PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT, 485APOS, 1997-02-27

PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT
485APOS, 1997-02-27

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<PAGE>

1933 ACT FILE No. 33-61488
1940 ACT FILE No. 811-7536

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 4 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14 [X]

(Check appropriate box or boxes)

PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)

PAINEWEBBER LIFE INSURANCE COMPANY
(Name of Depositor)

1200 HARBOR BOULEVARD
WEEHAWKEN, NEW JERSEY 07087
(Address of Depositor's Principal Executive Offices) (Zip Code)

Depositor's Telephone Number, including Area Code: (201) 902-3301

Copy to:
DENNIS J. HESS KIMBERLY J. SMITH, ESQ.
PAINEWEBBER INCORPORATED SUTHERLAND, ASBILL & BRENNAN, L.L.P.
1200 HARBOR BOULEVARD, 4TH FLOOR 1275 PENNSYLVANIA AVENUE, N.W.
WEEHAWKEN, NEW JERSEY 07087 WASHINGTON, D.C. 20004
(Name and Address of Agent for Service)

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

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

[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485

[X] on May 1, 1997 pursuant to paragraph (a)(i) of Rule 485

If appropriate, check the following:

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

The Company has elected pursuant to Rule 24f-2 under the Investment Company Act
of 1940 to register an indefinite number of securities. The most recent Rule
24f-2 Notice was filed on FEBRUARY 25, 1997.

<PAGE>

PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT

Cross Reference Sheet

ITEM NUMBER IN FORM N-4 AND CAPTION
- -----------------------------------
<TABLE>
<CAPTION>

Part A - Prospectus
- -------------------
<S> <C>
1. Cover Page.......................................... Cover Page
2. Definitions......................................... Definitions
3. Synopsis............................................ Summary
4. Condensed Financial INFORMATION.................... Condensed Financial Information
5. General Description of Registrant, Depositor and
Portfolio Companies ................................ The Insurance Company; The Separate Account;
The Fund
6. Deductions.......................................... Contract Charges and Deductions
7. General Description of Variable Annuity Contracts... The Contract; Variable Account Accumulation
Provisions; Death Benefit; Exercise of Rights under
the Contract; Annuity Provisions; General
Annuity Options; Additional Variable Annuity
Provisions; Miscellaneous Provisions
8. Annuity Period...................................... Variable and Fixed Annuity Provisions; General
Annuity Options; Additional Variable Annuity
Provisions
9. Death Benefit....................................... Death Benefit
10. Purchases and Contract Value........................ The Contract; Variable Account Accumulation
Provisions; How to Purchase a Contract
11. Redemptions......................................... EXERCISE OF RIGHTS UNDER THE CONTRACT
-Withdrawals
12. Taxes............................................... Federal Income Tax Status
13. Legal Proceedings................................... Legal Proceedings
14. Table of Contents of the Statement of
Additional Information............................ Table of Contents (Statement OF Additional
Information)
</TABLE>
Part B - Statement of Additional Information
- --------------------------------------------

Certain information required in Part B of the Registration Statement has
been included within the Prospectus forming part of this Registration Statement;
the following cross-references suffixed with ("P") are made by reference to the
captions in the Prospectus:
<TABLE>
<CAPTION>

ITEM NUMBER IN FORM N-4 AND CAPTION
- ----------------------------------
<S> <C>
15. Cover Page........................................... Cover Page
16. Table of Contents.................................... Table of Contents
17. General Information and History...................... PaineWebber Life Insurance Company, The
Separate Account, The Fund
18. Services............................................. THE CONTRACT - Purchase Payments (P),
MISCELLANEOUS PROVISIONS - Reports To
Contractowners (P), THE CONTRACT - DISTRIBUTION
OF CONTRACTS, OTHER INFORMATION - Administrative
Services
19. Purchase of Securities Being Offered................. THE CONTRACT - Purchase Payments (P)
20. Underwriters......................................... THE CONTRACT - Purchase Payments (P)
21. Calculation of Performance Data...................... Separate Account Performance
22. Annuity Payments..................................... THE CONTRACT - Annuity Payments
23. Financial Statements................................. Financial Statements
</TABLE>

Part C
------

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.

<PAGE>

MILESTONES
ISSUED BY
PAINEWEBBER LIFE INSURANCE COMPANY

ADMINISTRATIVE OFFICE: EXECUTIVE OFFICE:
601 6TH AVENUE 1200 HARBOR BOULEVARD
DES MOINES, IOWA 50309 WEEHAWKEN, NEW JERSEY 07087

IN CONNECTION WITH
PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
(WITHOUT EARLY WITHDRAWAL CHARGE)

The Individual Deferred Variable Annuity Contract (the "Contract") described
in this prospectus is designed to provide retirement programs for individual
purchasers on a variable payment basis. The Contract may also be used to
provide annuity benefits to individual participants in connection with
retirement plans which qualify for special tax treatment under the Internal
Revenue Code ("Code"). Purchase Payments under the Contract are allocated to
the PaineWebber Life Variable Annuity Account (the "Separate Account"), a
segregated investment account of PaineWebber Life Insurance Company
("PaineWebber Life"). The Separate Account will invest in shares of
PaineWebber Series Trust, an open-end, management investment company
registered under the Investment Company Act of 1940 ("1940 Act"). PaineWebber
Series Trust currently has the following nine available Portfolios, each
having its own investment objective and policies: Money Market, Strategic
Fixed Income, High Grade Fixed Income, Global Income, Balanced, Growth and
Income, Growth, Aggressive Growth, and Global Growth.

PaineWebber Life has filed a registration statement (the "Registration
Statement") with the Securities and Exchange Commission ("Commission") under
the Securities Act of 1933, as amended, relating to the Contract offered by
this prospectus. This prospectus has been filed as a part of the Registration
Statement and does not contain all of the information set forth in the
Registration Statement and exhibits thereto, and reference is hereby made to
such Registration Statement and exhibits for further information relating to
PaineWebber Life, the Separate Account, and the Contract. The Registration
Statement and the exhibits thereto may be inspected and copied; and copies can
be obtained at the public reference facilities of the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.

This prospectus and the prospectus for PaineWebber Series Trust set forth
information that a prospective investor should know before investing. A
Statement of Additional Information about the Separate Account dated the same
day as this prospectus has been filed with the Commission and is incorporated
herein by reference and is available without charge upon written request to
PaineWebber Life. The table of contents of the Statement of Additional
Information is contained at page 26 of this prospectus.

-------------------------------------
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS OF
PAINEWEBBER SERIES TRUST. BOTH PROSPECTUSES SHOULD BE READ CAREFULLY AND
RETAINED FOR FUTURE REFERENCE.

SHARES IN THE PAINEWEBBER SERIES TRUST AND INTERESTS IN THE CONTRACTS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, A BANK, AND THE
SHARES AND INTERESTS ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.

-------------------------------------
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.

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

Prospectus dated May 1, 1997

PWD 1
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
TOPIC PAGE
<S> <C>
DEFINITIONS................................................................ 3
SUMMARY.................................................................... 4
FEE TABLE AND EXAMPLE...................................................... 6
FINANCIAL INFORMATION...................................................... 8
CONDENSED FINANCIAL INFORMATION............................................ 8
SEPARATE ACCOUNT PERFORMANCE............................................... 10
THE INSURANCE COMPANY...................................................... 10
THE SEPARATE ACCOUNT....................................................... 11
CONTRACT CHARGES AND DEDUCTIONS............................................ 11
Withdrawal Transaction Charge............................................ 11
Transfer Charges......................................................... 12
Contract Maintenance Charge.............................................. 12
Premium and Other Taxes.................................................. 12
Mortality Risk Charge.................................................... 12
Enhanced Death Benefit Charge............................................ 12
Expense Risk Charge...................................................... 13
Distribution Expense Charge.............................................. 13
THE FUND................................................................... 13
Money Market Portfolio................................................... 14
Strategic Fixed Income Portfolio......................................... 14
High Grade Fixed Income Portfolio........................................ 14
Global Income Portfolio.................................................. 14
Balanced Portfolio (formerly Asset Allocation Portfolio)................. 14
Growth and Income Portfolio.............................................. 14
Growth Portfolio......................................................... 14
Aggressive Growth Portfolio.............................................. 14
Global Growth Portfolio.................................................. 15
THE CONTRACT............................................................... 15
Purchase Payments........................................................ 15
Dollar Cost Averaging.................................................... 15
Asset Allocation Program................................................. 16
Systematic Purchase Program.............................................. 16
VARIABLE ACCOUNT ACCUMULATION PROVISIONS................................... 17
Accumulation Units....................................................... 17
Value of an Accumulation Unit............................................ 17
Net Investment Factor.................................................... 17
DEATH BENEFIT.............................................................. 17
Before the Annuity Date.................................................. 17
After the Annuity Date................................................... 19
</TABLE>

<TABLE>
<CAPTION>
TOPIC PAGE
<S> <C>
EXERCISE OF RIGHTS UNDER THE CONTRACT...................................... 19
Beneficiary.............................................................. 19
Annuitant................................................................ 19
Ownership................................................................ 19
Collateral Assignment.................................................... 19
Transfers................................................................ 19
Withdrawals.............................................................. 20
Systematic Withdrawal Program............................................ 20
Substitution and Change.................................................. 21
ANNUITY PROVISIONS......................................................... 21
Minimum Annuity Payments................................................. 21
Annuity Date............................................................. 21
Proof of Age, Sex and Survival........................................... 21
Misstatement of Age or Sex............................................... 22
Change of Annuity Date or Annuity Option................................. 22
Frequency of Payment..................................................... 22
GENERAL ANNUITY OPTIONS.................................................... 22
Option 1--Payments for a Guaranteed Fixed Period......................... 22
Option 2--Life Annuity................................................... 22
Option 3--Life Annuity With Payments Guaranteed for 10 or 20 Years....... 22
Option 4--Joint and Survivor Annuity..................................... 23
ADDITIONAL VARIABLE ANNUITY PROVISIONS..................................... 23
First Variable Annuity Payment........................................... 23
Assumed Investment Rate.................................................. 23
Number of Annuity Units.................................................. 23
Value of Each Annuity Unit............................................... 23
Subsequent Variable Annuity Payments..................................... 23
MISCELLANEOUS PROVISIONS................................................... 23
Notices, Changes and Elections........................................... 23
Amendment of Contract.................................................... 24
Right to Examine......................................................... 24
Group or Sponsored Arrangements.......................................... 24
State Variations......................................................... 24
Retirement Plan Conditions............................................... 24
Reports to Contract Owners............................................... 25
FEDERAL INCOME TAX STATUS.................................................. 25
HOW TO PURCHASE A CONTRACT................................................. 33
VOTING RIGHTS.............................................................. 33
LEGAL PROCEEDINGS.......................................................... 34
TABLE OF CONTENTS (STATEMENT OF ADDITIONAL INFORMATION).................... 35
APPENDIX A................................................................. 36
</TABLE>

PWD 2
<PAGE>

DEFINITIONS

Accumulation Unit: A measuring unit used to determine the value of a Contract
Owner's interest in a Division of the Separate Account prior to the Annuity
Date.

Allocation Options: Each of the Divisions of the Separate Account.

Annuitant: The person on whose life Annuity payments under a Contract may be
based.

Annuity: A series of income payments made to a Contract Owner for a defined
period of time.

Annuity Date: The date on which the initial Annuity payment is determined or a
settlement option is effective. It must be the first day of a month.

Annuity Unit: A measuring unit used to compute the Variable Annuity payments
from a Division of the Separate Account.

Contract: The variable annuity contract described in this prospectus issued by
PaineWebber Life.

Contract Value: The sum of a Contract Owner's values in the Divisions.

Division: The Separate Account currently consists of nine available Divisions.
Each Division is invested in a specific Portfolio of PaineWebber Series Trust.

Fixed Annuity: A series of periodic guaranteed level payments. Such payments
are not based upon the investment experience of the Separate Account.

Fund: PaineWebber Series Trust.

Net Contract Value: The Contract Value less all applicable contract
maintenance charges and premium taxes due.

Net Purchase Payment: The Purchase Payment less any applicable premium taxes
that may be deducted.

