CG VARIABLE ANNUITY SEPARATE ACCOUNT, 485APOS, 1996-10-02

CG VARIABLE ANNUITY SEPARATE ACCOUNT
485APOS, 1996-10-02

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As filed with the Securities and Exchange Commission on October 2, 1996

FILE NOS. 33-48137 AND 811-6691

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. [_]

[X]
Post-Effective Amendment No. 5

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

[X]
Amendment No. 7

CG VARIABLE ANNUITY SEPARATE ACCOUNT
(Exact Name of Registrant)

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
900 Cottage Grove Road
Hartford, Connecticut 06152(860) 726-6000
(Name, Address and Telephone Number of Depositor)

Robert A. Picarello, Esquire George N. Gingold, Esquire
Connecticut General Life Insurance Company 197 King Philip Drive
900 Cottage Grove Road West Hartford, CT 06117-1409
Hartford, CT 06152-2321 (To Receive Copy)
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: Continuous

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite amount of the securities offered
by this Registration Statement.

Form 24F-2 for the Registrant's fiscal year ended December 31, 1995 was filed
February 26, 1996.

It is proposed that this filing will become effective:

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

pursuant to paragraph (b) of Rule 485

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

on , pursuant to paragraph (a) of Rule 485
<PAGE>

Pursuant to Rule 481(a)

Showing Location in Part A (Prospectus) and
Part B (Statement of Additional Information)
of Registration Statement of Information Required by Form N-4

PART A

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Item of Form N-4 Prospectus Caption
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<C> <S>
1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis Summary
4. Condensed Financial Information Condensed Financial Information
5. General
(a) Depositor Connecticut General Life Insurance Company
(b) Registrant CG Variable Annuity Separate Account
(c) Portfolio Company The AIM Variable Insurance Funds
(d) Fund Prospectus The AIM Variable Insurance Funds
(e) Voting Rights Voting of Fund Shares
6. Deductions and Expenses
(a) General Contract Charges and Fees
(b) Sales Load % Withdrawal Charges
(c) Special Purchase Plan N/A
(d) Commissions Distribution of the Contracts
(e) Expenses - Registrant N/A
(f) Fund Expenses The AIM Variable Insurance Funds
(g) Organizational Expenses N/A
7. Contracts
(a) Persons with Rights Death Benefits;
Surrenders;
Annuity Provisions;
Election - Change of Annuity Option;
Designation and Change of
Beneficiary;
Exercise of Contract Rights;
Transfer of Ownership;
Death of Purchaser
Voting of Fund Shares
(b) (i) Allocation of Premium Payments Allocation of Premium Payments
(ii) Transfers Transfer Privilege
(iii) Exchanges N/A
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(c) Changes Modification;
Election - Change of
Annuity Option;
Designation and Change
of Beneficiary;
(d) Inquiries Face Page; Summary
8. Annuity Period Annuity Option
9. Death Benefit Death Benefits
10. Purchase and Contract Values
(a) Purchases Premium Payments
Purchaser's Annuity
(b) Valuation Account;
Variable Accumulation
Value;
Fixed Accumulation Value
Variable Accumulation
(c) Daily Calculation Unit Value;
Fixed Accumulation Value
Distribution of the
(d) Underwriter Contracts
11. Redemptions
(a) By Owners Surrender of Contracts
By Annuitant N/A
(b) Texas ORP N/A
(c) Check Delay Deferral of Payment
(d) Lapse N/A
Right to Examine
(e) Free Look Contracts
12. Taxes Federal Tax Matters
13. Legal Proceedings N/A
14. Table of Contents for the Statement of Additional Statement of Additional
Information Information

PART B

<CAPTION>
Statement of Additional
Item of Form N-4 Information Caption
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<C> <S>
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History (Prospectus) The Company
18. Services
(a) Fees and Expenses of Registrant N/A
(b) Management Contracts N/A
(c) Custodian Custody of Assets
Independent Public Account Experts
(d) Assets of Registrant Custody of Assets
(e) Affiliated Person N/A
(f) Principal Underwriter Distribution of the
Contracts
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<C> <S>
19. Purchase of Securities Being
Offered Distribution of the Contracts
Offering Sales Load N/A
20. Underwriters Distribution of the Contracts;
(Prospectus) Distribution of the
Contracts
21. Calculation of Performance Data Investment Experience; Historical Performance Data
22. Annuity Payments (Prospectus) Annuity Provisions;
(Prospectus) Determination of Annuity
Payments
23. Financial Statements Financial Statements
</TABLE>

PART C -- OTHER INFORMATION

<TABLE>
<CAPTION>
Item of Form N-4 Part C Caption
---------------- --------------
<C> <S>
24. Financial Statements and Exhibits Financial Statements and Exhibits
(a) Financial Statements Financial Statements
(b) Exhibits Exhibits
25. Directors and Officers of the Depositor Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Persons Controlled By or Under
Control with the Depositor or Registrant Common Control with Depositor or
Registrant
27. Number of Owners Number of Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriter
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services; (SAI)
Administration
32. Undertakings Undertakings
Signature Page Signatures
</TABLE>

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<PAGE>

PROSPECTUS

November , 1996
AIM/CIGNA HERITAGE
VARIABLE ANNUITY
This Prospectus describes the Flexible Payment Deferred Variable Annuity
Contracts with Fixed and Variable Accounts (the "Contracts") offered by
Connecticut General Life Insurance Company in individual or group form. These
Contracts are designed to aid in long-term financial planning by individuals
on a tax-deferred basis for retirement or other long-term purposes.

The Owner may elect to have Annuity Account Values accumulate on a fixed basis
in the Fixed Account, which pays interest at the applicable Guaranteed
Interest Rate(s) for the duration of the particular Guaranteed Period(s)
selected by the Owner, or on a variable basis in CG Variable Annuity Separate
Account (the "Variable Account"), a separate account of the Company, or a
combination of the two. The assets of the Variable Account are divided into
Sub-Accounts. Each Sub-Account invests in a specific series of AIM Variable
Insurance Funds, Inc. (the "Fund"), a mutual fund. Nine portfolios are
currently available for investment within the Variable Account: (1) AIM V.I.
Capital Appreciation Fund; (2) AIM V.I. Diversified Income Fund; (3) AIM V.I.
Global Utilities Fund; (4) AIM V.I. Government Securities Fund; (5) AIM V.I.
Growth Fund; (6) AIM V.I. Growth and Income Fund; (7) AIM V.I. International
Equity Fund; (8) AIM V.I. Money Market Fund; and (9) AIM V.I. Value Fund.

Annuity Account Values allocated to the Variable Account will vary in
accordance with the investment performance of the Sub-Accounts selected by the
Owner. Thus, the Owner bears the entire investment risk under the Contract for
all amounts allocated to the Variable Account. Amounts allocated to the Fixed
Account are guaranteed by Connecticut General Life Insurance Company (the
"Company") and will earn a specified rate of interest for the Guaranteed
Period(s) selected unless prematurely withdrawn or transferred, in which case
a market value adjustment will apply.

These Contracts provide for monthly annuity payments to be made by the Company
for the life of the Annuitant or for some other period, beginning on the
Annuity Date selected by the Owner. The Owner can also elect to surrender all
or a portion of the Annuity Account Value in exchange for a cash withdrawal
payment from the Company; however, withdrawals may be taxable, and/or subject
to a withdrawal charge and/or a market value adjustment ("MVA") and/or a tax
penalty and/or a deduction for State premium taxes. Under certain
circumstances, the Owner can transfer amounts between the Accounts and the
corresponding Sub-Accounts (some restrictions may apply).

This Prospectus sets forth the information that a prospective investor should
consider before investing in these Contracts. A Statement of Additional
Information about the Contracts, dated December , 1996, has been filed with
the Securities and Exchange Commission and is incorporated herein by
reference. The Statement of Additional Information is available at no cost to
any person requesting a copy by writing the Company at the address listed
below or by calling the telephone number also listed below. The table of
contents of the Statement of Additional Information is included at the end of
this Prospectus.

This Prospectus and the Statement of Additional Information generally describe
only the Contract and the Variable Account, except when the Fixed Account is
specifically mentioned.

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

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS OF
AIM VARIABLE INSURANCE FUNDS, INC. YOU SHOULD RETAIN BOTH THESE PROSPECTUSES
FOR FUTURE REFERENCE.

ANY REFERENCE IN THIS PROSPECTUS TO RECEIVED OR RECEIPT BY THE COMPANY MEANS
RECEIPT AT ITS ANNUITY & VARIABLE LIFE SERVICE CENTER MAILING ADDRESS:
ANNUIITY & VARIABLE LIFE SERVICE CENTER: ROUTING S249, HARTFORD, CT 06152-
2249. THE SERVICE CENTER'S TELEPHONE IS (800) 552-9898.
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TABLE OF CONTENTS

<TABLE>
<S> <C>
DEFINITIONS........................... 2
SUMMARY............................... 5
EXPENSE DATA.......................... 8
CONDENSED FINANCIAL INFORMATION....... 9
THE PURPOSE OF THIS PROSPECTUS........ 10
THE COMPANY, THE FIXED ACCOUNT, THE
VARIABLE ACCOUNT AND THE FUND........ 10
The Company.......................... 10
The Fixed Account.................... 10
The Variable Account................. 10
AIM Variable Insurance Funds, Inc.... 11
PREMIUM PAYMENTS AND ANNUITY ACCOUNT
VALUES DURING ACCUMULATION PERIOD.... 12
Premium Payments..................... 12
Owner's Annuity Account............. 12
Annuity Account Continuation........ 13
Allocation of Premium Payment(s).... 13
Fixed Accumulation Value............. 13
Guaranteed Periods.................. 13
Guaranteed Interest Rates........... 13
Variable Accumulation Value.......... 14
Crediting Variable Accumulation
Units.............................. 14
Variable Accumulation Unit Value.... 14
Dollar Cost Averaging................ 14
Automatic Rebalancing................ 15
Transfer Privilege................... 15
DISTRIBUTIONS UNDER THE CONTRACT...... 16
Cash Withdrawals..................... 16
Minimum Value Requirement............ 16
Section 403(b) Annuities............. 16
DEATH BENEFITS........................ 17
Death Benefit Provided by the
Contracts........................... 17
Election and Effective Date of
Election............................ 17
Payment of Death Benefit............. 17
Amount of Death Benefit.............. 17
SURRENDER OF CONTRACTS................ 18
</TABLE>
<TABLE>
<S> <C>
ANNUITY PROVISIONS..................................................... 18
Annuity Date.......................................................... 18
Election -- Change of Annuity Option.................................. 18
Annuity Options....................................................... 19
Fixed Annuity Options................................................. 19
Variable Annuity Options.............................................. 20
Determination of Annuity Payments..................................... 20
CONTRACT CHARGES AND FEES.............................................. 20
Withdrawal Charges.................................................... 20
Free Partial Withdrawal............................................... 21
Annuity Account Fee................................................... 21
Administrative Fee.................................................... 22
Premium Taxes......................................................... 22
Charge for Mortality and Expense Risks................................ 22
MVA................................................................... 22
OTHER CONTRACT PROVISIONS.............................................. 23
Deferral of Payment................................................... 23
Designation and Change of Beneficiary................................. 23
Exercise of Contract Rights........................................... 23
Transfer of Ownership................................................. 24
Death of Owner........................................................ 24
Voting of Fund Shares................................................. 24
Addition, Deletion, or Substitution of Securities..................... 25
Change in Operation of Variable Account............................... 25
Modification.......................................................... 25
Discontinuance of New Purchasers...................................... 26
Right to Examine Contracts............................................ 26
IRA Right of Revocation............................................... 26
Periodic Reports...................................................... 26
FEDERAL TAX MATTERS.................................................... 26
Introduction.......................................................... 26
Taxation of Annuities................................................. 26
Qualified Plans....................................................... 28
DISTRIBUTION OF THE CONTRACTS.......................................... 28
HISTORICAL PERFORMANCE DATA............................................ 29
STATEMENT OF ADDITIONAL INFORMATION.................................... 30
</TABLE>

DEFINITIONS

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The following terms as used in this Prospectus have the indicated meanings:

ACCUMULATION PERIOD: The period from the Date of Issue to the Annuity Date,
the date on which the Death Benefit becomes payable, or the date on which the
Contract is surrendered or annuitized, whichever is earliest.

ACT: Investment Company Act of 1940, as amended.

*ANNUITANT(S): The person or persons on whose life the first annuity payment
is to be made. The Owner shall identify the Annuitant whose name(s) shall be
set forth in the Contract Specifications. If prior to the Annuity Date the
Annuitant predeceases the Owner, the Owner becomes the Annuitant unless and
until the Owner designates a new Annuitant to the Company in writing. If joint
Annuitants are named and if one of the Annuitants predeceases the Owner prior
to the Annuity Date, the Contract will thereupon become an annuity contract on
the life of the surviving Annuitant until such time as the Owner designates
another joint Annuitant, or one or more new Annuitants. The Owner generally
has the right to change the Annuitant prior to the Annuity Date by requesting
such a change in writing to the Company. Any such requested change will not be
effective until recorded by the Company.

ANNUITY ACCOUNT: An account established for each Owner to which all Premium
Payments are credited. In addition, net investment results attributable to
Premium Payments are credited to (or charged against) the Owner's Annuity
Account.

ANNUITY ACCOUNT VALUE: The variable accumulation value, if any, plus the
fixed accumulation value, if any, of an Owner's Annuity Account for any
Valuation Period.

*ANNUITY DATE: The date on which annuity payments under the Contract
commence.

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ANNUITY OPTION: The method for making income payment(s). In the Contract,
the term "Income Payments" is synonymous with the term "annuity payments" in
this Prospectus.

BENEFICIARY: The person or entity having the right to receive the death
benefit set forth in the Contract and, for Non-Qualified Contracts, who is the
"designated beneficiary" for purposes of Section 72(s) of the Code in the
event of the Owner's death.

CERTIFICATE: (For group Contracts only) The document for each Owner which
evidences the coverage of the Owner under the Contract.

CODE: Internal Revenue Code of 1986, as amended.

COMMISSION: Securities and Exchange Commission.

COMPANY: Connecticut General Life Insurance Company.

CONTRACT: The document for each Owner which evidences the terms, conditions,
coverage, and rights of the Owner under the Contract. Thus, as used herein the
term "Contract" includes both an individual Contract and a Certificate under a
group contract.

CONTRACT APPLICATION: In states where required, the document signed by the
Owner, that evidences the Owner's application for the Contract. Includes
Certificate applications under a group contract.

CONTRACT YEARS AND CONTRACT ANNIVERSARIES: All Contract Years and Contract
Anniversaries are 12-month periods measured from the Date of Issue.

DATE OF ISSUE: The date on which the Contract becomes effective.

DUE PROOF OF DEATH: An original certified copy of an official death
certificate, an original certified copy of a decree of a court of competent
jurisdiction as to the finding of death, or any other proof of death
satisfactory to the Company.

FIXED ACCOUNT: Those Sub-Account(s) associated with Guaranteed Period(s) and
Guaranteed Interest Rate(s). Fixed Account assets are general assets of the
Company and are distinguishable from those allocated to a separate account of
the Company.

FIXED ANNUITY: An annuity with payments which do not vary as to dollar
amount.

FUND: AIM Variable Insurance Funds, Inc.

GUARANTEED PERIOD AMOUNT: Any portion of an Owner's Annuity Account Value
allocated to a specific Guaranteed Period with a specified Expiration Date
(including interest earned thereon).

GUARANTEED INTEREST RATE: The rate of interest credited by the Company on a
compound annual basis during a Guaranteed Period.

GUARANTEED PERIOD: The period for which interest, at either an initial or
subsequent Guaranteed Interest Rate, will be credited to any amounts which an
Owner allocates to a Fixed Account Sub-Account. In most states in which these
Contracts are issued, this period may be one to ten years, as elected by the
Owner.

INDEX RATE: An index rate based on the Treasury Constant Maturity Series
published by the Federal Reserve Board.

IN WRITING: The term "in writing" means in a written form satisfactory to
the Company and received by the Company at its Annuity & Variable Life Service
Center Mailing Address.

NON-QUALIFIED CONTRACT: A Contract used in connection with a retirement plan
which does not receive favorable federal income tax treatment under Sections
401, 403, 408, or 457 of the Code. The Owner of a Non-Qualified Contract must
be a natural person or an agent for a natural person for the Contract to
receive favorable income tax treatment as an annuity.

ORDER TO PURCHASE: A request to purchase a Contract, containing sufficient
information to permit the processing of such request and to issue the
Contract.

OWNER: The person(s) entitled to the ownership rights stated in the
Contract; is the Certificate Owner(s) under a group contract. The Owner, or
the Annuitant if the Owner is a non-natural person, may be no more than 85
years of age on the Date of Issue.

PAYEE: A recipient of payments under the Contract.

PREMIUM PAYMENT: Any amount paid to the Company as consideration for the
benefits provided by the Contract. Premium Payment includes the initial
Premium Payment and subsequent Premium Payments.

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QUALIFIED CONTRACT: A Contract used in connection with a retirement plan
which receives favorable federal income tax treatment under Sections 401, 403,
403, 408, or 457 of the Code.

SUB-ACCOUNT: That portion of the Fixed Account associated with a specific
Guaranteed Period and Guaranteed Interest Rate and each portion of the
Variable Account which invests in shares of a specific series of AIM Variable
Insurance Funds, Inc.

SURRENDER: When a lump sum amount representing the Owner's Annuity Account
Value (minus any applicable withdrawal charges, contract fees, or premium
taxes, and plus or minus any market value adjustment) is paid to the Owner.
After a surrender, all of the Owner's rights under the Contract are
terminated.

SURRENDER DATE: The date or deemed date the Owner elects a surrender of the
Contract or Certificate.

VALUATION DATE: Every day on which the New York Stock Exchange ("NYSE") is
open for business, except any day on which trading on the NYSE is restricted,
or on which an emergency exists, as determined by the Commission, so that
valuation or disposal of securities is not practicable.

VALUATION PERIOD: The period of time beginning on the day following the
Valuation Date and ending on the next Valuation Date. A Valuation Period may
be more than one day.

VARIABLE ACCOUNT: The separate account of the Company comprised of those
Sub-Account(s) associated with investments in AIM Variable Insurance Funds,
Inc. Variable Account assets are separate account assets of the Company, the
investment performance of which is kept separate from that of the general
assets of the Company.

VARIABLE ACCUMULATION UNIT: A unit of measure used in the calculation of the
value of the variable portion of an Owner's Annuity Account.

4
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SUMMARY

NOTE: THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION IN THE REMAINDER OF THIS PROSPECTUS, IN THE STATEMENT OF
ADDITIONAL INFORMATION, IN THE PROSPECTUS FOR AIM VARIABLE INSURANCE FUNDS,
INC., AND IN THE CONTRACT, ALL OF WHICH SHOULD BE REFERRED TO FOR MORE
INFORMATION. THIS PROSPECTUS GENERALLY DESCRIBES ONLY THE CONTRACT AND THE
VARIABLE ACCOUNT. A SEPARATE PROSPECTUS ATTACHED HERETO DESCRIBES AIM VARIABLE
INSURANCE FUNDS, INC.

THE CONTRACT. These Contracts are Flexible Payment Deferred Variable Annuity
Contracts with Fixed and Variable Accounts (the "Contracts") designed for use
in connection with retirement and tax-deferred plans, some of which may
qualify as retirement programs under Sections 401, 403, 408, or 457 of the
Code or for use on a non-tax qualified basis. The Contracts provide for the
accumulation of values on either a fixed or variable basis, or a combination
fixed and variable basis as elected by the Owner, and provide for payment of
these values on a selected future date in either one lump sum or as annuity
payments.

The Contracts are offered as both individual and group annuity contracts.
The term "Contract" as used in this Prospectus refers to either an individual
annuity contract or to a Certificate under a group annuity contract, as
appropriate.

PREMIUM PAYMENTS. The Owner must generally make a minimum initial Premium
Payment of at least $2,500 ($2,000 for IRAs). The Owner may generally make
additional Premium Payments of at least $2,500 each for allocation into any
single Guaranteed Period within the Fixed Account and/or at least $100 for
allocation into any Variable Sub-Account. The prior approval of the Company is
required before it will accept a Premium Payment in excess of $1,000,000 (See
"Premium Payments").

THE ANNUITY ACCOUNTS. The Owner may elect to have Annuity Account Values
accumulate on a fixed basis in the Fixed Account, which pays interest at the
applicable Guaranteed Interest Rate(s) for the duration of the particular Sub-
Account's Guaranteed Period, or on a variable basis in CG Variable Annuity
Separate Account (the "Variable Account"), a separate account of the Company,
or a combination of them (See "The Fixed Account" and "The Variable Account").

THE FIXED ACCOUNT. The Owner may elect to have values accumulated on a fixed
basis whereby a Premium Payment is allocated to one or more Sub-Accounts
available in connection with the Fixed Account. Each Sub-Account available
within the Fixed Account has a Guaranteed Period with a duration which ranges
from one to ten years. The Fixed Account is part of the general account of the
Company (See "The Fixed Account"). The Company guarantees these amounts and
specifies various interest rates (the "Guaranteed Interest Rates") which will
be earned by amounts allocated to each particular Sub-Account within the Fixed
Account if the amounts remain in that Sub-Account for the duration of the Sub-
Account's Guaranteed Period, subject to the imposition of Annuity Account Fees
or premium taxes. The Company may not change a Guaranteed Interest Rate for
the duration of the Sub-Account's Guaranteed Period. The Company will credit
interest at a rate of not less than three percent (3%) per year, compounded
annually, to amounts allocated to the Fixed Account. Guaranteed Interest Rates
applicable to particular Guaranteed Periods cannot be predicted and will be
determined at the sole discretion of the Company. There is no assurance that
Guaranteed Interest Rates will exceed 3% per year. Amounts that are withdrawn
or transferred prior to the end of the Guaranteed Period may be subject to a
withdrawal charge and/or an MVA. The MVA could be positive or negative.

THE VARIABLE ACCOUNT. The assets of the Variable Account are also divided
into Sub-Accounts. Each Variable Sub-Account uses its assets to purchase, at
their net asset value, shares of a specific portfolio of AIM Variable
Insurance Funds, Inc. (the "Fund"), a mutual fund registered under the Act and
advised by A I M Advisors, Inc. (See "The Variable Account".) Nine portfolios
are currently available for investment within the Variable Account: (1) AIM
V.I. Capital Appreciation Fund; (2) AIM V.I. Diversified Income Fund; (3) AIM
V.I. Global Utilities Fund; (4) AIM V.I. Government Securities Fund; (5) AIM
V.I. Growth Fund; (6) AIM V.I. Growth and Income Fund; (7) AIM V.I.
International Equity Fund; (8) AIM V.I. Money Market Fund; and (9) AIM V.I.
Value Fund.

TRANSFERS. Subject to certain conditions, the Owner may transfer amounts
among the Sub-Accounts available under the Contract before the Annuity Date.
All transfers are subject to the following conditions: (1) an Owner is limited
to twelve transfers each Contract Year unless otherwise authorized by the
Company, in writing; (2) transfers to any Variable Sub-Account may not be less
than $100; (3) transfers to any Fixed Sub-Account may not be less than $2,500;
(4) if after the transfer the Owner's Annuity Account Value remaining would be
less than $2,500 in the applicable Fixed Sub-Account and/or $50 in the
applicable Variable Sub-Account, then the entire Annuity Account Value within
the Sub-Account must be transferred; and (5) no transfers are permitted during
the "Right to Examine Contract" period. In addition, transfers from any Fixed
Sub-Account are restricted in frequency and amount and may also be subject to
the Market Value Adjustment. After the Annuity Date, transfers among the
Variable Sub-Accounts may also be permitted, subject to certain conditions
(See "Transfer Privilege").

CASH WITHDRAWALS. At any time before the Annuity Date, the Purchaser may
elect to receive a cash withdrawal payment from the Company. Each cash
withdrawal request must be to receive at least $1,000. Subject to the Free
Partial Withdrawal privilege described below, a cash withdrawal of a
Purchaser's Annuity Account Value will be subject to any applicable withdrawal
charges. A cash withdrawal will also be subject to any applicable Market Value
Adjustment, Annuity Account Fees, or State premium taxes.

Federal income taxes and a tax penalty may be applicable to withdrawals (See
"Federal Tax Matters").

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FREE PARTIAL WITHDRAWAL. Each Contract Year an Owner may generally withdraw,
in one or more transactions, up to 15% of the total amount of the Owner's
Premium Payments made to the Owner's Annuity Account without the imposition of
a withdrawal charge. The Company will deem all free withdrawals to have
withdrawn Premium Payments from an Owner's Annuity Account in the order in
which they were received by the Company for purposes of computing the
contingent deferred sales charge (the withdrawal charge) on amounts remaining
within the Owner's Annuity Account (I.E. oldest Premium Payment first). See
"Free Partial Withdrawal".

ANNUITY PAYMENTS. Annuity Payments as elected by the Owner will begin on the
Annuity Date. The Owner selects the Annuity Date and the Annuity Option. See
"Annuity Provisions".

DEATH BENEFIT. In the event of the death of the Owner prior to the Annuity
Date, the Company will pay a death benefit to the Beneficiary. If the death of
the Owner (or Annuitant if the Owner is a non-natural person) occurs on or
after the Annuity Date, no death benefit will be payable except as may be
provided under the Annuity Option elected. The Death Benefit prior to the
Annuity Date generally equals the greater of (1) the Annuity Account Value for
the Valuation Period during which the Death Benefit election is effective or
deemed to become effective, and (2) the sum of all Premium Payments under the
Contract, minus the sum of all partial withdrawals from the Contract. The
Death Benefit level for a subsequent Owner will be different from that of the
original Owner. See "Death Benefit".

RIGHT TO EXAMINE CONTRACTS. If the Owner is not satisfied with a Contract it
may be returned by mailing it to the Company at the Annuity & Variable Life
Service Center mailing address listed on the cover of this Prospectus within
ten days, or longer if state law requires, after it was received by the Owner.
An Owner may not make transfers during the Right to Examine period. When the
Company receives the returned Contract it will be canceled and in most states
the Owner will receive a refund equal to the Owner's Annuity Account Value at
the end of the Valuation Period during which the returned Contract was
received by the Company.

Where state law requires the full amount of any initial Premium Payment and
subsequent Premium Payment(s) if any, received by the Company to be refunded,
the Company will place the Premium Payment(s) that are allocated to Sub-
Accounts of the Variable Account in the AIM V.I. Money Market Fund until the
end of the Right to Examine period. This period will be deemed to commence on
the day the Contract is mailed, and on the first business day after the end of
such period, the Premium Payments will be allocated as had been specified by
the Owner.

CHARGES AND DEDUCTIONS

CONTINGENT DEFERRED SALES CHARGE. The Company does not deduct a sales charge
when it receives a Premium Payment. However, if any part of an Owner's Annuity
Account is withdrawn, a withdrawal charge (contingent deferred sales charge)
may be assessed by the Company. Subject to the Free Partial Withdrawal amount
described above, Annuity Account withdrawals derived from a Premium Payment
deposited with the Company for a period of seven years or less will be subject
to a withdrawal charge ranging from 7% to 4% of the applicable Premium Payment
(adjusted by any applicable MVA with respect to the Fixed Account). The length
of time between the Company's acceptance of a Premium Payment and the making
of a withdrawal determines the withdrawal charge percentage. The withdrawal
charge is not imposed on a Premium Payment after the end of the seventh year
of its deposit with the Company. For purposes of computing the withdrawal
charge, amounts are deemed to be withdrawn in the order in which they were
received by the Company (I.E. oldest Premium Payment first). See "Withdrawal
Charges".

MARKET VALUE ADJUSTMENT. In certain situations, a cash withdrawal of amounts
from the Fixed Account will be subject to a Market Value Adjustment. See
"MVA". The MVA will reflect the relationship between an index published by the
Federal Reserve Board as to current yields on U.S. government securities of
various maturities at the time a cash withdrawal is made, and this index at
the time that the Premium Payments being withdrawn were made. Generally, if
the Index Rate at the time of withdrawal is more than .50% lower than the
Index Rate at the time the Premium Payment was allocated, then the application
of the MVA will result in a higher payment upon withdrawal. Similarly, if the
Index Rate at the time of withdrawal is higher than the Index Rate at the time
the Premium Payment was allocated (or less than 0.50% lower), the application
of the MVA will generally result in a lower payment upon withdrawal. In
addition to actual cash withdrawals, the MVA applies to transfers from the
Fixed Account (unless effective at the end of a Guaranteed Period). The MVA is
not applied against a withdrawal or transfer which becomes effective upon the
Expiration Date of a Guaranteed Period or which is used to make a Death
Benefit payment.

ANNUITY ACCOUNT FEE. On the last Valuation Date of each contract year, the
Company will deduct an annual annuity account administration fee ("Annuity
Account Fee") of $35 from the Owner's Annuity Account Value. If the Contract
is surrendered, a $35 Annuity Account Fee will be deducted. After the Annuity
Date, an annual Annuity Account Fee of $35 will be deducted in approximately
equal amounts from each variable annuity payment made during the year. No
Annuity Account Fee will be deducted from fixed annuity payments. If
applicable state law requires, the $35 Annuity Account Fee will be reduced to
a lesser amount. Prior to the Annuity Date the annual Annuity Account Fee will
be waived each contract year that the Owner's Annuity Account Value equals or
exceeds $100,000 on the last Valuation Date of that year.

6
<PAGE>

ADMINISTRATIVE FEE. The Company also deducts an administrative fee at the end
of each Valuation Period equal to an annual rate of 0.10% of the daily net
assets of the Variable Account for administrative expenses assumed by the
Company. See "Administrative Fees".

RISK CHARGE. The Company deducts a mortality and expense risk charge at the
end of each Valuation Period equal to an annual rate of 1.15% of the daily net
assets of the Variable Account for mortality and expense risks assumed by the
Company. See "Charge for Mortality and Expense Risks".

TAXES. The Company may incur premium, or similar state or local taxes
relating to the Contracts. The Company will deduct any such taxes related to a
particular Contract upon an Owner's surrender, withdrawal, annuitization, or
payment of death benefits. See "Premium Taxes".

CHARGES AGAINST THE FUND. The value of the net assets of the Sub-Accounts of
the Variable Account will reflect the investment advisory fee and other
expenses incurred by AIM Variable Insurance Funds, Inc. See "Expense Data"
below.

7
<PAGE>

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

EXPENSE DATA

The purpose of the following table and Example is to help Owners and
prospective purchasers understand the costs and expenses that are borne,
directly and indirectly, by Owners assuming that all Premium Payments are
allocated to the Variable Account. The table reflects expenses of the Variable
Account as well as of AIM Variable Insurance Funds, Inc. The information set
forth should be considered together with the information provided under the
heading "Contract Charges and Fees", and with the Fund's Prospectus. In
addition to the expenses listed below, premium taxes may be applicable.

FEE TABLE

<TABLE>
<CAPTION>
AIM V.I. AIM V.I. AIM V.I. AIM V.I. AIM V.I. AIM V.I.
CAPITAL AIM V.I. GLOBAL GOVERNMENT AIM V.I. GROWTH AND INTER- MONEY AIM V.I.
APPRECIA- DIVERSIFIED UTILITIES SECURITIES GROWTH INCOME NATIONAL MARKET VALUE
TION FUND INCOME FUND FUND FUND FUND FUND EQUITY FUND FUND FUND
--------- ----------- --------- ---------- -------- ---------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PURCHASER TRANSACTION
EXPENSES
Sales Load on
Purchases............. 0 0 0 0 0 0 0 0 0
Maximum deferred sales
charge on withdrawals
(as a percentage of
Purchaser's Premium
Payment)(1)........... 7% 7% 7% 7% 7% 7% 7% 7% 7%
Transfer fee(2)........ 0 0 0 0 0 0 0 0 0
Annual Annuity Account
Fee(3)................
-------------------------------------------- $35 per Contract -------------------------------------
SEPARATE ACCOUNT ANNUAL
EXPENSES (AS A
PERCENTAGE OF AVERAGE
SEPARATE ACCOUNT
ASSETS)
Mortality and Expense
Risk Fee.............. 1.15% 1.15% 1.15% 1.15% 1.15% 1.15% 1.15% 1.15% 1.15%
Administrative Fee..... 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
Other Fees and
Expenses.............. 0% 0% 0 0% 0% 0 0% 0% 0%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total............... 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
AIM VARIABLE INSURANCE
FUNDS, INC. ANNUAL
EXPENSES (AS A
PERCENTAGE OF FUND
AVERAGE NET ASSETS)
Management Fees........ 0.65% 0.60% 0.65%(/4/) 0.50% 0.65% 0.65%(/4/) 0.75% 0.40% 0.65%
Other Expenses......... 0.10% 0.28% 1.03%(/4/) 0.69% 0.19% 0.52%(/4/) 0.40% 0.13% 0.10%
---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL............... 0.75% 0.88% 1.68% 1.19% 0.84% 1.17% 1.15% 0.53% 0.75%
</TABLE>
- ----------

(1) A portion of a Owner's Annuity Account may be withdrawn each Contract Year
without the assessment of a withdrawal charge if all Premium Payments have
not previously been withdrawn. The withdrawal charge on the remaining
portion is equal to a percentage of the Owner's Premium Payment withdrawn
and ranges from 7% to 0%, depending upon the length of time between the
Company's acceptance of the Premium Payment withdrawn and the making of a
withdrawal. After the Premium Payment has been held by the Company for
seven years such Premium Payment may be withdrawn without assessment of the
withdrawal charge.

(2) Before the Annuity Date, an Owner is limited to twelve transfers each
Contract Year unless otherwise authorized by the Company in writing.
Transfers from any Fixed Sub-Account are restricted in frequency and amount
and may also be subject to a MVA. After the Annuity Date, a Payee is
limited to three transfers per Contract Year.

(3) Waived for Annuity Account Values of $100,000 or more as determined on the
last Valuation Date of a contract year.

(4) Management fees and other expenses have been restated to reflect current
agreements.

8
<PAGE>

EXAMPLES An Owner would pay the following expenses on a $1,000 investment,
assuming a 5% annual return on assets (and assuming all Premium Payments are
allocated to the Variable Account):

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
1. IF THE CONTRACT IS SURRENDERED AT THE END OF THE
APPLICABLE TIME PERIOD:
AIM V.I. Capital Appreciation Fund......... $80 $124 $162 $239
AIM V.I. Diversified Income Fund........... $82 $128 $169 $252
AIM V.I. Global Utilities Fund............. $90 $135 $183 $331
AIM V.I. Government Securities Fund........ $85 $138 $184 $284
AIM V.I. Growth Fund....................... $81 $127 $167 $248
AIM V.I. Growth and Income Fund............ $85 $137 $183 $282
AIM V.I. International Equity Fund......... $85 $136 $182 $280
AIM V.I. Money Market Fund................. $78 $118 $151 $216
AIM V.I. Value Fund........................ $80 $124 $162 $239
2. IF THE CONTRACT IS NOT SURRENDERED OR IF IT IS
ANNUITIZED:
AIM V.I. Capital Appreciation Fund......... $21 $ 65 $111 $239
AIM V.I. Diversified Income Fund........... $22 $ 69 $118 $252
AIM V.I. Global Utilities Fund............. $30 $ 93 $158 $331
AIM V.I. Government Securities Fund........ $25 $ 78 $133 $284
AIM V.I. Growth Fund....................... $22 $ 68 $116 $248
AIM V.I. Growth and Income Fund............ $25 $ 77 $132 $282
AIM V.I. International Equity Fund......... $25 $ 77 $131 $280
AIM V.I. Money Market Fund................. $19 $ 58 $100 $216
AIM V.I. Value Fund........................ $21 $ 65 $111 $239
</TABLE>

The above tables are intended to assist the Owner in understanding the costs
and expenses that will be borne, directly or indirectly, by Premium Payments
allocated to the Variable Account. These include the expenses of AIM Variable
Insurance Funds, Inc. See the Fund Prospectus. In addition to the expenses
listed above, premium taxes may be applicable.

These examples reflect the annual $35 Annuity Account Fee as an annual
charge of .07% of assets, based on an anticipated average Annuity Account
Value of $50,000.

The Examples should not be considered a representation of past or future
expenses, and actual expenses may be greater or lesser than those shown.

INQUIRIES. Inquiries from Owners or prospective purchasers should be
directed to CIGNA Individual Insurance, Annuity & Variable Life Service
Center: Routing S249, Hartford, CT 06152-2249, Telephone (800) 552-9898.

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

CONDENSED FINANCIAL INFORMATION

There follows, for each of the nine Sub-Accounts available under the
Contracts during the Variable Account's fiscal year ended December 31, 1995,
information regarding the changes in the accumulation unit values during the
eleven months ended December 31, 1995, the fiscal years ended January 31, 1995
and January 31, 1994, and the number of accumulation units outstanding at
December 31, 1995. During 1995, the Account changed its fiscal year end from
January 31 to December 31, effective in the year beginning January 1, 1996.
Accordingly, the information which follows includes the eleven months
transition period ended December 31, 1995. The beginning accumulation unit
value for each Sub-Account was $10.00.

<TABLE>
<CAPTION>
NUMBER OF
ACCUMULATION UNIT ACCUMULATION UNIT ACCUMULATION UNIT ACCUMULATION UNITS
ENDING VALUE ENDING VALUE ENDING VALUE OUTSTANDING AT
SUB-ACCOUNT AT 01/31/94 AT 01/31/95 AT 12/31/95 12/31/95
----------- ----------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital
Appreciation........... $12.38041595 $11.73552614 $15.92378352 13,216,713
AIM V.I. Diversified
Income................. $10.74882414 $ 9.93099697 $11.58511339 3,747,828
AIM V.I. Global
Utilities*............. $ -- $10.23506635 $12.50840432 571,320
AIM V.I. Government
Securities............. $10.25974178 $ 9.77511075 $10.99124674 1,672,986
AIM V.I. Growth......... $11.44824866 $10.49090794 $13.97787385 7,342,011
AIM V.I. Growth and
Income*................ $ -- $10.21572537 $13.38512650 2,779,812
AIM V.I. International
Equity................. $12.29642468 $10.73834133 $13.15613040 6,249,610
AIM V.I. Money Market... $10.08363319 $10.37828057 $10.77544248 6,071,486
AIM V.I. Value.......... $11.92155242 $11.52168559 $15.50537319 16,590,052
</TABLE>
* May 2, 1994 Fund Inception Date

9
<PAGE>

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

THE PURPOSE OF THIS PROSPECTUS

This Prospectus contains information about the individual and group
AIM/CIGNA Heritage Variable Annuity Contract (the "Contract") which provides
fixed or variable accumulations or a combination of both, and fixed and/or
variable annuity payments starting at the Annuity Date. It describes the
Contract's uses and objectives, its benefits and costs, and the rights and
privileges of the Owner. It also contains information about the Company, the
Variable Account, the Fixed Account and the Fund. It has been carefully
prepared in non-technical language to help you decide whether the purchase of
a Contract will fit your needs. We urge you to read it carefully and retain it
for future reference.

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

THE COMPANY, THE FIXED ACCOUNT, THE VARIABLE ACCOUNT AND THE FUND

THE COMPANY. Connecticut General Life Insurance Company is a stock life
insurance company incorporated in Connecticut in 1865. Its Executive Office
mailing address is Hartford, Connecticut 06152, Telephone (860) 726-6000. It
does business in fifty states, the District of Columbia and Puerto Rico. The
Company issues group and individual life and health insurance policies and
annuities. The Company has various wholly-owned subsidiaries which are
generally engaged in the insurance business. The Company is a wholly-owned
subsidiary of Connecticut General Corporation, Bloomfield, Connecticut.
Connecticut General Corporation is wholly-owned by CIGNA Holdings Inc.,
Philadelphia, Pennsylvania which is in turn wholly-owned by CIGNA Corporation,
Philadelphia, Pennsylvania. Connecticut General Corporation is the holding
company of various insurance companies, one of which is Connecticut General
Life Insurance Company.

THE FIXED ACCOUNT. The Fixed Account is made up of the general assets of the
Company other than those allocated to any separate account. The Fixed Account
is part of the Company's general account. Because of applicable exemptive and
exclusionary provisions, interests in the Fixed Account have not been
registered under the Securities Act of 1933 (the "1933 Act"), and neither the
Fixed Account nor the Company's general account has been registered under the
Investment Company Act of 1940 (the "1940 Act"). Therefore, neither the Fixed
Account nor any interest therein is 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 Commission has not reviewed the disclosure in
this Prospectus relating to the Fixed Account.

The initial Premium Payment and any subsequent Premium Payment(s) will be
allocated to Sub-Accounts available in connection with the Fixed Account to
the extent elected by the Owner at the time such payment is made. In addition,
all or part of the Owner's Annuity Account Value may be transferred to such
Sub-Accounts available under the Contract as described under "Transfer
Privilege." Instead of the Owner assuming all of the investment risk as is the
case for Premium Payments allocated to the Variable Account, the Company
guarantees it will credit a specified minimum interest rate to amounts
allocated to the Fixed Account.

Assets supporting amounts allocated to Sub-Accounts within the Fixed Account
become part of the Company's general account assets and are available to fund
the claims of all creditors of the Company. All of the Company's general
account assets will be available to fund benefits under the Contracts. The
Owner does not participate in the investment performance of the assets of the
Fixed Account or the Company's general account. Instead, a specified rate of
interest, declared in advance, is credited to amounts allocated to the Fixed
Account. This rate is guaranteed to be at least 3% per year. The Company may
credit interest at a rate in excess of 3% per year; however, the Company is
not obligated to credit any interest in excess of 3% per year.

The Company will invest the assets of the general account in those assets
chosen by the Company and allowed by applicable state laws regarding the
nature and quality of investments that may be made by life insurance companies
and the percentage of their assets that may be committed to any particular
type of investment. In general, these laws permit investments, within
specified limits and subject to certain qualifications, in federal, state and
municipal obligations, corporate bonds, preferred and common stocks, real
estate mortgages, real estate and certain other investments.

