<PAGE>
MILESTONES
----------
issued by
PAINEWEBBER LIFE INSURANCE COMPANY
in connection with
PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT
Individual Deferred Variable Annuity Contract
============================
Supplement Dated August 1, 1995 to Prospectus Dated May 1, 1995
Changes in the Portfolios of PaineWebber Series Trust
-----------------------------------------------------
PaineWebber Life Insurance Company has been advised that at a meeting of
the Board of Trustees of PaineWebber Series Trust ("Trust") on July 20, 1995, a
number of changes were approved in the operations of a number of the Trust's
Portfolios. The shares of the various Trust Portfolios are held by the
corresponding Divisions of the Separate Account pursuant to allocation
instructions of owners of the Milestones annuity contract. A summary of the
actions authorized by the Board and the Separate Account Divisions to which they
apply is set forth below. For more complete information regarding the changes,
----------------------------------------------------
see the "Supplement to Prospectus" of the PaineWebber Series Trust which
- ------------------------------------------------------------------------
accompanies this prospectus.
- ----------------------------
The Balanced Division - No Longer Available
- -------------------------------------------
Effective July 21, 1995, shares of the Balanced Portfolio of PaineWebber
Series Trust are no longer available for purchase or transfer by the Balanced
Division of the Separate Account. The rights of Contract Owners to surrender
Contract Values invested in this Portfolio and transfers out of this Portfolio
into others is not affected.
PaineWebber Life, on behalf of the Separate Account, intends to seek
regulatory approval in the form of an order of the Securities and Exchange
Commission ("S.E.C.") to permit the substitution of the shares of the Asset
Allocation Portfolio (see below) for the shares of the Balanced Portfolio now
held by the Balanced Division of the Separate Account. Contract Owners will be
notified and given the opportunity to transfer Contract Values they have in the
Balanced Division to any of the other Portfolios of the Trust at no charge.
Contract Owners from whom no instructions are received will have their Contract
Values which are invested in the Balanced Portfolio transferred to the Asset
Allocation Portfolio if regulatory approval is received.
<PAGE>
The Asset Allocation Division
- -----------------------------
Changes in the investment policies (but not the investment objective) of
the Asset Allocation Portfolio have been approved by the Trust's Board of
Trustees and will be implemented as of August 14, 1995. Pursuant to these
changes, the Portfolio will operate as a "balanced fund", in that it will invest
in a combination of equity securities, investment grade debt obligations and
money market instruments.
If and when the substitution of shares of the Asset Allocation Portfolio
for shares of the Balanced Portfolio is effected pursuant to the above-described
S.E.C. order, the name of the Portfolio will be changed to the "Balanced
Portfolio", to reflect more accurately the Portfolio's new investment policies.
At that time, the name of this Division will be changed to "Balanced Division".
The Government Division
- -----------------------
A special meeting of shareholders is scheduled to be held in September
1995, at which the shareholders of the Trust's Government Portfolio will be
asked to approve (1) a sub-advisory agreement between Mitchell Hutchins Asset
Management, Inc. ("Mitchell Hutchins") and Pacific Investment Management
Company, (2) changing the Portfolio's investment objective from "high current
income consistent with the preservation of capital" to "total return consisting
of capital appreciation and income" and (3) an amendment to the Portfolio's
fundamental investment limitation governing borrowing to increase permissable
borrowing from 10% to 33-1/3% of its assets and permit the use of dollar rolls.
In addition, if all such proposals are approved by shareholders, the name
of the Portfolio will be changed to "Strategic Fixed Income Portfolio" and the
Division name will be changed to "Strategic Fixed Income Division".
The Fixed Income Division
- -------------------------
At its July 20, 1995 meting, the Trust Board approved the change of the
name of the Fixed Income Portfolio to "High Grade Fixed Income Portfolio", which
Mitchell Hutchins and the Trust's Board of Trustees have indicated they believe
is more descriptive of the Portfolio's policies. To avoid confusion of contract
owners, the name change will not be effective until the proposed changes in the
Government Portfolio (see above) have been implemented. The name of the
Division will be changed at that time.
Effective July 21, 1995, the Sub-Advisory Agreement between Mitchell
Hutchins and Wolf, Webb, Burk and Campbell, Inc. was terminated by the Trust.
<PAGE>
Dividend Growth Division to become Growth and Income Division
- -------------------------------------------------------------
Changes in the investment policies (but not the investment objective) of
the Dividend Growth Portfolio have been approved by the Trust's Board of
Trustees and are to be implemented as of August 14, 1995.
Upon implementation of the above-described changes in the Portfolio's
investment policies, the name of this Portfolio will be changed to the "Growth
and Income Portfolio" which, the Trustees concur, will more accurately reflect
the changes in investment policies. The name of the Separate Account Division
will also be changed to "Growth and Income Division" to reflect the Portfolio
change.