PaineWebber Life: PaineWebber Life Insurance Company.

Purchase Payments: The money paid by or on behalf of a Contract Owner under a
Contract.

Qualified Plan: An employee or individual retirement plan or annuity qualified
for favorable tax treatment under the Internal Revenue Code.

Separate Account: PaineWebber Life Variable Annuity Account, a segregated
investment account established by PaineWebber Life to receive and invest
amounts allocated to provide variable accumulations and/or variable annuity
benefits under the Contract.

Valuation Day: Each day the New York Stock Exchange is open for trading and
valuations have not been suspended by the Securities and Exchange Commission.

Valuation Period: The interval from one Valuation Day to the following
Valuation Day.

Variable Annuity: A series of periodic payments which vary in amount according
to the investment experience of one or more Division(s) of the Separate
Account.

PWD 3
<PAGE>

SUMMARY

This prospectus contains information about the Contract, which provides fixed
benefits, variable benefits or a combination of both. It describes the uses
and objectives of the Contract, the costs of Contracts, and the rights and
privileges of Contract Owners. It also contains information about PaineWebber
Life, the Separate Account and its Divisions, and the Portfolios of the Fund
in which the Divisions invest. We urge you to read it carefully and retain it
for future reference.

The Contract has provisions relating to variable accumulation values and
variable and fixed annuity payments. On and after the Annuity Date, annuity
payments will be made to a designated payee, generally for the life of an
Annuitant. (Normally, the Contract Owner is both the payee and the Annuitant.)
PaineWebber Life assumes mortality and expense risks under the Contract, for
which it receives certain specified compensation.

Except to the extent limited by a retirement plan pursuant to which a Contract
is issued, the Contract Owner is entitled to exercise all rights of ownership
under the Contract. Net Purchase Payments for a Contract may be allocated to
one or more Divisions of the Separate Account. The Separate Account invests in
shares of the Fund.

Except to the extent provided in the Enhanced Death Benefit, the Contract
Owner bears all the investment risk for Net Purchase Payments allocated to the
Separate Account prior to the Annuity Date. The most significant difference
between a Variable Annuity and a Fixed Annuity is that under a Variable
Annuity, all investment risk after the Annuity Date is assumed by the Contract
Owner or other payee; the amounts of the annuity payments vary with the
investment performance of the Divisions of the Separate Account selected by
the Contract Owner. Under a Fixed Annuity, in contrast, the investment risk
after the Annuity Date is assumed by PaineWebber Life and the amounts of the
annuity payments do not vary.

As explained below, Net Contract Value may be withdrawn free of any withdrawal
charge at any time prior to the Annuity Date, unless restricted by the
particular retirement plan pursuant to which the Contract is issued. The
Federal tax laws, however, impose penalties upon, and under certain Qualified
Plans may prohibit, certain premature distributions from the Contracts before
or after the date on which the annuity payments are to begin. See "Exercise of
Rights Under the Contract--Withdrawals."

For purposes of determining federal income tax liability, withdrawals are
deemed to be on a last-in, first-out basis, which means taxable income is
withdrawn first. In addition, the Code imposes a 10% tax penalty to the income
portion of any premature distribution (e.g., withdrawal) from annuity
contracts generally. The penalty is not imposed on amounts received by the
Contract Owner on or after the date the Contract Owner reaches age 59 1/2. For
additional exceptions to the penalty tax, see "Federal Income Tax Status." The
tax consequences of distributions from Qualified Plans may differ from those
described above, and may vary with the type of Plan as well. There are
restrictions on withdrawals from Tax-Sheltered Annuities described in section
403(b) of the Code ("TSAs").

Contract Owners should consult their own tax counsel or other tax adviser
regarding any withdrawals or distributions.

The Contract Purchaser may return the Contract to PaineWebber Life within 10
days (or longer period if required by state law) after it is received by
delivering or mailing it to the PaineWebber Life Administrative Office at 601
6th Avenue, Des Moines, Iowa 50309. If the Contract is returned to PaineWebber
Life, it will be terminated and, unless otherwise required by state law,
PaineWebber Life will pay the Contract Owner an amount equal to his or her
Contract Value. The Contract Value

PWD 4
<PAGE>

may be more or less than the Purchase Payments made. Since state laws differ
as to the consequences of returning a Contract, a purchaser should refer to
the Contract which he or she receives for information about his or her
circumstances.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFER DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION TO ANY PERSON TO
WHOM SUCH OFFER WOULD BE UNLAWFUL.

PWD 5
<PAGE>

FEE TABLE AND EXAMPLE

VARIABLE ANNUITY
<TABLE>
<CAPTION>
PERCENTAGE
CHARGE
------------------
<S> <C>
Contract Owner Transaction Expenses
Contingent Deferred Sales Load or Early Withdrawal Charge
(as a percentage of Purchase Payments)(1)................. 0%
Transfer Fee(2)........................................... $10
Charge for Excess Withdrawals(2).......................... $25 or 2% (lesser)
Annual Contract Maintenance Charge........................ $30
</TABLE>

<TABLE>
<CAPTION>
HIGH
STRATEGIC GRADE GROWTH
MONEY FIXED FIXED GLOBAL AND AGGRESSIVE GLOBAL
MARKET INCOME INCOME INCOME BALANCED INCOME GROWTH GROWTH GROWTH
DIVISION DIVISION DIVISION DIVISION DIVISION(4) DIVISION DIVISION DIVISION DIVISION
-------- --------- -------- -------- ----------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Separate Account Annual
Expenses
(as a percentage of
average account value)
Mortality and Expense
Risk Fees.............. 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Enhanced Death Benefit
Fee(3)................. 0.12% 0.12% 0.12% 0.12% 0.12% 0.12% 0.12% 0.12% 0.12%
Distribution Expense
Charge(1).............. 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% 0.40%
Total Separate
Account Annual
Expenses(1)(3)....... 1.77% 1.77% 1.77% 1.77% 1.77% 1.77% 1.77% 1.77% 1.77%
Fund Annual Expenses
For the Year Ended
December 31, 1996 (as
a percentage of
portfolio company
average net assets)
Management Fees........ 0.50% 0.50% 0.50% 0.75% 0.75% 0.70% 0.75% 0.80% 0.75%
Other Expenses.........
Total Fund Annual
Expenses.............
</TABLE>
- ----
(1) PaineWebber Life also offers another form of this contract ("other
contract form") which is identical in most material respects to the form
described in this prospectus. The two forms differ, however, in that the
other contract form (1) imposes an early withdrawal charge but has a lower
distribution expense charge (i.e., 0.15%); and (2) has a higher Enhanced
Death Benefit charge (i.e., 0.20%). The total Separate Account Annual
Expenses for the other contract form equals 1.60%.

(2) The Contract provides that each transfer in excess of 12 in a Contract
Year is subject to a charge of $10. PaineWebber Life has waived this fee
until further notice. A withdrawal transaction charge equal to the lesser
of $25 or 2% of the amount withdrawn will be imposed on each withdrawal in
excess of two per Contract Year, except for withdrawals under a systematic
withdrawal program. An administrative fee of $1.50 per payment may be
charged for processing withdrawals under a systematic withdrawal program.
PaineWebber Life has waived this fee until further notice.
(3) The Enhanced Death Benefit is applicable (i.e., after annuity
commencement) to Contract Owners. The Enhanced Death Benefit is not
available after annuity payments begin. Thus, where the Enhanced Death
Benefit is not available, the Total Separate Account Annual Expenses would
be 1.65%.

(4) Formerly the Asset Allocation Division, PaineWebber Life, on behalf of the
Separate Account, obtained an Order from the Securities and Exchange
Commission on December 28, 1995 permitting the substitution of the shares
of the former Asset Allocation Portfolio for shares of the former Balanced
Portfolio held by the former Balanced Division of the Separate Account. On
January 26, 1996, the substitution of shares of the former Asset
Allocation Portfolio for shares of the former Balanced Portfolio was
effected pursuant to the above-described Order. At that time, the names of
both the Asset Allocation Portfolio and Division were changed to "Balanced
Portfolio" and "Balanced Division," respectively, to reflect the new
Balanced Portfolio's investment policies.

PWD 6
<PAGE>

EXAMPLE

<TABLE>
<CAPTION>
BALANCED
HIGH DIVISION
STRATEGIC GRADE (FORMERLY GROWTH
MONEY FIXED FIXED GLOBAL ASSET AND AGGRESSIVE GLOBAL
MARKET INCOME INCOME INCOME ALLOCATION INCOME GROWTH GROWTH GROWTH
DIVISION DIVISION DIVISION DIVISION DIVISION) DIVISION DIVISION DIVISION DIVISION
-------- --------- -------- -------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Whether or not you 1 Year $ 27 $ 29 $ 29 $ 31 $ 30 $ 33 $ 29 $ 32 $ 38
surrender your Contract
at the end of the 3 Years $ 82 $ 88 $ 89 $ 94 $ 91 $100 $ 89 $ 97 $117
applicable time period,
you would pay the
following expenses on a
$1,000 investment,
assuming 5% annual
return on assets:
5 Years $141 $150 $151 $160 $155 $169 $152 $165 $197
10 Years $298 $318 $320 $336 $327 $353 $320 $346 $405
</TABLE>
- ----
The purpose of the above tables is to assist the Contract Owner in
understanding the various costs and expenses that a Contract Owner will bear
directly or indirectly. Premium taxes, which are not shown in the table or
Example and which currently range from 0 to 3.5%, may be deducted when
incurred; however, PaineWebber Life may advance them when incurred and deduct
them subsequently. Note that the expense amounts shown above in the
hypothetical example are aggregate amounts for the total number of years
indicated. For additional information about expenses of the Contract, see
"Contract Charges and Deductions." THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.

PWD 7
<PAGE>

FINANCIAL INFORMATION

Financial statements of the Separate Account and PaineWebber Life are
contained in the Statement of Additional Information bearing the same date as
this prospectus. A copy of the Statement of Additional Information may be
obtained without charge by sending a written request to the administrative
offices of PaineWebber Life at 601 6th Avenue, Des Moines, Iowa 50309.

CONDENSED FINANCIAL INFORMATION

The following table sets forth condensed financial information on
accumulation units respecting Contracts issued under this prospectus through
the Separate Account, which is derived from the audited financial statements
of the Separate Account through December 31, 1996. This information should be
read in conjunction with the financial statements, related notes and other
financial information in the Statement of Additional Information.

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE AT UNIT VALUE AT UNITS AT END
YEAR ENDED 12/31 START OF YEAR (1) END OF YEAR OF YEAR
---------------- ----------------- ------------- ------------
<S> <C> <C> <C>
Money Market Division
1993............................ $10.00 $10.01 19,307
1994............................ $10.01 $10.17 56,433
1995............................ 10.17 10.53 52,325
1996............................ 10.53 10.79 26,046
Strategic Fixed Income Division
1993............................ 10.00 9.96 10,160
1994............................ 9.96 9.27 56,044
1995............................ 9.27 10.79 57,187
1996............................ 10.79 11.00 57,837
High Grade Fixed Income Division
1993............................ 10.00 9.60 14,554
1994............................ 9.60 8.81 100,691
1995............................ 8.81 10.00 82,637
1996............................ 10.00 9.95 78,789
Global Income Division
1993............................ 10.00 10.16 40,197
1994............................ 10.16 9.44 117,924
1995............................ 9.44 10.54 105,563
1996............................
Former Balanced Division (No
longer available)
1993............................ 10.00 9.87 40,536
1994............................ 9.87 9.38 202,593
1995............................ 9.38 11.35 108,366
1996............................
Balanced Division
1993............................ 10.00 10.35 12,505
1994............................ 10.35 9.20 65,539
1995............................ 9.20 11.15 59,063
1996............................ 11.15 12.78 123,705
Growth and Income Division
1993............................ 10.00 10.34 6,382
1994............................ 10.34 9.53 50,211
1995............................ 9.53 12.22 56,171
1996............................ 12.22 14.64 57,109
Growth Division
1993............................ 10.00 9.96 23,103
1994............................ 9.96 8.64 55,628
1995............................ 8.64 11.25 55,259
1996............................ 11.25 13.09 59,853
</TABLE>

PWD 8
<PAGE>

PWD 9
<PAGE>

SEPARATE ACCOUNT PERFORMANCE

From time to time the Separate Account may advertise the individual Divisions'
"yields," "effective yields" or "average total returns". "Yield" and
"effective yield" will be used for the Money Market Division and "average
total return" and "yield" will be used for all other Divisions. Both yield and
total return performance figures are based on historical earnings and are not
intended to indicate future performance. The "yield" of a Division refers to
the income generated by an investment in the Division over a stated period
expressed as a percentage of the investment. In the case of the Money Market
Division, this percentage (based upon a stated period of seven days' duration)
is then "annualized" by assuming the same percentage will be generated for
each seven day period during a year. The "effective yield" is calculated
similarly but, when annualized, the income earned by the investment in the
Division is assumed to be reinvested at the same rate in each successive seven
day period during a year. The "effective yield" will be slightly higher than
the "yield" because of the compounding effect of the assumed reinvestment of
income. In the case of Divisions other than the Money Market Division, "yield"
is computed on the basis of a one month stated period. Yield in those cases is
annualized by assuming monthly reinvestments at the same percentage over a six
month period and then doubling the six month percentage rate so obtained. The
"average total return" is computed by calculating the average annual
compounded rate of return over the stated period that would equate the initial
amounts invested to the ending redeemable Contract Value of the stated period.
See "Separate Account Performance in the Statement of Additional Information."

