CANADA LIFE OF AMERICA VARIABLE ANNUITY ACCOUNT 2, 497, 1996-03-14

CANADA LIFE OF AMERICA VARIABLE ANNUITY ACCOUNT 2
497, 1996-03-14

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<PAGE> 1
SUPPLEMENT DATED MARCH 13, 1996 TO THE PROSPECTUS
DATED MAY 1, 1995 FOR THE CANADA LIFE INSURANCE
COMPANY OF AMERICA VARIABLE ANNUITY ACCOUNT 2

Effective March 13, 1996 the sections in the prospectus captioned Death Benefit
and Proceeds on Death of Last Surviving Annuitant Before Annuity Date or
Maturity Date (The Death Benefit) are amended to include the following:

If we receive due proof of death of the last surviving annuitant before the
annuity date or maturity date ("such due proof"), we will pay the beneficiary a
death benefit.

If we receive such due proof during the first five policy years, the death
benefit is the greater of:
1. the premiums paid, less: a) any partial withdrawals,
including applicable surrender charges; and b) any incurred
taxes; or
2. the policy value on the date we receive such due proof.

If we receive such due proof after the first five policy years, the death
benefit is the greatest of:
1. item "1" above; or
2. item "2" above; or
3. the policy value at the end of the most recent 5 policy year
period preceding the date we receive such due proof, adjusted
for any of the following items that occur after such last 5
policy year period: a) less any partial withdrawals,
including applicable surrender charges; b) less any incurred
taxes; and c) plus any premiums paid. The 5 policy year
periods are measured from the policy date (i.e., 5, 10, 15,
20, etc.)

If on the date the policy was issued, all annuitants were attained age 80 or
less, then after any annuitant attains age 81, the death benefit is the greater
of items 1 or 2 above, with no further step-ups in Death Benefit occuring.
However, if on the date the policy was issued, any annuitant was attained age
81 or more, then the death benefit is the policy value.

The Owner(s) of policies issued on or after January 1, 1996 may elect the Death
Benefit provision described above after such date as regulatory approval is
received for such Death Benefit provision from the Owner s state of residence.
The Company will not assess a charge in connection with the election of the 5
policy year step-up Death Benefit provision. There is no guarantee that the 5
policy year step-up Death Benefit provision will increase or enhance the death
benefit otherwise payable.
<PAGE> 2
CANADA LIFE INSURANCE COMPANY OF AMERICA

ADMINISTRATIVE OFFICE: 6201 POWERS FERRY ROAD, NW, ATLANTA, GEORGIA 30339

PHONE: 1-800-905-1959

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PROSPECTUS

VARIABLE ANNUITY ACCOUNT 2

FLEXIBLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY

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

This Prospectus describes the flexible premium variable deferred annuity policy
(the "policy") offered by Canada Life Insurance Company of America ("we,"
"our," or "us"), a stock life insurance company domiciled in Michigan which is
a wholly-owned subsidiary of The Canada Life Assurance Company. The policy is
designed for use in connection with retirement plans which may or may not
qualify for special federal income tax treatment.

The owner ("you") may allocate net premiums when paid and policy value among
the ten sub-accounts of the Canada Life of America Variable Annuity Account 2
(the "Variable Account") and the Fixed Account. The Fixed Account is part of
our general account. Assets of each sub-account are invested in a corresponding
portfolio of Seligman Portfolios, Inc. (the "Fund"), a Maryland corporation
that is a diversified open-end investment company which uses the investment
management services of J. & W. Seligman & Co. Incorporated, a Delaware
corporation (the Global and the Global Smaller CompaniesOpportunities
Portfolios use the sub-advisory services of Seligman Henderson Co.
headquartered in New York). The Fund has ten portfolios: Capital; Cash
Management; Common Stock; Fixed Income Securities; Income; Global;
Communications and Information; Frontier; Global Smaller Companies; and
High-Yield Bond. The policy value prior to the annuity date, except for amounts
in the Fixed Account, will vary according to the investment performance of the
portfolio of the Fund in which your elected sub-accounts are invested. You bear
the entire investment risk on amounts allocated to the Variable Account.

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

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

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

The date of this Prospectus is May 1, 1995
<PAGE> 3
TABLE OF CONTENTS

<TABLE>
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PAGE
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<S> <C>
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
TABLE OF EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
CONDENSED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
THE VARIABLE ACCOUNT AND THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Variable Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Capital Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Cash Management Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Common Stock Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Fixed Income Securities Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Income Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Global Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Communications and Information Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Frontier Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Global Smaller Companies Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
High-Yield Bond Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Reserved Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Change in Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DESCRIPTION OF ANNUITY POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Ten Day Right to Examine the Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Initial Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Additional Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Wire Transmittal Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Electronic Data Transmission of Application Information . . . . . . . . . . . . . . . . . . . . 14
Net Premium Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Variable Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Unit Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Net Investment Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Transfer Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Telephone Transfer Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Dollar Cost Averaging Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Restrictions on Transfers From Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Transfer Processing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Payment of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Proceeds on Annuity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Proceeds on Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Proceeds on Death Of Last Surviving Annuitant
Before Annuity Date (The Death Benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Proceeds on Death of Owner Before or After Annuity Date . . . . . . . . . . . . . . . . . . . . 18
Interest on Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Partial Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Systematic Withdrawal Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Payment of Benefits, Partial Withdrawals, Cash Surrenders, & Transfers - Postponement . . . . . 20
Charges Against the Policy, Variable Account, & Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Surrender Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Policy Administration Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Daily Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Transfer Processing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Annualized Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Waiver of Surrender Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Reduction or Elimination of Surrender Charges . . . . . . . . . . . . . . . . . . . . . . . . . 22
Reduction or Elimination of Policy Administration Charge . . . . . . . . . . . . . . . . . . . . 23
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Other Charges Including Investment Management Fees . . . . . . . . . . . . . . . . . . . . . . . 23
Order of Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Payment Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Election of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Excess Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Description of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Age and Survival of Payee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Death of Payee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Other Policy Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Written Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Periodic Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
YIELDS AND TOTAL RETURNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
TAX DEFERRAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
FEDERAL TAX STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
The Company's Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Tax Status of the Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Diversification Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Required Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Taxation of Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Withdrawals/Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Taxation of Death Benefit Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Penalty Tax on Certain Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Transfers, Assignments, or Exchanges of a Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Multiple Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Possible Tax Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Taxation of Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Individual Retirement Annuities and Simplified Employee Pensions (SEP/IRAs) . . . . . . . . . . 32
Corporate and Self-Employed (H.R.10 and Keogh) Pension and Profit-Sharing Plans . . . . . . . . 33
Deferred Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tax-Sheltered Annuity Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Other Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
RESTRICTIONS UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
DISTRIBUTION OF POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
FIXED ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Fixed Account Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
APPENDIX A: STATE PREMIUM TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>

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<PAGE> 4

DEFINITIONS

ADMINISTRATIVE OFFICE: Our office at the address shown on page one of the
Prospectus. This is our mailing address.

ANNUITANT: Any natural person whose life is used to determine the duration of
any payments made under a payment option involving life contingencies. The term
annuitant also includes any co-annuitant, a term used to refer to more than one
annuitant.

ANNUITY DATE: The date when the policy value will be applied under a payment
option, unless you have elected to receive a lump sum payment of the cash
surrender value.

BENEFICIARY: The person to whom we will pay the proceeds payable on your death
or on the death of the last surviving annuitant.

CASH SURRENDER VALUE: The policy value less: 1) any applicable surrender
charge; and 2) the policy administration charge.

CO-ANNUITANT: A term used solely for the purpose of referring to more than one
annuitant. There is no other distinction between the terms annuitant and
co-annuitant. A co-annuitant: 1) is allowed but not required under a
nonqualified policy; and 2) is not allowed under a qualified policy, and any
designation of a co-annuitant under a qualified policy will be of no effect.

COMPANY: Canada Life Insurance Company of America.

DUE PROOF OF DEATH: Proof of death that is satisfactory to us. Such proof may
consist of: 1) a certified copy of the death certificate; or 2) a certified
copy of the decree of a court of competent jurisdiction as to the finding of
death.

EFFECTIVE DATE: The date the policy is effective is the date we accept your
application and apply your initial premium.

FIXED ACCOUNT: This account is part of our general account. This account is
not part of and does not depend on the investment performance of the Variable
Account.

FUND: Seligman Portfolios, Inc., a diversified open-end investment company
that has ten portfolios of shares in which the corresponding sub-accounts of
the Variable Account are invested.

LAST SURVIVING ANNUITANT: The annuitant or co-annuitant that survives the
other.

NET PREMIUMS: The premium paid less any premium tax deducted in the year the
premium is paid.

NONQUALIFIED POLICY: A policy that is not a "qualified" policy under the
Internal Revenue Code of 1986, as amended (the "Code"). However, any increase
in policy value under a nonqualified policy is not taxable to the owner or
annuitant until received (tax deferred), subject to certain exceptions. See
"FEDERAL TAX STATUS" on page 28.

OWNER: The owner is entitled to exercise all rights and privileges provided
the owner in the policy.

PAC: Pre-authorized check, including electronic fund transfers.

POLICY: One of the flexible premium variable deferred annuity policies offered
by this Prospectus.

POLICY VALUE: The sum of the Variable Account value and the Fixed Account
value.

POLICY DATE, YEARS, MONTHS, and ANNIVERSARIES: Are measured from the policy
date shown in the "Policy Details" of the policy.

QUALIFIED POLICY: A policy that is issued in connection with plans that
receive special federal income tax treatment under sections 401, 403(a),
403(b), 408 or 457 of the Code. See "FEDERAL TAX STATUS" on page 28.

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<PAGE> 5

SUB-ACCOUNT: The Variable Account has ten sub-accounts: Capital; Cash
Management; Common Stock; Fixed Income Securities; Income; Global;
Communications and Information; Frontier; Global Smaller Companies; and
High-Yield Bond;. The assets of these sub-accounts are invested in the
corresponding portfolio of the Fund.

UNIT: A unit is a measurement used in the determination of the policy's
Variable Account value before the annuity date.

VALUATION DAY: Each day on which valuation of assets is required by applicable
law, which currently is each day the New York Stock Exchange is open for
trading, except for the business day after Thanksgiving and the business day
after Christmas which are days that we will be closed although the New York
Stock Exchange may be open for trading.

VALUATION PERIOD: The period that starts at the close of business on one
valuation day and ends at the close of business on the next succeeding
valuation day. The close of business is when the New York Stock Exchange closes
(usually at 4:00 P.M. Eastern Time).

VARIABLE ACCOUNT: The Canada Life of America Variable Annuity Account 2, which
is not part of our general account. The Variable Account has ten sub-accounts,
the assets of which are invested in the corresponding portfolio of the Fund.

WE, OUR, and US: Canada Life Insurance Company of America.

WRITTEN NOTICE: See the "Written Notice" provision on page 26 in the "Other
Policy Provisions" section of this Prospectus.

YOU or YOUR: The owner. See the definition of "owner" above.

SUMMARY

TEN DAY RIGHT TO EXAMINE POLICY

You have ten days after you receive the policy to decide if the policy meets
your needs (except in California you have 30 days if the Owner is age 60 or
over, and in Idaho and North Dakota you have 20 days), and if the policy does
not meet your needs to return the policy to our Administrative Office. We will
promptly return either the Policy Value (where allowed by law); or in states
which do not allow return of Policy Value, we will return the full premium
paid, without interest and less the amount of any partial withdrawals, within
seven days. When the policy is issued as an Individual Retirement Annuity,
during the first seven days of the ten day period, we will return all premiums
if this is greater than the amount otherwise payable.

PREMIUMS

The minimum initial premium is $5,000 ($2,000 if the Policy is an Individual
Retirement Annuity, but we reserve the right to lower or raise the minimum
premium for IRAs). However, the minimum initial premium is $100 ($50 if the
policy is an Individual Retirement Annuity) if submitted with a pre-authorized
check ("PAC") agreement. You may make additional premium payments during the
annuitant's lifetime and before the annuity date. The minimum additional
premium is $1,000, or $100 per month if paid by PAC (or $50 per month if paid
by PAC if the Policy is an Individual Retirement Annuity). Our prior approval
is required before your total premiums paid exceed $1,000,000. You may
allocate your net premiums among the sub-accounts of the Variable Account and
the Fixed Account. Allocate the premiums by using whole percentages not less
than 10%. See "Premiums" on page 13.

THE VARIABLE ACCOUNT

The Variable Account is a separate investment account consisting of ten
sub-accounts. The policy value before the annuity date, except for amounts in
the Fixed Account, will vary according to the investment performance of the
portfolios of the Fund in which your elected sub-accounts are invested. See
"The Variable Account" on page 14.

THE FUND

The assets of each sub-account are invested in the corresponding portfolios of
the Fund. The Fund currently has ten portfolios: Capital; Cash Management;
Common Stock; Fixed Income Securities; Income; Global; Communications and

4
<PAGE> 6

Information; Frontier; Global Smaller Companies (formerly known as Global
Emerging Companies); and High-Yield Bond. The Fund is a diversified, open-end
investment company. See "The Fund" on page 11.

THE FIXED ACCOUNT

The Fixed Account is not part of and does not depend on the investment
performance of the Variable Account. We credit interest to amounts in the Fixed
Account at a guaranteed minimum rate of 3% per annum, and we may credit a
higher current interest rate. See "Fixed Account" on page 36.

