Agreement Among Wanger Advisors Trust and
National Home Life Assurance Company dated as of May 19, 1995.
/10/
(f) Participation Agreement Among Tomorrow Funds Retirement Trust,
Weiss, Peck & Greer, L.L.C. and Providian Life and Health
Insurance Company dated as of September 11, 1995./10/
(g) Participation Agreement among Montgomery Funds III, Montgomery
Asset Management, L.P., and Providian Life and Health Insurance
Company dated as of January 31, 1996./11/
(h) Participation Agreement Among Strong Variable Insurance Funds,
Inc.; Strong Capital Management, Inc.; Strong Funds
Distributors, Inc. and Providian Life and Health Insurance
Company dated March 31, 1997./12/
(i) Participation Agreement Among Warburg, Pincus Trust; Warburg,
Pincus Counsellors, Inc.; Counsellors Securities Inc. and
Providian Life and Health Insurance Company dated March 31,
1997./12/
(j) Amendment No. 1 dated December 16, 1996 to Participation
Agreement Among Wanger Advisors Trust and Providian Life and
Health Insurance Company dated May 19, 1995./12/
(k) Participation Agreement Among SteinRoe Variable Investment
Trust, SteinRoe & Farnham Incorporated and Providian Life and
Health Insurance Company dated March 31, 1997./12/
(l) Participation Agreement Among Providian Life and Health
Insurance Company, Providian Series Trust, and Providian
Investment Advisors, Inc. dated March 25, 1997./12/

(m) Participation Agreement Among Endeavor Series Trust, Endeavor
Management Co. and PFL Life Insurance Company dated February
28, 1991, as amended./13/
<PAGE>
(9) (a) Opinion and Consent of Counsel./13/
(b) Consent of Counsel./13/

- -----------
/1/ Incorporated by reference from the initial Registration Statement of
National Home Life Assurance Company Separate Account V, File No. 33-45862.

/2/ Incorporated by reference from the initial Registration Statement of
National Home Life Assurance Company Separate Account II, File No. 33-7033.

/3/ Incorporated by reference from Post-Effective Amendment No. 3 to the
Registration Statement of National Home Life Assurance Company Separate
Account II, File No. 33-7033.

/4/ Incorporated by reference from Post-Effective Amendment No. 5 to the
Registration Statement of National Home Life Assurance Company Separate
Account II, File No. 33-7033.

/5/ Incorporated by reference from Pre-Effective Amendment No. 1 to the
Registration Statement of National Home Life Assurance Company Separate
Account V, File No. 33-45862.

/6/ Incorporated by reference from the Registration Statement of National
Home Life Assurance Company Separate Account V, File No. 33-72838, filed on
December 10, 1993.

/7/ Incorporated by reference from the Registration Statement of National
Home Life Assurance Company Separate Account V, File No. 33-79502, filed on
May 27, 1994.

/8/ Incorporated by reference from the Post-Effective Amendment No. 1 to the
Registration Statement of National Home Life Assurance Company Separate
Account V, File No. 33-80958, filed April 28, 1995.

/9/ Incorporated by reference from Post-Effective Amendment No. 2 to the
Registration Statement of National Home Life Assurance Company Separate
Account V, File No. 33-80958, Filed September 19, 1995.

/10/ Incorporated by reference from Post-Effective Amendment No. 3 to the
Registration Statement of National Home Life Assurance Company Separate
Account V, File No. 33-80958.

/11/ Incorporated by reference from Post-Effective Amendment No. 4 to the
Registration Statement of Providian Life and Health Insurance Company
Separate Account V, File No. 33-80958.

/12/ Incorporated by reference from Post-Effective Amendment No. 7 to the
Registration Statement of Providian Life and Health Insurance Company
Separate Account V, File No. 33-80958.

/13/ Filed herewith.
<PAGE>

(10) Consent of Independent Auditors./13/
(11) No Financial Statements are omitted from Item 23.
(12) Not Applicable.
(13) Performance Computation./12/
(14) Not Applicable.

<PAGE>

Item 25. Directors and Officers of Depositor

Positions and Offices with Depositor Name and Principal Business Address*
- ------------------------------------ ------------------------------------

President Bart Herbert, Jr.
Senior Vice President Edward A. Biemer
Senior Vice President Thomas P. Bowie
Senior Vice President G. Douglas Mangum, Jr.
Executive Vice President William L. Busler
Treasurer Martha A. McConnell
Vice President Brian Alford
Vice President & Assistant Treasurer Nathan C. Anguiano
Vice President & Division General Counsel Frank A. Camp
Vice President Brenda K. Clancy
Vice President Michele M. Coan
Vice President Jane A. Coyne
Vice President Karen H. Fleming
Vice President Carolyn M. Johnson
Vice President Michael F. Lane
Vice President, Secretary and
Associate General Counsel Susan E. Martin
Vice President John A. Mazzuca
Vice President Daniel C. Mohwinkel
Vice President Thomas B. Nesspor
Vice President Maureen E. Nielsen
Vice President Larry N. Norman
Vice President G. Eric O'Brien
Vice President Daniel H. Odum
Vice President and Actuary John C. Prestwood, Jr.
Vice President Frank J. Rosa
Vice President Douglas A. Sarcia
Vice President Gary H. Scott
Vice President Brian A. Smith
Vice President Colleen M. Tobiason
Vice President William A. Waldie, Jr.
Vice President Michael A. Wapp
Vice President and Actuary Ronald L. Ziegler
Assistant Vice President Janice Boehmler
Assistant Vice President & Qualified
Actuary Michael A. Cioffi
Assistant Vice President Kimberly A. Cushing
Assistant Vice President Mary Ellen Fahringer
Assistant Vice President JoAnn Herndon
Assistant Vice President Patricia A. Lukacs
Assistant Vice President William R. Maurer

1
<PAGE>

Assistant Vice President Robert E. Payne
Assistant Vice President Teresa L. Stolba
Assistant Vice President Harvey Waite
Assistant Treasurer Cliford W. Flenniken
Assistant Treasurer William C. White, IV
Assistant Controller Paul J. Lukacs
Assistant Controller Joseph C. Noone
Second Vice President Amy E. Anders
Second Vice President George E. Claiborne, Jr.
Second Vice President Cindy L. Chanley
Second Vice President Marvin A. Johnson
Second Vice President Anne M. Spaes
Second Vice President/Investments David L. Blankenship
Second Vice President/Investments C. Ray Brewer
Second Vice President/Investments Kirk W. Buese
Second Vice President/Investments Joel L. Coleman
Second Vice President/Investments William S. Cook
Second Vice President/Investments Deborah A. Dias
Second Vice President/Investments Lee W. Eastland
Second Vice President/Investments Donald E. Flynn
Second Vice President/Investments Eric B. Goodman
Second Vice President/Investments M. Josette Goulet
Second Vice President/Investments James Grant
Second Vice President/Investments David R. Halfpap
Second Vice President/Investments Robert L. Hansen
Second Vice President/Investments Donna L. Heitzman
Second Vice President/Investments David W. Hopewell
Second Vice President/Investments Frederick B. Howard
Second Vice President/Investments Claudia Jackson
Second Vice President/Investments Jon D. Kettering
Second Vice President/Investments Tim Kuussalo
Second Vice President/Investments James D. MacKinnon
Second Vice President/Investments Kathleen B. Madden
Second Vice President/Investments Jeffrey T. McGlaun
Second Vice President/Investments Paul D. Mier
Second Vice President/Investments Thomas L. Nordstrom
Second Vice President/Investments Ralph M. O'Brien
Second Vice President/Investments Douglas H. Owen, Jr.
Second Vice President/Investments Dennis Roland
Second Vice President/Investments James D. Ross
Second Vice President/Investments J. Alan Schork
Second Vice President/Investments Lindsay Schumacher
Second Vice President/Investments Michael B. Schaffer
Second Vice President/Investments Clifford Sheets

2
<PAGE>

Second Vice President/Investments Michael B. Simpson
Second Vice President/Investments Jon L. Skaggs
Second Vice President/Investments Elizabeth A. Smedley
Second Vice President/Investments Michael S. Smith
Second Vice President/Investments Anne M. Spaes
Second Vice President/Investments Donna J. Spalding
Second Vice President/Investments Robert T. Stanley
Second Vice President/Investments Bradley L. Stofferahn
Second Vice President/Investments Randall K. Waddell
Second Vice President/Investments Marcia Weiland
Second Vice President/Investments Tammy C. Wetterer
Second Vice President/Special Markets Kim A. Bivins
Second Vice President/Special Markets Gregory Lee Chapman
Second Vice President/Special Markets Gregory M. Curry
Second Vice President/Special Markets Lisa L. Patterson
Second Vice President/Special Markets Rhonda L. Pritchett
Second Vice President/Special Markets Thomas E. Walsh
Second Vice President/Special Markets Harvey Willis
Second Vice President/Special Markets Edward P. Reiter
Secretary
Assistant Secretary L. Jude Clark
Assistant Secretary Colleen S. Lyons
Assistant Secretary Mary Ann Malinyak
Assistant Secretary John F. Reesor
Assistant Secretary Mary L. Schaefer
Assistant Secretary Kimberly A. Scouller
Assistant Secretary R. Michael Slaven
Assistant Secretary Craig D. Vermie
Assistant Secretary Carolyn Wetterer
Advertising Compliance Officer Nancy E. Partington
Product Compliance Officer James T. Bradley

DIRECTORS:
- ---------

Jay H. Berman John C. Prestwood, Jr.
Bart Herbert, Jr. Douglas A. Sarcia
G. Douglas Mangum, Jr. Brian A. Smith
Susan E. Martin Craig D. Vermie
Thomas B. Nesspor

*The business address of each director and officer of Providian Life and Health
Insurance Company is 20 Moores Road, Frazer, Pennsylvania 19355; 400 West Market
Street, Louisville, Kentucky 40202 or 4333 Edgewood Road NE, Cedar Rapids, Iowa
52499.

3
<PAGE>

Item 26. Persons controlled by or Under Common Control with the Depositor or
Registrant.

The Depositor, Providian Life and Health Insurance Company is directly and
indirectly wholly owned by AEGON USA, INC., which is indirectly wholly owned by
AEGON n.v. The Registrant is a segregated asset account of Providian Life and
Health Insurance Company.

The following chart indicates the persons controlled by or under common
control with Providian Life and Health Insurance Company:
<PAGE>

Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- --------------- ----------------- --------
<S> <C> <C> <C>

AEGON N.V. Netherlands 53.63% of Vereniging Holding company
Corporation AEGON Netherlands
Membership Association

Groninger Financieringen B.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation

AEGON Netherland N.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation

AEGON Nevak Holding B.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation

AEGON International N.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation

Voting Trust Delaware Voting Trust
Trustees:
K.J. Storm
Donald J. Shepard
H.B. Van Wijk
Dennis Hersch

AEGON U.S. Holding Delaware 100% of Voting Trust Holding company
Corporation

Short Hills Management New Jersey 100% of AEGON U.S. Holding company
Company Holding Corporation

CORPA Reinsurance New York 100% of AEGON U.S. Holding company
Company Holding Corporation

AEGON Management Indiana 100% of AEGON U.S. Holding company
Company Holding Corporation

RCC North America Inc. Delaware 100% of AEGON U.S. Holding company
Holding Corporation

AEGON USA, Inc. Iowa 100% AEGON U.S. Holding company
Holding Corporation

AUSA Holding Company Maryland 100% AEGON USA, Inc. Holding company

Monumental General Insurance Maryland 100% AUSA Holding Co. Holding company
Group, Inc.

Trip Mate Insurance Agency, Inc. Kansas 100% Monumental General Sale/admin. of travel
Insurance Group, Inc. insurance
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- ---------------- ----------------- --------
<S> <C> <C> <C>
Monumental General Maryland 100% Monumental General Provides management srvcs.
Administrators, Inc. Insurance Group, Inc. to unaffiliated third party
administrator

Executive Management and Maryland 100% Monumental General Provides actuarial consulting
Consultant Services, Inc. Administrators, Inc. services

Monumental General Mass Maryland 100% Monumental General Marketing arm for sale of
Marketing, Inc. Insurance Group, Inc. mass marketed insurance
coverages

Diversified Investment Delaware 100% AUSA Holding Co. Registered investment advisor
Advisors, Inc.

Diversified Investors Securities Delaware 100% Diversified Investment Broker-Dealer
Corp. Advisors, Inc.

AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer

Supplemental Ins. Division, Inc. Tennessee 100% AUSA Holding Co. Insurance

Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance

CRC Creditor Resources Canada 100% Creditor Resources, Inc. Insurance agency
Canadian Dealer Network Inc.

AEGON USA Investment Iowa 100% AUSA Holding Co. Investment advisor
Management, Inc.

AEGON USA Realty Iowa 100% AUSA Holding Co. Provides real estate
Advisors, Inc. administrative and real
estate investment services

Quantra Corporation Delaware 100% AEGON USA Realty Real estate and financial
Advisors, Inc. software production and sales

Quantra Software Corporation Delaware 100% Quantra Corporation Manufacture and sell
mortgage loan and security
management software

Landauer Realty Advisors, Inc. Iowa 100% AEGON USA Realty Real estate counseling
Advisors, Inc.

Landauer Associates, Inc. Delaware 100% AEGON USA Realty Real estate counseling
Advisors, Inc.

Realty Information Systems, Inc. Iowa 100% AEGON USA Realty Information Systems for
Advisors, Inc. real estate investment
management

AEGON USA Realty Iowa 100% AEGON USA Real estate management
Management, Inc Realty Advisors, Inc.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- ---------------- ----------------- --------
<S> <C> <C> <C>
USP Real Estate Investment Trust Iowa 21.89% First AUSA Life Ins. Co. Real estate investment trust
13.11% PFL Life Ins. Co.
4.86% Bankers United Life
Assurance Co.

Cedar Income Fund, Ltd. Iowa 16.73% PFL Life Ins. Co. Real estate investment trust
3.77% Bankers United Life
Assurance Company
3.38% Life Investors Co. of America
1.97% AEGON USA Realty Advisors, Inc.
.18% First AUSA Life Ins. Co.

RCC Properties Limited Iowa AEGON USA Realty Advisors, Limited Partnership
Partnership Inc. is General Partner and 5%
owner.

AUSA Financial Markets, Inc. Iowa 100% AUSA Holding Co. Marketing

Endeavor Investment Advisors California 49.9% AUSA Financial General Partnership
Markets, Inc.

Universal Benefits Corporation Iowa 100% AUSA Holding Co. Third party administrator

Investors Warranty of Iowa 100% AUSA Holding Co. Provider of automobile
America, Inc. extended maintenance
contracts

Massachusetts Fidelity Trust Co. Iowa 100% AUSA Holding Co. Trust company

Money Services, Inc. Delaware 100% AUSA Holding Co. Provides financial counseling
for employees and agents of
affiliated companies

Zahorik Company, Inc. California 100% AUSA Holding Co. Broker-Dealer

ZCI, Inc. Alabama 100% Zahorik Company, Inc. Insurance agency

AEGON Asset Management Delaware 100% AUSA Holding Co. Registered investment advisor
Services, Inc.

Intersecurities, Inc. Delaware 100% AUSA Holding Co. Broker-Dealer

ISI Insurance Agency, Inc. California 100% Intersecurities, Inc. Insurance agency

ISI Insurance Agency Ohio 100% ISI Insurance Agency, Inc. Insurance agency
of Ohio, Inc.

ISI Insurance Agency Texas 100% ISI Insurance Agency, Inc. Insurance agency
of Texas, Inc.

ISI Insurance Agency Massachusetts 100% ISI Insurance Agency, Inc. Insurance agency
of Massachusetts, Inc.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- --------------- ----------------- --------
<S> <C> <C> <C>
Associated Mariner Financial Group, Inc. Michigan 100% Intersecurities, Inc. Holding co./management services

Mariner Financial Services, Inc. Michigan 100% Associated Mariner Broker/Dealer
Financial Group, Inc.

Mariner Planning Corporation Michigan 100% Mariner Financial Financial planning
Services, Inc.

Associated Mariner Agency, Inc. Michigan 100% Associated Mariner Insurance agency
Financial Group, Inc.

Associated Mariner Agency Hawaii 100% Associated Mariner Insurance agency
of Hawaii, Inc. Agency, Inc.

Associated Mariner Ins. Agency Massachusetts 100% Associated Mariner Insurance agency
of Massachusetts, Inc. Agency, Inc.

Associated Mariner Agency Ohio, Inc. Ohio 100% Associated Mariner Insurance agency
Agency, Inc.

Associated Mariner Agency Texas, Inc. Texas 100% Associated Mariner Insurance agency
Agency, Inc.

Associated Mariner Agency New Mexico 100% Associated Mariner Insurance agency
New Mexico, Inc. Agency, Inc.

Mariner Mortgage Corp. Michigan 100% Associated Mariner Mortgage origination
Financial Group, Inc.

Idex Investor Services, Inc. Florida 100% AUSA Holding Co. Shareholder services

Idex Management, Inc. Delaware 50% AUSA Holding Co. Investment advisor
50% Janus Capital Corp.

IDEX II Series Fund Massachusetts Various Mutual fund

IDEX Fund Massachusetts Various Mutual fund

IDEX Fund 3 Massachusetts Various Mutual fund

First AUSA Life Insurance Company Maryland 100% AEGON USA, Inc. Insurance holding company

AUSA Life Insurance Company, Inc. New York 100% First AUSA Life Insurance
Insurance Company

Life Investors Insurance Company Iowa 100% First AUSA Life Ins. Co. Insurance
of America

Bankers United Life Assurance Company Iowa 100% Life Investors Inc. Insurance
Company of America
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- --------------- ----------------- --------
<S> <C> <C> <C>
Life Investors Agency Group, Inc. Iowa 100% Life Investors Ins. Marketing
Company of America

PFL Life Insurance Company Iowa 100% First AUSA Life Ins. Co. Insurance

AEGON Financial Services Group, Inc. Minnesota 100% PFL Life Insurance Co. Marketing

AEGON Assignment Corporation Kentucky 100% AEGON Financial Services Administrator of structured
Group, Inc. settlements

Southwest Equity Life Ins. Co. Arizona 100% of Common Voting Stock Insurance
First AUSA Life Ins. Co.

Iowa Fidelity Life Insurance Co. Arizona 100% of Common Voting Stock Insurance
First AUSA Life Ins. Co.