If the Owner maintains Annuity Account Values within a Fixed Account Sub-
Account for the duration of the Sub-Account's Guaranteed Period, the Company
guarantees that it will credit interest at the guaranteed rate specified for
the Sub-Account. In the event the Owner withdraws any amount from the Sub-
Account prior to the expiration of the Sub-Account's Guaranteed Period for any
reason, the withdrawn amount is subjected to a MVA (see "Market Value
Adjustment") and a withdrawal charge, if applicable. The Company guarantees,
however, that an Owner will be credited with interest at a rate of not less
than 3% per year, compounded annually, on amounts allocated to any Fixed
Account Sub-Account under the Contracts, regardless of any application of the
MVA (that is, the MVA will not reduce the amount available for withdrawal or
transfer to an amount less than the initial amount allocated or transferred to
the Fixed Account Sub-Account plus interest of 3% per year). Application of
any withdrawal charge may cause the amount realized to be less than the net
interest credited at 3% per year. The Company reserves the right to defer the
payment or transfer of amounts withdrawn from the Fixed Account for a period
not to exceed six (6) months from the date a proper request for such
withdrawal or transfer is received by the Company.

THE VARIABLE ACCOUNT. The basic objective of a variable annuity contract is
to provide variable accumulation of Premium Payments which will be to some
degree responsive to changes in the economic environment, including
inflationary forces and changes

10
<PAGE>

in rates of return available from various types of investments. The Contracts
are designed to seek to accomplish this objective by providing that Annuity
Account Values and/or Variable Annuity payments will reflect the investment
performance of the Sub-Accounts of the Variable Account with respect to
amounts allocated to Sub-Accounts of the Variable Account. (See "Annuity
Options".) Since Sub-Accounts of the Variable Account are always fully
invested in shares of corresponding portfolios of the Fund, their investment
performance reflects the investment performance of those portfolios. Values of
Fund shares held by the Variable Account fluctuate and are subject to the
risks of changing economic conditions as well as the risk inherent in the
ability of the Fund's management to make necessary changes in its portfolios
to anticipate changes in economic conditions. Therefore, the Owner bears the
entire investment risk that the basic objectives of the Contract may not be
realized and that the adverse effects of inflation may not be lessened. There
can be no assurance that the total surrender proceeds or the aggregate amount
of annuity payments will equal or exceed the Premium Payments made with
respect to a particular Owner's Annuity Account.

CG Variable Annuity Separate Account (the "Variable Account") was
established by the Company as a separate account on May 15, 1992 pursuant to a
resolution of its Board of Directors. Under Connecticut insurance law, the
income, gains or losses of the Variable Account are credited to or charged
against the assets of the Variable Account without regard to the other income,
gains, or losses of the Company. These assets are held in relation to the
Contracts described in this Prospectus. Although that portion of the assets
maintained in the Variable Account equal to the reserves and other contract
liabilities with respect to the Variable Account will not be charged with any
liabilities arising out of any other business conducted by the Company, all
obligations arising under the Contracts, including the promise to make annuity
payments, are general corporate obligations of the Company.

The Variable Account is registered with the Commission as a unit investment
trust under the Act and meets the definition of a separate account under the
federal securities laws. Registration with the Commission does not involve
supervision of the management or investment practices or policies of the
Variable Account or of the Company by the Commission.

The assets of the Variable Account are divided into Sub-Accounts. Each Sub-
Account invests exclusively in shares of a specific portfolio of the Fund. All
amounts allocated to the Variable Account will be used to purchase Fund shares
as designated by the Owner at their net asset value. Any and all distributions
made by the Fund with respect to the shares held by the Variable Account will
be reinvested to purchase additional shares at their net asset value.
Deductions from the Variable Account for cash withdrawals, annuity payments,
death benefits, annuity account fees, and any applicable taxes will, in
effect, be made by redeeming the number of Fund shares at their net asset
value equal in total value to the amount to be deducted. (The Variable Account
will purchase and redeem Fund shares on an aggregate basis.) The Variable
Account will be fully invested in Fund shares at all times.

AIM VARIABLE INSURANCE FUNDS, INC. AIM Variable Insurance Funds, Inc. (the
"Fund") is an open-end investment management company registered under the Act.
Shares of the various portfolios of the Fund may be sold to other separate
accounts established by the Company or by other insurance companies to fund
other variable annuity or variable life insurance contracts. A I M Advisors,
Inc., ("AIM") the Fund's investment adviser, its affiliates, and any insurance
companies with separate accounts investing in the Fund will be responsible for
reporting to the Fund's Board of Directors any potential or existing conflicts
between the interests of variable annuity contract owners/participants and the
interests of owners of variable life insurance contracts that provide for
investment in shares of the Fund. The Board of Directors, a majority of whom
are not "interested persons" of the Fund, as that term is defined in the Act,
also will monitor the Fund to identify the existence of any such
irreconcilable material conflicts and to determine what action, if any, should
be taken by the Fund and/or AIM, and its affiliates (see "Management of the
Fund" in the Fund Prospectus).

The Fund is currently composed of nine independent portfolios of securities,
each of which has separate investment objectives and policies. Shares of the
Fund are issued in nine series, each corresponding to one of the portfolios.
Additional portfolios may be added to the Fund which may or may not be
available for investment by the Variable Account.

AIM V.I. CAPITAL APPRECIATION FUND ("CAPITAL APPRECIATION FUND") is a
diversified portfolio which seeks to provide capital appreciation through
investments in common stocks, with emphasis on medium-sized and smaller
emerging growth companies.

AIM V.I. DIVERSIFIED INCOME FUND ("DIVERSIFIED INCOME FUND") is a
diversified portfolio which seeks to achieve a high level of current income
primarily by investing in a diversified portfolio of foreign and U.S.
government and corporate debt securities, including lower rated high yield
debt securities (commonly known as "junk bonds").

AIM V.I. GLOBAL UTILITIES FUND ("GLOBAL UTILITIES FUND"), formerly AIM V.I.
Utilities Fund, is a non-diversified portfolio which seeks to achieve a high
level of current income, and as a secondary objective capital appreciation, by
investing primarily in common and preferred stocks of public utility companies
(either domestic or foreign).

AIM V.I. GOVERNMENT SECURITIES FUND ("GOVERNMENT FUND") is a diversified
portfolio which seeks to achieve a high level of current income consistent
with reasonable concern for safety of principal by investing in debt
securities issued, guaranteed or otherwise backed by the U.S. Government.

AIM V.I. GROWTH FUND ("GROWTH FUND") is a diversified portfolio which seeks
to provide growth of capital through investments primarily in common stocks of
leading U.S. companies considered by AIM to have strong earnings momentum.

11
<PAGE>

AIM V.I. GROWTH AND INCOME FUND ("GROWTH & INCOME FUND") is a diversified
portfolio which seeks to provide growth of capital, with current income as a
secondary objective by investing primarily in dividend paying common stocks
which have prospects for both growth of capital and dividend income.

AIM V.I. INTERNATIONAL EQUITY FUND ("INTERNATIONAL FUND") is a diversified
portfolio which seeks to provide long-term growth of capital by investing in
international equity securities, the issuers of which are considered by AIM to
have strong earnings momentum.

AIM V.I. MONEY MARKET FUND ("MONEY MARKET FUND") is a diversified portfolio
which seeks to provide as high a level of current income as is consistent with
the preservation of capital and liquidity by investing in a diversified
portfolio of money market instruments.

AIM V.I. VALUE FUND ("VALUE FUND") is a diversified portfolio which seeks to
achieve long-term growth of capital by investing primarily in equity
securities judged by AIM to be undervalued relative to the current or
projected earnings of the companies issuing the securities, or relative to
current market values of assets owned by the companies issuing the securities
or relative to the equity markets generally. Income is a secondary objective.

AIM is paid fees by the Fund for its services pursuant to an investment
advisory agreement. AIM, a Delaware corporation, also serves as investment
adviser to each of the funds in The AIM Family of Funds(R), and to certain
other investment companies. AIM operates as an autonomous organization and the
obligation of performance with respect to the investment advisory agreement is
solely that of AIM. The Company undertakes no obligation in this respect.

THERE IS NO ASSURANCE THAT ANY SERIES WILL ACHIEVE ITS STATED OBJECTIVE. A
more detailed description of the Fund, its investment objectives, policies and
restrictions and expenses may be found in the accompanying current Prospectus
of the Fund and in the Fund's Statement of Additional Information. Information
contained in the Fund's Prospectus should be read carefully before allocating
Premium Payments or making transfers to a Sub-Account of the Variable Account.

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

PREMIUM PAYMENTS AND ANNUITY ACCOUNT VALUES DURING ACCUMULATION PERIOD

PREMIUM PAYMENTS. All initial and subsequent Premium Payments are to be paid
to an authorized agent of the Company or to the Company at: CGLIC Annuity
Services, P.O. Box 30790, Hartford, CT 06150; or if by overnight courier:
Fleet Bank, 20 Church Street, 20th Floor MSN 275, Hartford CT 06120, Attn:
Lynn Johnson, Hartford Lock Box Department, Ref: Lock Box #30790. The Company
will not accept an initial Premium Payment from a Purchaser which is less than
$2,500 ($2,000 for IRAs). In addition, any allocation of such initial Premium
Payment must be in minimum amounts of $2,500 per Fixed Account Sub-Account and
$100 per Variable Account Sub-Account. The Company will accept subsequent
Premium Payments in minimum amounts of $2,500 (for amounts to be allocated to
each Fixed Account Sub-Account) and $100 (for amounts to be allocated to each
Variable Account Sub-Account). The Company may reduce the minimum Premium
Payment requirements under group contracts where Premium Payments are made by
each Owner through employee payroll deduction. The Company may also reduce the
minimum Premium Payment requirements for Owners who use the Contract under a
program which qualifies under Section 403 or 408 of the Code. The prior
approval of the Company is required before it will accept any Premium Payment
in excess of $1,000,000.

A completed Contract Application, if required, or Order to Purchase and the
Initial Premium Payment must be received by the Company for acceptance. Upon
acceptance, the Contract is issued to the Owner and the Initial Premium
Payment is then credited to the Owner's Annuity Account. An Initial Premium
Payment must be credited within two business days of receipt by the Company of
a completed Contract Application or Order to Purchase containing information
sufficient to issue the Contract. The Company may retain the Premium Payment
for up to five business days while attempting to obtain any missing
information. If sufficient information is not obtained within five business
days of receipt of the Premium Payment, the prospective Owner will be informed
of the reasons for the delay and the Premium Payment will be returned
immediately unless the prospective Owner specifically consents to the
Company's retaining the Premium Payment until sufficient information is
obtained.

Subsequent Premium Payments are also forwarded to the Company for
acceptance. Upon acceptance, the Premium Payment is credited to the Owner's
Annuity Account. A subsequent Premium Payment received by the Company prior to
the closing time of the New York Stock Exchange (currently 4 p.m. Eastern
Time) will be applied on the same day of receipt.

An Owner, or Annuitant if the Owner is a non-natural person, may be no more
than 85 years of age on the Date of Issue. The Company reserves the right in
its sole discretion not to accept a Premium Payment. In addition, the payment
by the Company of any amount under the Contract which is derived, all or in
part, from any Premium Payment paid to the Company by check or draft may be
postponed until such time as the Company determines the check or draft has
been honored.

OWNER'S ANNUITY ACCOUNT. The Company will establish an Owner's Annuity
Account upon its acceptance of an initial Premium Payment. Each subsequent
Premium Payment under the Contract will be credited to the Owner's Annuity
Account.

12
<PAGE>

The Company will maintain the Annuity Account for the Owner during the
Accumulation Period. The Contract's Annuity Account Value for any Valuation
Period is equal to the sum of the variable accumulation value, if any, plus
the fixed accumulation value, if any, of the Annuity Account for that
Valuation Period.

ANNUITY ACCOUNT CONTINUATION. The Annuity Account shall be continued
automatically in full force for the Owner until the earlier of: (1) the
Annuity Date; (2) all death benefits under the Contract are paid; (3) the
Contract is surrendered; and (4) the Annuity Account Value no longer meets the
requirements specified in the "Minimum Value Requirement." Cash withdrawals
may cause the Annuity Account to be discontinued by the Company.

ALLOCATION OF PREMIUM PAYMENT(S). The Initial Premium Payment and any
Subsequent Premium Payment(s) will be allocated among the Sub-Accounts
available in connection with the Fixed Account or the Variable Account, or to
a combination of both as specified by the Owner. Subject to the $2,500 Fixed
Account Sub-Account and $100 Variable Account Sub-Account minimum allocations
specified above (See "Premium Payments"), the Company will allocate the
Initial Premium Payment as specified by the Owner. Subsequent Premium Payments
will also be allocated as initially specified by the Owner unless the Company
receives different allocation instructions In Writing from the Owner.
Allocations to multiple sub-accounts will be made in whole percentages. At
this time, no more than 18 Fixed Account and Variable Account Sub-Accounts may
be opened during the life of the Contract. The Company may expand this number
at a future date. If applicable allocation instructions would result in an
allocation to a Fixed Account Sub-Account that does not meet the $2,500
minimum, then the Company will promptly seek further instructions from the
Owner regarding allocation of the premium. In certain states, with respect to
Premium Payments received before or during the Right to Examine Contract
period and allocated to the Variable Account, the Company will allocate such
Premium Payments to the AIM V.I. Money Market Fund during the Right to Examine
Contract period (see "Right to Examine Contract"). After expiration of this
period the Company will allocate the initial Premium Payment as specified by
the Owner (see "Right to Examine Contract").

FIXED ACCUMULATION VALUE. The fixed accumulation value of a Purchaser's
Annuity Account, if any, for any Valuation Period is equal to the sum of the
values of all Fixed Account Sub-Accounts credited to the Annuity Account for
such Valuation Period.

GUARANTEED PERIODS. The Owner may elect to allocate Premium Payments to one
or more Sub-Accounts within the Fixed Account. Each Sub-Account will maintain
a Guaranteed Period with a duration ranging from one to ten years. The
duration of the Guaranteed Period will affect the Guaranteed Interest Rate of
the Sub-Account. Initial Premium Payments and Subsequent Premium Payments, or
portions thereof, and transfer amounts allocated to a Fixed Account Sub-
Account, less any amounts subsequently withdrawn, will earn interest at the
Guaranteed Interest Rate during the particular Sub-Account's Guaranteed Period
unless withdrawn prior to the end of the Guaranteed Period. Initial Sub-
Account Guaranteed Periods begin on the date a Premium Payment is accepted or,
in the case of a transfer, on the effective date of the transfer, and end on
the number of calendar years in the Sub-Account's Guaranteed Period elected
from the date on which the amount was allocated to the Sub-Account (the
"Expiration Date"). Any portion of the Annuity Account Value allocated to a
specific Sub-Account with a specified Expiration Date (including interest
earned thereon) will be referred to herein as a "Guaranteed Period Amount."
Interest will be credited daily at a rate equivalent to the compound annual
rate. As a result of renewals and transfers of portions of the Annuity Account
Value described under "Transfer Privilege" below, which will begin new Sub-
Account Guaranteed Periods, amounts allocated to Sub-Accounts of the same
duration may have different Expiration Dates. Thus each Guaranteed Period
Amount will be treated separately for purposes of determining any applicable
market value adjustment (see "MVA").

The Company will notify the Owner in writing at least 60 days prior to the
Expiration Date for any Guaranteed Period Amount. A new Sub-Account Guaranteed
Period of the same duration as the previous Sub-Account Guaranteed Period will
commence automatically at the end of the previous Guaranteed Period unless the
Company receives, within the 60 day period prior to the end of such Guaranteed
Period, a written election by the Owner to transfer the Guaranteed Period
Amount, in accordance with the Transfer Privilege provision, to a different
Fixed Account Sub-Account or to a Variable Account Sub-Account from among
those being offered by the Company at such time. Transfers of any Guaranteed
Period Amount which become effective upon the expiration of the applicable
Guaranteed Period are not subject to the twelve transfers per Contract Year
limitations or the additional Fixed Sub-Account transfer restrictions (see
"Transfer Privilege").

GUARANTEED INTEREST RATES. The Company periodically will establish an
applicable Guaranteed Interest Rate for each of the Sub-Account Guaranteed
Periods within the Fixed Account. Guaranteed Interest Rates offered at any
time may be changed by the Company depending on interest rates on investments
available to the Company and other factors as described below, but once
established, rates will be guaranteed for the entire duration of the Sub-
Account's respective Guaranteed Period. However, any amount withdrawn from the
Sub-Account may be subject to any applicable withdrawal charges, Annuity
Account Fees, MVA, premium taxes or other fees. Amounts transferred out of a
Fixed Account Sub-Account prior to the end of the Guaranteed Period will be
subject to the MVA.

The Guaranteed Interest Rate will not be less than 3% per year compounded
annually, regardless of any application of the MVA. The Company has no
specific formula for determining the rate of interest that it will declare as
a Guaranteed Interest Rate, as these rates will be reflective of interest
rates available on the types of debt instruments in which the Company intends
to invest amounts allocated to the Fixed Account (see "The Fixed Account"). In
addition, the Company's management may consider other factors in

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<PAGE>

determining Guaranteed Interest Rates for a particular Sub-Account including:
regulatory and tax requirements; sales commissions and administrative expenses
borne by the Company; general economic trends; and competitive factors. There
is no obligation to declare a rate in excess of 3%; the Owner assumes the risk
that declared rates will not exceed 3%. The Company has complete discretion to
declare any rate of at least 3%, regardless of market interest rates, the
amounts earned by the Company on its investments, or any other factors.

VARIABLE ACCUMULATION VALUE. The variable accumulation value of an Owner's
Annuity Account, if any, for any Valuation Period is equal to the sum of the
value of all Variable Accumulation Units credited to the Owner's Annuity
Account for such Valuation Period.

CREDITING VARIABLE ACCUMULATION UNITS. Upon the Company's acceptance of an
Initial Premium Payment and any Subsequent Premium Payment(s), all or that
portion, if any, of the Premium Payment(s) to be allocated to any Sub-Accounts
in accordance with the allocation factors will be credited to the Owner's
Annuity Account in the form of Variable Accumulation Units. The number of
particular Variable Accumulation Units to be credited is determined by
dividing the dollar amount allocated to the particular Sub-Account by the
Variable Accumulation Unit value for the particular Sub-Account for the
Valuation Period during which the Premium Payment is received and accepted.
Subsequent Premium Payments are applied upon receipt.

VARIABLE ACCUMULATION UNIT VALUE. The Variable Accumulation Unit value for
each Sub-Account was established at $10 for the first Valuation Period of the
particular Sub-Account. The Variable Accumulation Unit value for the
particular Sub-Account for any subsequent Valuation Period is determined by
multiplying the Variable Accumulation Unit value for the particular Sub-
Account for the immediately preceding Valuation Period by the Net Investment
Factor for the particular Sub-Account for such subsequent Valuation Period.
The Variable Accumulation Unit value for each Sub-Account for any Valuation
Period is the value determined as of the end of the particular Valuation
Period and such value may increase, decrease or remain the same from Valuation
Period to Valuation Period in accordance with the Net Investment Factor. The
Net Investment Factor is an index applied to measure the investment
performance of a Variable Account Sub-Account from one Valuation Period to the
next. For a description of the Net Investment Factor and a hypothetical
example of the calculation of the value of a Variable Accumulation Unit, see
the Statement of Additional Information. The investment performance of the
portfolio of the Fund corresponding to the applicable Sub-Account, expenses,
and the deduction of certain charges affect the Variable Accumulation Unit
Value.

OPTIONAL VARIABLE ACCOUNT SUB-ACCOUNT ALLOCATION PROGRAMS

The Owner may elect to enroll in either of the following programs. However,
both programs cannot be in effect at the same time.

DOLLAR COST AVERAGING. Dollar Cost Averaging is a program which, if elected
by the Owner, systematically allocates specified dollar amounts from the Money
Market Sub-Account or the One-Year Fixed Account Sub-Account to one or more of
the Contract's Variable Account Sub-Account at regular intervals as selected
by the Owner. By allocating on a regularly scheduled basis as opposed to
allocating the total amount at one particular time, an Owner may be less
susceptible to the impact of market fluctuations.

Dollar Cost Averaging may be selected by establishing a Money Market Sub-
Account of at least $1,000 or the One-Year Fixed Account Sub-Account value of
at least $2,500. The minimum amount per month to allocate is $50 (subject to
the 18 Sub-Account limitation described under "Allocation of Premium Payments"
above). Enrollment in this program may occur at any time by calling the
Annuity & Variable Life Service Center or by providing the information
requested on the Dollar Cost Averaging election form to the Company and
ensuring that sufficient value is in the Money Market Sub-Account or the One-
Year Fixed Account Sub-Account. Transfers to any Fixed Account Sub-Account or
from a Fixed Account Sub-Account other than the One-Year Fixed Account Sub-
Account are not permitted under Dollar Cost Averaging. The Company may, at its
sole discretion, waive Dollar Cost Averaging minimum deposit and transfer
requirements.

Dollar Cost Averaging will terminate when any of the following occurs: (1)
the number of designated transfers has been completed; (2) the value of the
Money Market Sub-Account or the One-Year Fixed Sub-Account is insufficient to
complete the next transfer; (3) the Owner requests termination by telephone or
in writing and such request is received at least one week prior to the next
scheduled transfer date to take effect that month; or (4) the Contract is
surrendered.

The Dollar Cost Averaging program may not be active following the Annuity
Date. There is no current charge for Dollar Cost Averaging but the Company
reserves the right to charge for this program.

The Company does not control the Fund and cannot guarantee that it or any
Series thereunder will accept transfers under the Dollar Cost Averaging
program. Therefore, the Company reserves the right to discontinue or change
this program at any time. THERE IS NO GUARANTEE THAT THE DOLLAR COST AVERAGING
PROGRAM WILL RESULT IN ANNUITY ACCOUNT VALUES WHICH EQUAL OR EXCEED ANY
INITIAL PREMIUM PAYMENT OR SUBSEQUENT PREMIUM PAYMENT MADE. The Dollar Cost
Averaging program may not achieve its objective. There is no guarantee that
the program will result in a profit, or protect against loss, nor is there any
guarantee that it produces better results than a single lump-sum investment.

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<PAGE>

AUTOMATIC REBALANCING. Automatic Rebalancing is an option which, if elected
by the Owner, periodically restores to a pre-determined level the percentage
of Contract Value allocated to each Variable Account Sub-Account (e.g. 20%
Money Market, 50% Growth, 30% Utilities). This pre-determined level will be
the allocation initially selected when the Contract was purchased, unless
subsequently changed. The Automatic Rebalancing allocation may be changed at
any time by submitting a request to the Company.

If Automatic Rebalancing is elected, all Net Premium Payments allocated to
the Variable Account Sub-Accounts must be subject to Automatic Rebalancing.
The Fixed Account Sub-Account is not available for Automatic Rebalancing.

Automatic Rebalancing may take place on either a quarterly, semi-annual or
annual basis, as selected by the Owner. Once the rebalancing option is
activated, any Variable Account Sub-Account transfers executed outside of the
rebalancing option will terminate the Automatic Rebalancing option. Any
subsequent premium payment or withdrawal that modifies the net account balance
within each Variable Account Sub-Account may also cause termination of the
Automatic Rebalancing option. Any such termination will be confirmed to the
Owner. The Owner may terminate the Automatic Rebalancing option or re-enroll
at any time by calling or writing the Annuity & Variable Life Service Center.

The Automatic Rebalancing program may not be active following the Annuity
Date. There is no current charge for Automatic Rebalancing but the Company
reserves the right to charge for this program.

TRANSFER PRIVILEGE

ACCUMULATION PERIOD. During the Accumulation Period the Owner may, upon
request, transfer all or part of any of the Purchaser's Annuity Account
Value(s) to one or more Sub-Accounts available under the Contract. Transfers
from Fixed Account Sub-Accounts and Variable Account Sub-Accounts are subject
to the following conditions: (1) an Owner is limited to twelve transfers each
Contract Year unless otherwise authorized by the Company in writing; (2) the
amount being transferred may not be less than $1,000 from a Fixed Account Sub-
Account or $100 from a Variable Account Sub-Account, unless the entire value
of the Fixed or Variable Account Sub-Account is being transferred; (3) the
amount transferred to any Fixed Account Sub-Account may not be less than
$2,500, or $100 to a Variable Account Sub-Account; (4) the Annuity Account
Value remaining in a Fixed Sub-Account may not be less than $2,500, and not
less than $50 in a Variable Sub-Account; and (5) no transfers are permitted
during the Right to Examine period. With the exception of transfers of any
Guaranteed Period Amount which become effective upon the expiration of the
applicable Guaranteed Period, all transfers from any Fixed Sub-Account are
subject to the following additional conditions: (1) an Owner may make only one
transfer from each Fixed Sub-Account in any Contract Year; and (2) The amount
transferred from any Fixed Sub-Account may not exceed 15% of the Annuity
Account Value in the Sub-Account on the transfer's effective date. Transfers
from Fixed Account Sub-Accounts may be subject to a MVA. Amounts transferred
into a Fixed Account Sub-Account will earn interest at the Guaranteed Interest
Rate declared by the Company for that Guaranteed Period as of the effective
date of the transfer (subject to any future MVA).

The Company reserves the right to otherwise restrict the transfer privilege
in any way or to eliminate it entirely. The Company also reserves the right to
defer transfer of amounts from the Fixed Account for a period not to exceed
six (6) months from the date a request for such transfer is received by the
Company.

Transfer requests in Writing must be upon a form acceptable to the Company.
Telephone transfers will be allowed automatically, unless the Owner
specifically declines this privilege in the Contract Application or Order to
Purchase. Owners may effect telephone transfers by calling the Annuity &
Variable Life Service Center.

The Company will take the following procedures to confirm that instructions
communicated by telephone are genuine. Before a service representative accepts
any request, the caller will be asked for specific information to validate the
request. All calls will be recorded. All transactions performed will be
confirmed by the Company in writing. The Company is not liable for any loss,
cost or expense for acting on telephone instructions which are believed to be
genuine in accordance with these procedures.

Transfers of all or a portion of any Guaranteed Period Amount will be
subject to the MVA described below unless the transfer becomes effective upon
the Expiration Date of such Guaranteed Period. Transfers involving Variable
Accumulation Units shall be subject to such terms and conditions as may be
imposed by the Fund. A transfer from a Sub-Account of the Variable Account
will be effective on the date the request for transfer is received by the
Company, provided such request is received by the Company prior to 4:00 p.m.
Eastern Time on a day which the New York Stock Exchange is open for business.
Otherwise, the transfer will become effective the next succeeding day upon
which the New York Stock Exchange is open for business. Under current law,
there will not be any tax liability to the Owner for making a transfer.

ANNUITY PERIOD. After the Annuity Date the Payee may, by filing a request in
writing with the Company, exchange the value of a designated number of Annuity
Units of particular Variable Sub-Accounts then credited under the Contract
into other Annuity Units, the value of which would be such that the dollar
amount of an annuity payment made on the date of the exchange would be
unaffected by the exchange. Each Payee is limited to three exchanges per
Contract Year after the Annuity Date, and such exchanges may be made only
between Variable Account Sub-Accounts. Exchanges will be made using the
Annuity Unit values for the Valuation Period during which any request for
exchange is received by the Company.

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<PAGE>

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DISTRIBUTIONS UNDER THE CONTRACT

CASH WITHDRAWALS. At any time prior to the Annuity Date and during the
lifetime of the Owner, or of the Annuitant if the Owner is a non-natural
person, an Owner may elect to receive a cash withdrawal payment from the
Company. Any such withdrawal from the Variable Account will be effective on
the date that it is received by the Company and will be processed within seven
days of the Company's receipt of such request, except as the Company may be
permitted to defer such payment in accordance with the Act and applicable
state insurance law.

The Owner may request a full surrender (see "Surrender of the Contracts") or
a partial cash withdrawal. A request for a partial withdrawal will result in
the cancellation of a portion of the Owner's Annuity Account Value equal to
the dollar amount of the cash withdrawal payment, plus or minus any applicable
MVA plus any applicable withdrawal charge and premium taxes. The Company, upon
request, will advise the Owner of the amounts that would be payable in the
event of a full surrender or partial withdrawal.

A partial cash withdrawal must be in a minimum amount of at least $1,000.
When electing such a partial withdrawal, the Owner must instruct the Company
as to: 1) the amount to be withdrawn; and 2) the Sub-Account(s) from which the
withdrawal shall occur. Partial withdrawals may not reduce the total Annuity
Account Value below $1,000. In the event the Owner does not specify the Sub-
Account(s) from which the withdrawal shall occur, the Company will withdraw
the requested amount pro-rata from each Sub-Account maintained by the Owner.
If such a pro-rata withdrawal reduces the value of any Fixed Sub-Account
balance below $2,500 and/or any Variable Sub-Account balance below $50, the
Company will transfer the value of those Sub-Accounts to that Variable Sub-
Account of the Owner maintaining the highest value, or to the Fixed Account if
there is no Variable Sub-Account maintaining a balance greater than $50.

ALL CASH WITHDRAWALS FROM ANY FIXED ACCOUNT SUB-ACCOUNT WILL BE SUBJECT TO
THE MVA, EXCEPT THOSE WHICH BECOME EFFECTIVE UPON THE EXPIRATION DATE OF SUCH
SUB-ACCOUNT'S GUARANTEED PERIOD. If an Owner makes a partial cash withdrawal,
the Company will assess any applicable withdrawal charge, MVA, and premium
taxes pro rata against the amounts remaining in each Sub-Account to which an
Owner's Annuity Account is allocated. If a full Surrender of the Contract is
requested by the Owner, the Company will assess any applicable withdrawal
charges, MVA, Annuity Account Fee, and premium taxes against the amount
withdrawn. See "Contract Charges and Fees". The Annuity Account Fee and any
applicable MVA will be deducted from the Annuity Account before the
application of any withdrawal charge.

The Company reserves the right to defer the payment of amounts withdrawn or
transferred from the Fixed Account for a period not to exceed six (6) months
from the date written request for such withdrawal or transfer is received by
the Company. (See "Deferral of Payment.")

Cash withdrawals from a Variable Account Sub-Account will result in the
cancellation of Variable Accumulation Units attributable to the Owner's
Annuity Account with an aggregate value on the effective date of the
withdrawal equal to the total amount by which the Annuity Account Value is
reduced (which amount will include any applicable withdrawal charge). The
cancellation of such units will be based on the Variable Accumulation Unit
values of the Variable Account Sub-Accounts at the end of the Valuation Period
during which the cash withdrawal request is received.

A cash withdrawal may have federal income tax consequences. See "Federal Tax
Matters".

MINIMUM VALUE REQUIREMENT. If a partial withdrawal is requested which would
cause an Owner's Annuity Account Value to fall to less than $1,000, then the
partial withdrawal will be treated as a request for a full surrender. In
addition, the Company will terminate a Contract and pay the Owner as if the
Contract were surrendered if no Premium Payments are made to the Company under
the Contract for three consecutive years and the Annuity Account Value has
fallen below $1,000 during this period. Prior to exercising this right to
terminate, the Company will provide the Owner with thirty (30) days notice and
the opportunity to make an additional Premium Payment to increase the Annuity
Account Value above the minimum amount. On termination, the Owner will receive
the amount which would have been paid had the Contract been fully surrendered.
The Company also reserves the right to transfer any Fixed Sub-Account balance
which has a value below $2,500 and any Variable Sub-Account balance which has
a value below $50 to that Variable Sub-Account of the Owner maintaining the
highest value, or to the Fixed Account if there is no Variable Account Sub-
Account maintaining a balance greater than $50.

SECTION 403(B) ANNUITIES. The Code imposes restrictions on cash withdrawals
from Contracts used with Section 403(b) Annuities. In order for these
Contracts to receive tax deferred treatment, the Contract must provide that
cash withdrawals of amounts attributable to salary reduction contributions
(other than withdrawals of accumulation account value as of December 31, 1988
("Pre-1989 Salary Reduction Account Value")) may be made only when the Owner
attains age 59 1/2, separates from service with the employer, dies or becomes
disabled (within the meaning of Section 72(m)(7) of the Code). These
restrictions apply to any growth or interest on or after January 1, 1989 on
Pre-1989 Salary Reduction Account Value(s), salary reduction contributions
made on or after January 1, 1989, and any growth or interest on such
contributions ("Restricted Annuity Account Value(s)").

Withdrawals of Restricted Annuity Account Value(s) are also permitted in
cases of financial hardship, but only to the extent of contributions; earnings
on contributions cannot be withdrawn for hardship reasons. Hardship (and
other) withdrawals may be subject

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<PAGE>

to a 10% tax penalty, in addition to any withdrawal charge, MVA, Annuity
Account Fee, and premium taxes applicable under the Contract.

Under the terms of a particular Section 403(b) plan, the Owner may be
entitled to transfer all or a portion of the Annuity Account Value to one or
more alternative funding options. An Owner should consult the documents
governing his or her plan and the person who administers the plan for
information as to such investment alternatives.

With respect to these restrictions on withdrawals from the Variable Account,
the Company is relying upon a no-action letter dated November 28, 1988 from
the staff of the Commission to the American Council of Life Insurance, the
requirements for which have been or will be complied with by the Company.

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DEATH BENEFITS

DEATH BENEFIT PROVIDED BY THE CONTRACTS. In the event of the death of any
Owner prior to the Annuity Date, the Company will pay a death benefit to the
Beneficiary upon receipt of due proof of death of the Owner. If there is no
designated Beneficiary living on the date of death of the deceased Owner, the
Company will, upon receipt of due proof of death of both the deceased Owner
and the designated Beneficiary, pay the death benefit in one lump sum to the
deceased Owner's estate. If the death of any Annuitant occurs on or after the
Annuity Date, no death benefit will be payable under the Contract except as
may be provided under the Annuity Option elected.

ELECTION AND EFFECTIVE DATE OF ELECTION. During the lifetime of the Owner
and prior to the Annuity Date, the Owner may elect In Writing to have the
death benefit applied under the Annuity Options for the Beneficiary after the
death of the Owner.

If no death benefit payment method is in effect on the date of the Owner's
death, the Beneficiary may elect (a) to receive the death benefit in the form
of a single cash payment; or (b) to have the death benefit applied under the
Annuity Options (on the Annuity Date described under "Payment of Death
Benefit") for the Beneficiary. Such election may be made by filing with the
Company an election in writing. An Owner's election of an Annuity Option
specifying the method by which the death benefit shall be paid will become
effective on the date it is received by the Company. Any Annuity Option
elected by the Beneficiary will become effective on the later of: (a) the date
the election is received by the Company; or (b) the date due proof of the
death of the deceased Owner is received by the Company. If an election by the
Beneficiary is not received by the Company within 60 days following the date
due proof of the death of the Owner is received by the Company, the
Beneficiary will be deemed to have elected on such 60th day to receive the
death benefit in the form of a single cash payment.

The Annuity Option elected by the Owner or the Beneficiary may be restricted
by the Code. See "Federal Tax Matters" for further discussion.

PAYMENT OF DEATH BENEFIT. If the death benefit is to be paid in cash to the
Beneficiary, subject to the Company's receipt of due proof of death, payment
will be made within seven days of the date the election becomes effective or
is deemed to become effective, except as the Company may be permitted to defer
any such payment of amounts derived from the Variable Account in accordance
with the Act. If the death benefit is to be paid in one lump sum to the estate
of the Owner, payment will be made within seven (7) days of the date due proof
of the death of the Owner and/or the designated Beneficiary, as applicable, is
received by the Company except as the Company may be permitted to defer any
such payment of amounts derived from the Variable Account in accordance with
the Act. If payment is to be made under any of the Annuity Options, the
Annuity Date will be thirty (30) days following the effective date or the
deemed effective date of the election, and the Owner's Annuity Account will be
maintained in effect until the Annuity Date.

AMOUNT OF DEATH BENEFIT. No MVA or withdrawal charges are assessed against
amounts which are applied toward payment of a death benefit. The amount of the
death benefit is determined as of the effective date or deemed effective date
of the death benefit election (not as of the date of death), and unless there
is a transfer of ownership, is equal to the greater of (1) the Annuity Account
Value for the Valuation Period during which the Death Benefit election is
effective or deemed to become effective, and (2) the sum of all Premium
Payments made under the Contract, less the sum of all partial withdrawals from
the Contract.

On and after the effective date of each transfer of ownership, the amount of
the Death Benefit applicable to the new Owner will be equal to the greater of
(1) Annuity Account Value on the date of such transfer of ownership, plus the
sum of all Premium Payments made on or after the effective date of such
transfer, less the sum of all partial withdrawals made on or after the
effective date of such transfer, or (2) the Annuity Account Value for the
Valuation Period during which the Death Benefit election is effective or is
deemed to become effective.

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<PAGE>

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SURRENDER OF THE CONTRACTS

At any time before the Annuity Date, the Owner may elect to surrender the
Contract and receive a cash payment from the Company. On the Surrender Date
the Owner's Annuity Account will be canceled and the Annuity Account Value,
minus any applicable withdrawal charges, Annuity Account Fee, and premium
taxes, and plus or minus any applicable MVA, will be paid to the Owner within
seven days of the Surrender Date in the form of a cash payment except as the
Company may be permitted to defer any such payment of amount derived from the
Variable Account in accordance with the Act. The Company reserves the right,
however, to defer the payment of amounts withdrawn from the Fixed Account for
a period not to exceed six (6) months from the date written request for such
withdrawal is received by the Company.

Because withdrawals from an Owner's Annuity Account may be subject to a
withdrawal charge, a MVA, and applicable taxes and fees, and because the Owner
assumes the investment risk with respect to amounts allocated to the Variable
Account, the total amount paid upon total surrender of the Contract (taking
any prior cash withdrawals into account) may be more or less than the total
Premium Payments made. Following a surrender of the Contract, or if the
Contract terminates for any other reason, all rights of the Owner, Annuitant,
and Beneficiary will terminate.

A surrender may have federal income tax consequences. See "Federal Tax
Matters".

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ANNUITY PROVISIONS

ANNUITY DATE. Annuity payments will begin on the first day of the month
following the Annuity Date selected by the Purchaser, as specified in the
Contract Application or Order to Purchase. In most states, the date selected
by the Owner may not be sooner than 30 days following the Date of Issue. This
date may be changed by the Owner from time to time by notifying the Company in
writing, provided that notice of each change is received by the Company at
least 45 days prior to the then current Annuity Date and the new Annuity Date
is a date which is: (1) at least 30 days after the effective date of the
change; (2) the first day of a month; and (3) not later than the first day of
the first month following the Annuitant's 90th birthday, unless otherwise
restricted, in the case of a Qualified Contract, by the particular retirement
plan or by applicable law. The Annuity Date may also be changed by an election
of an Annuity Option as described in the Death Benefit section of this
Prospectus.

On the Annuity Date the Owner's Annuity Account will be canceled and the
Annuity Account Value, minus any applicable Annuity Account Fee and premium
taxes, will be applied to provide an annuity under one or more of the options
described below. No MVA or withdrawal charges will be imposed upon amounts
applied to purchase an annuity. NO PAYMENTS MAY BE REQUESTED UNDER THE
CONTRACT'S CASH WITHDRAWAL PROVISIONS ON OR AFTER THE ANNUITY DATE.

Since the Contracts offered by this Prospectus may be issued in connection
with retirement plans which meet the requirements of Section 401, 403, 408, or
457 of the Code, as well as certain non-qualified plans, reference should be
made to the terms of the particular plan for any limitations or restrictions
on the Annuity Date.

ELECTION -- CHANGE OF ANNUITY OPTION. During the lifetime of the Owner and
prior to the Annuity Date, the Owner may elect one or more of the Annuity
Options described below, or such other Annuity Option as may be agreed to by
the Company. The Owner may also change any election, but notice in writing of
any election or change of election must be received by the Company at least 45
days prior to the Annuity Date.

If no election is in effect on the 30th day prior to the Annuity Date and
the Contract is used by the Owner in connection with a retirement plan which
meets the requirements of either Section 401 (including Section 401(k)),
Section 403, Section 408(c), Section 408(k), or Section 457 of the Code, the
Joint and Survivor Annuity described below or Life Annuity, whichever is
applicable, will be deemed to have been elected if required by such retirement
plan. If the Contract is not used by the Owner in connection with one of these
plans, the Owner will be deemed to have elected Life Annuity with 120 Monthly
Payments Certain.

At any time the Owner may (in writing) request annuitization of the then
current Annuity Account Value in accordance with any one of the Annuity
Options described below. In such event, no withdrawal charge or MVA will be
imposed at the time payments under the Annuity Option begin. Such
annuitization will automatically result in a change in the Annuity Date to the
date payments commence under the Annuity Option elected.

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<PAGE>

Reference should be made to the terms of a particular retirement plan and
any applicable legislation for any limitations or restrictions on the options
which may be elected. NO CHANGE OF ANNUITY OPTION IS PERMITTED AFTER THE
ANNUITY DATE.

ANNUITY OPTIONS. The Contract provides for seven different Annuity Options
which are described below. Four are fixed annuity options, and three are
variable annuity options. An Owner may elect a Fixed Annuity, a Variable
Annuity, or a combination of both. If electing a combination, the Owner must
specify what part of the Annuity Account is to be applied to each Fixed and
Variable Annuity Option. (If no such election is received by the 30th day
prior to the Annuity Date, the portion of the Annuity Account to be applied
for a Fixed Annuity and/or a Variable Annuity will be determined on a pro rata
basis from the composition of the Annuity Account on the Annuity Date. Thus,
any amounts in the Variable Account will be applied to a Variable Annuity, and
amounts in the Fixed Account will be applied to a Fixed Annuity.) Variable
Annuity payments will be based on the Sub-Account(s) selected by the Owner, or
on the allocation of the Annuity Account Value among the Sub-Accounts.

A FIXED ANNUITY provides for Annuity Option payments which will remain
constant pursuant to the terms of the Annuity Option elected. The effect of
choosing a Fixed Annuity is that the amount of each payment will be set on the
Annuity Date and will not change. If a Fixed Annuity is selected, the Variable
Account used to provide the Fixed Annuity will be transferred to the general
account of the Company, and the annuity payments will be fixed in amount by
the fixed annuity provisions selected and, for some options, the settlement
age of the Annuitant (determined in accordance with the Contract). The Fixed
Annuity payment amounts are determined by applying the Annuity Payment Rates
found in the Contract to the portion of the Annuity Account Value allocated to
the Fixed Annuity Option selected by the Owner, or, if more favorable to the
Payee(s), by applying the Annuity Payment Rates published by the Company and
in use on the Annuity Date. The rates found in the Contracts show, for each
$1,000 applied, the dollar amount of the monthly fixed annuity payment. This
rate may be changed by the Company with respect to Contracts established after
the effective date of such change (see "Modification").