TRANSFERS

You may transfer all or part of an amount in a sub-account or the Fixed Account
to another sub-account(s) or the Fixed Account, subject to certain
restrictions. See "Transfers" on page 15.

DEATH BENEFIT

If we receive due proof of death of the last surviving annuitant before the
annuity date ("such due proof"), we will pay the beneficiary a death benefit.

If we receive such due proof during the first seven policy years, the
death benefit is the greater of:

1. the premiums paid, less: a) any partial withdrawals,
including applicable surrender charges; and b) any
incurred taxes; or
2. the policy value on the date we receive such due
proof.

If we receive such due proof after the first seven policy years, the
death benefit is the greatest of:

1. item "1." above; or
2. item "2." above; or
3. the policy value at the end of the most recent 7
policy year period preceding the date we receive such
due proof, adjusted for any of the following items
that occur after such last 7 policy year period: a)
less any partial withdrawals, including applicable
surrender charges; b) less any incurred taxes; and c)
plus any premiums paid. The 7 policy year periods are
measured from the policy date (i.e., 7, 14, 21, 28,
etc.). For policies issued May 1, 1995, or such later
date as applicable regulatory approvals are obtained
in the jurisdiction in which the contracts are
offered, no further step-ups in Death Benefits will
occur after the age of 80.

No death benefit is payable if the policy is surrendered before the last
surviving annuitant's death.

See "Proceeds on Death of Last Surviving Annuitant Before Annuity Date" on page
17.

PARTIAL WITHDRAWALS AND CASH SURRENDERS

You may withdraw part or all of the cash surrender value at any time before the
earlier of the death of the last surviving annuitant or the annuity date,
subject to certain limitations. See "Partial Withdrawals" on page 18 and
"Proceeds on Surrender" on page 17. Partial withdrawals and cash surrenders may
be subject to federal income tax, including a penalty tax. See "Federal Tax
Status" on page 28.

POLICY CHARGES

No deduction for a sales charge is made when premiums are paid. However, a
surrender charge (contingent deferred sales charge) will be deducted when
certain partial withdrawals and cash surrenders are made. For the purpose of
determining if any surrender charge applies and the amount of such charge,
partial withdrawals and surrenders are taken according to these rules from
policy value attributable to premiums or investment earnings in the following
order:

5
<PAGE> 7

<TABLE>
<CAPTION>
SURRENDER CHARGE
----------------
<S> <C> <C>
1. Up to 100% of positive investment earnings of each variable sub-account available
at the time the request is made, once a policy year, PLUS . . . . . . . . . . . . . . . . . . . . . . . None
2. Up to 100% of current policy year's interest on the FIXED ACCOUNT at the time the
request for surrender/withdrawal is made, once a policy year, PLUS . . . . . . . . . . . . . . . . . . . None
3. Up to 10% of total premiums STILL SUBJECT TO A SURRENDER CHARGE, once a policy
year, PLUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
4. Up to 100% of those premiums NOT SUBJECT TO A SURRENDER CHARGE, available
at any time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
5. Premiums subject to a surrender charge:
Policy Years Since Premium Was Paid
Less than 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
At least 1, but less than 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
At least 2, but less than 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
At least 3, but less than 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
At least 4, but less than 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
At least 5, but less than 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
At least 6, but less than 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
At least 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>

See "Surrender Charge" on page 20.

We deduct a policy administration charge of $30 for the prior policy year on
each policy anniversary. We will also deduct this charge for the current policy
year if the policy is surrendered for its cash surrender value, unless the
surrender occurs on the policy anniversary. See "Policy Administration Charge"
on page 21.

At each valuation period, we also deduct a daily administration fee at an
effective annual rate of 0.35% from the assets of the Variable Account. See
"Daily Administration Fee" on page 21.

The first 12 transfers during each policy year are free under our current
Company policy, which we reserve the right to change. If our current policy
changes, we guarantee that we will provide at least four free transfers during
each policy year. We assess a $25 transfer fee for each additional transfer.
See "Transfer Processing Fee" on page 21.

We deduct a mortality and expense risk charge at each valuation period from the
assets of the Variable Account at an effective annual rate of 1.25%. This
charge is not made after the annuity date, or against any amounts in the Fixed
Account before the annuity date. See "Annualized Mortality and Expense Risk
Charge" on page 22.

We will incur premium taxes in some jurisdictions relating to the policies.
Depending on the jurisdiction, we deduct any such taxes from either: a) the
premium when paid; or b) the policy value when it is applied under a payment
option, cash surrender value or partial withdrawal. See "Taxes" on page 23.

Each portfolio of the Fund in which the Variable Account invests is responsible
for its own expenses. In addition, charges for investment management services
are charged daily from each portfolio of the Fund as a percentage of the
average net assets of the portfolios, as follows: 0.40% for Capital, Cash
Management (currently waived), Common Stock, Fixed Income Securities, and
Income; 0.75% for Communications and Information, and Frontier; 1.00% for
Global, and Global Smaller Companies; and 0.50% for High-Yield Bond. See "Other
Charges Including Investment Management Fees" on page 23 and the attached
"PROSPECTUS FOR THE FUND."

LOANS

6
<PAGE> 8

ANNUITY DATE AND PAYMENT OPTIONS

On the annuity date, we will apply the policy value under a payment option,
unless you have elected to receive the cash surrender value. Payments under
these payment options do not depend on the Variable Account's performance. The
payment options are: 1) payments of interest; 2) payments of a specified
amount; 3) payments for a fixed period; 4) life income; 5) joint life income;
and 6) mutual agreement. See "Payment Options" on page 24.

OTHER POLICY PROVISIONS

For information concerning the owner, beneficiary, written notice, periodic
policy reports, assignment, and modification see "Other Policy Provisions" on
page 25.

FEDERAL TAX STATUS

For a brief discussion of our current understanding of the federal tax laws
concerning us and the annuity policies we issue see "Federal Tax Status" on
page 28.

QUESTIONS

We will be happy to answer your questions about the policy or our procedures.
Call or write to us at the phone number or address on page one. All inquiries
should include the policy number, and the names of the owner and the annuitant.

TABLE OF EXPENSES

EXPENSE DATA

The following information regarding expenses assumes that the entire policy
value is in the Variable Account.
<TABLE>
<S> <C>
POLICYOWNER TRANSACTION EXPENSES

Sales load on purchase payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None

Maximum contingent deferred sales charge as a percentage of amount surrendered
(10% of total premiums still subject to a surrender charge are free of any sales load.
See "Policy Charges" on page 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.00%

Transfer fee
Current policy - First 12 transfers each policy year: . . . . . . . . . . . . . . . . . . . . No fee
Guarantee - First 4 transfers each policy year: . . . . . . . . . . . . . . . . . . . . . . . No fee
Each transfer thereafter: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25

POLICY ADMINISTRATION CHARGE
Per policy per policy year: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30

VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of account value)
Mortality and expense risk charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25%
Effective annual rate of daily administration fee . . . . . . . . . . . . . . . . . . . . . . . . . . 0.35f%
Total Variable Account annual expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.60%
</TABLE>

SELIGMAN PORTFOLIOS, INC. (THE "FUND")
ANNUAL EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT AFTER EXPENSE TOTAL ANNUAL
FEES REIMBURSEMENT* EXPENSES
---------- -------------- ------------
<S> <C> <C> <C>
Capital 0.40% 0.20% 0.60%
Cash Management 0.00% 0.00% 0.00%
</TABLE>

7
<PAGE> 9

<TABLE>
<S> <C> <C> <C>
Common Stock 0.40% 0.20% 0.60%
Fixed Income Securities 0.40% 0.20% 0.60%
Income 0.40% 0.20% 0.60%
Global 1.00% 0.40% 1.40%
Communications and Information 0.75% 0.20% 0.95%
Frontier 0.75% 0.20% 0.95%
Global Smaller Companies 1.00% 0.40% 1.40%
High-Yield Bond 0.50% 0.20% 0.70%
</TABLE>

* The above table is intended to assist the policyowner in understanding
the costs and expenses that will be borne, under the policy, directly
or indirectly. These include the expenses of the Fund. The 0.00%
following "Management Fees" under Cash Management is based on the fact
that the Manager, in its sole discretion, waived its fee of 0.40%
during 1994, and voluntarily has agreed in 1995 to waive this fee.
There is no assurance that the Manager will continue this policy in
the future. In the event that this waiver is discontinued, this will
be reflected in an updated prospectus. With respect to all portfolios
of the Fund except Global and Global Smaller Companies, the 0.20%
(0.00% under Cash Management) listed following "Other expenses after
expense reimbursement" is based on the fact that the Fund expenses,
other than the management fee, exceeding 0.20% (0.00% under Cash
Management) will be reimbursed by the Fund's Manager by voluntary
agreement of the Manager. There is no assurance that the Manager will
continue this policy in the future. With respect to Global and Global
Smaller Companies for the year/period ended December 31, 1994, the
Sub-Advisor voluntarily agreed to reimburse certain annual expenses
(other than the management fee) that exceeded 0.20% of average net
assets and will continue to do so for the period prior to May 1, 1995.
Effective May 1, 1995, the Sub-Advisor has agreed to reimburse annual
expenses (other than the management fee) that exceed 0.40% of average
net assets. There is no assurance that the Manager and the Sub-Advisor
will continue this policy in the future. In the event that any of
these waivers and reimbursements are discontinued, this will be
reflected in an updated prospectus. Absent such a reimbursement, the
Fund's "Other Expenses" would be higher, and during 1994 would have
been: Capital 0.56%; Cash Management 1.48%; Common Stock 0.22%; Fixed
Income Securities 0.91%; Income 0.37%; Global 5.12%; Communications
and Information 13.21%; Frontier 39.72%; Global Smaller Companies
36.25%. The High-Yield Bond Portfolio had not commenced operations
on December 31, 1994. The Communications and Information, Frontier and
Global Smaller Companies commenced operations on October 11, 1994.

The data with respect to the Fund's annual expenses have been provided to us by
the Fund and we have not independently verified such data.

See "Charges Against the Policy, Variable Account, and Fund," page 20, and the
Prospectus for the Fund. In addition to the expenses listed above, premium
taxes may be applicable, which currently range between 0.5% to 3.5%, according
to the jurisdiction. In many jurisdictions, there is no tax at all. See
Appendix A, State Premium Taxes.

EXAMPLES

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

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

<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Capital $77 $114 $146 $255
Cash Management $70 $ 96 $115 $192
Common Stock $77 $114 $146 $255
Fixed Income Securities $77 $114 $146 $255
Income $77 $114 $146 $255
Global $84 $138 $186 $334
Communications and Information $80 $125 $164 $290
Frontier $80 $125 $164 $290
Global Smaller Companies $84 $138 $186 $334
High-Yield Bond $78 $117 $151 $266
</TABLE>

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

<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Capital $23 $69 $119 $255
</TABLE>

8
<PAGE> 10

<TABLE>
<S> <C> <C> <C> <C>
Cash Management $16 $51 $ 88 $192
Common Stock $23 $69 $119 $255
Fixed Income Securities $23 $69 $119 $255
Income $23 $69 $119 $255
Global $30 $93 $159 $334
Communications and Information $26 $80 $136 $290
Frontier $26 $80 $136 $290
Global Smaller Companies $30 $93 $159 $334
High-Yield Bond $24 $72 $124 $266
</TABLE>

The examples provided above assume that no transfer charges have been assessed.
The examples also reflect a policy administration charge of 0.02% of assets,
determined by dividing the total policy administration charge collected by the
total average net assets of the sub-accounts of the Variable Account.

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

CONDENSED FINANCIAL INFORMATION

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

The table below sets forth certain information regarding the sub-accounts for a
policy for the period from commencement of business operations on June 21, 1993
through December 31, 1994. Accumulation Unit Values will not be provided for
any date prior to the inception of the separate account. The Communications and
Information, Frontier and Global Smaller Companies commenced operations on
October 11, 1994. No condensed financial information is shown for the
High-Yield Bond Sub-Account since this portfolio had not commenced operations
on December 31, 1994.

ACCUMULATION UNIT VALUE
<TABLE>
<CAPTION>
AS OF AS OF AS OF DATE OF
SUB-ACCOUNT 12/31/94 12/31/93 INCEPTION 6/21/93
----------- -------- -------- -----------------
<S> <C> <C> <C>
Capital 18.2918 19.6172 17.5309
Cash Management 1.2485 1.2207 1.2169
Common Stock 18.5345 18.7397 17.3783
Fixed Income Securities 13.1729 13.8444 13.5230
Income 15.6909 16.9728 16.2960
Global 11.2629 11.3350 9.9778
Communications and Information 10.4007 *
Frontier 10.5399 *
Global Smaller Companies 10.3193 *

NUMBER OF UNITS OUTSTANDING
AT END OF PERIOD
AS OF AS OF
SUB-ACCOUNT 12/31/94 12/31/93
----------- -------- --------
Capital 62,358 4,660
Cash Management 434,226 56,138
Common Stock 127,570 35,206
Fixed Income Securities 64,614 15,084
Income 124,878 27,474
Global 150,440 47,001
Communications and Information 47,541 *
Frontier 11,609 *
Global Smaller Companies 12,740 *
</TABLE>

9
<PAGE> 11

* The Accumulation Unit Value for the Communications and Information,
Frontier and Global Smaller Companies Sub-Accounts' first valuation
period was set at $10. Since these Sub-Accounts were not in existence
in 1993, there were no outstanding units to report at the end of the
period December 31, 1993.