Western Reserve Life Assurance Co. Ohio 100% First AUSA Life Ins. Co. Insurance
of Ohio

WRL Series Fund, Inc. Maryland Various Mutual fund

WRL Investment Services, Inc. Florida 100% Western Reserve Life Provides administration for
Assurance Co. of Ohio affiliated mutual fund

WRL Investment Management, Inc. Florida 100% Western Reserve Life Registered investment advisor
Assurance Co. of Ohio

Monumental Life Insurance Co. Maryland 100% First AUSA Life Ins. Co. Insurance

AEGON Special Markets Group, Inc. Maryland 100% Monumental Life Ins. Co. Marketing

Monumental General Casualty Co. Maryland 100% First AUSA Life Ins. Co. Insurance

United Financial Services, Inc. Maryland 100% First AUSA Life Ins. Co. General agency

Bankers Financial Life Ins. Co. Arizona 100% First AUSA Life Ins. Co. Insurance

The Whitestone Corporation Maryland 100% First AUSA Life Ins. Co. Insurance agency

Cadet Holding Corp. Iowa 100% First AUSA Life Holding company
Insurance Company

Commonwealth General Corporation Delaware 100% AEGON USA, Inc. Holding company
("CGC")

PB Series Trust Massachusetts N/A Mutual fund

Monumental Agency Group, Inc. Kentucky 100% CGC Provider of srvcs. to ins. cos.

Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples Security Life
Insurance Company
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- --------------- ----------------- --------
<S> <C> <C> <C>
Durco Agency, Inc. Virginia 100% Benefit Plans, Inc. General agent

Commonwealth General Kentucky 100% CGC Administrator of structured
Assignment Corporation settlements

Providian Financial Services Inc. Pennsylvania 100% CGC Financial services

AFSG Securities Corporation Pennsylvania 100% CGC Broker-Dealer

PB Investment Advisors, Inc. Delaware 100% CGC Registered investment advisor

Diversified Financial Products Inc. Delaware 100% CGC Provider of investment,
marketing and admin.
services to ins. cos.

AEGON USA Real Estate Delaware 100% Diversified Financial Real estate and mortgage
Services, Inc. Products Inc. holding company

Capital Real Estate Delaware 100% CGC Furniture and equipment lessor
Development Corporation

Captial General Development Delaware 100% CGC Holding company
Corporation

Commonwealth Life Kentucky 100% Capital General Insurance company
Insurance Company Development Corporation

Agency Holding I, Inc. Delaware 100% Commonwealth Life Investment subsidiary
Insurance Company

Agency Investments I, Inc. Delaware 100% Agency Holding I, Inc. Investment subsidiary

Peoples Security Life North Carolina 100% Capital General Insurance company
Insurance Company Development Corporation

Ammest Realty Corporation Texas 100% Peoples Security Life Special purpose subsidiary
Insurance Company

Agency Holding II, Inc. Delaware 100% Peoples Security Life Investment subsidiary
Insurance Company

Agency Investments II, Inc. Delaware 100% Agency Holding II, Inc. Investment subsidiary

Agency Holding III, Inc. Delaware 100% Peoples Security Life Investment subsidiary
Insurance Company

Agency Investments III, Inc. Delaware 100% Agency Holding III, Inc. Investment subsidiary
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- --------------- ----------------- --------
<S> <C> <C> <C>
JMH Operating Company, Inc. Mississippi 100% Peoples Security Life Real estate holdings
Insurance Company

Capital Security Life Ins. Co. North Carolina 100% Capital General Insurance company
Development Corporation

Independence Automobile Florida 100% Capital Security Automobile Club
Association, Inc. Life Insurance Company

Independence Automobile Georgia 100% Capital Security Automobile Club
Club, Inc. Life Insurance Company

Capital 200 Block Corporation Delaware 100% CGC Real estate holdings

Capital Broadway Corporation Kentucky 100% CGC Real estate holdings

Southlife, Inc. Tennessee 100% CGC Investment subsidiary

Ampac Insurance Agency, Inc. Pennsylvania 100% CGC Provider of management
(EIN 23-1720755) support services

National Home Life Corporation Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.

Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Corporation Agency, Inc.

Association Consultants, Inc. Illinois 100% Ampac Insurance TPA license-holder
Agency, Inc.

Valley Forge Associates, Inc. Pennsylvania 100% Ampac Insurance Furniture & equipment lessor
Agency, Inc.

Veterans Benefits Plans, Inc. Pennsylvania 100% Ampac Insurance Administrator of group
Agency, Inc. insurance programs

Veterans Insurance Services, Inc. Delaware 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.

Financial Planning Services, Inc. Dist. Columbia 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.

Providian Auto and Home Missouri 100% CGC Insurance company
Insurance Company

Academy Insurance Group, Inc. Delaware 100% CGC Holding company
</TABLE>

<PAGE>

Jurisdication of Percent of Voting
Name Incorporation Securities Owned Business
- ---- ---------------- ----------------- --------
<S> <C> <C> <C>
Academy Life Insurance Co. Missouri 100% Academy Insurance Insurance company
Group, Inc.

Pension Life Insurance New Jersey 100% Academy Insurance Insurance company
Company of America Group, Inc.

Academy Services, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

Ammest Development Corp. Inc. Kansas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

Ammest Insurance Agency, Inc. California 100% Academy Insurance General agent
Group, Inc.

Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose subsidiary
Insurance Agency, Inc. Group, Inc.

Ammest Realty, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

Ampac, Inc. Texas 100% Academy Insurance Managing general agent
Group, Inc.

Ampac Insurance Agency, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
(EIN 23-2364438) Group, Inc.

Data/Mark Services, Inc. Delaware 100% Academy Insurance Provider of mgmt. services
Group, Inc.

Force Financial Group, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

Force Financial Services, Inc. Massachusetts 100% Force Fin. Group, Inc. Special-purpose subsidiary

Military Associates, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

NCOA Motor Club, Inc. Georgia 100% Academy Insurance Automobile club
Group, Inc.

NCOAA Management Company Texas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.

Unicom Administrative Pennsylvania 100% Academy Insurance Provider of admin. services
Services, Inc. Group, Inc.

Unicom Administrative Germany 100% Unicom Administrative Provider of admin. services
Services, GmbH Services, Inc.
</TABLE>

<PAGE>

Jurisdication of Percent of Voting
Name Incorporation Securities Owned Business
- ---- ---------------- ----------------- --------
<S> <C> <C> <C>
Providian Property and Casualty Kentucky 100% Providian Auto and Insurance company
Insurance Company Home Insurance Company

Providian Fire Insurance Co. Kentucky 100% Providian Property Insurance company
and Casualty Insurance Co.

Capital Liberty, L.P. Delaware 79.2% Commonwealth Life Holding Company
Insurance Company
19.8% Peoples Security Life
Insurance Company
1% CGC

Commonwealth General LLC Turks & 100% CGC Special-purpose subsidiary
Caicos Islands

Providian Life and Health Missouri 3.7% CGC Insurance company
Insurance Company 15.3% Peoples Security Life
Insurance Company
20% Capital Liberty, L.P.
61% Commonwealth Life
Insurance Company

Veterans Life Insurance Co. Illinois 100% Providian Life and Insurance company
Health Insurance Company

Peoples Benefit Services, Inc. Pennsylvania 100% Veterans Life Ins. Co. Special-purpose subsidiary

First Providian Life and New York 100% Veterans Life Ins. Co. Insurance Company
Health Insurance Company
</TABLE>

<PAGE>

ITEM 27. NUMBER OF CONTRACT OWNERS

As of the date of this filing, there were no Contract Owners of the Advisor's
Edge Select Variable Annuity.

ITEM 28. INDEMNIFICATION

Item 28 is incorporated by reference from the Post-Effective Amendment No. 6 to
the Registration Statement of the National Home Life Assurance Company Separate
Account II, File No. 33-7033.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) AFSG Securities Corporation ("AFSG"), which serves as the principal
underwriter for the variable annuity contracts funded by Separate
Account V, also serves as the principal underwriter for variable life
insurance policies funded by Separate Account I and Variable Annuity
contracts funded by Separate Account II of Providian Life and Health
Insurance Company. In addition, AFSG serves as principal underwriter
for variable annuity contracts funded by Separate Account C of First
Providian Life and Health Insurance Company; PFL Life Variable Annuity
Account A, PFL Endeavor VA Separate Account, PFL Wright Variable
Annuity Account and PFL Retirement Builder Variable Annuity Account of
PFL Life Insurance Company and AUSA Endeavor Variable Annuity Account
of AUSA Life Insurance Company, Inc.

(b) Directors and Officers

<TABLE>
<CAPTION>
Positions and Officers
Name with Underwriter
---- ----------------------
<S> <C>
Larry N. Norman President and Director
Lisa A. Wachendorf Vice President and Chief Compliance Officer
Michael F. Lane Vice President
Frank A. Camp Secretary and Director
Sarah J. Strange Vice President and Director
Linda Gilmer Treasurer/Controller
Colleen S. Lyons Assistant Secretary
John F. Reesor Assistant Secretary
Debra C. Cubero Vice President
Anne M. Spaes Vice President
Kori D. Cusick Assistant Compliance Officer
Robert W. Warner Assistant Compliance Officer
Emily Bates Assistant Treasurer
William C. White Assistant Treasurer
Clifton W. Flenniken Assistant Treasurer
</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

The books, accounts and other documents required by Section 31(a) under the
Investment Company Act and the rules promulgated thereunder will be maintained
in the Administrative Offices of Providian Life and Health in Louisville,
Kentucky.

ITEM 31. MANAGEMENT SERVICES

All management contracts are discussed in Part A or Part B.

<PAGE>

ITEM 32. UNDERTAKINGS.

(a) Providian Life and Health Insurance Company represents that the fees
and charges deducted under the contracts in this registration statement, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred and the risks assumed by Providian Life and Health
Insurance Company.
<PAGE>

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Providian Life and Health Insurance Company Separate
Account V, certifies that it meets the requirements of Securities Act Rule
485(a) for effectiveness of this amended Registration Statement and has caused
this amended Registration Statement to be signed on its behalf in the County of
Jefferson and Commonwealth of Kentucky on the 3rd day of June, 1998.

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
SEPARATE ACCOUNT V (REGISTRANT)

By: Providian Life and Health Insurance Company

By: /s/ BART HERBERT, JR.*
-------------------------------------------
Bart Herbert, Jr., President

PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
(DEPOSITOR)

By: /s/ BART HERBERT, JR.*
-------------------------------------------
Bart Herbert, Jr., President

*By: /s/ R. Michael Slaven
------------------------
R. Michael Slaven
Attorney-in-fact
<PAGE>

As required by the Securities Act of 1933, this amended Registration
Statement has been duly signed by the following persons in the capacities and on
the dates indicated.

Signature Title Date
--------- ----- ----
<S> <C> <C>

/s/ JAY H. BERMAN* Director June 3, 1998
- ---------------------------
Jay H. Berman

/s/ G. DOUGLAS MANGUM, JR.* Senior Vice President June 3, 1998
- ---------------------------
G. Douglas Mangum, Jr.

/s/ MARTHA A. McCONNELL* Treasurer (Chief Accounting Officer) June 3, 1998
- ---------------------------
Martha A. McConnell

/s/ DOUGLAS A. SARCIA* Director and Vice President June 3, 1998
- ---------------------------
Douglas A. Sarcia

/s/ THOMAS B. NESSPOR* Director and Vice President June 3, 1998
- ---------------------------
Thomas B. Nesspor

/s/ BRIAN A. SMITH* Director and Senior Vice President June 3, 1998
- ---------------------------
Brian A. Smith

/s/ SUSAN E. MARTIN* Director, Vice President, Secretary June 3, 1998
- --------------------------- and Associate General Counsel
Susan E. Martin

/s/ BART HERBERT, JR.* Director and President June 3, 1998
- ---------------------------
Bart Herbert, Jr.

/s/ JOHN C. PRESTWOOD, JR.* Director, Vice President and Actuary June 3, 1998
- ---------------------------
John C. Prestwood, Jr.

/s/ CRAIG D. VERMIE* Director June 3, 1998
- ---------------------------
Craig D. Vermie

*By: /s/ R. Michael Slaven
----------------------
R. Michael Slaven
Attorney-in-fact
</TABLE>

<PAGE>

SEPARATE ACCOUNT V
ADVISOR'S EDGE SELECT VARIABLE ANNUITY

<TABLE>
<CAPTION>
<S> <C>
EXHIBIT 4(c) FORM OF VARIABLE ANNUITY CONTRACT (ADVISOR'S EDGE SELECT).

EXHIBIT 9(a) OPINION AND CONSENT OF COUNSEL

EXHIBIT 9(b) CONSENT OF COUNSEL

EXHIBIT 10 CONSENT OF INDEPENDENT AUDITORS
</TABLE>

<PAGE>

A MISSOURI STOCK COMPANY . HOME OFFICE; JEFFERSON CITY, MISSOURI 65101
ADMINISTRATIVE OFFICE: 4333 EDGEWOOD ROAD N.E., CEDAR RAPIDS, IOWA 52499
1-800-866-6007

We, Providian Life and Health Insurance Company, have issued this Contract on
the life of the Annuitant in consideration of Our receipt of Your Initial
Purchase Payment.

This plan provides a monthly Annuity Payment for the life of the Annuitant.
Payments start on the Annuity Date.

Benefits under this Contract when based on the investment experience of a
separate account are variable and are not guaranteed as to amount.

FREE LOOK PERIOD - RIGHT TO CANCEL CONTRACT

If for any reason You are not satisfied with this Contract, You may return it to
Us within 10 days (20 days if this Contract is replacing a previously existing
life insurance or annuity contract) of the date You received it. You may return
it by delivering or mailing it to Our Administrative Office, 4333 Edgewood Road
N.E., Cedar Rapids, IA 52499, or to the agent from whom You purchased this
Contract. If returned, the Contract shall be void from the Contract Date. We
will return the Accumulated Value of Your Contract, as of the date We receive
it, plus any loads, fees, and/or Premium Taxes that may have been subtracted
from Your Purchase Payment(s).

This is a legal contract between You and Us. READ THE CONTRACT CAREFULLY.

Signed for the Company by its President and Secretary.

Bart Herbert, Jr. Susan E. Martin
President Secretary

Flexible Premium Multi-Funded Variable Deferred Annuity Contract

The Details Of The Variable Provision Begin On Page 8

Nonparticipating

[THE GUARANTEED EQUITY FIXED ACCOUNT OPTION DOES NOT PROVIDE CASH SURRENDER
VALUES PRIOR TO THE END OF THE GUARANTEED PERIOD] (appears only in states where
Guaranteed Equity Option is allowed)

1
<PAGE>

TABLE OF CONTENTS
Index
Page No.

Right to Cancel Contract........................................................
Contract Schedule Page..........................................................
Definitions.....................................................................
The Separate Account............................................................
Accumulated Value
Exchanges
Dollar Cost Averaging......................................................
Asset Rebalancing..........................................................
Withdrawals
Partial or Full Withdrawals................................................
Systematic Withdrawal Option...............................................
Death Benefit...................................................................
Ownership, Assignment and Beneficiary...........................................
Death of Annuitant..............................................................
Death of Annuitant's Beneficiary................................................
Death of Owner..................................................................
General Provisions..............................................................
Annuity Payment Options.........................................................
Annuity Tables..................................................................

2
<PAGE>

Contract Schedule Page

Please address all correspondence to the address listed below. Include the
Contract number on all correspondence in order to facilitate the processing of
the request.

Providian Life and Health Insurance Company
Administrative Office
4333 Edgewood Road N.E.
Cedar Rapids, IA 52499

Contract Schedule:

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Contract Owner: xxxxxxxxxxxxxxxx Contract Number: xxxxxxxxxxx
Joint Owner: yyyyyyyyyyyyyyyy Contract Date: yyyyyyyyyyy
Annuitant: zzzzzzzzzzzzzzzz Annuity Date: zzzzzzzzzzz
Annuitant's Beneficiary: @@@@@@@@@@@@@@@@ Initial Purchase Payment: @@@@@@@@@@@
Death Benefit: 6 Year Step-up
</TABLE>

Each Subaccount of the Providian Life and Health Insurance Company Separate
Account V offered in this Contract invests in a corresponding Portfolio of the
Providian Life and Health Advisor's Edge Select Fund(s). These Portfolios are
listed below. The allocation of the Initial Purchase Payment that You chose is
also shown below.

Separate Account Allocations

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Dreyfus Small Cap Value Portfolio % Enhanced Index managed by J.P. Morgan %
Federated American Leaders Portfolio % Federated Utility Portfolio %
Federated Prime Money Portfolio % Federated High Income Bond Portfolio %
Federated Fund for U.S. Government % Montgomery Growth Portfolio %
Securities Portfolio
Montgomery Emerging Markets Portfolio % SteinRoe Special Venture Portfolio %
Strong International Stock Portfolio % Strong Schafer Value Portfolio %
Wanger U.S. Small Cap Advisor Portfolio % Wanger International Small Cap Portfolio %
Warburg Pincus International Equity Portfolio % Warburg Pincus Small Company Growth Portfolio %
T Rowe Price International Stock Portfolio %
</TABLE>

Fixed Account Allocations:
One-Year Guaranteed Rate Option
Multi-Year Guaranteed Rate Option
Guaranteed Equity Option
Dollar Cost Averaging Option

Contract Charges:

. Daily Administrative Charge corresponding to an annual charge of .15% of the
value of the Subaccounts.

. Daily Mortality and Expense Risk Charge corresponding to an annual charge of
1.35% of the value of the Subaccounts.

We have the right to charge a fee of $15 for each Exchange after the first 12
Exchanges made in any Contract Year. All Exchanges made simultaneously will be
treated as a single request.

3
<PAGE>

Definitions

Whenever used in this Contract, the following shall mean:

Accumulated Value
The value of all amounts accumulated under the Contract prior to the Annuity
Date.

Adjusted Death Benefit

The Adjusted Death Benefit during the first six Contract Years will be equal to
the sum of all Net Purchase Payments made less any partial withdrawals. During
each subsequent six-year period beginning before age 81, the Adjusted Death
Benefit will be equal to the Death Benefit on the last day of the previous six-
year period, plus any Net Purchase Payments made, less any partial withdrawals
taken during the current six-year period. For any six-year period after the one
in which the Annuitant attains age 81, the Adjusted Death Benefit will be equal
to the Death Benefit on the last day of the six-year period before age 81
occurs, plus any Net Purchase Payments subsequently made, less any partial
withdrawals subsequently taken.