A VARIABLE ANNUITY provides for payments that fluctuate or vary in dollar
amount, based on the investment performance of a Variable Account Sub-Account.
The Variable Annuity purchase rate tables in the Contract reflect an assumed
interest rate of 3%, so if the actual net investment performance of the Sub-
Account is less than this rate, then the dollar amount of the actual annuity
payments will decrease. If the actual net investment performance of the Sub-
Account is higher than this rate, then the dollar amount of the actual annuity
payments will increase. If the net investment performance exactly equals the
3% rate, then the dollar amount of the actual annuity payments will remain
constant.

The amount of the first Variable Annuity payment is determined by the
variable annuity provisions selected and, for some options, the settlement age
of the Annuitant (determined in accordance with the Contract). All Variable
Annuity payments other than the first are determined by means of Annuity Units
credited to the contract with respect to the particular payee. The number of
Annuity Units to be credited in respect of a particular Sub-Account is
determined by dividing that portion of the first Variable Annuity payment
attributable to that Sub-Account by the Annuity Unit Value of that Sub-Account
for the Valuation Period which ends immediately preceding the Annuity Date.
The number of Annuity Units of each Sub-Account credited with respect to the
particular payee then remains fixed unless an exchange of Annuity Units is
made pursuant to the "Transfer Privilege -- Annuity Period" section. The
dollar amount of each Variable Annuity payment after the first may increase,
decrease or remain constant, and is equal to the sum of the amounts determined
by multiplying the number of Annuity Units of a particular Sub-Account for the
Valuation Period which ends immediately preceding the due date of each
subsequent payment by the Annuity Unit Value for that Sub-Account for the
first Valuation Period occurring on or immediately prior to the first day of
each month. The annual Annuity Account Fee is deducted, pro rata, from each
Variable Annuity payment.

The Owner may choose to receive annuity payments under any one of the
Annuity Options described below. The Company may consent to other plans of
payment before the Annuity Date.

If the Contract is used by the Owner in connection with a retirement plan
which meets the requirements of either Section 401 (including Section 401(k)),
Section 403, Section 408(c), Section 408(k), or Section 457 of the Code, a
Joint and Survivor Annuity will be offered under the Contract. A Joint and
Survivor Annuity provides for monthly payments payable during the joint
lifetime of the Payee and a designated second person and during the lifetime
of the survivor. During the lifetime of the survivor the monthly payment
payable will be determined in the same manner as during the joint lifetime of
the Payee and the designated second person.

FIXED ANNUITY OPTIONS

LIFE ANNUITY OPTION. An annuity payable monthly to the Payee during the
lifetime of the Annuitant, ceasing with the last payment due prior to the
death of the Annuitant. Under this option, only one payment will be made if
the Annuitant dies before the second payment is made, only two payments will
be made if the Annuitant dies before the third payment is made, etc.

LIFE ANNUITY WITH CERTAIN PERIOD OPTION. An Annuity providing monthly income
to the Payee for a fixed period of 60, 120, 180, or 240 months (as selected),
and for as long thereafter as the Annuitant lives.

CASH REFUND LIFE ANNUITY OPTION. An annuity payable monthly to the Payee
during the lifetime of the Annuitant ceasing with the last payment due prior
to the death of the Annuitant provided that, at the death of the Annuitant,
the Payee will receive an additional

19
<PAGE>

payment equal to the excess, if any, of (a) over (b) where: (a) is the initial
value of the proceeds applied under this option; and (b) is the dollar amount
of payments already paid.

ANNUITY CERTAIN OPTION. An amount payable monthly for the number of years
selected which may be from 5 to 30 years.

VARIABLE ANNUITY OPTIONS

VARIABLE LIFE ANNUITY OPTION. A Variable Annuity payable monthly to the
Payee during the lifetime of the Annuitant, ceasing with the last payment due
prior to the death of the Annuitant. Under this option, only one payment will
be made if the Annuitant dies before the second payment is made, only two
payments will be made if the Annuitant dies before the third payment is made,
etc.

VARIABLE LIFE ANNUITY WITH CERTAIN PERIOD OPTION. A Variable Annuity
providing monthly income to the Payee for a fixed period of 60, 120, 180, or
240 months (as selected), and for as long thereafter as the Annuitant shall
live.

VARIABLE ANNUITY CERTAIN OPTION. A variable amount payable monthly for the
number of years selected which may be from 5 to 30 years. The value of the
variable annuity certain is determined by first converting an Owner's number
of annuity units into dollars based on the value of the annuity units.
Thereafter the dollar value is divided by an annuity certain payment factor to
obtain the total value of the variable annuity certain. The annuity certain
payment factor is determined by calculating the number of monthly payments
remaining from the date of withdrawal to the end of the variable annuity
certain period and discounting such payments to a present value using an
assumed interest rate of 3%. The Annuitant may elect that the Payee receive
all or a portion of this present value.

ADDITIONAL ANNUITY OPTIONS. Any proceeds payable under the Contract may also
be settled under any other method of settlement (including joint and survivor
settlement options under joint life annuities) offered by the Company at the
time of the request.

DETERMINATION OF ANNUITY PAYMENTS. On the Annuity Date, the adjusted value of
(i) the Fixed Account and (ii) the Variable Account will be applied to provide
for payments under the selected Annuity Option. The adjusted value will be
equal to the Annuity Account Value at the end of the Valuation Period which
ends immediately preceding the Annuity Date, reduced by a proportionate amount
of the Annuity Account Fee to reflect the time elapsed between the last day of
the prior contract year and the day before the Annuity Date, and minus premium
or similar taxes.

If the amount to be applied under any annuity option is less than $5,000, or
if the monthly annuity payment payable in accordance with such option is less
than $50, the Company will pay the amount to be applied in a single payment to
the Payee designated by the Owner.

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

CONTRACT CHARGES AND FEES

As more fully described below, charges under the Contracts offered by this
Prospectus are assessed in four ways: (1) as withdrawal charges (contingent
deferred sales charges); (2) as deductions for Contract administration
expenses and, if applicable, for premium taxes; (3) as charges against the
assets of the Variable Account for the assumption of mortality and expense
risks and for administrative expenses; and (4) as MVAs on certain withdrawals
from the Fixed Account. In addition, certain deductions are made from the
assets of the Fund for investment management fees and expenses. These fees and
expenses are described in the Fund's Prospectus and Statement of Additional
Information.

WITHDRAWAL CHARGES. No deduction for sales charges is made from a Premium
Payment. However, if a cash withdrawal of a Premium Payment is made, a
withdrawal charge (contingent deferred sales charge) may be assessed by the
Company. The length of time between the Company's acceptance of the Premium
Payment deemed withdrawn and the receipt of a withdrawal request determines
the withdrawal charge. This charge will be used to cover certain expenses
relating to the sale of the Contracts including commissions paid to sales
personnel, the costs of preparation of sales literature, other promotional
costs and acquisition expenses.

Each Premium Payment has its own time period for purposes of assessing a
withdrawal charge. For purposes of computing the withdrawal charge, amounts
are deemed to be withdrawn in the order in which they were received by the
Company. For example, the Company will deem amounts first withdrawn to be from
the oldest Premium Payment accepted by the Company. After these amounts are
exhausted, the Company will deem amounts withdrawn to be from the second
oldest Premium Payment accepted by the Company, and so on until all of an
Owner's Premium Payments have been withdrawn. After all Premium Payments have
been deemed withdrawn, the Company will deem further withdrawals to be from
net investment results attributable to such Premium Payments, if any.

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<PAGE>

Subject to the Free Partial Withdrawal described below, Premium Payment
amounts withdrawn from an Owner's Annuity Account will be assessed the
following withdrawal charge (after being adjusted by any applicable MVA):

<TABLE>
<CAPTION>
WITHDRAWAL
CHARGE
PERCENTAGE YEAR APPLICABLE
---------- ---------------
<S> <C>
7%.............. During 1st Year since Premium Payment accepted
7%.............. During 2nd Year since Premium Payment accepted
7%.............. During 3rd Year since Premium Payment accepted
6%.............. During 4th Year since Premium Payment accepted
6%.............. During 5th Year since Premium Payment accepted
5%.............. During 6th Year since Premium Payment accepted
4%.............. During 7th Year since Premium Payment accepted
0%.............. Thereafter
</TABLE>

On withdrawal, any applicable Annuity Account Fee will be deducted from, and
any Market Value Adjustment will be made to, the Owner's Annuity Account
before the application of any withdrawal charge. The withdrawal charge is then
assessed against the amounts remaining in the Owner's Annuity Account. If the
Owner's Annuity Account is allocated among more than one Sub-Account within
the Contract, the withdrawal charge will be assessed pro rata against the
amounts remaining within the Sub-Accounts from which the withdrawal occurred.
If the Sub-Accounts from which the withdrawal occurred do not contain
sufficient amounts to satisfy the withdrawal charge, the deficiency will be
assessed pro rata against all amounts remaining within the Sub-Accounts. If a
cash withdrawal causes the entire value of the Annuity Account to be withdrawn
(i.e., a complete surrender), then the withdrawal charge will be deducted from
the amount paid. The withdrawal charge is not imposed on a Premium Payment
withdrawn after the end of the seventh year from the Company's acceptance of
such Premium Payment, nor is the withdrawal charge imposed upon payment of the
Death Benefit or upon amounts applied to an Annuity Option.

The Company may, upon notice to the Owner, modify the withdrawal charges
provided that such modification shall apply only to an Owner's Annuity Account
established after the effective date of such modification (see
"Modification"). For examples of withdrawals, surrenders, withdrawal charges
and the MVA, see the Statement of Additional Information.

FREE PARTIAL WITHDRAWAL. Upon request in writing, an Owner may withdraw
during each Contract Year prior to the Annuity Date a portion of Premium
Payments made to the Owner's Annuity Account without the imposition of a
withdrawal charge. This privilege continues until all Premium Payments made to
the Owner's Annuity Account are considered withdrawn. Up to 15% of the total
amount of a Owner's Premium Payments may be withdrawn, in one or more
increments, without a withdrawal charge each Contract Year. The amount must be
at least $1,000.

Additional withdrawals may be made free of surrender charges under certain
circumstances, pursuant to riders to the Contract. A Nursing Care Rider, for
example, permits additional (but not unlimited) withdrawals free of surrender
charges when the Owner is confined to a hospital or nursing care facility.

An Owner must specify the Sub-Account(s) from which the amount will be
withdrawn. If an Owner does not specify the Sub-Account(s) from which the
withdrawal will occur, the Company will withdraw the amount pro rata from all
the Owner's Sub-Accounts.

If an Owner requests to withdraw less than 15% of the Premium Payments, such
Owner may make further withdrawals in the same Contract Year until the 15%
Free Partial Withdrawal provision is utilized.

Withdrawals under this provision may be paid as a lump sum or, upon consent
of the Company, paid over equal installments no more frequently than monthly.

A Free Partial Withdrawal may have federal income tax consequences. See
"Federal Tax Matters".

ANNUITY ACCOUNT FEE. On the last Valuation Date of each contract year, the
Company deducts an annual policy administration fee ("Annuity Account Fee") on
a pro rata basis from all of an Owner's Sub-Accounts equal to $35 to partially
reimburse it for administrative expenses relating to the issue and maintenance
of the Contract and the Owner's Annuity Account. Thereafter the full $35
Annuity Account Fee will be assessed annually. If the Contract is surrendered,
a $35 Annuity Account Fee will be deducted. On the Annuity Date, the Annuity
Account Value will be reduced by a proportionate amount of the Annuity Account
Fee to reflect the time elapsed between the previous December 31 and the day
before the Annuity Date. After the Annuity Date, an annual $35 Annuity Account
Fee will be deducted in approximately equal amounts from each Variable Annuity
payment made during the year. No Annuity Account Fee will be deducted from
Fixed Annuity payments. If applicable state law requires, the $35 Annuity
Account Fee will be reduced to a lesser amount. The annual Annuity Account Fee
will be waived each year that the Purchaser's Annuity Account Value equals or
exceeds $100,000 on the last Valuation Date of that year.

21
<PAGE>

ADMINISTRATIVE FEE. The Company also deducts a daily Administrative Fee from
the assets of each Sub-Account of the Variable Account to partially reimburse
it for administrative expenses relating to the issue and maintenance of the
Contract and the Owner's Annuity Account. This charge is currently at an
effective annual rate of 0.10% (equal to a daily rate of 0.0002738361% of the
assets in each Sub-Account). There is no necessary relationship between the
administrative charges imposed and the amount of expenses that may be
attributable to any single Owner's Annuity Account. The Company does not
anticipate realizing any profit from this fee.

PREMIUM TAXES. Premium tax equivalents (including any related retaliatory
taxes), if any, and any other taxes due under the Contract will be deducted if
applicable. It is currently the Company's practice to deduct such taxes, if
any, at the time the Annuity Account Value, or any portion thereof, is
withdrawn or annuitized (although the deduction could, in the future, be taken
from Premium Payments). Currently these taxes range from 0% to 3.5% of the
amount of premium paid depending upon the Owner's state of residence.

No charges are currently made for federal, state or local taxes other than
state premium taxes. However, the Company reserves the right to deduct charges
in the future for such taxes or other economic burden resulting from the
application of any tax laws that the Company determines to be attributable to
the Contracts.

CHARGE FOR MORTALITY AND EXPENSE RISKS. The mortality risk assumed by the
Company arises from the contractual obligation to continue to make annuity
payments to one or more Payees regardless of how long the Annuitant lives and
regardless of how long all annuitants as a group live. This assures each
annuitant that neither the longevity of fellow annuitants nor an improvement
in the life expectancy generally will have an adverse effect on the amount of
any annuity payment received under the Contract. The Company assumes this
mortality risk by virtue of annuity rates incorporated into the Contract which
cannot be changed. The Company also assumes a mortality risk in connection
with the Death Benefits. The expense risk assumed by the Company is the risk
that the administrative charges assessed under the Contract may be
insufficient to cover the actual total administrative expenses incurred by the
Company.

For assuming these risks, the Company makes a deduction from the Variable
Account at the end of each Valuation Period at an effective annual rate of
1.15% (calculated at a daily rate of 0.0031327553% of the assets in the
Variable Account). (The approximate portion of this charge estimated to be
attributable to mortality risks is 0.65%; the approximate portion of this
charge estimated to be attributable to expense risks is 0.50%.) If the
deduction is insufficient to cover the actual cost of the mortality and
expense risk undertaking, the Company will bear the loss. Conversely, if the
deduction proves more than sufficient, the excess will be profit to the
Company. The Company expects to realize a profit from this charge. No
deduction for these risks is made from the Fixed Account.

The Company assumes the risk that withdrawal charges assessed under the
Contracts may be insufficient to compensate the Company for the costs of
distributing the Contracts. In the event the withdrawal charges prove to be
insufficient to cover actual distribution expenses, the deficiency will be met
from the Company's general corporate funds, which may include amounts derived
from the mortality and expense risk charge.

The Contracts provide that the Company may modify the mortality and expense
risk charges; however, such modification shall apply only with respect to an
Owner's Annuity Account established after the effective date of such
modification.

MVA. Any cash withdrawal or transfer of a Fixed Account Guaranteed Period
Amount, other than a withdrawal or transfer pursuant to an election which
becomes effective upon the Expiration Date of the Guaranteed Period, will be
subject to a MVA. The MVA will be applied to the amount being withdrawn or
transferred after deduction of any applicable Annuity Account Fee and before
deduction of any applicable withdrawal charge.

The MVA generally reflects the relationship between the Index Rate (based
upon the Treasury Constant Maturity Series published by the Federal Reserve)
in effect at the time a Premium Payment is allocated to a Sub-Account's
Guaranteed Period under the Contract and the Index Rate in effect at the time
of the Premium Payment's withdrawal or transfer. It also reflects the time
remaining in the Sub-Account's Guaranteed Period. Generally, if the Index Rate
at the time of withdrawal or transfer is more than .50% lower than the Index
Rate at the time the Premium Payment was allocated, then the application of
the MVA will result in higher payment upon withdrawal or transfer. Similarly,
if the Index Rate at the time of withdrawal or transfer is higher than the
Index Rate at the time the Premium Payment was allocated (or less than 0.50%
lower), the application of the MVA will generally result in a lower payment
upon withdrawal or transfer.

22
<PAGE>

The MVA is computed by applying the following formula:

(1+A)N
(1+B)N
Where:

A = an Index Rate (based on the Treasury Constant Maturity Series published
by the Federal Reserve) for a security with time to maturity equal to the Sub-
Account's Guaranteed Period, determined at the beginning of the Guaranteed
Period.

B = an Index Rate (based on the Treasury Constant Maturity Series published
by the Federal Reserve) for a security with time to maturity equal to the Sub-
Account's Guaranteed Period, determined at the time of withdrawal or transfer,
plus a 0.50% adjustment (unless otherwise limited by applicable state law).
This adjustment builds into the formula a factor representing direct and
indirect costs to the Company associated with liquidating general account
assets in order to satisfy surrender requests. This adjustment of .50% has
been added to the denominator of the formula because it is anticipated that a
substantial portion of applicable general account portfolio assets will be in
relatively illiquid securities. Thus, in addition to direct transaction costs,
if such securities must be sold (e.g., because of surrenders), the market
price may be lower. Accordingly, even if interest rates decline, there will
not be a positive adjustment until this factor is overcome, and then any
adjustment will be lower than otherwise, to compensate for this factor.
Similarly, if interest rates rise, any negative adjustment will be greater
than otherwise, to compensate for this factor. If interest rates stay the
same, this factor will result in a small but negative MVA. If Index Rates "A"
and "B" are within .25% of each other when the Index Rate Factor is
determined, no such percentage adjustment to "B" will be made.

N = The number of years remaining in the Guaranteed Period (e.g. 1 year and
73 days = 1 + (73 divided by 365) = 1.2 years)

Straight line interpolation is used for periods to maturity not quoted.

See the Statement of Additional Information for examples of the application
of the MVA.

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

OTHER CONTRACT PROVISIONS

DEFERRAL OF PAYMENT. The Company may defer the calculation and payment of
partial withdrawal and full surrender values, transfers or Death Benefits from
any Variable Account Sub-Account during any period:

(1)(a) during which the New York Stock Exchange is closed other than
customary week-end and holiday closings or (b) during which trading on the
New York Stock Exchange is restricted as determined by the Commission, (2)
for any period during which an emergency exists as a result of which (a)
disposal of securities held by the Fund is not reasonably practicable or
(b) it is not reasonably practicable to determine the value of the net
assets of the Fund or (3) for such other periods as the Commission may by
order permit for the protection of security holders.

The Company reserves the right to defer the payment or transfer of amounts
withdrawn from any Fixed Account Sub-Account for a period not to exceed six
months from the date written request for such withdrawal or transfer is
received by the Company. If payment or transfer is deferred beyond thirty (30)
days, the Company will pay interest of not less than 3% per year on amounts so
deferred.

In addition, payment of the amount of any withdrawal derived, all or in
part, from any Premium Payment paid to the Company by check or draft may be
postponed until the Company determines the check or draft has been honored.

DESIGNATION AND CHANGE OF BENEFICIARY. The Beneficiary designation contained
in the Contract Specifications will remain in effect until changed. The right
to change any Beneficiary is reserved to the Owner. Subject to the rights of
an irrevocably designated Beneficiary, the Owner may change or revoke the
designation of a Beneficiary at any time while the Owner is living by filing
with the Company a beneficiary designation or revocation in writing. The
change or revocation will not be binding upon the Company until it is recorded
by the Company. When it is so recorded the change or revocation will be
effective as of the date on which the beneficiary designation or revocation
was signed, but the change or revocation will be without prejudice to the
Company with regard to any payment made or any action taken by the Company
prior to recording the change or revocation.

Reference should be made to the terms of a particular retirement plan and
any applicable legislation for any restrictions on the beneficiary
designation.

EXERCISE OF CONTRACT RIGHTS. A Contract shall belong to the Owner. All
Contract rights and privileges may be expressly reserved by the Owner. Such
rights and privileges can be exercised without the consent of the Beneficiary
(other than an irrevocably designated Beneficiary) or any other person. Such
rights and privileges may be exercised only during the lifetime of the Owner
and prior to the Annuity Date, except as otherwise provided in the Contract.

Unless provided otherwise, the Annuitant becomes the Payee on and after the
Annuity Date. If the Annuitant predeceases the Owner prior to the Annuity
Date, the Owner becomes the Annuitant until the Owner designates a new
Annuitant to the Company in writing. The Beneficiary becomes the Payee on the
death of the Annuitant after the Annuity Date. Such Payee(s) may thereafter
exercise such rights and privileges, if any, of ownership which continue.

23
<PAGE>

TRANSFER OF OWNERSHIP. The Owner of a Non-Qualified Contract may transfer
the ownership of the Contract prior to the Annuity Date. A transfer of
ownership will not be binding upon the Company until written notification is
received and recorded by the Company. When such notification is so recorded,
the change will be effective as of the effective date specified by the Owner,
but the change will be without prejudice to the Company regarding any payment
made or any action taken by the Company prior to recording the change. Upon
the transfer of ownership, the level of Death Benefits available to the
subsequent Owner will be different from that available to the previous Owner
(see "Death Benefits" above).

Ownership of a Qualified Contract may not be transferred except to: (1) the
Annuitant; (2) a trustee or successor trustee of a pension or profit sharing
trust which is qualified under Section 401 of the Code; (3) the employer of
the Annuitant provided that the Qualified Contract after transfer is
maintained under the terms of a retirement plan qualified under Section 403(a)
of the Code for the benefit of the Annuitant; (4) the trustee of an individual
retirement account plan qualified under Section 408 of the Code for the
benefit of the Purchaser; or (5) as otherwise permitted from time to time by
laws and regulations governing the retirement or deferred compensation plans
for which a Qualified Contract may be issued. Subject to the foregoing, a
Qualified Contract may not be sold, assigned, transferred, discounted or
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose to any person other than the Company.

A transfer of ownership may have federal income tax consequences. See
"Federal Tax Matters".

DEATH OF OWNER. If the Owner of a Non-Qualified Contract dies before the
Annuity Date, the death benefit payable under the Contract, if any, must be
distributed to the Beneficiary, if then alive, either (1) within five years
after the date of death of the Owner, or (2) over some period not greater than
the life or expected life of the Beneficiary, with annuity payments beginning
within one year after the date of death of the Owner. The person named as the
Owner's Beneficiary in the Contract Application or Order to Purchase shall be
considered the designated beneficiary for the purposes of Section 72(s) of the
Code and if no person then living has been so named, then the Annuitant shall
automatically be the designated beneficiary for this purpose. In all cases,
any such designated beneficiary shall not be entitled to exercise any rights
prohibited by applicable federal income tax law.

These mandatory distribution requirements will not apply when the designated
beneficiary is the spouse of the deceased Owner, if the spouse elects to
continue the Contract in the spouse's own name, as Owner.

If the Payee dies after the Annuity Date and before the entire accumulation
under such Owner's Annuity Account has been distributed, the remaining portion
of such Owner's Annuity Account, if any, must be distributed at least as
rapidly as the method of distribution then in effect. Similar rules may apply
with respect to Qualified Contracts.

VOTING OF FUND SHARES. The Company will vote Fund shares held by the Sub-
Accounts at meetings of shareholders of the Fund, and to the extent required
by law, will follow voting instructions received from persons having the right
to give voting instructions. The Owner is the person having the right to give
voting instructions prior to the Annuity Date. If an Owner elects a Variable
Annuity Option, then after the Annuity Date, the Payee has the right to give
voting instructions. The number of votes decreases as annuity payments are
made and as the reserves for the Contract decrease. The person's number of
votes will be determined by dividing the reserve for the Contract allocated to
the applicable Sub-Account by the net asset value per share of the
corresponding Portfolio of the Fund. There are no voting rights associated
with the Fixed Account or a Fixed Annuity before or after the Annuity Date.

Any shares attributable to the Company and Fund shares for which no timely
voting instructions are received will be voted by the Company in the same
proportion as the shares for which instructions are received from Owners.
Voting instructions must be received by the Company at least one day prior to
the shareholders meeting in order to be considered timely.

Owners participating under Qualified Contracts may be subject to other
voting provisions of the particular plan. Individuals who contribute to plans
which are funded by the Contracts may be entitled to instruct the Owners as to
how to instruct the Company to vote the Fund shares attributable to their
contributions. Such plans may also provide the additional extent, if any, to
which the Owners shall follow voting instructions of persons with rights under
the plans. If no voting instructions are received from any such person with
respect to a particular employee's Annuity Account, the Owner may instruct the
Company as to how to vote the number of Fund shares for which instructions may
be given.

Neither the Variable Account nor the Company is under any duty to provide
information concerning the voting instruction rights of persons who may have
such rights under plans, other than rights afforded by the Act, nor any duty
to inquire as to the instructions received or the authority of Owners or
others to instruct the voting of Fund shares. Except as the Variable Account
or the Company has actual knowledge to the contrary, the instructions given by
Owners will be valid as they affect the Variable Account, the Company and any
others having voting instruction rights with respect to the Variable Account.

All Fund proxy material, together with an appropriate form to be used to
give voting instructions, will be provided to each person known by the Company
to have the right to give voting instructions at least ten days prior to each
meeting of the shareholders of the Fund. The number of Fund shares as to which
each such person is entitled to give instructions will be determined as of a
date not more than 90 days prior to each such meeting. Prior to the Annuity
Date, the number of Fund shares as to which voting instructions may be given
to the Company is determined by dividing the value of all of the Variable
Accumulation Units of the particular Sub-Account

24
<PAGE>

credited to the Owner's Annuity Account by the net asset value of one Fund
share as of the same date. The Fund is not required to, and does not intend
to, hold annual or other regular meetings of shareholders.

If the Act or any regulation thereunder should be amended, or if the present
interpretation thereof should change, and as a result the Company determines
that it is permitted to vote the Fund's shares in its own right, it may elect
to do so. Fund shares held by the Company or its affiliates in which Owners or
other persons entitled to vote have no beneficial interest may be voted by the
shareholder thereof (the Company or its affiliates) in its sole discretion.

ADDITION, DELETION, OR SUBSTITUTION OF SECURITIES. The Company does not
control the Fund and cannot guarantee that it or any Portfolio thereunder will
be available for investment in the future or that it or any Portfolio
thereunder will accept Premium Payments or transfers. In the event the Fund or
any Portfolio thereunder is not available, the Company reserves the right to
make changes in the Variable Account and its investments, and may take
reasonable action to secure a comparable or otherwise appropriate funding
vehicle, although it is not required to do so and may not actually do so. In
the unlikely event that the Fund is not available in the future and a
substitute funding vehicle is not obtained, then all Annuity Account values
could be maintained in the Fixed Account. If the Fund or other funding vehicle
restricts or refuses to accept transfers or other transactions, then transfer
privileges under the Contract may be changed, modified or revoked.

The Company reserves the right, subject to compliance with applicable law,
to make additions to, deletions from, or substitutions for the shares of the
Fund that are held by the Variable Account (or any Sub-Account thereof) or
that the Variable Account (or any Sub-Account thereof) may purchase. The
Company may eliminate the shares of any of the Portfolios of the Fund and
substitute shares of another Portfolio of the Fund or any other investment
vehicle or of another open-end, registered investment company if laws or
regulations are changed, if the shares of the Fund or of a Portfolio are no
longer available for investment, or if the Company determines that further
investment in any Portfolio should become inappropriate in view of the
purposes of the Variable Account. If any of these events occurs, substitution
of any shares attributable to an Owner's interest in a Sub-Account of the
Variable Account shall occur only after notice and prior approval by the
Commission to the extent required. Nothing contained herein shall prevent the
Variable Account from purchasing other securities for other series or classes
of policies, or from permitting a conversion between series or classes of
policies on the basis of requests made by Owners. The Company shall make any
appropriate endorsement to the Contracts to reflect any substitution pursuant
to this provision.

New Sub-Accounts may be established when, in the sole discretion of the
Company, marketing, tax, investment or other conditions warrant. Any new Sub-
Accounts may be made available to existing Owners on a basis to be determined
by the Company. Each additional Sub-Account will purchase shares in a
portfolio of the Fund or in another mutual fund or investment vehicle. The
Company may also eliminate one or more Sub-Accounts if, in its sole
discretion, marketing, tax, investment or other conditions warrant such
change. In the event any Sub-Account is eliminated, the Company will notify
Owners and request a reallocation of the amounts invested in the eliminated
Sub-Account.

CHANGE IN OPERATION OF VARIABLE ACCOUNT. At the Company's election and if
deemed in the best interests of persons having voting rights under the
Contracts, the Variable Account may be operated as a management company under
the Act or any other form permitted by law; de-registered under the Act in the
event registration is no longer required (deregistration of the Variable
Account requires an order by the Commission); or combined with one or more
other separate accounts. To the extent permitted by applicable law, the
Company also may transfer the assets of the Variable Account associated with
the Contracts to another account or accounts. In the event of any change in
the operation of the Variable Account pursuant to this provision, the Company
may make appropriate endorsement to the Contracts to reflect the change and
take such other action as may be necessary and appropriate to effect the
change.

MODIFICATION. Upon notice to the Owner(s) (or the Payee(s) after the Annuity
Date), the Contracts may be modified by the Company if such modification: (i)
is necessary to make the Contracts or the Variable Account comply with, or
take advantage of, any law or regulation issued by a governmental agency to
which the Company or the Variable Account is subject; or (ii) is necessary to
attempt to assure continued qualification of the Contracts under the Code or
other federal or state laws relating to retirement annuities or annuity
contracts; or (iii) is necessary to reflect a change in the operation of the
Variable Account or its Sub-Account(s) (see "Change in Operation of Variable
Account"); or (iv) provides additional Variable Account and/or fixed
accumulation options. In the event of any such modification, the Company may
make appropriate endorsement in the Contracts to reflect such modification.

In addition, upon notice to the Owner the Contracts may be modified by the
Company to change the withdrawal charges, Annuity Account Fees, mortality and
expense risk charges, the tables used in determining the amount of the first
monthly fixed annuity payment, and the formula used to calculate the MVA,
provided that such modification shall apply only to Contracts established
after the effective date of such modification. In order to exercise its
modification rights in these particular instances, the Company must notify the
Owner of such modification in writing. All of the charges and the annuity
tables which are provided in the Contracts prior to any such modification will
remain in effect permanently, unless improved by the Company, with respect to
Contracts established prior to the effective date of such modification.

25
<PAGE>

DISCONTINUANCE OF NEW PURCHASES. The Company reserves the right to limit or
discontinue the acceptance of new Contract Applications and Orders to Purchase
and the issuance of new Contracts. Such limitation or discontinuance shall
have no effect on rights or benefits with respect to any Contracts issued
prior to the effective date of such limitation or discontinuance.

RIGHT TO EXAMINE CONTRACT. If the Owner is not satisfied with a Contract it
may be returned by mailing it to the Company at the Annuity & Variable Life
Service Center mailing address listed on the cover of this Prospectus within
ten days, or longer if state law requires, after it was received by the Owner.
A Owner may not make transfers during this period. When the Company receives
the returned Contract it will be canceled and in most states the Owner will
receive a refund equal to the Owner's Annuity Account Value at the end of the
Valuation Period during which the returned Contract was received by the
Company.

Where state law requires, the full amount of any initial Premium Payment and
subsequent Premium Payment(s) if any, received by the Company will be refunded
and/or the period may be extended to 20 days. In those states, the Company
will place the Premium Payment(s) that are allocated to Sub-Accounts of the
Variable Account in the AIM V.I. Money Market Fund until the end of the Right
to Examine period. This period will be deemed to commence on the day the
Contract is mailed, and on the first business day after the end of such
period, the Premium Payments will be allocated as specified by the Owner.

IRA RIGHT OF REVOCATION. With respect to Individual Retirement Accounts,
under the Employee Retirement Income Security Act of 1974 ("ERISA") an Owner
establishing an Individual Retirement Account must be furnished with a
disclosure statement containing certain information about the Contract and
applicable legal requirements. This statement must be furnished on or before
the date the Individual Retirement Account is established. If the Owner is
furnished with such disclosure statement before the seventh day preceding the
date the Individual Retirement Account is established, the Owner will not have
any right of revocation. If the disclosure statement is furnished after the
seventh day preceding the establishment of the Individual Retirement Account,
then the Owner may give a notice of revocation to the Company at any time
within seven days after the Date of Issue. Upon such revocation, the Company
will refund the Premium Payment made by the Owner. The foregoing right of
revocation with respect to an Individual Retirement Account is in addition to
the return privilege set forth in the preceding paragraph. The Company will
allow a participant establishing an Individual Retirement Account a "ten day
free-look", notwithstanding the provisions of ERISA.

PERIODIC REPORTS. At least once each calendar year, the Company will provide
an Owner a report showing the Annuity Account Value at the end of the
preceding calendar year, all transactions during the calendar year, the
current Annuity Account Value, the number of Accumulation Units in each
Variable Sub-Account, the applicable Variable Accumulation Unit Value(s) as of
the date of the report and the interest rate credited to the Fixed Account
Sub-Account(s). In addition, each person having voting rights in the Variable
Account and a Fund or Funds will receive such reports as may be required by
the Investment Company Act of 1940 and the Securities Act of 1933. The Company
will also send such statements reflecting transactions in the Annuity Account
as may be required by applicable laws, rules and regulations.

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

FEDERAL TAX MATTERS

INTRODUCTION. The Contracts described in this Prospectus are designed for
use by individuals to accumulate Annuity Account Values and may be used by
retirement plans, whether or not they qualify for special federal income tax
treatment. The ultimate effect of federal income taxes on the amounts held
under a Contract, on annuity payments, and on the economic benefits to the
Owner, Annuitant or Beneficiary depends on the Company's tax status, on the
type of retirement plan for which a Contract is purchased, and upon the tax
and employment status of the individual concerned.

The following discussion is general in nature and is not intended as tax
advice. Each person concerned should consult a competent tax advisor. 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. THE COMPANY DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS,
FEDERAL, STATE OR LOCAL, OF ANY CONTRACT OR ANY TRANSACTION INVOLVING THE
CONTRACT.

TAXATION OF ANNUITIES. The following discussion assumes the Contracts will
qualify as annuity contracts for federal income tax purposes. The Statement of
Additional Information discusses the requirements for qualifying as an
annuity.

IN GENERAL. Code Section 72 governs taxation of annuities. In general, a
Owner is not taxed on increases in value under a Contract until some form of
distribution is made under the Contract. The exception to this rule is that
generally, an Owner who is not a natural person must include in income any
increase in the excess of the Owner's Annuity Account Value over the Owner's
investment in the contract during the taxable year. However, there are some
exceptions to this exception and you may wish to discuss these with your tax
counsel. The taxable portion of a distribution (in the form of an annuity or
lump sum payment) is generally taxed as ordinary income. For this purpose, the
assignment, pledge, or agreement to assign or pledge any portion of the
Annuity Account Value (or the Contract) generally will be treated as a
distribution.

26
<PAGE>

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

WITHDRAWALS AND SURRENDERS. In the case of a withdrawal distributed to a
participant or beneficiary under a Qualified Contract (other than a Qualified
Contract used in a retirement plan that qualifies for special income tax
treatment under Section 457 of the Code, as to which there are special rules)
a ratable portion of the amount received is taxable, generally based on the
ratio of the investment in the Contract to the total Annuity Account Value.
The "investment in the contract" generally equals the portion, if any, of any
Premium Payments paid by or on behalf of an individual under a Contract which
is not excluded from the individual's gross income. For contracts issued in
connection with qualified plans, the "investment in the contract" can be zero.
Special tax rules may be available for certain distribution from Qualified
Contracts.

Generally, in the case of a partial withdrawal under a Non-Qualified
Contract before the Annuity Date (including systematic withdrawals), amounts
received are first treated as taxable income to the extent that the Annuity
Account Value immediately before the withdrawal exceeds the "investment in the
contract" at that time. The Annuity Account Value immediately before a
withdrawal may have to be increased by any positive MVA which results from
such a withdrawal. There is, however, no definitive guidance on the proper tax
treatment of MVAs, and the Owner should contact a competent tax advisor with
respect to the potential tax consequences of a MVA.

In the case of a full surrender under a Non-Qualified Contract, the amount
received is generally treated as taxable income to the extent the net amount
received exceeds the "investment in the contract" at that time.

ANNUITY PAYMENTS. Although the tax consequences may vary depending on the
Annuity Option elected under the Contract, in general, only the portion of an
annuity payment that represents the amount by which the Annuity Account Value
exceeds the investment in the Contract will be taxed; after the investment in
the Contract is recovered, the full amount of any additional annuity payments
is taxable. For Variable Annuity payments, the taxable portion is generally
determined by an equation 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 entire distribution will, however, be taxable once the recipient
has recovered the dollar amount of the "investment in the contract." For Fixed
Annuity payments, in general, there is no tax on the portion of each payment
which represents the same ratio that the "investment in the contract" bears to
the total expected value of the annuity payments for the term of the payments;
however, the remainder of each annuity payment is taxable until the recovery
of the investment in the contract, and thereafter the full amount or each
annuity payment is taxable.

PENALTY TAX ON CERTAIN WITHDRAWALS. In the case of a distribution from a
Non-Qualified Contract (including systematic withdrawals, other partial
withdrawals, surrenders, and any other distribution), there may be imposed a
penalty tax equal to 10% of the amount treated as taxable income. The penalty
tax is not imposed in certain circumstances, including, generally,
distributions: (1) made on or after the date on which the Owner is age 59 1/2;
(2) made as a result of death of the Owner or disability of the taxpayer; or
(3) received in substantially equal installments as a life annuity. Other tax
penalties may apply to certain distributions pursuant to a Qualified Contract.

TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from a
Contract because of the death of an Owner. Generally, such amounts are
includable in the income of the recipient as follows: (1) if distributed in a
lump sum, they are taxed in the same manner as a full surrender of the
Contract, as described above, or (2) if distributed under an Annuity Option,
they are taxed in the same manner as annuity payments, as described above.

MULTIPLE CONTRACTS. All non-qualified, deferred annuity contracts that are
issued by the Company (or its affiliates) to the same Owner during any
calendar year are to be treated as one annuity contract for purposes of
determining the amount includable in an individual's gross income. There may
be other situations in which the Treasury may conclude that it would be
appropriate to aggregate two or more annuity contracts purchased by the same
investor. Accordingly, an Owner should consult a competent tax adviser before
purchasing more than one Contract or other annuity contracts.

TRANSFERS, ASSIGNMENTS OR EXCHANGES OF CONTRACTS. A transfer of ownership of
a Contract; the designation of an Annuitant, Payee or other Beneficiary who is
not also the Owner; the selection of certain Annuity Dates; or a change of
Annuitant; may result in certain income or gift tax consequences to the Owner
that are beyond the scope of this discussion. An Owner contemplating any such
transfer, assignment or change should contact a competent tax adviser in
respect to the potential tax effects of such a transaction.

WITHHOLDING. Withholding of federal income taxes on the taxable portion of
all distributions may be required unless the recipient elects not to have any
such amounts withheld and properly notifies the Company of that election.
Different rules may apply to United States citizens or expatriates living
abroad. Withholding is mandatory for certain distributions from Qualified
Contracts. In addition, some states have enacted legislation requiring
withholding.

SECTION 1035 EXCHANGES. Code Section 1035 generally provides that no gain or
loss shall be recognized on the exchange of one annuity contract for another.
If the surrendered contract was issued prior to August 14, 1982, the tax rules
that formerly provided that the surrender was taxable only to the extent the
amount received exceeds the owner's investment in the contract will continue
to apply to amounts allocable to investment in the contract before August 14,
1982. Special rules and procedures apply to Code Section 1035 transactions.
Prospective purchasers wishing to take advantage of Code Section 1035 should
consult their tax advisers.

27
<PAGE>

QUALIFIED PLANS. The Qualified Contract is designed for use with several
types of qualified plans. The tax rules applicable to participants and
beneficiaries in such qualified plans vary according to the type of plan and
the terms and conditions of the plan itself. Special favorable tax treatment
may be available for certain types of contributions and distributions
(including special rules for certain lump sum distributions). Adverse tax
consequences may result from contributions in excess of specified limits,
distributions prior to age 59 1/2 (subject to certain exceptions),
distributions that do not conform to specified minimum distribution rules,
aggregate distributions in excess of a specified annual amount, and in certain
other circumstances. Therefore, the Company makes no attempt to provide more
than general information about use of the Contract with the various types of
qualified plans. Owners and participants under qualified plans as well as
Annuitants, Payees and Beneficiaries are cautioned that the rights of any
person to any benefits under qualified plans may be subject to the terms and
conditions of the plan themselves, regardless of the terms and conditions of
the Contract issued in connection therewith. Owners of Contracts for use with
any qualified plan should seek competent legal and tax advice regarding the
suitability of the Contract therefor.

SECTION 403(B) PLANS. Under Section 403(b) of the Code, payments made by
public school systems and certain tax exempt organizations to purchase annuity
policies for their employees are excludable from the gross income of the
employee, subject to certain limitations. However, such payments may be
subject to FICA (Social Security) taxes. Additionally, in accordance with the
requirements of the Code, Section 403(b) annuities generally may not permit
distribution of (i) elective contributions made in years beginning after
December 31, 1988, and (ii) earnings on those contributions and (iii) earnings
on amounts attributed to elective contributions held as of the end of the last
year beginning before January 1, 1989. Distributions of such amounts will be
allowed only upon the death of the employee, on or after attainment of age 59
1/2, separation from service, disability, or financial hardship, except that
income attributable to elective contributions may not be distributed in the
case of hardship.

INDIVIDUAL RETIREMENT ANNUITIES. Sections 219 and 408 of the Code permit
individuals or their employers to contribute to an individual retirement
program known as an "Individual Retirement Annuity" or an "IRA". Individual
Retirement Annuities are subject to limitation on the amount which may be
contributed and deducted and the time when distributions may commence. In
addition, distributions from certain other types of qualified plans may be
placed into an Individual Retirement Annuity on a tax-deferred basis.

CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS. Section 401(a)
and 403(a) of the Code permit corporate employers to establish various types
of retirement plans for employees and self-employed individuals to establish
qualified plans for themselves and their employees. Such retirement plans may
permit the purchase of the Contracts to provide benefits under the plans.

DEFERRED COMPENSATION PLANS. Section 457 of the Code, while not actually
providing for a qualified plan as that term is normally used, provides for
certain deferred compensation plans with respect to service for state
governments, local governments, political sub-divisions, agencies,
instrumentalities and certain affiliates of such entities and tax exempt
organizations which enjoy special treatment. The Contracts can be used with
such plans. Under such plans a participant may specify the form of investment
in which his or her participation will be made. All such investments, however,
are owned by, and are subject to, the claims of the general creditors of the
sponsoring employer.