THE COMPANY

Canada Life Insurance Company of America ("we," "our," and "us") is a stock
life insurance company with assets as of December 31, 1994 of approximately
$2.2 billion. We were incorporated under Michigan law on April 12, 1988, and
our administrative office is located at 6201 Powers Ferry Road, NW, Atlanta,
Georgia 30339. We currently are principally engaged in issuing and reinsuring
annuity policies.

We share our A.M. Best rating with our parent company, The Canada Life
Assurance Company. From time to time, we will quote this rating, our rating
from Standard & Poor's Corporation, Duff & Phelps Inc., and/or Moody's
Investors Service for claims paying ability. These ratings address the
financial ability of these companies to meet their contractual obligations in
accordance with the terms of their insurance contracts. They do not take into
account deductibles, surrender or cancellation penalties, or timeliness of
claim payment, nor do they address the suitability of the policy for a
particular purchaser. Also, these evaluations do not refer to the ability of
these companies to meet non-policy obligations.

We are a wholly-owned subsidiary of The Canada Life Assurance Company, a
Canadian life insurance company headquartered in Toronto, Ontario, Canada, with
a U.S. home office in Atlanta, Georgia. The Canada Life Assurance Company:
commenced insurance operations in 1847, and has been actively operating in the
United States since 1889; and is one of the largest life insurance companies in
North America with consolidated assets as of December 31, 1994 of approximately
$17.8 billion (U.S. dollars).

Obligations under the policies are obligations of Canada Life Insurance Company
of America.

We are subject to regulation and supervision by the Michigan Insurance Bureau,
as well as the applicable laws and regulations of all jurisdictions in which we
are authorized to do business.

THE VARIABLE ACCOUNT AND THE FUND

THE VARIABLE ACCOUNT

We established the Canada Life of America Variable Annuity Account 2 (the
"Variable Account") as a separate investment account on October 30, 1992, under
Michigan law. Although we own the assets in the Variable Account, these assets
are held separately from our other assets and are not part of our general
account. The income, gains or losses, whether or not realized, from the assets
of the Variable Account are credited to or charged against the Variable Account
in accordance with the policies without regard to our other income, gains or
losses.

The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be charged with
liabilities that arise from any other business that we conduct and will be held
in the Variable Account. We have the right to transfer to our general account
any assets of the Variable Account which are in excess of such reserves and
other liabilities.

The Variable Account is registered with the Securities and Exchange Commission
(the "SEC") as a unit investment trust under the Investment Company Act of 1940
(the "1940 Act") and meets the definition of a "separate account" under the
federal securities laws. A unit investment trust is a type of investment
company that invests its assets in specified securities, such as the shares of
one or more investment companies. Registration under the 1940 Act does not
involve the supervision by the SEC of the management or investment policies or
practices of the Variable Account.

The Variable Account has ten sub-accounts: Capital; Cash Management; Common
Stock; Fixed Income Securities; Income; Global; Communications and Information;
Frontier; Global Smaller Companies; and High-Yield Bond. The assets of each
sub-account are invested in shares of the corresponding portfolio of the Fund.

10
<PAGE> 12

THE FUND

Seligman Portfolios, Inc. (the "Fund") currently has ten portfolios: Capital;
Cash Management; Common Stock; Fixed Income Securities; Income; Global;
Communications and Information; Frontier; Global Smaller Companies; and
High-Yield Bond. Shares of a portfolio are purchased and redeemed for a
corresponding sub-account at their net asset value. Any amounts of income,
dividends and gains distributed from the shares of a portfolio will be
reinvested in additional shares of that portfolio at their net asset value.
The Fund Prospectus defines the net asset value of portfolio shares.

The Fund is a diversified open-end investment company incorporated in Maryland
which uses the investment management services of J. & W. Seligman & Co.
Incorporated, a Delaware corporation (the Global and Global Smaller Companies
Portfolios use the sub-advisory services of Seligman Henderson Co.
headquartered in New York). The following is a brief description of the
investment objectives of each of the current portfolios of the Fund. There is,
of course, no assurance that the investment objective of any portfolios will be
achieved. The following brief descriptions are qualified in their entirety by
the more detailed information appearing in the attached Prospectus for the Fund.

SELIGMAN CAPITAL PORTFOLIO

The investment objective of this Portfolio is to produce capital appreciation,
not current income, by investing in common stocks (primarily those with strong
near or intermediate-term prospects) and securities convertible into or
exchangeable for common stocks, in common stock purchase warrants, in debt
securities and in preferred stocks believed to provide capital appreciation
opportunities.

SELIGMAN CASH MANAGEMENT PORTFOLIO

The investment objective of this Portfolio is to preserve capital and to
maximize liquidity and current income by investing in a diversified portfolio
of high-quality money market instruments. Investments in this Portfolio are
neither insured nor guaranteed by the U.S. Government and there is no assurance
that this Portfolio will be able to maintain a stable net asset value of $1.00
per share.

SELIGMAN COMMON STOCK PORTFOLIO

The investment objective of this Portfolio is to produce favorable, but not the
highest, current income and long-term growth of both income and capital value,
without exposing capital to undue risk, primarily through equity investments
broadly diversified over a number of industries.

SELIGMAN FIXED INCOME SECURITIES PORTFOLIO

The investment objective of this Portfolio is to achieve favorable current
income by investing in a diversified range of debt securities, primarily of
investment grade, including convertible issues and preferred stock, with
capital appreciation as a secondary consideration.

SELIGMAN INCOME PORTFOLIO

The investment objective of this Portfolio is primarily to produce high current
income consistent with what is believed to be prudent risk of capital and
secondarily to provide the possibility of improvement in income and capital
value over the longer term, by investing primarily in income-producing
securities.

SELIGMAN HENDERSON GLOBAL PORTFOLIO

The investment objective of this Portfolio is long-term capital appreciation
primarily through global investments in securities of medium-to-large sized
companies.

SELIGMAN COMMUNICATIONS AND INFORMATION PORTFOLIO

The investment objective of this Portfolio is to produce capital gain. Income
is not an objective. The Portfolio seeks to achieve its objective by investing
primarily in securities of companies operating in the communications,
information and related industries.

11
<PAGE> 13

SELIGMAN FRONTIER PORTFOLIO

The investment objective of this Portfolio is to produce growth in capital
value; income may be considered but will be only incidental to the Portfolio's
investment objective. In general, securities owned are likely to be those
issued by small-to-medium sized companies selected for their growth prospects.

SELIGMAN HENDERSON GLOBAL SMALLER COMPANIES PORTFOLIO

The investment objective of this Portfolio is long-term capital appreciation
primarily through global investments in securities of companies with
small-to-medium market capitalizations.

SELIGMAN HIGH-YIELD BOND PORTFOLIO

The investment objective of this Portfolio is to produce current income. The
Series seeks to achieve its objective by investing primarily in high-yielding,
high risk corporate bonds and corporate notes, which, generally, are unrated or
carry ratings lower than those assigned to investment grade bonds by Standard &
Poor's Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"). An
investment in the Series is appropriate for you only if you can bear the high
risk inherent in investing in such securities. This risk is described in the
attached Prospectus for the Fund, which should be read carefully before
investing.

Since the Fund may be available to other separate accounts, including
registered separate accounts for variable annuity and variable life products,
and non-registered separate accounts for group annuity products, of Canada Life
Insurance Company of America, Canada Life Insurance Company of New York, The
Canada Life Assurance Company, and other unaffiliated insurance companies, it
is possible that material conflicts may arise between the interests of the
Variable Account and one or more other separate accounts investing in the Fund.
The Fund's board of directors, the Fund's investment manager, and we and any
other insurance companies participating in the Fund will monitor events to
identify any irreconcilable material conflict. Upon being advised of such a
conflict, we will take any steps we believe necessary to resolve the matter,
including removing the assets of the Variable Account from one or more series.

A FULL DESCRIPTION OF THE FUND, ITS INVESTMENT OBJECTIVES, ITS POLICIES AND
RESTRICTIONS, ITS EXPENSES AND OTHER ASPECTS OF ITS OPERATION, AS WELL AS A
DESCRIPTION OF THE RISKS RELATED TO INVESTMENT IN THE FUND IS CONTAINED IN THE
ATTACHED PROSPECTUS FOR THE FUND. THE PROSPECTUS FOR THE FUND SHOULD BE READ
CAREFULLY BY A PROSPECTIVE PURCHASER ALONG WITH THIS PROSPECTUS.

RESERVED RIGHTS

We reserve the right to substitute shares of another portfolio of the Fund or
shares of another registered open-end investment company if, in the judgment of
our management, investment in shares of one or more portfolios is no longer
appropriate for any legitimate reason, including: a change in investment
policy; or a change in the tax laws; or the shares are no longer available for
investment. However, we will obtain the approval of the SEC before we make a
substitution of shares, if such approval is required by law.

When permitted by law, we also reserve the right to: create new variable
accounts; combine variable accounts, including the Canada Life of America
Variable Annuity Account 2; remove, combine or add sub-accounts and make the
new sub-accounts available to policyowners at our discretion; add new
portfolios of the Fund or of other registered investment companies; deregister
the Variable Account under the 1940 Act if registration is no longer required;
make any changes required by the 1940 Act; and operate the Variable Account as
a managed investment company under the 1940 Act or any other form permitted by
law.

If a change is made, we will send you a revised Prospectus and any notice
required by law.

CHANGE IN INVESTMENT POLICY

The investment policy of a sub-account of the Variable Account may not be
changed unless: the change is approved, if required, by the Michigan Insurance
Bureau; and a statement of such approval is filed, if required, with the
insurance department of the state in which the policy is delivered.

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<PAGE> 14

DESCRIPTION OF ANNUITY POLICY

TEN DAY RIGHT TO EXAMINE POLICY

PREMIUMS

INITIAL PREMIUM

An applicant must submit a properly completed application along with a check
made payable to us for the initial premium. The minimum initial premium is
$5,000 ($2,000 if the Policy is an Individual Retirement Annuity, but we
reserve the right to lower or raise the minimum premium for IRAs). However, the
minimum initial premium is $100 ($50 if the Policy is an Individual Retirement
Annuity) when an applicant has enclosed a completed pre-authorized check
("PAC") agreement for additional premiums to be automatically withdrawn monthly
from the owner's bank account.

The application is subject to our underwriting standards. If the application is
properly completed and is accompanied by all the information necessary to
process it, including the initial premium, we will normally accept the
application and apply the initial net premium within two valuation days of
receipt at our Administrative Office. However, we may retain the premium for up
to five valuation days while we attempt to complete the processing of an
incomplete application. If this cannot be achieved within five valuation days,
we will inform the applicant of the reasons for the delay and immediately
return the premium, unless the applicant specifically consents to our retaining
the premium until the application is made complete. If the applicant consents
to our retaining the premium, we will apply the initial net premium within two
valuation days of when the application is complete.

ADDITIONAL PREMIUMS

The minimum additional premium is $1,000. However, the minimum additional
premium paid by PAC is $100 per month ($50 per month if the policy is an
Individual Retirement Annuity). We will apply additional net premiums as of
receipt at our Administrative Office.

You may make additional premium payments at any time during any annuitant's
lifetime and before the annuity date. Our prior approval is required before we
will accept an additional premium which, together with the total of other
premiums paid, would exceed $1,000,000. We will give you a receipt for each
additional premium payment.

WIRE TRANSMITTAL PRIVILEGE

If a written agreement between us and broker/dealers who use wire transmittals
is in effect, as a privilege to you we will accept transmittal of the initial
and/or additional premiums by wire order from the broker/dealer to our
designated financial institution. A copy of such transmittal must be
simultaneously sent to our Administrative Office via a telephone facsimile
transmission that also contains the essential information we require to begin
application processing and/or to allocate the net premium. We will normally
apply the initial net premium within two valuation days of receipt at our
Administrative Office of the facsimile transmission that contains a copy of the
wire order and such required essential information. We may retain such wire
orders for up to five valuation days while an attempt is made to obtain such
required information that we do not receive via such facsimile transmission.
If such required information is not obtained within five valuation days, we will
inform the broker/dealer, on behalf of the applicant, of the reasons for the
delay and immediately return the premium wired to us to the broker/dealer who
will return the full premium paid to the applicant, unless we receive within
such five valuation days the applicant's specific written consent to our
retaining the premium until we receive such required information via facsimile
transmission.

13
<PAGE> 15

Our acceptance of the wire order and facsimile does not create a contractual
obligation with us until we receive and accept a properly completed original
application. If we do not receive a properly completed original application
within ten valuation days of receipt of the initial wire order premium, we will
return the premium wired to us to the broker/dealer who will return the full
premium paid to the applicant. If the allocation instructions in the properly
completed original application are inconsistent with such instructions
contained in the facsimile transmission, the policy value will be reallocated
in accordance with the allocation instructions in the application at the price
which was next determined after receipt of the wire order.