Recurring charges or deductions from Contract Owner accounts are reflected in
the calculations of the performance figures. Non-recurring charges are not
reflected in the calculations of performance figures; if such charges were
incurred by the Contract Owner, the effect would be to lower the "yield,"
"effective yield," or "average total return." See "Separate Account
Performance in the Statement of Additional Information."

THE INSURANCE COMPANY

PaineWebber Life is a stock life insurance company organized under the laws of
the State of California in 1956 as Pacific Fidelity Life Insurance Company.
The executive and administrative offices of PaineWebber Life are at 1200
Harbor Boulevard, Weehawken, New Jersey 07087 and 601 6th Avenue, Des Moines,
Iowa 50309, respectively. PaineWebber Life is admitted to conduct life
insurance business in the District of Columbia and all states except
Connecticut and New York. It intends to market the Contract in all of the
jurisdictions in which it is admitted to conduct life insurance business.
PaineWebber Life is a wholly owned subsidiary of PaineWebber Life Holdings
Inc., which in turn is a wholly owned subsidiary of PaineWebber Group Inc.

PaineWebber Life has entered into a contract with American Republic Insurance
Company of 601 6th Avenue, Des Moines, Iowa 50309 under which the latter has
agreed to perform certain of the administrative services relating to the
Contract. Such administrative services include: issuing Contracts, maintaining
Contract Owner records (accounting, valuation and reporting services) and
issuing reports.

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THE SEPARATE ACCOUNT

The Separate Account was established by PaineWebber Life on December 31, 1992,
pursuant to the provisions of the California insurance laws, as a segregated
investment account of PaineWebber Life. The Separate Account currently has
nine available Divisions: the Money Market Division, the Strategic Fixed
Income Division, the High Grade Fixed Income Division, the Global Income
Division, the Balanced Division (formerly, the Asset Allocation Division), the
Growth and Income Division, the Growth Division, the Aggressive Growth
Division and the Global Growth Division, each of which is invested in shares
of a designated Portfolio of the Fund.

The Separate Account and each Division therein is administered as part of the
general business of PaineWebber Life; but the income, gains and losses,
whether or not realized, from assets allocated to each Division are credited
to or charged against that Division in accordance with the terms of the
Contract, without regard to other income, gains or losses of any other
Division or arising out of any other business PaineWebber Life may conduct.
California insurance law provides that the assets of the Separate Account are
not chargeable with liabilities arising out of any other business PaineWebber
Life may conduct.

Obligations arising under the Contract are obligations of PaineWebber Life.
While PaineWebber Life is obligated to make Variable Annuity payments under
the Contract, the amount of such payments is not guaranteed. The Contract
Value allocated to the Divisions and the amount of Variable Annuity payments
will vary with the investment experience of the Division(s) to which the
Contract Owner's Contract Value is allocated. Such amounts will be subject to
certain charges and deductions. See "Contract Charges and Deductions."

The Separate Account is registered with the Commission as a unit investment
trust under the 1940 Act. Such registration does not involve supervision of
the management of the Separate Account or PaineWebber Life by the Commission.

CONTRACT CHARGES AND DEDUCTIONS

WITHDRAWAL TRANSACTION CHARGE--No initial sales charge is deducted from
Purchase Payments nor is any early withdrawal charge (contingent deferred
sales charge) imposed. Thus, a Contract Owner may, subject to the restrictions
of the particular retirement plan, withdraw his or her Net Contract Value at
any time without being subject to a redemption charge.

There is, however, a Distribution Expense risk charge imposed to recover
PaineWebber Life's expenses relating to the sale of the Contract, including
commissions, preparation of sales literature and other sales activities.
PaineWebber Life deducts a distribution expense charge daily from each
Division, at an annual rate of 0.40% of the total net assets of each Division.
See "Distribution Expense Charge." The amount of any sales charge imposed in
the form of a distribution expense charge will not exceed 8.5% of all Net
Purchase Payments.

There is also a withdrawal transaction charge of the lesser of $25 or 2% of
the amount withdrawn imposed on each withdrawal in excess of two per Contract
year, unless the withdrawal is made under a systematic withdrawal program. See
"Withdrawals."

PaineWebber Life also offers another form of this contract ("other contract
form") which is identical in most material respects to the form described in
this prospectus. The two forms differ, however, in that the other contract
form (1) imposes an early withdrawal charge, but has a lower distribution
expense charge (i.e., 0.15%), and (2) has a higher Enhanced Death Benefit
charge (i.e., 0.20%).

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TRANSFER CHARGES--Prior to the Annuity Date, the Contract Owner has the right
to transfer part or all of his or her Contract Value from one Allocation
Option to one or more of the remaining Allocation Options subject to the rules
and procedures relating to transfers. After the Annuity Date under a Variable
Annuity option, the Contract Owner may also transfer Annuity Unit values among
the Divisions of the Separate Account. The Contract provides that each
transfer in excess of 12 in a Contract Year is subject to a charge of $10.
PaineWebber Life has waived this fee until further notice.

Prior to the Annuity Date, any transfer charge will be deducted from the
Allocation Option(s) to which amounts are transferred in the ratio of the
Contract Value received by each to the total Contract Value transferred. After
the Annuity Date, any charge will be deducted from the next Annuity payment.

PaineWebber Life has the right to waive any transfer charge on automatic
transfers effected through an approved automatic allocation service.

CONTRACT MAINTENANCE CHARGE--During the accumulation period, PaineWebber Life
will deduct a Contract Maintenance Charge of $30 from the Contract Value of
each Contract in force on the first Valuation Day on or after each Contract
anniversary. The charge will also be deducted upon full withdrawal of the
Contract Value, or commencement of Annuity payments, without proration, if
such withdrawal is made or Annuity payments commence prior to the first
Valuation Day on or after each contract anniversary. If the Contract Owner
participates in more than one Allocation Option, a share of the $30 charge
will be made against each in the ratio of Contact Value in each to the total
Contract Value. The Contract Maintenance Charge is waived if total premiums
received in the first Contract Year equal or exceed $100,000. The amount of
the charge is guaranteed not to increase.

PREMIUM AND OTHER TAXES--PaineWebber Life will deduct from the Contract Value
the amount of any premium and other similar policyholder taxes levied by any
state or governmental entity with respect to that particular Contract. Such
taxes, which currently range from 0 to 3.5%, may be deducted when incurred;
however, PaineWebber Life may advance them when incurred and deduct them
subsequently. If the Contract Owner participates in more than one Allocation
Option, any premium or other taxes will be charged against each Allocation
Option in the ratio of the Contract Owner's value in each to the total
Contract Value.

MORTALITY RISK CHARGE--Annuity payments will not be affected by the mortality
experience (death rate) of persons receiving Annuity payments or of the
general population. For assuming this mortality risk and the risk inherent in
the death benefit, PaineWebber Life deducts during the entire life of the
Contract a mortality risk charge daily from each Division at an annual rate of
0.85% of the total net assets of such Division. If the mortality risk charge
is insufficient to cover the actual costs of the mortality risk, PaineWebber
Life will bear the loss; however, if the amount proves more than sufficient,
the excess will be a gain which PaineWebber Life may use at its discretion to
pay distribution and other expenses. The rate imposed for the mortality risk
charge may not be changed.

ENHANCED DEATH BENEFIT CHARGE--PaineWebber Life provides an Enhanced Death
Benefit that guarantees a specified minimum death benefit should the Contract
Owner die during the accumulation phase of the Contract. For assuming the
mortality and investment risk of the Enhanced Death Benefit, PaineWebber Life
deducts a daily risk charge from each Division at an annual rate of 0.12% of
the total net assets of such Division. The rate may not be changed by
PaineWebber Life. No charge will be deducted from assets attributable to
Contracts under which annuity payments have begun.

No charge will be deducted from assets attributable to (a) Purchase payments
in those states where PaineWebber Life is not allowed to offer an Enhanced
Death Benefit or (b) Contracts under which annuity payments have begun.

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EXPENSE RISK CHARGE--PaineWebber Life guarantees that the $30 contract
maintenance charge will not increase, regardless of actual expenses incurred
by PaineWebber Life. For assuming this expense risk, PaineWebber Life deducts
during the entire life of the Contract an expense risk charge daily from each
Division at an annual rate of 0.40% of the total net assets of each Division.
If the expense risk charge is insufficient to cover the actual cost of the
expense risk, PaineWebber Life will bear the loss; however, if the charge is
more than sufficient, the excess will be a gain which PaineWebber Life may use
at its discretion to pay distribution and other expenses. The rate imposed for
the expense risk charge may not be changed.

DISTRIBUTION EXPENSE CHARGE--For assuming the expense of distributing this
Contract, PaineWebber Life deducts a distribution expense charge daily from
each Division at an annual rate of 0.40% of the total net assets of such
Division for this Contract. If the distribution expense charge is insufficient
to cover the actual cost of distribution, PaineWebber Life will bear the loss;
however, if the charge is more than sufficient, the excess will be a gain
which PaineWebber Life may use at its discretion. The rate of the distribution
expense charge may not be changed. The staff of the Securities and Exchange
Commission considers this type of charge to constitute a sales charge. The
amount of any sales charge imposed when added to any previous sales charge,
will not exceed 8.5% of all Purchase Payments.

THE FUND

The Fund is organized as a Massachusetts business trust and is registered as
an open-end management investment company under the 1940 Act. The Fund
currently consists of nine available Portfolios: the Money Market Portfolio,
the Strategic Fixed Income Portfolio, the High Grade Fixed Income Portfolio,
the Global Income Portfolio, the Balanced Portfolio, the Growth and Income
Portfolio, the Growth Portfolio, the Aggressive Growth Portfolio and the
Global Growth Portfolio, each having its own investment objective and
policies. The Fund will offer its shares to insurance company separate
accounts only. The Trustees of the Fund may establish additional portfolios at
any time.

The Global Income Portfolio is managed as a non-diversified investment
company; the other Portfolios are all managed as diversified investment
companies. Portfolio assets are segregated and a shareholder's interest is
limited to the Portfolio(s) in which the shareholder invests. Each Portfolio
has, and is subject to, certain investment objectives and restrictions which
may not be changed without a majority vote of shareholders in that Portfolio.

Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins" or the
"investment adviser") acts as the investment adviser and administrator for
each Portfolio and the Fund, and as such provides a continuous investment
program for the Portfolios and supervision of all matters relating to the
operations of the Fund. In the case of certain Portfolios, as is discussed
below, Mitchell Hutchins has engaged other investment managers to act as
subadvisers for those Portfolios. Mitchell Hutchins is a Delaware corporation
and a wholly owned subsidiary of PaineWebber Incorporated, which is in turn a
wholly owned subsidiary of Paine Webber Group Inc., a publicly held financial
services holding company. As compensation for its services, Mitchell Hutchins
receives a fee from the Fund accrued daily and paid monthly, based on the
average daily net assets of each Portfolio.