* * * * * * * * * * * * * *

The above description of federal income tax consequences pertaining to the
different types of Qualified Plans that may be funded by the Contracts is only
a brief summary and is not intended as tax advice. The rules governing the
provisions of Qualified Plans are extremely complex and often difficult to
comprehend, and are subject to change. Anything less than full compliance with
the applicable rules, all of which are subject to change, may have significant
adverse tax consequences. A prospective purchaser considering the purchase of
a Contract in connection with a Qualified Plan should first consult a
qualified and competent tax advisor with regard to the suitability of the
Contract as an investment vehicle for the Qualified Plan.

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

DISTRIBUTION OF THE CONTRACTS

CIGNA Financial Advisors, Inc. ("CFA") located at 900 Cottage Grove Road,
Bloomfield, Connecticut 06002 is the principal underwriter and the distributor
of the Contracts. CFA is a wholly-owned subsidiary of Connecticut General
Corporation, which is an affiliate of CIGNA Corporation. CFA may enter into
contracts with various broker-dealers to aid in the distribution of the
Contracts. The commissions paid to dealers are no greater than 6.75% of
Premium Payments.

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

28
<PAGE>

HISTORICAL PERFORMANCE DATA

The Company may from time to time disclose the current annualized yield of
the Money Market Sub-Account for a 7-day period in a manner which does not
take into consideration any realized or unrealized gains or losses on shares
of the AIM V.I. Money Market Series or on its portfolio securities. Yield
figures will not reflect withdrawal charges or premium taxes. The current
annualized yield is computed by determining the net change (exclusive of
realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) at the end of the 7-day period in the value of
a hypothetical account having a balance of 1 variable accumulation unit of the
Money Market Sub-Account at the beginning of the 7-day period, dividing such
net change in account value by the value of the account at the beginning of
the period to determine the base period return, and annualizing this quotient
on a 365-day basis. The net change in account value reflects (i) net income
from the Portfolio attributable to the hypothetical account; and (ii) charges
and deductions imposed under a Contract that are attributable to the
hypothetical account.

The Company may also disclose the effective yield of the Money Market Sub-
Account for the same 7-day period, determined on a compounded basis. The
effective yield is calculated by compounding the unannualized base period
return by adding one to the base period return, raising the sum to a power
equal to 365 divided by 7, and subtracting one from the result.

The Company may also advertise or disclose the current annualized yield of
one or more of the Sub-Accounts of the Variable Account (except the Money
Market Sub-Account) for 30-day periods. The annualized yield of a Sub-Account
refers to income generated by the Sub-Account over a specific 30-day period.
Because the yield is annualized, the yield generated by a Sub-Account during
the 30-day period is assumed to be generated each 30-day period over a 12-
month period. The yield is computed by dividing the net investment income per
variable accumulation unit earned during the period by the maximum offering
price per unit on the last day of the period. The yield calculations do not
reflect the effect of any premium taxes or withdrawal charges that may be
applicable to a particular Contract.

The Company may also advertise or disclose annual average total returns for
one or more Sub-Accounts of the Variable Account for various period of time.
The standardized total return of a Sub-Account refers to return quotations
assuming an investment has been held in the Sub-Account for various periods of
time including, but not limited to, one year, five years, and ten years (if
the Sub-Account has been in operation for those periods), and a period
measured from the date the Sub-Account commenced operations. Total returns
represent the average annual compounded rates of return that would equate the
initial amount invested to the redemption value of that investment as of the
last day of each of the periods for which total return quotations are
provided. Accordingly, the total return quotations will reflect not only
income but also changes in principal (i.e., variable accumulation unit) value,
whereas the yield figures will only reflect income. The standardized total
return quotations reflect the withdrawal charge, but the standardized yield
figures will not.

The Company may from time to time also disclose average annual total returns
in a non-standard format in conjunction with the standard format described
above. The non-standard format will be identical to the standard format except
that the withdrawal charge percentage will be assumed to be 0%. The Company
may from time to time also disclose cumulative total returns in conjunction
with the standard format described above. The cumulative returns will be
calculated assuming that the withdrawal charge is 0%.

All non-standard performance data will only be advertised if the standard
performance data is also disclosed. Performance will vary from time to time
and historical results will not be representative of future performance.
Performance information may not provide a basis for comparison with other
investments or other investment companies using a different method of
calculating performance. Current yield is not fixed and varies with changes in
investment income and variable accumulation unit values. The Money Market Sub-
Account's yield will be affected if it experiences a net inflow of new money
which is invested at interest rates different from those being earned on its
then-current investments. An investor's principal in a Sub-Account and a Sub-
Account's return are not guaranteed and will fluctuate according to market
conditions. And, as noted above, advertised performance data figures will be
historical figures for a contract during the Accumulation Period.

The Company may also from time to time use advertising which includes
hypothetical illustrations to compare the difference between the growth of a
taxable investment and a tax-deferred investment in a variable annuity.

For additional information regarding the calculation of performance data,
please refer to the Statement of Additional Information.

29
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

A Statement of Additional Information is available (at no cost) which
contains more details concerning the subjects discussed in this Prospectus. The
following is the Table of Contents for that Statement:

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE CONTRACTS-GENERAL PROVISIONS........................................ 3
The Contracts.......................................................... 3
Loans.................................................................. 3
Non-Participating Contracts............................................ 3
Misstatement of Age.................................................... 3
Assignment............................................................. 3
Evidence of Survival................................................... 3
Endorsement of Annuity Payments........................................ 3
TAXATION OF THE COMPANY................................................. 3
INVESTMENT EXPERIENCE................................................... 4
Variable Accumulation Unit Value and Variable Accumulation Value....... 4
Net Investment Factor.................................................. 4
SAMPLE CALCULATIONS AND TABLES.......................................... 4
Variable Account Calculations.......................................... 4
Withdrawal Charge and MVA Tables....................................... 5
STATE REGULATION OF THE COMPANY......................................... 6
ADMINISTRATION.......................................................... 7
DISTRIBUTION OF THE CONTRACTS........................................... 7
CUSTODY OF ASSETS....................................................... 7
HISTORICAL PERFORMANCE DATA............................................. 7
Money Market Sub-Account Yield......................................... 7
Other Sub-Account Yields............................................... 8
Total Returns.......................................................... 8
Other Performance Data................................................. 9
LEGAL MATTERS........................................................... 9
LEGAL PROCEEDINGS....................................................... 9
EXPERTS................................................................. 9
FINANCIAL STATEMENTS.................................................... 9
Connecticut General Life Insurance Company............................. 10
CG Variable Annuity Separate Account................................... 28
</TABLE>

30
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

AIM/CIGNA HERITAGE VARIABLE ANNUITY

Issued through

CG VARIABLE ANNUITY SEPARATE ACCOUNT

Offered by
CONNECTICUT GENERAL LIFE INSURANCE COMPANY

Home Office Location
900 Cottage Grove Road
Hartford, Connecticut 06152

CIGNA Individual Insurance

Annuity & Variable Life

Service Center: Routing S-249

Hartford, CT 06152-2249

(800) 552-9898

This Statement of Additional Information ("Statement") expands upon subjects
discussed in the current Prospectus for the Variable Annuity Contracts (the
"Contracts") offered by Connecticut General Life Insurance Company through CG
Variable Annuity Separate Account. You may obtain a copy of the Prospectus
dated December , 1996, by calling (800) 552-9898, or by writing to
Connecticut General Life Insurance Company at the mailing address shown above.
Terms used in the current Prospectus for the Contracts 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 CONTRACTS AND CG VARIABLE
ANNUITY SEPARATE ACCOUNT.

Dated: December , 1996
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE CONTRACTS-GENERAL PROVISIONS........................................... 3
The Contracts............................................................ 3
Loans.................................................................... 3
Non-Participating Contracts.............................................. 3
Misstatement of Age...................................................... 3
Assignment............................................................... 3
Evidence of Survival..................................................... 3
Endorsement of Annuity Payments.......................................... 3
TAXATION OF THE COMPANY.................................................... 3
INVESTMENT EXPERIENCE...................................................... 4
Variable Accumulation Unit Value and Variable Accumulation Value......... 4
Net Investment Factor.................................................... 4
SAMPLE CALCULATIONS AND TABLES............................................. 4
Variable Account Calculations............................................ 4
Withdrawal Charge and Market Value Adjustment Tables..................... 5
STATE REGULATION OF THE COMPANY............................................ 6
ADMINISTRATION............................................................. 7
DISTRIBUTION OF THE CONTRACTS.............................................. 7
CUSTODY OF ASSETS.......................................................... 7
HISTORICAL PERFORMANCE DATA................................................ 7
Money Market Sub-Account Yield........................................... 7
Other Sub-Account Yields................................................. 8
Total Returns............................................................ 8
Other Performance Data................................................... 9
LEGAL MATTERS.............................................................. 9
LEGAL PROCEEDINGS.......................................................... 9
EXPERTS.................................................................... 9
FINANCIAL STATEMENTS....................................................... 9
Connecticut General Life Insurance Company............................... 10
CG Variable Annuity Separate Account..................................... 28
</TABLE>

2
<PAGE>

In order to supplement the description in the Prospectus, the following
provides additional information about Connecticut General Life Insurance
Company (the "Company") and the Contracts which may be of interest to a
Contract Owner. Terms have the same meaning as in the Prospectus, unless
otherwise indicated.

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THE CONTRACTS--GENERAL PROVISIONS

THE CONTRACTS. A Contract, attached riders, amendments, any application, and
any applications for additional amounts, form the entire contract. Only the
President, a Vice President, an Assistant Vice President, a Secretary, a
Director, or an Assistant Director of the Company may change or waive any
provision in a Contract. Any changes or waivers must be in writing.

The Company may change or amend the Contracts if such change or amendment is
necessary for the Contracts to comply with or take advantage of any state or
federal law, rule or regulation.

LOANS. Under the Contracts, loans are not permitted.

NON-PARTICIPATING CONTRACTS. The Contracts do not participate or share in
the profits or surplus earnings of the Company.

MISSTATEMENT OF AGE. If the age of the Annuitant is misstated, any amounts
payable by the Company under the Contract will be adjusted to be those amounts
which the Premium Payments would have purchased for the correct age, according
to the Company's rates in effect on the Date of Issue. Any overpayment by the
Company, with interest at the rate of 6% per year, compounded annually, will
be charged against the payments to be made next succeeding the adjustment. Any
underpayment by the Company will be paid in a lump sum.

ASSIGNMENT. During the lifetime of the Annuitant the Owner may assign any
rights under a Contract as security for a loan or other reasons. This does not
change the ownership of a Contract, but the rights of the Owner and any
Beneficiary are subject to the terms of the assignments. An assignment will
not be binding on the Company until the original assignment or a certified
copy has been filed at the Annuity & Variable Life Service Center. The Company
is not responsible for the validity of the assignment. An assignment may have
income tax consequences. Rights under Qualified Contracts may not be
assignable.

EVIDENCE OF SURVIVAL. The Company reserves the right to require evidence of
the survival of any Payee at the time any payment payable to such Payee is due
under the following Annuity Options: Life Annuity (fixed), Life Annuity with
Certain Period (fixed), Cash Refund Life Annuity (fixed), Variable Life
Annuity, and Variable Life Annuity with Certain Period.

ENDORSEMENT OF ANNUITY PAYMENTS. The Company will make each annuity payment
at its Home Office by check. Each check must be personally endorsed by the
Payee, and the Company may require that proof of the Annuitant's survival be
furnished.

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

TAXATION OF THE COMPANY

The Company at present is taxed as a life insurance company under part I of
Subchapter L of the Internal Revenue Code of 1986, as amended. The Variable
Account is treated as part of the Company and, accordingly, will not be taxed
separately as a "regulated investment company" under Subchapter M of the Code.
The Company does not expect to incur any federal income tax liability with
respect to investment income and net capital gains arising from the activities
of the Variable Account retained as part of the reserves under the Contract.
Based on this expectation, it is anticipated that no charges will be made
against the Variable Account for federal income taxes. If, in future years,
any federal income taxes or other economic burden are incurred by the Company
with respect to the Variable Account or the Contracts, the Company may make a
charge for any such amounts that are attributable to the Variable Account.

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

3
<PAGE>

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

INVESTMENT EXPERIENCE

On any Valuation Date, the Variable Account value is equal to the totals of
the values allocated to the Contract in each Variable Account Sub-Account. The
portion of an Owner's Annuity Account Value held in any Variable Account Sub-
Account is equal to the number of Sub-Account units allocated to a Contract
multiplied by the Sub-Account accumulation unit value as described below.

VARIABLE ACCUMULATION UNIT VALUE AND VARIABLE ACCUMULATION VALUE. Upon
receipt of a Premium Payment by the Company, all or that portion, if any, of
the Premium Payment to be allocated to the Variable Account Sub-Accounts will
be credited to the Variable Account in the form of Variable Accumulation
Units. The number of particular Variable Accumulation Units to be credited is
determined by dividing the dollar amount allocated to the particular Variable
Account Sub-Account by the Variable Accumulation Unit Value for the particular
Variable Account Sub-Account for the Valuation Period during which the Premium
Payment is received by the Company (for the initial Premium Payment, for the
Valuation Period during which the Premium Payment is accepted).

The Variable Accumulation Unit Value for each Variable Account Sub-Account
was established at $10.00 for the first Valuation Period of the particular
Variable Account Sub-Account. The Variable Accumulation Unit Value for the
particular Variable Account Sub-Account for any subsequent Valuation Period is
determined by multiplying the Variable Accumulation Unit Value for the
particular Variable Account Sub-Account for the immediately preceding
Valuation Period by the Net Investment Factor for the particular Variable
Account Sub-Account for such subsequent Valuation Period. The Variable
Accumulation Unit Value for each Variable Account Sub-Account for any
Valuation Period is the value determined as of the end of the particular
Valuation Period and may increase, decrease, or remain constant from Valuation
Period to Valuation Period.

The variable accumulation value of the Annuity Account, if any, for any
Valuation Period is equal to the sum of the value of all Variable Accumulation
Units of each Variable Account Sub-Account credited to the Variable Account
for such Valuation Period. The variable accumulation value of each Variable
Account Sub-Account is determined by multiplying the number of Variable
Accumulation Units, if any, credited to each Variable Account Sub-Account by
the Variable Accumulation Unit Value of the particular Variable Account Sub-
Account for such Valuation Period.

NET INVESTMENT FACTOR. The Net Investment Factor is an index applied to
measure the investment performance of a Variable Account Sub-Account from one
Valuation Period to the next. The Net Investment Factor may be greater or less
than or equal to 1.0; therefore, the value of a Variable Accumulation Unit may
increase, decrease, or remain the same.

The Net Investment Factor for any Variable Account Sub-Account for any
Valuation Period is determined by dividing (a) by (b) and then subtracting (c)
from the result where:

(a) is the net result of:

(1) the net asset value of a Fund share held in the Variable Account
Sub-Account determined as of the end of the Valuation Period, plus

(2) the per share amount of any dividend or other distribution
declared on the Fund shares held in the Variable Account Sub-Account if
the "ex-dividend" date occurs during the Valuation Period, plus or minus

(3) a per share credit or charge with respect to any taxes paid or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of the
Variable Account Sub-Account;

(b) is the net asset value of the Fund share held in the Variable Account
Sub-Account determined as of the end of the preceding Valuation Period; and

(c) is the total of charges for mortality and expense risks, and the
administrative expense fee during the Valuation Period.

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

SAMPLE CALCULATIONS AND TABLES

VARIABLE ACCOUNT CALCULATIONS

VARIABLE ACCUMULATION UNIT VALUE CALCULATION. Assume the net asset value of
a Fund share at the end of the current Valuation Period is $16.50; and its
value at the end of the immediately preceding Valuation Period was $16.46; the
Valuation Period is one day; and no dividends or distributions caused Fund
shares to go "ex-dividend" during the current Valuation Period. $16.50 divided
by $16.46 is 1.002430134. Subtracting the one day risk factor for mortality
and expense risks and the administrative expense charge of 0.000034461823 (the
daily equivalent of the current charge of 1.25% on an annual basis) gives a
net investment factor of 1.002395672. If the value of the Variable
Accumulation Unit for the immediately preceding Valuation Period had been
$14.7036925, the value for the current Valuation Period would be $14.73891772
($14.7036925 X 1.002395672).

4
<PAGE>

VARIABLE ANNUITY UNIT VALUE CALCULATION. The assumptions in the above
example exist. Also assume that the value of an Annuity Unit for the
immediately preceding Valuation Period had been $13.5791357. If the first
variable annuity payment is determined by using an assumed interest rate of 3%
per year, the value of the Annuity Unit for the current Valuation Period would
be $13.610565 [$13.5791357 X 1.00239672 (the net investment factor) X
0.99991902]. 0.99991902 is the factor, for a one day Valuation Period, that
neutralizes the assumed interest rate of three percent (3%) per year used to
establish the Annuity Payment Rates found in the Contract.

VARIABLE ANNUITY PAYMENT CALCULATION. Assume that a Participant's Variable
Annuity Account is credited with 5319.7531 Variable Accumulation Units of a
particular Sub-Account; that the Variable Accumulation Unit Value and the
Annuity Unit Value for the particular Sub-Account for the Valuation Period
which ends immediately preceding the Annuity Date are $14.7036925 and
$13.5791357 respectively; that the Annuity Payment Rate for the age and option
elected is $6.52 per $1,000; and that the Annuity Unit Value on the day prior
to the second variable annuity payment date is $13.61017004. The first
variable annuity payment would be $509.99 (5319.7531 X $14.7036925 X 6.52
divided by 1,000). The number of Annuity Units credited would be 37.5569
($509.99 divided by $13.5791357) and the second variable annuity payment would
be $511.16 (37.5569 X $13.61017004).

WITHDRAWAL CHARGE AND MARKET VALUE ADJUSTMENT TABLES

The following example illustrates the detailed calculations for a $100,000
deposit into the Fixed Account with a guaranteed rate of 8% for a duration of
five years. The intent of the example is to show the effect of the Market
Value Adjustment ("MVA") and the 3% minimum guarantee under various interest
rates on the calculation of the cash surrender value. The effect of the MVA is
reflected in the index rate factor in column (2) and the minimum 3% guarantee
is shown under column (4) under the "Surrender Value Calculation". The effect
of the withdrawal charge and any taxes, such as premium taxes, is not shown.
The "Market Value Adjustment Tables" and "Minimum Value Calculation" contain
the explicit calculation of the index factors and the 3% minimum guarantee
respectively. Since an intial deposit of $100,000 is assumed, the annual $35
Annuity Account Fee is waived in the following examples.

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

SAMPLE CALCULATIONS FOR MALE 35 ISSUE

CASH SURRENDER VALUES

<TABLE>
<S> <C>
Single Premium..................................................... $100,000
Premium Taxes...................................................... 0
Withdrawals........................................................ None
Guaranteed Period.................................................. 5 years
Guaranteed Interest Rate........................................... 6.00%
Annuity Date....................................................... Age 70
Index Rate A....................................................... 6.5%
Index Rate B....................................................... 7.00% end of policy year 1
6.75% end of policy year 1
6.00% end of policy year 1
5.50% end of policy year 1
Percentage Adjustment to B......................................... 0.50%
</TABLE>

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

SURRENDER VALUE CALCULATION

<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6) (7)
-------- -------- -------- -------- -------- --------- ---------
INDEX ADJUSTED GREATER
CONTRACT ANNUITY RATE ANNUITY MINIMUM OF SURRENDER SURRENDER
YEAR VALUE FACTOR VALUE VALUE (3)&(4) CHARGE VALUE
- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $106,000 0.963307 $102,111 $103,000 $103,000 $5,950 $ 97,050
2 $112,360 0.992991 $111,572 $106,090 $111,572 $5,950 $105,622
3 $119,102 1.000000 $119,102 $109,273 $119,102 $5,950 $113,152
4 $126,248 1.004717 $126,843 $112,551 $126,843 $5,100 $121,743
5 $133,823 1.000000 $133,823 $115,927 $133,823 $5,100 $128,723
</TABLE>

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

5
<PAGE>

ANNUITY VALUE CALCULATION

<TABLE>
<CAPTION>
CONTRACT YEAR ANNUITY VALUE
------------- --------------------------
<S> <C>
1 $100,000 X 1.06 = $106,000
2 $106,000 X 1.06 = $112,360
3 $112,360 X 1.06 = $119,102
4 $119,102 X 1.06 = $126,248
5 $126,248 X 1.06 = $133,823
</TABLE>

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

SURRENDER CHARGE CALCULATION

<TABLE>
<CAPTION>
(1) (2) (3)
------------- -------------------------------- ---------
SURRENDER SURRENDER CHARGE FACTOR ADJUSTED SURRENDER
CONTRACT YEAR CHARGE FACTOR FOR FREE PARTIAL WITHDRAWALS CHARGE
------------- ------------- -------------------------------- ---------
<S> <C> <C> <C>
1 0.07 0.0595 $5,950
2 0.07 0.0595 $5,950
3 0.07 0.0595 $5,950
4 0.06 0.0510 $5,100
5 0.06 0.0510 $5,100
</TABLE>

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

MARKET VALUE ADJUSTMENT TABLES

<TABLE>
<CAPTION>
INTEREST RATE FACTOR CALCULATION
----------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
------ ------ ------------ --- --------
INDEX INDEX ADJUSTED (1+A)N
CONTRACT YEAR RATE A RATE B INDEX RATE B N (I+B)N
------------- ------ ------ ------------ --- --------
<S> <C> <C> <C> <C> <C>
1 6.50% 7.00% 7.50% 4 0.963307
2 6.50% 6.75% 6.75% 3 0.992991
3 6.50% 6.00% 6.50% 2 1.000000
4 6.50% 5.50% 6.00% 1 1.004717
5 6.50% NA NA 0 1.000000
</TABLE>

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

<TABLE>
<CAPTION>
MINIMUM VALUE CALCULATION
-------------------------------------------------------------------
CONTRACT YEAR MINIMUM VALUE
------------- --------------------------
<S> <C>
1 $100,000 X 1.03 = $103,000
2 $103,000 X 1.03 = $106,090
3 $106,090 X 1.03 = $109,273
4 $109,273 X 1.03 = $112,551
5 $112,551 X 1.03 = $115,927
</TABLE>

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

STATE REGULATION OF THE COMPANY

The Company, a Connecticut corporation, is subject to regulation by the
Connecticut Department of Insurance. An annual statement is filed with the
Connecticut Department of Insurance each year covering the operations and
reporting on the financial condition of the Company as of December 31 of the
preceding year. Periodically, the Connecticut Department of Insurance or other
authorities examine the liabilities and reserves of the Company and the
Variable Account, and a full examination of the Company's operations is
conducted periodically by the Connecticut Department of Insurance. In
addition, the Company is subject to the insurance laws and regulations of
other states within which it is licensed to operate.

A Contract is governed by the law of the state in which it is delivered. The
values and benefits of each policy are at least equal to those required by
such state.

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

6
<PAGE>

ADMINISTRATION

The Company performs certain administrative functions relating to the
Contracts, the Fixed Account, and the Variable Account. These functions
include, among other things, maintaining the books and records of the Variable
Account, the Fixed Account, and the Sub-Accounts, and maintaining records of
the name, address, taxpayer identification number, contract number, Annuity
Account number and type, the status of each Annuity Account and other
pertinent information necessary to the administration and operation of the
Contracts.

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

DISTRIBUTION OF THE CONTRACTS

The offering of the Contracts is continuous. The Contracts will be sold by
licensed insurance agents in those states where the Contracts may be lawfully
sold. Such agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are members of the
National Association of Securities Dealers, Inc. and who have entered into
distribution agreements with the Company and the principal underwriter for the
Contracts, CIGNA Financial Advisors, Inc. ("CFA"), Bloomfield, Connecticut,
which is an affiliate of the Company as well as of CIGNA Corporation. CFA is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc. CFA also acts as the general
distributor of other variable annuity contracts and of variable life insurance
contracts issued by the Company. Commissions and other distribution
compensation will be paid by the Company and will not be more than 6.75% of
Premium Payments. The Company received $521,227 in deferred sales charges
attributable to the Variable Account portion of the Contracts during the
eleven months ended December 31, 1995.

Sales charges on the Contracts are as described in the Prospectus. There are
no variations in sales load.

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

CUSTODY OF ASSETS

The Company is the Custodian of the assets of the Variable Account. The
Company will purchase Fund shares at net asset value in connection with
amounts allocated to the Variable Account Sub-Accounts in accordance with the
instructions of the Purchasers and redeem Fund shares at net asset value for
the purpose of meeting the contractual obligations of the Variable Account,
paying charges relative to the Variable Account or making adjustments for
annuity reserves held in the Variable Account. The assets of the Sub-Accounts
of the Variable Account are held separate and apart from the assets of any
other segregated asset accounts of the Company and separate and apart from the
Company's general account assets. The Company maintains records of all
purchases and redemptions of shares of the Fund held by each of the Sub-
Accounts of the Variable Account. Additional protection for the assets of the
Variable Account is afforded by the Company's fidelity bond covering the acts
of officers and employees of the Company which is presently (as of November 1,
1996) in the amount of $100,000,000.

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

HISTORICAL PERFORMANCE DATA

Historical performance data as of December 31, 1995 for each of the Sub-
Accounts of the Separate Account follows in the Financial Statements.

MONEY MARKET SUB-ACCOUNT YIELD. The Company may from time to time disclose
the current annualized yield of the Money Market Sub-Account, which invests in
the Money Market Fund, for a 7-day period in a manner which does not take into
consideration any realized or unrealized gains or losses on shares of the
Money Market Fund or on its portfolio securities. This current annualized
yield is computed by determining the net change (exclusive of realized gains
and losses on the sale of securities and unrealized appreciation and
depreciation) at the end of the 7-day period in the value of a hypothetical
account having a balance of 1 unit of the Money Market Sub-Account at the
beginning of the 7-day period, dividing such net change in account value by
the value of the account at the beginning of the period to determine the base
period return, and annualizing this quotient on a 365-day basis. The net
change in account value reflects (i) net income from the Money Market Fund
attributable to the hypothetical account; and (ii) charges and deductions
imposed under a Contract that are attributable to the hypothetical account.

The effective yield is calculated by compounding the unannualized base
period return according to the following formula:

EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) /3//6//5///7/] - 1

7
<PAGE>

The yield on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Fund, the types and quality of portfolio securities held by the
Money Market Fund and its operating expenses. The yield figures do not reflect
withdrawal charges or premium taxes.

OTHER SUB-ACCOUNT YIELDS. The Company may from time to time advertise or
disclose the current annualized yield of one or more of the Sub-Accounts of
the Variable Account (except the Money Market Sub-Account) for 30-day periods.
The annualized yield of a Sub-Account refers to income generated by the Sub-
Account over a specific 30-day period. Because the yield is annualized, the
yield generated by a Sub-Account during the 30-day period is assumed to be
generated each 30-day period over a 12-month period. The yield is computed by:
(i) dividing the net investment income per accumulation unit earned during the
period by the maximum offering price per unit on the last day of the period,
according to the following formula:

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

Where:

a = Net investment income earned during the period by the Fund attributable
to shares owned by the Sub-Account.

b = Expenses accrued for the period.

c = The average daily number of accumulation units outstanding during the
period.

d = The maximum offering price per accumulation unit on the last day of the
period.

Because of the charges and deductions imposed by the Variable Account, the
yield for a Sub-Account of the Variable Account will be lower than the yield
for its corresponding Fund. The yield calculations do not reflect the effect
of any premium taxes or withdrawal charges that may be applicable to a
particular Contract. Withdrawal charges range from 7% to 5% of the amount
withdrawn on total Premium Payments paid less prior partial surrenders, based
on the Contract Year of surrender.

The yield on amounts held in the Sub-Accounts of the Variable Account
normally will fluctuate over time. Therefore, the disclosed yield for any
given past period is not an indication or representation of future yields or
rates of return. A Sub-Account's actual yield is affected by the types and
quality of the Fund's investments and its operating expenses.

TOTAL RETURNS. The Company may from time to time also advertise or disclose
annual average total returns for one or more of the Sub-Accounts of the
Variable Account for various periods of time. When a Sub-Account has been in
operation for 1, 5 and 10 years, respectively, the total return for these
periods will be provided. Total returns for other periods of time may from
time to time also be disclosed. Total returns represent the average annual
compounded rates of return that would equate the initial amount invested to
the redemption value of that investment as of the last day of each of the
periods.

Total returns will be calculated using Sub-Account Unit Values which the
Company calculates on each Valuation Period based on the performance of the
Sub-Account's underlying Portfolio, and the deductions for the mortality and
expense risk charge, the administrative expense charge, and the Annuity
Account Fee. The Annuity Account Fee is reflected by dividing the total amount
of such charges collected during the year that are attributable to the
Variable Account by the total average net assets of all the Variable Sub-
Accounts. The resulting percentage is deducted from the return in calculating
the ending redeemable value. These figures will not reflect any premium taxes
or charges or credits for market value adjustments. Total return calculations
will reflect the effect of withdrawal charges that may be applicable to a
particular period. The total return will then be calculated according to the
following formula:

P(l + T)n = ERV

Where: P = A hypothetical initial Premium Payment of $1,000.

T = Average annual total return.

n = Number of years in the period.

ERV = Ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the one, five or ten-year period, at the end of the
one, five or ten-year period (or fractional portion thereof).

8
<PAGE>

OTHER PERFORMANCE DATA. The Company may from time to time also disclose
average annual total returns in a non-standard format in conjunction with the
standard format described above. The non-standard format will be identical to
the standard format except that the withdrawal charge percentage will be
assumed to be 0%.

The Company may also from time to time also disclose cumulative total
returns in conjunction with the standard format described above. The
cumulative returns will be calculated using the following formula assuming
that the withdrawal charge percentage will be 0%.

CTR = (ERV/P) - 1

Where: CTR = The cumulative total return net of Sub-Account recurring
charges for the period.

ERV = The ending redeemable value of the hypothetical investment made
at the beginning of the one, five or ten-year period, at the end of the
one, five or ten-year period (or fractional portion thereof).

P = A hypothetical initial payment of $10,000

All non-standard performance data will only be advertised if the standard
performance data is also disclosed.

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

LEGAL MATTERS

Legal advice regarding certain matters relating to the federal securities
laws applicable to the issuance of the Contracts described in this Prospectus
has been provided by George N. Gingold, Esq., 197 King Philip Drive, West
Hartford, CT 06117. All matters of Connecticut law pertaining to the
Contracts, including the validity of the Contracts and the Company's right to
issue the Contracts under Connecticut Insurance Law and any other applicable
state insurance or securities laws, have been passed upon by Robert A.
Picarello, Chief Counsel, Individual Insurance, CIGNA Companies.

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

LEGAL PROCEEDINGS

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

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

EXPERTS

The consolidated financial statements of Connecticut General Life Insurance
Company as of December 31, 1995 and 1994 and for each of the three years in
the period ended December 31, 1995 included in this Statement of Additional
Information, have been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting. Price Waterhouse LLP's consent to this
reference to the firm as an "expert" is filed as an exhibit to the
registration statement of which this Statement of Additional Information is a
part.

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

FINANCIAL STATEMENTS

The consolidated financial statements of the Company which are included in
this Statement of Additional Information should be considered only as bearing
on the ability of the Company to meet the obligations under the Contracts.
They should not be considered as bearing on the investment performance of the
assets held in the Variable Account, or on the Guaranteed Interest Rate
credited by the Company during a Guaranteed Period.

The Financial Statements of the Variable Account as of December 31, 1995 are
also included. The Account changed its fiscal year from January 31 to December
31 effective in the year beginning January 1, 1996. Accordingly, the
accompanying financial statements include the eleven month transition period
ended December 31, 1995.

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

9
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Shareholder of
Connecticut General Life Insurance Company

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Connecticut
General Life Insurance Company and its subsidiaries at December 31, 1995 and
1994, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

February 13, 1996

10
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
FINANCIAL
STATEMENTS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
CONSOLIDATED STATEMENTS OF INCOME DECEMBER 31,
AND RETAINED EARNINGS ----------------------
1995 1994 1993
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
REVENUES
Premiums and fees........................................ $4,998 $4,960 $4,704
Net investment income.................................... 3,138 2,805 2,742
Realized investment gains (losses)....................... (7) 27 (65)
Other revenues........................................... 9 8 15
------ ------ ------
Total revenues....................................... 8,138 7,800 7,396
------ ------ ------
BENEFITS, LOSSES AND EXPENSES
Benefits, losses and settlement expenses................. 5,892 5,574 5,215
Policy acquisition expenses.............................. 127 89 84
Other operating expenses................................. 1,358 1,363 1,351
------ ------ ------
Total benefits, losses and expenses.................. 7,377 7,026 6,650
------ ------ ------
INCOME BEFORE INCOME TAXES .............................. 761 774 746
------ ------ ------
Income taxes (benefits):
Current................................................ 301 220 433
Deferred............................................... (44) 45 (197)
------ ------ ------
Total taxes.......................................... 257 265 236
------ ------ ------
NET INCOME............................................... 504 509 510
Dividends declared....................................... (252) (300) (190)
Retained earnings, beginning of year..................... 2,968 2,759 2,439
------ ------ ------
RETAINED EARNINGS, END OF YEAR........................... $3,220 $2,968 $2,759
====== ====== ======
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

11
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
FINANCIAL
STATEMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
CONSOLIDATED BALANCE SHEETS ---------------------
1995 1994
-------- -------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at fair value (amortized cost,
$20,031; $8,571)....................................... $ 22,046 $ 8,324
Held to maturity, at amortized cost (fair value,
$10,075)............................................... -- 10,061
Mortgage loans............................................ 10,218 8,975
Equity securities, at fair value (cost, $54; $109)........ 66 119
Policy loans.............................................. 6,925 5,237
Real estate............................................... 1,158 1,442
Other long-term investments............................... 193 128
Short-term investments.................................... 254 143
-------- -------
Total investments..................................... 40,860 34,429
Cash and cash equivalents................................... -- 80
Accrued investment income................................... 626 578
Premiums and accounts receivable............................ 991 911
Reinsurance recoverables.................................... 1,258 2,533
Deferred policy acquisition costs........................... 689 700
Property and equipment, net................................. 319 346
Current income taxes........................................ 21 119
Deferred income taxes, net.................................. 403 661
Goodwill.................................................... 503 518
Other assets................................................ 149 135
Separate account assets..................................... 18,177 14,498
-------- -------
Total................................................. $ 63,996 $55,508
======== =======
LIABILITIES
Contractholder deposit funds................................ $ 29,762 $26,696
Future policy benefits...................................... 8,547 7,875
Unpaid claims and claim expenses............................ 1,151 1,096
Unearned premiums........................................... 95 84
-------- -------
Total insurance and contractholder liabilities........ 39,555 35,751
Accounts payable, accrued expenses and other liabilities.... 1,872 1,632
Separate account liabilities................................ 18,075 14,427
-------- -------
Total liabilities..................................... 59,502 51,810
======== =======
CONTINGENCIES - NOTE 11
SHAREHOLDER'S EQUITY
Common stock (6 shares outstanding)......................... 30 30
Additional paid-in capital.................................. 766 764
Net unrealized appreciation (depreciation) on investments... 476 (66)
Net translation of foreign currencies....................... 2 2
Retained earnings........................................... 3,220 2,968
-------- -------
Total shareholder's equity............................ 4,494 3,698
-------- -------
Total................................................. $ 63,996 $55,508
======== =======
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

12
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
FINANCIAL
STATEMENTS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
CONSOLIDATED STATEMENTS OF CASH FLOWS -------------------------
1995 1994 1993
------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................... $ 504 $ 509 $ 510
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Insurance liabilities.............................. (90) (249) 251
Reinsurance recoverables........................... 1,201 282 (392)
Premiums and accounts receivable................... 32 (188) 85
Deferred income taxes, net......................... (44) 45 (197)
Other assets....................................... (14) 68 54
Accounts payable, accrued expenses, other
liabilities and current income taxes.............. 212 (192) 5
Other, net......................................... 22 (24) (82)
------- ------- -------
Net cash provided by operating activities........ 1,823 251 234
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investments sold:
Fixed maturities--available for sale............... 1,070 1,389 --
Fixed maturities--held to maturity................. -- 12 599
Mortgage loans..................................... 383 496 1,004
Equity securities.................................. 119 41 41
Real Estate........................................ 299 242 78
Other (primarily short-term investments)........... 2,268 1,005 3,762
Investment maturities and repayments:
Fixed maturities--available for sale............... 478 686 --
Fixed maturities--held to maturity................. 1,756 1,764 3,167
Mortgage loans..................................... 420 194 202
Investments purchased:
Fixed maturities--available for sale............... (3,054) (2,390) --
Fixed maturities--held to maturity................. (1,385) (1,788) (5,128)
Mortgage loans..................................... (1,908) (882) (823)
Equity securities.................................. (20) (12) (112)
Policy loans....................................... (2,129) (1,614) (1,561)
Other (primarily short-term investments)........... (2,334) (1,093) (3,587)
Other, net........................................... (119) (129) (48)
------- ------- -------
Net cash used in investing activities............ (4,156) (2,079) (2,406)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits and interest credited to contractholder
deposit funds....................................... 7,489 6,388 7,537
Withdrawals and benefit payments from contractholder
deposit funds....................................... (4,985) (4,216) (5,166)
Dividends paid to Parent............................. (252) (300) (190)
Other, net........................................... 1 36 (30)
------- ------- -------
Net cash provided by financing activities........ 2,253 1,908 2,151
------- ------- -------
Net increase (decrease) in cash and cash equivalents. (80) 80 (21)
Cash and cash equivalents, beginning of year......... 80 -- 21
------- ------- -------
Cash and cash equivalents, end of year............... $ -- $ 80 $ --
------- ------- -------
Supplemental Disclosure of Cash Information:
Income taxes paid, net of refunds.................. $ 211 $ 411 $ 352
Interest paid...................................... $ 7 $ 5 $ 5
======= ======= =======
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

13
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS
Connecticut General Life Insurance Company and its subsidiaries (the Company)
provide insurance and related financial services throughout the United States
and in many locations worldwide. Principal products and services include group
life and health insurance, individual life insurance and annuity products, and
retirement and investment products and services.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of the Company and all significant subsidiaries. The Company is a
wholly-owned subsidiary of Connecticut General Corporation, which is an
indirect wholly-owned subsidiary of CIGNA Corporation (CIGNA). These
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles, and reflect management's estimates
and assumptions, such as those regarding medical costs and interest rates, that
affect the recorded amounts. Significant estimates used in determining
insurance and contractholder liabilities, related reinsurance recoverables, and
valuation allowances for investment assets are discussed throughout the Notes
to the Financial Statements. Certain reclassifications have been made to prior
years' amounts to conform with the 1995 presentation.
B) RECENT ACCOUNTING PRONOUNCEMENTS: In 1993, the Company implemented
Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." SFAS No. 115 requires that
debt and equity securities be classified into different categories and carried
at fair value if they are not classified as held to maturity. During the fourth
quarter of 1995, the Financial Accounting Standards Board (FASB) issued a guide
to implementation of SFAS No. 115, which permits a one-time opportunity to
reclassify securities subject to SFAS No. 115. Consequently, the Company
reclassified all held-to-maturity securities to available-for-sale as of
December 31, 1995. The non-cash reclassification of these securities, which had
an aggregate amortized cost of $9.2 billion and fair value of $10.1 billion,
resulted in an increase of approximately $396 million, net of policyholder-
related amounts and deferred income taxes, in net unrealized appreciation
included in Shareholders' Equity as of December 31, 1995.
In 1993, the Financial Accounting Standards Board (FASB) issued SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," which provides guidance on
the accounting and disclosure for impaired loans. In 1994, the FASB issued SFAS
No. 118, "Accounting by Creditors for Impairment of a Loan--Income Recognition
and Disclosures," which eliminates the income recognition requirements of SFAS
No. 114. The Company adopted SFAS Nos. 114 and 118 in the first quarter of
1995, which resulted in a $6 million increase in net income.
In 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 121
requires write-down to fair value when long-lived assets to be held and used
are impaired. Long-lived assets to be disposed of, including real estate held
for sale, must be carried at the lower of cost or fair value less costs to
sell. Depreciation of assets to be disposed of is prohibited. The Company will
adopt this standard in the first quarter of 1996. The effect on the Company's
results of operations, liquidity and financial condition is not expected to be
material.
C) FINANCIAL INSTRUMENTS: In the normal course of business, the Company enters
into transactions involving various types of financial instruments, including
investments such as fixed maturities and equity securities and off-balance-
sheet financial instruments such as investment and loan commitments and
financial guarantees. These instruments have credit risk and also may be
subject to risk of loss due to interest rate and market fluctuations. The
Company evaluates and monitors each financial instrument individually and,
where appropriate, uses certain derivative instruments or obtains collateral or
other forms of security to minimize risk of loss.
See Note 12 for additional information on the fair value of financial
instruments.
D) INVESTMENTS: Investments in fixed maturities include bonds, asset-backed
securities, including collateralized mortgage obligations (CMOs), and
redeemable preferred stocks. Fixed maturities classified as held to maturity
are carried at amortized cost, net of impairments, and those classified as
available for sale are carried at fair value, with unrealized appreciation or
depreciation included in Shareholder's Equity. Fixed maturities are considered
impaired and written down to fair value when a decline in value is considered
to be other than temporary.
Mortgage loans are carried principally at unpaid principal balances, net of
valuation reserves. Mortgage loans are considered impaired when it is probable
that the Company will be unable to collect all amounts according to the
contractual terms of the loan agreement. If impaired, a valuation reserve is
utilized when a decline in the fair value of the underlying collateral is below
the carrying value.
Fixed maturities and mortgage loans that are delinquent or restructured to
modify basic financial terms, typically to reduce the interest rate and, in
certain cases, extend the term, are placed on non-accrual status, and
thereafter interest income is recognized only when payment is received.
Real estate investments are either held for the production of income or held
for sale. Real estate investments held for the production of income are carried
at depreciated cost less valuation reserves when a decline in