ELECTRONIC DATA TRANSMISSION OF APPLICATION INFORMATION

In certain states, we will also accept, by agreement with broker-dealers who
use electronic data transmissions of application information, wire transmittals
of initial premium payments from the broker-dealer to the Company for purchase
of the policy. Contact us to find out about state availability.

Upon receipt of the electronic data and wire transmittal, we will process the
information and allocate the premium payment according to the policyowner's
instructions. Based on the information provided, we will generate a policy and
a verification letter to be forwarded to the policyowner for signature.

During the period from receipt of the initial premium until the signed
verification letter is received, the policyowner may not execute any financial
transactions with respect to the policy unless such transactions are requested
in writing by the owner and signature guaranteed.

NET PREMIUM ALLOCATION

You elect in your application how you want your initial net premium to be
allocated among the sub-accounts and the Fixed Account. Any additional net
premiums will be allocated in the same manner, unless at the time of payment we
have received your written notice to the contrary. The amount of net premium to
be allocated to each elected sub-account and the Fixed Account must be a whole
percentage of not less than 10%. The total allocation must equal 100%. At
anytime, net premiums may be allocated in up to five sub-accounts if no amount
is in the Fixed Account, or in up to four sub-accounts if an amount is in the
Fixed Account.

We cannot guarantee that a sub-account or shares of a portfolio will always be
available. If you request that all or part of a premium be allocated to a
sub-account at a time when the sub-account or underlying portfolio is not
available, we will immediately return that portion of the premium to you,
unless you specify otherwise.

TERMINATION

We may pay you the cash surrender value and terminate the policy if before the
annuity date all of these events simultaneously exist:

1. you have not paid any premiums for at least two years;
2. the policy value is less than $2,000; and
3. the total premiums paid, less any partial withdrawals, is less
than $2,000.

We will mail you a notice of our intention to terminate this policy at least
six months in advance. The policy will automatically terminate on the date
specified in the notice, unless we receive an additional premium before the
termination date specified in the notice. This additional premium must be at
least the minimum amount specified in "Additional Premiums."

VARIABLE ACCOUNT VALUE

The Variable Account value before the annuity date is determined by multiplying
the number of units credited to this policy for each sub-account by the current
unit value of these units.

UNITS

We credit net premiums in the form of units. The number of units credited to
the policy for each sub-account is determined by dividing the net premium
allocated to that sub-account by the unit value for that sub-account at the end
of the valuation period during which we receive the premium at our
Administrative Office.

14
<PAGE> 16

We will credit units for the initial net premium on the effective date of the
policy. We will adjust the units for any transfers in or out of a sub-account,
including any transfer processing fee.

We will cancel the appropriate number of units based on the unit value at the
end of the valuation period in which any of the following events occur: the
policy administration charge is assessed; the date we receive and file your
written notice for a partial withdrawal or surrender; the date of a systematic
withdrawal; the annuity date; or the date we receive due proof of your death or
the last surviving annuitant's death.

UNIT VALUE

The unit value for each sub-account's first valuation period is set at $10,
except the Cash Management sub-account which is set at $1. The unit value for
each subsequent valuation period is determined by multiplying the unit value at
the end of the immediately preceding valuation period by the net investment
factor for the valuation period for which the value is being determined.

The unit value for a valuation period applies to each day in that period. The
unit value may increase or decrease from one valuation period to the next.

NET INVESTMENT FACTOR

The net investment factor is an index that measures the investment performance
of a sub-account from one valuation period to the next. Each sub-account has a
net investment factor, which may be greater than or less than one.

The net investment factor for each sub-account for a valuation period equals 1
plus the rate of return earned by the relevant portfolio of the Fund, adjusted
for the effect of taxes charged or credited to the sub-account, the mortality
and expense risk charge, and the daily administration fee.

The rate of return of the relevant portfolio is equal to the fraction obtained
by dividing (a) by (b) where:

(a) is the net investment income and net gains, realized and
unrealized, credited during the current valuation period; and
(b) is the value of the net assets of the relevant portfolio at
the end of the preceding valuation period, adjusted for the
net capital transactions and dividends declared during the
current valuation period.

TRANSFERS

TRANSFER PRIVILEGE

You may transfer all or a part of an amount in the sub-account(s) to another
sub-account(s) or to the Fixed Account, or transfer a part of an amount in the
Fixed Account to the sub-account(s), subject to these general restrictions and
the additional restrictions in "Restrictions On Transfers From Fixed Account":

1. the Company's minimum transfer amount, currently $250;
2. a transfer request that would reduce the amount in that
sub-account or the Fixed Account below $500 will be treated as
a transfer request for the entire amount in that sub-account
or the Fixed Account; and
3. at anytime, amounts may be allocated in up to five
sub-accounts if no amount is in the Fixed Account, or in up to
four sub-accounts if an amount is in the Fixed Account. A
transfer request beyond this limitation will not be processed.

We cannot guarantee that a sub-account or shares of a portfolio will always be
available. If you request an amount in a sub-account or Fixed Account be
transferred to a sub-account at a time when the sub-account or underlying
portfolio is unavailable, we will not process your transfer request, and this
request will not be counted as a transfer for purposes of determining the
number of free transfers executed. The Company reserves the right to change its
minimum transfer amount requirements.

15
<PAGE> 17

TELEPHONE TRANSFER PRIVILEGE

You may direct us to act on transfer instructions given by telephone, subject
to our procedures, by initialing the authorization on the application or by
subsequently completing our administrative form. The authorization will
continue in effect until we receive your written revocation or we discontinue
this privilege. We reserve the right to change our procedures and to
discontinue this privilege.

We will employ reasonable procedures to confirm that instructions communicated
by telephone are genuine. If we do not employ such reasonable procedures, we
may be liable for any losses due to unauthorized or fraudulent instructions.
These procedures may include, but are not limited to, possible recording of
telephone calls and obtaining appropriate personal security codes and contract
number before effecting any transfers.

DOLLAR COST AVERAGING PRIVILEGE ("DCA")

You may elect to have us automatically transfer specified amounts from any
sub-account to another sub-account(s) or the Fixed Account on a periodic basis,
subject to our administrative procedures and the restrictions in "Transfer
Privilege" above. This privilege is intended to allow you to utilize "Dollar
Cost Averaging," a long-term investment method which provides for regular,
level investments over time. We make no representation or guarantee that DCA
will result in a profit or protect against loss.

To initiate DCA, we must receive your written notice on our form. You may
transfer amounts FROM ANY ONE of the variable sub-accounts TO ANY OF THE OTHER
variable sub-accounts and/or Fixed Account.

Once elected, such transfers will be processed until the entire value of the
sub-account is completely depleted; or we receive your written revocation of
such monthly transfers; or we discontinue this privilege. We reserve the right
to change our procedures or to discontinue the DCA privilege upon 30 days
written notice to you.

RESTRICTIONS ON TRANSFERS FROM FIXED ACCOUNT

You may transfer a part of an amount in the Fixed Account to the sub-account(s)
of the Variable Account, subject to these additional restrictions:

1. we allow only one transfer each year and this transfer must be
within the period that is 30 days before and 30 days after the
policy anniversary, and an unused transfer option does not
carry over to the next year; and
2. the maximum transfer amount is 50% of the Fixed Account value
on the date of the transfer, unless the balance after the
transfer is less than $5,000, in which case you have the
option to transfer the entire value.

Under our current procedures, the transfer will be made on the valuation date
that occurs on or next following the date we receive your transfer request at
our Administrative Office.

TRANSFER PROCESSING FEE

There is no limit to the number of transfers that you can make between
sub-accounts or to the Fixed Account. However, we only allow one transfer each
year from the Fixed Account (see "Restrictions On Transfers From Fixed Account"
on page 16). The first 12 transfers during each policy year are free under our
current policy, which we reserve the right to change. If our current policy
changes, we guarantee that we will provide at least four free transfers during
each policy year. Any unused free transfers do not carry over. We will assess
a $25 processing fee for each additional transfer. For the purposes of
assessing the fee, each transfer request (which includes a written notice or
telephone call, but does not include dollar cost averaging automatic transfers)
is considered to be one transfer, regardless of the number of sub-accounts or
the Fixed Account affected by the transfer. The processing fee will be charged
proportionately to the receiving sub-account(s) and/or the Fixed Account.

PAYMENT OF PROCEEDS

PROCEEDS

Proceeds means the amount we will pay under your policy when the first of the
following events occurs: the annuity date; or the policy is surrendered; or we
receive due proof of death of the last surviving annuitant or the owner. We
will pay

16
<PAGE> 18

any proceeds in a single sum that may be payable due to death before the
annuity date, unless an election is made for a payment option. See "Election Of
Options" on page 24. The policy ends when we pay the proceeds.

We will deduct any applicable premium tax from the proceeds described below,
unless we deducted the tax from the premiums when paid.

PROCEEDS ON ANNUITY DATE

If you have elected to receive the proceeds in a lump sum, the proceeds we will
pay is the policy value, which we will apply under a payment option on the
annuity date. See "Payment Options" on page 24. If the proceeds are paid in a
lump sum on the annuity date, we will pay the cash surrender value.

You may change the annuity date, subject to these limitations:

1. we must receive your written notice at our Administrative
Office at least 30 days before the current annuity date;
2. the requested annuity date must be a date that is at least 30
days after we receive your written notice; and
3. the requested annuity date should be no later than the first
day of the month following the annuitant's 85th birthday or
ten years after the Effective Date; whichever is later, or any
earlier date required by law.

PROCEEDS ON SURRENDER

If you surrender the policy before the annuity date, the proceeds we will pay
is the cash surrender value. The cash surrender value is the policy value, less
any applicable surrender charge. The cash surrender value will be determined on
the date we receive your written notice for surrender and this policy at our
Administrative Office.

You may surrender the policy for its cash surrender value at any time before
the earlier of the death of the last surviving annuitant or the annuity date.
However, the surrender proceeds may be subject to federal income tax, including
a penalty tax. See "Federal Tax Status" on page 28.

You may elect to have the cash surrender value paid in a single sum or under a
payment option. See "Payment Options" on page 24. The policy ends when we pay
the cash surrender value. You may avoid a surrender charge by changing the
annuity date and electing to apply the policy value under a payment option. See
"Proceeds On Annuity Date" on page 17.

PROCEEDS ON DEATH OF LAST SURVIVING ANNUITANT BEFORE ANNUITY DATE (THE DEATH
BENEFIT)

If we receive due proof of death of the last surviving annuitant before the
annuity date ("such due proof"), the proceeds we will pay to the beneficiary is
the death benefit.

If we receive such due proof during the first seven policy
years, the death benefit is the greater of:

1. the premiums paid, less: a) any partial withdrawals,
including applicable surrender charges; and b) any
incurred taxes; or
2. the policy value on the date we receive such due
proof.

If we receive such due proof after the first seven policy years, the
death benefit is the greatest of:

1. item "1." above; or
2. item "2." above; or
3. the policy value at the end of the 7 policy year
period preceding the date we receive such due proof,
adjusted for any of the following items that occur
after such last 7 policy year period: a) less any
partial withdrawals, including applicable surrender
charges; b) less any incurred taxes; and c) plus any
premiums paid. The 7 policy year periods are measured
from the policy date (i.e., 7, 14, 21, 28, etc). For
policies issued May 1, 1995, or such later date as
applicable regulatory approvals are obtained in the
jurisdiction in which the contracts are offered, no
further step-ups in Death Benefits will occur after
the age of 80.

17
<PAGE> 19

No death benefit is payable if the policy is surrendered before the last
surviving annuitant's death. If you are the last surviving annuitant who dies
before the annuity date, the death benefit proceeds must be distributed
pursuant to the rules set forth below in "Proceeds on Death of Owner Before or
After Annuity Date."

PROCEEDS ON DEATH OF OWNER BEFORE OR AFTER ANNUITY DATE

If we receive due proof of your death before the annuity date and you are not
the last surviving annuitant, the proceeds we will pay to the beneficiary is
the policy value on the date we receive due proof of your death. If we receive
due proof of your death before the annuity date and you are the last surviving
annuitant, the proceeds we will pay to the beneficiary is the death benefit
described in "Proceeds on the Death of Last Surviving Annuitant Before Annuity
Date." If you die before the annuity date, Federal tax law requires the policy
value be distributed within five years after the date of your death regardless
of whether you are or are not an annuitant, unless your spouse is the
designated beneficiary, in which case, the policy may be continued with your
surviving spouse as the new owner. All such distributions will be made in
accordance with the requirements of the Investment Company Act of 1940.

Your "designated beneficiary" is the person designated by you as a beneficiary
and to whom the proceeds of the policy pass by reason of your death and must be
a natural person.

If you die on or after the annuity date, any remaining payments must be
distributed at least as rapidly as under the payment option in effect on the
date of your death.

The distribution requirements described above will be considered satisfied as
to any portion of the proceeds:

1. payable to or for the benefit of a designated beneficiary; and
2. which is distributed over the life (or period not exceeding
the life expectancy) of that beneficiary, provided that the
beneficiary is a natural person and such distributions begin
within one year of your death.

If you are not a natural person, the primary annuitant as determined in
accordance with Section 72(s) of the Code (i.e., the individual the events in
the life of whom are of primary importance in effecting the timing or amount of
the payout under the policy) will be treated as owner for purposes of these
distribution requirements, and any change in the primary annuitant will be
treated as the death of the owner.