Administrative Charge
A daily charge to the Contract to cover issuance and maintenance costs expected
to be incurred over the life of the Contract.

Annuitant
The person or persons on whose life expectancy the duration of any Annuity
Payments under Payment Options 1, 2, 3, and 4 is determined and upon whose
death, benefits under the Contract are paid. See Primary Annuitant.

Annuitant's Beneficiary
The person to whom any benefits are due upon the Annuitant's death.

Annuity Date
The date on which Annuity Payments begin. The Annuity Date is always the first
day of the month.

Annuity Payment
One of a series of payments made under an Annuity Payment Option.

Annuity Payment Option
One of several ways in which the Accumulated Value of this Contract can be paid.
Under a Fixed Annuity Option, the dollar amount of each Annuity Payment does not
change over time. Under a Variable Annuity Option, the dollar amount of each
Annuity Payment will change over time, depending upon the investment experience
of the underlying Portfolio or Portfolios You choose.

Annuity Unit
Unit of measure used to calculate variable Annuity Payments.

Annuity Unit Value
The value calculated for each Annuity Unit.

Business Day
A day when the New York Stock Exchange is open for trading.

Contract Anniversary
Any anniversary of the Contract Date.

4
<PAGE>

Contract Date
The date of issue of this Contract as shown on the Contract Schedule Page.

Contract Year
A period of 12 months starting with the Contract Date or any Contract
Anniversary.

Death Benefit
The greater of the Adjusted Death Benefit or the Contract's Accumulated Value on
the date that We receive proof of the Annuitant's death.

Exchange
One Exchange will be deemed to occur with each voluntary transfer from any
Subaccount. All exchanges made simultaneously will be treated as a single
request.

Free Look Period
The period during which this Contract can be canceled.

Initial Purchase Payment
The first payment You make to purchase this Contract. The Initial Purchase
Payment must be at least $25,000 for Non-Qualified Contracts and $1,000 (or $50
if payments are to be made by monthly payroll deduction) for Qualified
Contracts. In no event, however, can the Initial Purchase Payment be greater
than $1,000,000 without Our consent. The Initial Purchase Payment less any
applicable Premium Tax, if any, will be credited to Your Accumulated Value
within two Business Days after We receive Your Initial Purchase Payment.

Mortality and Expense Risk Charge
An annual charge to the Contract as compensation to the Company for bearing
certain mortality and expense risks under the Contract. These risks include the
guarantees associated with the Death Benefit and any fixed annuity payments
made, and the first variable annuity payment.

Net Asset Value
The Net Asset Value of a fund share is the per-share value calculated by the
Fund. The Net Asset Value is computed by adding the value of the Subaccount's
investments, cash and other assets, subtracting its liabilities, and then
dividing by the number of shares outstanding. Net Assets Values of Fund shares
reflect investment advisory fees and other expenses incurred in managing a Fund.

Net Investment Factor
The Net Investment Factor used to calculate the value of an Accumulation Unit in
each Subaccount for the Valuation Period is determined by dividing (a) by (b)
and subtracting (c) from the result, where:

(a) is the result of:
(1) the net asset value of a Fund share held in that Subaccount determined
as of the end of the current Valuation Period; plus
(2) the per share amount of any dividend or capital gain distributions made
by the Fund for shares held in that Subaccount if the ex-dividend date
occurs during the Valuation Period; plus or minus
(3) a per share credit or charge for any taxes reserved for, which We
determine to have resulted from the investment operations of that
Subaccount.

(b) is the net asset value of a Fund share held in that Subaccount determined
as of the end of the immediately preceding Valuation Period.

5
<PAGE>

This factor is less than or equal to, on an annual basis, the percentage shown
on the Schedule Page of the daily net asset value of a Fund share held in that
Subaccount.

Net Purchase Payment
Any Purchase Payment less any applicable Premium Tax.

Nonnatural Owner
Any Owner that is not a living person or persons.

Non-Qualified Contract
Any Contract other than those described under the Qualified Contract definition
in this Definitions section.

Owner
The purchaser of this Contract, as shown in the Contract Schedule Page. Any
Joint Owner shares ownership in all respects with the Owner. The Owner has the
right to assign ownership to a person or party other than himself.

Owner's Designated Beneficiary
The person You designate to receive Your interest in this Contract if You die,
pursuant to Section 72(s) of the Internal Revenue Code of 1986, as amended,
unless You are also the Annuitant, in which case the Annuitant's Beneficiary is
entitled to the benefits due.

Payee
You, the Annuitant, the Owner's Designated Beneficiary, the Annuitant's
Beneficiary or any other person, estate, or legal entity to whom benefits are to
be paid.

Portfolio
A collection of various types of securities available for investment under this
Contract.

Premium Tax
A regulatory tax that may be assessed by Your state on the Purchase Payments You
make to this Contract or at the time Annuity Payments begin. The amount which We
must pay as Premium Tax will be deducted from each Purchase Payment or from Your
Accumulated Value at the time it is incurred by Us.

Primary Annuitant
First person named as the Annuitant on the Contract Schedule Page.

Proof of Death
A certified death certificate; a certified decree from a court of competent
jurisdiction as to the finding of death; a written statement by a medical doctor
who attended the deceased; or any other proof satisfactory to Us.

Purchase Payment
An amount You invest in this Contract. Purchase Payments after the Initial
Purchase Payment may be made at any time prior to the Annuity Date as long as
the Annuitant is living. Each Purchase Payment after the Initial Purchase
Payment must be at least $500 for Non-Qualified Contracts or $50 for Qualified
Contracts. The total of all Purchase Payments may not exceed $1,000,000 without
Our consent. Net Purchase Payments received prior to the close of the New York
Stock Exchange will be credited to Your Accumulated Value at the close of
business that same day. Net Purchase Payments received after the close of the
New York Stock Exchange will be credited the following Business Day.

Qualified Contract
An annuity contract as defined under certain sections of the Internal Revenue
Code, as amended (the "Code").

6
<PAGE>

SEC
The Securities and Exchange Commission.

Separate Account

The Providian Life and Health Insurance Company Separate Account V. The Separate
Account consists of assets that are segregated by Us and invested in the Fund(s)
as shown on the Schedule Page. The investment performance of the Separate
Account is independent of the performance of the general assets of the Company.

Subaccount
That portion of the Separate Account which invests in shares of the Fund(s)'
Portfolios. Each Subaccount will invest only in a single Portfolio. The
investment performance of each Subaccount is linked directly to the investment
performance of the underlying Portfolio of the Fund(s).

Valuation Period
A period between two successive Business Days commencing at the close of
business on the first Business Day and ending at the close of business of the
following Business Day.

We, Us, Ours
"We" means Providian Life and Health Insurance Company. "Us", "Our" and "Ours"
also refer to Providian Life and Health Insurance Company.

Withdrawal
Any amount equal to or greater than $500 that the Owner may remove from the
Contract prior to the Annuity Date. Accumulated Value will be reduced by any
Withdrawal.

Written Request (or Written Notice)
Any notice, change or request in writing by You to Us. It is how You let Us know
any requests You have or changes You want to make to this Contract. Such
requests must be in a format and content acceptable to Us. A signature guarantee
may be required for Your protection.

You, Your, Yours
"You" refers to the purchaser ("Owner") of this Contract unless another Owner is
named by You, the purchaser. The term shall also include any person named as
Joint Owner. A Joint Owner shares ownership in all respects with the Owner. The
Owner has the right to assign ownership to a person or party other than himself.
"Your" and "Yours" also refer to the Owner and the Joint Owner.

7
<PAGE>

The Separate Account

Nature of the Separate Account
The Separate Account was established under Missouri law and is registered with
the SEC under the Investment Company Act of 1940 as a Unit Investment Trust type
of investment company. We established the Separate Account to support variable
annuity contracts. We own the assets of the Separate Account and keep them
separate from the assets of Our general investment account.

We use the assets of the Separate Account to buy shares in the Fund(s). The
Separate Account has Subaccounts which are invested in corresponding specific
Portfolios of the Fund(s). Income and realized and unrealized gains and losses
from assets in each Subaccount are credited to, or charged against, the
Subaccount without regard to income, gains or losses in Our other investment
accounts.

We will determine the value of the assets in the Separate Account at the end of
each Business Day. In order to determine the value of an asset on a day that is
not a Business Day, We will use the value of that asset as of the end of the
next Business Day.

We will always keep assets in the Separate Account with a value at least equal
to the total investment amount under Contracts similar to this one. To the
extent those assets do not exceed this total, We use them to support only those
Contracts and do not use those assets to support any other business. We may use
any excess over this amount at Our discretion.

Subaccounts
The Separate Account has several Subaccounts. Each Subaccount invests in a
corresponding Portfolio of the Fund(s). The Portfolios available on the Contract
Date are listed on the Contract Schedule Page.

Allocations to the Subaccounts
You determine, using whole percentages, what portion of the Net Purchase
Payment(s) will be allocated among the Subaccounts. The Contract Schedule Page
will show Your initial allocation percentages. You may choose to allocate
nothing to a particular Subaccount. The minimum balance for each Subaccount
prior to the Annuity Date must be at least $250.

You may change the allocation percentages for additional Purchase Payments at
any time. The change will take effect on the date We receive notice as required
by Us.

Accumulated Value
On the Contract Date, the Accumulated Value is equal to Your Initial Purchase
Payment less any applicable Premium Tax. On any Business day after the Contract
Date, the Accumulated Value is equal to the Accumulated Value from the previous
Business Day, PLUS:

1. Any Additional Net Purchase Payments received; and
2. Any increase in the value of the Subaccount(s), due to investment results,
to which the Accumulated Value is allocated;

LESS:
1. Any decrease in the value of the Subaccount(s), due to investment results,
to which the Accumulated Value is allocated;
2. The Mortality and Expense Risk Charge, as shown on the Contract Schedule
Page;
3. The daily Administrative Charge, as shown on the Contract Schedule Page;
4. Any applicable fees for exchanges as shown on the Contract Schedule Page;
and
5. Any withdrawals.

8
<PAGE>

Exchanges

Exchanging Units
You may make as many Exchanges among Subaccounts during a Contract Year as You
wish, provided You maintain a minimum balance of $250 in any Subaccount to which
You have allocated Net Purchase Payments. We have the right to charge a fee of
$15 for each Exchange after the first 12 Exchanges made in any Contract Year.

Exchanges may be made by notifying Us in writing. All Exchanges made
simultaneously will be treated as a single request.

If You make an Exchange from one Subaccount to any of the other Subaccounts at
any time prior to the Annuity Date, We will reduce the value of that Subaccount
by the amount exchanged.

Dollar Cost Averaging
If You have at least $5,000 of Accumulated Value in the money market portfolio,
or Dollar Cost Averaging Fixed Account (if shown on the Contract Schedule Page),
You may elect to have a specified dollar amount transferred from that Subaccount
to other Subaccounts on a monthly basis.

The minimum amount You may exchange each month is $250 for each Subaccount. The
maximum amount You may transfer is equal to the value of the money market
portfolio (or Dollar Cost Averaging Fixed Account) when You made Your election,
divided by 12. You may change the amount to be exchanged once each Contract Year
provided We receive Written Notice at least seven days prior to the next
exchange date.

We will make this Exchange each month on the same date as the Contract Date. The
dollar amount will be allocated to the Subaccounts in the proportions You
specified in Your notice. If, on any Exchange date, the value in the money
market portfolio (or Dollar Cost Averaging Fixed Account) is equal to or less
than the amount You elected to have exchanged, We will exchange the entire
amount and Dollar Cost Averaging will cease.

You may cancel this option at any time provided We receive Written Notice at
least seven days prior to the next exchange date.

Asset Rebalancing
Prior to the Annuity Date, You may instruct Us to automatically exchange amounts
among the Subaccounts of the Separate Account to maintain a desired allocation
of the Accumulated Value among those Subaccounts. Rebalancing will occur
monthly, quarterly, semi-annually, or annually, beginning on the date You
select. You must select the percentage of the Separate Account Accumulated Value
You desire in each of the various Subaccounts offered (totaling 100%).
Rebalancing can be started, stopped or changed at any time, except that
rebalancing will not be available when Dollar Cost Averaging is in effect or
when any other Exchange is requested.

Withdrawals

Partial or Full Withdrawals
You may make a partial or full withdrawal of Your Accumulated Value at any time
before the Annuity Date. The minimum partial withdrawal is $500. On the Annuity
Date, You may elect to have the full withdrawal amount paid in a lump sum, or
You may elect to have it all paid out under an Annuity Payment Option. See
Payment Option section for more information.

On the date We receive Your Written Request for a partial withdrawal, the
Accumulated Value will be reduced by an amount equal to the withdrawal amount,
subject to the following:

9
<PAGE>

1. Partial withdrawals will be deducted as directed by You in Your Written
Request for a partial withdrawal. In the absence of specific direction from You,
We will make deductions from the Subaccounts to which You have allocated Net
Purchase Payments on a pro rata basis.

2. If a partial withdrawal or exchange would reduce the value in a Subaccount
to less than $250, the remaining balance in that Subaccount will be exchanged to
the other Subaccounts in which the Contract's Accumulated Value is then
allocated on a pro rata basis. If the Accumulated Value under this Contract is
less than $1,000, We reserve the right to terminate the Contract and pay You the
Accumulated Value. You will be notified if Your Accumulated Value is below the
minimum, and will be given 60 days in which to make an additional Purchase
Payment.

On the date We receive Your Written Request for full withdrawal, the amount
payable is the Accumulated Value.

Systematic Withdrawal Option
You may elect to have a specified dollar amount withdrawn from that portion of
Your Contract's Accumulated Value which is allocated to the Subaccounts, on a
monthly, quarterly, semiannual or annual basis. The minimum amount for each
withdrawal is $100.

You may elect this option by completing a Systematic Withdrawal Request Form. We
must receive it at least 30 days prior to the date You want systematic
withdrawals to begin. We will process each systematic withdrawal on the date and
at the frequency specified by You in Your Systematic Withdrawal Request Form. We
will forward the withdrawal amount to You within 10 Business Days of the process
date.

You may change the amount to be withdrawn, or elect to cancel the systematic
withdrawals at any time provided We receive Written Notice at least 30 days
prior to the next systematic withdrawal date.

We reserve the right to discontinue offering this systematic withdrawal option.
We will notify You in writing 30 days prior to discontinuing this option.

Death Benefit

Death Benefit Prior to the Annuity Date
We will pay the Death Benefit to the Annuitant's Beneficiary when we receive
proof that the Annuitant died prior to the Annuity Date. The Death Benefit may
be paid as a lump sum cash benefit or an annuity payment benefit. If You and the
Annuitant are the same person and the Annuitant's Beneficiary is your surviving
spouse, then the Annuitant's Beneficiary may elect to be treated as the Owner's
Designated Beneficiary pursuant to the "Owner's Death Before Entire Interest is
Distributed" provision.

Ownership, Assignment and Beneficiary

Ownership of the Contract
You may, while the Annuitant is living:
1. Assign this Contract.
2. Surrender the Contract to Us.
3. Amend or modify the Contract with Our consent.
4. Receive Annuity Payments or name a Payee to receive the payments.
5. Exercise, receive and enjoy every other right and benefit contained in the
Contract.

The Annuitant is the Owner unless You have designated another person as Owner.
During the Annuitant's lifetime, all rights and privileges under this Contract
may be exercised solely by the Owner. The use of these rights may be

10
<PAGE>

subject to the consent of any assignee or irrevocable beneficiary, and of the
spouse in a community or marital property state. Unless We have been notified of
a community or marital property interest in this contract, We will rely on Our
good faith belief that no such interest exists and will assume no responsibility
for inquiry. From time to time, We may require proof that the Annuitant is still
living.

Change of Ownership
In the case of a Non-Qualified Annuity, You can change the Owner of this
Contract, from Yourself to a new Owner, in a Written Request that You sign that
gives Us the facts that We need. When this change takes effect, all rights of
ownership in this Contract will pass to the new Owner.

A change of Owner will not be effective until it is recorded by Us. After it has
been so recorded, the change will take effect as of the date You signed the
Written Request. However, if the Annuitant dies before the notice has been so
recorded, it will not be effective as to those proceeds We have paid before the
change was recorded by Us. We may require that the change be endorsed in the
Contract. Changing the Owner or naming a new Successor Owner cancels any prior
choice of Successor Owner, but does not change the Beneficiary or the Annuitant.

A change in ownership may result in adverse tax consequences.

Assignment of the Contract
We are not responsible for the validity or effect of any assignment. No
assignment will be recognized until We receive Written Notice. The interest of
any Annuitant's Beneficiary which the assignor has the right to change shall be
subordinate to the interest of an assignee. Any amount paid to the assignee
shall be paid in one sum, notwithstanding any settlement agreement in effect at
the time the assignment was executed. We shall not be liable as to any payment
or other settlement made by Us before We received the Written Notice.

Annuitant's Beneficiary
You may name an Annuitant's Beneficiary in writing. You may make this
designation irrevocable by a Written Notice filed and approved by Us. An
irrevocable Annuitant's Beneficiary may be changed only with his or her own
written consent. (If an irrevocable Beneficiary dies, You may designate a new
Beneficiary.) Changes in Annuitant's Beneficiary must be made by Written Notice
to Us. The notice must have been postmarked (or show other evidence of delivery
that is acceptable to Us) on or before the date of death. The change will take
effect on the date the notice is signed, whether or not You are living when We
receive it. We will acknowledge in writing receipt of this notice. The change
will not affect any payment made or other action taken before the Written Notice
was received.

You may direct that the Annuitant's Beneficiary shall not have the right to
withdraw, assign or commute any sum payable under an option. In the absence of
such election or direction, the Annuitant's Beneficiary may change the manner of
payment or make an election of any option.