14
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

value is other than temporary. Depreciation is generally calculated using the
straight-line method based on the estimated useful lives of the assets. Real
estate investments held for sale are generally those which are acquired through
the foreclosure of mortgage loans. These assets are valued at their fair value
at the time of foreclosure. The fair value is established as the new cost basis
and the asset acquired is reclassified from mortgage loans to real estate held
for sale. Subsequent to foreclosure, these investments are carried at the lower
of depreciated cost or current fair value less estimated costs to sell.
Adjustments to the carrying value as a result of changes in fair value
subsequent to foreclosure are recorded as valuation reserves and reported in
realized investment gains and losses. The Company considers several methods in
determining fair value for real estate acquired through foreclosure, with
greater emphasis placed on the use of discounted cash flow analyses and, in
some cases, the use of third-party appraisals. Assets held for sale are
depreciated using the straight-line method based on the estimated useful lives
of the assets.
Equity securities, which include common and non-redeemable preferred stocks,
are carried at fair value. Short-term investments are carried at fair value,
which approximates cost. Equity securities and short-term investments are
classified as available for sale.
Policy loans are generally carried at unpaid principal balances.
Realized investment gains and losses result from sales, investment asset
write-downs and changes in valuation reserves, after deducting amounts
attributable to experience-rated pension policyholders' contracts and
participating life policies ("policyholder share"). Generally, realized
investment gains and losses are based upon specific identification of the
investment assets.
Unrealized investment gains and losses, after deducting policyholder-related
amounts and net of deferred income taxes, if applicable, for investments
carried at fair value are included in Shareholder's Equity.
See Note 3(F) for a discussion of the Company's accounting policies for
derivative financial instruments.
E) CASH AND CASH EQUIVALENTS: Short-term investments with a maturity of three
months or less at the time of purchase are reported as cash equivalents.
F) REINSURANCE RECOVERABLES: Reinsurance recoverables are estimates of amounts
to be received from reinsurers, including amounts under reinsurance agreements
with affiliated companies. Allowances are established for amounts deemed
uncollectible.
G) DEFERRED POLICY ACQUISITION COSTS: Acquisition costs consist of
commissions, premium taxes and other costs, which vary with, and are primarily
related to, the production of revenues. Group life and a portion of group
health insurance business acquisition costs are deferred and amortized over the
terms of the insurance policies. Acquisition costs related to universal life
products and contractholder deposit funds are deferred and amortized in
proportion to total estimated gross profits over the expected life of the
contracts. Acquisition costs related to annuity and other life insurance
businesses are deferred and amortized, generally in proportion to the ratio of
annual revenue to the estimated total revenues over the contract periods.
Deferred acquisition costs are reviewed to determine if they are recoverable
from future income, including investment income. If such costs are estimated to
be unrecoverable, they are expensed. If such costs are estimated to be
unrecoverable or are accelerated as a result of treating unrealized investment
gains and losses as though they had been realized, a deferred acquisition cost
valuation allowance may be established or adjusted, with a comparable offset in
net unrealized appreciation (depreciation).
H) PROPERTY AND EQUIPMENT: Property and equipment are carried at cost less
accumulated depreciation. When applicable, cost includes interest and real
estate taxes incurred during construction and other construction-related costs.
Depreciation is calculated principally on the straight-line method based on the
estimated useful lives of the assets. Accumulated depreciation was $387 million
and $333 million at December 31, 1995 and 1994, respectively.
I) OTHER ASSETS: Other Assets consists of various insurance-related assets,
principally ceded unearned premiums, reinsurance deposits and other amounts due
from affiliated companies.
J) GOODWILL: Goodwill represents the excess of the cost of businesses acquired
over the fair value of their net assets. These costs are amortized on
systematic bases over periods, not exceeding 40 years, that correspond with the
benefits estimated to be derived from the acquisitions. The Company evaluates
the carrying amount of goodwill by analyzing historical and estimated future
income and undiscounted estimated cash flows of the related businesses.
Goodwill is written down when impaired. Amortization periods are revised if it
is estimated that the remaining period of benefit of the goodwill has changed.
Accumulated amortization was $84 million and $70 million at December 31, 1995
and 1994, respectively.
K) SEPARATE ACCOUNTS: Separate account assets and liabilities are principally
carried at market value, with less than 5% carried at amortized cost, and
represent policyholder funds maintained in accounts having specific investment
objectives. The investment income, gains and losses of these accounts generally
accrue to the policyholders and, therefore, are not included in the Company's
net income.
L) CONTRACTHOLDER DEPOSIT FUNDS: Contractholder Deposit Funds are liabilities
for investment-related and universal life products which were $19.8 billion and
$10.0 billion, respectively, as of December 31, 1995,

15
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

compared with $18.6 billion and $8.1 billion, respectively, as of December 31,
1994. These liabilities consist of deposits received from customers and
investment earnings on their fund balances, less administrative charges and,
for universal life fund balances, mortality charges.
M) FUTURE POLICY BENEFITS: Future policy benefits are liabilities for life,
health and annuity products. Such liabilities are established in amounts
adequate to meet the estimated future obligations of policies in force. These
liabilities are computed using premium assumptions for group annuity policies
and the net level premium method for individual life and annuity policies, and
are based upon estimates as to future investment yield, mortality and
withdrawals that include provisions for adverse deviation. Future policy
benefits for individual life insurance and annuity policies are computed using
interest rates ranging from 2% to 11%, generally graded down after 10 to 30
years. Mortality, morbidity, and withdrawal assumptions are based on either the
Company's own experience or various actuarial tables.
N) UNPAID CLAIMS AND CLAIM EXPENSES: Liabilities for unpaid claims and claim
expenses are estimates of payments to be made on insurance claims for reported
losses and estimates of losses incurred but not reported.
O) UNEARNED PREMIUMS: Premiums for group life, and accident and health
insurance are reported as earned on a pro rata basis over the contract period.
The unexpired portion of these premiums is recorded as Unearned Premiums.
P) OTHER LIABILITIES: Other Liabilities consists principally of postretirement
and postemployment benefits and various insurance-related liabilities,
including amounts related to reinsurance contracts. Also included in Other
Liabilities are liabilities for guaranty fund assessments that can be
reasonably estimated.
Q) TRANSLATION OF FOREIGN CURRENCIES: Foreign operations primarily utilize the
local currencies as their functional currencies, and assets and liabilities are
translated at the rates of exchange as of the balance sheet date. The
translation gain or loss on such functional currencies, net of applicable
taxes, is generally reflected in Shareholder's Equity. Revenues and expenses
are translated at the average rates of exchange prevailing during the year.
R) PREMIUM AND FEES, REVENUES AND RELATED EXPENSES: Premiums for group life
and accident and health insurance are recognized as revenue on a pro rata basis
over their contract periods. Premiums for individual life and health insurance
as well as individual and group annuity products, excluding universal life and
investment-related products, are recognized as revenue when due. Benefits,
losses and expenses are matched with premiums.
Revenues for universal life products consist of net investment income and
mortality, administration and surrender fees assessed against the fund values
during the period. Benefit expenses for universal life products consist of
benefit claims in excess of fund values and interest credited to fund values.
Revenues for investment-related products consist of net investment income and
contract charges assessed against the fund values during the period. Benefit
expenses for investment-related products primarily consist of interest credited
to the fund values after deduction for investment and risk fees.
S) PARTICIPATING BUSINESS: Certain life insurance policies contain dividend
payment provisions that enable the policyholder to participate in the earnings
of the Company's business. The participating insurance in force accounted for
7.0% of total insurance in force at December 31, 1995, compared with 5.2% at
December 31, 1994 and 3.6% at December 31, 1993.
T) INCOME TAXES: The Company and its domestic subsidiaries are included in the
consolidated United States federal income tax return filed by CIGNA. In
accordance with a tax sharing agreement with CIGNA, the provision for federal
income tax is computed as if the Company were filing a separate federal income
tax return, except that benefits arising from tax credits and net operating and
capital losses are allocated to those subsidiaries producing such attributes to
the extent they are utilized in CIGNA's consolidated federal income tax
provision.
Deferred income taxes are generally recognized when assets and liabilities
have different values for financial statement and tax reporting purposes. See
Note 6 for additional information.

16
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

NOTE 3. INVESTMENTS
A) FIXED MATURITIES: Fixed maturities are net of cumulative write-downs of $103
million and $78 million, including policyholder share, as of December 31, 1995
and 1994, respectively.
As of December 31, 1995, all fixed maturities are classified as available for
sale and are carried at fair value. See Note 2(B) for additional information.
The amortized cost and fair value by contractual maturity periods for
available-for-sale fixed maturities (carried at fair value), including
policyholder share, as of December 31, 1995 were as follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
--------- -------
(In millions)
<S> <C> <C>
Due in one year or less...................................... $ 944 $ 980
Due after one year through five years........................ 5,260 5,566
Due after five years through ten years....................... 4,936 5,404
Due after ten years.......................................... 3,401 4,276
Asset-backed securities...................................... 5,490 5,820
-------- -------
Total...................................................... $ 20,031 $22,046
======== =======
</TABLE>
Actual maturities could differ from contractual maturities because issuers may
have the right to call or prepay obligations with or without call or prepayment
penalties. Also, the Company may extend maturities in some cases.
Gross unrealized appreciation (depreciation) for fixed maturities, including
policyholder share, by type of issuer was as follows:
<TABLE>
<CAPTION>
December 31, 1995
-------------------------------------------
Amortized Fair
Cost Appreciation Depreciation Value
--------- ------------ ------------ -------
(In millions)
<S> <C> <C> <C> <C>
Available for Sale (Carried at
Fair Value)
Federal government bonds.......... $ 497 $ 300 $ -- $ 797
State and local government bonds.. 161 24 (1) 184
Foreign government bonds.......... 131 9 (1) 139
Corporate securities.............. 13,752 1,427 (73) 15,106
Asset-backed securities........... 5,490 371 (41) 5,820
------- ------ ----- -------
Total........................... $20,031 $2,131 $(116) $22,046
======= ====== ===== =======
</TABLE>

<TABLE>
<CAPTION>
December 31, 1994
-------------------------------------------
Amortized Fair
Cost Appreciation Depreciation Value
--------- ------------ ------------ -------
(In millions)
<S> <C> <C> <C> <C>
Available for Sale (Carried at
Fair Value)
Federal government bonds.......... $ 393 $ 35 $ (13) $ 415
State and local government bonds.. 48 -- (4) 44
Foreign government bonds.......... 135 1 (6) 130
Corporate securities.............. 5,042 84 (244) 4,882
Asset-backed securities........... 2,953 98 (198) 2,853
-------- ---- ----- -------
Total........................... $ 8,571 $218 $(465) $ 8,324
======== ==== ===== =======
Held to Maturity (Carried at
Amortized Cost)
State and local government bonds.. $ 61 $ 4 $ (1) $ 64
Foreign government bonds.......... 49 1 (1) 49
Corporate securities.............. 8,088 293 (232) 8,149
Asset-backed securities........... 1,863 46 (96) 1,813
-------- ---- ----- -------
Total........................... $ 10,061 $344 $(330) $10,075
======== ==== ===== =======
</TABLE>
Asset-backed securities include investments in CMOs as of December 31, 1995 of
$2.1 billion carried at fair value (amortized cost, $2.0 billion). As of
December 31, 1994, investments in CMOs consisted of $1.5 billion carried at
fair value (amortized cost, $1.6 billion), and $150 million carried at
amortized cost (fair value, $160 million). Certain of these securities are
backed by Aaa/AAA-rated government agencies. All other CMO securities have high
quality standards through use of credit enhancement provided by subordinated
securities or mortgage insurance from an Aaa/AAA-rated insurance company. CMO
holdings are concentrated in securities with limited prepayment, extension and
default risk, such as planned amortization class bonds. The Company's
investments in interest-only and principal-only CMOs, which are also subject to
interest rate risk resulting from accelerated prepayments, represented
approximately 2% and 6% of total CMO investments at December 31, 1995 and 1994,
respectively.

17
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

At December 31, 1995, contractual fixed maturity investment commitments
approximated $229 million. The majority of investment commitments are for the
purchase of investment grade fixed maturities, bearing interest at a fixed
market rate, and require no collateral. These commitments are diversified by
issuer and maturity date, and it is estimated that the full amount will be
disbursed in 1996, with the majority occurring within the first three months.
B) SHORT-TERM INVESTMENTS AND CASH EQUIVALENTS: Short-term investments and
cash equivalents, in the aggregate, included debt securities, principally
corporate securities of $259 million and $323 million and federal government
securities of $70 million and $7 million at December 31, 1995 and 1994,
respectively, and foreign government securities of $1 million at December 31,
1994.
C) MORTGAGE LOANS AND REAL ESTATE: The Company's mortgage loans and real
estate investments are diversified by property type and location and, for
mortgage loans, by borrower. Mortgage loans are collateralized by the related
properties and generally approximate 80% of the property's value at the time
the original loan is made.
At December 31, the carrying values of mortgage loans and real estate
investments, including policyholder share, were as follows:
<TABLE>
<CAPTION>
1995 1994
-------- -------
(In millions)
<S> <C> <C>
Mortgage Loans................................................ $ 10,218 $ 8,975
-------- -------
Real estate:
Held for sale............................................... 671 760
Held for production of income............................... 487 682
-------- -------
Total real estate......................................... 1,158 1,442
-------- -------
Total..................................................... $ 11,376 $10,417
======== =======
</TABLE>
Valuation reserves for mortgage loans, including policyholder share, were $82
million and $115 million as of December 31, 1995 and 1994, respectively.
Valuation reserves and cumulative write-downs related to real estate, including
policyholder share, were $310 million and $309 million as of December 31, 1995
and 1994, respectively.
During 1995, 1994 and 1993, non-cash investing activities included real estate
acquired through foreclosure of mortgage loans, which totaled $144 million,
$127 million and $458 million, respectively.
At December 31, mortgage loans and real estate investments comprised the
following property types and geographic regions:
<TABLE>
<CAPTION>
1995 1994
-------- -------
(In millions)
<S> <C> <C>
Property type:
Office buildings............................................. $ 4,493 $ 4,092
Retail facilities............................................ 4,327 3,867
Hotels....................................................... 711 819
Apartment buildings.......................................... 1,246 997
Other........................................................ 599 642
-------- -------
Total...................................................... $ 11,376 $10,417
======== =======
Geographic region:
Central...................................................... $ 4,032 $ 3,664
Pacific...................................................... 2,580 2,558
Middle Atlantic.............................................. 1,951 1,652
South Atlantic............................................... 1,647 1,585
New England.................................................. 1,166 958
-------- -------
Total...................................................... $ 11,376 $10,417
======== =======
</TABLE>
At December 31, 1995, scheduled mortgage loan maturities were as follows:
1996--$1.1 billion; 1997--$1 billion; 1998--$750 million; 1999--$1.3 billion;
2000--$1.6 billion; and $4.5 billion thereafter. Actual maturities could differ
from contractual maturities because borrowers may have the right to prepay
obligations with or without prepayment penalties, and loans may be refinanced.
During 1995 and 1994, the Company refinanced approximately $379 million and
$600 million, respectively, of its mortgage loans relating to borrowers that
were unable to obtain alternative financing.
At December 31, 1995, the Company's total investment in impaired mortgage
loans was $838 million, including $447 million, before valuation reserves
totaling $82 million, and $391 million, which had no valuation reserves. During
1995, valuation reserves for mortgage loans, including policyholder share,
decreased from $127 million as of December 31, 1994 to $82 million as of
December 31, 1995. The net decrease for the year reflects: (1) $27 million of
mortgage loan reserves transferred to foreclosed real estate, (2) $33 million
of charge-offs, and (3) a $15 million net increase in valuation reserves.

18
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(Continued)

During 1995, the average total investment in impaired mortgage loans, before
valuation reserves, was approximately $935 million, and interest income
recorded and cash received on these loans was approximately $71 million.
At December 31, 1995, contractual commitments to extend credit under
commercial mortgage loan agreements amounted to approximately $580 million, all
of which were at a fixed market rate of interest. These commitments expire
within three months, and are diversified by property type and geographic
region.
D) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS: Unrealized
appreciation (depreciation) for investments carried at fair value as of
December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994
------ ----
<S> <C> <C>
(In
millions)
Unrealized appreciation:
Fixed maturities............................................... $2,131 $218
Equity securities.............................................. 23 22
------ ----
2,154 240
------ ----
Unrealized depreciation:
Fixed maturities............................................... (116) (465)
Equity securities.............................................. (11) (12)
------ ----
(127) (477)
------ ----
Less policyholder-related amounts................................ 1,279 (141)
------ ----
Shareholder net unrealized appreciation (depreciation)........... 748 (96)
Less deferred income taxes (benefits)............................ 272 (30)
------ ----
Net unrealized appreciation (depreciation)....................... $ 476 $(66)
====== ====
</TABLE>
Net unrealized appreciation (depreciation) for investments carried at fair
value is included as a separate component of Shareholders' Equity, net of
policyholder-related amounts and deferred income taxes. The net unrealized
appreciation (depreciation) for these investments, primarily fixed maturities,
during 1995, 1994 and 1993 was $542 million, ($494) million and $423 million,
respectively.
During 1995, 1994 and 1993, the net unrealized appreciation (depreciation) for
fixed maturities that were carried at amortized cost in the financial
statements was ($14) million, ($1.2) billion and $129 million, respectively.
E) NON-INCOME PRODUCING INVESTMENTS: At December 31, the carrying values of
investments that were non-income producing during the preceding 12 months,
including policyholder share, were as follows:
<TABLE>
<CAPTION>
1995 1994
----- ----
(In
millions)
<S> <C> <C>
Fixed maturities..................................................... $ 75 $ 71
Mortgage loans....................................................... 17 81
Real estate.......................................................... 234 280
----- ----
Total.............................................................. $ 326 $432
===== ====
</TABLE>
F) DERIVATIVE FINANCIAL INSTRUMENTS: The Company's investment strategy is to
manage the characteristics of investment assets, such as liquidity, currency,
yield and duration, to reflect the underlying characteristics of the related
insurance and contractholder liabilities, which vary among the Company's
principal product lines. In connection with this investment strategy, the
Company uses derivative instruments through hedging applications to manage
market risk.
Generally, the Company uses interest rate swap contracts to create, when
combined with cash flows from variable rate bonds, fixed rate cash flows that
meet its portfolio investment strategy. Currency swaps are used to match the
currency of individual investments to that of the associated liabilities.
Interest rate futures are used to temporarily hedge against changes in market
values of bonds and mortgage loans to be purchased or sold, and stock index
futures may be used to hedge the temporary cash position of equity accounts.
Interest rate futures also are used to hedge interest rate risk associated with
withdrawals by contractholders over a scheduled time period.
Cash requirements arise as a result of the Company's derivative activities.
Under interest rate swaps, the Company agrees with other parties to exchange,
at specified intervals, the difference between fixed rate and variable rate
interest amounts calculated by reference to an agreed-upon notional principal
amount. Under futures contracts, initial margin requirements are settled with
cash or other instruments and changes in the contract values are settled in
cash daily with the exchange on which the instrument is traded. Under currency
swaps, the parties generally exchange a principal amount in the two relevant
currencies, agreeing to re-exchange principal amounts at a specified future
date using an agreed-upon exchange rate, and agreeing to periodically exchange
amounts equal to interest payments using the agreed-upon exchange rate.

19
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

Because the Company's use of derivatives is limited to hedging applications,
changes in the market value of the derivatives are substantially offset by
changes in the market value of the hedged assets or underlying liabilities,
minimizing market risk. The Company routinely monitors, by individual
counterparty, exposure to credit risk associated with swap contracts. Futures
contracts are exchange-traded and, therefore, credit risk is limited since the
exchange assumes the obligations. The Company manages legal risks by following
industry standardized documentation procedures, by monitoring legal
developments and, consistent with its credit exposure policies, by limiting
risks associated with counterparty failure by diversifying the swaps portfolio
among approved dealers of high credit quality.
Changes in the market value of futures contracts that qualify for hedge
accounting are deferred and recorded as adjustments to the carrying value of
the related bond or mortgage loan. Deferred gains and losses are amortized into
net investment income over the life of the investments purchased or recognized
in full as realized investment gains and losses in the event that the
investment or futures contract is sold prior to maturity. Futures contracts
totaled $22 million and $142 million as of December 31, 1995 and 1994,
respectively, and were accounted for as hedges. At December 31, 1995, gains and
losses on futures contracts deferred in anticipation of investment purchases
were $4 million and $1 million, respectively. At December 31, 1994, gains and
losses on futures contracts deferred in anticipation of investment purchases
were $1 million and $3 million, respectively.
Net interest received or paid on an interest rate swap contract is recognized
currently as an adjustment to net investment income. The fair value of interest
rate swap contracts is reported as an adjustment to the fair value of the
related investment. Underlying notional principal amounts associated with
interest rate swap contracts outstanding were $508 million and $596 million at
December 31, 1995 and 1994, respectively.
The interest payment cash flows received in U.S. dollars from currency swaps
related to foreign currency denominated investment securities (primarily
Canadian dollars, pound sterling, Swiss francs and Japanese yen) are recognized
as net investment income when received. The fair value of currency swaps is
reported as an adjustment to the fair value of the related investment.
Underlying principal amounts associated with currency swap contracts
outstanding were $335 million and $325 million at December 31, 1995 and 994,
respectively.
As of December 31, 1995 and 1994, respectively, the Company's variable rate
investments consisted of approximately $1.4 billion and $810 million of fixed
maturities, respectively. As of December 31, 1995 and 1994, the Company's fixed
rate investments consisted of $20.6 billion and $17.6 billion, respectively, of
fixed maturities and $10 billion and $9 billion, respectively, of mortgage
loans. As a result of recognizing amortization of deferred market value changes
in futures contracts, net investment income on bonds and mortgage loans was
increased by $10 million and $1 million, respectively, for the year ended
December 31, 1995 and by $7 million and $1 million, respectively, for the year
ended December 31, 1994. In addition, the increase in net investment income for
bonds resulting from interest rate swap contracts was $3 million, $12 million
and $19 million for 1995, 1994 and 1993, respectively.
G) OTHER: As of December 31, 1995 and 1994, the Company had no concentration
of investments in a single investee exceeding 10% of Shareholder's Equity.

NOTE 4. INVESTMENT INCOME AND GAINS AND LOSSES
A) NET INVESTMENT INCOME: The components of net investment income, including
policyholder share, for the year ended December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------ ------
(In millions)
<S> <C> <C> <C>
Fixed maturities......................................... $ 1,669 $1,596 $1,547
Mortgage loans........................................... 866 776 892
Equity securities........................................ 15 20 16
Policy loans............................................. 499 365 253
Real estate.............................................. 301 291 238
Other long-term investments.............................. 33 23 20
Short-term investments................................... 40 8 18
------- ------ ------
3,423 3,079 2,984
Less investment expenses................................. 285 274 242
------- ------ ------
Net investment income.................................... $ 3,138 $2,805 $2,742
======= ====== ======
</TABLE>
Net investment income attributable to policyholder contracts, which is
included in the Company's revenues and is primarily offset by amounts included
in Benefits, Losses and Settlement Expenses, was approximately $1.8 billion,
$1.5 billion and $1.6 billion for 1995, 1994 and 1993, respectively. Net
investment income for separate accounts, which is not reflected in the
Company's revenues, was $885 million, $693 million and $604 million for
December 31, 1995, 1994 and 1993, respectively.
As of December 31, 1995, fixed maturities and mortgage loans on non-accrual
status, including policyholder share, were $149 million and $523 million,
including restructured investments of $105 million and $447 million,
respectively. Amounts on non-accrual status as of December 31, 1994 were $272
million of fixed

20
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

maturities and $743 million of mortgage loans, including restructurings of $148
million and $543 million, respectively. If interest on these investments had
been recognized in accordance with their original terms, net income would have
been increased by $12 million, $14 million and $17 million in 1995, 1994 and
1993, respectively.
B) REALIZED INVESTMENT GAINS AND LOSSES: Realized gains and losses on
investments, excluding policyholder share, for the year ended December 31 were
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(In millions)
<S> <C> <C> <C>
Realized investment gains (losses):
Fixed maturities............................................ $(10) $ 4 $ 28
Mortgage loans.............................................. (5) -- (5)
Equity securities........................................... 5 2 (5)
Real estate................................................. 4 15 (66)
Other....................................................... (1) 6 (17)
---- --- ----
(7) 27 (65)
Income tax (benefits) expenses................................ (2) 12 (16)
---- --- ----
Net realized investment gains (losses)........................ $ (5) $15 $(49)
==== === ====
</TABLE>
Impairments in the value of investments, net of recoveries, that are included
in realized investment gains and losses were $27 million, $33 million and $55
million in 1995, 1994 and 1993, respectively.
Realized investment gains (losses) for separate accounts, which are not
reflected in the Company's revenues, were $412 million, ($51) million and $612
million for the years ended December 31, 1995, 1994 and 1993, respectively.
Realized investment (losses) attributable to policyholder contracts, which also
are not reflected in the Company's revenues, were ($6) million and ($5) million
for the years ended December 31, 1995 and 1993, respectively. Realized
investment gains (losses) attributable to policyholder contracts were zero for
the year ended December 31, 1994.
Sale of available-for-sale fixed maturities and equity securities, including
policyholder share, for the year ended December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994
------ ------
(In millions)
<S> <C> <C>
Proceeds from sales............................................. $1,667 $2,116
Gross gains on sales............................................ $ 78 $ 73
Gross losses on sales........................................... $ (53) $ (70)
------ ------
</TABLE>
Prior to the SFAS No. 115 reclassification described in Note 2(B), $171
million of fixed maturities classified as held-to-maturity, including
policyholder share, were transferred to the available-for-sale category in 1995
resulting in the recognition in Shareholder's Equity of unrealized depreciation
of $15 million, net of policyholder-related amounts and deferred income taxes.
During 1994, the Company sold $14 million of held-to-maturity fixed maturities,
including policyholder share, resulting in gross proceeds of $12 million and a
pre-tax realized loss of $2 million. In addition, in 1994 $82 million of fixed
maturities classified as held-to-maturity, including policyholder share, were
transferred to the available-for-sale category at fair value, which was not
significantly different from the carrying value. The sales of fixed maturities
classified as held to maturity and the transfer of such securities to the
available-for-sale category were the result of significant credit deterioration
of the issuers of the affected investments.
Prior to adoption of SFAS No. 115, proceeds from voluntary sales of
investments in fixed maturities, including policyholder share, were $599
million in 1993. Such sales resulted in gross realized gains and gross realized
(losses), including policyholder share, of $36 million and ($3) million,
respectively. These amounts exclude the effects of sales of fixed maturities
that, prior to the implementation of SFAS No. 115, were classified as short-
term investments.

NOTE 5. SHAREHOLDER'S EQUITY AND DIVIDEND RESTRICTIONS
The Connecticut Insurance Department (the Department) recognizes as net income
and surplus (shareholder's equity) those amounts determined in conformity with
statutory accounting practices prescribed or permitted by the Department, which
differ in certain respects from generally accepted accounting principles. As of
December 31, 1994, there were no permitted accounting practices utilized by the
Company that were materially different from those prescribed by the Department.
Capital stock of the Company at December 31, 1995 and 1994 consisted of
5,978,322 shares of common stock authorized, issued and outstanding (par value
$5.00).
The Company's statutory net income was $390 million, $428 million and $397
million for 1995, 1994 and 1993, respectively. Statutory surplus was $2.1
billion and $2.0 billion at December 31, 1995 and 1994, respectively. The
Connecticut Insurance Holding Company Act limits the amount of annual dividends
or other

21
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

distributions available to shareholders of Connecticut insurance companies
without prior approval of the Insurance Commissioner. Under current law, the
maximum dividend distribution that may be made by the Company during 1996
without prior approval is $432 million. The amount of restricted net assets as
of December 31, 1995 was approximately $4.1 billion.

NOTE 6. INCOME TAXES
The Company's net deferred tax asset of $403 million and $661 million as of
December 31, 1995 and 1994, respectively, reflects management's belief that the
Company's taxable income in future years will be sufficient to realize the net
deferred tax asset based on the Company's earnings history and its future
expectations. In determining the adequacy of future taxable income, management
considered the future reversal of its existing taxable temporary differences
and available tax planning strategies that could be implemented, if necessary.
In accordance with the Life Insurance Company Income Tax Act of 1959, a
portion of the Company's statutory income was not subject to current income
taxation but was accumulated in an account designated Policyholders' Surplus
Account. Under the Tax Reform Act of 1984, no further additions may be made to
the Policyholders' Surplus Account for tax years ending after December 31,
1983. The balance in the account of approximately $450 million at December 31,
1995 would result in a tax liability of $158 million, only if distributed to
the shareholders or if the account balance exceeded a prescribed maximum. No
income taxes have been provided on this amount because, in management's
opinion, the likelihood that these conditions will be met is remote.
CIGNA's federal income tax returns are routinely audited by the Internal
Revenue Service (IRS), and provisions are made in CIGNA's financial statements
in anticipation of the results of these audits.
In management's opinion, adequate tax liabilities have been established for
all years.
The tax effect of temporary differences which give rise to deferred income tax
assets and liabilities as of December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994
----- ----
(In
millions)
<S> <C> <C>
Deferred tax assets:
Insurance and contractholder liabilities.......................... $ 324 $337
Employee and retiree benefit plans................................ 176 175
Investments, net.................................................. 225 220
Unrealized depreciation on investments............................ -- 30
Other............................................................. 72 71
----- ----
Total deferred tax assets....................................... 797 833
----- ----
Deferred tax liabilities:
Policy acquisition expenses....................................... 25 60
Depreciation...................................................... 97 102
Unrealized appreciation on investments............................ 272 --
Other............................................................. -- 10
----- ----
Total deferred tax liabilities.................................. 394 172
----- ----
Deferred income taxes, net.......................................... $ 403 $661
===== ====
</TABLE>
Total income tax expense was less than the amount computed using the nominal
federal income tax rate of 35% for the following reasons:
<TABLE>
<CAPTION>
1995 1994 1993
----- ---- ----
(In millions)
<S> <C> <C> <C>
Tax expense at nominal rate.................................. $ 266 $271 $261
Tax-exempt interest income................................... (6) (7) (6)
Dividends received deduction................................. (7) (3) (4)
Amortization of goodwill..................................... 4 4 5
Resolved federal tax audit issues............................ -- (2) (3)
Increase in deferred tax asset for tax rate change........... -- -- (13)
Other, net................................................... -- 2 (4)
----- ---- ----
Total income tax expense................................... $ 257 $265 $236
===== ==== ====
</TABLE>

22
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

Temporary and other differences which resulted in the deferred tax expense
(benefit) for the year ended December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ---- -----
(In millions)
<S> <C> <C> <C>
Insurance and contractholder liabilities................... $ 13 $93 $ (80)
Policy acquisition expenses................................ (35) (8) (39)
Investments, net........................................... (21) (19) (36)
Employee and retiree benefit plans......................... (1) (9) (16)
Realized investment (gains) losses......................... 16 (20) (24)
Other...................................................... (16) 8 (2)
----- --- -----
Deferred taxes (benefits).................................. $ (44) $45 $(197)
===== === =====
</TABLE>

NOTE 7. PENSION AND OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS PLANS
A) PENSION PLANS: The Company provides retirement benefits to eligible
employees and agents. These benefits are provided through a plan sponsored by
CIGNA covering most domestic employees (the Plan) and by several separate
pension plans for various subsidiaries, agents and foreign employees.
The Plan is a non-contributory, defined benefit, trusteed plan available to
eligible domestic employees. Benefits are based on employees' years of service
and compensation during the highest three or, if service commenced after
December 31, 1988, five consecutive years of employment, offset by a portion of
the Social Security benefit for which they are eligible. CIGNA funds at least
the minimum amount required by the Employee Retirement Income Security Act of
1974. Allocated pension cost for the Company was $23 million, $31 million and
$27 million in 1995, 1994 and 1993, respectively.
The Plan, and several separate pension plans for various subsidiaries and
agents, had deposits with the Company totalling approximately $2.0 billion and
$1.7 billion at December 31, 1995 and 1994, respectively.
B) OTHER POSTRETIREMENT BENEFITS PLANS: In addition to providing pension
benefits, the Company provides certain health care and life insurance benefits
to retired employees, spouses and other eligible dependents through various
plans sponsored by CIGNA. A substantial portion of the Company's employees may
become eligible for these benefits upon retirement. CIGNA's contributions for
health care benefits depend upon a retiree's date of retirement, age, years of
service and other cost-sharing features, such as deductibles and coinsurance.
Under the terms of the benefit plans, benefit provisions and cost-sharing
features can be adjusted. In general, retiree health care benefits are not
funded by CIGNA, but are paid as covered expenses are incurred. Retiree life
insurance benefits are paid from plan assets or as covered expenses are
incurred.
An employer's postretirement benefit liability is primarily measured by
determining the present value of the projected future costs of health benefits
based on an estimate of health care cost trend rates. Expense for
postretirement benefits other than pensions allocated to the Company totalled
$20 million for 1995, $28 million for 1994 and $15 million for 1993. The other
postretirement benefit liability included in Accounts Payable, Accrued Expenses
and Other Liabilities as of December 31, 1995 and 1994 was $427 million and
$422 million, including net intercompany payables of $28 million and $29
million, respectively, for services provided by affiliates' employees.
C) OTHER POSTEMPLOYMENT BENEFITS: The Company provides certain salary
continuation (severance and disability), health care and life insurance
benefits to inactive and former employees, spouses and other eligible
dependents through various employee benefit plans sponsored by CIGNA.
Although severance benefits accumulate with additional service, the Company
recognizes severance expense when severance is probable and the costs can be
reasonably estimated. Postemployment benefits other than severance generally do
not vest or accumulate; therefore, the estimated cost of benefits is accrued
when determined to be probable and estimable, generally upon disability or
termination. See Note 8 for additional information regarding severance accrued
as part of cost reduction initiatives.
D) CAPITAL ACCUMULATION PLANS: CIGNA sponsors various capital accumulation
plans in which employee contributions on a pre-tax basis (401(k)) are
supplemented by CIGNA matching contributions. Contributions are invested, at
the election of the employee, in one or more of the following investments:
CIGNA common stock fund, several non-CIGNA stock and bond portfolios and a
fixed-income fund. The Company's expense for such plans totaled $14 million for
1995 and 1994 and $13 million for 1993.

23
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

NOTE 8. SEGMENT INFORMATION

The Company operates principally in three segments: Employee Life and Health
Benefits, Employee Retirement and Savings Benefits, and Individual Financial
Services. Other Operations consists principally of the results of the Company's
settlement annuity business.
Summarized financial information with respect to the business segments for the
year ended and as of December 31 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(In millions)
<S> <C> <C> <C>
REVENUES
Employee Life and Health Benefits.................... $ 4,243 $ 4,194 $ 3,811
Employee Retirement and Savings Benefits............. 1,914 1,887 2,044
Individual Financial Services........................ 1,800 1,546 1,351
Other Operations..................................... 181 173 190
------- ------- -------
Total.............................................. $ 8,138 $ 7,800 $ 7,396
======= ======= =======
INCOME (LOSS) BEFORE INCOME TAXES
Employee Life and Health Benefits.................... $ 294 $ 323 $ 378
Employee Retirement and Savings Benefits............. 232 258 172
Individual Financial Services........................ 252 237 198
Other Operations..................................... (17) (44) (2)
------- ------- -------
Total.............................................. $ 761 $ 774 $ 746
======= ======= =======
IDENTIFIABLE ASSETS
Employee Life and Health Benefits.................... $ 7,629 $ 7,197 $ 7,307
Employee Retirement and Savings Benefits............. 37,609 33,588 34,068
Individual Financial Services........................ 16,189 12,612 9,824
Other Operations..................................... 2,569 2,111 2,283
------- ------- -------
Total.............................................. $63,996 $55,508 $53,482
======= ======= =======
</TABLE>
During 1995, the Company recorded a $13 million pre-tax charge, included in
Other Operating Expenses, for cost reduction initiatives in the Employee Life
and Health Benefits segment. The charge consisted primarily of severance-
related expenses representing costs associated with nonvoluntary employee
terminations covering approximately 1,100 employees. The cash outlays
associated with the restructuring initiatives began in the third quarter of
1995 and will continue through 1997, with most of the cash outlays expected to
occur in 1996. During 1995, $3 million of severance was paid to 500 terminated
employees. During 1993, the Company implemented cost reduction initiatives in
the Employee Life and Health Benefits segment to reduce operating expenses.
Results for 1993 reflected a pre-tax charge of $8 million for the estimated
costs of these cost reduction actions. The Company has funded, and will
continue to fund, these costs through liquid assets, and such funding will not
have a material adverse effect on its liquidity.

NOTE 9. LEASES AND RENTALS
Rental expenses for operating leases, principally with respect to buildings,
amounted to $60 million, $62 million and $66 million in 1995, 1994 and 1993,
respectively.
As of December 31, 1995, future net minimum rental payments under non-
cancelable operating leases were $92 million, payable as follows: 1996--$37
million; 1997--$24 million; 1998--$13 million; 1999--$9 million; 2000--$4
million; and $5 million thereafter.

NOTE 10. REINSURANCE
In the normal course of business, the Company enters into agreements, primarily
relating to short-duration contracts, to assume and cede reinsurance with other
insurance companies. Reinsurance is ceded primarily to limit losses from large
exposures and to permit recovery of a portion of direct losses, although ceded
reinsurance does not relieve the originating insurer of liability. The Company
evaluates the financial condition of its reinsurers and monitors concentrations
of credit risk arising from similar geographic regions, activities, or economic
characteristic of its reinsurers.
Failure of reinsurers to indemnify the Company, as a result of reinsurer
insolvencies and disputes, could result in losses. As of December 31, 1995 and
1994 there were no allowances for uncollectible amounts. While future charges
for unrecoverable reinsurance may materially affect results of operations in
future periods, such amounts are not expected to have a material adverse effect
on the Company's liquidity or financial condition.

24
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

The effects of reinsurance on net earned premiums and fees for the year ended
December 31 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------ ------
(In millions)
<S> <C> <C> <C>
SHORT-DURATION CONTRACTS
Premiums and Fees:
Direct............................................... $ 3,374 $3,419 $2,666
Assumed.............................................. 818 716 1,248
Ceded................................................ (391) (291) (329)
------- ------ ------
Net earned premiums and fees....................... $ 3,801 $3,844 $3,585
======= ====== ======
LONG-DURATION CONTRACTS
Premiums and Fees:
Direct............................................... $ 1,189 $1,068 $1,023
Assumed.............................................. 127 126 166
Ceded................................................ (119) (78) (70)
------- ------ ------
Net earned premiums and fees....................... $ 1,197 $1,116 $1,119
======= ====== ======
</TABLE>
The effects of reinsurance on written premiums and fees for short-duration
contracts were not materially different from the amounts shown above. Benefits,
Losses and Settlement Expenses for 1995, 1994 and 1993 were net of reinsurance
recoveries of $574 million, $415 million and $603 million, respectively.

NOTE 11. CONTINGENCIES
A) FINANCIAL GUARANTEES: The Company is contingently liable for financial
guarantees provided in the ordinary course of business on the repayment of
principal and interest on certain industrial revenue bonds. The contractual
amounts of financial guarantees reflect the Company's maximum exposure to
credit loss in the event of nonperformance. To limit the Company's exposure in
the event of default of any guaranteed obligation, various programs are in
place to ascertain the creditworthiness of guaranteed parties, to monitor this
status on a periodic basis and to reduce risk through security arrangements.
The industrial revenue bonds guaranteed directly by the Company have remaining
maturities of up to 20 years. The guarantees provide for payment of debt
service only as it becomes due; consequently, an event of default would not
cause an acceleration of scheduled principal and interest payments. The
principal amount of the bonds guaranteed by the Company at December 31, 1995
and 1994 was $266 million and $296 million, respectively. Revenues in
connection with industrial revenue bond guarantees are derived principally from
equity participations in the related projects and are included in Net
Investment Income as earned. Loss reserves for financial guarantees are
established when a default has occurred or when the Company believes that a
loss has been incurred. During 1994, losses for industrial revenue bonds were
$1 million. There were no such losses in 1995 and 1993.
The Company also guarantees a minimum level of benefits for certain separate
account contracts and, in the event that separate account assets are
insufficient to fund minimum policy benefits, the Company is obligated to fund
the difference. As of December 31, 1995 and 1994, the amount of minimum benefit
guarantees for separate account contracts was $5.1 billion and $4.8 billion,
respectively. Reserves in addition to the separate account liabilities are
established when the Company believes a payment will be required under one of
these guarantees. As of December 31, 1994, reserves of $6 million were
recorded. No such reserves were required as of December 31, 1995. Guarantee
fees are part of the overall management fee charged to separate accounts and
are recognized in income as earned.
Although the ultimate outcome of any loss contingencies arising from the
Company's financial guarantees may adversely affect results of operations in
future periods, they are not expected to have a material adverse effect on the
Company's liquidity or financial condition.
B) REGULATORY AND INDUSTRY DEVELOPMENTS: The Company's businesses are subject
to a changing social, economic, legal, legislative and regulatory environment
that could affect them. Some of the changes include initiatives to: reform the
federal tax system; restrict insurance pricing and the application of
underwriting standards; reform health care; and expand regulation. Some of the
more significant issues are discussed below.
Legislation is expected to be considered by Congress that is likely to limit,
and eventually substantially eliminate, the tax deductibility of policy loan
interest for corporate-owned life insurance. The outcome of such legislation is
uncertain and, although it could have a material adverse effect on results of
operations for the Individual Financial Services segment, it is not expected to
be material to the Company's consolidated results of operations, liquidity or
financial condition.
The Company expects proposals for federal and state legislation seeking some
health care insurance reforms. Due to uncertainties associated with the timing
and content of any health care legislation, the effect on the Company's future
results of operations, liquidity or financial condition cannot be reasonably
estimated at this time.

25
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

In recent years, the number of insurance companies that are impaired or
insolvent has increased. This is expected to result in an increase in mandatory
assessments by state guaranty funds of, or voluntary payments by, solvent
insurance companies to cover losses to policyholders of insolvent or
rehabilitated companies. Mandatory assessments, which are subject to statutory
limits, can be partially recovered through a reduction in future premium taxes
in some states. The Company recorded pre-tax charges of $17 million, $12
million and $10 million for 1995, 1994 and 1993, respectively, for guaranty
fund assessments that can be reasonably estimated before giving effect to
future premium tax recoveries. Although future assessments and payments may
adversely affect results of operations in future periods, such amounts are not
expected to have a material adverse effect on the Company's liquidity or
financial condition.
The eventual effect on the Company of the changing environment in which it
operates remains uncertain.
C) LITIGATION: The Company is routinely engaged in litigation incidental to
its business, including litigation associated with syndicated investment
products. While the outcome of all litigation involving the Company, including
insurance-related litigation, cannot be determined, litigation is not expected
to result in losses that differ from recorded reserves by amounts that would be
material to results of operations, liquidity or financial condition.

NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments that are subject to fair value disclosure requirements
(insurance contracts, real estate, goodwill and taxes are excluded) are carried
in the financial statements at amounts that approximate fair values, unless
otherwise indicated in the following table. The fair values used for financial
instruments are estimates that in many cases may differ significantly from the
amounts that could be realized upon immediate liquidation. In cases where
market prices are not available, estimates of fair value are based on
discounted cash flow analyses which utilize current interest rates for similar
financial instruments with comparable terms and credit quality. The fair value
of liabilities for contractholder deposit funds was estimated using the amount
payable on demand and, for those not payable on demand, discounted cash flow
analyses.
The following table presents carrying amounts and estimated fair values as of
December 31 for the Company's financial instruments that are not carried in the
financial statements at amounts approximating fair value.
<TABLE>
<CAPTION>
1995 1994
---------------- ----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- -------
(In millions)
<S> <C> <C> <C> <C>
Assets:
Fixed maturities-held to maturity.......... $ -- $ -- $10,061 $10,075
Mortgage loans............................. $10,218 $10,364 $ 8,975 $ 8,610
Liabilities:
Contractholder deposit funds-
non-insurance products..................... $19,797 $19,890 $18,561 $18,381
======= ======= ======= =======
</TABLE>
For additional information on fair values of fixed maturities, see Note 2(A).
Fair values of off-balance-sheet financial instruments as of December 31, 1995
and 1994 were not material.

NOTE 13. RELATED PARTY TRANSACTIONS
The Company has ceded group accident and health business under an experience-
rated stop loss agreement to CIGNA P&C. Reinsurance recoverables from CIGNA P&C
were $1.3 billion at December 31, 1994. During 1993, the Company earned
experience-rated refunds from CIGNA P&C, net of premiums ceded, of $63 million.
Effective January 1, 1995 the treaty was cancelled. Reserves of approximately
$300 million, primarily related to long-term disability business, were
recaptured in 1995, with CIGNA P&C assuming responsibility for runout claims on
the remaining reserves. Assets, principally mortgages, with a fair market value
equal to reserves were received as part of the recapture.
The Company has assumed the settlement annuity and group pension business
written by Life Insurance Company of North America (LINA), an affiliate.
Reserves held by the Company with respect to this business were $1.7 billion at
December 31, 1995 and 1994.
The Company cedes long-term disability business to LINA. Reinsurance
recoverables from LINA at December 31, 1995 and 1994 were $996 million and $992
million, respectively.
The Company had lines of credit available from affiliates totaling $600
million at both December 31, 1995 and 1994. All borrowings are payable upon
demand with interest rates equivalent to CIGNA's average monthly short-term
borrowing rate plus 1/4 of 1%. Interest expense was $1 million and $3 million
for 1994 and 1993 respectively. As of December 31, 1995 and 1994, there were no
borrowings outstanding under such lines.
The Company extended lines of credit to affiliates totalling $600 million at
December 31, 1995 and 1994. All loans are payable upon demand with interest
rates equivalent to CIGNA's average monthly short-term borrowing rate. As of
December 31, 1994, the Company had $1.5 million in outstanding loans to
affiliates under such lines. There were no amounts outstanding as of December
31, 1995.

26
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL
STATEMENTS
(continued)

The Company, together with other CIGNA subsidiaries, has entered into a pooling
arrangement known as the CIGNA Corporate Liquidity Account (the Account) for
the purpose of maximizing earnings on funds available for short-term
investments. Withdrawals from the Account, up to the total amount of the
participant's investment in the Account, are allowed on a demand basis. As of
December 31, 1995 and 1994, the Company had a balance in the Account of $212
million and $259 million, respectively.
CIGNA allocates to the Company its share of operating expenses incurred at the
corporate level. The Company also allocates a portion of its operating expenses
to affiliated companies on whose behalf it performs certain administrative
services.

27
<PAGE>

CG VARIABLE ANNUITY
SEPARATE ACCOUNT
AIM V.I. CAPITAL
APPRECIATION
SUB-ACCOUNT
FINANCIAL
STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in AIM Variable Insurance Funds, Inc. - Capital
Appreciation portfolio at value.............................. $210,469,276
Receivable from Connecticut General Life Insurance Company.... 269,013
------------
Total assets................................................ 210,738,289
------------
LIABILITIES:
Payable for fund shares purchased............................. 269,013
------------
Net assets.................................................. $210,469,276
============
Accumulation units outstanding................................ 13,216,713
Net asset value per accumulation unit......................... $15.92378352
Accumulation net assets....................................... $210,460,077
Annuity reserves.............................................. 9,199
============
$210,469,276
============
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 1, 1995 TO DECEMBER 31, 1995
INVESTMENT INCOME:
Dividends...................................................... $ 45,004
EXPENSES:
Mortality and expense risk and administrative charges.......... 1,821,225
-----------
Net investment loss.......................................... (1,776,221)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss.............................................. (185,467)
Net unrealized gain............................................ 37,366,222
-----------
Net realized and unrealized gain on investments.............. 37,180,755
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $35,404,534
===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 1, 1995
STATEMENT OF CHANGES IN NET ASSETS TO YEAR ENDED
DECEMBER 31, 1995 JANUARY 31, 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment loss............................ $ (1,776,221) $ (593,920)
Net realized loss.............................. (185,467) (66,662)
Net unrealized gain (loss)..................... 37,366,222 (1,528,246)
------------ -----------
Net increase (decrease) from operations...... 35,404,534 (2,188,828)
------------ -----------
ACCUMULATION AND ANNUITY UNIT TRANSACTIONS:
Participant deposits........................... 75,416,433 47,861,215
Participant transfers.......................... 16,533,461 10,713,993
Participant withdrawals and annuity payments... (5,071,327) (2,295,908)
------------ -----------
Net increase from participant transactions... 86,878,567 56,279,300
------------ -----------
Total increase in net assets............... 122,283,101 54,090,472
------------ -----------
NET ASSETS:
Beginning of period............................ 88,186,175 34,095,703
------------ -----------
End of period.................................. $210,469,276 $88,186,175
============ ===========
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... 5,006,509 4,063,706
Participant transfers.......................... 1,041,696 891,878
Participant withdrawals........................ (345,299) (195,780)
------------ -----------
Net increase in units from participant
transactions................................ 5,702,906 4,759,804
============ ===========
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

28
<PAGE>

CG VARIABLE ANNUITY
SEPARATE ACCOUNT
AIM V.I. DIVERSIFIED
INCOME
SUB-ACCOUNT
FINANCIAL
STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in AIM Variable Insurance Funds, Inc. -Diversified
Income portfolio
at value..................................................... $ 43,419,012
Receivable for fund shares sold............................... 17,298
------------
Total assets................................................ 43,436,310
------------
LIABILITIES:
Payable to Connecticut General Life Insurance Company ........ 17,298
------------
$ 43,419,012
============
Accumulation units outstanding................................ 3,747,828
Net asset value per accumulation unit......................... $11.58511339
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 1, 1995 TO DECEMBER 31, 1995
INVESTMENT INCOME:
Dividends........................................................ $2,795,670
EXPENSES:
Mortality and expense risk and administrative charges............ 420,074
----------
Net investment income.......................................... 2,375,596
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain................................................ 9,483
Net unrealized gain.............................................. 2,580,177
----------
Net realized and unrealized gain on investments................ 2,589,660
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. $4,965,256
==========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 1, 1995
STATEMENT OF CHANGES IN NET ASSETS TO YEAR ENDED
DECEMBER 31, 1995 JANUARY 31, 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income.......................... $ 2,375,596 $ 1,106,983
Net realized gain (loss)....................... 9,483 (6,208)
Net unrealized gain (loss)..................... 2,580,177 (2,270,380)
----------- -----------
Net increase (decrease) from operations...... 4,965,256 (1,169,605)
----------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits........................... 10,812,192 12,974,053
Participant transfers.......................... 5,634,473 1,408,408
Participant withdrawals........................ (2,244,711) (1,327,049)
----------- -----------
Net increase from participant transactions... 14,201,954 13,055,412
----------- -----------
Total increase in net assets............... 19,167,210 11,885,807
----------- -----------
NET ASSETS:
Beginning of period............................ 24,251,802 12,365,995
----------- -----------
End of period.................................. $43,419,012 $24,251,802
=========== ===========
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... 986,223 1,279,685
Participant transfers.......................... 527,843 144,996
Participant withdrawals........................ (208,269) (133,101)
----------- -----------
Net increase in units from participant
transactions................................ 1,305,797 1,291,580
=========== ===========
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

29
<PAGE>

CG VARIABLE ANNUITY
SEPARATE ACCOUNT
AIM V.I. GLOBAL
UTILITIES
SUB-ACCOUNT*
FINANCIAL
STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in AIM Variable Insurance Funds, Inc. - Global
Utilities portfolio at value................................. $ 7,146,302
Receivable from Connecticut General Life Insurance Company.... 31,966
------------
Total assets................................................ 7,178,268
------------
LIABILITIES:
Payable for fund shares purchased............................. 31,966
------------
Net assets.................................................. $ 7,146,302
============
Accumulation units outstanding................................ 571,320
Net asset value per accumulation unit......................... $12.50840432
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 1, 1995 TO DECEMBER 31, 1995
INVESTMENT INCOME:
Dividends......................................................... $153,565
EXPENSES:
Mortality and expense risk and administrative charges............. 50,920
--------
Net investment income........................................... 102,645
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Capital distribution from portfolio sponsor....................... 7,930
Realized gain on share transactions............................... 15,042
--------
Net realized gain................................................. 22,972
Net unrealized gain............................................... 776,711
--------
Net realized and unrealized gain on investments................. 799,683
--------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $902,328
========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
FEBRUARY 1, 1995 MAY 11, 1994**
STATEMENT OF CHANGES IN NET ASSETS TO TO
DECEMBER 31, 1995 JANUARY 31, 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income.......................... $102,645 $ 21,588
Net realized gain (loss)....................... 22,972 (52)
Net unrealized gain (loss)..................... 776,711 (8,552)
---------- ----------
Net increase from operations................. 902,328 12,984
---------- ----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits........................... 3,456,984 1,473,651
Participant transfers.......................... 1,139,686 484,260
Participant withdrawals........................ (300,061) (23,530)
---------- ----------
Net increase from participant transactions... 4,296,609 1,934,381
---------- ----------
Total increase in net assets............... 5,198,937 1,947,365
---------- ----------
NET ASSETS:
Beginning of period............................ 1,947,365 --
---------- ----------
End of period.................................. $7,146,302 $1,947,365
========== ==========
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... 303,996 145,002
Participant transfers.......................... 104,156 47,601
Participant withdrawals........................ (27,096) (2,339)
---------- ----------
Net increase in units from participant
transactions................................ 381,056 190,264
========== ==========
</TABLE>
* Formerly AIM V.I. Utilities Sub-Account
** Date deposits first received

The Notes to Financial Statements are an integral part of these statements.

30
<PAGE>

CG VARIABLE ANNUITY
SEPARATE ACCOUNT
AIM V.I. GOVERNMENT SECURITIES
SUB-ACCOUNT
FINANCIAL
STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in AIM Variable Insurance Funds, Inc. -Government
Securities portfolio at value................................ $ 18,388,202
Receivable for fund shares sold............................... 8,670
------------
Total assets................................................ 18,396,872
------------
LIABILITIES:
Payable to Connecticut General Life Insurance Company......... 8,670
------------
Net assets.................................................. $ 18,388,202
============
Accumulation units outstanding................................ 1,672,986
Net asset value per accumulation unit......................... $10.99124674
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 1, 1995 TO DECEMBER 31, 1995
INVESTMENT INCOME:
Dividends........................................................ $ 797,759
EXPENSES:
Mortality and expense risk and administrative charges............ 178,350
----------
Net investment income.......................................... 619,409
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain................................................ 9,074
Net unrealized gain.............................................. 1,067,582
----------
Net realized and unrealized gain on investments................ 1,076,656
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. $1,696,065
==========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 1, 1995
STATEMENT OF CHANGES IN NET ASSETS TO YEAR ENDED
DECEMBER 31, 1995 JANUARY 31, 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income.......................... $ 619,409 $ 421,968
Net realized gain (loss)....................... 9,074 (9,420)
Net unrealized gain (loss)..................... 1,067,582 (848,124)
----------- -----------
Net increase (decrease) from operations...... 1,696,065 (435,576)
----------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits........................... 4,464,331 5,389,472
Participant transfers.......................... 1,401,722 614,767
Participant withdrawals........................ (1,045,358) (2,248,900)
----------- -----------
Net increase from participant transactions... 4,820,695 3,755,339
----------- -----------
Total increase in net assets............... 6,516,760 3,319,763
----------- -----------
NET ASSETS:
Beginning of period............................ 11,871,442 8,551,679
----------- -----------
End of period.................................. $18,388,202 $11,871,442
=========== ===========
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... 423,722 550,168
Participant transfers.......................... 134,953 63,574
Participant withdrawals........................ (100,145) (232,804)
----------- -----------
Net increase in units from participant
transactions................................ 458,530 380,938
=========== ===========
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

31
<PAGE>

CG VARIABLE ANNUITY
SEPARATE ACCOUNT
AIM V.I. GROWTH
SUB-ACCOUNT
FINANCIAL
STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in AIM Variable Insurance Funds, Inc. - Growth
portfolio at value........................................... $102,625,704
Receivable from Connecticut General Life Insurance Company.... 88,795
------------
Total assets................................................ 102,714,499
------------
LIABILITIES:
Payable for fund shares purchased............................. 88,795
------------
Net assets.................................................. $102,625,704
============
Accumulation units outstanding................................ 7,342,011
Net asset value per accumulation unit......................... $13.97787385
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 1, 1995 TO DECEMBER 31, 1995
INVESTMENT INCOME:
Dividends...................................................... $ 48,608
EXPENSES:
Mortality and expense risk and administrative charges.......... 900,822
-----------
Net investment loss.......................................... (852,214)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss.............................................. (8,433)
Net unrealized gain............................................ 18,487,083
-----------
Net realized and unrealized gain on investments.............. 18,478,650
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $17,626,436
===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 1, 1995
STATEMENT OF CHANGES IN NET ASSETS TO YEAR ENDED
DECEMBER 31, 1995 JANUARY 31, 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment loss............................ $ (852,214) $ (258,370)
Net realized loss.............................. (8,433) (1,456)
Net unrealized gain (loss)..................... 18,487,083 (2,020,293)
------------ -----------
Net increase (decrease) from operations...... 17,626,436 (2,280,119)
------------ -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits........................... 32,668,572 20,375,982
Participant transfers.......................... 9,479,797 5,252,277
Participant withdrawals........................ (2,651,893) (1,809,246)
------------ -----------
Net increase from participant transactions... 39,496,476 23,819,013
------------ -----------
Total increase in net assets............... 57,122,912 21,538,894
------------ -----------
NET ASSETS:
Beginning of period............................ 45,502,792 23,963,898
------------ -----------
End of period.................................. $102,625,704 $45,502,792
============ ===========
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... 2,484,497 1,915,861
Participant transfers.......................... 722,364 500,502
Participant withdrawals........................ (202,205) (172,245)
------------ -----------
Net increase in units from participant
transactions................................ 3,004,656 2,244,118
============ ===========
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

32
<PAGE>

CG VARIABLE ANNUITY
SEPARATE ACCOUNT
AIM V.I. GROWTH
AND INCOME
SUB-ACCOUNT
FINANCIAL
STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in AIM Variable Insurance Funds, Inc. - Growth and
Income portfolio
at value..................................................... $ 37,208,135
Receivable from Connecticut General Life Insurance Company.... 126,847
------------
Total assets................................................ 37,334,982
------------
LIABILITIES:
Payable for fund shares purchased............................. 126,847
------------
Net assets.................................................. $ 37,208,135
============
Accumulation units outstanding................................ 2,779,812
Net asset value per accumulation unit......................... $13.38512650
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 1, 1995 TO DECEMBER 31, 1995
INVESTMENT INCOME:
Dividends....................................................... $ 311,799
EXPENSES:
Mortality and expense risk and administrative charges........... 220,231
----------
Net investment income......................................... 91,568
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Capital distribution from portfolio sponsor..................... 1,073,273
Realized gain on share transactions............................. 221
----------
Net realized gain............................................... 1,073,494
Net unrealized gain............................................. 2,522,533
----------
Net realized and unrealized gain on investments............... 3,596,027
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $3,687,595
==========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
FEBRUARY 1, 1995 MAY 11, 1994*
STATEMENT OF CHANGES IN NET ASSETS TO TO
DECEMBER 31, 1995 JANUARY 31, 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income.......................... $ 91,568 $ 18,146
Net realized gain.............................. 1,073,494 898
Net unrealized gain (loss)..................... 2,522,533 (42,533)
----------- ----------
Net increase (decrease) from operations...... 3,687,595 (23,489)
----------- ----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits........................... 21,652,744 4,650,433
Participant transfers.......................... 6,032,618 1,973,321
Participant withdrawals........................ (524,244) (240,843)
----------- ----------
Net increase from participant transactions... 27,161,118 6,382,911
----------- ----------
Total increase in net assets............... 30,848,713 6,359,422
----------- ----------
NET ASSETS:
Beginning of period............................ 6,359,422 --
----------- ----------
End of period.................................. $37,208,135 $6,359,422
=========== ==========
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... 1,718,553 453,278
Participant transfers.......................... 480,720 192,739
Participant withdrawals........................ (41,974) (23,504)
----------- ----------
Net increase in units from participant
transactions................................ 2,157,299 622,513
=========== ==========
</TABLE>

*Date deposits first received

The Notes to Financial Statements are an integral part of these statements.

33
<PAGE>

CG VARIABLE ANNUITY
SEPARATE ACCOUNT
AIM V.I. INTERNATIONAL
EQUITY
SUB-ACCOUNT
FINANCIAL
STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in AIM Variable Insurance Funds, Inc. -
International Equity portfolio
at value..................................................... $ 82,231,131
Receivable from Connecticut General Life Insurance Company.... 136,070
------------
Total assets................................................ 82,367,201
------------
LIABILITIES:
Payable for fund shares purchased............................. 136,070
------------
Net assets.................................................. $ 82,231,131
============
Accumulation units outstanding................................ 6,249,610
Net asset value per accumulation unit......................... $13.15613040
Accumulation net assets....................................... $ 82,220,684
Annuity reserves.............................................. 10,447
============
$ 82,231,131
============
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 1, 1995 TO DECEMBER 31, 1995
INVESTMENT INCOME:
Dividends...................................................... $ 123,270
EXPENSES:
Mortality and expense risk and administrative charges.......... 822,709
-----------
Net investment loss.......................................... (699,439)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain.............................................. 70,775
Net unrealized gain............................................ 13,573,062
-----------
Net realized and unrealized gain on investments.............. 13,643,837
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $12,944,398
===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 1, 1995
STATEMENT OF CHANGES IN NET ASSETS TO YEAR ENDED
DECEMBER 31, 1995 JANUARY 31, 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment loss............................ $ (699,439) $ (449,995)
Net realized gain (loss)....................... 70,775 (5,996)
Net unrealized gain (loss)..................... 13,573,062 (5,586,224)
----------- -----------
Net increase (decrease) from operations...... 12,944,398 (6,042,215)
----------- -----------
ACCUMULATION AND ANNUITY UNIT TRANSACTIONS:
Participant deposits........................... 22,515,674 33,888,206
Participant transfers.......................... (4,928,544) 6,567,073
Participant withdrawals and annuity payments... (3,340,047) (1,662,700)
----------- -----------
Net increase from participant transactions... 14,247,083 38,792,579
----------- -----------
Total increase in net assets............... 27,191,481 32,750,364
----------- -----------
NET ASSETS:
Beginning of period............................ 55,039,650 22,289,286
----------- -----------
End of period.................................. $82,231,131 $55,039,650
=========== ===========
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... 1,821,338 2,901,379
Participant transfers.......................... (418,823) 554,755
Participant withdrawals........................ (277,532) (144,171)
----------- -----------
Net increase in units from participant
transactions................................ 1,124,983 3,311,963
=========== ===========
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

34
<PAGE>

CG VARIABLE ANNUITY
SEPARATE ACCOUNT
AIM V.I. MONEY
MARKET
SUB-ACCOUNT
FINANCIAL
STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in AIM Variable Insurance Funds, Inc. - Money
Market portfolio at value.................................... $ 65,466,418
Receivable from Connecticut General Life Insurance Company.... 347,290
------------
Total assets................................................ 65,813,708
------------
LIABILITIES:
Payable for fund shares purchased............................. 347,290
------------
Net assets.................................................. $ 65,466,418
============
Accumulation units outstanding................................ 6,071,486
Net asset value per accumulation unit......................... $10.77544248
Accumulation net assets....................................... $ 65,422,948
Annuity reserves.............................................. 43,470
============
$ 65,466,418
============
</TABLE>

<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 1, 1995 TO DECEMBER 31, 1995
INVESTMENT INCOME:
Dividends........................................................ $2,275,535
EXPENSES:
Mortality and expense risk and administrative charges............ 568,817
----------
Net investment income.......................................... 1,706,718
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. $1,706,718
==========
</TABLE>

<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 1, 1995
STATEMENT OF CHANGES IN NET ASSETS TO YEAR ENDED
DECEMBER 31, 1995 JANUARY 31, 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income.......................... $ 1,706,718 $ 797,659
------------ ------------
ACCUMULATION AND ANNUITY UNIT TRANSACTIONS:
Participant deposits........................... 90,031,694 63,480,794
Participant transfers.......................... (53,839,727) (44,489,039)
Participant withdrawals and annuity payments... (3,395,341) (1,598,683)
------------ ------------
Net increase from participant transactions... 32,796,626 17,393,072
------------ ------------
Total increase in net assets............... 34,503,344 18,190,731
------------ ------------
NET ASSETS:
Beginning of period............................ 30,963,074 12,772,343
------------ ------------
End of period.................................. $ 65,466,418 $ 30,963,074
============ ============
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... 8,480,343 6,221,992
Participant transfers.......................... (5,068,522) (4,353,875)
Participant withdrawals........................ (319,563) (155,530)
------------ ------------
Net increase in units from participant
transactions................................ 3,092,258 1,712,587
============ ============
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

35
<PAGE>

CG VARIABLE ANNUITY
SEPARATE ACCOUNT
AIM V.I. VALUE
SUB-ACCOUNT
FINANCIAL
STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS:
Investments in AIM Variable Insurance Funds, Inc. - Value
portfolio at value........................................... $257,264,665
Receivable from Connecticut General Life Insurance Company.... 160,376
------------
Total assets................................................ 257,425,041
------------
LIABILITIES:
Payable for fund shares purchased............................. 160,376
------------
Net assets.................................................. $257,264,665
============
Accumulation units outstanding................................ 16,590,052
Net asset value per accumulation unit......................... $15.50537319
Accumulation net assets....................................... $257,234,948
Annuity reserves.............................................. 29,717
============
$257,264,665
============
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 1, 1995 TO DECEMBER 31, 1995
INVESTMENT INCOME:
Dividends...................................................... $ 124,487
EXPENSES:
Mortality and expense risk and administrative charges.......... 2,234,613
-----------
Net investment loss.......................................... (2,110,126)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain.............................................. 2,326
Net unrealized gain............................................ 46,641,463
-----------
Net realized and unrealized gain on investments.............. 46,643,789
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $44,533,663
===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 1, 1995
STATEMENT OF CHANGES IN NET ASSETS TO YEAR ENDED
DECEMBER 31, 1995 JANUARY 31, 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment loss............................ $(2,110,126) $ (247,487)
Net realized gain (loss)....................... 2,326 (2,944)
Net unrealized gain (loss)..................... 46,641,463 (1,118,759)
------------ ------------
Net increase (decrease) from operations...... 44,533,663 (1,369,190)
------------ ------------
ACCUMULATION AND ANNUITY UNIT TRANSACTIONS:
Participant deposits........................... 93,272,878 62,651,212
Participant transfers.......................... 17,331,114 14,822,577
Participant withdrawals and annuity payments... (7,116,527) (3,886,817)
------------ ------------
Net increase from participant transactions... 103,487,465 73,586,972
------------ ------------
Total increase in net assets............... 148,021,128 72,217,782
------------ ------------
NET ASSETS:
Beginning of period............................ 109,243,537 37,025,755
------------ ------------
End of period.................................. $257,264,665 $109,243,537
============ ============
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... 6,429,791 5,430,406
Participant transfers.......................... 1,180,159 1,281,113
Participant withdrawals........................ (499,393) (337,807)
------------ ------------
Net increase in units from participant
transactions................................ 7,110,557 6,373,712
============ ============
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

36
<PAGE>

CG VARIABLE ANNUITY SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS

December 31, 1995

1. ORGANIZATION
CG Variable Annuity Separate Account (the Account) is registered as a Unit
Investment Trust under the Investment Company Act of 1940, as amended. The
operations of the Account are part of the operations of Connecticut General
Life Insurance Company (CG Life). The assets and liabilities of the Account are
clearly identified and distinguished from other assets and liabilities of CG
Life. The assets of the Account are not available to meet the general
obligations of CG Life and are held for the exclusive benefit of the
participants.
During 1995, the Account changed its fiscal year end from January 31 to
December 31, effective in the year beginning January 1, 1996. Accordingly, the
accompanying financial statements include the eleven month transition period
ended December 31, 1995.
The assets of the Account are divided into variable sub-accounts invested in
shares of a specific series of the AIM Variable Insurance Funds, Inc. (the
Fund), a mutual fund. Nine sub-accounts are currently available for investment
within the Account: AIM V.I. Capital Appreciation Fund; AIM V.I. Diversified
Income Fund; AIM V.I. Global Utilities Fund (formerly named AIM V.I. Utilities
Fund); AIM V.I. Government Securities Fund; AIM V.I. Growth Fund; AIM V.I.
Growth and Income Fund; AIM V.I. International Equity Fund; AIM V.I. Money
Market Fund; and AIM V.I. Value Fund.

2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in conformity with generally
accepted accounting principles. The following is a summary of significant
accounting policies consistently followed in the preparation of the Account's
financial statements.
A. Investment Valuation:- Investments held by the sub-accounts are valued at
their respective closing net asset value per share as determined by the Fund
as of December 29, 1995, the last business day of 1995. The change in the
difference between cost and value is reflected as unrealized gain (loss) in
the Statements of Operations.
B. Investment Transactions:- Investment transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and losses
on sales of investments are determined by the last-in, first-out cost basis
of the investment sold. Dividend and capital gain distributions are recorded
on the ex-dividend date. Investment transactions are settled through CG
Life.
C. Federal Income Taxes:- The operations of the Account form a part of, and are
taxed with, the total operations of CG Life, which is taxed as a life
insurance company. Under existing federal income tax law, investment income
(dividends) and capital gains attributable to the Account are not taxed.
D. Annuity Reserves:- The amount of annuity reserves is determined by actuarial
assumptions which meet statutory requirements. Gains or losses resulting from
actual mortality experience, the responsibility for which is assumed by CG
Life, are offset by transfers to or from CG Life.

3. INVESTMENTS
Total shares held and cost of investments at December 31, 1995 were:
<TABLE>
<CAPTION>
Shares Cost Of
AIM V.I. Sub-Account Held Investments
- -------------------- ------ ------------
<S> <C> <C>
Capital Appreciation.................................... 12,717,177 $171,208,303
Diversified Income...................................... 4,341,901 42,998,616
Global Utilities........................................ 613,943 6,378,143
Government Securities................................... 1,808,083 18,132,154
Growth.................................................. 7,107,043 84,698,235
Growth and Income....................................... 2,934,395 34,728,135
International Equity.................................... 6,019,849 72,001,262
Money Market............................................ 65,466,418 65,466,418
Value................................................... 15,969,253 208,732,503
</TABLE>
Total purchases and sales of shares of the Fund, for the period February 1,
1995 to December 31, 1995, amounted to:
<TABLE>
<CAPTION>
AIM V.I. Sub-Account Purchases Sales
- -------------------- ----------- -----------
<S> <C> <C>
Capital Appreciation $94,966,376 $ 9,864,030
Diversified Income 20,694,829 4,117,279
Global Utilities 5,843,708 1,436,524
Government Securities 7,744,986 2,304,882
Growth 41,798,023 3,153,761
Growth and Income 28,573,966 248,007
International Equity 20,721,921 7,174,277
Money Market 82,392,403 47,889,059
Value 103,768,298 2,390,959
</TABLE>

37
<PAGE>

CG VARIABLE ANNUITY SEPARATE ACCOUNT NOTES TO FINANCIAL STATEMENTS
(continued)

December 31, 1995

4. CHARGES AND DEDUCTIONS:
CG Life assumes the risk that annuitants as a class may live longer than
expected and also assumes a mortality risk in connection with the death
benefits of the contract. CG Life also assumes a risk that its actual
administrative expenses may be higher than amounts deducted for such expenses.
CG Life charges each variable sub-account the daily equivalent of 1.25%
(approximately .75% for mortality risks and approximately .50% for expense
risks), on an annual basis, of the current value of each sub-account's assets
for the assumption of these risks.
CG Life also deducts a daily administrative fee from the assets of each
variable sub-account as partial reimbursement for administrative expenses
relating to the issuance and maintenance of the contract and the participant's
annuity account. This charge is currently at an effective annual rate of .10%.
As partial compensation for administrative services provided, CG Life
additionally receives a $35 annuity account fee per year from each contract.
This charge is deducted from the fixed or variable sub-account of the
participant or on a pro-rata basis from two or more fixed or variable sub-
accounts in relation to their values under the contract. Fixed sub-accounts are
part of the general account of CG Life and are not included in these financial
statements.
The fees charged by CG Life for mortality and expense risks, administrative
fees and the amount deducted for annuity account fees, (included in participant
withdrawals), from variable sub-accounts, for the period from February 1, 1995
to December 31, 1995, amounted to:
<TABLE>
<CAPTION>
Mortality Asset Based Annuity
and Expense Administrative Account
AIM V.I. Sub-Account Risk Fees Fees Fees
- -------------------- ----------- -------------- --------
<S> <C> <C> <C>
Capital Appreciation $1,686,319 $134,906 $101,006
Diversified Income 388,957 31,117 15,912
Global Utilities 47,148 3,772 2,064
Government Securities 165,139 13,211 6,711
Growth 834,094 66,728 47,673
Growth and Income 203,917 16,314 11,055
International Equity 761,768 60,941 42,019
Money Market 526,683 42,134 18,420
Value 2,069,087 165,526 119,935
</TABLE>
No deduction for sales charges is made from a premium payment. However, if a
cash withdrawal is made, a withdrawal charge (contingent deferred sales charge)
may be assessed by CG Life. The withdrawal charge, if assessed, varies from 0-
7% depending upon the duration of each contract deposit. The withdrawal charge
is deducted from withdrawal proceeds for full withdrawals and reduces the
remaining account value for partial withdrawals. These charges are paid to CG
Life as reimbursement for services provided. These services include commissions
paid to sales personnel, the costs of preparation of sales literature and other
promotional costs and acquisition expenses. Withdrawal charges paid to CG Life
for the variable sub-accounts, for the period from February 1, 1995 to December
31, 1995, amounted to $521,227.

5. DISTRIBUTION OF NET INCOME
The Account does not expect to declare dividends to participants from
accumulated net income. The accumulated net income is distributed to
participants as part of surrenders, death benefits, transfers to other fixed or
variable sub-accounts or annuity payments in excess of net purchase payments.

6. DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code of 1986
(the Code), a variable annuity contract, other than a contract issued in
connection with certain types of employee benefit plans, will not be treated as
an annuity contract for federal tax purposes for any period for which the
investments of the segregated asset account, on which the contract is based,
are not adequately diversified. The Code provides that the "adequately
diversified" requirement may be met if the underlying investments satisfy
either a statutory safe habor test or diversification requirements set forth in
regulations issued by the Secretary of the Treasury. CG Life believes, based on
assurances from the Fund, that the Fund satisfies the requirements of the
regulations.

38
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of Connecticut General
Life Insurance Company and Participants of the
CG Variable Annuity Separate Account

In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly,
in all material respects, the financial position of each of the sub-accounts
AIM V.I. Capital Appreciation, AIM V.I. Diversified Income, AIM V.I. Global
Utilities (formerly AIM V.I. Utilities), AIM V.I. Government Securities, AIM
V.I. Growth, AIM V.I. Growth and Income, AIM V.I. International Equity, AIM
V.I. Money Market, and AIM V.I. Value (constituting the CG Variable Annuity
Separate Account, hereafter referred to as "the Account") at December 31, 1995,
and the results of each of their operations and the changes in each of their
net assets for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Account's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31, 1995 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.

PRICE WATERHOUSE LLP

Hartford, Connecticut
February 26, 1996

39
<PAGE>

PART C. OTHER INFORMATION
<PAGE>

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements+

(1) Registrant

(A) Statements of Assets and Liabilities as of December 31, 1995.

(B) Statements of Operations for the Eleven Months Ended December
31, 1995.

(C) Statements of Changes in Net Assets for the Eleven Months Ended
December 31, 1995 and the year ended January 31, 1995

(2) Depositor

(A) Consolidated Statements of Income and Retained Earnings for the
Years Ended December 31, 1995, 1994, and 1993.

(B) Consolidated Balance Sheets As of December 31, 1995 and 1994.

(b) Exhibits

(1) Resolution of Board of Directors Authorizing Establishment of
Registrant*

(2) Not Applicable

(3) Form of Selling Agreement among Connecticut General Life Insurance
Company, CIGNA Financial Advisors, Inc. as principal underwriter, and
selling dealers.*

(4) (A) Form of Connecticut General Life Insurance Company Variable
Annuity Contract Form Number AN 400, together with Optional Methods
of Settlement Riders (Form Numbers AR 400 and AR 401).*

(B) Form of Connecticut General Life Insurance Company Variable
Annuity Contract Form Number AN 415, together with Optional Methods
of Settlement Riders (Form Numbers AR 425 and AR 426).

(5) Form of Application Which May Be Used in Connection with the
Contract Shown As Exhibit (4)

(6) (A) Certificate of Incorporation (Charter) of Connecticut General
Life Insurance Company, as amended*

(B) By-Laws of Connecticut General Life Insurance Company*

(7) Not Applicable

(8) Not Applicable

(9) Opinion of Robert A. Picarello, Esq., Chief Counsel of Connecticut
General Life Insurance Company

(10) (A) Consent of Independent Accountants

(B) Consent of Counsel (included in Exhibit 9)

(11) Not Applicable

(12) Not Applicable

(13) Schedules for Computation of Performance Data*

(14) Not Applicable

*Incorporated by reference to previous filings of this Registration Statement

+Incorporated by reference to Post-Effective Amendment No. 5 to this Form N-4
Registration Statement, filed on April 19, 1996.

1
<PAGE>

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

The principal business address of each of the directors and officers of
Connecticut General Life Insurance Company (the "Company") is the company's
Home Office, 900 Cottage Grove Road, Hartford, Connecticut 06152.

DIRECTORS AND OFFICERS OF DEPOSITOR

<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH DEPOSITOR
---- ---------------------------------------------------
<C> <S>
Thomas C. Jones President (Principal Executive Officer)
Bradley K. Miller Assistant Vice President and Actuary (Principal
Financial Officer)
Robert Moose Vice President (Principal Accounting Officer)
David C. Kopp Corporate Secretary
Andrew G. Helming Secretary
Stephen C. Stachelek Vice President and Treasurer
Harold W. Albert Director
Robert W. Burgess Director
John G. Day Director and Chief Counsel
Joseph M. Fitzgerald Director and Senior Vice President
H. Edward Hanway Director and Chairman of the Board
John E. Pacy Director and Senior Vice President
Arthur C. Reeds, III Director and Senior Vice President
Patricia L. Rowland Director and Senior Vice President
W. Allen Schaffer, MD Director
John Wilkinson Director, Senior Vice President and Chief Financial
Officer
</TABLE>

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

Incorporated by reference to Item 26 of Post-Effective Amendment No. 3 to
the Form N-4 Registration Statement of CG Variable Annuity Separate Account
(File No. 33-48137) filed April 28, 1995 is a chart of persons controlled by
or under common control with the Depositor. The consolidated financial
statements of the Depositor include the accounts of the Depositor and its
wholly-owned subsidiaries.

ITEM 27. NUMBER OF PURCHASERS

As of September 20, 1996 there were 19,527 owners of Contracts covered by
this Registration Statement.

ITEM 28. INDEMNIFICATION

The answer to this Item 28 is incorporated by reference to Item 28 of Post-
Effective Amendment No. 3 to this Form N-4 Registration Statement under the
Securities Act of 1933 (File No. 33-48137) filed April 28, 1995.

ITEM 29. PRINCIPAL UNDERWRITER

The Registrant's principal underwriter is CIGNA Financial Advisors, Inc.
("CFA"). Deferred sales charges of $521,227 were paid on the Contracts during
Registrant's eleven months ended December 31, 1995. CFA also acts as principal
underwriter of other variable annuity contracts and variable life policies
issued by the Company, and by the CIGNA Life Insurance Company. CFA's mailing
address is 900 Cottage Grove Road, Hartford, Connecticut 06152.

2
<PAGE>

DIRECTORS AND OFFICERS OF PRINCIPAL UNDERWRITER

<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH
NAME UNDERWRITER
---- -------------------------------------
<C> <S>
Edward M. Berube President and Director
Karen E. Goldman Director & Assistant Vice President
John Wilkinson Director
James F. Meehan Vice President
Karen R. Matheson Vice President
Joy P. McConnell Vice President
Peter R. Scanlon Vice President
Allan P. Wick Vice President and Treasurer
Therese M. Squillacote Director of Compliance
Robert A. Picarello Chief Counsel and Assistant Secretary
H. Edward Cohen Assistant Vice President
Robert B. Pinkham Assistant Vice President
David C. Kopp Secretary
David A. Carlson Assistant Secretary
Dawn M. Cormier Assistant Secretary
David M. Porcello Assistant Secretary
Pamela S. Williams Assistant Secretary
Mary K. Cristino Assistant Treasurer
Michael M. Sinisgalli Assistant Treasurer
Brian W. Villalobos Assistant Treasurer
</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

The records required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder are
maintained by Connecticut General Life Insurance Company at its Home Office at
900 Cottage Grove Road, Hartford, CT 06152.

ITEM 31. MANAGEMENT SERVICES

All management policies are discussed in Part A or Part B.

ITEM 32. UNDERTAKINGS

(a) Registrant undertakes that it will file a post effective amendment to
this registration statement under the Securities Act of 1933 as frequently as
necessary to ensure that the audited financial statements in the registration
statement are never more than 16 months old for so long as Premium Payments
under the Contracts may be accepted.

(b) Registrant undertakes that it will include either (i) a postcard or
similar written communication affixed to or included in the Prospectus that
the applicant can remove to send for a Statement of Additional Information or
(ii) a space in the Contract application that an applicant can check to
request a Statement of Additional Information.

(c) Registrant undertakes to deliver promptly, upon written or oral request
made to Connecticut General Life Insurance Company at the address or phone
number listed in the Prospectus, any Statement of Additional Information and
any financial statements required by Form N-4 to be made available to
applicants or contract owners.

SECTION 403(B) REPRESENTATION

Registrant represents that it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-
88), regarding Sections 22(e), 27(c)(1) and 27(d) of the Investment Company
Act of 1940, in connection with redeemability restrictions on Section 403(b)
Contracts, and that paragraphs numbered (1) through (4) of that letter will be
complied with.

3
<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has duly caused this Post-Effective Amendment No. 5 to
its Registration Statement on Form N-4 (File No. 33-48137) to be signed on its
behalf by the undersigned thereunto duly authorized, in the Town of Bloomfield
and State of Connecticut on the 1st day of October, 1996.

CG VARIABLE ANNUITY SEPARATE ACCOUNT
(REGISTRANT)

/s/ Thomas C. Jones
By ________________________________________
Thomas C. Jones
President
Connecticut General Life Insurance Company

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
(DEPOSITOR)

/s/ Thomas C. Jones
By ________________________________________
Thomas C. Jones
President
<PAGE>

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 5 to this Registration Statement (File No. 33-48137)
has been signed below by the following persons on October 1, 1996 in the
capacities indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ Thomas C. Jones
________________________________________
President (Principal Executive
Thomas C. Jones Officer)
/s/ James T. Kohan
________________________________________
Vice President and Actuary
James T. Kohan (Principal Financial Officer)
/s/ Robert Moose
________________________________________
Vice President (Principal Accounting
Robert Moose Officer)
/s/ Harold W. Albert
________________________________________
Harold W. Albert Director
/s/ Martin A. Brennan
________________________________________
Martin A. Brennan Director
/s/ Robert W. Burgess
________________________________________
Robert W. Burgess Director
/s/ John G. Day
________________________________________
John G. Day Director
/s/ Joseph M. Fitzgerald
________________________________________
Joseph M. Fitzgerald Director
/s/ Arthur C. Reeds, III
________________________________________
Arthur C. Reeds, III Director
/s/ Patricia L. Rowland
________________________________________
Patricia L. Rowland Director
/s/ W. Allen Schaeffer, M.D.
________________________________________
W. Allen Schaeffer, M.D. Director
</TABLE>

/s/ Robert A. Picarello

By__________________________
Robert A. Picarello
Attorney-in-Fact

(A Majority of the Directors)
<PAGE>

POWER OF ATTORNEY

We, the undersigned directors and officers of Connecticut General Life
Insurance Company, hereby severally constitute and appoint David C. Kopp and
Robert A. Picarello, and each of them individually, our true and lawful
attorneys-in-fact, with full power to them and each of them to sign for us, in
our names and in the capacities indicated below, any and all amendments to
Registration Statement No. 33-48137 filed with the Securities and Exchange
Commission under the Securities Act of 1933, hereby ratifying and confirming
our signatures as they may be signed by either of our attorneys-in-fact to any
such Registration Statement.