INTEREST ON PROCEEDS

We will pay interest on proceeds if we do not pay the proceeds in a single sum
or begin paying the proceeds under a payment option:

1. within 30 days after the proceeds become payable; or
2. within the time required by the applicable jurisdiction, if
less than 30 days.

This interest will accrue from the date the proceeds become payable to the date
of payment, but not for more than one year, at an annual rate of 3%, or the
rate and time required by law, if greater.

PARTIAL WITHDRAWALS

You may withdraw part of the cash surrender value at any time before the
earlier of the death of the last surviving annuitant or the annuity date,
subject to these limits:

1. the Company's minimum partial withdrawal, currently $250;
2. the maximum partial withdrawal is the amount that would leave
a cash surrender value of $5,000;
3. a partial withdrawal request which would reduce the amount in
a sub-account or the Fixed Account below $500 will be treated
as a request for a full withdrawal of the amount in that
sub-account or Fixed Account; and
4. a partial withdrawal request for an amount exceeding $10,000
must be accompanied by a guarantee of the owner's signature by
a commercial bank, a trust company, or a savings and loan.

On the date we receive your written notice for a partial withdrawal at our
Administrative Office, we will withdraw the amount of the partial withdrawal
from the policy value and we will then deduct any applicable surrender charge
from the remaining policy value. The Company reserves the right to change its
minimum partial withdrawal amount requirements.

18
<PAGE> 20

You may specify the amount to be withdrawn from certain sub-accounts or the
Fixed Account. If you do not specify this information to us, or the amount in
the designated sub-accounts or the Fixed Account is inadequate to comply with
your specification, we will withdraw the amount according to the "Order of
Depletion" Provision on page 29.

Any partial or systematic withdrawal may be included in the owner's gross
income in the year in which the withdrawal occurs, and may be subject to
federal income tax, including a penalty tax equal to 10% of the amount treated
as taxable income, and the Code restricts certain distributions under
Tax-Sheltered Annuity Plans and other qualified plans. See "Federal Tax Status"
on page 28.

SYSTEMATIC WITHDRAWAL PRIVILEGE ("SWP")

You may elect to withdraw a fixed-level amount from the sub-account(s) on a
monthly, quarterly, or semi-annual basis, beginning 30 days after the Effective
Date, if we receive your written notice on our form and the policy meets the
Company's minimum premium, currently $25,000, and in accordance with "Partial
Withdrawals" above (when surrender charges are applicable). No minimum is
necessary when Surrender Charges are not applicable. While Surrender Charges
are applicable, each year you may withdraw as follows:

1. Up to 100% of positive investment earnings of each variable
sub-account available at the time the SWP is
executed/processed; PLUS
2. Up to 100% of current policy year's interest on FIXED ACCOUNT
available at the time the SWP is executed/processed; PLUS
3. Up to 10% of total premiums still subject to a surrender
charge; PLUS
4. Up to 100% of total premiums NOT SUBJECT TO A SURRENDER CHARGE.

When no Surrender Charges are applicable, the entire policy is available for
systematic withdrawal. The Systematic Withdrawal Privilege will end at the
earliest of the date: when the sub-account(s) you specified for those
withdrawals has no remaining amount to withdraw; or the cash surrender value is
reduced to $5,000; or you elect to pay premiums by pre-authorized check; or we
receive your written notice to end this privilege; or we elect to discontinue
this privilege upon 30 days written notice to you. Use of this privilege during
a policy year counts as your first 10% free withdrawal of total premiums under
the "Surrender Charge" provision. References to partial withdrawals in other
provisions of this Prospectus include systematic withdrawals. If applicable, a
charge for premium taxes may be deducted from each systematic withdrawal
payment. The Company reserves the right to change its minimum systematic
withdrawal amount requirements.

LOANS

The Company may in the future offer a loan privilege to owners of policies
issued in connection with Section 403(b) qualified plans that are not subject
to Title I of ERISA. If offered, owners of such policies may obtain loans using
the policy as the only security for the loan. Loans are subject to provisions
of the Code and to applicable retirement program rules (collectively, "loan
rules"). Tax advisers and retirement plan fiduciaries should be consulted prior
to exercising loan privileges. Policy loans that satisfy certain requirements
with respect to loan amount and repayment are not treated as taxable
distributions. If these requirements are not satisfied, or if the policy
terminates while a loan is outstanding, the loan balance will be treated as a
taxable distribution and may be subject to penalty tax, and the treatment of
the policy under Section 403(b) may be adversely affected.

If loans are offered, the following will apply:

Under the terms of the policy, qualified policies have a maximum loan
value equal to 80% of the policy value, although loan rules may serve
to reduce such maximum loan value in some cases. The amount available
for a loan at any given time is the loan value less any outstanding
debt. Debt equals the amount of any loans plus accrued interest.
Loans will be made only upon written request from the owner. The
Company will make loans within seven days of receiving a properly
completed loan application (applications are available from the
Company), subject to postponement under the same circumstances that
payment of withdrawals may be postponed. See "Partial Withdrawals"
on page 18.

When an owner requests a loan, the Company will reduce the owner's
investment in the investment accounts and transfer the amount of the
loan to the loan account, a part of the Company's general account. The
owner may designate the investment accounts from which the loan is to
be withdrawn. Absent such a designation, the amount of the loan will
be withdrawn from the investment accounts in accordance with the rules
for making

19
<PAGE> 21

partial withdrawals. See "Partial Withdrawals" on page 18. The
policy provides that owners may repay policy debt at any time. Under
applicable loan rules, loans generally must be repaid within five
years, repayments must be made at least quarterly and repayments must
be made in substantially equal amounts. When a loan is repaid, the
amount of the repayment will be transferred from the loan account to
the investment accounts. The owner may designate the investment
accounts to which a repayment is to be allocated. Otherwise, the
repayment will be allocated in the same manner as the owner's most
recent premium. On each policy anniversary, the Company will transfer
from the investment accounts to the loan account the amount by which
the debt on the policy exceeds the balance in the loan account.

The Company charges interest of 6% per year on policy loans. Loan
interest is payable in arrears and, unless paid in cash, the accrued
loan interest is added to the amount of the debt and bears interest at
6% as well. The Company credits interest with respect to amounts held
in the loan account at a rate of 4% per year. Consequently, the net
cost of loans under the policy is 2%. If on any date debt under a
policy exceeds the policy value, the policy will be in default. In
such case the owner will receive a notice indicating the payment
needed to bring the policy out of default and will have a thirty-one
day grace period within which to pay the default amount. If the
required payment is not made within the grace period, the policy will
be foreclosed (terminated without value).

The amount of any debt will be deducted from the minimum death
benefit. See "Proceeds on Death of Annuitant Before Annuity Date" on
page 18. In addition, debt, whether or not repaid, will have a
permanent effect on the policy value because the investment results of
the investments accounts will apply only to the unborrowed portion of
the policy value. The longer debt is outstanding, the greater the
effect is likely to be. The effect could be favorable or unfavorable.
If the investment results are greater than the rate being credited on
amounts held in the loan account while the debt is outstanding, the
policy value will not increase as rapidly as it would have if no debt
were outstanding. If investment results are below that rate, the
policy value will be higher than it would have been had no debt been
outstanding.

PAYMENT OF BENEFITS, PARTIAL WITHDRAWALS, CASH SURRENDERS & TRANSFERS -
POSTPONEMENT

We will usually pay any proceeds payable, amounts partially withdrawn, or the
cash surrender value within seven calendar days after:

1. we receive your written notice for a partial withdrawal or a
cash surrender; or
2. the date chosen for any systematic withdrawal; or
3. we receive due proof of your death or the death of the last
surviving annuitant.

However, we can postpone the payment of proceeds, amounts withdrawn, the cash
surrender value, or the transfer of amounts between sub-accounts if:

1. the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or trading on the exchange is
restricted as determined by the SEC; or
2. the SEC permits by an order the postponement for the
protection of policyowners; or
3. the SEC determines that an emergency exists that would make
the disposal of securities held in the Variable Account or the
determination of the value of the Variable Account's net
assets not reasonably practicable.

We have the right to defer payment of any partial withdrawal, cash surrender,
or transfer from the Fixed Account for up to six months from the date we
receive your written notice for a withdrawal, surrender or transfer.

CHARGES AGAINST THE POLICY, VARIABLE ACCOUNT, AND FUND

SURRENDER CHARGE

No deduction for a sales charge is made when premiums are paid. However, a
surrender charge (contingent deferred sales charge) will be deducted when
certain partial withdrawals and cash surrenders are made to at least partially
reimburse us for certain expenses relating to the sale of the policy, including
commissions to registered representatives and other promotional expenses. A
surrender charge may also be applied to the proceeds paid on the annuity date,
unless the proceeds are applied under a payment option.

20
<PAGE> 22

For the purpose of determining if any surrender charge applies and the amount
of such charge, partial withdrawals and surrenders are taken according to these
rules from policy value attributable to premiums or investment earnings in the
following order:

<TABLE>
<CAPTION>
SURRENDER CHARGE
----------------
<S> <C> <C>
1. Up to 100% of positive investment earnings of each variable sub-account available
at the time the request is made, once a policy year, PLUS . . . . . . . . . . . . . . . . . . . . . None
2. Up to 100% of current policy year's interest on the FIXED ACCOUNT at the time the
request for surrender/withdrawal is made, once a policy year, PLUS . . . . . . . . . . . . . . . . . None
3. Up to 10% of total premiums STILL SUBJECT TO A SURRENDER CHARGE, once a policy
year, PLUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
4. Up to 100% of those premiums NOT SUBJECT TO A SURRENDER CHARGE, available
at any time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
5. Premiums subject to a surrender charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Policy Years Since Premium Was Paid
Less than 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
At least 1, but less than 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
At least 2, but less than 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
At least 3, but less than 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
At least 4, but less than 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
At least 5, but less than 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
At least 6, but less than 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
At least 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>

Any surrender charge will be deducted proportionately from the sub-account(s)
or Fixed Account being surrendered or partially withdrawn in relation to the
amount(s) withdrawn. If the amount remaining in a sub-account or the Fixed
Account after the withdrawal is insufficient to cover the proportionate
surrender charge deduction, the balance of the surrender charge will be
deducted according to the "Order Of Depletion" Provision on page 23.

POLICY ADMINISTRATION CHARGE

To cover the costs of providing certain administrative services attributable to
the policies and the operations of the Variable Account, including policy
records, communicating with policyowners, and processing transactions, we
deduct a policy administration charge of $30 for the prior policy year on each
policy anniversary. We will also deduct this charge for the current policy year
if the policy is surrendered for its cash surrender value, unless the policy is
surrendered on a policy anniversary. We do not anticipate any profit from this
charge. Even though our administrative expenses may increase, we guarantee that
we will not increase this charge.

The charge will be assessed according to the "Order Of Depletion" Provision
on page 23. If the charge is obtained from a sub-account(s), we will cancel
the appropriate number of units credited to this policy based on the unit value
at the end of the valuation period when the charge is assessed.

DAILY ADMINISTRATION FEE

At each valuation period, we also deduct a daily administration fee at an
effective annual rate of 0.35% from the assets of the Variable Account. This
daily administration fee is intended to reimburse us for other administrative
costs under the policies. There is no necessary relationship between the daily
administration fee and the amount of expenses that may be attributable to any
one policy. We do not anticipate realizing any profit from this fee, which is
guaranteed not to increase for the duration of your policy.

TRANSFER PROCESSING FEE

The first 12 transfers during each policy year are free under our current
policy, which we reserve the right to change. If our current policy changes,
we guarantee that we will provide at least four free transfers during each
policy year. We will assess a $25 processing fee for each additional transfer.
For the purposes of assessing the fee, each transfer request (which includes a
written notice or telephone call, but does not include dollar cost averaging
automatic transfers, telephone call, or automatic transfer) is considered to be
one transfer, regardless of the number of sub-accounts or the Fixed Account
effected by the transfer. The processing fee will be charged proportionately to
the receiving sub-account(s) and/or the Fixed Account. We do not expect a
profit from this fee. See "Transfers" on page 15 for the rules concerning
transfers.

21
<PAGE> 23

ANNUALIZED MORTALITY AND EXPENSE RISK CHARGE

The mortality risk we assume is the risk that annuitants may live for a longer
period of time than we estimated when we established our guarantees in the
policy. Because of these guarantees, each annuitant is assured that their
longevity will not have an adverse effect on the annuity payments they receive.
The mortality risk we assume also includes our guarantee to pay a death benefit
if the last surviving annuitant dies before the annuity date. The expense risk
we assume is the risk that the surrender charges, policy administration charge,
daily administration fee, and transfer fees may be insufficient to cover our
actual future expenses.