Death of Annuitant

Annuitant's Death Prior to Annuity Date
If the Owner and the Annuitant are different and if the Annuitant dies prior to
the Annuity Date, the following will apply unless You have made other
provisions:

1. If there is more than one Annuitant's Beneficiary, each will share equally.
2. If one of two or more Annuitant's Beneficiaries has already died, that share
of the Death Benefit will be paid equally to the surviving Annuitant's
Beneficiaries.
3. If no Annuitant's Beneficiary is living, the Death Benefit will be paid to
You, your legal representatives or assigns.
4. If an Annuitant's Beneficiary dies at the same time as the Annuitant, the
Death Benefit will be paid as though the Annuitant's Beneficiary had died
first.
5. If an Annuitant's Beneficiary dies within 15 days after the Annuitant's
death and before we receive due proof

11
<PAGE>

of the Annuitant's death, the Death Benefit will be paid as though the
Annuitant's Beneficiary had died first.
6. If any Annuitant's Beneficiary is alive at the time the Death Benefits
become payable, but dies before receiving their payment, their share will be
paid to their estate.

The Annuitant's Beneficiary may choose to receive a lump sum payment or to
receive a series of payments under one of the Annuity Payment Options available
under the Contract. However, any election to receive an Annuity Payment Option
must be made within 60 days of the date on which the Death Benefit becomes
payable. These Annuity Payments must begin within one year of the date the Death
Benefit became payable.

Annuitant's Death After Annuity Date
If the Annuitant dies on or after the Annuity Date, any unpaid payments certain
will be paid to the Annuitant's Beneficiary.

Death of Annuitant's Beneficiary

Death of Annuitant's Beneficiary
If an Annuitant's Beneficiary who is currently receiving Annuity Payments dies,
any remaining Payments Certain will be paid to that Annuitant's Beneficiary's
named beneficiary as they come due.

Death of Owner

Owner's Death Before Entire Interest is Distributed:
If any Owner dies before the entire interest in the Contract is distributed:

1. The following applies:
(a) If You die on or after the Annuity Date, 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 death; and

(b) If You die before the Annuity Date, the entire interest in this
Contract will be distributed as follows:
1) within five years after the date of the Owner's death;
2) over the lifetime of the Owner's Designated Beneficiary of this
Contract; or
3) over a period that does not exceed the life expectancy, as
defined by Internal Revenue Code regulations, of the Owner's
Designated Beneficiary of this Contract.

Subparagraphs 2) and 3) apply only to individuals, and such payments
must start within one year of the date of such Owner's death.

The preceding paragraph (b) does not apply in the case of a Qualified
Contract. Any after death distributions from a Qualified Contract must
comply with the specific Internal Revenue Code requirements applicable to
such Qualified Contract.

2. Special rule where surviving spouse is entitled to Death Benefit: If any
Owner dies before the Annuity Date and the individual entitled to the Death
Benefit is your surviving spouse, he or she may elect to become the Owner
under the Contract and to treat the Contract as his or her own. If no such
election is made, payments will be made to your spouse in accordance with
paragraph (b).

Special rules for Nonnatural Owners
If a Nonnatural person is named as Owner of this Contract, then the death of the
Primary Annuitant shall be treated as the death of the Owner and the entire
interest in this Contract must be distributed within five years of (1) the
Primary Annuitant's death prior to the Annuity Date, or (2) a change in the
Primary Annuitant.

<PAGE>

General Provisions

Entire Contract
The entire contract consists of this Contract, including any riders or
endorsements. Changes to this Contract are not valid unless We make them in
writing. They must be signed by one of Our Executive Officers. No agent has the
authority to change this Contract or to waive any of its provisions.

Incontestability
This Contract is incontestable from the Contract Date.

Nonparticipating
This Contract is nonparticipating. This means We do not pay dividends on it. The
Contract will not share in Our profits or surplus.

Protection of Proceeds and Payments
To the extent permitted by law, neither the proceeds nor any payments under this
Contract shall be subject to the claims of creditors or legal process.

Annual Statement
You will receive an annual statement at least once each Contract Year. It will
show such things as the beginning and ending account values, as well as any
additional Purchase Payments, withdrawals, exchanges, or charges that apply to
this Contract for the year. The statement may contain other information
required by law or regulation.

Misstatement of Age or Sex
If the Annuitant's age or sex is misstated, payments will be adjusted to the
amount which would have been provided for at the correct age or sex. If
payments have already commenced and the misstatement has caused an underpayment,
the full amount due will be paid with the next scheduled payment. If the
misstatement has caused an overpayment, the amount due will be deducted from one
or more future payments.

Deferment of Payment
If a lump sum or cash withdrawal is to be paid from the Separate Account,
payment will be made within seven calendar days from the date the election
becomes effective.

We may defer payment in cases where the New York Stock Exchange is closed or
trading has been restricted by the SEC, or when the SEC allows Us to defer
payments in order to protect Our Contract Owners.

Contract Amendment
We will amend this Contract from time to time in cases where We are acting to
comply with the United States Internal Revenue Code and/or regulations of the
United States Treasury Department, or are acting to maintain the tax-deferred
status of this Contract, pursuant to these provisions or regulations. You have
the right to refuse such amendment. Such refusal may result in adverse tax
consequences.

Rights Reserved by the Company
Subject to any required approval by the SEC, the Missouri Department of
Insurance, and any other regulatory authority, We reserve the right, when
permitted by law, to:

a) deregister the Separate Account under the Investment Company Act of 1940;
b) manage the Separate Account under the direction of a committee at any time;
c) restrict or eliminate any voting rights of policyowners or other persons who
have voting rights as to the Separate Account; and
d) combine the Separate Account with one or more other separate accounts;
e) create new Separate Accounts;

13
<PAGE>

f) add new Subaccounts to or remove existing Subaccounts from the Separate
Account, or combine Subaccounts;
g) add new underlying mutual funds, remove existing funds, or substitute a new
fund for an existing fund.

We also reserve the right to exchange assets of the Separate Account, which We
determine to be associated with the class of policies to which this contract
belongs, to another separate account. If this type of exchange is made, the term
"Separate Account", as used in this contract, shall then mean the separate
account to which the assets were exchanged.

Annuity Payment Options

You may elect that Annuity Payments be received on a fixed basis, a variable
basis, or some combination of both.

Proceeds
The normal Annuity Date is the first day of the month following the Annuitant's
85th birthday. However, You may choose to advance or defer the Annuity Date,
provided that notice of each change is received by Us at least thirty (30) days
prior to the then current Annuity Date. Except as otherwise permitted by Us, a
new Annuity Date must be a date which is: (1) at least thirty (30) days after
the date notice of the change is received by Us and (2) not later than the last
day of the Policy month starting after the Annuitant's 85th birthday. In no
event will an Annuity Date be permitted to be later than the last day of the
Policy month following month of the Annuitant's 95th birthday. The Annuity Date
may also be changed by the Beneficiary's election of the Annuity Option after
the Annuitant's death. On the Annuity Date the proceeds to be applied under a
Payment Option will be equal to the Contract's Accumulated Value 10 Business
Days prior to the Annuity Date less any applicable Premium Tax. Any Accumulated
Values attributable to Fixed Account Allocations, if any, as listed on the
Contract Schedule Page, will become a portion of the proceeds to be applied
under a Payment Option. No Market Value Adjustment or Interest Penalty will
apply on the Annuity Date.

Annuity Payments
The Annuitant at the Annuity Date may be either the Contract Owner or the
individual named as the Primary Annuitant as shown on the Contract Schedule
Page. Annuity Payments are made monthly, quarterly, semi-annually, or annually
starting on the Annuity Date. We may require all monthly and quarterly payments
to be made by Electronic Funds Transfer. The Annuity Payments are guaranteed to
be no less than the amount provided by the Annuity Tables. The minimum payment
is $100. The number of payments made in a year may be adjusted to maintain this
minimum. If the Accumulated Value is less than $2,000, We have the right to pay
that amount in a lump sum. We may require proof of the Annuitant's age before
making payments. From time to time, We may require proof that the Annuitant is
living.

Supplementary Contract
Once proceeds become payable and a payment option has been selected, this
contract will terminate and we will issue a supplementary contract to reflect
the terms of the selected option. The supplementary contract will name the
payees and will describe the payment schedule.

Payment Options

1. Life Annuity - We will make Annuity Payments for the lifetime of the
Annuitant, ceasing with the last payment due prior to the Annuitant's death.

2. Life Annuity with 120, 180 or 240 Monthly Payments Certain - We will make
Annuity Payments for the lifetime of the Annuitant, or if the Annuitant dies
prior to the end of the certain period elected, payments will continue for
the remainder of the 120, 180 or 240 months.

14
<PAGE>

3. Joint and Last Survivor Annuity - We will make Annuity Payments as long as
the Annuitant or Joint Annuitant is living. Payments to be made following
the death of one of the Annuitants may be the same amount or may be reduced
to a percentage of the original Annuity Payment. Such percentage must be
chosen at the time You selected a Payment Option.

4. Installment (Fixed Annuity Payment Option) or Unit Refund (Variable Annuity
Payment Option) Life Annuity - We will make Annuity Payments for the
lifetime of the Annuitant, with a Period Certain which is determined by
dividing the Accumulated Value at the Annuity Date by the first Annuity
Payment.

5. Designated Period Annuity - We will make Annuity payments for a Period
Certain which may be from 10 to 30 years, as elected. This option is only
available on a Fixed Payment basis.

Additional Options
Other options may be arranged by agreement with Us.

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

Annuity Tables

The annuity tables show the guaranteed minimum amount of monthly Annuity Payment
for each $1,000 of proceeds to be applied to each Fixed Annuity option. We may,
at the time of election of a Fixed Annuity Payment Option, offer more favorable
rates in lieu of the guaranteed rates shown in the annuity tables. The amount of
each Annuity Payment will depend on the Annuitant's sex and adjusted age on the
birthday nearest to the date the first Annuity Payment is due (unless a
Designated Period Annuity is chosen). The adjusted age is the Annuitant's actual
age on the Annuitant's nearest birthday, at the annuity commencement date,
adjusted as follows:

Annuity Commencement Date Adjusted Age
Before Year 2001 Actual Age
2001 - 2010 Actual Age minus 1
2011 - 2020 Actual Age minus 2
2021 - 2027 Actual Age minus 3
2028 - 2035 Actual Age minus 4
After 2035 to be determined.

We base the tables for the first four options on the 1983 Table "A" Mortality
Table projected for mortality improvement using Projection Scale G and an
interest rate of 3% a year for Fixed Payment Options and 4% a year for Variable
Payment Options. The table for Option 5 is based on an interest rate of 3% a
year for Fixed Payment Options. On request We will furnish the amount of monthly
Annuity Payment per $1,000 applied for any ages not shown.

Fixed Payment Amounts
With respect to a Fixed Payment option, the amounts shown on the tables
represent the guaranteed minimum for each Annuity Payment. If a Fixed Payment
Option is selected and the first Annuity Payment has been received, the Annuity
Payment election can not be revoked.

Variable Payment Amounts
With respect to a Variable Payment option, the amounts shown on the tables
represent the first Annuity Payment, based on the assumed interest rate of 4%.
The amount of each Annuity Payment after the first is determined by means of
Annuity Units.

You may exchange all or a part of the value of Variable Annuity Units to Fixed
Annuity Payments.

If You exchange Variable Annuity Payments to Fixed Annuity Payments, the Fixed
Annuity Payments will be a
15
<PAGE>

continuation of the Payment Option under which Your Variable Annuity Payments
were being made. For example, if You were receiving payments under a Variable
Life with 10 Year Certain for 2 years and elect to exchange to a Fixed Annuity
Payment, Your Payment Option would be a Fixed Life and 8 Year Certain Option.
You should consult a competent tax adviser regarding the tax implications of
exchanging from a Variable to a Fixed Payment Option after the Annuity Date.

You may exchange between Subaccounts while receiving Variable Payments. We
reserve the right to limit Exchanges to no more than 12 in any one Contract
Year. Any Exchanges in excess of 12 per Contract Year may be charged a $15 fee
per Exchange. (All Exchanges made simultaneously will be treated as a single
request.)

The number of Annuity Units is determined by dividing the first Annuity Payment
by the Selected Subaccount's Annuity Unit value as of 10 Business Days prior to
the Annuity Date. The number of Annuity Units for the Subaccount then remains
fixed, unless an exchange of Annuity Units is made. After the first Annuity
Payment, the dollar amount of each subsequent Annuity Payment is equal to the
number of the Selected Subaccounts' annuity units multiplied by the respective
Annuity Unit Values as of 10 Business Days before the due date of the Annuity
Payment.

The Annuity Unit Value for each Subaccount was established at $10. The Annuity
Unit Value for any subsequent Business Day is equal to (a) times (b) times (c),
where:

(a) is the Annuity Unit Value on the immediately preceding Business Day;

(b) is the Net Investment Factor for the day;

(c) is the Investment Result Adjustment Factor (.99989255 per day), which
recognized an assumed interest rate of 4% per year used in determine the
Annuity Payment Amounts.

The Net Investment Factor is a factor applied to a Subaccount that reflects
daily changes in the value of the Subaccount due to:

(a) Any increase or decrease in the value of the Subaccount due to investment
results.

(b) Daily Mortality and Expense Risk Charge corresponding to an annual charge
as shown on the Contract Schedule Page.

(d) A charge or credit for any taxes reserved for, which We determine to have
resulted from the investment operations of the Subaccount.

When annuity payments begin, neither expenses actually incurred other than taxes
on the investment return, nor mortality actually experienced, shall adversely
affect the dollar amount of variable annuity payments.

Alternate Annuity
We may, at the time of election of an Annuity Payment Option, offer more
favorable rates in lieu of the guaranteed rates shown in the Annuity Tables for
Fixed Payment amounts.

16
<PAGE>

Annuity Tables
Guaranteed Minimum
Fixed Amount of Monthly Payment
For Each $1,000 Applied

Male, Single Life Annuities, Payment Options One, Two and Four (fixed basis)
- --------------------------------------------------------------------------------------------------------------
Adjusted Monthly Payments Certain Adjusted Monthly Payments Certain
Age of ------------------------ Install- Age of ------------------------ Install-
Payee ment Payee ment
None 120 180 240 Refund None 120 180 240 Refund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
45 3.68 3.66 3.64 3.61 3.59 66 5.63 5.42 5.16 4.84 5.08
46 3.73 3.71 3.69 3.66 3.63 67 5.80 5.56 5.27 4.90 5.20
47 3.78 3.76 3.74 3.70 3.67 68 5.99 5.70 5.37 4.96 5.32
48 3.84 3.81 3.79 3.75 3.72 69 6.19 5.86 5.47 5.02 5.45
49 3.90 3.87 3.84 3.80 3.77 70 6.41 6.01 5.58 5.08 5.59

50 3.96 3.93 3.89 3.85 3.83 71 6.63 6.17 5.68 5.13 5.73
51 4.02 3.99 3.95 3.90 3.88 72 6.88 6.34 5.78 5.18 5.88
52 4.09 4.05 4.01 3.95 3.93 73 7.14 6.51 5.88 5.23 6.04
53 4.16 4.12 4.08 4.01 3.99 74 7.41 6.68 5.98 5.27 6.21
54 4.24 4.19 4.14 4.06 4.05 75 7.71 6.86 6.07 5.31 6.40

55 4.32 4.27 4.21 4.12 4.11 76 8.03 7.04 6.16 5.34 6.59
56 4.40 4.35 4.28 4.18 4.18 77 8.38 7.22 6.25 5.38 6.79
57 4.49 4.43 4.36 4.24 4.25 78 8.75 7.41 6.33 5.40 7.01
58 4.59 4.52 4.43 4.31 4.33 79 9.15 7.59 6.41 5.43 7.23
59 4.69 4.61 4.51 4.37 4.41 80 9.58 7.77 6.48 5.45 7.47

60 4.80 4.71 4.60 4.44 4.49 81 10.03 7.95 6.54 5.46 7.72
61 4.91 4.81 4.69 4.50 4.58 82 10.52 8.12 6.60 5.48 7.98
62 5.04 4.92 4.78 4.57 4.67 83 11.05 8.28 6.65 5.49 8.27
63 5.17 5.04 4.87 4.64 4.76 84 11.61 8.44 6.69 5.50 8.57
64 5.31 5.16 4.97 4.70 4.86 85 12.21 8.59 6.73 5.50 8.88
65 5.47 5.29 5.06 4.77 4.97
- --------------------------------------------------------------------------------------------------------------
</TABLE>

Female, Single Life Annuities, Payment Options One, Two and Four (fixed basis)
- --------------------------------------------------------------------------------------------------------------

Adjusted Monthly Payments Certain Adjusted Monthly Payments Certain
Age of ------------------------ Install- Age of ------------------------ Install-
Payee ment Payee ment
None 120 180 240 Refund None 120 180 240 Refund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
45 3.43 3.43 3.42 3.41 3.39 66 4.95 4.86 4.75 4.57 4.65
46 3.47 3.47 3.46 3.44 3.43 67 5.08 4.98 4.84 4.64 4.75
47 3.51 3.51 3.50 3.48 3.47 68 5.23 5.11 4.95 4.72 4.86
48 3.56 3.55 3.54 3.52 3.51 69 5.38 5.24 5.05 4.79 4.97
49 3.60 3.59 3.58 3.56 3.55 70 5.55 5.38 5.16 4.86 5.09

50 3.65 3.64 3.63 3.61 3.59 71 5.73 5.53 5.28 4.93 5.22
51 3.70 3.69 3.68 3.65 3.63 72 5.92 5.69 5.39 5.00 5.36
52 3.76 3.74 3.73 3.70 3.68 73 6.13 5.86 5.51 5.07 5.50
53 3.81 3.80 3.78 3.75 3.73 74 6.36 6.03 5.63 5.13 5.66
54 3.87 3.86 3.83 3.80 3.78 75 6.61 6.21 5.74 5.18 5.82

55 3.94 3.92 3.89 3.85 3.83 76 6.88 6.40 5.86 5.23 5.99
56 4.00 3.98 3.95 3.91 3.89 77 7.17 6.60 5.97 5.28 6.18
57 4.07 4.05 4.02 3.97 3.95 78 7.49 6.80 6.07 5.32 6.38
58 4.15 4.12 4.08 4.02 4.01 79 7.83 7.00 6.18 5.36 6.59
59 4.23 4.20 4.15 4.09 4.08 80 8.20 7.21 6.27 5.40 6.80

60 4.31 4.28 4.23 4.15 4.15 81 8.61 7.42 6.36 5.42 7.04
61 4.40 4.36 4.30 4.22 4.22 82 9.05 7.63 6.44 5.45 7.30
62 4.50 4.45 4.38 4.28 4.30 83 9.53 7.83 6.52 5.47 7.56
63 4.60 4.54 4.47 4.35 4.38 84 10.05 8.03 6.59 5.48 7.85
64 4.71 4.64 4.56 4.43 4.47 85 10.62 8.22 6.65 5.49 8.15
65 4.83 4.75 4.65 4.50 4.56
- --------------------------------------------------------------------------------------------------------------
</TABLE>