WITNESS our hands and common seal on this 6th day of September, 1996.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ Thomas C. Jones
________________________________________
President (Principal Executive
Thomas C. Jones Officer)
/s/ Bradley K. Miller
________________________________________
Assistant Vice President and Actuary
Bradley K. Miller (Principal Financial Officer)
/s/ Robert Moose
________________________________________
Vice President (Principal Accounting
Robert Moose Officer)
/s/ Harold W. Albert
________________________________________
Harold W. Albert Director
/s/ Robert W. Burgess
________________________________________
Robert W. Burgess Director
/s/ John G. Day
________________________________________
John G. Day Director
/s/ Joseph M. Fitzgerald
________________________________________
Joseph M. Fitzgerald Director
/s/ H. Edward Hanway
________________________________________
H. Edward Hanway Director
/s/ John E. Pacy
________________________________________
John E. Pacy Director
/s/ Arthur C. Reeds, III
________________________________________
Arthur C. Reeds, III Director
/s/ Patricia L. Rowland
________________________________________
Patricia L. Rowland Director
/s/ W. Allen Schaeffer, M.D.
________________________________________
W. Allen Schaeffer, M.D. Director
/s/ John Wilkinson
________________________________________
John Wilkinson Director
</TABLE>

<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
A Stock Company Home Office Location: 900 Cottage Grove Road
Bloomfield, Connecticut

MAILING ADDRESS: CIGNA INDIVIDUAL INSURANCE
ANNUITY & VARIABLE LIFE SERVICE CENTER - ROUTING S249
HARTFORD, CT 06152-2249

The Company agrees with the Owner to provide the benefits in this contract.

RIGHT TO EXAMINE CONTRACT. The contract may be returned to the individual
through whom it was purchased or to the Company within 10 days after its receipt
(20 days after its receipt where required by law for a contract issued in
replacement of another contract). If the contract is so returned, it will be
deemed void from the Date of Issue, and the Company will refund the Premium
Payment(s) as provided plus or minus any investment gains or losses under the
contract as of the date the returned contract is received by the Company, unless
required otherwise by law.

The contract is issued and accepted subject to the terms set forth on this page
and on the following pages which are made a part of the contract. In
consideration of the Premium Payment(s) as provided, this contract is executed
by Connecticut General Life Insurance Company as of its Date of Issue.

/S/ THOMAS C. JONES

PRESIDENT

Registrar

PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD OR DOWNWARD
ADJUSTMENTS IN AMOUNTS PAYABLE TO THE OWNER, INCLUDING WITHDRAWALS AND TRANS
FERS. PAYMENTS MADE FROM THE FIXED ACCOUNT PURSUANT TO AN ELECTION WHICH
BECOMES EFFECTIVE AT THE END OF A GUARANTEED PERIOD AND PAYMENTS MADE UNDER THE
"ANNUITY BENEFIT" PROVISIONS ARE NOT SUBJECT TO THE MARKET VALUE ADJUSTMENT.
PAYMENTS MADE UNDER THE "DEATH BENEFIT" PROVISIONS ARE NOT SUBJECT TO ANY MARKET
VALUE ADJUSTMENT.

ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.

USE OF CONTRACT. This contract is available for retirement and deferred
compensation plans some of which may qualify for special tax treatment under
various sections of the Internal Revenue Code.

FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
WITH FIXED AND VARIABLE ACCOUNTS - NON-PARTICIPATING

THIS IS A LEGAL CONTRACT BETWEEN THE OWNER AND THE COMPANY
READ YOUR CONTRACT CAREFULLY.

AN415
<PAGE>

TABLE OF CONTENTS

CONTRACT SPECIFICATIONS.................................... 5

SCHEDULE OF CHARGES, EXPENSES AND FEES..................... 7

DEFINITIONS................................................ 9

PREMIUM PAYMENT PROVISIONS................................. 10
Premium Payments
Allocation of Premium Payments
Annuity Account Continuation
Minimum Value Requirements

OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS........... 11
Owner
Rights of Owner
Transfer of Ownership
Assignment
Beneficiary
Change of Beneficiary

FIXED AND VARIABLE ACCOUNTS PROVISIONS..................... 12
Fixed Account and Sub-Accounts
Variable Account and Sub-Accounts
Investment Risk
Investments of the Variable Account
Sub-Accounts
Substituted Securities

CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS...... 13
Part A - Fixed Account Value
Guaranteed Periods
Guaranteed Interest Rates
Fixed Accumulation Value
Minimum Surrender Value
Part B - Variable Account Value
Acquisition and Redemption of
Variable Accumulation Units
Variable Accumulation Unit Value
Variable Accumulation Value
Net Investment Factor
Part C - General
Annuity Account
Transfer Privilege
Annuity Account Fee

CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE
ADJUSTMENT PROVISIONS.................................... 16
Cash Withdrawals
Withdrawal Charges
Market Value Adjustment

AN415 2
<PAGE>

TABLE OF CONTENTS (Continued)

PENALTY-FREE WITHDRAWALS, TRANSFERS AND
ANNUITIZATION PROVISIONS................................ 18
Penalty-Free Partial Withdrawals or Transfers
Full or Partial Withdrawals and Transfers at the
End of a Guaranteed Period
Waiver of Withdrawal Charge and Market Value
Adjustment on Death or Annuity Date
Penalty-Free Annuitization
BENEFIT PROVISIONS......................................... 18
Annuity Benefit
Annuity Date
Election and Effective Date of Election with
Respect to Annuity Benefit
Determination of Amount
Income Payment Benefits
Death Benefit
Election and Effective Date of Election with
Respect to Death Benefit
Payment of Death Benefit
Amount of Death Benefit

GENERAL PROVISIONS......................................... 21
The Contract
Modification of Contract
Non-Participation
Loans
Determination of Values
Endorsement of Income Payments
Misstatement of Age
Claims of Creditors
Periodic Reports

Followed by Optional Methods of Settlement and any Riders

Note: Pages 4, 6 and 8 are intentionally "blank."

AN415 3
<PAGE>

CONTRACT SPECIFICATIONS

ANNUITANT(S) JOHN DOE SPECIMEN CONTRACT NUMBER

AGE AT ISSUE 35 DECEMBER 1, 1996 DATE OF ISSUE

DECEMBER 1, 2026 ANNUITY DATE

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

AIM/CIGNA HERITAGE VARIABLE ANNUITY
<TABLE>
<CAPTION>

FORM BENEFIT INITIAL PREMIUM
PAYMENT
<S> <C> <C>
AN415 FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY $50,000
WITH FIXED AND VARIABLE ACCOUNTS

INITIAL PREMIUM PAYMENT ALLOCATION PERCENTAGE

FIXED ACCOUNT - SUB-ACCOUNTS
PERCENTAGE ADJUSTMENT TO INDEX RATE "B": .50%

INITIAL GUARANTEED PERIOD/INTEREST RATE 1/YEAR/4.55% 10%
INITIAL GUARANTEED PERIOD/INTEREST RATE 2/YEARS/5.17% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 3/YEARS/5.80% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 4/YEARS/6.10% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 5/YEARS/6.40% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 6/YEARS/6.52% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 7/YEARS/6.65% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 8/YEARS/6.73% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 9/YEARS/6.81% 0%
INITIAL GUARANTEED PERIOD/INTEREST RATE 10/YEARS/6.90% 0%
VARIABLE ACCOUNT - SUB-ACCOUNTS (FUNDS)
AIM V.I. CAPITAL APPRECIATION FUND 10%
AIM V.I. DIVERSIFIED INCOME FUND 10%
AIM V.I. GOVERNMENT SECURITIES FUND 10%
AIM V.I. GLOBAL UTILITIES FUND 10%
AIM V.I. GROWTH FUND 10%
AIM V.I. GROWTH AND INCOME FUND 10%
AIM V.I. INTERNATIONAL EQUITY FUND 10%
AIM V.I. MONEY MARKET FUND 10%
AIM V.I. VALUE FUND 10%

TOTAL 100%
----
</TABLE>

OWNER: THE ANNUITANT

BENEFICIARY: THE PERSON(S) DESIGNATED BY THE OWNER AND RECORDED BY THE COMPANY

MINIMUM SUBSEQUENT PREMIUM PAYMENTS:

$2,500 PER FIXED ACCOUNT GUARANTEED PERIOD
$100 PER VARIABLE ACCOUNT SUB-ACCOUNT

AN415 5
<PAGE>

CONTRACT SPECIFICATIONS (CONTINUED)

ANNUITANT(S) JOHN DOE SPECIMEN CONTRACT NUMBER

AGE AT ISSUE 35 DECEMBER 1, 1996 DATE OF ISSUE

DECEMBER 1, 2026 ANNUITY DATE

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

LIMITATIONS ON TRANSFERS FROM FIXED ACCOUNT: ONLY ONE SUCH TRANSFER ALLOWED PER
CONTRACT YEAR FROM EACH SUB-ACCOUNT, AND THE AMOUNT(S) TRANSFERRED MAY NOT
EXCEED 15% OF THE THEN CURRENT VALUE OF THE APPLICABLE SUB-ACCOUNT(S).

THIS CONTRACT IS FOR USE WITH "CG VARIABLE ANNUITY SEPARATE ACCOUNT"; A
CONNECTICUT GENERAL LIFE INSURANCE COMPANY SEPARATE INVESTMENT ACCOUNT WHICH WAS
ESTABLISHED ON MAY 15, 1992.

AN415 5A
<PAGE>

SCHEDULE OF CHARGES, EXPENSES AND FEES

Annuity Account Fee: The Annuity Account Fee is $35 per Contract Year and will
be deducted on the last Valuation Date of each Contract Year. The Annuity
Account Fee, however, will be waived for any Contract Year for which the Annuity
Account Value equals or exceeds $100,000 as of the last Valuation Date of such
Contract Year.

Withdrawal Charges: The Withdrawal charges applicable under this contract are
as follows.

Withdrawal Charge
Against Premium Year
Payment Withdrawn Applicable
- ----------------- ----------
7% During 1st year since Premium Payment Accepted
7% During 2nd year since Premium Payment Accepted
7% During 3rd year since Premium Payment Accepted
6% During 4th year since Premium Payment Accepted
6% During 5th year since Premium Payment Accepted
5% During 6th year since Premium Payment Accepted
4% During 7th year since Premium Payment Accepted
0% Thereafter

Each Subsequent Premium Payment will be subject to its own 7-year period.

Any Withdrawal from the Fixed Account prior to the end of a Guaran teed Period
may also be subject to a Market Value Adjustment as de scribed on page 17 which
may increase, decrease, or have no affect on the applicable account value(s). A
Market Value Adjustment would not apply to a withdrawal effective at the end of
a Guaranteed Period. Withdrawal charges are not applicable to certain partial
withdrawals of 15% or less of Premium Payments annually (see page 18).
Withdrawal charges and a Market Value Adjustment are not applicable to
annuitization of the contract at any time. Withdrawal charges and a Market
Value Adjustment are not applicable to payment of the Death Benefit. (See
"Penalty-Free Withdrawals, Transfers and Annuitization Provisions.")

Asset Charges: The Company imposes a mortality and expense ("M&E") risk charge
and an administrative expense charge, each of which is calculated as a
percentage of asset value of each Variable Account Sub-Account, to cover
mortality and expense risk and other administrative costs. The percentages
applied to asset value to determine these charges are the Daily M&E Rate and the
Daily Administrative Rate. These charges are deducted from each Variable
Account Sub-Account by reducing the Variable Accumulation Unit Value at the end
of each Valuation Period. The Daily M&E Rate is equal to the daily rate
equivalent of the annual rate of 1.15% and the Daily Administrative Rate is
equal to the daily rate equivalent of the annual rate of 0.10%.

In addition, Daily Fund Operating Expenses will be applied by each Fund as a
percent of the daily fund balance as set forth in the prospectus for the
applicable Fund(s).

AN415 7
<PAGE>

SCHEDULE OF CHARGES, EXPENSES AND FEES (CONTINUED)

Taxes: Premium tax equivalents (including any related retaliatory taxes), if
any, and any other taxes due under this contract will be deducted if applicable.
It is currently the Company's practice to deduct such taxes, if any, at the time
the Annuity Account Value, or any portion thereof, becomes payable.

AN415 7.1
<PAGE>

DEFINITIONS

ACCUMULATION PERIOD. The period from the Date of Issue to the Annuity Date, the
date on which the Death Benefit becomes payable, or the date on which the
contract is surrendered or annuitized, whichever is earliest.

ANNUITANT(S). The person or persons on whose life the first Income Payment is
to be made. The Annuitant(s) on the Date of Issue is/are the person(s)
designated in the Contract Specifications and will remain the Annuitant(s) under
the contract unless the Owner exercises the right to change the Annuitant(s) as
set forth in the "Rights of Owner" provision. If prior to the Annuity Date, the
Annuitant predeceases the Owner, the Owner will then become the Annuitant until
such time as the Owner exercises the right to designate a new Annuitant as set
forth in the "Rights of Owner" provision. (If joint Annuitants are named and if
one of the Annuitants predeceases the Owner prior to the Annuity Date, the
contract will thereupon become an annuity contract on the surviving Annuitant
until such time that the Owner exercises the right to designate another joint
Annuitant as set forth in the "Rights of Owner" provision.) A request for
change of Annuitant(s) must be in writing to the Company at its Annuity &
Variable Life Service Center's Mailing Address and will not take effect until
recorded by the Company.

ANNUITY ACCOUNT. The account which is comprised of the Fixed and Variable
Accounts with respect to this contract.

ANNUITY ACCOUNT VALUE. The account value which at any time equals the sum of
all the then current values of the Fixed and Variable Accounts with respect to
this contract. Applicable premium taxes, if any, will be deducted when the
Annuity Account Value amount to be applied under the Annuity Benefit, Death
Benefit, Cash Withdrawals or Penalty-Free Withdrawal and Annuitization
provisions is determined.

ANNUITY DATE. The date on which Income Payments begin upon annuitization of the
contract.

CONTRACT YEARS AND CONTRACT ANNIVERSARIES. All Contract Years and Contract
Anniversaries are 12-month periods measured from the Date of Issue.

DAILY M&E RATE. The rate applied by the Company as a percentage of each
Variable Account Sub-Accounts asset value to determine the M&E charge for its
assumption of mortality and expense risks for a 24-hour period.

DATE OF ISSUE. The date on which the contract becomes effective.

DUE PROOF OF DEATH. An original certified copy of an official death
certificate, an original certified copy of a decree of a court of competent
jurisdiction as to the finding of death, or any other proof of death
satisfactory to the Company.

EXPIRATION DATE(S). The date(s) on which Guaranteed Period(s), if any, end.

FIXED ACCOUNT. The term "Fixed Account" under this contract means all Sub-
Account(s) associated with Guar anteed Period(s) and Guaranteed Interest
Rate(s). Fixed Account assets are general assets of the Company and are
distinguishable from those allocated to a separate account of the Company.

FUND(S). The Variable Account Sub-Accounts in which Premium Payments, or
Transfers in accordance with the "Transfer Privilege" provision, may be
invested.

GUARANTEED PERIOD. The Guaranteed Period is the period for which interest, at
either an initial or subsequent Guaranteed Interest Rate will be credited to an
amount under a Fixed Account Sub-Account.

HOME OFFICE. The term "Home Office" means Connecticut General Life Insurance
Company, the mailing address of which for this contract is CIGNA Individual
Insurance, Annuity & Variable Life Service Center, Routing S249, Hartford,
Connecticut 06152-2249.

AN415 9
<PAGE>

DEFINITIONS (CONTINUED)

IN WRITING. The term "in writing" means in a written form satisfactory to the
Company and received by the Com pany at its Annuity & Variable Life Service
Center's Mailing Address.

INCOME PAYMENTS. Income Payments are the amounts payable under this contract as
determined by the settlement options provisions of the contract.

PAYOUT PERIOD. The period during which Income Payments are made under this
contract.

SEC. The Securities and Exchange Commission.

SUB-ACCOUNT. That portion of the Fixed Account associated with specific
Guaranteed Period(s) and Guaranteed Interest Rate(s) and that portion of the
Variable Account which invests in shares of a specific Fund.

VALUATION DATE. Any day on which the New York Stock Exchange ("NYSE") is open
for business, except a day during which trading on the NYSE is restricted or on
which an emergency exists as a result of which the valuation or disposal of
securities is not reasonably practicable.

VALUATION PERIOD. The period beginning immediately after the close of business
on a Valuation Date and ending at the close of business on the next Valuation
Date.

VARIABLE ACCOUNT. The term "Variable Account" under this contract means all
Sub-Account(s) associated with investments in the Fund(s). Variable Account
assets are separate account assets of the Company, the investment performance of
which is kept separate from that of the general assets of the Company and are
not chargeable with general liabilities of the Company.

VARIABLE ANNUITY UNITS. A unit of measure used in the calculation of the value
of the variable portion of the Annuity Account during the Payout Period.

VARIABLE ACCUMULATION UNIT. A unit of measure used in the calculation of the
value of the variable portion of the Annuity Account before the Payout Period.

PREMIUM PAYMENT PROVISIONS

PREMIUM PAYMENTS. Premium Payments are payable to the Company at its Annuity &
Variable Life Service Center's Mailing Address (or its lockbox address) or to an
authorized agent of the Company. A Company receipt will be furnished upon
request. The Initial Premium Payment is the amount paid to the Company as
consideration for the benefits provided under the contract on the Date of Issue.
Subsequent Premium Payments may be paid to the Company from time to time after
the Date of Issue and prior to the Annuity Date. The Company will not accept
any Premium Payment which is less than the minimum amount requirement then in
effect as determined by the Company. In addition, the prior approval of the
Company is required before it will accept a Premium Payment in excess of the
maximum amount limit then in effect as determined by the Company. All Premium
Payments must meet the allocation requirements specified under the "Allocation
of Premium Payments" provision. The payment of any amount under the contract
which is derived, all or in part, from any Premium Payments made by check or
draft may be postponed until such check or draft has been honored by the
financial institution upon which it is drawn.

The Initial Premium Payment attributable to the contract is shown on the
Contract Specifications page.

ALLOCATION OF PREMIUM PAYMENTS. Upon receipt by the Company at its Annuity &
Variable Life Service Center's Mailing Address, each Premium Payment will be
added to the Annuity Account established under the contract. The Annuity
Account is described under the "Annuity Account" provision and is comprised of
Fixed Account Sub-Account(s) and Variable Account Sub-Account(s). The Initial
Premium Payment will be allocated to one or more such Sub-Accounts in accordance
with the allocation percentages specified by the Owner and shown in the Contract
Specifications, provided such allocations to Fixed and/or Variable Accounts
conform to the Company's minimum deposit requirements in effect as of the
Date of Issue.

AN415 10
<PAGE>

PREMIUM PAYMENT PROVISIONS (CONTINUED)

Subsequent Premium Payments will be allocated on the same basis as the most
recent previous Premium Pay ment unless the Company is otherwise instructed to
change the allocation percentages. If a portion of the most recent previous
Premium Payment was allocated to the Fixed Account and the allocation
percentages when applied to a Subsequent Premium Payment does not produce an
amount which meets the Fixed Account minimum requirements, the Company will
promptly seek further instructions from the Owner regarding allocation of the
premium or otherwise return the applicable portion of such Premium Payment as
provided by law.

ANNUITY ACCOUNT CONTINUATION. The Annuity Account shall be continued
automatically in full force from the Date of Issue until the Annuity Date or
until the contract is surrendered or annuitized, the Death Benefit is paid, or
the Annuity Account Value no longer meets the requirements specified in the
"Minimum Value Requirements" provision, whichever occurs first.

MINIMUM VALUE REQUIREMENTS. If no Premium Payments have been made for three
consecutive years and the Annuity Account Value decreases to less than $1,000
during that period, or if any partial withdrawal decreases the Annuity Account
Value to less than $1,000, the Company reserves the right to cancel the contract
and pay to the Owner an adjusted value of the Annuity Account as would be
calculated under the "Determination of Amount" provision. The Company will,
however, provide at least 30 days advance notice to the Owner of its intended
action. During the notification period an additional Premium Payment may be
made to meet the minimum value requirements.

OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS

OWNER. The Owner on the Date of Issue will be the person designated in the
Contract Specifications. If no Owner is designated, the Annuitant(s) will be the
Owner.

RIGHTS OF OWNER. The Owner may exercise all rights and privileges under the
contract including the right to: (a) agree with the Company to any change in or
amendment to the contract, (b) transfer all rights and privileges to another
person, (c) change the Beneficiary, (d) change the Annuitant(s) any time prior
to the Annuity Date or name a new Annuitant if the Annuitant, or one of the
Anuitants named under a joint life annuity predeceases the Owner, (e) name the
payee to whom Income Payments are to be directed, and (f) assign the contract.

All rights and privileges of the Owner may be exercised without the consent of
any designated transferee, or any Beneficiary if the Owner has reserved the
right to change the Beneficiary. All such rights and privileges, however, may be
exercised only with the consent of any assignee on record with the Company.

TRANSFER OF OWNERSHIP. The Owner may transfer all rights and privileges of the
Owner. On the effective date of transfer, (a) the transferee will become the
Owner and will have all the rights and privileges of the Owner, and (b) the
amount of Death Benefit applicable under the contract changes as set forth under
the "Amount of Death Benefit" provision. The Owner may revoke any transfer
prior to its effective date.

Unless provided otherwise, a transfer will not affect the interest of any
Beneficiary designated prior to the effective date of the transfer.

A transfer of Ownership, or a revocation of transfer, must be in writing to the
Company at its Annuity & Variable Life Service Center's Mailing Address. A
transfer or a revocation will not take effect until recorded in writing by the
Company at its Annuity & Variable Life Service Center's Mailing Address. When a
transfer or revocation has been so recorded, it will take effect as of the
effective date specified by the Owner. Any payment made or any action taken or
allowed by the Company before the transfer or the revocation is recorded will be
without pre judice to the Company.

ASSIGNMENT. The Company will not be affected by any assignment of the contract
until the original assignment or a certified copy of the assignment is filed
with the Company at its Annuity & Variable Life Service Center's Mailing
Address.

AN415 11
<PAGE>

OWNERSHIP, ASSIGNMENT AND BENEFICIARY PROVISIONS (CONTINUED)

The Company does not assume responsibility for the validity or sufficiency of
any assignment. An assignment of the contract will operate so long as the
assignment remains in force.

To the extent provided under the terms of the assignment, an assignment will
transfer the interest of any designated transferee or of any Beneficiary if the
Owner has reserved the right to change the Beneficiary.

BENEFICIARY. The Beneficiary is the person who has the right to receive the
Death Benefit set forth in the con tract and, for Non-Qualified Contracts, who
is the "designated beneficiary" for purposes of Section 72(s) of the Internal
Revenue Code in the event of the Owner's death. The Beneficiary on the Date of
Issue will be the person designated in the Contract Specifications.

Unless provided otherwise, the interest of any Beneficiary who dies before the
Owner will vest in the Owner or the Owner's administrators or assigns.

CHANGE OF BENEFICIARY. A new Beneficiary may be designated from time to time. A
request for change of Beneficiary must be in writing to the Company at its
Annuity & Variable Life Service Center's Mailing Address. The request must be
signed by the Owner. The request must also be signed by the Beneficiary if the
right to change the Beneficiary has not been reserved to the Owner.

A change of Beneficiary will not take effect until recorded by the Company. When
a change of Beneficiary has been so recorded, whether or not the Owner is then
alive, it will take effect as of the date the request was signed. Any payment
made or any action taken or allowed by the Company before the change of
Beneficiary is recorded will be without prejudice to the Company.

Unless provided otherwise, the right to change any Beneficiary is reserved to
the Owner.

FIXED AND VARIABLE ACCOUNTS PROVISIONS

FIXED ACCOUNT AND SUB-ACCOUNTS. Fixed Account assets are general assets of the
Company and are dis tinguishable from those allocated to a separate account of
the Company. Any portion of Premium Payments allocated by the Owner to a Fixed
Account Sub-Account will become part of the Fixed Account.

VARIABLE ACCOUNT AND SUB-ACCOUNTS. The Variable Account to which the variable
accumulation values, if any, under this contract relate is shown in the Contract
Specifications. It was established pursuant to a resolution of its Board of
Directors as a "separate account" under governing law of Connecticut, the
Company's state of domicile, and registered as a unit investment trust under the
1940 Act. Under Connecticut law, the Variable Account assets (except assets in
excess of its reserves and other contract liabilities) cannot be charged with
the general liabilities from any other business of the Company and the income,
gains or losses from the Variable Account assets are credited or charged against
the Variable Account without regard to the income, gains or losses of the
Company. The Variable Account assets are owned and controlled exclusively by
the Company, and the Company is not a trustee with respect to those assets.

The Variable Account is divided into Sub-Accounts. Each Variable Account Sub-
Account's assets are invested in shares of a particular Fund made available as a
funding vehicle under this contract. For each Variable Account Sub-Account, the
Company maintains Variable Accumulation Units whose values reflect the
investment performance of the Fund whose shares are held in that Sub-Account.

Subject to any vote by persons having the right under the 1940 Act to vote
thereon, the Company may elect to operate the Variable Account as a management
company rather than a unit investment trust under the 1940 Act, or, if
registration is no longer required, to deregister the Variable Account. In such
event, the Company may endorse this contract to reflect such change and any
necessary or appropriate action taken to effect the change. Any changes in
Variable Account investment policy shall have been approved by the Connecticut
Insurance Commissioner and approved or filed, as required, in the state or other
jurisdiction where this policy was issued.

AN415 12
<PAGE>

FIXED AND VARIABLE ACCOUNTS PROVISIONS (CONTINUED)

INVESTMENT RISK. Each Variable Account Sub-Account's assets are always fully
invested in the shares of the particular Fund purchased for that Sub-Account.
Each Variable Account Sub-Account's investment performance reflects the
investment performance of the Fund. Fund share values fluctuate, reflecting the
risks of changing economic conditions and the ability of a Fund's investment
advisor or sub-adviser to manage that Fund and anticipate changes in economic
conditions. As to the Variable Account assets, the Owner bears the entire
investment risk of gain or loss.

INVESTMENTS OF THE VARIABLE ACCOUNT SUB-ACCOUNTS. All amounts allocated to a
Variable Account Sub-Account will be used to purchase shares of a specific Fund.
The Funds available on the Date of Issue are shown in the Contract
Specifications; more may be subsequently added. The Fund is an open-end
management investment company registered under the Investment Company Act of
1940. Any and all distributions made by the Fund(s) will be reinvested to
purchase additional shares of that Fund at net asset value. Deductions from the
Variable Account Sub-Accounts will, in effect, be made by redeeming a number of
Fund shares at net asset value equal in total value to the amount to be
deducted. Assets of Variable Account Sub-Accounts will be fully invested in
Fund shares at all times.

SUBSTITUTED SECURITIES. Shares corresponding to a particular Fund may not always
be available for purchase or the Company may decide that further investment in
such Fund is no longer appropriate in view of the purposes of the Variable
Account, or in view of legal, regulatory or federal income tax restrictions. In
such event, shares of another registered open-end investment company or unit
investment trust may be substituted both for Fund shares already purchased
and/or as the securities to be purchased in the future, provided that these
substitutions meet applicable Internal Revenue Service diversification
guidelines and have been approved by the Securities and Exchange Commission and
such other regulatory authorities as may be necessary. In the event of any
substitution pursuant to this provision, the Company may make appropriate
endorsement(s) to this contract to reflect the substitution.

CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS

PART A - FIXED ACCOUNT VALUE

GUARANTEED PERIODS. The Initial Guaranteed Period(s), if any, are selected by
the Owner and are shown in the Contract Specifications. The duration of the
Initial Guaranteed Period(s) will affect the Initial Guaranteed Interest
Rate(s). Any Premium Payment or the portion thereof (or amount transferred in
accordance with the "Transfer Privilege" provision described below) allocated to
a particular Guaranteed Period will earn interest at the specified Guaranteed
Interest Rate during the Guaranteed Period. Initial Guaranteed Periods begin on
the date a Premium Payment is accepted (or, in the case of a transfer, on the
effective date of the transfer) and end on the Expiration Date for each duration
selected.

Any portion of the Annuity Account Value comprising a particular Fixed Account
Sub-Account (including interest earned thereon) will be referred to in this
contract as the "Guaranteed Period Amount." As a result of renewals, Subsequent
Payments, and transfers of portions of the Annuity Account Value, Guaranteed
Amounts for Guaranteed Periods of the same duration may have different
Expiration Dates, and each Guaranteed Period Amount will be treated separately
for purposes of determining any Market Value Adjustment.

The Company will give written notice to the Owner by ordinary mail to the most
recent address in the Company's records about the upcoming expiration of a
Guaranteed Period with respect to a Fixed Account Sub-Account at least 60 days
prior to the Expiration Date of such Guaranteed Period. A subsequent Guaranteed
Period of the same duration will begin automatically at the end of the previous
Guaranteed Period unless the Company receives, in writing at its Annuity &
Variable Life Service Center's Mailing Address within the 60-day period
immediately preceding the end of such Guaranteed Period, an election by the
Owner of a different Guaranteed Period from among those being offered by the
Company at such time, or instructions to transfer all or a portion of the
applicable Guaranteed Period Amount to one or more Fixed Account or Variable
Account Sub-Accounts in accordance with the "Transfer Privilege" provision.

AN415 13
<PAGE>

CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)

GUARANTEED INTEREST RATES. The Company will establish the applicable Guaranteed
Interest Rate that will be used to determine the interest with respect to a
Fixed Account Sub-Account for each Guaranteed Period at the beginning of the
Guaranteed Period. This rate will be guaranteed for the duration of the
applicable Guaranteed Period. The Initial or Subsequent Guaranteed Interest
Rate will never be less than 3% per year, compounded annually. Subsequent
Guaranteed Interest Rate(s) will also be determined at the beginning of
Guaranteed Period(s) and may be higher or lower than the previous rate, but will
never be less than 3% per year, compounded annually. (See "Minimum Surrender
Value" provision.)

FIXED ACCUMULATION VALUE. Upon receipt of a Premium Payment by the Company at
its Annuity & Variable Life Service Center's Mailing Address, all or that
portion, if any, of the Premium Payment which is allocated to the Fixed Account
will be credited to the Fixed Account and allocated to the Fixed Account Sub-
Accounts selected by the Owner. The Fixed Accumulation Value, if any, at any
time, is equal to the sum of the then current values of all Guaranteed Period
Amounts with respect to this contract.

MINIMUM SURRENDER VALUE. The Minimum Surrender Value for the Fixed Account for
a given contract year is the Premium Payment(s), or portion thereof, and
transfers allocated to the Fixed Account accumulated at 3% per year, compounded
annually, less the deduction of the applicable withdrawal charge(s), any prior
withdrawals or transfers out of the Fixed Account, premium taxes, if any, and
applicable Annuity Account Fee(s).

PART B - VARIABLE ACCOUNT VALUE

ACQUISITION AND REDEMPTION OF VARIABLE ACCUMULATION UNITS. Any dollar amounts
allocated to a Variable Account Sub-Account shall be converted into Variable
Accumulation Units and credited to the Variable Account Sub-Account on a unit
basis. The number of Variable Accumulation Units into which a dollar amount
would be converted is calculated by dividing the dollar amount by the Variable
Accumulation Unit Value for the particular Sub-Account. Any redemption of units
from a Variable Account Sub-Account will be processed at the end of a Valuation
Period, including any units redeemed to fund a monthly deduction, and shall
result in the redemption and cancellation of Variable Accumulation Units having
an aggregate dollar value equal to the amount of such withdrawal.

VARIABLE ACCUMULATION UNIT VALUE. The Variable Accumulation Unit Value at the
beginning of the first Valuation Period of each Variable Account Sub-Account was
established at $10.00. The Variable Accumulation Unit value in any later
Valuation Period is equal to the net asset value per unit of the particular Sub-
Account as of the end of such Valuation Period.

VARIABLE ACCUMULATION VALUE. The Variable Accumulation Value of the Annuity
Account, if any, for any Valuation Period is equal to the sum of the value of
all Variable Accumulation Units of each Variable Account Sub-Account credited to
the Variable Account with respect to this contract at the end of such Valuation
Period. The Variable Accumulation Value of each Variable Account Sub-Account is
determined by multiplying the number of Variable Accumulation Units, if any,
credited to each Variable Account Sub-Account with respect to this contract at
the end of a Valuation Period, by the Variable Accumulation Unit Value of the
particular Variable Account Sub-Account for such Valuation Period.

NET INVESTMENT FACTOR. An index, calculated as described below, that provides a
measure of the investment performance of a Variable Account Sub-Account for each
Valuation Period. The Net Investment Factor is equal to A+B-C where:
----- -E
D

A is the net asset value per unit of the Fund held in the Variable Account
Sub-Account (such net asset value being determined as described in the
prospectus for the Fund) as of the end of the Valuation Period;

B is any dividend or other distribution payable with respect to units held
of record during the Valuation Period;

AN415 14
<PAGE>

CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)

C is the per unit amount of any tax determined by the Company to be
attributable to the operation of the Variable Acount Sub-Account during
such Valuation Period;

D is the net asset value of each unit of the Fund as of the close of
business on the Valuation Date immediately preceding the Valuation Period;

E is the sum of the Daily M&E Rate plus the Daily Administrative Rate,
multiplied by the number of 24 hour periods included in the Valuation
Period.

The Net Investment Factor may be 1.0 or may be greater or less than 1.0,
reflecting the possibility that the Variable Accumulation Unit Value of a
particular Variable Account Sub-Account may remain the same, increase or
decrease.

PART C - GENERAL

ANNUITY ACCOUNT. The Company will establish an Annuity Account under the
contract and will maintain the Annuity Account during the Accumulation Period.
The Annuity Account Value at any time equals the sum of all the then current
values of the Fixed and Variable Accounts with respect to this contract.

TRANSFER PRIVILEGE. At any time during the Accumulation Period, other than
during the "Right to Examine Contract" period, the Owner may transfer all or
part of the Annuity Account Value to one or more of the Fixed or Variable
Account Sub-Accounts then available under the contract, subject to the
provisions set forth below. Transfers may be made in writing or by telephone,
if telephone transfers have been previously authorized in writing. Transfer
requests must be received at the Company's Annuity & Variable Life Service
Center prior to the time of day set forth in the prospectus, and provided the
New York Stock Exchange is open for business, in order to be processed as of
the close of business on the date the request is received; otherwise, the
transfer will be processed on the next business day the New York Stock Exchange
is open for business. The Company will not be held legally responsible for (a)
any liability for acting in good faith upon any transfer instructions given by
telephone, or (b) the authenticity of such instructions.

Transfers involving Variable Account Sub-Accounts will reflect the purchase or
cancellation of Variable Accu mulation Units having an aggregate value equal to
the dollar amount being transferred to or from a particular Variable Account
Sub-Account. The purchase or cancellation of such units shall be made using
Variable Accumulation Unit Values of the applicable Variable Account Sub-Account
at the end of the Valuation Period for which the transfer is effective.
Transfers to a Fixed Account Sub-Account will result in a new Guaranteed Period
for the amount being transferred. Any such Guaranteed Period will begin on the
effective date of the transfer. The amount transferred into such Fixed Account
Sub-Account will earn interest at the Guaranteed Interest Rate declared by the
Company for that Guaranteed Period as of the effective date of the transfer.

Transfers shall be subject to the following conditions: (a) Not more than 12
transfers may be made per Contract Year (including the frequency limitation
shown in the Contract Specifications with respect to transfers from the Fixed
Account), unless otherwise authorized in writing by the Company; (b) No
withdrawal charge will be imposed on transferred amounts, however, transfers of
all or a portion out of a Fixed Account Sub-Account may be subject to the Market
Value Adjustment set forth below unless such transfer is made in accordance with
the "Full or Partial Withdrawals and Transfers at the End of a Guaranteed
Period" provision; (c) The amount being transferred may not be less than $100
unless the entire value of the Fixed or Variable Account Sub-Account is being
transferred; (d) The amount being transferred may not exceed the Company's
maximum amount limit then in effect; (e) The amount transferred to any Fixed
Account Sub-Account may not be less than $2,500, or $100 to a Variable Sub-
Account; (f) Unless a transfer out of a Fixed Account Sub-Account is made in
accordance with the "Full or Partial Withdrawals and Transfers at the End of a
Guaranteed Period" provision, the amount transferred from each Fixed Account
Sub-Account during any contract year may not exceed the limits shown in the
Contract Specifications; (g) Any value remaining in a Fixed Account Sub-Account
may not be less than $2,500, or a Variable Account Sub-Account may not

AN415 15
<PAGE>

CONTRACT VALUES DURING ACCUMULATION PERIOD PROVISIONS (CONTINUED)

be less than $50; (h) The Company reserves the right to defer transfers of
amounts from the Fixed Account for a period not to exceed six months from the
date the request for such transfer is received by the Company in writing or by
telephone, if such has been previously authorized, at its Annuity & Variable
Life Service Center; and (i) Transfers involving Variable Account Sub-Account(s)
shall be subject to such terms and conditions as may be imposed by the Funds.

ANNUITY ACCOUNT FEE. Prior to the Annuity Date, on the last valuation date of
each Contract Year the Company will deduct from the value of the Annuity Account
the annual Annuity Account Fee, if any, shown in the Schedule of Charges,
Expenses and Fees to reimburse it for administrative expenses relating to the
Annuity Account. The Annuity Account Fee will be deducted on a pro rata basis
from amounts allocated to each Fixed and Variable Account Sub-Account in which
the Annuity Account values are invested at the time of such deduction. If the
Annuity Account is surrendered for its full value, the Annuity Account Fee will
be deducted in full at the time of such surrender. On the Annuity Date the
value of the Annuity Account will be reduced by a proportionate amount of the
Annuity Account Fee to reflect the time elapsed between the last valuation date
of the most recent Contract Year and the day before the Annuity Date.

CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS

CASH WITHDRAWALS. At any time before the Annuity Date, the Owner may elect to
receive a cash withdrawal payment from the Company by filing with the Company
at its Annuity & Variable Life Service Center's Mailing Address a written
election in such form as the Company may require. Any such election shall
specify the amount of the withdrawal and will be effective on the date that it
is received at the Company's Annuity & Variable Life Service Center's Mailing
Address. Any cash withdrawal payment will be paid within seven days of the
Company's receipt of such request, except as the Company may be permitted to
defer the payment of amounts withdrawn from the Variable Account in accordance
with the Investment Company Act of 1940. The Company reserves the right to defer
the payment of amounts withdrawn from the Fixed Account for a period not to
exceed six months from the date written request for such withdrawal is received
by the Company at its Annuity & Variable Life Service Center's Mailing Address.

The amount of the cash withdrawal payment may be for any amount not to exceed
the Annuity Account Value at the end of the Valuation Period during which
the election becomes effective, plus or minus any applicable Market Value
Adjustment, and less any applicable withdrawal charge and premium taxes. In the
case of a full surrender, the Annuity Account will be canceled and the contract
will terminate. A partial withdrawal will result in a decrease in the Annuity
Account Value by an amount with an aggregate dollar value equal to the dollar
amount of the cash withdrawal payment, plus or minus any applicable Market Value
Adjustment, any applicable withdrawal charge and premium taxes.

In the case of a partial withdrawal, the Owner must instruct the Company as to
the amounts to be withdrawn from each Fixed and/or Variable Account Sub-Account.
If not so instructed, the Company will effect such withdrawal from each Fixed
and/or Variable Sub-Account in proportion to the then current Sub-Account
values. Partial withdrawals cannot reduce any Fixed Account Sub-Account below
$2,500 or any Variable Account Sub-Account below $50. Such partial withdrawals
will be treated as a full surrender of that Sub-Account and the balance will be
transferred to the largest Variable Account Sub-Account, if any. Partial
withdrawals may not reduce the total Annuity Account Value below $1,000. (See
"Minimum Value Requirements" provision.) Such partial withdrawals will be
treated as a full surrender.

Cash withdrawals from a Variable Account Sub-Account will result in the
cancellation of Variable Accumulation Units attributable to the Annuity Account
with an aggregate value on the effective date of the withdrawal equal to the
total amount by which the Variable Account Sub-Account is reduced. The
cancellation of such units will be based on the Variable Accumulation Unit
values of the Variable Account Sub-Account at the end of the Valuation Period
during which the cash withdrawal is effective.

AN415 16
<PAGE>

CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET
VALUE ADJUSTMENT PROVISIONS (CONTINUED)

All cash withdrawals or transfers of any portion of Fixed Account Sub-Accounts,
except those specified otherwise under "Penalty-Free Withdrawals, Transfers and
Annuitization Provisions," will be subject to the Market Value Adjustment
described below.

WITHDRAWAL CHARGES. If a cash withdrawal is made, a withdrawal charge may be
assessed by the Company. The length of time between the Company acceptance of
the Premium Payment(s) and the receipt of a withdrawal request determines the
withdrawal charge. For this purpose each withdrawal is deemed to represent a
withdrawal of a Premium Payment previously accepted (or a portion thereof).
Premium Payments will be deemed to have been withdrawn in the order in which the
Premium Payments were received by the Company (i.e., oldest premium first).
After all Premium Payments have been deemed withdrawn, the Company will deem
further withdrawals to be from net investment results attributable to such
Premium Payments, if any. The schedule of withdrawal charges is set forth in
the "Schedule of Charges, Expenses and Fees." On withdrawal, any applicable
Annuity Account Fee and Market Value Adjustment will be deducted before
application of any withdrawal charge.

Withdrawal charges are deducted proportionately from the Fixed and/or Variable
Account Sub-Account(s) from which the withdrawal is to be made, provided such
Sub-Account(s) have sufficient account value(s) for making such deduction(s).
If any of the account value(s) of such Sub-Account(s), however, are
insufficient, its remaining withdrawal charges will be deducted on a pro rata
basis from all Fixed and/or Variable Account Sub-Accounts in proportion to the
then current account value(s) of Such Sub-Account(s).

See "Penalty-Free Withdrawals, Transfers and Annuitization Provisions" for
situations in which a withdrawal charge is not imposed.

For the purpose of any qualified plan riders which may be attached to this
contract, the term "Surrender Charge" wherever referenced therein, shall mean
"withdrawal charge" as set forth above.

MARKET VALUE ADJUSTMENT. Any cash withdrawal or transfer from a Fixed Account
Sub-Account, except those specified otherwise under the "Penalty-Free
Withdrawals, Transfers and Annuitization Provisions," will be subject to a
Market Value Adjustment.

The amount payable on such cash withdrawal or transfer may be adjusted up or
down by the application of the Market Value Adjustment. The Index Rate Factor
applicable to the amount of such cash withdrawal or transfer is:
(1+A)/N/
--------
(1+B)/N/
where:

A = an Index Rate (based on the Treasury Constant Maturity Series published by
the Federal Reserve) for a security with time to maturity equal to the
applicable Guaranteed Period, determined at the beginning of the Guaranteed
Period.

B = an Index Rate (based on the Treasury Constant Maturity Series published by
the Federal Reserve) for a security with time to maturity equal to the
applicable Guaranteed Period, determined at the time of cash withdrawal or
transfer, plus the percentage adjustment to "B" as shown in the Contract
Specifications. If Index Rates "A" and "B" are within .25% of each other when
the Index Rate Factor is determined, no such percentage adjustment to "B" will
be made.