The annual mortality and expense risk charge is deducted at each valuation
period from the assets of the Variable Account at an effective annual rate of
1.25% of the value of the net assets in the Variable Account. We guarantee that
the rate of this charge will never increase. This charge is not made after the
annuity date, and this charge is not made against any Fixed Account valuebefore
the annuity date. This charge consists of approximately 0.75% to cover the
mortality risk, and approximately 0.50% to cover the expense risk. If this
charge is insufficient to cover our actual costs of mortality and expense
risks, we will bear the loss. However, if this charge exceeds our actual costs
of mortality and expense risks, the excess will be a profit to us and will be
available for any proper corporate purpose including, among other things,
payment of distribution expenses, since we anticipate that the surrender
charges will be insufficient to cover the costs of our actual distribution
expenses. We currently anticipate a profit from this charge.

WAIVER OF SURRENDER CHARGE

When the policy has been in effect for 1 year, upon written notice from you,
the Surrender Charge will be waived on any partial withdrawal or surrender
after you provide us evidence that satisfies us in a written statement signed
by a qualified physician that:

1. a) you are terminally ill: and
b) your life expectancy is not more than 12 months due
to the severity and nature of the terminal illness;
and
c) the diagnosis of the terminal illness was made after
the effective date of this policy.

2. you are or have been confined to a hospital, nursing home or
long-term care facility for at least 90 consecutive days,
provided:

a) confinement is for medically necessary reasons at the
recommendation of a physician;
b) the hospital, nursing home or long-term care facility
is licensed or otherwise recognized and operating as
such by the proper authority in the state where it is
located, the Joint Commission on Accreditation of
Hospitals or Medicare and satisfactory evidence of
such status is provided to us; and
c) the withdrawal or surrender request is received by us
no later than 91 days after the last day of your
confinement.

REDUCTION OR ELIMINATION OF SURRENDER CHARGES

The amount of the surrender charge on a policy may be reduced or eliminated
when some or all of the policies are to be sold to a group of individuals in
such a manner that results in savings of sales expenses. In determining whether
to reduce the surrender charge, the Company will consider certain factors
including the following:

1. The size and type of group to which the sales are to be made
will be considered. Generally, sales expenses for a larger
group are smaller than for a smaller group because of the
ability to implement large numbers of sales with fewer sales
contacts.
2. The total amount of premiums to be received will be
considered. Per dollar sales expenses are likely to be less on
larger premiums than on smaller ones.
3. Any prior or existing relationship with the Company will be
considered. Policy sales expenses are likely to be less when
there is a prior or existing relationship because of the
likelihood of implementing more sales with fewer sales
contacts.
4. The level of commissions paid to selling broker-dealers will
be considered. Certain broker-dealers may offer policies in
connection with financial planning programs offered on a fee
for service basis. In view of the financial planning fees,
such broker-dealers may elect to receive lower commissions for
sales of the policies, thereby reducing the Company's sales
expenses.

22
<PAGE> 24

If, after consideration of the foregoing factors, it is determined that there
will be a reduction in sales expenses, the Company will provide a reduction in
the surrender charge. The surrender charge will be eliminated when a policy is
issued to an officer, director, employee, or relative thereof of: the Company;
The Canada Life Assurance Company; J. & W. Seligman Co. Incorporated; or any of
their affiliates. In no event will reduction or elimination of the surrender
charge be permitted where such reduction or elimination will be discriminatory
to any person.

REDUCTION OR ELIMINATION OF POLICY ADMINISTRATION CHARGE

The amount of the policy administration charge on a policy may be reduced or
eliminated when some or all of the policies are to be sold to a group of
individuals in such a manner that results in savings of administration
expenses. In determining whether to reduce or eliminate the administration
charges, the Company will consider certain factors including the following:

1. The size and type of group to which administrative services
are to be provided will be considered.
2. The total amount of premiums to be received will be considered.

If, after consideration of the foregoing factors, it is determined that there
will be a reduction or elimination of administration expenses, the Company will
provide a reduction in the policy administration charge. In no event will
reduction or elimination of the administration charge be permitted where such
reduction or elimination will be discriminatory to any person.

TAXES

We will incur premium taxes in some jurisdictions relating to the policies.
Depending on the jurisdiction, we deduct any such taxes: a) from premiums when
paid; or b) when the policy value is applied under a payment option, at cash
surrender or upon partial withdrawal. A summary of current state premium tax
rates is contained in Appendix A.

When any tax is deducted from the policy value, it will be deducted according
to the "Order Of Depletion" Provision on page 23.

We reserve the right to charge or provide for any taxes levied by any
governmental entity, including:

1. taxes that are against or attributable to premiums, policy
values or annuity payments; or
2. taxes that we incur which are attributable to investment
income or capital gains retained as part of our reserves under
the policies or from the establishment or maintenance of the
Variable Account.

OTHER CHARGES INCLUDING INVESTMENT MANAGEMENT FEES

Each portfolio of the Fund is responsible for all of its operating expenses. In
addition, the Fund pays J. & W. Seligman Co. Incorporated (the "Manager") fees
for investment management services that are calculated daily and payable
monthly from each portfolio at an annual rate of 0.40% for Capital, Cash
Management (currently waived), Common Stock, Fixed Income Securities and
Income; 0.50% for High-Yield Bond; 0.75% for Communications and Information,
and Frontier; and 1.00% for Global and Global Smaller Companies(of which the
Manager in turn pays 0.90% to Seligman Henderson Co., the Sub-Adviser to Global
and Global Smaller Companies) of the average daily net assets of the portfolio.
The Prospectus and Statement of Additional Information for the Fund provide
more information concerning the investment management fee, other charges
against the portfolios, the investment management services provided to the
portfolios by J. & W. Seligman & Co. Incorporated, and the sub-advisory
services provided to the Global and Global Smaller CompaniesPortfolios by
Seligman Henderson Co.

ORDER OF DEPLETION

Withdrawals and deductions from policyowner accounts are made from the
sub-accounts and/or Fixed Account in the following order until the amount is
obtained: Cash Management; Income; Fixed Income Securities; Common Stock;
Capital; Global; Communications and Information; Global Smaller Companies;
Frontier; High-Yield Bond; Fixed Account. This order of withdrawals and
deductions from accounts is used:

1. if in a partial withdrawal request you do not specify the
amount to be withdrawn from certain sub-accounts or the Fixed
Account; or

23
<PAGE> 25

2. if the amount remaining in a sub-account or Fixed Account
after a withdrawal is insufficient to cover any surrender
charge; or
3. for the assessment of policy administration charges, daily
administration fees or the deduction of any taxes.

If in any systematic withdrawal request you do not specify which sub-account(s)
will be reduced by the withdrawals, withdrawals will be made from these
sub-accounts in the following order: Cash Management; Income; Fixed Income
Securities; Common Stock; Capital; Global; Communications and Information;
Global Smaller Companies; Frontier; High-Yield Bond.

PAYMENT OPTIONS

The policy ends on the annuity date, at which time we will apply the policy
value under a payment option, unless you have elected to receive the cash
surrender value in a single sum. See "Proceeds On Annuity Date" on page 17.
We require the surrender of your policy so that we may pay the cash surrender
value or issue a supplemental contract for the applicable payment option. The
term "payee" means a person who is entitled to receive payment under this
section.

If we do not have an election of a payment option on file at our Administrative
Office on the annuity date, the proceeds will be paid under Option 4, life
income with payments for 10 years certain.

We also offer other payment options. As described below, we will credit the
amounts left on deposit with us with a guaranteed rate of interest or make
periodic payments of the proceeds and provide for interest at a guaranteed
rate.

ELECTION OF OPTIONS

You may elect an option or revoke or change your election at any time before
the annuity date while any annuitant is living. If an election is not in effect
at the last surviving annuitant's death or if payment is to be made in one sum
under an existing election, the beneficiary may elect one of the options. This
election must be made within one year after the last surviving annuitant's
death and before any payment has been made.

An election of an option and any revocation or change must be made in a written
notice. It must be filed with our Administrative Office with the written
consent of any irrevocable beneficiary.

An option may not be elected and we will pay the proceeds in one sum if either
of the following conditions exist:

1. the amount to be applied under the option is less than $1,000;
or
2. any periodic payment under the election would be less than $50.

EXCESS INTEREST

We may pay excess interest in addition to the amounts guaranteed under the
options. Excess interest reflects additional interest earnings credited on the
policy proceeds left with us. If we pay excess interest, we guarantee the
excess interest rate will be in effect for at least one year from when it
became effective.

DESCRIPTION OF OPTIONS

Option 1: Interest

We will pay the proceeds for any period of time to which we may consent. We
will pay interest on the amount remaining with us at a rate of 3% per year. The
payee may choose to have interest paid annually, semi-annually, quarterly, or
monthly. In addition, on the anniversary of the date on which proceeds became
payable we may increase the interest then payable with the payment of excess
interest.

Option 2: Payments Of A Specified Amount

We will pay the proceeds in equal amounts annually, semi-annually, quarterly,
or monthly. The amount of each payment will be as stated in the election of
this option. The payments will be made until the proceeds with interest at a
rate of 3% per year plus any excess interest are exhausted.

24
<PAGE> 26

Option 3: Payments For A Fixed Period

We will pay the proceeds in equal amounts annually, semi-annually, quarterly,
or monthly for a fixed number of years. The amount of each payment will be
determined with interest at rate of 3% per year. We may increase the amount
with the payment of excess interest.

Option 4: Life Income

We will pay the proceeds paid in equal amounts each month, during the payee's
lifetime. The following plans may be chosen:

1. The life plan with payments ceasing on death;
2. The life with 10 years certain plan with payments for at least
10 years;
3. The life refund plan with payments to be made at least until
the sum of the payments made is equal to the amount of the
proceeds being paid under this option.

The amount of each payment will be determined from the Tables in the policy
which apply to Option 4 using the payee's age. During the refund period or the
certain period, we may increase the amount with the payment of excess interest.
Age will be determined from the nearest birthday at the due date of the first
payment.

Option 5: Joint Life Income

We will pay the proceeds in equal amounts each month, for as long as one of the
payees is alive. Payments will be made for at least 10 years. The amount of
each payment will be determined from the Table in the policy which applies to
Option 5 using the age of each of the two payees. Age will be determined from
the nearest birthday at the due date of the first payment.

Option 6: Mutual Agreement

We will pay the proceeds according to other terms, if both you and we agree to
these terms.

PAYMENT DATES

The interest periods and payment dates of the options will be calculated from
the date on which the proceeds become payable.

AGE AND SURVIVAL OF PAYEE

We have the right to require proof of age of the payee(s) before making any
payment. When any payment depends on the payee's survival, we will have the
right, before making the payment, to require proof satisfactory to us that the
payee is alive.

DEATH OF PAYEE

At the death of the payee, or the last survivor of the payees, any amount
remaining to be paid under this section will become payable in one sum, unless
specified otherwise.

The sum payable under Options 1 and 2 will include interest to the date of
death. The sum payable under Options 3, 4 (if payments do not cease on death)
and 5 will be the commuted value, at a rate of interest of 3% per year, of the
payments yet to be made.

OTHER POLICY PROVISIONS

OWNER

During any annuitant's lifetime and before the annuity date, you have all the
rights and privileges granted by the policy. If you appoint an irrevocable
beneficiary or assignee, then your rights will be subject to those of that
beneficiary or assignee.

25
<PAGE> 27

During any annuitant's lifetime and before the annuity date, you may name a new
owner or annuitant by giving us written notice.
If you die before the annuity date and before the last surviving annuitant, the
proceeds will pass:

1. to your surviving "designated beneficiary," if any; otherwise
2. to your estate.

The "designated beneficiary" is defined in "Proceeds on Death of Owner Before
or After Annuity Date."

BENEFICIARY

We will pay the beneficiary any proceeds payable on your death or the death of
the last surviving annuitant. During any annuitant's lifetime and before the
annuity date, you may name and change one or more beneficiaries by giving us
written notice. However, we will require written notice from any irrevocable
beneficiary or assignee specifying their consent to the change.

We will pay the proceeds under the beneficiary appointment in effect at the
date of death. If you have not designated otherwise in your appointment, the
proceeds will be paid to the surviving beneficiary(ies) equally. If no
beneficiary is living when you die or the last surviving annuitant dies, or if
none has been appointed, the proceeds will be paid to your estate.

WRITTEN NOTICE

Written Notice must be signed by you, dated, and of a form and content
acceptable to us. Your written notice will not be effective until we receive
and file it at our Administrative Office. However, the change provided in your
written notice to name or change the owner or beneficiary will then be
effective as of the date you signed the written notice:

1. subject to any payments made or other action we take before we
receive and file your written notice; and
2. whether or not you or the last surviving annuitant are alive
when we receive and file your written notice.

PERIODIC REPORTS

We will mail you a report showing the following items about your policy:

1. the number of units credited to the policy and the dollar
value of a unit;
2. the policy value;
3. any premiums paid, withdrawals, and charges made since the
last report; and
4. any other information required by law.

The information in the report will be as of a date not more than two months
before the date of the mailing. We will mail the report to you:

1. at least annually, or more often as required by law; and
2. to your last address known to us.

ASSIGNMENT

You may assign a nonqualified policy or an interest in it at any time before
the annuity date during any annuitant's lifetime. An assignment must be in a
written notice acceptable to us. It will not be binding on us until we receive
and file it at our Administrative Office. We are not responsible for the
validity of any assignment. Your rights and the rights of any beneficiary will
be effected by an assignment.

An assignment of a nonqualified policy may result in certain tax consequences
to the owner. See "Transfers, Assignment or Exchanges of a Policy" on page 31.