17
<PAGE>

Annuity Tables
Guaranteed Minimum
Fixed Amount of Monthly Payment
For Each $1,000 Applied

Payment Option Three (fixed basis) Joint and Last Survivor Annuity
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Age of Female Payee
Adjusted
Age of
Male 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
Payee
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

50 3.52 3.55 3.57 3.59 3.61 3.63 3.65 3.67 3.69 3.71 3.72 3.74 3.75 3.77 3.78 3.80 3.81 3.82 3.83 3.84 3.85
51 3.55 3.57 3.59 3.62 3.64 3.66 3.68 3.70 3.72 3.74 3.76 3.78 3.80 3.81 3.83 3.84 3.86 3.87 3.88 3.89 3.91
52 3.57 3.59 3.62 3.64 3.67 3.69 3.71 3.74 3.76 3.78 3.80 3.82 3.84 3.86 3.87 3.89 3.91 3.92 3.93 3.95 3.96
53 3.59 3.61 3.64 3.67 3.69 3.72 3.74 3.77 3.79 3.82 3.84 3.86 3.88 3.90 3.92 3.94 3.96 3.97 3.99 4.00 4.02
54 3.61 3.64 3.66 3.69 3.72 3.75 3.78 3.80 3.83 3.85 3.88 3.90 3.92 3.95 3.97 3.99 4.01 4.03 4.04 4.06 4.07

55 3.63 3.66 3.69 3.72 3.75 3.78 3.81 3.84 3.86 3.89 3.92 3.94 3.97 3.99 4.02 4.04 4.06 4.08 4.10 4.12 4.13
56 3.65 3.68 3.71 3.74 3.77 3.81 3.84 3.87 3.90 3.93 3.96 3.99 4.01 4.04 4.06 4.09 4.11 4.14 4.16 4.18 4.20
57 3.66 3.70 3.73 3.77 3.80 3.83 3.87 3.90 3.93 3.97 4.00 4.03 4.06 4.09 4.11 4.14 4.17 4.19 4.22 4.24 4.26
58 3.68 3.72 3.75 3.79 3.82 3.86 3.90 3.93 3.97 4.00 4.04 4.07 4.10 4.13 4.17 4.19 4.22 4.25 4.28 4.30 4.33
59 3.70 3.74 3.77 3.81 3.85 3.89 3.93 3.96 4.00 4.04 4.08 4.11 4.15 4.18 4.22 4.25 4.28 4.31 4.34 4.37 4.40

60 3.71 3.75 3.79 3.83 3.87 3.91 3.95 3.99 4.03 4.07 4.11 4.15 4.19 4.23 4.27 4.30 4.34 4.37 4.40 4.44 4.47
61 3.73 3.77 3.81 3.85 3.90 3.94 3.98 4.02 4.07 4.11 4.15 4.20 4.24 4.28 4.32 4.36 4.40 4.43 4.47 4.50 4.54
62 3.74 3.79 3.83 3.87 3.92 3.96 4.01 4.05 4.10 4.15 4.19 4.24 4.28 4.33 4.37 4.41 4.46 4.50 4.54 4.57 4.61
63 3.76 3.80 3.85 3.89 3.94 3.99 4.03 4.08 4.13 4.18 4.23 4.28 4.33 4.37 4.42 4.47 4.51 4.56 4.60 4.65 4.69
64 3.77 3.82 3.86 3.91 3.96 4.01 4.06 4.11 4.16 4.21 4.27 4.32 4.37 4.42 4.47 4.52 4.57 4.62 4.67 4.72 4.76

65 3.78 3.83 3.88 3.93 3.98 4.03 4.08 4.14 4.19 4.25 4.30 4.36 4.41 4.47 4.52 4.58 4.63 4.69 4.74 4.79 4.84
66 3.79 3.84 3.89 3.94 4.00 4.05 4.11 4.16 4.22 4.28 4.34 4.39 4.45 4.51 4.57 4.63 4.69 4.75 4.81 4.86 4.92
67 3.81 3.86 3.91 3.96 4.01 4.07 4.13 4.19 4.25 4.31 4.37 4.43 4.49 4.56 4.62 4.68 4.75 4.81 4.87 4.94 5.00
68 3.82 3.87 3.92 3.97 4.03 4.09 4.15 4.21 4.27 4.34 4.40 4.47 4.53 4.60 4.67 4.74 4.81 4.87 4.94 5.01 5.08
69 3.82 3.88 3.93 3.99 4.05 4.11 4.17 4.23 4.30 4.36 4.43 4.50 4.57 4.64 4.71 4.79 4.86 4.94 5.01 5.08 5.15

70 3.83 3.89 3.94 4.00 4.06 4.12 4.19 4.25 4.32 4.39 4.46 4.53 4.61 4.68 4.76 4.84 4.92 5.00 5.07 5.15 5.23
71 3.84 3.90 3.95 4.01 4.07 4.14 4.20 4.27 4.34 4.41 4.49 4.56 4.64 4.72 4.80 4.89 4.97 5.05 5.14 5.22 5.31
72 3.85 3.90 3.96 4.02 4.09 4.15 4.22 4.29 4.36 4.44 4.51 4.59 4.67 4.76 4.84 4.93 5.02 5.11 5.20 5.29 5.39
73 3.86 3.91 3.97 4.03 4.10 4.16 4.23 4.31 4.38 4.46 4.54 4.62 4.71 4.79 4.88 4.98 5.07 5.17 5.26 5.36 5.46
74 3.86 3.92 3.98 4.04 4.11 4.18 4.25 4.32 4.40 4.48 4.56 4.65 4.74 4.83 4.92 5.02 5.12 5.22 5.32 5.43 5.53

75 3.87 3.93 3.99 4.05 4.12 4.19 4.26 4.34 4.41 4.50 4.58 4.67 4.76 4.86 4.96 5.06 5.16 5.27 5.38 5.49 5.60
76 3.87 3.93 3.99 4.06 4.13 4.20 4.27 4.35 4.43 4.51 4.60 4.69 4.79 4.89 4.99 5.10 5.21 5.32 5.43 5.55 5.67
77 3.88 3.94 4.00 4.07 4.13 4.21 4.28 4.36 4.44 4.53 4.62 4.72 4.81 4.92 5.02 5.13 5.25 5.37 5.49 5.61 5.74
78 3.88 3.94 4.01 4.07 4.14 4.22 4.29 4.37 4.46 4.55 4.64 4.74 4.84 4.94 5.05 5.17 5.29 5.41 5.54 5.67 5.80
79 3.89 3.95 4.01 4.08 4.15 4.22 4.30 4.38 4.47 4.56 4.65 4.75 4.86 4.97 5.08 5.20 5.32 5.45 5.58 5.72 5.86

80 3.89 3.95 4.02 4.08 4.16 4.23 4.31 4.39 4.48 4.57 4.67 4.77 4.88 4.99 5.10 5.23 5.36 5.49 5.63 5.77 5.92

Monthly payment for ages not shown will be furnished by the Company on request.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Payment Option Five (fixed basis) Payment for a Designated Period
- -------------------------------------------------------------------------------------------------------------------------------
Amount of Monthly Amount of Monthly Amount of Monthly
Years of Payments Payment Years of Payments Payment Years of Payment Payment
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
12 8.24 19 5.73 26 4.59
13 7.71 20 5.51 27 4.47
14 7.26 21 5.32 28 4.37
15 6.87 22 5.15 29 4.27
16 6.53 23 4.99 30 4.18
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

18
<PAGE>

Annuity Tables
Payment Options Applied on a Variable Basis
Amount of First Monthly Payment
For Each $1,000 Applied

Male, Single Life Annuities, Payment Options One, Two and Four (variable basis)

Monthly Payments Certain Monthly Payments Certain
------------------------ ------------------------
Adjusted Adjusted
Age of Unit Age of Unit
Payee None 120 180 240 Refund Payee None 120 180 240 Refund
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 4.28 4.27 4.24 4.21 4.21 66 6.22 5.98 5.70 5.36 5.73
46 4.33 4.31 4.29 4.25 4.25 67 6.39 6.11 5.80 5.42 5.85
47 4.39 4.36 4.33 4.29 4.29 68 6.58 6.26 5.90 5.48 5.98
48 4.44 4.41 4.38 4.34 4.34 69 6.78 6.40 6.00 5.54 6.12
49 4.50 4.47 4.43 4.38 4.39 70 7.00 6.56 6.10 5.59 6.26

50 4.56 4.52 4.48 4.43 4.44 71 7.23 6.71 6.20 5.64 6.41
51 4.62 4.58 4.54 4.48 4.49 72 7.47 6.88 6.29 5.69 6.58
52 4.69 4.64 4.59 4.53 4.55 73 7.73 7.04 6.39 5.73 6.75
53 4.76 4.71 4.65 4.58 4.61 74 8.01 7.21 6.48 5.77 6.93
54 4.83 4.78 4.72 4.63 4.67 75 8.31 7.39 6.57 5.81 7.12

55 4.91 4.85 4.78 4.69 4.74 76 8.64 7.56 6.66 5.84 7.32
56 4.99 4.93 4.85 4.74 4.81 77 8.98 7.74 6.74 5.87 7.53
57 5.08 5.01 4.92 4.80 4.88 78 9.36 7.92 6.82 5.90 7.75
58 5.17 5.09 5.00 4.86 4.95 79 9.76 8.09 6.89 5.92 7.99
59 5.28 5.19 5.08 4.92 5.03 80 10.19 8.27 6.96 5.94 8.24

60 5.38 5.28 5.16 4.99 5.12 81 10.65 8.44 7.02 5.96 8.52
61 5.50 5.38 5.24 5.05 5.21 82 11.14 8.60 7.07 5.97 8.80
62 5.62 5.49 5.33 5.11 5.30 83 11.67 8.76 7.12 5.98 9.11
63 5.76 5.60 5.42 5.17 5.40 84 12.24 8.91 7.17 5.99 9.42
64 5.90 5.72 5.51 5.24 5.50 85 12.84 9.06 7.20 5.99 9.75
65 6.05 5.85 5.60 5.30 5.61
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Female, Single Life Annuities, Payment Options One,
Two and Four (variable basis)

Monthly Payments Certain Monthly Payments Certain
------------------------ ------------------------
Adjusted Adjusted
Age of Unit Age of Unit
Payee None 120 180 240 Refund Payee None 120 180 240 Refund
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 4.05 4.04 4.03 4.01 4.01 66 5.52 5.42 5.29 5.11 5.27
46 4.08 4.07 4.06 4.05 4.04 67 5.65 5.54 5.39 5.18 5.37
47 4.12 4.11 4.10 4.08 4.08 68 5.80 5.66 5.49 5.25 5.48
48 4.16 4.15 4.14 4.12 4.12 69 5.95 5.79 5.59 5.32 5.60
49 4.21 4.20 4.18 4.16 4.16 70 6.12 5.93 5.70 5.39 5.72

50 4.25 4.24 4.22 4.20 4.20 71 6.30 6.08 5.81 5.45 5.86
51 4.30 4.29 4.27 4.24 4.24 72 6.49 6.23 5.92 5.52 6.00
52 4.35 4.34 4.31 4.28 4.29 73 6.71 6.40 6.03 5.58 6.15
53 4.41 4.39 4.36 4.33 4.34 74 6.94 6.57 6.14 5.64 6.31
54 4.47 4.44 4.42 4.38 4.39 75 7.19 6.74 6.25 5.69 6.48

55 4.53 4.50 4.47 4.43 4.44 76 7.46 6.93 6.36 5.74 6.66
56 4.59 4.56 4.53 4.48 4.50 77 7.75 7.12 6.47 5.78 6.86
57 4.66 4.63 4.59 4.53 4.56 78 8.07 7.32 6.57 5.82 7.07
58 4.73 4.70 4.65 4.59 4.62 79 8.41 7.52 6.67 5.86 7.30
59 4.81 4.77 4.72 4.65 4.68 80 8.79 7.72 6.76 5.89 7.53

60 4.89 4.85 4.79 4.71 4.75 81 9.20 7.92 6.85 5.92 7.78
61 4.98 4.93 4.87 4.77 4.83 82 9.64 8.12 6.93 5.94 8.04
62 5.08 5.02 4.94 4.84 4.91 83 10.13 8.32 7.00 5.96 8.33
63 5.18 5.11 5.02 4.90 4.99 84 10.65 8.51 7.06 5.97 8.62
64 5.28 5.21 5.11 4.97 5.07 85 11.22 8.70 7.12 5.98 8.97
65 5.40 5.31 5.20 5.04 5.17
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

19
<PAGE>

Annuity Tables
Payment Options applied on a Variable Basis
Amount of First Monthly Payment
For Each $1,000 Applied

Payment Option Three (variable basis) Joint and Last Survivor Annuity
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted Age of Female Payee
Adjusted
Age of
Male
Payee 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

50 4.11 4.13 4.15 4.17 4.19 4.21 4.23 4.25 4.27 4.29 4.30 4.32 4.34 4.35 4.37 4.38 4.39 4.41 4.42 4.43 4.44
51 4.13 4.16 4.18 4.20 4.22 4.24 4.26 4.28 4.30 4.32 4.34 4.36 4.38 4.39 4.41 4.42 4.44 4.45 4.46 4.48 4.49
52 4.15 4.18 4.20 4.22 4.25 4.27 4.29 4.31 4.34 4.36 4.38 4.40 4.41 4.43 4.45 4.47 4.48 4.50 4.51 4.53 4.54
53 4.17 4.20 4.22 4.25 4.27 4.30 4.32 4.35 4.37 4.39 4.41 4.43 4.46 4.48 4.49 4.51 4.53 4.55 4.56 4.58 4.59
54 4.19 4.22 4.24 4.27 4.30 4.32 4.35 4.38 4.40 4.43 4.45 4.47 4.50 4.52 4.54 4.56 4.58 4.60 4.62 4.63 4.65

55 4.21 4.24 4.27 4.30 4.32 4.35 4.38 4.41 4.43 4.46 4.49 4.51 4.54 4.56 4.59 4.61 4.63 4.65 4.67 4.69 4.71
56 4.23 4.26 4.29 4.32 4.35 4.38 4.41 4.44 4.47 4.50 4.52 4.55 4.58 4.61 4.63 4.66 4.68 4.70 4.73 4.75 4.77
57 4.24 4.28 4.31 4.34 4.37 4.41 4.44 4.47 4.50 4.53 4.56 4.59 4.62 4.65 4.68 4.71 4.73 4.76 4.78 4.81 4.83
58 4.26 4.29 4.33 4.36 4.40 4.43 4.47 4.50 4.53 4.57 4.60 4.63 4.67 4.70 4.73 4.76 4.79 4.81 4.84 4.87 4.89
59 4.28 4.31 4.35 4.38 4.42 4.46 4.49 4.53 4.57 4.60 4.64 4.67 4.71 4.74 4.78 4.81 4.84 4.87 4.90 4.93 4.96

60 4.29 4.33 4.37 4.40 4.44 4.48 4.52 4.56 4.60 4.64 4.68 4.71 4.75 4.79 4.82 4.86 4.90 4.93 4.96 4.99 5.02
61 4.31 4.35 4.39 4.43 4.47 4.51 4.55 4.59 4.63 4.67 4.71 4.75 4.79 4.83 4.87 4.91 4.95 4.99 5.03 5.06 5.09
62 4.32 4.36 4.40 4.44 4.49 4.53 4.57 4.62 4.66 4.71 4.75 4.79 4.84 4.88 4.92 4.97 5.01 5.05 5.09 5.13 5.17
63 4.34 4.38 4.42 4.46 4.51 4.55 4.60 4.64 4.69 4.74 4.79 4.83 4.88 4.93 4.97 5.02 5.07 5.11 5.15 5.20 5.24
64 4.35 4.39 4.44 4.48 4.53 4.57 4.62 4.67 4.72 4.77 4.82 4.87 4.92 4.97 5.02 5.07 5.12 5.17 5.22 5.27 5.31

65 4.36 4.41 4.45 4.50 4.55 4.60 4.65 4.70 4.75 4.80 4.86 4.91 4.96 5.02 5.07 5.13 5.18 5.23 5.29 5.34 5.39
66 4.37 4.42 4.47 4.52 4.57 4.62 4.67 4.72 4.78 4.83 4.89 4.95 5.00 5.06 5.12 5.18 5.24 5.30 5.35 5.41 5.46
67 4.38 4.43 4.48 4.53 4.58 4.64 4.69 4.75 4.80 4.86 4.92 4.98 5.04 5.11 5.17 5.23 5.29 5.36 5.42 5.48 5.54
68 4.39 4.44 4.49 4.55 4.60 4.65 4.71 4.77 4.83 4.89 4.95 5.02 5.08 5.15 5.22 5.28 5.35 5.42 5.49 5.55 5.62
69 4.40 4.45 4.51 4.56 4.61 4.67 4.73 4.79 4.85 4.92 4.98 5.05 5.12 5.19 5.26 5.33 5.41 5.48 5.55 5.62 5.70

70 4.41 4.46 4.52 4.57 4.63 4.69 4.75 4.81 4.88 4.94 5.01 5.08 5.16 5.23 5.31 5.38 5.46 5.54 5.62 5.69 5.77
71 4.42 4.47 4.53 4.58 4.64 4.70 4.77 4.83 4.90 4.97 5.04 5.12 5.19 5.27 5.35 5.43 5.51 5.60 5.68 5.76 5.85
72 4.43 4.48 4.54 4.60 4.66 4.72 4.78 4.85 4.92 4.99 5.07 5.15 5.22 5.31 5.39 5.48 5.56 5.65 5.74 5.83 5.92
73 4.44 4.49 4.55 4.61 4.67 4.73 4.80 4.87 4.94 5.02 5.09 5.17 5.26 5.34 5.43 5.52 5.61 5.71 5.80 5.90 6.00
74 4.44 4.50 4.56 4.62 4.68 4.74 4.81 4.88 4.96 5.04 5.12 5.20 5.29 5.38 5.47 5.56 5.66 5.76 5.86 5.97 6.07