Mitchell Hutchins has engaged the following investment management firms to
serve as subadvisers for the Portfolios indicated: (1) Pacific Investment
Management Company ("PIMCO") for the Strategic Fixed Income Division; (2)
Nicholas-Applegate Capital Management ("NACM") for the Aggressive Growth
Portfolio; and (3) GE Investment Management Incorporated ("GEIM") for the
Global Growth Portfolio. Pursuant to subadvisory agreements entered into
between Mitchell Hutchins and those firms, each of the subadvisers is
responsible for providing all of the day-to-day investment advisory services
for the respective Portfolio for which it acts as subadviser. As compensation
for such services,

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Mitchell Hutchins pays each of them a subadvisory fee. Such fee is paid out of
Mitchell Hutchins' advisory fee for the relevant Portfolios, and not directly
by the Portfolios.

A summary of the investment objective of, and the investment advisory fees
charged to, each Portfolio of the Fund available for purchase is described
below. MORE DETAILED INFORMATION IS CONTAINED IN THE CURRENT PROSPECTUS OF THE
FUND WHICH ACCOMPANIES THIS PROSPECTUS.

The MONEY MARKET PORTFOLIO seeks maximum current income consistent with
liquidity and conservation of capital. To achieve its objective, the Portfolio
invests in high grade money market instruments and repurchase agreements
secured by such instruments. As compensation for its services, the Money
Market Portfolio pays the investment adviser a fee at the annual rate of .50%
of average daily net assets.

The STRATEGIC FIXED INCOME PORTFOLIO seeks total return consisting of capital
appreciation and income. To achieve this objective, this Portfolio invests
primarily in fixed income securities of varying maturities with a dollar-
weighted average portfolio duration between three and eight years. As
compensation for its services, the Strategic Fixed Income Portfolio pays the
investment adviser a fee at the annual rate of .50% of average daily net
assets; the investment adviser pays PIMCO a subadvisory fee at the annual rate
of .25% of average daily net assets.

The HIGH GRADE FIXED INCOME PORTFOLIO primarily seeks current income
consistent with the preservation of capital and secondarily seeks capital
appreciation. This Portfolio invests primarily in debt securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities and high
quality corporate debt securities and mortgage-backed and asset-backed
securities of private issuers. As compensation for its services, the High
Grade Fixed Income Portfolio pays the investment adviser a fee at the annual
rate of .50% of average daily net assets.

The GLOBAL INCOME PORTFOLIO primarily seeks high current income and
secondarily seeks capital appreciation. To achieve its objective, this
Portfolio invests principally in high quality debt securities of foreign and
U.S. issuers. As compensation for its services, the Global Income Portfolio
pays the investment adviser a fee at the annual rate of .75% of average daily
net assets.

The BALANCED PORTFOLIO seeks a high total return with low volatility. To
achieve its objective, the Portfolio allocates investments among equity
securities, investment grade debt securities and money market instruments. As
compensation for its services, the Balanced Portfolio pays the investment
adviser a fee at the annual rate of .75% of average daily net assets.

The GROWTH AND INCOME PORTFOLIO seeks current income and capital growth. This
Portfolio invests primarily in dividend-paying equity securities believed by
Mitchell Hutchins to have potential for rapid earnings growth. As compensation
for its services, the Growth and Income Portfolio pays the investment adviser
a fee at the annual rate of .70% of average daily net assets.

The GROWTH PORTFOLIO seeks to provide long-term capital appreciation. To
achieve its objective, this Portfolio invests primarily in equity securities
of companies that, in the judgment of Mitchell Hutchins, have substantial
potential for capital growth. As compensation for its services, the Growth
Portfolio pays the investment adviser a fee at the annual rate of .75% of
average daily net assets.

The AGGRESSIVE GROWTH PORTFOLIO seeks to maximize long-term capital
appreciation. This Portfolio invests primarily in the common stocks of U.S.
companies. NACM serves as subadviser to this Portfolio. As compensation for
its services, the Aggressive Growth Portfolio pays the investment adviser a
fee at the annual rate of .80% of average daily net assets; the investment
adviser pays NACM a subadvisory fee at the annual rate of .50% of average
daily net assets.

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The GLOBAL GROWTH PORTFOLIO seeks to provide long-term capital appreciation.
To achieve its objective, this Portfolio invests primarily in common stocks of
companies based in the U.S., Europe, Japan and the Pacific Basin. As
compensation for its services, the Global Growth Portfolio pays the investment
adviser a fee at the annual rate of .75% of average daily net assets. Under an
investment Subadvisory agreement with Mitchell Hutchins, GEIM serves as
subadviser to this Portfolio. As compensation for its services, the investment
adviser pays GEIM a subadvisory fee at the annual rate of .29% of average
daily net assets.

THE CONTRACT

PURCHASE PAYMENTS--The minimum initial Purchase Payment for a Contract not
issued pursuant to a Qualified Plan is $5,000. The minimum initial Purchase
Payment for a Contract issued pursuant to a Qualified Plan or other plan
qualified for special tax treatment is $1,000. The minimum amount of a
subsequent Purchase Payment is $500 ($50 for Contracts issued under Qualified
Plans). A program for automatic transfer of Purchase Payments is also
available. See "Systematic Purchase Program." PaineWebber Life reserves the
right to reduce the amount of the minimum Purchase Payment for certain
Qualified Plans, for certain automatic purchase plans, and for Contracts
issued to officers, directors, agents, or full-time employees of PaineWebber
Life or its affiliates, the investment adviser or subadviser of the Fund, the
distributor and agents of the distributor, or the third party administrator.
At the time a Purchase Payment is made, Contract Owners should instruct
PaineWebber Life how it is to be allocated among the Allocation Options. If no
allocation is indicated or allocation instructions are not properly completed,
the Contract application is not in good order, and will be processed as
described in the paragraph immediately below. Subsequent Purchase Payments may
be made at any time without prior notice. Subsequent Purchase Payments with no
allocation specified, or improperly completed allocation instructions, will be
allocated based on the last allocation made for either a Purchase Payment or a
transfer, or as previously specified in a request to change allocations for
future Purchase Payments. Requests to change such allocations may be made in
writing or, unless the Contract Owner has requested in writing to the
contrary, by telephone or facsimile instruction, under safeguards and
conditions described in "Transfers." The Contract will not be in default if no
subsequent Purchase Payments are made. PaineWebber Life reserves the right to
reject any application or Purchase Payment. In addition, PaineWebber Life will
not accept a Purchase Payment which would cause total Purchase Payments under
a Contract to exceed $1,500,000 without prior approval by an appropriate
officer of PaineWebber Life.

That part of an initial Purchase Payment to be allocated to a Division will be
applied to purchase Accumulation Units at a price which is next computed no
later than two business days after a properly completed application is
received by PaineWebber Life. See "Variable Account Accumulation Provisions."
In the event that an application fails to recite all of the necessary
information, PaineWebber Life will promptly request that the Contract Owner
furnish further instructions and will hold the entire initial Purchase Payment
in a suspense account, without interest, for a period of five business days
pending receipt of such information. If the necessary information is not
received within five business days, PaineWebber Life will return the entire
Purchase Payment to the prospective Contract Owner, unless the prospective
Contract Owner, after being informed of the reasons for the delay,
specifically consents to PaineWebber Life retaining the initial Purchase
Payment until the application is made complete.

DOLLAR COST AVERAGING--Contract Owners who wish their Purchase Payment(s) to
be applied to purchase Accumulation Units of one or more Divisions over a
period of time will be able to do so through a dollar cost averaging ("DCA")
program. Under the DCA program, a Contract Owner may authorize the automatic
transfer of Contract Values from either the Money Market Division, the High
Grade Fixed Income Division, or the Strategic Fixed Income Division of a fixed
dollar amount (until the outgoing Division is either exhausted or reaches a
minimum level set by the Contract Owner) into one or more of the remaining
Divisions of his or her choice. Transfers will be allocated according to the
most recent allocations on record with PaineWebber Life. Any request to
transfer into the

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outgoing Division will instead be made proportionately to other Divisions
receiving the transfer. Under the DCA program, the minimum amount that may be
transferred is $100. Accumulation Units acquired by the DCA program will be
purchased at their unit values determined on the dates of the transfers. The
intervals between transfer purchases may be, at the option of the Contract
Owner, either monthly, quarterly, semi-annually or annually. Transfers will
occur on the same day of the month as the Contract issue date. If the
resulting day is not a Valuation Day, then the transfer will be made on the
next Valuation Day.

The theory of dollar cost averaging is that greater numbers of units are
purchased at times when the unit prices are relatively low than are purchased
when the prices are higher. This has the effect of reducing the aggregate
average cost per unit to less than the average of the unit prices on the same
purchase dates. However, participation in the DCA program does not assure the
Contract Owner of a greater profit, or any profit, for his or her purchases
under the program; nor will it prevent or necessarily alleviate losses in a
declining market.

Application to participate in the DCA program must be in writing on the form
supplied by PaineWebber Life for such purpose. Participation in the program
will be effective within one month after PaineWebber Life has received and
processed the application.

ASSET ALLOCATION PROGRAM--Contract Owners who wish to have their Contract
Values automatically invested in accordance with a pre-selected asset
investment program may elect to enroll in the Milestones Asset Allocation
Program ("MAAP"). MAAP allows Contract Owners to have their assets reallocated
monthly by PaineWebber Life between the Growth Portfolio, the Strategic Fixed
Income Portfolio and the Money Market Portfolio. MAAP provides three
customized programs from which a Contract Owner may select the one that best
meets his or her individual investment goals. There are three allocation
programs available: aggressive, moderate and conservative.

MAAP is based on the PaineWebber Asset Allocation Model that was designed by
Edward Kerschner, Chairman of PaineWebber Incorporated's Investment Policy
Committee and Managing Director for PaineWebber Incorporated. PaineWebber Life
will monitor whether MAAP presents a risk to orderly portfolio management. If
PaineWebber Life determines that such a risk is presented, it will consult
with the adviser to the Portfolios involved.

The Model for each program is reviewed to see whether changes in economic and
market conditions dictate a change in the program's asset mix. Such changes,
if any, will be made monthly and will be subject to certain minimum and
maximum parameters. PaineWebber Life is provided a copy of the Asset
Allocation Model on a monthly basis. The parameters of the three programs are
as follows:

<TABLE>
<CAPTION>
PORTFOLIOS AGGRESSIVE MODERATE CONSERVATIVE
---------- ---------- -------- ------------
<S> <C> <C> <C>
Growth.................................. 60%-90% 40%-70% 20%-50%
Strategic Fixed Income.................. 10%-40% 10%-50% 40%-70%
Money Market............................ 0%-30% 5%-40% 10%-40%
</TABLE>

Once the Contract Owner selects the program with which he or she is
comfortable, MAAP then automatically adjusts the invested Contract Values each
month to comply with the asset percentage mix called for by the selected
program.

Participation in MAAP requires the specific request of a Contract Owner before
it can be initiated and may be terminated at any time. Contract Owners are not
assessed a charge for this service.

SYSTEMATIC PURCHASE PROGRAM--A Contract Owner may also arrange to have a
specific dollar amount automatically withdrawn from his or her bank account or
PaineWebber Resource Management Account at periodic intervals (monthly or
quarterly) and transferred to PaineWebber Life as Purchase Payments. The bank
must be a member of the Automated Clearing House. The payments must be at

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least $100 each. Payments will be allocated among the Allocation Options in
accordance with the most recent allocation on record. The Contract Owner may
terminate his or her participation in this program at any time.

VARIABLE ACCOUNT ACCUMULATION PROVISIONS

ACCUMULATION UNITS--The number of Accumulation Units purchased for a Contract
Owner with respect to his or her initial Purchase Payment is determined by
dividing the amount credited to each Division by the Accumulation Unit value
for that Division next computed following acceptance of the application
(generally the next business day after receipt of the Purchase Payment by
PaineWebber Life). The number of Accumulation Units purchased with respect to
subsequent Purchase Payments is determined by dividing the amount credited to
each Division by the applicable Accumulation Unit value for the Valuation
Period next determined following receipt of the Purchase Payment by
PaineWebber Life.