MODIFICATION

Upon notice to you, we may modify the policy, but only if such modification:

26
<PAGE> 28

1. is necessary to make the policy or the Variable Account comply
with any law or regulation issued by a governmental agency to
which we are subject; or
2. is necessary to assure continued qualification of the policy
under the Code or other federal or state laws relating to
retirement annuities or variable annuity policies; or
3. is necessary to reflect a change in the operation of the
Variable Accounts; or
4. provides additional variable account and/or fixed accumulation
options.

In the event of any such modification, we may make any appropriate endorsement
to the policy.

YIELDS AND TOTAL RETURNS

From time to time, we may advertise yields, effective yields, and total returns
for the sub-accounts. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND DO NOT
INDICATE OR PROJECT FUTURE PERFORMANCE. Each sub-account may, from time to
time, advertise performance relative to certain performance rankings and
indices compiled by independent organizations. More detailed information as to
the calculation of performance information, as well as comparisons with
unmanaged market indices, appears in the Statement of Additional Information.

Effective yields and total returns for the sub-accounts are based on the
investment performance of the corresponding portfolios of the Fund. The Fund's
performance in part reflects the Fund's expenses. See the Prospectus for the
Fund.

The yield of the Cash Management Sub-Account refers to the annualized income
generated by an investment in the Sub-Account over a specified 7 day period.
The yield is calculated by assuming that the income generated for that 7 day
period is generated each 7 day period over a 52 week period and is shown as a
percentage of the investment. The effective yield is calculated similarly but,
when annualized, the income earned by an investment in the Sub-Account is
assumed to be reinvested. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.

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

The total return of a sub-account refers to return quotations assuming an
investment under a policy has been held in the sub-account for various periods
of time including, but not limited to, a period measured from the date the
sub-account commenced operations. When a sub-account has been in operation for
1, 5, and 10 years, respectively, the total return for these periods will be
provided.

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

We may, in addition, advertise total return performance information computed on
a different basis. We may present total return information computed on the same
basis as described above, except deductions will not include the surrender
charge. This presentation assumes that the investment in the policy persists
beyond the period when the surrender charge applies, consistent with the
long-term investment and retirement objectives of the policy.

We may compare the performance of each sub-account in advertising and sales
literature to the performance of other variable annuity issuers in general or
to the performance of particular types of variable annuities investing in
mutual funds, or investment series of mutual funds with investment objectives
similar to each of the sub-accounts. Lipper Analytical Services, Inc.
("Lipper") and the Variable Annuity Research Data Service ("VARDS") are
independent services which monitor and rank the performances of variable
annuity issuers in each of the major categories of investment objectives on an
industry-wide basis. Other services or publications may also be cited in our
advertising and sales literature.

27
<PAGE> 29

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

We may also compare the performance of each sub-account in advertising and
sales literature to the Standard & Poor's composite index of 500 common stocks,
a widely used index to measure stock market performance. This unmanaged index
does not reflect any "deduction" for the expense of operating or managing an
investment portfolio. We may also make comparison to Lehman Brothers
Government/Corporate Bond Index, an index that includes the Lehman Brothers
Government Bond and Corporate Bond Indices. These indices are total rate of
return indices. The Government Bond Index includes the Treasury Bond Index
(public obligations of the U.S. Treasury) and the Agency Bond Index (publicly
issued debt of U.S. Government agencies, quasi-federal corporations, and
corporate debt guaranteed by the U.S. Government). The Corporate Bond Index
includes publicly issued, fixed rate, nonconvertible investment grade
dollar-denominated, SEC registered corporate debt. All issues have at least a
one-year maturity, and all returns are at market value inclusive of accrued
interest. Other independent indices such as those prepared by Lehman Brothers
Bond Indices may also be used as a source of performance comparison.

We may also compare the performance of each sub-account in advertising and
sales literature to the Dow Jones Industrial Average, a stock average of 30
blue chip stock companies that does not represent all new industries. Other
independent averages such as those prepared by Dow Jones & Company, Inc. may
also be used as a source of performance comparison. Day to day changes may not
be reflective of the overall market when an average is composed of a small
number of companies.

TAX DEFERRAL

Under current tax laws any increase in policy value is generally not taxable to
you or an annuitant until received, subject to certain exceptions. See "FEDERAL
TAX STATUS" on page 28. This deferred tax treatment may be beneficial to you
in building assets in a long-range investment program.

We may also distribute sales literature or other information including the
effect of tax-deferred compounding on a sub-account's investment returns, or
returns in general, which may be illustrated by tables, graphs, charts or
otherwise, and which may include a comparison, at various points in time, of
the return from an investment in a policy (or returns in general) on a
tax-deferred basis (assuming one or more tax rates) with the return on a
currently taxable basis where allowed by state law. All income and capital
gains derived from sub-account investments are reinvested and compound tax-
deferred until distributed. Such tax-deferred compounding can result in
substantial long-term accumulation of assets, provided that the investment
experience of the underlying portfolio of the Fund is positive.

FEDERAL TAX STATUS

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

INTRODUCTION

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

The policy may be purchased on a nonqualified tax basis ("Nonqualified Policy")
or purchased and used in connection with plans qualifying for favorable tax
treatment ("Qualified Policy"). The Qualified Policy was designed for use by
individuals whose premium payments are comprised of proceeds from and/or
contributions under retirement plans which

28
<PAGE> 30

are intended to qualify as plans entitled to special income tax treatment under
Sections 401(a), 401(k), 403(a), 403(b), 408 or 457 of the Code. The ultimate
effect of Federal income taxes on the amounts held under a policy, or annuity
payments, and on the economic benefit to the owner, an annuitant, or the
beneficiary depends on the type of retirement plan, on the tax and employment
status of the individual concerned and on our tax status. In addition, certain
requirements must be satisfied in purchasing a Qualified Policy with proceeds
from a tax qualified plan and receiving distributions from a Qualified Policy
in order to continue receiving favorable tax treatment. Therefore, purchasers
of Qualified Policies should seek legal and tax advice regarding the
suitability of a policy for their situation, the applicable requirements, and
the tax treatment of the rights and benefits of a policy. The following
discussion assumes that Qualified Policies are purchased with proceeds from
and/or contributions under retirement plans that receive the intended special
Federal income tax treatment.

THE COMPANY'S TAX STATUS

The Variable Account is not separately taxed as a "regulated investment
company" under Subchapter M of the Code. The operations of the Variable Account
are a part of and taxed with our operations. We are taxed as a life insurance
company under Subchapter L of the Code.

At the present time, we make no charge for any Federal, state or local taxes
(other than premium taxes) that we incur which may be attributable to the
Variable Account or to the policies. We, however, reserve the right in the
future to make a charge for any such tax or other economic burden resulting
from the application of the tax laws that we determine to be properly
attributable to the Variable Account or to the policies.

TAX STATUS OF THE POLICY

DIVERSIFICATION REQUIREMENTS

Section 817(h) of the Code provides that separate account investments
underlying a policy must be "adequately diversified" in accordance with
Treasury regulations in order for the policy to qualify as an annuity policy
under Section 72 of the Code. The Variable Account through each portfolio of
the Fund, intends to comply with the diversification requirements prescribed in
regulations under Section 817(h) of the Code, which affect how the assets in
the various divisions of the Accounts may be invested. Although we do not have
control over the fund in which the Variable Account invests, we believe that
each portfolio in which the Variable Account owns shares will meet the
diversification requirements and that therefore the Policy will be treated as
an annuity under the Code.

In certain circumstances, variable annuity policyowners may be considered the
owners, for Federal income tax purposes, of the assets of the separate account
used to support their policies. In those circumstances, income and gains from
the separate account assets would be includable in the variable annuity
policyowner's gross income. Several years ago, the IRS stated in published
rulings that a variable policyowner will be considered the owner of separate
account assets if the policyowner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the assets.
More recently, the Treasury Department announced, in connection with the
issuance of regulations concerning investment diversification, that those
regulations "do not provide guidance concerning the circumstances in which
investor control of the investments of a segregated asset account may cause the
investor, rather than the insurance company, to be treated as the owner of the
assets in the account." This announcement also stated that guidance would be
issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular sub-accounts without being treated
as owners of the underlying assets." As of the date of this Prospectus, no
such guidance has been issued.

The ownership rights under the policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyowners were not owners of separate account assets. For example, the
owner of the policy has the choice of more subdivisions to which to allocate
premiums and policy values then such rulings, has a choice of investment
strategies different from such rulings, and may be able to transfer among
subdivisions more frequently than in such rulings. These differences could
result in the policyowner being treated as the owner of the assets of the
Variable Account. In addition, we do not know what standards will be set forth
in the regulations or rulings which the Treasury Department has stated it
expects to issue. We therefore reserve the right to modify the policy as
necessary to attempt to prevent the policyowner from being considered the owner
of the assets of the Variable Account.

29
<PAGE> 31

REQUIRED DISTRIBUTIONS

In addition to the requirements of Section 817(h) of the Code, in order to be
treated as an annuity policy for Federal income tax purposes, Section 72(s) of
the Code requires any Nonqualified Policy to provide that (a) if any owner dies
on or after the annuity commencement date but prior to the time the entire
interest in the Policy has been distributed, the remaining portion of such
interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that owner's death; and (b) if any
owner dies prior to the annuity commencement date, the entire interest in the
Policy will be distributed within five years after the date of the owner's
death. These requirements will be considered satisfied as to any portion of the
owner's interest which is payable to or for the benefit of a "designated
beneficiary" and which is distributed over the life of such "designated
beneficiary" or over a period not extending beyond the life expectancy of that
beneficiary, provided that such distributions begin within one year of that
owner's death. The owner's "designated beneficiary" is the person designated by
such owner as a beneficiary and to whom ownership of the Policy passes by
reason of death and must be a natural person. However, if the owner's
"designated beneficiary" is the surviving spouse of the owner, the Policy may
be continued with the surviving spouse as the new owner.

The Nonqualified Policies contain provisions which are intended to comply with
the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. We intend to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code Section 72(s) when clarified by regulation or otherwise.

Other rules may apply to Qualified Policies.

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

TAXATION OF ANNUITIES

IN GENERAL

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

The owner of any annuity policy who is not a natural person generally must
include in income any increase in the excess of the policy's accumulation value
over the policy's "investment in the contract" during the taxable year. There
are some exceptions to this rule and a prospective owner that is not a natural
person may wish to discuss these with a tax adviser.

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

WITHDRAWALS/DISTRIBUTIONS

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

In the case of a withdrawal/distribution (e.g., surrender, partial withdrawal
or systematic withdrawal) under a Nonqualified Policy before the annuity
commencement date, under Code Section 72(e) amounts received are generally
first treated as taxable income to the extent that the accumulation value
immediately before the withdrawal exceeds the "investment in the contract" at
that time. Any additional amount withdrawn is not taxable.

30
<PAGE> 32

ANNUITY PAYMENTS

Although tax consequences may vary depending on the annuity option elected
under an annuity policy, under Code Section 72(b), generally gross income does
not include that part of any amount received as an annuity under an annuity
policy that bears the same ratio to such amount as the investment in the
contract bears to the expected return at the annuity starting date. For
variable income payments, in general, the taxable portion (prior to recovery of
the investment in the contract) is determined by a formula which establishes
the specific dollar amount of each annuity 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. For fixed income payments (prior to
recovery of the investment in the contract), in general, there is no tax on the
amount of each payment which represents the same ratio that the "investment in
the contract" bears to the total expected value of the annuity payments for the
term of the payments; however, the remainder of each income payment is taxable.
In all cases, after the "investment in the contract" is recovered, the full
amount of any additional annuity payments is taxable.

TAXATION OF DEATH BENEFIT PROCEEDS

Amounts may be distributed from a policy because of the death of the owner or
the last surviving annuitant. 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 surrender of the policy; or
2. if distributed under a payment option, they are taxed in the
same manner as annuity payments.

PENALTY TAX ON CERTAIN WITHDRAWALS

In the case of a distribution pursuant to a Nonqualified Policy, there may be
imposed a Federal penalty tax equal to 10% of the amount treated as taxable
income. In general, however, there is no penalty tax on distributions:

1. made on or after the taxpayer reaches age 59 1/2;
2. made on or after the death of the owner (or if the owner is
not an individual, the death of the primary annuitant);
3. attributable to the owner becoming disabled;
4. a part of a series of substantially equal periodic payments
(not less frequently than annually) for the life (or life
expectancy) of the taxpayer or the joint lives (or joint life
expectancies) of the taxpayer and beneficiary;
5. made under an annuity policy that is purchased with a single
premium when the annuity starting date is no later than a year
from purchase of the annuity and substantially equal periodic
payments are made, not less frequently than annually, during
the annuity period; and
6. made under certain annuities issued in connection with
structured settlement agreements.