75 4.45 4.51 4.56 4.63 4.69 4.76 4.83 4.90 4.98 5.06 5.14 5.22 5.31 5.41 5.50 5.60 5.71 5.81 5.92 6.03 6.14
76 4.46 4.51 4.57 4.63 4.70 4.77 4.84 4.91 4.99 5.07 5.16 5.25 5.34 5.44 5.54 5.64 5.75 5.86 5.98 6.09 6.21
77 4.46 4.52 4.58 4.64 4.71 4.78 4.85 4.93 5.01 5.09 5.18 5.27 5.37 5.47 5.57 5.68 5.79 5.91 6.03 6.15 6.28
78 4.47 4.52 4.59 4.65 4.72 4.79 4.86 4.94 5.02 5.11 5.20 5.29 5.39 5.49 5.60 5.71 5.83 5.95 6.08 6.21 6.34
79 4.47 4.53 4.59 4.66 4.72 4.80 4.87 4.95 5.03 5.12 5.21 5.31 5.41 5.52 5.63 5.75 5.87 6.00 6.13 6.26 6.40

80 4.48 4.53 4.60 4.66 4.73 4.80 4.88 4.96 5.05 5.14 5.23 5.33 5.43 5.54 5.66 5.78 5.90 6.04 6.17 6.32 6.46

20
<PAGE>

Annuity Tables
Guaranteed Minimum
Fixed Amount of Monthly Payment
For Each $1,000 Applied

<TABLE>
<CAPTION>
Unisex, Single Life Annuities, Payment Options One, Two and Four (fixed basis)
- ------------------------------------------------------------------------------------------------------------------------------
Monthly Payments Certain Monthly Payments Certain
------------------------ ------------------------
Adjusted Install- Adjusted Install-
Age of ment Age of ment
Payee None 120 180 240 Refund Payee None 120 180 240 Refund
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 3.53 3.52 3.51 3.49 3.47 66 5.22 5.09 4.92 4.69 4.82
46 3.58 3.57 3.55 3.53 3.51 67 5.37 5.22 5.02 4.76 4.93
47 3.62 3.61 3.60 3.57 3.55 68 5.53 5.35 5.13 4.82 5.04
48 3.67 3.66 3.64 3.62 3.60 69 5.70 5.49 5.23 4.89 5.16
49 3.72 3.71 3.69 3.66 3.64 70 5.89 5.64 5.34 4.96 5.29

50 3.78 3.76 3.74 3.71 3.69 71 6.09 5.80 5.45 5.02 5.42
51 3.83 3.81 3.79 3.75 3.73 72 6.30 5.96 5.56 5.08 5.57
52 3.89 3.87 3.84 3.80 3.78 73 6.53 6.13 5.67 5.14 5.72
53 3.96 3.93 3.90 3.86 3.84 74 6.78 6.30 5.78 5.19 5.87
54 4.02 4.00 3.96 3.91 3.89 75 7.05 6.48 5.89 5.24 6.05

55 4.09 4.06 4.02 3.97 3.95 76 7.34 6.67 5.99 5.28 6.23
56 4.17 4.13 4.09 4.02 4.01 77 7.65 6.86 6.09 5.32 6.42
57 4.24 4.21 4.16 4.08 4.08 78 7.99 7.05 6.19 5.36 6.62
58 4.33 4.28 4.23 4.14 4.14 79 8.35 7.25 6.28 5.39 6.84
59 4.42 4.37 4.30 4.21 4.21 80 8.74 7.45 6.36 5.42 7.07

60 4.51 4.45 4.38 4.27 4.29 81 9.17 7.64 6.44 5.44 7.32
61 4.61 4.55 4.46 4.34 4.37 82 9.63 7.84 6.51 5.46 7.57
62 4.72 4.64 4.55 4.41 4.45 83 10.13 8.02 6.58 5.48 7.84
63 4.83 4.75 4.64 4.48 4.53 84 10.67 8.20 6.63 5.49 8.13
64 4.95 4.86 4.73 4.55 4.63 85 11.25 8.38 6.69 5.50 8.44
65 5.08 4.97 4.82 4.62 4.72
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

21
<PAGE>

Annuity Tables
Guaranteed Minimum
Fixed Amount of Monthly Payment
For Each $1,000 Applied

Payment Option Three (fixed basis)
Unisex Joint and Last Survivor Annuity
Adjusted Age of Joint Payee

<TABLE>
<CAPTION>
Adjusted
Age of
First
Payee
55 56 57 58 59 60 61 62 63 64 65
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 3.50 3.51 3.53 3.55 3.56 3.58 3.59 3.60 3.61 3.63 3.64
51 3.52 3.54 3.56 3.58 3.59 3.61 3.62 3.64 3.65 3.67 3.68
52 3.55 3.57 3.59 3.61 3.62 3.64 3.66 3.67 3.69 3.70 3.72
53 3.57 3.60 3.62 3.64 3.66 3.68 3.69 3.71 3.73 3.74 3.76
54 3.60 3.62 3.64 3.67 3.69 3.71 3.73 3.75 3.77 3.78 3.80

55 3.62 3.65 3.67 3.70 3.72 3.74 3.76 3.79 3.81 3.83 3.85
56 3.65 3.68 3.70 3.73 3.75 3.78 3.80 3.82 3.85 3.87 3.89
57 3.67 3.70 3.73 3.76 3.78 3.81 3.84 3.86 3.89 3.91 3.93
58 3.70 3.73 3.76 3.79 3.82 3.84 3.87 3.90 3.93 3.95 3.98
59 3.72 3.75 3.78 3.81 3.85 3.88 3.91 3.94 3.97 4.00 4.02

60 3.74 3.78 3.81 3.84 3.88 3.91 3.94 3.98 4.01 4.04 4.07
61 3.76 3.80 3.83 3.87 3.91 3.94 3.98 4.01 4.05 4.08 4.11
62 3.78 3.82 3.86 3.90 3.94 3.97 4.01 4.05 4.09 4.12 4.16
63 3.80 3.84 3.88 3.92 3.96 4.01 4.05 4.09 4.13 4.17 4.21
64 3.82 3.86 3.91 3.95 3.99 4.04 4.08 4.12 4.17 4.21 4.25

65 3.84 3.88 3.93 3.97 4.02 4.07 4.11 4.16 4.20 4.25 4.30
66 3.86 3.90 3.95 4.00 4.05 4.09 4.14 4.19 4.24 4.29 4.34
67 3.87 3.92 3.97 4.02 4.07 4.12 4.17 4.23 4.28 4.33 4.38
68 3.89 3.94 3.99 4.04 4.10 4.15 4.20 4.26 4.31 4.37 4.43
69 3.91 3.96 4.01 4.06 4.12 4.17 4.23 4.29 4.35 4.41 4.47

70 3.92 3.97 4.03 4.08 4.14 4.20 4.26 4.32 4.38 4.44 4.51
71 3.93 3.99 4.04 4.10 4.16 4.22 4.28 4.35 4.41 4.48 4.55
72 3.95 4.00 4.06 4.12 4.18 4.24 4.31 4.38 4.44 4.51 4.59
73 3.96 4.01 4.07 4.14 4.20 4.26 4.33 4.40 4.47 4.55 4.62
74 3.97 4.03 4.09 4.15 4.22 4.28 4.35 4.43 4.50 4.58 4.66

75 3.98 4.04 4.10 4.17 4.23 4.30 4.38 4.45 4.53 4.61 4.69
76 3.99 4.05 4.11 4.18 4.25 4.32 4.39 4.47 4.55 4.64 4.72
77 4.00 4.06 4.12 4.19 4.26 4.34 4.41 4.49 4.58 4.66 4.75
78 4.00 4.07 4.13 4.20 4.27 4.35 4.43 4.51 4.60 4.69 4.78
79 4.01 4.08 4.14 4.21 4.29 4.36 4.44 4.53 4.62 4.71 4.80

80 4.02 4.08 4.15 4.22 4.30 4.38 4.46 4.55 4.64 4.73 4.83
</TABLE>

66 67 68 69 70 71 72 73 74 75
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 3.65 3.66 3.67 3.68 3.68 3.69 3.70 3.71 3.71 3.72
51 3.69 3.70 3.71 3.72 3.73 3.74 3.75 3.75 3.76 3.77
52 3.73 3.74 3.76 3.77 3.78 3.79 3.80 3.80 3.81 3.82
53 3.77 3.79 3.80 3.81 3.83 3.84 3.85 3.86 3.86 3.87
54 3.82 3.83 3.85 3.86 3.87 3.89 3.90 3.91 3.92 3.93

55 3.86 3.88 3.90 3.91 3.93 3.94 3.95 3.96 3.98 3.99
56 3.91 3.93 3.95 3.96 3.98 3.99 4.01 4.02 4.03 4.05
57 3.95 3.98 4.00 4.02 4.03 4.05 4.07 4.08 4.10 4.11
58 4.00 4.03 4.05 4.07 4.09 4.11 4.13 4.14 4.16 4.17
59 4.05 4.08 4.10 4.12 4.15 4.17 4.19 4.21 4.22 4.24

60 4.10 4.13 4.15 4.18 4.20 4.23 4.25 4.27 4.29 4.31
61 4.15 4.18 4.21 4.24 4.26 4.29 4.32 4.34 4.36 4.38
62 4.20 4.23 4.26 4.29 4.33 4.35 4.38 4.41 4.44 4.46
63 4.24 4.28 4.32 4.35 4.39 4.42 4.45 4.48 4.51 4.54
64 4.29 4.33 4.37 4.41 4.45 4.49 4.52 4.55 4.59 4.62

65 4.34 4.39 4.43 4.47 4.51 4.55 4.59 4.63 4.66 4.70
66 4.39 4.44 4.48 4.53 4.58 4.62 4.66 4.70 4.74 4.78
67 4.44 4.49 4.54 4.59 4.64 4.69 4.74 4.78 4.83 4.87
68 4.48 4.54 4.59 4.65 4.70 4.76 4.81 4.86 4.91 4.96
69 4.53 4.59 4.65 4.71 4.77 4.82 4.88 4.94 4.99 5.04

70 4.57 4.64 4.70 4.77 4.83 4.89 4.96 5.02 5.08 5.13
71 4.62 4.68 4.75 4.82 4.89 4.96 5.03 5.10 5.16 5.23
72 4.66 4.73 4.80 4.88 4.95 5.03 5.10 5.17 5.25 5.32
73 4.70 4.78 4.85 4.93 5.01 5.09 5.17 5.25 5.33 5.41
74 4.74 4.82 4.90 4.99 5.07 5.16 5.24 5.33 5.41 5.50

75 4.77 4.86 4.95 5.04 5.13 5.22 5.31 5.41 5.50 5.59
76 4.81 4.90 4.99 5.09 5.18 5.28 5.38 5.48 5.58 5.68
77 4.84 4.94 5.03 5.13 5.24 5.34 5.45 5.55 5.66 5.77
78 4.87 4.97 5.07 5.18 5.29 5.40 5.51 5.62 5.74 5.85
79 4.90 5.01 5.11 5.22 5.33 5.45 5.57 5.69 5.81 5.94

80 4.93 5.04 5.15 5.26 5.38 5.50 5.63 5.75 5.88 6.02
</TABLE>
Monthly payment for ages not shown will be furnished by the Company on request.

<TABLE>
<CAPTION>
Payment Option Five (fixed basis) Payment for a Designated Period

Amount of Amount of Amount of
Years of Monthly Years of Monthly Years of Monthly
Payments Payment Payments Payment Payments Payment
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
12 8.24 19 5.73 26 4.59
13 7.71 20 5.51 27 4.47
14 7.26 21 5.32 28 4.37
15 6.87 22 5.15 29 4.27
16 6.53 23 4.99 30 4.18
- ----------------------------------------------------------------------------------
</TABLE>

22
<PAGE>

Annuity Tables
Payment Options Applied on a Variable Basis
Amount of First Monthly Payment
For Each $1,000 Applied

Unisex, Single Life Annuities,
Payment Options One, Two and Four (variable basis)

Monthly Payments Certain Monthly Payments Certain
------------------------ ------------------------
Adjusted Adjusted
Age of Unit Age of Unit
Payee None 120 180 240 Refund Payee None 120 180 240 Refund
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 4.14 4.13 4.12 4.10 4.09 66 5.80 5.65 5.46 5.22 5.45
46 4.19 4.17 4.16 4.13 4.13 67 5.95 5.77 5.56 5.28 5.57
47 4.23 4.22 4.20 4.17 4.17 68 6.11 5.91 5.66 5.35 5.69
48 4.28 4.26 4.24 4.21 4.21 69 6.28 6.04 5.76 5.41 5.81
49 4.33 4.31 4.28 4.25 4.25 70 6.47 6.19 5.87 5.48 5.94

50 4.38 4.36 4.33 4.29 4.30 71 6.67 6.34 5.97 5.54 6.08
51 4.43 4.41 4.38 4.34 4.35 72 6.88 6.50 6.08 5.59 6.23
52 4.49 4.46 4.43 4.39 4.40 73 7.11 6.66 6.18 5.65 6.39
53 4.55 4.52 4.48 4.43 4.45 74 7.36 6.84 6.29 5.70 6.56
54 4.61 4.58 4.54 4.49 4.50 75 7.63 7.01 6.39 5.74 6.74

55 4.68 4.65 4.60 4.54 4.56 76 7.92 7.19 6.49 5.79 6.92
56 4.75 4.71 4.66 4.59 4.62 77 8.24 7.38 6.59 5.82 7.13
57 4.83 4.79 4.73 4.65 4.69 78 8.58 7.57 6.68 5.86 7.34
58 4.91 4.86 4.80 4.71 4.76 79 8.94 7.76 6.77 5.89 7.57
59 5.00 4.94 4.87 4.77 4.83 80 9.34 7.95 6.85 5.91 7.81

60 5.09 5.03 4.94 4.83 4.90 81 9.77 8.14 6.92 5.94 8.07
61 5.19 5.12 5.02 4.89 4.98 82 10.23 8.33 6.99 5.96 8.34
62 5.30 5.21 5.10 4.95 5.07 83 10.73 8.51 7.05 5.97 8.63
63 5.41 5.31 5.19 5.02 5.16 84 11.28 8.69 7.11 5.98 8.95
64 5.53 5.42 5.28 5.09 5.25 85 11.86 8.85 7.16 5.99 9.27
65 5.66 5.53 5.37 5.15 5.35
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

23
<PAGE>

<TABLE>
<CAPTION>
Annuity Tables
Payment Options applied on a Variable Basis
Amount of First Monthly Payment
For Each $1,000 Applied

Payment Option Three (variable basis) Unisex Joint and Last Survivor Annuity
- -------------------------------------------------------------------------------------------------------------------------------

Adjusted Adjusted Age of Joint Payee
Age of
First
Payee 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

50 4.09 4.10 4.12 4.14 4.15 4.16 4.18 4.19 4.20 4.21 4.23 4.24 4.25 4.26 4.27
51 4.11 4.13 4.15 4.16 4.18 4.19 4.21 4.22 4.24 4.25 4.26 4.27 4.29 4.30 4.31
52 4.14 4.16 4.17 4.19 4.21 4.23 4.24 4.26 4.27 4.29 4.30 4.31 4.33 4.34 4.35
53 4.16 4.18 4.20 4.22 4.24 4.26 4.27 4.29 4.31 4.32 4.34 4.35 4.37 4.38 4.39
54 4.18 4.21 4.23 4.25 4.27 4.29 4.31 4.33 4.34 4.36 4.38 4.40 4.41 4.43 4.44

55 4.21 4.23 4.25 4.28 4.30 4.32 4.34 4.36 4.38 4.40 4.42 4.44 4.45 4.47 4.49
56 4.23 4.26 4.28 4.30 4.33 4.35 4.37 4.40 4.42 4.44 4.46 4.48 4.50 4.52 4.53
57 4.25 4.28 4.31 4.33 4.36 4.38 4.41 4.43 4.46 4.48 4.50 4.52 4.55 4.57 4.58
58 4.28 4.30 4.33 4.36 4.39 4.42 4.44 4.47 4.50 4.52 4.55 4.57 4.59 4.61 4.64
59 4.30 4.33 4.36 4.39 4.42 4.45 4.48 4.51 4.53 4.56 4.59 4.61 4.64 4.66 4.69

60 4.32 4.35 4.38 4.41 4.45 4.48 4.51 4.54 4.57 4.60 4.63 4.66 4.69 4.72 4.74
61 4.34 4.37 4.41 4.44 4.48 4.51 4.54 4.58 4.61 4.64 4.68 4.71 4.74 4.77 4.80
62 4.36 4.40 4.43 4.47 4.50 4.54 4.58 4.61 4.65 4.68 4.72 4.75 4.79 4.82 4.85
63 4.38 4.42 4.45 4.49 4.53 4.57 4.61 4.65 4.69 4.73 4.76 4.80 4.84 4.87 4.91
64 4.40 4.44 4.48 4.52 4.56 4.60 4.64 4.68 4.73 4.77 4.81 4.85 4.89 4.93 4.97

65 4.42 4.46 4.50 4.54 4.59 4.63 4.67 4.72 4.76 4.81 4.85 4.89 4.94 4.98 5.02
66 4.43 4.48 4.52 4.57 4.61 4.66 4.70 4.75 4.80 4.85 4.89 4.94 4.99 5.03 5.08
67 4.45 4.50 4.54 4.59 4.64 4.69 4.73 4.78 4.84 4.89 4.94 4.99 5.04 5.09 5.14
68 4.47 4.51 4.56 4.61 4.66 4.71 4.76 4.82 4.87 4.92 4.98 5.03 5.09 5.14 5.20
69 4.48 4.53 4.58 4.63 4.68 4.74 4.79 4.85 4.90 4.96 5.02 5.08 5.14 5.20 5.25

70 4.50 4.55 4.60 4.65 4.71 4.76 4.82 4.88 4.94 5.00 5.06 5.12 5.19 5.25 5.31
71 4.51 4.56 4.61 4.67 4.73 4.79 4.85 4.91 4.97 5.03 5.10 5.17 5.23 5.30 5.37
72 4.52 4.58 4.63 4.69 4.75 4.81 4.87 4.93 5.00 5.07 5.14 5.21 5.28 5.35 5.42
73 4.53 4.59 4.65 4.70 4.77 4.83 4.89 4.96 5.03 5.10 5.17 5.25 5.32 5.40 5.48
74 4.55 4.60 4.66 4.72 4.78 4.85 4.92 4.99 5.06 5.13 5.21 5.29 5.37 5.45 5.53