Any transactions involving the purchase, withdrawal or transfer of amounts
received after 3:00 p.m. central time will be effected on the following
business day. The Accumulation Unit value of each Division varies in
accordance with the investment experience of that Division.

VALUE OF AN ACCUMULATION UNIT--The value of an Accumulation Unit of each
Division was arbitrarily set at $10 when the Division was established. The
value may increase or decrease from one Valuation Period to the next. The
value of an Accumulation Unit is determined by multiplying the value of an
Accumulation Unit for the last Valuation Period by the net investment factor
for that Division for the current Valuation Period. The Contract Owners bear
the investment risk that the aggregate value of the amounts allocated to the
Divisions of the Separate Account may at any time be less than, equal to, or
more than the amounts initially invested in those Divisions.

NET INVESTMENT FACTOR--This is an index used to measure the investment
performance of a Division of the Separate Account from one Valuation Period to
the next. For any Division, the net investment factor for a Valuation Period
is found by dividing (A) by (B) and subtracting (C) where: (A) is the net
asset value per share of the Portfolio held in the Division, as of the end of
the Valuation Period, plus the per-share amount of any dividend, capital gain
or other distributions made by the Portfolio in the Valuation Period; (B) is
the net asset value per share of the Portfolio held in the Division as of the
end of the immediately preceding Valuation Period; and (C) is a factor
representing the sum of the daily risk and expense charges attributable to the
particular Contract. During the Annuity Period, the factor will not reflect a
deduction at an annual basis of 0.12% for this benefit. See "Contract Charges
and Deductions." The net investment factor may be adjusted to make provision
for any income taxes required to be paid by the Separate Account.

DEATH BENEFIT

BEFORE THE ANNUITY DATE--If any Owner (or, where there are Joint Spousal
Owners, the Owner indicated by the applicable Death Benefit Option) dies prior
to the Annuity Date, PaineWebber Life will pay an Enhanced Death Benefit to
the beneficiary. The Enhanced Death Benefit must be paid in a lump sum
distribution or in the form of an annuity, as described below. If there are
Joint Spousal Owners, two Enhanced Death Benefit Options are available: the
Single Life Death Benefit Option and the Joint Life Death Benefit Option.
Under the Single Life Death Benefit Option, the Enhanced Death Benefit is paid
upon the death of the designated Owner. Under the Joint Life Death Benefit
Option, the Enhanced Death Benefit is paid upon the death of the last Owner.

The Enhanced Death Benefit equals the greatest of (A), (B), or (C) as follows:

(A) The Contract Value; or

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(B) The greatest of the Contract Values on the first Valuation Day of each
5 year period less any partial withdrawals, transfer charges, and
withdrawal transaction charges, since the beginning of the 5 year
period. The first 5 year period begins on the 5th Contract Anniversary;
or

(C) The sum of all amounts invested in the eligible Separate Account
Divisions, accumulated at interest, less any partial withdrawals,
transfer charges, and withdrawal transaction charges accumulated at
interest.

For Single Life Death Benefit Options, the interest is at an effective
annual rate of 4% for Divisions other than the Money Market Division
and at a rate equal to the Net Investment Factor for each Valuation
Period for the Money Market Division.

If this Contract has Joint Spousal Owners and a Joint Life Death
Benefit Option has been selected, the interest accumulates at an
effective annual rate of 6% for Divisions other than the Money Market
Division and at a rate equal to the Net Investment Factor for each
Valuation Period for the Money Market Division.

Interest accrual terminates on the Owner's 75th birthday. If Joint
Spousal Owners exist and the Joint Life Death Benefit Option has been
selected, then interest accrual ends on the youngest Owner's 75th
birthday.

The maximum death benefit under this paragraph (C) is the sum of all
Net Purchase Payments, each accumulated at the interest rate for
Divisions other than the Money Market Division to a maximum of two
times each Net Purchase Payment, less any partial withdrawals, transfer
charges, and withdrawal transaction charges, each accumulated at the
interest rate for Divisions other than the Money Market Division to two
times each withdrawal or deducted charge.

The Death Benefit is determined as of the Valuation Day on which PaineWebber
Life receives due proof of the Owner's death and an election of the method of
payment from the Beneficiary at its Administrative Office at 601 Sixth Avenue,
Des Moines, Iowa 50309.

If any Owner is not a natural person, the Annuitant will be treated as an
Owner for the purposes of determining if a Death Benefit is payable and for
purposes of applying the distribution requirements described below.

If any Contract Owner (or any Annuitant if any Contract Owner is not a natural
person) dies before the Annuity Date, the entire Contract Value must be
distributed within five years. An exception to this requirement exists for any
portion of the Contract Owner's interest payable to (or for the benefit of) a
designated beneficiary (within the meaning of the tax law) provided (a) such
portion will be distributed as an Annuity for the life or a period not
exceeding the life expectancy of the designated beneficiary and (b) such
Annuity payments begin not later than one year after the Contract Owner's
death (or Annuitant's death where any Contract Owner is not a natural person).
Another exception exists where the designated beneficiary is the spouse of the
deceased Contract Owner. This spousal exception may only be used once,
however. The payee under the Contract with respect to any Death Benefit will
always be the beneficiary. These minimum distribution rules vary somewhat in
the case of Qualified Plans. For example, in certain cases, the Annuity
payments must commence no later than December 31 of the calendar year in which
the Annuitant would have become age 70 1/2.

Where permitted by law and any retirement plan involved, if the designated
beneficiary is the surviving spouse he or she will be treated as the new
Contract Owner and Annuitant unless he or she elects otherwise. If Joint
Spousal Owners exist and the Joint Life Death Benefit Option was chosen, the
surviving spouse will be treated as the new Contract Owner upon the death of
the first spouse.

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AFTER THE ANNUITY DATE--If the Annuitant (or a Contract Owner who is not the
Annuitant) dies on or after the Annuity Date, the remaining portion (if any)
of his or her interest in the Contract will be distributed to the beneficiary
at least as rapidly as under the Annuity option being used at the date of
death. A beneficiary receiving payments under a Variable Annuity option after
the death may elect at any time to receive the present value of the remaining
number (if any) of guaranteed payments in a single payment, calculated using
the assumed investment rate. If no designated beneficiary survives, the
present value of any remaining guaranteed payments on the date of death,
calculated using the assumed investment rate, may be paid in one sum to the
Contract Owner or his or her estate unless other provisions have been made and
approved by PaineWebber Life. This value is calculated as of the date of
payment following receipt of due proof of death by PaineWebber Life.

EXERCISE OF RIGHTS UNDER THE CONTRACT

BENEFICIARY--The beneficiary is named in the application. Unless the
beneficiary has been irrevocably designated, the beneficiary may be changed if
a written request of the Contract Owner is received by PaineWebber Life. The
estate or heirs of any beneficiary who dies before amounts become payable to
the beneficiary have no rights under the Contract. If no beneficiary survives,
payment will be made to the Contract Owner or his or her estate.

ANNUITANT--The Annuitant is the person designated in the Application, upon
whose life annuity payments under the Contract will depend. Normally, the
Annuitant is also the Contract Owner.

OWNERSHIP--The Contract Owner is the person entitled to exercise all rights
under the Contract. Ownership of the Contract may be transferred to a new
Contract Owner with PaineWebber Life's approval. Such a transfer of ownership
does not affect a beneficiary designation. The Contract Owner should consult a
competent tax adviser prior to making any such designations or transfers.

COLLATERAL ASSIGNMENT--Unless the Contract is issued in connection with a
Qualified Plan or a non-Qualified Plan subject to Title 1 of the Employee
Retirement Income Security Act of 1974 ("ERISA"), a Contract Owner may assign
the Contract as security for an obligation. No assignment of any interest
under the Contract is binding upon PaineWebber Life until a written assignment
is filed with PaineWebber Life, and PaineWebber Life assumes no obligation
with respect to the effect or validity of any such assignment. In the event
that the Contract is issued pursuant to a Qualified Plan or a plan covered by
Title 1 of ERISA, it may not be assigned, pledged or transferred except as
allowed by law. The Contract Owner should consult a competent tax adviser
prior to assigning his or her Contract.

TRANSFERS--Prior to and after the Annuity Date, the value of any Units
(Accumulation or Annuity Units, respectively) may be transferred among the
Divisions. Transfers may be effected by writing to PaineWebber Life. The
Contract Owner may also avail himself or herself of telephone or facsimile
transfer privileges, unless he or she has made an election in writing not to
have such services made available. PaineWebber Life will employ reasonable
procedures to confirm that instructions communicated by telephone or facsimile
are genuine (including tape recording of telephone communications and
requiring that proper identification--the Contract Owner's tax I.D.
number/Social Security number and Contract number--be provided). If
PaineWebber Life fails to employ reasonable procedures to confirm that
transfer instructions communicated by telephone or facsimile are genuine, it
may be liable for any losses due to unauthorized or fraudulent transfer
instructions. PaineWebber Life reserves the right to modify or discontinue the
telephone/facsimile services at any time.

Transfers among the Divisions will be effected at the unit value next computed
after the transfer request is received by PaineWebber Life. Transfer
instructions must identify the Divisions affected and the amount to be
transferred. If the request is not received in proper form, the Contract Owner
will be contacted. If the amount in any Allocation Option is not enough to
cover the requested transfer,

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the transfer will be executed up to the amount available. Under certain
circumstances, transfers may be subject to a transfer charge. See "Transfer
Charges."

WITHDRAWALS--A Contract Owner may effect a withdrawal by submitting a request
to PaineWebber Life. The request must be submitted in writing and must be
signed by the Contract Owner(s). The signature should be exactly the same form
as the name reflected on the Contract Owner's account. The request should
include the Contract Owner's Contract number, and should identify the
Division(s) affected and the amounts to be withdrawn from each. If the request
is not received in proper form, the Contract Owner will be contacted. The
request must be accompanied by the Contract where a complete withdrawal is
requested. To comply with Code requirements, requests for withdrawals from
TSAs and Individual Retirement Plans ("IRPs") must be in an acceptable form
which indicates the reason for withdrawal.

The Contract Owner may make a partial or complete withdrawal (redemption) of
the Net Contract Value at any time before Annuity payments begin and the death
of the Owner. Upon request for a complete withdrawal, the Contract Owner will
receive his or her Net Contract Value as of the Valuation Day a written
request for such withdrawal is received by PaineWebber Life. Partial
withdrawals are subject to a $500 minimum (unless made pursuant to a
systematic withdrawal program, below). No partial withdrawal may be effected
if it would cause the remaining Contract Value to be less than the greater of
$1,000 or the amount of any unassessed premium taxes. In the event a partial
withdrawal is requested that would cause the Contract Value to fall below the
minimum, such a request will be treated as a request for a full withdrawal.

Unless otherwise directed by the Contract Owner, a request for partial
withdrawal will be treated as a request for a withdrawal from each Allocation
Option in proportion to the respective Contract Values allocated thereto.

Under certain circumstances, the withdrawal may be subject to a withdrawal
transaction charge equal to the lesser of $25 or 2% of the amount withdrawn.
See "Withdrawal Transaction Charges" and "Contract Maintenance Charge."

A withdrawal may result in adverse federal income tax consequences and is
restricted in regard to TSA Plan contracts. See "Federal Income Tax Status."

Payment of withdrawals from the Divisions will normally be made within seven
days of receipt by PaineWebber Life of a proper request. PaineWebber Life
reserves the right, however, to defer any withdrawal payment or transfer of
values if (a) the New York Stock Exchange is closed (other than customary
weekend and holiday closings); (b) an emergency exists making disposal of the
Divisions' securities or the valuation of net assets of the Divisions not
reasonably practicable; (c) the Securities and Exchange Commission has by
order permitted suspension of redemptions for the protection of security
holders; or (d) at any other time when payment may be suspended under
applicable law.

The Commission determines the conditions under which trading of securities
shall be deemed to be restricted and the conditions under which an emergency
shall be deemed to exist.