N = The number of years remaining in the applicable Guaranteed Period (e.g. 1
year and 73 days = 1 + (73 divided by 365) = 1.2 years)

Straight-line interpolation is used for periods to maturity not quoted.

AN415 17
<PAGE>

PENALTY-FREE WITHDRAWALS, TRANSFERS AND ANNUITIZATION PROVISIONS

PENALTY-FREE PARTIAL WITHDRAWALS OR TRANSFERS. Upon request in writing, the
Owner may, during any Contract Year prior to the Annuity Date, withdraw up to
15% of the Premium Payment(s) or portion remaining thereof, without incurring a
withdrawal charge. For this purpose each withdrawal is deemed to represent a
withdrawal of a portion of a Premium Payment previously accepted. Premium
Payments will be deemed to be withdrawn in the order in which they were received
by the Company (i.e., the oldest premium first). Any such withdrawal from a
Fixed Account Sub-Account may be subject to a Market Value Adjustment unless the
withdrawal is made at the end of a Guaranteed Period as set forth below. The
Owner must specify from which Fixed and/or Variable Account Sub-Accounts the
withdrawal is to be made, otherwise the Company may effect such withdrawal on a
proportionate basis from all Fixed and/or Variable Account Sub-Accounts in which
the Annuity Account is invested.

Such partial withdrawals may be either taken as a lump sum or, upon consent of
the Company, paid in equal installments.

No withdrawal charge will be imposed on any withdrawal with respect to a Premium
Payment after the end of the seventh year following the Company's acceptance of
that Premium Payment.

The Owner may also transfer amounts within the Annuity Account during the
Accumulation Period without the application of a withdrawal charge, however, any
transfers would be subject to any terms and conditions as may be imposed under
the "Transfer Privilege" provision.

FULL OR PARTIAL WITHDRAWALS AND TRANSFERS AT THE END OF A GUARANTEED PERIOD. No
Market Value Adjustment will be imposed on a full or partial withdrawal or
transfer made from a Fixed Account Sub-Account which becomes effective at the
end of the applicable initial or subsequent Guaranteed Period. In such event,
the Owner's proper request for withdrawal or transfer must be received at the
Company's Annuity & Variable Life Service Center's Mailing Address within a 45-
day period immediately preceding the end of such Guaranteed Period.

WAIVER OF WITHDRAWAL CHARGE AND MARKET VALUE ADJUSTMENT ON DEATH OR ANNUITY
DATE. No withdrawal charge or Market Value Adjustment will be imposed upon
payments made under the Annuity Benefit or Death Benefit provisions of this
contract.

PENALTY-FREE ANNUITIZATION. At any time the Owner may request in writing
payment of the then current Annuity Account Value in accordance with any one of
the settlement options set forth in this contract. In such event, no withdrawal
charge or Market Value Adjustment will be imposed at the time such settlement is
made. Such annuitization will automatically result in a change in the Annuity
Date to the date Income Payments commence under the settlement option elected.

BENEFIT PROVISIONS

ANNUITY BENEFIT. On the Annuity Date the Company will pay all or a part of the
adjusted value of the Annuity Account (as set forth below) in cash or apply it
in accordance with the settlement option(s) elected by the Owner. However, if
the amount to be applied under any settlement option is less than $5,000, or if
the first Income Payment payable in accordance with such option is less than
$50, the Company will pay the adjusted value in a single payment to the payee
designated by the Owner.

AN415 18
<PAGE>

BENEFIT PROVISIONS (CONTINUED)

ANNUITY DATE. The Annuity Date selected by the Owner is shown in the Contract
Specifications. The Annuity Date may be changed from time to time by the Owner
by notifying the Company in writing. The notice must be received at the
Company's Annuity & Variable Life Service Center's Mailing Address at least 45
days prior to the Annuity Date then in effect. The new Annuity Date selected
must be at least 30 days after the effective date of the change and not later
than the Annuitant's 90th birthday.

After the Annuity Date, no change of a settlement option is permitted, no
payments may be requested under the "Cash Withdrawals" provision of the
contract, and no Death Benefit is payable under the contract except as otherwise
specified under the settlement option selected.

ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO ANNUITY BENEFIT. During
the lifetime of the Owner and prior to the Annuity Date, the Owner may elect to
have the adjusted value of the Annuity Account applied on the Annuity Date under
one or more of the settlement options set forth in this contract, or under any
other settlement option as agreed to by the Company. The Owner may also change
any election, but any election or change of election must be received at the
Company's Annuity & Variable Life Service Center's Mailing Address at least 45
days prior to the Annuity Date. The election or change of election may be made
by filing with the Company at its Annuity & Variable Life Service Center's
Mailing Address written notice in such form as the Company may require. If no
such election is in effect on the 30th day prior to the Annuity Date, the
adjusted value of the Annuity Account will be applied under a Life Annuity with
120 months guaranteed. In such situation, the portion of the adjusted value of
the Annuity Account to be applied for a Fixed Life Annuity under the Second
Option and/or a Variable Life Annuity under Option II will be determined on a
pro rata basis from the composition of the Annuity Account on the Annuity Date.

DETERMINATION OF AMOUNT. On the Annuity Date the Annuity Account will be
canceled and the adjusted value of the Annuity Account to be applied under the
settlement options provisions shall be equal to the Annuity Account Value for
the Valuation Period which ends immediately preceding the Annuity Date, minus
any applicable premium or similar tax. For the purposes of any qualified plan
riders which may be attached to this contract, the term "Annuity Value,"
wherever referenced therein, shall mean the "adjusted value of the Annuity
Account" as defined above.

INCOME PAYMENT BENEFITS. On the Annuity Date, the adjusted value of the Annuity
Account as determined under the "Determination of Amount" provision may be
applied, as elected by the Owner, under one or more of the settlement options
set forth in the contract to effect: (a) a Fixed Income Payment Benefit or a
Variable Income Payment Benefit; or (b) a combination of the Fixed Income
Payment Benefit and the Variable Income Payment Benefit. If a combination Fixed
and Variable Income Payment Benefit is elected, the Owner may specify the amount
to be allocated to the Fixed Income Payment Benefit and the amount to be
allocated to the Variable Income Payment Benefit. Such election and allocation
may also be made by a Beneficiary to the extent provided in the "Election and
Effective Date of Election with Respect to Death Benefit Provision."

DEATH BENEFIT. If the Owner dies before the Annuity Date, the Company will pay
the Death Benefit to the Beneficiary upon receipt of due proof of the death of
the Owner in accordance with the "Payment of Death Benefit" provision. If there
is no designated Beneficiary living on the date of death of the Owner, the
Company will pay the Death Benefit, upon receipt of due proof of the death of
both the Owner and the designated Beneficiary, in one sum to the estate of the
Owner.

ELECTION AND EFFECTIVE DATE OF ELECTION WITH RESPECT TO DEATH BENEFIT. During
the lifetime of the Annuitant and prior to the Annuity Date, the Owner may elect
one or more of the settlement options set forth in this contract to effect an
annuity for the Beneficiary as payee after the death of the Owner. This
election may be made or subsequently revoked by filing with the Company at its
Annuity & Variable Life Service Center's Mailing Address a written election or
revocation of an election in such form as required by the Company.

AN415 19
<PAGE>

BENEFIT PROVISIONS (CONTINUED)

Any election or revocation of an election of a method of settlement of the Death
Benefit will become effective on the date it is received by the Company at its
Annuity & Variable Life Service Center's Mailing Address.

Unless otherwise specified in writing by the Owner, the Beneficiary may elect
(a) to receive the Death Benefit as a cash payment, in which event the Annuity
Account will be canceled, or (b) to have the Death Benefit applied under one or
more of the settlement options set forth under the contract. This election may
be made by filing with the Company a written request in a form as required by
the Company. Any written request for an election of a settlement option for the
Death Benefit by the Beneficiary will become effective on the later of (a) the
date the request is received by the Company at its Annuity & Variable Life
Service Center's Mailing Address; or (b) the date due proof of the death of the
Owner is received by the Company at its Annuity & Variable Life Service Center's
Mailing Address. If a written request for a settlement option by the
Beneficiary is not received by the Company within 60 days following the date due
proof of the death of the Owner is received by the Company, the Beneficiary
shall be deemed to have elected a cash payment as of the last day of the 60-day
period.

Notwithstanding the above, the Owner or Beneficiary may only elect a settlement
option which provides for the distribution of the entire Death Benefit to the
Beneficiary within five years of the Owner's death unless; (a) the entire
interest in the contract is distributed over the life of the Beneficiary, with
distributions beginning within one year of the Owner's death; (b) the entire
interest in the contract is distributed over a period not extending beyond the
life expectancy of the Beneficiary, with distributions beginning within one year
of the Owner's death; or (c) the Beneficiary is the deceased Owner's spouse and
elects to continue the contract and become the new Owner, but in no event may
such an election be made under this contract more than once.

For purposes of Section 72(s) of the Internal Revenue Code, if any Owner is not
an individual, the death or change of any Annuitant is treated as the death of
an Owner, and if the Owner is grantor trust within the meaning of the Internal
Revenue Code, the death of the grantor of such trust is also treated as the
death of an Owner.

PAYMENT OF DEATH BENEFIT. If the Death Benefit is to be paid in cash to the
Beneficiary, payment will be made within 7 days of the date the election becomes
effective or is deemed to become effective, provided due proof of the death of
the Owner is received by the Company at its Annuity & Variable Life Service
Center's Mailing Address, except as the Company may be permitted to defer any
such payment of amounts derived from the Variable Account in accordance with the
Investment Company Act of 1940. If the Death Benefit is to be paid in one sum
to the estate of the deceased Owner, payment will be made within 7 days of the
date due proof of the death of the Owner and/or Beneficiary is received by the
Company at its Annuity & Variable Life Service Center's Mailing Address, except
as the Company may be permitted to defer any such payment of amounts derived
from the Variable Account in accordance with the Investment Company Act of 1940.
If settlement under the settlement option provisions is elected, the Income
Payments will commence 30 days following the effective date or the deemed
effective date of the election and the Annuity Account will be maintained in
effect until such Income Payments commence.

AMOUNT OF DEATH BENEFIT. The Death Benefit is determined as of the effective
date or deemed effective date of the Death Benefit election and unless there is
a transfer of Ownership is equal to the greater of (a) the Annuity Account Value
for the Valuation Period during which the Death Benefit election is effective or
is deemed to become effective, or (b) the sum of all the Premium Payment(s) made
under the contract less the sum of all partial withdrawals. On and after the
effective date of each transfer of Ownership, the Amount of Death Benefit will
be equal to the greater of 1) Annuity Account Value on the date of such transfer
of Ownership, plus the sum of all Premium Payments made on or after the
effective date of such transfer, less the sum of all partial withdrawals made on
or after the effective date of such transfer, or 2) the Annuity Account Value
for the Valuation Period during which the Death Benefit election is effective or
is deemed to become effective.

AN415 20
<PAGE>

GENERAL PROVISIONS

THE CONTRACT. The contract constitutes the entire contract between the parties.

Only the President, a Vice President, an Assistant Vice President, a Secretary,
a Director or an Assistant Director of the Company may make or modify this
contract.

The contract is executed at the Company's Home Office, the mailing address of
which for this contract is CIGNA Individual Insurance, Annuity & Variable Life
Service Center, Routing S249, Hartford, Connecticut 06152-2249.

MODIFICATION OF CONTRACT. The Company reserves the right to modify this
contract to meet the requirements of applicable state and federal laws or
regulations. The Company will notify the Owner in writing of any changes.

NON-PARTICIPATION. The contract is not entitled to share in surplus
distribution.

LOANS. Loans are not permitted under this contract.

DETERMINATION OF VALUES. The method of determination by the Company of the Net
Investment Factor and the number and value of Accumulation Units and Annuity
Units shall be conclusive upon the Owner, and any Beneficiary or payee.

ENDORSEMENT OF INCOME PAYMENTS. The Company will make each Income Payment at
the Home Office by check. Each check must be personally endorsed by the
payee/Annuitant, or the Company may require that proof of the payee/Annuitant's
survival be furnished.

MISSTATEMENT OF AGE. If the age of an Annuitant is misstated, the amount
payable under the contract will be adjusted to be the amount of Income which the
actual premium paid would have purchased for the correct age according to the
Company's rates in effect on the Date of Issue. Any overpayment by the Company,
with interest at the rate of 6% per year, compounded annually, will be charged
against the payments to be made next succeeding the adjustment. Any
underpayment by the Company will be paid in a lump sum, with interest at the
rate of 6% per year, compounded annually.

CLAIMS OF CREDITORS. To the extent permitted by law, no amounts payable under
this contract will be subject to the claims of creditors of any payee.

PERIODIC REPORTS. At least once each calendar year, the Company will furnish
the Owner a report as required by law showing the Annuity Account Value at the
end of the preceding year, all transactions during the year, the current Annuity
Account Value, the number of Accumulation Units in each Variable Accumulation
Account, the applicable Accumulation Unit Value as of the date of the report and
the interest rate credited to the Fixed Account Sub-Account(s). The Company
will also send such statements reflecting transactions in the Annuity Account as
may be required by applicable laws, rules and regulations.

AN415 21
<PAGE>

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACT
WITH FIXED AND VARIABLE ACCOUNTS - NON-PARTICIPATING

AN415
<PAGE>

OPTIONAL METHODS OF SETTLEMENT

This rider is made part of the contract to which it is attached as of the Date
of Issue. Upon written request, the Company will agree to pay in accordance with
any one of the options shown below all or part of the net proceeds that may be
payable under the contract.

While the Owner is alive, the request, including the designation of the payee,
may be made by the Owner. At the time a Death Benefit becomes payable under the
contract, the request, including the designation of the payee, may then be made
by the Beneficiary. Once Income Payments have begun, no surrender of the Annuity
Value can be made (unless Variable Income Payments are made under Option III)
and the Annuitant(s) cannot be changed, nor can the settlement option be
changed.

PAYMENT DATES. The first income Payment under the settlement option selected
will be made on the first day of the month following the Annuity Date.
Subsequent payments will be made on the first day of each month in accordance
with the manner of payment selected.

MINIMUM PAYMENT AMOUNT. The settlement option elected must result in an Income
Payment at least equal to the minimum payment amount in accordance with the
Company's rules then in effect. If at any time payments are less than the
minimum payment amount, the Company has the right to change the frequency to an
interval that will provide the minimum payment amount. If any amount due is less
than the minimum per year, the Company may make other arrangements that are
equitable.

FIXED BENEFIT OPTIONS

FIXED INCOME PAYMENTS. Fixed Income Payments will remain constant pursuant to
the terms of the fixed settlement option(s) selected. the amount of each Fixed
Income Payment shall be determined in accordance with the terms of the
settlement option and the table(s) set forth in this rider, as applicable. The
mortality table used is the 1983 Individual Annuitant Mortality (IAM) Table "a"
and 3% interest. In determining the settlement amount, the Annuitant's
settlement age will be reduced by one year when the first instalment is payable
during the 1990's, reduced by two years when the first instalment is payable
during the decade 2000-2009, and so on.

FIRST OPTION: LIFE ANNUITY. An annuity payable monthly to the payee during the
lifetime of the Annuitant, ceasing with the last payment due prior to the death
of the Annuitant.

SECOND OPTION: LIFE ANNUITY WITH CERTAIN PERIOD. An annuity providing monthly
income to the payee for a fixed period of 60, 120, 180, or 240 months (as
selected), and for as long thereafter as the Annuitant shall live.

THIRD OPTION: CASH REFUND LIFE ANNUITY. An annuity payable monthly to the payee
during the lifetime of the Annuitant ceasing with the last payment due prior
to the death of the Annuitant provided that, at the death of the Annuitant, the
payee will receive an additional payment equal to the excess, if any, of (a)
over (b) where: (a) is the initial value of the proceeds applied under this
option; and (b) is the dollar amount of payments already paid.

FOURTH OPTION: ANNUITY CERTAIN. An amount payable monthly for the number of
years selected which may be from 5 to 30 years.

EXCESS INTEREST. At the sole discretion of the Company, excess interest may be
paid or credited from time to time in addition to the payments guaranteed under
any fixed benefit Optional Method of Settlement.

AR425 (Page 1)
<PAGE>

OPTIONAL METHODS OF SETTLEMENT (CONTINUED)

VARIABLE BENEFIT OPTIONS

VARIABLE INCOME PAYMENTS. The amount of the first Variable Income Payment shall
be determined in accordance with the terms of the settlement option and the
table(s) set forth in this rider, as applicable. The mortality table used is the
1983 Individual Annuitant Mortality (IAM) Table "a" and 3%. In determining the
settlement amount, the Annuitant's settlement age will be reduced by one year
when the first instalment is payable during the 1990's, reduced by two years
when the first instalment is payable during the decade 2000-2009 and so on.

All Variable Income Payments other than the first are determined by means of
Annuity Units credited to the contract with respect to the particular payee. The
number of Annuity Units to be credited in respect of a particular Sub-Account is
determined by dividing that portion of the first Variable Income Payment
attributable to that Sub-Account by the Annuity Unit Value of that Sub-Account
for the Valuation Period which ends immediately preceding the Annuity Date. The
number of Annuity Units of each Sub-Account credited with respect to the
particular payee then remains fixed unless an exchange of Annuity Units is made
pursuant to the "Exchange of Variable Annuity Units" section. The dollar amount
of each Variable Income Payment after the first may increase, decrease or remain
constant, and is equal to the sum of the amounts determined by multiplying the
number of Annuity Units of a particular Sub-Account for the Valuation Period
which ends immediately preceding the due date of each subsequent payment by the
Annuity Unit Value for the particular Sub-Account for the first Valuation
Period occurring on or immediately prior to the first day of each month.

ANNUITY UNIT VALUE. The Annuity Unit Value for each Sub-Account was established
at $10.00 for the first Valuation Period of the particular Sub-Account. The
Annuity Unit Value for the particular Sub-Account for any subsequent Valuation
Period is determined by multiplying the Annuity Unit Value for the particular
Sub-Account for the immediately preceding Valuation Period by the Net Investment
Factor for the current Valuation Period and then multiplying that product by a
factor to neutralize the assumed interest rate of 3% per year to establish the
Annuity Payment Rates set forth in this rider. The factor is 0.99991902 for a
one day valuation period.

EXCHANGE OF VARIABLE ANNUITY UNITS. After the Annuity Date the payee may, by
filing a written request with the Company at its Annuity & Variable Life Service
Center's Mailing Address, exchange the value of a designated number of Annuity
Units of particular Variable Sub-Accounts then credited with respect to such
payee into other Annuity Units, the value of which would be such that the dollar
amount of an Income Payment made on the date of the exchange would be
unaffected by the exchange. Unless otherwise authorized by the Company in
writing, no more than 3 exchanges may be made in any Contract Year.

Exchanges may be made among the Variable Sub-Accounts only. Exchanges shall be
made using the Annuity Unit Values for the Valuation Period during which the
request for exchange is received by the Company at its Annuity & Variable Life
Service Center's Mailing Address.

ANNUITY ACCOUNT FEE. After the Annuity Date an Annuity Account Fee amounting to
$35 per year will be deducted in equal amounts from each variable Income Payment
made during the calendar year. For example, this would amount to a $2.92
deduction from each monthly Variable Income Payment. No deduction will be made
from Fixed Income Payments.

OPTION I: VARIABLE LIFE ANNUITY. A variable annuity payable monthly to the payee
during the lifetime of the Annuitant, ceasing with the last payment due prior to
the death of the Annuitant.

AR425 (Page 2)
<PAGE>

OPTIONAL METHODS OF SETTLEMENT (CONTINUED)

OPTION II: VARIABLE LIFE ANNUITY WITH CERTAIN PERIOD. A variable annuity which
provides monthly payments during the lifetime of the annuitant and further
provides that if, at the death of the annuitant, payments have been made for
less than the elected period certain, which may be 60, 120, 180 or 240 months,
the annuity payments will be continued during the remainder of such period.

OPTION III: VARIABLE ANNUITY CERTAIN. A variable amount payable monthly for the
number of years selected which may be from 5 to 30 years. At the expiration of
the period certain, no further payments of any kind are payable. If the
Annuitant dies before the specified number of certain payments have been
received, the remainder of the payments will be continued during the remainder
of such period.

ADDITIONAL FIXED AND VARIABLE OPTIONS. Any proceeds payable under the contract
may also be settled under any other method of settlement (including joint and
survivor settlement options under joint life annuities) offered by the Company
at the time of the request.

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

/S/ THOMAS C. JONES

PRESIDENT

AR425 (Page 3)
<PAGE>

OPTIONAL METHODS OF SETTLEMENT (CONTINUED)

LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH
$1,000 APPLIED--MALE

SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST
BIRTHDAY 60 120 180 240
- ----------------------------------------------------------------
Age Life Annuity

10 $2.87 $2.87 $2.87 $2.87 $2.87
11 2.89 2.89 2.89 2.88 2.88
12 2.90 2.90 2.90 2.90 2.90
13 2.92 2.92 2.91 2.91 2.91
14 2.93 2.93 2.93 2.93 2.92

15 2.95 2.95 2.95 2.94 2.94
16 2.96 2.96 2.96 2.96 2.96
17 2.98 2.98 2.98 2.98 2.97
18 3.00 3.00 3.00 2.99 2.99
19 3.02 3.02 3.01 3.01 3.01

20 3.04 3.04 3.03 3.03 3.03
21 3.06 3.05 3.05 3.05 3.05
22 3.08 3.08 3.07 3.07 3.07
23 3.10 3.10 3.09 3.09 3.09
24 3.12 3.12 3.12 3.11 3.11

25 3.14 3.14 3.14 3.14 3.13
26 3.17 3.17 3.16 3.16 3.16
27 3.19 3.19 3.19 3.19 3.18
28 3.22 3.22 3.22 3.21 3.20
29 3.25 3.25 3.24 3.24 3.23

30 3.28 3.28 3.27 3.27 3.26
31 3.31 3.31 3.30 3.30 3.29
32 3.34 3.34 3.33 3.33 3.32
33 3.37 3.37 3.37 3.36 3.35
34 3.41 3.41 3.40 3.39 3.38

35 3.44 3.44 3.44 3.43 3.41
36 3.48 3.48 3.48 3.46 3.45
37 3.52 3.52 3.52 3.50 3.48
38 3.57 3.56 3.56 3.54 3.52
39 3.61 3.61 3.60 3.58 3.56

40 3.66 3.65 3.65 3.63 3.60
41 3.71 3.70 3.69 3.67 3.64
42 3.76 3.75 3.74 3.72 3.68
43 3.81 3.81 3.79 3.77 3.73
44 3.87 3.86 3.85 3.82 3.77

45 3.93 3.92 3.90 3.87 3.82
46 3.99 3.98 3.96 3.92 3.87
47 4.05 4.05 4.02 3.98 3.92
48 4.12 4.11 4.09 4.04 3.97
49 4.19 4.18 4.15 4.10 4.03

50 4.27 4.26 4.22 4.17 4.08
51 4.34 4.33 4.30 4.23 4.14
52 4.43 4.41 4.37 4.30 4.20
53 4.51 4.50 4.45 4.37 4.26
54 4.60 4.59 4.54 4.45 4.32

55 4.70 4.68 4.62 4.53 4.39
56 4.80 4.78 4.72 4.61 4.45
57 4.91 4.89 4.82 4.69 4.51
58 5.03 5.00 4.92 4.78 4.58
59 5.15 5.12 5.03 4.87 4.65

60 5.28 5.25 5.14 4.96 4.71
61 5.43 5.39 5.27 5.06 4.78
62 5.58 5.53 5.39 5.16 4.84
63 5.74 5.69 5.53 5.26 4.90
64 5.91 5.85 5.66 5.36 4.96

65 6.10 6.03 5.81 5.46 5.02
66 6.30 6.21 5.96 5.56 5.08
67 6.51 6.41 6.12 5.66 5.13
68 6.73 6.62 6.28 5.77 5.18
69 6.97 6.84 6.44 5.86 5.23

70 7.23 7.07 6.61 5.96 5.27
71 7.51 7.32 6.79 6.05 5.31
72 7.80 7.58 6.96 6.14 5.34
73 8.12 7.85 7.14 6.23 5.37
74 8.46 8.14 7.32 6.31 5.40

75 8.82 8.45 7.50 6.38 5.42
76 9.21 8.76 7.67 6.45 5.44
77 9.63 9.10 7.84 6.51 5.45
78 10.08 9.44 8.01 6.57 5.47
79 10.56 9.80 8.17 6.62 5.48

80 11.07 10.17 8.33 6.66 5.49
81 11.62 10.55 8.48 6.70 5.49
82 12.20 10.94 8.61 6.73 5.50
83 12.82 11.33 8.74 6.76 5.50
84 13.47 11.73 8.86 6.79 5.51

85 14.17 12.12 8.97 6.81 5.51

AR425 (Page 4)

<PAGE>

OPTIONAL METHODS OF SETTLEMENT (CONTINUED)

LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH
$1,000 APPLIED -- FEMALE

SETTLEMENT AGE OF NUMBER OF INSTALMENTS CERTAIN
ANNUITANT NEAREST
BIRTHDAY 60 120 180 240
- ----------------------------------------------------------------
Age Life Annuity

10 $2.80 $2.80 $2.80 $2.80 $2.80
11 2.81 2.81 2.81 2.81 2.81
12 2.82 2.82 2.82 2.82 2.82
13 2.83 2.83 2.83 2.83 2.83
14 2.85 2.85 2.85 2.84 2.84

15 2.86 2.86 2.86 2.86 2.86
16 2.87 2.87 2.87 2.87 2.87
17 2.89 2.89 2.89 2.88 2.88
18 2.90 2.90 2.90 2.90 2.90
19 2.92 2.92 2.92 2.91 2.91

20 2.93 2.93 2.93 2.93 2.93
21 2.95 2.95 2.95 2.95 2.94
22 2.96 2.96 2.96 2.96 2.96
23 2.98 2.98 2.98 2.98 2.98
24 3.00 3.00 3.00 3.00 2.99

25 3.02 3.02 3.02 3.02 3.01
26 3.04 3.04 3.04 3.03 3.03
27 3.06 3.06 3.06 3.06 3.05
28 3.08 3.08 3.08 3.08 3.07
29 3.10 3.10 3.10 3.10 3.09

30 3.13 3.13 3.12 3.12 3.12
31 3.15 3.15 3.15 3.14 3.14
32 3.18 3.18 3.17 3.17 3.16
33 3.20 3.20 3.20 3.20 3.19
34 3.23 3.23 3.23 3.22 3.22

35 3.26 3.26 3.26 3.25 3.24
36 3.29 3.29 3.29 3.28 3.27
37 3.32 3.32 3.32 3.31 3.30
38 3.35 3.35 3.35 3.34 3.33
39 3.39 3.39 3.38 3.38 3.37

40 3.42 3.42 3.42 3.41 3.40
41 3.46 3.46 3.46 3.45 3.43
42 3.50 3.50 3.50 3.49 3.47
43 3.54 3.54 3.54 3.53 3.51
44 3.59 3.59 3.58 3.57 3.55

45 3.64 3.63 3.63 3.61 3.59
46 3.68 3.68 3.67 3.66 3.63
47 3.73 3.73 3.72 3.71 3.68
48 3.79 3.79 3.77 3.76 3.72
49 3.84 3.84 3.83 3.81 3.77

50 3.90 3.90 3.89 3.86 3.82
51 3.97 3.96 3.95 3.92 3.88
52 4.03 4.03 4.01 3.98 3.93
53 4.10 4.10 4.08 4.04 3.99
54 4.18 4.17 4.15 4.11 4.04

55 4.25 4.25 4.22 4.18 4.11
56 4.34 4.33 4.30 4.25 4.17
57 4.42 4.41 4.38 4.32 4.23
58 4.52 4.51 4.47 4.40 4.30
59 4.61 4.60 4.56 4.48 4.37

60 4.72 4.70 4.66 4.57 4.44
61 4.83 4.81 4.76 4.66 4.51
62 4.95 4.93 4.87 4.75 4.58
63 5.08 5.05 4.98 4.85 4.65
64 5.21 5.18 5.10 4.95 4.72

65 5.36 5.32 5.22 5.05 4.79
66 5.51 5.47 5.36 5.16 4.86
67 5.67 5.63 5.50 5.26 4.93
68 5.85 5.80 5.65 5.37 5.00
69 6.04 5.98 5.80 5.49 5.06

70 6.25 6.18 5.97 5.60 5.12
71 6.47 6.39 6.14 5.71 5.18
72 6.71 6.62 6.32 5.83 5.23
73 6.98 6.86 6.50 5.94 5.28
74 7.26 7.12 6.69 6.04 5.32

75 7.57 7.40 6.89 6.14 5.35
76 7.90 7.69 7.09 6.24 5.39
77 8.26 8.01 7.29 6.33 5.41
78 8.65 8.34 7.49 6.41 5.43
79 9.08 8.70 7.69 6.49 5.45

80 9.54 9.07 7.89 6.55 5.47
81 10.03 9.47 8.08 6.61 5.48
82 10.58 9.88 8.26 6.66 5.49
83 11.16 10.31 8.43 6.70 5.49
84 11.80 10.75 8.59 6.74 5.50

85 12.48 11.20 8.74 6.77 5.50

- ----------------------------------------------------------------
ANNUITY CERTAIN TABLE FOR EACH $1,000 APPLIED

NUMBERS OF YEARS AMOUNTS OF EACH INSTALMENT
DURING WHICH
INSTALMENTS WILL BE
PAID ANNUAL MONTHLY
- ----------------------------------------------------------------
5 $211.99 $17.91
6 179.22 15.14
7 155.83 13.16
8 138.31 11.68
9 124.69 10.53
10 113.82 9.61
11 104.93 8.86
12 97.54 8.24
13 91.29 7.71
14 85.95 7.26
15 81.33 6.87
16 77.29 6.53
17 73.74 6.23
18 70.59 5.96
19 67.78 5.73
20 65.26 5.51
25 55.76 4.71

AR425 (Page 5)

<PAGE>

OPTIONAL METHODS OF SETTLEMENT

This rider is made part of the contract to which it is attached as of the Date
of Issue. Upon written request, the Company will agree to pay in accordance
with any one of the options shown below all or part of the net proceeds that may
be payable under the contract.

PAYMENT DATES. The first Income Payment under the settlement option selected
will be made on the first day of the month following the Annuity Date.
Subsequent payments will be made on the first day of each month in accordance
with the manner of payment selected.

MINIMUM PAYMENT AMOUNT. The settlement option elected must result in an Income
Payment at least equal to the minimum payment amount in accordance with the
Company's rules then in effect. If at any time payments are less than the
minimum payment amount, the Company has the right to change the frequency to an
interval that will provide the minimum payment amount. If any amount due is
less than the minimum per year, the Company may make other arrangements that are
equitable.

FIXED BENEFIT OPTIONS

FIXED INCOME PAYMENTS. Fixed Income Payments will remain constant pursuant to
the terms of the fixed settlement option(s) selected. The amount of each Fixed
Income Payment shall be determined in accordance with the terms of the
settlement option and the table(s) set forth in this rider, as applicable. The
mortality table used is the 1983 Individual Annuitant Mortality (IAM) Table "a"
and 3% interest. In determining the settlement amount, the Annuitant's
settlement age will be reduced by one year when the first instalment is payable
during the 1990's, reduced by two years when the first instalment is payable
during the decade 2000-2009, and so on.

FIRST OPTION: LIFE ANNUITY. An annuity payable monthly to the payee during the
lifetime of the Annuitant, ceasing with the last payment due prior to the death
of the Annuitant.

THIRD OPTION: CASH REFUND LIFE ANNUITY. An annuity payable monthly to the
payee during the lifetime of the Annuitant ceasing with the last payment due
prior to the death of the Annuitant provided that, at the death of the
Annuitant, the payee will receive an additional payment equal to the excess, if
any, of (a) over (b) where: (a) is the initial value of the proceeds applied
under this option; and (b) is the dollar amount of payments already paid.

FOURTH OPTION: ANNUITY CERTAIN. An amount payable monthly for the number of
years selected which may be from 5 to 30 years.

AR426 (Page 1)
<PAGE>

OPTIONAL METHODS OF SETTLEMENT (CONTINUED)

VARIABLE BENEFIT OPTIONS

VARIABLE INCOME PAYMENTS. The amount of the first Variable Income Payment shall
be determined in accordance with the terms of the settlement option and the
table(s) set forth in this rider, as applicable. The mortality table used is
the 1983 Individual Annuitant Mortality (IAM) Table "a" and 3%. In determining
the settlement amount, the Annuitant's settlement age will be reduced by one
year when the first instalment is payable during the 1990's, reduced by two
years when the first instalment is payable during the decade 2000-2009 and so
on.

All Variable Income Payments other than the first are determined by means of
Annuity Units credited to the contract with respect to the particular payee. The
number of Annuity Units to be credited in respect of a particular Sub-Account is
determined by dividing that portion of the first Variable Income Payment
attributable to that Sub-Account by the Annuity Unit Value of that Sub-Account
for the Valuation Period which ends immediately preceding the Annuity Date. The
number of Annuity Units of each Sub-Account credited with respect to the
particular payee then remains fixed unless an exchange of Annuity Units is made
pursuant to the "Exchange of Variable Annuity Units" section. The dollar amount
of each Variable Income Payment after the first may increase, decrease or remain
constant, and is equal to the sum of the amounts determined by multiplying the
number of Annuity Units of a particular Sub-Account for the Valuation Period
which ends immediately preceding the due date of each subsequent payment by the
Annuity Unit Value for the particular Sub-Account for the first Valuation Period
occurring on or immediately prior to the first day of each month.

EXCHANGE OF VARIABLE ANNUITY UNITS. After the Annuity Date the payee may, by
filing a written request with the Company at its Annuity & Variable Life Service
Center's Mailing Address, exchange the value of a designated number of Annuity
Units of particular Variable Sub-Accounts then credited with respect to such
payee into other Annuity Units, the value of which would be such that the dollar
amount of an Income Payment made on the date of the exchange would be unaffected
by the exchange. Unless otherwise authorized by the Company in writing, no more
than 3 exchanges may be made in any Contract Year.

OPTION I: VARIABLE LIFE ANNUITY. A variable annuity payable monthly to the
payee during the lifetime of the Annuitant, ceasing with the last payment due
prior to the death of the Annuitant.

AR426 (Page 2)
<PAGE>

OPTIONAL METHODS OF SETTLEMENT (CONTINUED)

OPTION II: VARIABLE LIFE ANNUITY WITH CERTAIN PERIOD. A variable annuity which
provides monthly payments during the lifetime of the annuitant and further
provides that if, at the death of the annuitant, payments have been made for
less than the elected period certain, which may be 60, 120, 180, or 240
months, the annuity payments will be continued during the remainder of such
period.

ADDITIONAL FIXED AND VARIABLE BENEFIT OPTIONS. Any proceeds payable under the
contract may also be settled under any other method of settlement (including
joint and survivor settlement options under joint life annuities) offered by the
Company at the time of the request.

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

/S/ THOMAS C. JONES

PRESIDENT

AR426 (Page 3)
<PAGE>

OPTIONAL METHODS OF SETTLEMENT (CONTINUED)

LIFE ANNUITY AND LIFE ANNUITY WITH CERTAIN PERIOD TABLE FOR EACH
$1,000 APPLIED -- UNISEX

Settlement age of Number of instalments certain
Annuitant nearest
birthday 60 120 180 240
- ----------------------------------------------------------------
Age Life Annuity

10 2.84 2.84 2.84 $2.84 $2.83
11 2.85 2.85 2.85 2.85 2.85
12 2.86 2.86 2.86 2.86 2.86
13 2.88 2.88 2.88 2.87 2.87
14 2.89 2.89 2.89 2.89 2.89

15 2.91 2.90 2.90 2.90 2.90
16 2.92 2.92 2.92 2.92 2.91
17 2.94 2.94 2.93 2.93 2.93
18 2.95 2.95 2.95 2.95 2.95
19 2.97 2.97 2.97 2.96 2.96

20 2.99 2.99 2.98 2.98 2.98
21 3.00 3.00 3.00 3.00 3.00
22 3.02 3.02 3.02 3.02 3.01
23 3.04 3.04 3.04 3.04 3.03
24 3.06 3.06 3.06 3.06 3.05

25 3.08 3.08 3.08 3.08 3.07
26 3.11 3.11 3.10 3.10 3.10
27 3.13 3.13 3.13 3.12 3.12
28 3.15 3.15 3.15 3.15 3.14
29 3.18 3.18 3.17 3.17 3.16

30 3.20 3.20 3.20 3.20 3.19
31 3.23 3.23 3.23 3.22 3.22
32 3.26 3.26 3.26 3.25 3.24
33 3.29 3.29 3.29 3.28 3.27
34 3.32 3.32 3.32 3.31 3.30

35 3.35 3.35 3.35 3.34 3.33
36 3.39 3.39 3.38 3.38 3.36
37 3.42 3.42 3.42 3.41 3.40
38 3.46 3.46 3.46 3.45 3.43
39 3.50 3.50 3.49 3.48 3.47

40 3.54 3.54 3.54 3.52 3.50
41 3.59 3.59 3.58 3.56 3.54
42 3.63 3.63 3.62 3.61 3.58
43 3.68 3.68 3.67 3.65 3.62
44 3.73 3.73 3.72 3.70 3.67

45 3.78 3.78 3.77 3.74 3.71
46 3.84 3.84 3.82 3.79 3.76
47 3.90 3.89 3.88 3.85 3.80
48 3.95 3.95 3.93 3.90 3.85
49 4.02 4.02 3.99 3.96 3.91

50 4.09 4.08 4.06 4.02 3.96
51 4.16 4.15 4.13 4.08 4.01
52 4.23 4.22 4.20 4.15 4.07
53 4.31 4.30 4.27 4.21 4.13
54 4.39 4.38 4.35 4.28 4.19

55 4.48 4.47 4.43 4.36 4.25
56 4.57 4.56 4.51 4.43 4.32
57 4.67 4.65 4.60 4.51 4.38
58 4.78 4.76 4.70 4.60 4.45
59 4.89 4.87 4.80 4.68 4.51

60 5.00 4.98 4.91 4.77 4.58
61 5.13 5.10 5.02 4.87 4.65
62 5.27 5.23 5.13 4.96 4.72
63 5.41 5.37 5.26 5.06 4.79
64 5.56 5.52 5.39 5.16 4.85

65 5.73 5.68 5.52 5.27 4.92
66 5.90 5.84 5.67 5.37 4.98
67 6.09 6.02 5.82 5.48 5.04
68 6.29 6.21 5.97 5.58 5.10
69 6.51 6.41 6.13 5.69 5.15

70 6.74 6.63 6.30 5.79 5.20
71 6.99 6.86 6.47 5.90 5.25
72 7.25 7.10 6.65 6.00 5.29
73 7.54 7.36 6.83 6.09 5.33
74 7.85 7.63 7.02 6.19 5.36

75 8.19 7.92 7.21 6.27 5.39
76 8.55 8.23 7.39 6.36 5.42
77 8.93 8.56 7.58 6.43 5.44
78 9.35 8.90 7.77 6.50 5.45
79 9.80 9.26 7.95 6.56 5.47

80 10.29 9.63 8.12 6.61 5.48
81 10.81 10.02 8.29 6.66 5.49
82 11.37 10.42 8.45 6.70 5.49
83 11.98 10.83 8.60 6.74 5.50
84 12.62 11.25 8.74 6.76 5.50

85 13.31 11.67 8.86 6.79 5.51
- ------------------------------------------------------------------

ANNUITY CERTAIN TABLE FOR EACH $1,000 APPLIED

Numbers of years Amount of each instalment
during which
instalments will be
paid Annual Monthly
- ------------------------------------------------------------------

5 211.99 17.91
6 179.22 15.14
7 155.83 13.16
8 138.31 11.68
9 124.69 10.53
10 113.82 9.61
11 104.93 8.86
12 97.54 8.24
13 91.29 7.71
14 85.95 7.26
15 81.33 6.87
16 77.29 6.53
17 73.74 6.23
18 70.59 5.96
19 67.78 5.73
20 65.26 5.51
25 55.76 4.71
30 49.53 4.18
- -----------------------------------------------------------------

AR426 (Page 4)

<PAGE>

Robert A. Picarello [CIGNA LOGO APPEARS HERE]
Chief Counsel

Legal Department, S-321
Hartford, CT 06152-2321
Telephone: (860) 726-8064
Facsimilie: (860) 726-1778

September 27, 1996

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Connecticut General Variable Annuity Separate Account
Connecticut General Life Insurance Company
Registration Statement on Form N-4: 33-48137

Dear Sirs:

As Chief Counsel of the Individual Insurance Division of Connecticut General
Life Insurance Company, I am familiar with the actions of the Board of Directors
of Connecticut General Life Insurance Company (the "Company"), establishing the
Account and its method of operation and authorizing the filing of a Registration
Statement under the Securities Act of 1933, (and amendments thereto) for the
securities to be issued by the Account and the Investment Company Act of 1940
for the Account itself.

In the course of preparing this opinion, I have reviewed the Certificate of
Incorporation and the By-Laws of the Company, the Board actions with respect to
the Account, and such other matters as I deemed necessary or appropriate. Based
on such review, I am of the opinion that the variable annuity contracts (and
interests therein) which are the subject of the above captioned Registration
Statement under the Securities Act of 1933 for the Account, as amended, will,
when issued, be legally issued and will represent binding obligations of the
Company, the depositor for the Account.

I further consent to the use of this opinion as an Exhibit to Post Effective
Amendment No. 5 to said Registration Statement and to the reference to me under
the heading "Experts" in said Registration Statement, as amended.

Very truly yours,

/s/ Robert A. Picarello
-----------------------
Robert A. Picarello
Chief Counsel

<PAGE>

EXHIBIT 10(A)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 5 under the Securities
Act of 1933 and Amendment No. 7 under the Investment Company Act of 1940 to
the registration statement of the CG Variable Annuity Separate Account on Form
N-4 of our reports dated February 13, 1996 and February 26, 1996, relating to
the consolidated financial statements of Connecticut General Life Insurance
Company and the financial statements of the CG Variable Annuity Separate
Account of Connecticut General Life Insurance Company, respectively, which
appear in such Statement of Additional Information. We also consent to the
reference to us under the heading "Experts" in such Statement of Additional
Information.

Price Waterhouse LLP
Hartford, Connecticut

October 2, 1996