75 4.56 4.61 4.67 4.74 4.80 4.87 4.94 5.01 5.09 5.16 5.24 5.32 5.41 5.49 5.58
76 4.57 4.63 4.69 4.75 4.82 4.89 4.96 5.03 5.11 5.19 5.28 5.36 5.45 5.54 5.63
77 4.58 4.64 4.70 4.76 4.83 4.90 4.98 5.05 5.14 5.22 5.31 5.40 5.49 5.58 5.68
78 4.58 4.65 4.71 4.78 4.85 4.92 5.00 5.07 5.16 5.24 5.33 5.43 5.52 5.62 5.73
79 4.59 4.65 4.72 4.79 4.86 4.93 5.01 5.09 5.18 5.27 5.36 5.46 5.56 5.66 5.77

80 4.60 4.66 4.73 4.80 4.87 4.95 5.03 5.11 5.20 5.29 5.39 5.49 5.59 5.70 5.81

<CAPTION>
Adjusted Adjusted Age of Joint Payee
Age of
First
Payee 70 71 72 73 74 75
<S> <C> <C> <C> <C> <C> <C>

50 4.27 4.28 4.29 4.30 4.30 4.31
51 4.32 4.33 4.33 4.34 4.35 4.36
52 4.36 4.37 4.38 4.39 4.40 4.41
53 4.41 4.42 4.43 4.44 4.45 4.46
54 4.45 4.47 4.48 4.49 4.50 4.51

55 4.50 4.52 4.53 4.54 4.55 4.56
56 4.55 4.57 4.58 4.60 4.61 4.62
57 4.60 4.62 4.64 4.65 4.67 4.68
58 4.66 4.68 4.69 4.71 4.73 4.74
59 4.71 4.73 4.75 4.77 4.79 4.81

60 4.77 4.79 4.81 4.84 4.86 4.88
61 4.82 4.85 4.88 4.90 4.92 4.95
62 4.88 4.91 4.94 4.97 4.99 5.02
63 4.94 4.97 5.01 5.04 5.07 5.09
64 5.00 5.04 5.07 5.11 5.14 5.17

65 5.06 5.10 5.14 5.18 5.22 5.25
66 5.13 5.17 5.21 5.25 5.29 5.33
67 5.19 5.24 5.28 5.33 5.37 5.42
68 5.25 5.30 5.35 5.40 5.45 5.50
69 5.31 5.37 5.43 5.48 5.54 5.59

70 5.37 5.44 5.50 5.56 5.62 5.68
71 5.44 5.50 5.57 5.64 5.70 5.77
72 5.50 5.57 5.64 5.71 5.79 5.86
73 5.56 5.63 5.71 5.79 5.87 5.95
74 5.61 5.70 5.78 5.87 5.95 6.04

75 5.67 5.76 5.85 5.94 6.04 6.13
76 5.73 5.82 5.92 6.02 6.12 6.22
77 5.78 5.88 5.99 6.09 6.20 6.30
78 5.83 5.94 6.05 6.16 6.27 6.39
79 5.88 5.99 6.11 6.23 6.35 6.47

80 5.93 6.05 6.17 6.30 6.42 6.56

24
<PAGE>

One-Year Guaranteed Rate Fixed Account Option Rider

This rider has been attached to and made a permanent part of your Contract as of
the original Contract Date. Subject to the provisions of this rider and of your
Contract, we will provide the benefits described below should you choose to
allocate a portion of your Net Purchase Payment(s) to this Fixed Account Option.

Definitions

"Exchange" - One Exchange will be deemed to occur with each voluntary transfer
from any Subaccount or any Fixed Account Option available under your Contract.

"Fixed Account" - The Fixed Account, which is part of our General Account,
consists of Accumulated Values that are allocated to it from contracts similar
to this one. We will credit these values with interest as specified in the One-
Year Guaranteed Rate Option provision, until the Annuity Date.

"General Account" - The account that contains all of our assets other than those
held in our separate accounts.

Allocations to the Fixed Account

You determine, using whole percentages, what portion of your initial Net
Purchase Payment will be allocated to this Option shown on the Schedule Page.
You may choose to allocate nothing to this Fixed Account Option. Any allocations
you do make must be at least $1,000 for Non-qualified or Qualified Contracts.
The minimum balance for this Option must be at least $1,000.

You may change the allocation for additional Net Purchase Payments at any time
by providing notice to us in writing or by phone. The change will take effect on
the date we receive notice from you.

One-Year Guaranteed Rate Option

On the date that you make an allocation to this option, we will declare an
interest rate effective for a one-year guarantee period. Each allocation will
have its own interest rate and one-year guarantee period. In no event will any
interest rate set for this option be less than 3%.

Unless you have previously given us notice directing us to do otherwise, at the
end of an allocation's one-year guarantee period, we will automatically renew
the value of that allocation for another one-year guarantee period in this
option at the rate we declare at the time of the renewal. You will have a ten-
day period, starting on the first day of the automatic renewal, during which you
may, without penalty, elect to transfer all or part of the value of that
allocation to: any of the Subaccounts then available; or any Fixed Account
Option then available. You must provide notice of your election to us by phone
or in writing within 10 days after the first day of each allocation's automatic
renewal to another one-year guarantee period.

Exchanges

You may make as many exchanges from the One-Year Guaranteed Rate Option to any
of the Subaccounts or any Fixed Account Options available under your Contract
during a Contract Year as you wish, subject to the terms and conditions set
forth for exchanges in the "Exchanging Units" section of your Contract.

However, if you make an exchange from this option at any time prior to the end
of a one-year guarantee period, we will reduce the amount exchanged by an amount
equal to the previous 90 days of interest on the amount of that exchange. The
value of this option will then be reduced by the exchange amount requested.

We guarantee that any loss of previous interest described above applicable to an
allocation will never be greater than the amount of interest credited to that
allocation in excess of 3%.

25
<PAGE>

Exchanges will be taken from your allocations to this option in the order
specified in your notice to us. If you do not specify which allocations to take
exchanges from, we will first take the exchange from the allocation with the
shortest time remaining until the end of its guarantee period, and then from the
allocation with the next shortest time remaining, and so on until the exchange
amount requested is reached.

Partial or Full Withdrawals

If you make a partial or full withdrawal from this option at any time prior to
the end of a one-year guarantee period, we will reduce the amount you withdraw
by an amount equal to the previous 90 days of interest on the amount of the
withdrawal.

As a result, you will receive an amount equal to: (a) the amount withdrawn from
this option; less (b) the applicable charges described above. The value of this
option will then be reduced by the amount withdrawn from this option.

We guarantee that any loss of previous interest described above applicable to an
allocation will never be greater than the amount of interest credited to that
allocation in excess of 3%.

Withdrawals will be taken from your allocations to this option in the order
specified in your Written Notice. If you do not specify which allocations to
take withdrawals from, we will first take the withdrawal from the allocation
with the shortest time remaining until the end of its guarantee period, and then
from the allocation with the next shortest time remaining, and so on until the
withdrawal amount requested is reached.

Deferment of Payment

We may defer payment of a partial or full withdrawal from this Fixed Account
Option for up to six months from receipt of Written Notice.

Dollar Cost Averaging

Subject to the same terms and conditions as set forth in the "Dollar Cost
Averaging" provision of your Contract and in this rider, you may elect to have a
specified dollar amount transferred from the money market portfolio to this
Fixed Account Option on a monthly basis.

Accumulated Value

On any Business Day after the Contract Date, the Accumulated Value is equal to:
(a) the Accumulated Value as defined in the Accumulated Value section of your
Contract; plus (b) any interest credited to this Fixed Account Option and any
other Fixed Account Option available under your Contract to which you have
allocated Net Purchase Payments.

This rider is subject to all the exclusions, definitions and provisions of the
Contract that are not inconsistent herewith. It will terminate when your
Contract terminates.

Providian Life and Health Insurance Company

/s/ Susan E. Martin

Susan E. Martin
Secretary

26
<PAGE>

Multi-Year Guaranteed Rate Fixed Account Option Rider

Definitions

"Exchange" - One Exchange will be deemed to occur with each voluntary transfer
from any Subaccount or any Fixed Account Option available under your Contract.

"Fixed Account" - The Fixed Account, which is part of our General Account,
consists of Accumulated Values that are allocated to it from contracts similar
to this one. We will credit these values with interest as specified in the
Multi-year Guaranteed Rate Option provision, until the Annuity Date.

"General Account" - The account that contains all of our assets other than those
held in our separate accounts.

Allocations to the Fixed Account

You determine, using whole percentages, what portion of your initial Net
Purchase Payment will be allocated to this Option as shown on the Schedule Page.
You may choose to allocate nothing to this Fixed Account Option. Any allocations
you do make must be at least $1,000 for Non-qualified or Qualified Contracts.
The minimum balance for this Option must be at least $1,000.

You may change the allocation for additional Net Purchase Payments at any time
by providing notice to us in writing or by phone. The change will take effect on
the date we receive notice from you.

Multi-year Guaranteed Rate Option

On the date that you make an allocation to this option, we will declare an
interest rate effective for the duration of the guarantee period you select.
Each allocation will have its own interest rate and guarantee period. In no
event will any interest rate set for this option be less than 3%.

Unless you have previously given us notice directing us to do otherwise, at the
end of an allocation's guarantee period, we will automatically renew the value
of that allocation for another guarantee period of the same duration as the one
just ended at the rate we declare at the time of the renewal unless such an
automatic renewal would result in a guarantee period that has an ending date
later than the Annuity Date. In this case, we will transfer the value of that
allocation to the money market portfolio.

For each allocation that is automatically renewed for another guarantee period
of the same duration, you will have a ten-day period, starting on the first day
of the automatic renewal, during which you may, without a market value
adjustment, elect to transfer all or part of the value of that allocation to:
any of the Subaccounts then available; any Fixed Account Option then available;
or to renew the value of that allocation for any guarantee period then available
under this option whose ending date is not later than the Annuity Date at the
rate we declare at the time of your renewal. You must provide notice of your
election to us by phone or in writing within 10 days after the first day of each
allocation's automatic renewal.

Exchanges

You may make as many exchanges from the Multi-year Guaranteed Rate Option to any
of the Subaccounts or any Fixed Account Options available under your Contract
during a Contract Year as you wish, subject to the terms and conditions set
forth for exchanges in the "Exchanging Units" section of your Contract.

If you have more than one allocation in the Multi-year Guaranteed Rate Option,
you may choose which allocation or allocations the exchange is to be made from.
If you do not specify which allocation or

27
<PAGE>

allocations to take the exchange from, we will first take the exchange amount
requested from the allocation with the shortest time remaining until the end of
its guarantee period and then from the allocation with the next shortest time
remaining until the end of its guarantee period until the amount of the exchange
requested is reached.

However, if you make an exchange from this option at any time prior to the end
of a guarantee period, we will increase or decrease the amount exchanged by a
market value adjustment equal to: (a) the exchange amount requested; multiplied
by (b) the Market Value Adjustment Factor described below.

We guarantee that any negative market value adjustment applicable to an
allocation will never be greater than the amount of interest credited to that
allocation in excess of 3%.

The Market Value Adjustment Factor is equal to: (N/12) x (B-E)

where:

"N" is the number of months remaining in the applicable guarantee period,
including any part of a month;

"B" is the interest rate in effect for the applicable guarantee period, which
was declared on the date of the applicable allocation to this option; and

"E" is the constant maturity Treasury rate for the duration equal to that of the
applicable guarantee period. If a constant maturity Treasury rate is not
published for that duration, we will use the published constant maturity
Treasury rate of the next longest maturity. For example, if the duration of the
guarantee period is nine years, we will use the 10-year constant maturity
Treasury rate. A constant maturity Treasury rate is the weekly average yield of
United States Treasury Securities adjusted to a constant maturity of a specified
number of years. Constant maturity Treasury rates are published in the Federal
Reserve Board Statistical Release H.15(519). Should constant maturity Treasury
rates ever change in frequency or be withdrawn from publication, we will replace
them with a comparable nationally published index.

The value of this option will be reduced by an amount equal to the exchange
amount requested.

Partial or Full Withdrawals

If you make a partial or full withdrawal from this option at any time prior to
the end of a guarantee period, the amount you withdraw will be increased or
decreased by an amount equal to: (a) the amount withdrawn; multiplied by (b) the
Market Value Adjustment Factor.

As a result, you will receive an amount equal to: (a) the amount withdrawn from
this option; adjusted by (b) a positive or negative Market Value Adjustment
Factor. The value of this option will be reduced by the amount withdrawn from
this option.

If you have more than one allocation in the Multi-year Guaranteed Rate Option,
you may choose which allocation or allocations the withdrawal is to be made
from. If you do not specify which allocation or allocations to take the
withdrawal from, we will first take the withdrawal from the allocation with the
shortest time remaining until the end of its guarantee period and then from the
allocation with the next shortest time remaining until the withdrawal amount
requested is reached.

Deferment of Payment

We may defer payment of a partial or full withdrawal from this Fixed Account
Option for up to six months from receipt of Written Notice.

Dollar Cost Averaging

Subject to the same terms and conditions as set forth in the "Dollar Cost
Averaging" provision of your Contract and this rider, you may elect to have a
specified dollar amount transferred from the money market portfolio to this
Fixed Account Option on a monthly basis.

28
<PAGE>

Accumulated Value

Death Benefit

If any portion of the Death Benefit described in your Contract is derived from
the Multi-year Guaranteed Rate Option, that portion of the Accumulated Value
will be adjusted by a positive Market Value Adjustment Factor, if applicable, as
defined above.

Annuity Payment Option Proceeds

If, on the Annuity Date, a portion of the Accumulated Value of your Contract is
allocated to this option, the proceeds to be applied under a Payment Option will
be equal to the Contract's Accumulated Value 10 Business Days prior to the
Annuity Date, less any applicable Premium Tax, adjusted by applying any positive
Market Value Adjustment Factor to that portion of the Accumulated Value that is
allocated to this option.

This rider is subject to all the exclusions, definitions and provisions of the
Contract that are not inconsistent herewith. It will terminate when your
Contract terminates.

Providian Life and Health Insurance Company

/s/ Susan E. Martin

Susan E. Martin
Secretary

29
<PAGE>

Guaranteed Equity Fixed Account Option Rider

Definitions

"Averaging Period" - The Averaging Period is the number of months prior to the
end of an allocation's guarantee period that we will use to determine the ending
value (the "Ending Value") of the S&P 500 Index at the end of that allocation's
guarantee period. In no event will the number of months comprising the Averaging
Period be less than one.

"Exchange" - One Exchange will be deemed to occur with each voluntary transfer
from any Subaccount or any Fixed Account Option available under your Contract.

"General Account" - The account that contains all of our assets other than those
held in our separate accounts.

"Index Affected Value" - At the end of an allocation's guarantee period, the
Index Affected Value is equal to (1) plus (2) where: (1) is that allocation; and
(2) is the Participation Rate for that allocation, multiplied by the percentage
change of the S&P 500 Index for that allocation (determined as described below),
multiplied by that allocation.

We calculate the percentage change of the S&P 500 Index for an allocation in the
following manner. First, the Ending Value of the S&P 500 Index is calculated for
the Averaging Period specified for that allocation. If the Averaging Period is
one month, then the closing value of the S&P 500 Index on the last business day
of the last month during the guarantee period is the Ending Value. If the
Averaging Period is greater than one month, then the average of the closing
value of the S&P 500 Index on the last business day of each month during the
Averaging Period is the Ending Value. Second, the Ending Value is divided by the
Beginning Value, which is the value of the S&P 500 Index on the date you made
that allocation. Third, one is subtracted from the value resulting from this
division.

"Participation Rate" - The Participation Rate is the rate at which you
participate in the percentage change of the S&P 500 Index for an allocation. In
no event will the Participation Rate be less than 0%.

"S&P 500 Index" - The S&P 500 Index is the Standard and Poor's Composite Stock
Price Index, as compiled and calculated by the Standard and Poor's Corporation.
Should the S&P 500 Index ever change in frequency or be withdrawn from
publication, we will replace it with a nationally published index. "S&P 500/R/"
is a trademark of The McGraw-Hill Companies, Inc. and has been licensed for use
by Providian Corporation.

The Guaranteed Equity Option is not sponsored by, endorsed, sold or promoted by
Standard & Poor's Corporation ("S&P"). S&P makes no representation or warranty,
express or implied, to investors in this Fixed Account Option or any member of
the public regarding the advisability of investing in securities generally or in
this Fixed Account Option particularly or the ability of the S&P 500 Index to
track general stock market performance. S&P's only relationship to Providian
Life and Health Insurance Company is the licensing of certain trademarks and
trade names of S&P and of the S&P 500 Index that is determined, composed and
calculated by S&P without regard to Providian Life and Health Insurance Company
or the

30
<PAGE>

Guaranteed Equity Option. S&P has no obligation to take the needs of Providian
Life and Health Insurance Company or the investors in this Fixed Account Option
into consideration in determining, composing or calculating the S&P 500 Index.
S&P is not responsible for and has not participated in the determination of the
timing of, prices at, or quantities of this Fixed Account Option to be issued or
in the determination or calculation of the equation by which this Fixed Account
Option is to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing or trading of the Guaranteed
Equity Option.

S&P does not guarantee the accuracy and/or the completeness of the S&P 500 Index
or any data included therein. S&P makes no warranty, express or implied, as to
the results to be obtained by Providian Life and Health Insurance Company,
investors in the Guaranteed Equity Option, or any other person or entity from
the use of the S&P 500 Index or any data included therein in connection with the
rights licensed by Providian Life and Health Insurance Company or fro any other
use. S&P makes no express or implied warranties, and hereby expressly disclaims
all warranties of merchantability or fitness for a particular purpose or use
with respect to the S&P 500 Index or any data included therein. Without limiting
any of the foregoing, in no event shall S&P have any liability for any special,
punitive, indirect, or such consequential damages (including lost profits), even
if notified of the possibility of such damages.

Allocations to the Fixed Account Option

You may change the allocation for additional Net Purchase Payments at any time
by providing notice to us in writing or by phone. The change will take effect on
the date we receive notice from you.

Guaranteed Equity Option

You may allocate Net Purchase Payments or exchanges to this option only on the
first Business Day of each month. We reserve the right to allow the allocation
of Net Purchase Payments or exchanges more frequently than the first Business
Day of each month at our sole discretion.