SYSTEMATIC WITHDRAWAL PROGRAM--A systematic withdrawal program allows Contract
Owners to initiate a procedure for automatically withdrawing a portion of
their investment at monthly, quarterly, semi-annual or annual intervals,
subject to certain limitations. The Contract Owner can specify that the
withdrawal either be mailed to an address he or she specifies or
electronically deposited into an account of his or her choice. The Contract
Owner selects the day of the month that the electronic deposit of funds is to
be made to that account. Currently, the Contract Owner may choose either the
15th of the month or the last day of the month. If the specified day is not a
business day, the deposit

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will occur on the prior business day. Withdrawals that are mailed may take
additional time to be received.

Unless a specific allocation request is made, withdrawals under the systematic
withdrawal program will be allocated to all Divisions in proportion to the
value in each Division. Under such a program, the minimum payout amount is
$100 per withdrawal.

Payments will be level within a Contract year. A Contract Owner electing to
participate in a systematic withdrawal program must specify (within the
foregoing limits) a fixed dollar amount to be received each period.
Applications for participating in a systematic withdrawal program must be in
writing on the form supplied by PaineWebber Life; participation under the
program will commence after PaineWebber Life has received and processed the
application. The Contract Owner may terminate his or her participation in the
systematic withdrawal program at any time. The termination will take effect
after PaineWebber Life has received and processed the request.

Withdrawals made under a systematic withdrawal program will not be subject to
the normal withdrawal transaction charge applied to withdrawals in excess of
two per year. PaineWebber Life may deduct an administrative fee of $1.50 for
each withdrawal pursuant to this program. PaineWebber Life, however, has
waived this fee until further notice. Like other withdrawals, withdrawals
under a systematic withdrawal program may have adverse tax consequences,
including a 10 percent tax penalty on premature withdrawals. See "Federal
Income Tax Status."

SUBSTITUTION AND CHANGE--Although there is no present intent to do so,
PaineWebber Life reserves the right to offer Contract Owners, at some future
date and in accordance with the requirements of the 1940 Act, the option to
direct that their Purchase Payments be allocated to an investment company
other than the Fund or to newly created Portfolios of the Fund. If shares of
the Fund or a Portfolio are not available for purchase by the Separate
Account, or if in the judgment of PaineWebber Life, further investment in such
shares is no longer appropriate in view of the purposes of the Separate
Account, then (i) shares of another registered open-end management investment
company ("mutual fund") or another Portfolio may be substituted for Fund or
Portfolio shares held in the Separate Account and/or (ii) payments received
after a date specified by PaineWebber Life may be applied to the purchase of
shares of another mutual fund or another Portfolio in lieu of Fund or
Portfolio shares. Approval of the Securities and Exchange Commission will be
obtained if necessary if shares of another mutual fund or if shares of another
Portfolio of the Fund are to be substituted for Portfolio shares held in the
Separate Account.

ANNUITY PROVISIONS

MINIMUM ANNUITY PAYMENTS--Annuity payments generally will be made monthly, but
if any payment would be less than $100 PaineWebber Life may change the
frequency so payments are at least $100 each. If the amount to be applied at
the Annuity Date is less than $5,000, PaineWebber Life may elect to pay such
amounts in a lump sum where permitted by state regulation.

ANNUITY DATE--The Contract Owner selects the Annuity Date in the application.
It must be on the first day of a month, and it may not be later than the first
day of the next month after the Annuitant's 85th birthday. If no Annuity Date
is elected, the Annuity Date will be the first day of the month after the
Annuitant attains age 85. Provisions of the Code may require that Contracts
issued pursuant to qualified retirement plans have an earlier Annuity Date.

PROOF OF AGE, SEX AND SURVIVAL--PaineWebber Life may require proof of age, sex
or survival of any person upon whose life continuation of Annuity payments
depends.

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<PAGE>

MISSTATEMENT OF AGE OR SEX--If the age or sex of the Annuitant has been
misstated, any Annuity payable shall be that which the amount applied would
have purchased at the correct age and sex. Overpayments made by PaineWebber
Life because of such misstatement, with interest at 6% per annum, will be
charged against benefits payable subsequent to adjustment. The dollar amount
of any underpayment made by PaineWebber Life as a result of a misstatement
will be paid in full with the next payment due under the Contract, with
interest at 6% per annum.

CHANGE OF ANNUITY DATE OR ANNUITY OPTION--The Contract Owner may change the
Annuity Date and/or the Annuity option by written notice received by
PaineWebber Life at least 30 days prior to the Annuity Date previously
selected and at least 30 days prior to the Annuity Date being requested.

FREQUENCY OF PAYMENT--Payments under all options will be made on a monthly
basis, unless a different arrangement has been requested by the Contract Owner
and agreed to by PaineWebber Life. If at any time any payments to be made to
any Annuitant are less than $100 each, PaineWebber Life has the right to
decrease the frequency of payments to an interval that will result in a
payment of at least $100.

Annuity payments will be made on the first Valuation Day of each month
starting with the month of the Annuity Date. Prior to the Annuity Date, the
Contract owner may choose a less frequent payment interval.

GENERAL ANNUITY OPTIONS

Subject to the provisions of the Code and of the retirement plan under which a
Contract is purchased, the Contract Owner may elect any one of the Annuity
options listed below. Other Annuity options may be selected by mutual
agreement between the Contract Owner and PaineWebber Life. If no Annuity
option election has been made by the Annuity Date, Variable Annuity payments
will automatically be made under Option 3, an Annuity payable for the life of
the Annuitant with ten years' payments certain. Contract Values in the
Separate Account will be applied to a Variable Annuity unless the Owner elects
otherwise in writing at least 30 days before the Annuity Date. Changes in the
optional form of Annuity payment may be made at any time up to 30 days prior
to the date on which Annuity payments are to begin. All options are available
as fixed or variable annuities. The Annuity payments described below are
determined on the basis of (i) the mortality table specified in the Contract,
(ii) the age and, where permitted, the sex of the Annuitant, (iii) the type of
Annuity payment option(s) selected, and (iv) the assumed investment rate.
Annuity payments will be determined on the basis of rates that are at least as
favorable as those specified in the Contract.

OPTION 1--PAYMENTS FOR A GUARANTEED FIXED PERIOD: An Annuity payable for a
specified period of time. The period must be at least five years. If this
option is taken as a Variable Annuity, the Contract Owner may at any time
choose to receive the present value of the remaining payments in a lump sum
computed at the assumed investment rate. Because a Variable Annuity under this
option is not based on a life contingency, the Contract Owner will receive no
benefit from the deduction of the mortality risk charge from the Separate
Account.

OPTION 2--LIFE ANNUITY: Payments will be made for the life of the Annuitant.
Payments will cease with the last payment due prior to the Annuitant's death.
Thus, depending on the date of the Annuitant's death, it is possible that as
few as one payment may be made under this option.

OPTION 3--LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS: An Annuity
payable during the lifetime of the Annuitant (no matter how long he or she
might live) with a guaranteed minimum number of payments. If the Annuitant
dies before the guaranteed number of payments have

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been made, the remaining payments for the guaranteed period chosen (10 or 20
years) will continue to the designated beneficiary.

OPTION 4--JOINT AND SURVIVOR ANNUITY: An Annuity will be paid during the
lifetimes of the Annuitant and the Annuitant's spouse. The amount of such
payments will not change by reason of the first death. Payments will end with
the last payment due prior to the second death. Thus, depending on the dates
of death of the Annuitant and his or her spouse, it is possible that as few as
one payment may be made under this option.

ADDITIONAL VARIABLE ANNUITY PROVISIONS

FIRST VARIABLE ANNUITY PAYMENT--The dollar amount of the first monthly Annuity
payment will be determined by applying the amount to be annuitized to the
Annuity table applicable to the Annuity option chosen. If more than one
Division has been selected, the value of the interest in each Division is
applied separately to the Annuity table to determine the amount of the first
Annuity payment attributable to that Division. The Annuity tables are in the
Contract and are based on the 1983 Table "a" for Individual Annuity Valuation
with interest at 4% for the life of the Contract.

ASSUMED INVESTMENT RATE--A 4% assumed investment rate is built into the
Annuity tables in the Contract. A higher assumption would mean a higher first
Annuity payment but more slowly rising (or more rapidly falling) subsequent
payments. A lower assumption would have the opposite effect. If the actual net
investment rate is 4% annually, Annuity payments would be level.

NUMBER OF ANNUITY UNITS--The number of Annuity Units for each applicable
Division is the amount of the first monthly Variable Annuity payment
attributable to that Division divided by the value of an Annuity Unit for that
Division as of the first Valuation Day on or after the Annuity Date. The
number of Annuity Units used in computing Annuity payments attributable to a
Division will remain constant during the Annuity period unless a transfer is
made.

VALUE OF EACH ANNUITY UNIT--The value of an Annuity Unit of each Division was
arbitrarily set at $10 when the Division was established. The value may
increase or decrease from one Valuation Period to the next. For any Valuation
Period, the value of an Annuity Unit of a particular Division is the value of
that Annuity Unit during the last Valuation Period, multiplied by the net
investment factor for that Division for the current Valuation Period. The
result is then multiplied by a factor that offsets the effect of the assumed
investment rate.

SUBSEQUENT VARIABLE ANNUITY PAYMENTS--Subsequent monthly Variable Annuity
payments will vary in amount according to the investment performance of the
applicable Division(s). The part of each subsequent Variable Annuity payment
attributable to a Division is the number of Annuity Units for that Division as
determined in the first Annuity payment (adjusted for transfers, if any)
multiplied by the value of an Annuity Unit for that Division for the Valuation
Period immediately preceding the Valuation Period in which payment is made.
The amount of each subsequent Annuity payment will not be affected by
variations in mortality experience.

MISCELLANEOUS PROVISIONS

NOTICES, CHANGES AND ELECTIONS--All notices, changes and elections under the
Contract must be in writing, signed by the proper party and received by the
Administrative Office of PaineWebber Life to be effective, except that account
transfers and changes in allocation for future Purchase Payments may be made
by telephone or facsimile unless the Contract Owner has elected in writing not
to have such services made available. Instructions given by telephone and
facsimile are subject to the safeguards

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and conditions described in "Transfers." All such notices and elections should
include the Allocation Options involved, the Contract Owner's Contract number,
and any other information necessary to process the request. If acceptable to
PaineWebber Life, notices or elections relating to beneficiaries and ownership
will take effect as of the date signed unless PaineWebber Life has already
acted in reliance on the prior status. PaineWebber Life is not responsible for
the validity of such notices and elections.

AMENDMENT OF CONTRACT--A condition or provision of the Contract may be waived
or modified only in writing signed by the President, Vice President or
Secretary of PaineWebber Life.

The Contract may be amended at any time as required to make it conform with
any law or regulation issued by any government agency to which the Contract is
subject.

RIGHT TO EXAMINE--Within the number of days of the receipt of a Contract as
prescribed by state law (typically ten), the Contract may be returned to
PaineWebber Life for cancellation. Unless state law requires otherwise,
PaineWebber Life will refund the Contract Value computed at the end of the
Valuation Period in which the Contract is received. The Contract Owner bears
the investment risk during this "free look" period. In those states, however,
where PaineWebber Life is required to return the entire Purchase Payment, to
minimize investment risk, PaineWebber Life will invest all initial Purchase
Payments in the Money Market Division until the end of the "Free Look" period
at which time it will be allocated pursuant to the Contract Owner's
allocation. In such cases, the amount returned upon cancellation prior to the
end of the "free look" period is the greater of the Purchase Payment or the
Contract Value.

GROUP OR SPONSORED ARRANGEMENTS--The Contracts may be issued to group or
sponsored arrangements, as well as on an individual basis. A "group
arrangement" includes a program under which a trustee, employer or similar
entity purchases individual Contracts with respect to a group of individuals.
A "sponsored arrangement" includes a program under which an employer permits
group solicitation of its employees or an association permits group
solicitation of its members for the purchase of the Contracts on an individual
basis.