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

TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF A POLICY

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

WITHHOLDING

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

31
<PAGE> 33

MULTIPLE POLICIES

Section 72(e)(11) of the Code treats all nonqualified deferred annuity policies
entered into after October 21, 1988 that are issued by us (or our affiliates)
to the same owner during any calendar year as one annuity policy for purposes
of determining the amount includable in gross income under Code Section 72(e).
The effects of this rule are not yet clear; however, it could effect the time
when income is taxable and the amount that might be subject to the 10% penalty
tax described above. In addition, the Treasury Department has specific
authority to issue regulations that prevent the avoidance of Section 72(e)
through the serial purchase of annuity contracts or otherwise. There may also
be other situations in which the Treasury may conclude that it would be
appropriate to aggregate two or more annuity contracts purchased by the same
owner. Accordingly, a policyowner should consult a tax adviser before
purchasing more than one annuity contract.

POSSIBLE TAX CHANGES

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

TAXATION OF QUALIFIED PLANS

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

INDIVIDUAL RETIREMENT ANNUITIES AND SIMPLIFIED EMPLOYEE PENSIONS (SEP/IRAS)

Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity" or
"IRA". These IRAs are subject to limits on the amount that may be contributed,
the persons who may be eligible and on the time when distributions may
commence. Also, distributions from certain other types of qualified retirement
plans may be "rolled over" on a tax-deferred basis into an IRA. Sales of the
policy for use with IRAs may be subject to special requirements of the Internal
Revenue Service.

Section 408(k) of the Code allows employers to establish simplified employee
pension plans for their employees, using an IRA for such purpose, if certain
criteria are met. Under these plans the employer may, within specified limits,
make deductible contributions on behalf of the employee to an IRA. Employers
intending to use the policy in connection with such plans should seek advice.

Purchasers of a policy for use with IRAs will be provided with supplemental
information required by the Internal Revenue Service or other appropriate
agency. Such purchasers will have the right to revoke their purchase within
seven days of the earlier of the establishment of the IRA or their purchase.
Purchasers should seek advice as to the suitability of the policy for use with
IRAs.

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<PAGE> 34

CORPORATE AND SELF-EMPLOYED (H.R.10 AND KEOGH) PENSION AND PROFIT-SHARING PLANS

Sections 401(a), 401(k) and 403(a) of the Code permit corporate employers to
establish various types of tax-favored retirement plans for employees. The
Self-Employed Individual Tax Retirement Act of 1962, as amended, commonly
referred to as "H.R.10" or "Keogh", permits self-employed individuals also to
establish such tax-favored retirement plans for themselves and their employees.
Such retirement plans may permit the purchase of the policies in order to
accumulate retirement savings under the plans. Adverse tax consequences to the
plan, to the participant or to both may result if this policy is assigned or
transferred to any individual as a means to provide benefit payments. Employers
intending to use the policy in connection with such plans should seek advice.

DEFERRED COMPENSATION PLANS

Section 457 of the Code provides for certain deferred compensation plans. These
plans may be offered with respect to service for state governments, local
governments, political subdivisions, agencies, instrumentalities and certain
affiliates of such entities, and tax exempt organizations. The plans may permit
participants to specify the form of investment for their deferred compensation
account. All distributions are taxable as ordinary income. All investments are
owned by the sponsoring employer and are subject to the claims of the general
creditors of the employer.

TAX-SHELTERED ANNUITY PLANS

Section 403(b) of the Code permits public school systems and certain tax exempt
organizations specified in Section 501(c)(3) to make payments to purchase
annuity policies for their employees. Such payments are excludable from the
employee's gross income (subject to certain limitations), but may be subject to
FICA (Social Security) taxes. We will accept 403(b) premiums if paid by PAC or
in a lump sum rollover, but not on a salary savings/list bill basis. Under Code
requirements, Section 403(b) annuities generally may not permit distribution
of: 1) elective contributions made in years beginning after December 31, 1988;
2) earnings on those contributions; and 3) earnings on amounts attributed to
elective contributions held as of the end of the last year beginning before
January 1, 1989. Under Code requirements, distributions of such amounts will be
allowed only: 1) upon the death of the employee; or 2) on or after attainment
of age 59 1/2; or 3) separation from service; or 4) disability; or 5) financial
hardship, except that income attributable to elective contributions may not be
distributed in the case of hardship. With respect to these restrictions, the
Company is relying upon a no-action letter dated November 28, 1988 from the
staff of the SEC to the American Council of Life Insurance, the requirements
for which have been or will be complied with by the Company.

OTHER TAX CONSEQUENCES

As noted above, the foregoing comments about the Federal tax consequences under
these policies are not exhaustive and special rules are provided with respect
to other tax situations not discussed in this Prospectus. Further, the Federal
income tax consequences discussed herein reflect our understanding of current
law and the law may change. Federal estate and state and local estate,
inheritance, and other tax consequences of ownership or receipt of
distributions under a Policy depend on the individual circumstances of each
owner or recipient of the distribution. A tax adviser should be consulted for
further information.

RESTRICTIONS UNDER THE TEXAS
OPTIONAL RETIREMENT PROGRAM

Section 36.105 of the Texas Educational Code permits participants in the Texas
Optional Retirement Program ("ORP") to withdraw their interest in a variable
annuity policy issued under the ORP only upon: 1) termination of employment in
the Texas public institutions of higher education; 2) retirement; or 3) death.
Accordingly, a participant in the ORP, or the participant's estate if the
participant has died, will be required to obtain a certificate of termination
from the employer or a certificate of death before policy values can be
withdrawn or surrendered.

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<PAGE> 35

DISTRIBUTION OF POLICIES

Canada Life of America Financial Services, Inc. ("CLAFS") acts as the principal
underwriter, as defined in the Investment Company Act of 1940, of the policies
for the Variable Account. CLAFS is a wholly-owned subsidiary of our Company.
CLAFS, a Georgia corporation organized on January 18, 1988, is registered with
the SEC under the Securities Exchange Act of 1934 (the "1934 Act") as a
broker-dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD"). CLAFS' principal business address is 6201 Powers Ferry
Road, NW, Atlanta, Georgia.

Sales of the policies will be made by registered representatives of
broker-dealers authorized by CLAFS to sell the policies. Such registered
representatives will be licensed insurance agents of our Company. CLAFS and our
Company have entered into an exclusive promotional agent (distribution)
agreement with Seligman Financial Services, Inc. ("Seligman Financial").
Seligman Financial is a broker-dealer registered with the SEC under the 1934
Act and is a member of the NASD. Under the promotional agent distribution
agreement, Seligman Financial will recruit and provide sales training and
licensing assistance to such registered representatives. In addition, Seligman
Financial will prepare sales and promotional materials for the policies. CLAFS
will pay distribution compensation to selling broker-dealers in varying amounts
which, under normal circumstances, are not expected to exceed 6.5% of premium
payments under the policies. Seligman Financial may from time to time pay
additional compensation pursuant to promotional contracts. In some
circumstances, Seligman Financial may provide reimbursement of certain sales
and marketing expenses. CLAFS will pay the promotional agent a fee for
providing marketing support for the distribution of the contracts.

The policies will be offered to the public on a continuous basis, and we do not
anticipate discontinuing the offering of the policies. However, we reserve the
right to discontinue the offering.

LEGAL PROCEEDINGS

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

VOTING RIGHTS

To the extent deemed to be required by law and as described in the Prospectus
for the Fund, portfolio shares held in the Variable Account and in our general
account will be voted by us at regular and special shareholder meetings of the
Fund in accordance with instructions received from persons having voting
interests in the corresponding sub-accounts. If however, the Investment Company
Act of 1940 or any regulation thereunder should be amended, or if the present
interpretation thereof should change, or if we determine that we are allowed to
vote the portfolio shares in our own right, we may elect to do so.

The number of votes which are available to you will be calculated separately
for each sub-account of the Variable Account, and may include fractional votes.
The number of votes attributable to a sub-account will be determined by
applying your percentage interest, if any, in a particular sub-account to the
total number of votes attributable to that sub-account. You hold a voting
interest in each sub-account to which the Variable Account value is allocated.
You only have voting interest prior to the annuity date.

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

Fund shares as to which no timely instructions are received and shares held by
us in a sub-account as to which you have no beneficial interest will be voted
in proportion to the voting instructions which are received with respect to all
policies participating in that sub-account. Voting instructions to abstain on
any item to be voted upon will be applied to reduce the total number of votes
cast on such item.

Each person having a voting interest in a sub-account will receive proxy
materials, reports, and other material relating to the appropriate series.

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<PAGE> 36

FINANCIAL STATEMENTS

Our balance sheets as of December 31, 1994 and 1993, and the related statements
of operations, accumulated deficit, and cash flows for each of the three years
in the period ended December 31, 1994, as well as the Report of Independent
Auditors, are contained in the Statement of Additional Information. The
Variable Account's statement of net assets as of December 31, 1994, and the
related statements of operations and changes in net assets for the periods
indicated therein, as well as the Report of Independent Auditors, are contained
in the Statement of Additional Information. The financial statements of the
Company included in the Statement of Additional Information should be
considered only as bearing on the ability of the Company to meet its
obligations under the policies. They should not be considered as bearing on the
investment performance of the assets held in the Variable Account.

STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS

<TABLE>
<S> <C>
ADDITIONAL POLICY PROVISIONS
Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incontestability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Misstatement of Age 2
Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Non-Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Our Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

CALCULATION OF YIELDS AND TOTAL RETURNS
Cash Management Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Other Sub-Account Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Total Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Effect of the Policy Administration Charge on Performance Data . . . . . . . . . . . . . . . . . . . . . . . . 6

SAFEKEEPING OF ACCOUNT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

STATE REGULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

RECORDS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>

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<PAGE> 37

THE FIXED ACCOUNT

DUE TO EXEMPTIVE AND EXCLUSIONARY PROVISIONS, OUR GENERAL ACCOUNT, INCLUDING
THE FIXED ACCOUNT, IS NOT SUBJECT TO OR REGISTERED UNDER THE SECURITIES ACT OF
1933, AND IS NOT SUBJECT TO OR REGISTERED AS AN INVESTMENT COMPANY UNDER THE
1940 ACT. THEREFORE, THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT REVIEWED THE DISCLOSURES IN THIS PROSPECTUS RELATING TO THE FIXED ACCOUNT.
HOWEVER, DISCLOSURES ABOUT THE GENERAL ACCOUNT AND THE FIXED ACCOUNT MAY BE
SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF FEDERAL SECURITIES LAWS
CONCERNING THE ACCURACY AND COMPLETENESS OF STATEMENTS IN PROSPECTUSES.

The Fixed Account is not part of and does not depend on the investment
performance of the Variable Account. Amounts in the Fixed Account are part of
our general account. We credit interest to amounts in the Fixed Account at
rates we determine. We guarantee the interest rate will not be less than 3% per
annum. At our sole discretion, we may credit a higher current interest rate.
Any higher current interest rate that we are crediting to the Fixed Account as
of the policy anniversary will remain in effect until that policy's next policy
anniversary, and will be applied to all amounts in the Fixed Account during
that policy year.

You may allocate all or a portion of initial and any additional net premiums to
the Fixed Account. The portion of a net premium allocated to the Fixed Account
must be a whole percentage not less than 10%. See "Net Premium Allocation" on
page 14. You may transfer all or a part of an amount in the sub-account(s) to
the Fixed Account. You may transfer a part of an amount in the Fixed Account to
the sub-account(s), subject to these restrictions:

Transfers to and from the Fixed Account may be subject to a transfer fee, and
are also subject to other restrictions. See "Transfers" on page 15.

A portion or all of the policy administration charge will be deducted from
amounts in the Fixed Account to the extent that amounts in the sub-accounts are
insufficient to cover the charge. See "Policy Administration Charge" on page
21. A fee for taxes may also be deducted from amounts in the Fixed Account.
See "Taxes" on page 23.

You may withdraw all or a part of your Fixed Account value. See "Partial
Withdrawals" on page 18 and "Proceeds on Surrender" on page 17. Upon a
partial withdrawal or a cash surrender, you may incur a surrender charge. See
"Surrender Charge" on page 20. We have the right to defer payment of any cash
surrender value or partial withdrawal from the Fixed Account for up to six
months from the date we receive your written notice for surrender. See "Payment
of Benefits, Withdrawals, Cash Surrenders and Transfers - Postponement" on page
20.

FIXED ACCOUNT VALUE

The Fixed Account value before the annuity date is:

1. the sum of the net premiums allocated to the Fixed Account;
plus
2. any amounts transferred to the Fixed Account from a
sub-account of the Variable Account; minus
3. any cash surrender value withdrawn or amounts transferred from
the Fixed Account; minus
4. any policy administration charge deducted from the amount in
the Fixed Account; plus
5. interest credited to the amount in the Fixed Account.

36
<PAGE> 38

APPENDIX A: STATE PREMIUM TAXES

Premium taxes vary according to the state and are subject to change. In many
jurisdictions there is no tax at all. For current information, a tax adviser
should be consulted.

<TABLE>
<CAPTION>
TAX RATE
--------
STATE QUALIFIED NONQUALIFIED
- ----- CONTRACTS CONTRACTS
--------- ------------
<S> <C> <C>

California .50% 2.35%

District of Columbia 2.25 2.25

Kansas .00 2.00

Kentucky 2.00 2.00

Maine .00 2.00

Mississippi .00 1.00*

Nevada .00 3.50

Pennsylvania .00 2.00

South Dakota .00 1.25

West Virginia 1.00 1.00

Wyoming .00 1.00
</TABLE>

* 1.00 effective July 1, 1994 to June 30, 1995 and 0.00 thereafter.