On the date you make an allocation to this option, we will declare: (a) the
duration of the guarantee period applicable to the allocation; (b) the duration
of the Averaging Period; and (c) the Participation Rate. Each allocation will
have its own guarantee period, Averaging Period, and Participation Rate.

During each allocation's guarantee period, we will establish a guaranteed fund
(the "Guaranteed Fund") applicable to that allocation and will credit interest
to that Guaranteed Fund at a guaranteed annual effective rate of 3% compounded
annually on 100% of that allocation. At the end of an allocation's guarantee
period, the value of that allocation will be equal to the greater of (a) the
Guaranteed Fund or, (b) the Index Affected Value.

At the end of an allocation's guarantee period you may, without penalty, elect
to exchange all or part of the value of that allocation to: any of the
Subaccounts then available; any Fixed Account Option then available; or to
reallocate the value of that allocation to this option at the guarantee period,
Averaging Period, and Participation Rate declared by us at the time of your
reallocation.

You must provide notice of your election to us within 30 days before the end of
each allocation's guarantee period. If we do not receive your Written Notice
within an allocation's 30-day period, we will automatically transfer the value
of that allocation to this option to the Money Market Portfolio at the end of
that allocation's guarantee period.

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Exchanges and Full and Partial Withdrawals

You may not make an exchange or a full or partial withdrawal from an allocation
to this option before the end of that allocation's guarantee period.

Dollar Cost Averaging

Subject to the terms and conditions set forth in the "Dollar Cost Averaging"
provision of your Contract and this rider, you may elect to have a specified
dollar amount transferred from the money market portfolio to the Guaranteed
Equity Option on a monthly basis.

Accumulated Value

On any Business Day after the Contract Date, the Accumulated Value is equal to:
(a) the Accumulated Value as defined in the Accumulated Value Section of your
Contract; plus (b) any interest credited to this Fixed Account Option; plus (c)
any interest credited to any other Fixed Account Options available under your
Contract to which you have allocated Net Purchase Payments.

Death Benefit

If any portion of the Death Benefit described in your Contract is derived from
the Guaranteed Equity Option, then that portion of the Death Benefit shall equal
the sum of the values of all current Guaranteed Funds.

This rider is subject to all the exclusions, definitions and provisions of the
Contract that are not inconsistent herewith. It will terminate when your
Contract terminates.

Providian Life and Health Insurance Company

/s/ Susan E. Martin

Susan E. Martin
Secretary

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<PAGE>

Dollar Cost Averaging Fixed Account Option Rider

Definitions

"Exchange" - One Exchange will be deemed to occur with each voluntary transfer
from any Subaccount or any Fixed Account Option available under your Contract.
No administrative fee will be charged for Exchanges from the DCA Fixed Account.

"Fixed Account" - The Fixed Account, which is part of our General Account,
consists of Accumulated Values that are allocated to it from contracts similar
to this one. We will credit these values with interest as specified in the DCA
Fixed Account Option provision, until the Annuity Date.

"General Account" - The account that contains all of our assets other than those
held in our separate accounts.

Allocations to the Dollar Cost Averaging Fixed Account

You may determine, using whole percentages, what portion of your initial Net
Purchase Payment, if any, will be allocated to this Option shown on the Schedule
Page. You may allocate all or any portion of subsequent Purchase Payments to the
DCA Fixed Account Option.

You may change the allocation for additional Net Purchase Payments at any time
by providing notice to us in writing or by phone. The change will take effect on
the date we receive notice from you.

Dollar Cost Averaging Fixed Account Option

We may offer a DCA Fixed Account Option. This option will have a one year
interest rate guarantee. The current interest rate we credit may vary on
different portions of the DCA Fixed Account. The credited interest rate will
never be less than the minimum effective annual interest rate of 3%.

Prior to the Annuity Date, if you have at least $5,000 in the DCA Fixed Account,
you may instruct us to automatically Exchange a specified amount from the DCA
Fixed Account to any Subaccount(s) of the Separate Account. The automatic
Exchange will occur monthly on a "first-in-first-out" basis. If the DCA request
is received prior to the 28th day of any month, the first Exchange will occur on
the 28th day of that month. If the DCA request is received on or after the 28th
day of any month, the first Exchange will occur on the 28th day of the following
month.

Prior to the Annuity Commencement Date, no Exchanges (except through automatic
Dollar Cost Averaging Exchanges) will be allowed from the DCA Fixed Account. On
the Annuity Date, any funds remaining in the DCA Fixed Account will be applied
to the Annuity Payment Option selected.

Exchanges will continue until the DCA Fixed Account value is depleted. The
amount transferred each time must be at least $250. All Exchanges from the DCA
Fixed Account will be the same amount as the initial Exchange. You may change
the amount Exchanged once per Contract Year. Changes can also be made, at any
time, to the choice of Subaccounts to which these Exchanges are allocated. We
must receive notice of any change, by phone or in writing, at least 7 days prior
to the next Exchange date. Exchanges must be scheduled for at least 6, but not
more than 24 months each time the DCA program is started or restarted following
termination of the program for any reason. If on any Exchange date, the value in
the DCA Fixed Account is equal to or less than the amount elected to have
transferred, we will transfer the entire amount and this program will no longer
be in effect.

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<PAGE>

You may discontinue automatic Dollar Cost Averaging Exchanges after satisfying
the minimum number of required Exchanges by phone or by sending written notice
to us at least 7 days prior to the next Exchange date. If the DCA program is
terminated by you for any reason, any remaining value attributable to the DCA
Fixed Account will remain in the DCA Fixed Account and will continue to earn
interest until such time as you either restart the program or make a full
withdrawal of the funds. If you wish to restart the program but have less than
$5,000 in the DCA Fixed Account, an exception will be made and Exchanges will
continue until the value in the DCA Fixed Account is depleted. You will not be
able to discontinue the automatic Exchanges until the value in the DCA Fixed
Account is depleted.

Partial or Full Withdrawals

For partial or full withdrawals, as described in the Contract to which this
Rider is attached, made during the first six Contract Years, we will reduce the
amount withdrawn by an additional amount equal to: (a) the applicable Withdrawal
Factor shown on the Contract Schedule Page; multiplied by (b) the amount of the
withdrawal which exceeds the Penalty Free Amount.

As a result, you will receive a withdrawal amount equal to: (a) the amount
withdrawn from this option; less (b) the applicable charges described above.

The value of this option will then be reduced by the amount withdrawn. Partial
withdrawals are made on a first in first out basis.

Deferment of Payment

We may defer payment of a partial or full withdrawal from this DCA Cost
Averaging Fixed Account Option for up to six months from receipt of Written
Notice.

Accumulated Value

On any Business Day after the Contract Date, the Accumulated Value under the
Contract is equal to: (a) the Accumulated Value as defined in the Accumulated
Value section of your Contract; plus (b) any interest credited to the DCA Fixed
Account Option.

This rider is subject to all the exclusions, definitions and provisions of the
Contract that are not inconsistent herewith. It will terminate when your
Contract terminates.

Providian Life and Health Insurance Company

/s/ Susan E. Martin

Susan E. Martin
Secretary

34
<PAGE>

Qualified Annuity Plan Amendment To Qualify the Contract as an Individual
Retirement Annuity (IRA)

This Amendment is part of the Contract to which it is attached

The Contract is amended as specified below to qualify as an Individual
Retirement Annuity under Section 408(b) of the Internal Revenue Code of 1986, as
amended from time to time ("the Code").

Notwithstanding any provisions in the Contract to the contrary:

A. The Annuitant will at all times be the Owner. The Annuitant's rights under
the contract shall be nonforfeitable and for the exclusive benefit of the
Annuitant and his or her beneficiary. Any provision of the Contract which
would allow joint ownership or which would allow more than one person to
share Annuity Payments is deleted.

B. The Contract may not be transferred, sold, assigned, alienated, or pledged as
collateral for a loan or as security for the performance of an obligation, or
for any other purpose, to any person; except that the Contract may be
transferred to a former spouse of the Annuitant' under a divorce decree or
written instrument incident to such divorce. In the event of such transfer,
the transferee shall for all purposes be treated as the Owner and Annuitant
under this Contract.

C. Except in the case of a "rollover contribution" as described in Section
402(a)(5), 402 (a)(6)(F), 402(a)(7), 403(a)(4), 403(b)(8), or 408(d)(3) of
the Code or a contribution made in accordance with the terms of a Simplified
Employee Pension ("SEP") as described in Section 408(k) of the code, the
premium paid (or "Purchase Payment" made, if the contract is a variable
annuity) under this contract shall not exceed $2,000 in cash, or such other
maximum as the Code may allow. The Annuitant shall have the sole
responsibility for determining whether any Premium Payment (Purchase Payment)
qualifies as a rollover contribution for income tax purposes.

D. Any refund of premiums, other than refunds attributable to excess
contributions, will be applied before the close of the calendar year
following the year of the refund toward the payment of additional premiums or
the purchase of additional benefits.

E. The Annuity Date is the date on which the entire Contract value will be
distributed or commence to be distributed. The Annuity Date shall not be
later than April 1 of the calendar year following the year in which the
Annuitant attains age 70-1/2.

The annual distribution required to be made on the Annuity Date will be for
the calendar year in which the Annuitant attains age 70-1/2. Annual Payments
for subsequent years including the year in which the Annuity Date occurs,
must be made by December 31 of that year. The amount distributed for each
year shall equal or exceed the Contract value as of the close of business on
December 31 of the preceding year, divided by the applicable life expectancy
or joint life expectancy.

F. If the Annuitant should receive a distribution from the Plan before age
59-1/2, additional Federal Income Tax will be incurred unless the early
payment is due to disability or death or distribution in the form of an
annuity payable over the life expectancy of the Annuitant and his designated
beneficiary. "Disability" means a medically determinable disability of such
nature that the Annuitant is unable to engage in any substantial gainful
activity and that it can be expected to result in death or to be of long,
continued and indefinite duration.

G. Benefit Payments may be made only (1) in one lump sum, or (2) in equal or
substantially equal amounts over (a) the Annuitant's life, or over the lives
of the Annuitant and his or her designated beneficiary, or (b) over a

35
<PAGE>

period certain that does not exceed the Annuitant's life expectancy, or the
joint life expectancy of the Annuitant and his or her beneficiary.

If the Annuitant's entire interest is to be distributed in other than lump
sum, then the minimum amount to be distributed each year, commencing with the
calendar year following the year in which the Annuitant attains age 70-1/2
and each year thereafter, shall be determined in accordance with Code Section
408(b)(3) and the regulations thereunder.

H. If the Annuitant dies after distribution of his or her interest has begun,
the remaining interest will continue to be distributed at least as rapidly as
under the method of distribution being used prior to the Annuitant's death.
If the Annuitant dies before his or her entire interest in this Contract has
been distributed, no additional premium payments (Purchase Payments) will be
accepted under this Contract after the Annuitant's death unless the
beneficiary is the Annuitant's surviving spouse.

If the Annuitant dies before any of his or her interest in the Contract has
been paid, the entire interest will be distributed no later than December 31
of the calendar year in which the fifth anniversary of the Annuitant's death
occurs unless (1) the interest is paid in substantially equal payments over a
period certain not to exceed the lifetime, or life expectancy, of a
designated beneficiary, and (2) payments begin not later than December 31 of
the calendar year following the year in which the Annuitant's death occurs.

If the designated beneficiary is the surviving spouse, the beneficiary may
elect no later than December 31 of the calendar year in which the fifth
anniversary of the Annuitant's death occurs, to receive equal or
substantially equal payments over the life or life expectancy of the
surviving spouse commencing no later than the date the Annuitant would have
attained age 70-1/2. Minimum payments will be calculated in accordance with
Code Section 408(b)(3) and the regulations thereunder. If the surviving
spouse dies before payments begin, subsequent distributions shall be made as
if the surviving spouse had been the Annuitant.

If the surviving spouse is not the beneficiary, the method of distribution
selected will assure that at least 50% of the present value of the amount
available for distribution is paid within the Annuitant's life expectancy and
that such method of distribution complies with the requirements of Code
Section 408(b)(3) and the regulations thereunder.

For purposes of this requirements, any amount paid to a child of the
Annuitant shall be treated as if it had been paid to the surviving spouse if
the remainder of the interest becomes payable to the surviving spouse when
the child reaches the age of majority.

I. For purposes of the foregoing provisions life expectancy of the Annuitant and
the joint life expectancy of the Annuitant and his or her beneficiary, shall
be computed by use of the expected return multiplies in Tables V and IV of
Sections 1.72-9 of the Income Tax Regulations, in accordance with Code
Section 408 (b)(3) and the regulations thereunder. In the case of
distributions under paragraph G above, the Annuitant's life expectancy or, if
applicable, the joint life expectancy of the Annuitant and his or her
beneficiary, will be initially determined on the basis of attained ages in
the year the Annuitant reaches age 70-1/2. In the case of a distribution
under paragraph H above, life expectancy shall be initially determined on the
basis of the computation of the Annuitant's life expectancy and the life
expectancy of his or her spouse shall be recalculated annually based on
attained ages in the year for which the required distribution is being
determined. The life expectancy of a nonspouse beneficiary shall not be
recalculated.

J. Death Benefits are subject to Federal Estate Tax.

K. We reserve the right to amend or modify the Contract or Amendment to the
extent necessary to qualify as an individual retirement annuity for federal
income tax purposes.

L. This Amendment is effective as of the Contract Date.

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<PAGE>

This Amendment is subject to all exclusions, definitions, and provisions of the
Contract which are not inconsistent herewith.

In Witness Whereof, We have caused this Amendment to be signed by Our Secretary.

Providian Life and Health Insurance Company.

Susan E. Martin
Secretary

<PAGE>

EXHIBIT 9(a)

June 3, 1998

Providian Life and Health Insurance Company
Administrative Offices
20 Moores Road
Frazer, Pennsylvania 19355

RE: PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
SEPARATE ACCOUNT V (ADVISOR'S EDGE SELECT VARIABLE ANNUITY) - OPINION
AND CONSENT

To Whom It May Concern:

This opinion and consent is furnished in connection with the filing of Post-
Effective Amendment No. 9 (the "Amendment") to the Registration Statement on
Form N-4, File No. 33-80958 (the "Registration Statement") under the Securities
Act of 1933, as amended (the "Act"), of Providian Life and Health Insurance
Company Separate Account V ("Separate Account V"). Separate Account V receives
and invests premiums allocated to it under a flexible premium multi-funded
annuity contract (the "Annuity Contract"). The Annuity Contract is offered in
the manner described in the prospectuses contained in the Registration Statement
(the "Prospectuses").

In my capacity as legal adviser to Providian Life and Health Insurance Company,
I hereby confirm the establishment of Separate Account V pursuant to a
resolution adopted by the Board of Directors of Providian Life and Health
Insurance Company for a separate account for assets applicable to the Annuity
Contract, pursuant to the provisions of Section 376.309 of the Missouri
Insurance Statutes. In addition, I have made such examination of the law in
addition to consultation with outside counsel and have examined such corporate
records and such other documents as I consider appropriate as a basis for the
opinion hereinafter expressed. On the basis of such examination, it is my
professional opinion that:

1. Providian Life and Health Insurance Company is a corporation duly organized
and validly existing under the laws of the State of Missouri.

2. Separate Account V is an account established and maintained by Providian
Life and Health Insurance Company pursuant to the laws of the State of
Missouri, under which income, capital gains and capital losses incurred on
the assets of Separate Account V are credited to or charged against the
assets of Separate
<PAGE>

Providian Life and Health Insurance Company
Separate Account V
June 3, 1998
Page 2

Account V, without regard to the income, capital gains or capital
losses arising out of any other business which Providian Life and Health
Insurance Company may conduct.

3. Assets allocated to Separate Account V will be owned by Providian Life and
Health Insurance Company. The assets in Separate Account V attributable to
the Annuity Contract generally are not chargeable with liabilities arising
out of any other business which Providian Life and Health Insurance Company
may conduct. The assets of Separate Account V are available to cover the
general liabilities of Providian Life and Health Insurance Company only to
the extent that the assets of Separate Account V exceed the liabilities
arising under the Annuity Contracts.

4. The Annuity Contracts have been duly authorized by Providian Life and
Health Insurance Company and, when sold in jurisdictions authorizing such
sales, in accordance with the Registration Statement, will constitute
validly issued and binding obligations of Providian Life and Health
Insurance Company in accordance with their terms.

5. Owners of the Annuity Contracts as such, will not be subject to any
deductions, charges or assessments imposed by Providian Life and Health
Insurance Company other than those provided in the Annuity Contract.

I hereby consent to the use of this opinion as an exhibit to the Amendment and
to the reference to my name under the heading "Legal Matters" in the
Prospectuses.

Very truly yours,

/s/ Gregory E. Miller-Breetz

Gregory E. Miller-Breetz
Attorney

<PAGE>

EXHIBIT 9(b)

JORDEN BURT BOROS CICCHETTI BERENSON & JOHNSON LLP
1025 THOMAS JEFFERSON STREET, N.W.
SUITE 400-EAST
WASHINGTON, D.C. 20007-0805
(202) 965-8100
TELECOPIER (202) 965-8104

June 3, 1998

Providian Life and Health
Insurance Company
20 Moores Road
Frazer, Pennsylvania 19355

Ladies and Gentlemen:

We hereby consent to the reference to our name under the caption "Legal
Matters" in the Prospectuses contained in Post-Effective Amendment No. 9 to the
Registration Statement on Form N-4 (file No.33-80958) filed by Providian Life
and Health Insurance Company and Providian Life and Health Insurance Company
Separate Account V with the Securities and Exchange Commission under the
Securities Act of 1933 and the Investment Company Act of 1940.

Very truly yours,

/s/ Jorden Burt Boros Cicchetti Berenson &
Johnson LLP

Jorden Burt Boros Cicchetti Berenson &
Johnson LLP

<PAGE>

Exhibit No. (10)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Auditors" and to the
use of our report dated April 24, 1998, with respect to the statutory-basis
financial statements of Providian Life and Health Insurance Company in Post-
Effective Amendment No. 9 to the Registration Statement (Form N-4 No. 33-80958)
and related Prospectus of Providian Life and Health Insurance Company Separate
Account V--Advisor's Edge Select Variable Annuity.

/s/ ERNST & YOUNG LLP

Louisville, Kentucky
May 29, 1998