For Contracts issued in connection with group or sponsored arrangements,
PaineWebber Life may waive or reduce one or more of the following charges:
withdrawal transaction charges, contract maintenance charges, transfer
charges, enhanced death benefit charges, mortality and expense risk charges,
distribution expense charges, and premium and other tax charges as described
in "Contract Charges and Deductions." To qualify for a waiver or reduction, a
group or sponsored arrangement must satisfy certain criteria as to, for
example, size and number of years in existence. Generally, the sales contacts
and effort, administrative costs and mortality cost per Contract vary based on
such factors as the size of the group or sponsored arrangement, its stability,
the purposes for which the Contracts are purchased and certain characteristics
of its members. The amount of reduction and the criteria for qualification
will reflect the reduced sales and administrative effort resulting from sales
to qualifying group or sponsored arrangements. PaineWebber Life may modify
from time to time both the amounts of reductions and the criteria for
qualification. Reductions in or waivers of these charges will not be unfairly
discriminatory against any person, including the affected Contract Owners and
all other Contract Owners of Contracts funded by the Separate Account.

STATE VARIATIONS--Certain contract features, including the "free look" period,
are subject to state variation. The Contract Owner should read his or her
Contract carefully to determine whether any variations apply in the state in
which the Contract is issued.

RETIREMENT PLAN CONDITIONS--A Contract acquired in connection with a
retirement plan will be subject to the conditions of the retirement plan. Such
plans may impose restrictions or special taxation

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<PAGE>

consequences in the event of withdrawal, death, disability, separation from
employment, premature distributions or excess contributions. The Contract
Owner should understand the features of any retirement plan in which he or she
participates and, if necessary, seek an explanation thereof from a qualified
tax adviser.

REPORTS TO CONTRACT OWNERS--At least once a year, a report which will set
forth information regarding the Contract Value will be sent to the Contract
Owner. The Contract Owner will also be furnished notices, proxies and
solicitation materials which relate to the Fund.

FEDERAL INCOME TAX STATUS

INTRODUCTION--The following discussion of the federal income tax treatment of
the Contract is not exhaustive, does not purport to cover all situations, and
is not intended as tax advice. The federal income tax treatment of the
Contract is unclear in certain circumstances, and a competent tax adviser
should always be consulted with regard to the application of the tax law to
individual circumstances. This discussion is based on the Internal Revenue
Code of 1986, as amended, Treasury Department regulations, and interpretations
existing on the date of this prospectus. These authorities, however, are
subject to change by Congress, the Treasury Department, and judicial
decisions.

This discussion does not address federal estate and gift tax consequences, or
any state or local tax consequences, associated with the purchase of the
Contract. In addition, PaineWebber Life makes no guarantee regarding any tax
treatment--federal, state or local--of any Contract or of any transaction
involving a Contract.

TAX STATUS OF PAINEWEBBER LIFE--PaineWebber Life is taxed as a life
insurance company under the Code. Since the operations of the Separate Account
are a part of, and are taxed with, the operations of PaineWebber Life, the
Separate Account is not separately taxed as a "regulated investment company"
under the Code. Under existing federal income tax laws, investment income and
capital gains of the Separate Account are not taxed to PaineWebber Life to the
extent they are applied under a Contract. PaineWebber Life does not anticipate
that it will incur any federal income tax liability in the Separate Account
attributable to such income and gains, and therefore PaineWebber Life does not
intend to make provision for any such taxes. If PaineWebber Life is taxed on
investment income or capital gains of the Separate Account, then PaineWebber
Life may impose a charge against the Separate Account in order to make
provision for such taxes.

NON-QUALIFIED ANNUITIES: TAX DEFERRAL DURING ACCUMULATION PERIOD--The
Contract may be issued as a "non-qualified annuity contract," that is, an
annuity contract not issued in connection with a Qualified Plan. Under
existing provisions of the Code, except as described below, any increase in a
Contract Owner's Contract Value is generally not taxable to the Contract Owner
until amounts are received from such a Contract, either in the form of Annuity
payments as contemplated by the Contract, or in some other form of
distribution. However, certain requirements must be satisfied in order for
this general rule to apply, including: (1) the investments of the Separate
Account must be "adequately diversified" in accordance with Treasury
Department regulations, (2) PaineWebber Life, rather than the Contract Owner,
must be considered the owner of the assets of the Separate Account for federal
income tax purposes, and (3) the Contract must be owned by an individual (or
treated as owned by an individual).

(1) Diversification Requirements. The Code and Treasury Department
regulations prescribe the manner in which the investments of a
segregated asset account, such as the Divisions of the Separate Account,
are to be "adequately diversified." If a Division of the Separate
Account failed to comply with these diversification standards, Contracts
based on that segregated asset account would not be treated as an
annuity contract for federal income tax purposes and the Contract Owner
would generally be taxable currently on the income on the contract

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(as defined in the tax law) beginning with the period of non-
diversification. PaineWebber Life expects that the Divisions of the
Separate Account will comply with the diversification requirements
prescribed by the Code and Treasury Department regulations.

(2) Ownership Treatment. In certain circumstances, variable annuity
contract owners may be considered the owners, for federal income tax
purposes, of the assets of a segregated asset account, such as the
assets of the Divisions of the Separate Account, used to support their
contracts. In those circumstances, income and gains from the segregated
asset account would be includible in the contract owners' gross income.
The Internal Revenue Service (the "IRS") has stated in published rulings
that a variable contract owner will be considered the owner of the
assets of a segregated asset account if the owner possesses incidents of
ownership in those assets, such as the ability to exercise investment
control over the assets. In addition, 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
[of a segregated asset account] 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 Contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it
was determined that contract owners were not owners of the assets of a
segregated asset account. For example, under this Contract, the

Contract Owner has the choice of more investment options to which to
allocate Purchase Payments and the Contract Value, and may be able to
transfer among investment options more frequently, than in such rulings.
These differences could result in the Contract Owner being treated as
the owner of all or a portion of the assets of the Separate Account. In
addition, PaineWebber Life does not know what standards will be set
forth in the regulations or rulings which the Treasury Department has
stated it expects to issue. PaineWebber Life therefore reserves the
right to modify the Contract as necessary to attempt to prevent Contract
Owners from being considered the owners of the assets of the Separate
Account. However, there is no assurance that such efforts would be
successful.

Frequently, if the IRS or the Treasury Department sets forth a new
position which is adverse to taxpayers, the position is applied on a
prospective basis only. Thus, if the IRS or the Treasury Department were
to issue regulations or a ruling which treated a Contract Owner as the
owner of the Separate Account, that treatment might apply on a
prospective basis. However, if the regulations or ruling were not
considered to set forth a new position, a Contract Owner might
retroactively be determined to be the owner of the assets of the
Separate Account.

(3) Non-Natural Owner. As a general rule, contracts held by "non-natural
persons" such as a corporation, trust or other similar entity, as
opposed to a natural person, are not treated as annuity contracts for
federal tax purposes. The income on such contracts (as defined in the
tax law) is taxed as ordinary income that is received or accrued by the
owner of the contract during the taxable year. There are several
exceptions to this general rule for non-natural owners. First, contracts
will generally be treated as held by a natural person if the nominal
owner is a trust or other entity which holds the contract as an agent
for a natural person. However, this special exception will not apply in
the case of any employer who is the nominal owner of a contract under a
non-qualified deferred compensation arrangement for its employees.

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In addition, exceptions to the general rule for non-natural owners will
apply with respect to (a) contracts acquired by an estate of a decedent
by reason of the death of the decedent, (b) certain contracts issued in
connection with certain Qualified Plans, (c) certain contracts purchased
by employers upon the termination of certain Qualified Plans, (d)
certain contracts used in connection with structured settlement
agreements, and (e) contracts purchased with a single purchase payment
when the annuity starting date (as defined in the tax law) is no later
than a year from purchase of the contract and substantially equal
periodic payments are made, not less frequently than annually, during
the annuity period.

The remainder of this discussion assumes that the Contract will be treated
as an annuity contract for federal income tax purposes.

TAXATION OF WITHDRAWALS FROM NON-QUALIFIED ANNUITIES--In the case of a
partial withdrawal prior to the Annuity Date, amounts received generally are
includible in income to the extent the Contract Owner's Contract Value before
the withdrawal exceeds his or her "investment in the contract." In the case of
a complete withdrawal for the Net Contract Value, amounts received are
includible in income to the extent they exceed the "investment in the
contract." For these purposes, the investment in the contract at any time
generally equals the total of the Purchase Payments made under the Contract to
that time less any amounts previously received from the Contract which were
not includible in income.

In the case of withdrawals made under the systematic withdrawal program, the
amount of each withdrawal will generally be taxed in the same manner as a
partial withdrawal made prior to the Annuity Date, as described above.
However, there is some uncertainty regarding the tax treatment of systematic
partial withdrawals, and it is possible that additional amounts may be
includible in income.

The Contract provides an Enhanced Death Benefit that in certain circumstances
may exceed the greater of the Purchase Payments and the Contract Value. As
described elsewhere in this pro- spectus, PaineWebber Life imposes certain
charges with respect to the Enhanced Death Benefit. It is possible that all or
a portion of those charges could be treated for federal income tax purposes as
a partial withdrawal from the Contract.

TAXATION OF ANNUITY PAYMENTS FROM NON-QUALIFIED ANNUITIES--Normally, the
portion of each Annuity payment taxable as ordinary income is equal to the
excess of the payment over the exclusion amount. In the case of fixed Annuity
payments, the exclusion amount is the amount determined by multiplying (1) the
fixed Annuity payment by (2) the ratio of the "investment in the contract"
(defined above), adjusted for any period certain or refund feature, allocated
to the fixed Annuity option to the total expected amount of fixed Annuity
payments for the period of the Contract (determined under Treasury Department
regulations). In the case of variable Annuity payments, the exclusion amount
for each variable Annuity payment is a specified dollar amount equal to the
investment in the contract allocated to the variable Annuity option when
payments begin divided by the number of variable payments expected to be made
(determined under Treasury Department regulations). There is some uncertainty
regarding the tax treatment of variable annuity payments under Option 1,
"payments for a guaranteed fixed period," and it is possible that certain
additional amounts might be includible in income.

Once the total amount of the investment in the contract is excluded using
these formulas, Annuity payments will be fully taxable. If Annuity payments
cease because of the death of the Annuitant and before the total amount of the
investment in the contract is recovered, the unrecovered amount will be
allowed as a deduction.

TAXATION OF DEATH BENEFIT PROCEEDS FROM NON-QUALIFIED ANNUITIES--Prior to the
Annuity Date, the Enhanced Death Benefit may be distributed from a Contract
because of the death of a Contract

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<PAGE>

Owner. Such death benefit proceeds are includible in income as follows: (1) if
distributed in a lump sum, they are taxed in the same manner as a complete
withdrawal, as described above, or (2) if distributed under an Annuity option,
they are taxed in the same manner as Annuity payments, as described above.
After the Annuity Date, where a guaranteed period exists under an Annuity
option and the Annuitant dies before the end of that period, payments made to
the beneficiary for the remainder of that period are includible in income as
follows: (1) if received in a lump sum, they are includible in income to the
extent that they exceed the unrecovered investment in the contract at that
time, or (2) if distributed in accordance with the existing Annuity option
selected, they are fully excludable from income until the remaining investment
in the contract is deemed to be recovered, and all Annuity payments thereafter
are fully includible in income.

If certain amounts become payable in a lump sum from a Contract, such as the
Enhanced Death Benefit, it is possible that such amounts might be viewed as
constructively received and thus subject to tax, even though not actually
received. The Enhanced Death Benefit will not be constructively received if it
is applied under an Annuity option within 60 days after the day on which it
becomes payable. (Any Annuity option selected must comply with any applicable
minimum distribution requirements under the Contract).

ASSIGNMENTS, PLEDGES, AND GRATUITOUS TRANSFERS OF NON-QUALIFIED ANNUITIES--Any
assignment or pledge (or agreement to assign or pledge) any portion of the
value of the Contract is treated for federal income tax purposes as a partial
withdrawal of such amount or portion. The investment in the contract is
increased by the amount includible in income with respect to such assignment
or pledge, though it is not affected by any other aspect of the assignment or
pledge (including its release). If a Contract Owner transfers a Contract
without adequate consideration to a person other than the Contract Owner's
spouse (or to a former spouse incident to divorce), the Contract Owner will be
taxed on the difference between the cash surrender value (within the meaning
of the tax law) and the investment in the contract at the time of transfer. In
such case, the transferee's investment in the contract will be increased to
reflect the increase in the transferor's income.

SECTION 1035 EXCHANGES OF NON-QUALIFIED ANNUITIES--Section 1035 of the Code
provides that no gain or loss is recognized when an annuity contract is
received in exchange for a life insurance, endowment, or annuity contract if
no cash or other property is received in the exchange transaction. Special
rules and procedures apply in order for an exchange to meet the requirements
of section 1035. Prospective purchasers of this Contract should consult a tax
advisor before entering into a section 1035 exchange.

PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM NON-QUALIFIED ANNUITIES--A 10%
penalty tax applies to the taxable amount of any payment from the Contract
unless the payment is: (a) received on or after the taxpayer reaches age 59
1/2; (b) attributable to the taxpayer's becoming disabled (as defined in the
tax law); (c) made on or after the death of the Contract Owner or, if the
Contract Owner is not an individual, on or after the death of the primary
annuitant (as defined in the tax law); (d) made as a series of substantially
equal periodic payments (not less frequently than annually) over the life (or
life expectancy) of the taxpayer or the joint lives (or joint life
expectancies) of the taxpayer and a designated beneficiary (as defined in the
tax law); or (e) made under a Contract purchased with a single purchase
payment when the annuity starting date (as defined in the tax law) is no later
than a year from purchase of the Contract and substantially equal periodic
payments are made, not less frequently than annually, during the Annuity
period. It is unclear whether variable Annuity distributions, or withdrawals
made pursuant to the systematic withdrawal program, will qualify for
exceptions (d) or (e) above. Accordingly, a prospective purchaser of a non-
qualified Contract who expects to receive distributions prior to attaining age
59 1/2 should consult a qualified tax advisor regarding the application of the
penalty tax to distributions.

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<PAGE>

AGGREGATION OF NON-QUALIFIED ANNUITY CONTRACTS--In certain circumstances, the
amount of an Annuity payment, partial withdrawal, or complete withdrawal from
a Contract that is includible in income is determined by combining some or all
of the annuity contracts owned by an individual. For example, if a person
purchases two or more deferred annuity contracts from the same insurance
company (or its affiliates) during any calendar year, all such contracts will
be treated as one contract for purposes of determining whether any payment not
received as an annuity (including a withdrawal prior to the annuity starting
date) is includible in income. In addition, if a person purchases a Contract
offered by this prospectus and also purchases at approximately the same time
an immediate annuity, the IRS may treat the two contracts as one contract. The
effects of such aggregation are not clear; however, it could affect the time
when income is taxable and the amount which might be subject to the 10%
penalty tax described above.

USE OF THE CONTRACT IN CONNECTION WITH QUALIFIED PLANS--In addition to issuing
the Contracts as non-qualified annuities, PaineWebber Life currently issues
the Contracts as Individual Retirement Annuities ("IRAs"). PaineWebber Life
may also issue the Contracts in connection with certain other types of
Qualified Plans which receive favorable treatment under the Code. Numerous
special tax rules apply to the Contract Owners under IRAs and other Qualified
Plans and to the Contracts used in connection with such plans. Therefore, no
attempt is made to provide more than general information about the use of
Contracts with the various types of Qualified Plans. A tax advisor should be
consulted before the purchase, change, or transfer of a Contract (or of funds
held thereunder) in connection with a Qualified Plan.

The tax rules applicable to Qualified Plans vary according to the type of plan
and the terms and conditions of the plan itself. For example, for both
withdrawals and Annuity payments under certain Contracts issued in connection
with Qualified Plans, there may be no "investment in the contract" and the
total amount received may be taxable. Also, special rules apply to the time at
which distributions must commence and the form in which the distributions must
be paid. For example, the length of any guarantee period may be limited in
some circumstances to satisfy certain minimum distribution requirements under
the Code. In addition, loans, assignments and pledges are permitted only in
limited circumstances under Contracts issued in connection with Qualified
Plans.

When issued in connection with a Qualified Plan, a Contract will be amended as
necessary to conform to the requirements of the plan. However, Contract
Owners, Annuitants, and beneficiaries are cautioned that the rights of any
person to any benefits under Qualified Plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the Contract. In addition, PaineWebber Life is not bound by terms and
conditions of Qualified Plans to the extent such terms and conditions
contradict the Contract, unless PaineWebber Life consents.

INDIVIDUAL RETIREMENT ANNUITIES--In General. As indicated above, PaineWebber
Life currently issues the Contract as an IRA. If the Contract is used for this
purpose, the Contract Owner must be the Annuitant.

Purchase Payments. When this Contract is issued as an IRA, both the Purchase
Payments that may be paid, and the tax deduction that the Contract Owner may
claim for such Purchase Payments, are limited by the tax law. In general, the
Purchase Payments that may be made for an IRA for any year are limited to the
lesser of $2,000 or 100% of the Contract Owner's earned income for the year.
Also, with respect to an individual who has less income than his or her
spouse, Purchase Payments may be made by that individual to an IRA to the
extent of the lesser of (1) $2,000, or (2) the sum of (i) the compensation
includible in such individual's gross income for the taxable year and (ii) the
compensation includible in the gross income of the individual's spouse for the
taxable year reduced by the amount allowed as a deduction for IRA
contributions to such spouse. An excise tax is imposed on IRA contributions
that exceed the law's limits.

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<PAGE>

The deductible amount of the Purchase Payments made for an IRA for any taxable
year is limited to the amount of Purchase Payments that may be paid for the
Contract for that year, or a lesser amount where the individual or his or her
spouse is an active participant in certain Qualified Plans. A single person
who is an active participant in a Qualified Plan (including a qualified
pension, profit-sharing, or annuity plan, a simplified employee pension plan,
a "section 403(b)" annuity plan, or a SIMPLE retirement account, as discussed
below) and who has adjusted gross income in excess of $35,000 may not deduct
Purchase Payments, and such a person with adjusted gross income between
$25,000 and $35,000 may deduct only a portion of such payments. Also, married
persons who file a joint return, one of whom is an active participant in a
Qualified Plan, and who have adjusted gross income in excess of $50,000 may
not deduct Purchase Payments, and those with adjusted gross income between
$40,000 and $50,000 may deduct only a portion of such payments. Married
persons filing separately may not deduct Purchase Payments if either the
taxpayer or the taxpayer's spouse is an active participant in a Qualified
Plan.

In applying these and other rules applicable to an IRA, all individual
retirement accounts and IRAs owned by an individual are treated as one
contract, and all amounts distributed during any taxable year are treated as
one distribution.

Tax Deferral During Accumulation Period. Until distributions are made from an
IRA, increases in the Contract Value of the Contract are not taxed.

IRAs and individual retirement accounts (that may invest in this Contract)
generally may not invest in life insurance contracts, but an annuity contract
that is issued as an IRA (or that is purchased by an individual retirement
account) may provide a death benefit that equals the greater of the premiums
paid and the contract's cash value. This Contract provides an Enhanced Death
Benefit that in certain circumstances may exceed the greater of the Purchase
Payments and the Contract Value. It is possible that the Enhanced Death
Benefit could be viewed as violating the prohibition on investment in life
insurance contracts with the result that the Contract would not be viewed as
satisfying the requirements of an IRA.

Taxation of Distributions and Rollovers. If all Purchase Payments made to an
IRA were deductible, all amounts distributed from the Contract are included in
the recipient's income when distributed. However, if nondeductible Purchase
Payments were made to an IRA (within the limits allowed by the tax law), only
a portion of each distribution from the Contract typically is includible in
income when it is distributed. In such a case, any amount distributed as an
Annuity payment or in a lump sum upon death or a withdrawal is taxed as
described above in connection with such a distribution from a non-qualified
annuity, treating as the investment in the contract the sum of the
nondeductible Purchase Payments at the end of the taxable year in which the
distribution commences or is made (less any amounts previously distributed
that were excluded from income). Also, in such a case, any amount distributed
upon a partial withdrawal is partially includible in income. The includible
amount is the excess of the distribution over the exclusion amount, which in
turn equals the distribution multiplied by the ratio of the investment in the
contract to the Contract Value immediately before the distribution.

In any event, subject to the direct rollover and mandatory withholding
requirements (discussed below), amounts may be "rolled over" from certain
Qualified Plans to an IRA (or from one IRA or individual retirement account to
an IRA) without incurring current income tax if certain conditions are met.
Only certain types of distributions to eligible individuals from Qualified
Plans, individual retirement accounts, and IRAs may be rolled over.

Penalty Taxes. Subject to certain exceptions, a penalty tax is imposed on
distributions from an IRA equal to 10% of the amount of the distribution
includible in income. (Amounts rolled over from an IRA generally are
excludable from income.) The exceptions provide, however, that this penalty
tax does

PWD 30
<PAGE>

not apply to distributions made to the Contract Owner (a) on or after age 59
1/2, (b) on or after death or because of disability (as defined in the tax
law), or (c) as part of a series of substantially equal periodic payments over
the life (or life expectancy) of the Contract Owner or the joint lives (or
joint life expectancies) of the Contract Owner and his or her beneficiary (as
defined in the tax law). It is unclear whether variable Annuity distributions
from this Contract, or withdrawals made pursuant to the systematic withdrawal
program, will qualify for exception (c) above. In addition to the foregoing,
failure to comply with a minimum distribution requirement will result in the
imposition of a penalty tax of 50% of the amount by which a minimum required
distribution exceeds the actual distribution from an IRA. Under this
requirement, distributions of minimum amounts from an IRA as specified in the
tax law must generally commence by April 1 of the calendar year following the
calendar year in which the Contract Owner attains age 70 1/2.

OTHER TYPES OF QUALIFIED PLANS--The following sections describe tax
considerations of Contracts used in connection with various types of Qualified
Plans other than IRAs. PaineWebber Life may not offer all of the types of
Qualified Plans described at any given time. Prospective purchasers of
Contracts for use in connection with such Qualified Plans should therefore
contact PaineWebber Life's Administrative Office at 601 6th Avenue, Des
Moines, Iowa 50309 to ascertain the availability of the Contract for certain
Qualified Plans at any given time.

Simplified Employee Pensions (SEP-IRAs). Section 408(k) of the Code allows
employers to establish simplified employee pension plans for their employees,
using the employees' IRAs for such purposes, if certain criteria are met.
Under these plans the employer may, within specified limits, make deductible
contributions on behalf of the employees to IRAs. As discussed above (see
Individual Retirement Annuities), there is some uncertainty regarding the
treatment of the Contract's Enhanced Death Benefit for purposes of certain tax
rules governing IRAs (which would include SEP-IRAs). Employers intending to
use the Contract in connection with SEP-IRAs should seek competent advice.

SIMPLE IRAs. Section 408(p) of the Code permits certain small employers to
establish "SIMPLE retirement accounts," including SIMPLE IRAs, for their
employees. Under SIMPLE IRAs, certain deductible contributions are made by
both employees and employers. SIMPLE IRAs are subject to various requirements,
including limits on the amounts that may be contributed, the persons who may
be eligible, and the time when distributions may commence. As discussed above
(see Individual Retirement Annuities), there is some uncertainty regarding the
proper characterization of the Contract's Enhanced Death Benefit for purposes
of certain tax rules governing IRAs (which would include SIMPLE IRAs).

Corporate and Self-Employed ("H.R. 10" or "Keogh") Pension and Profit-Sharing
Plans. Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of tax-favored retirement plans for employees. The
Self-Employed Individuals' 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 Contract in
order to provide benefits under the plans. The Contract provides an Enhanced
Death Benefit that in certain circumstances may exceed the greater of the
Purchase Payments and the Contract Value. It is possible that this Enhanced
Death Benefit could be characterized as an incidental death benefit. There are
limitations on the amount of incidental benefits that may be provided under
pension and profit sharing plans. In addition, the provision of such benefits
may result in currently taxable income to participants. Employers intending to
use the Contract in connection with such plans should seek competent advice.

Section 403(b) Annuity Contracts. Section 403(b) of the Code permits public
school employees, employees of certain types of charitable, educational and
scientific organizations exempt from tax under section 501(c)(3) of the Code,
and employees of certain types of State educational organizations specified in
section 170(b)(1)(A)(ii), to have their employers purchase annuity contracts
for them and,

PWD 31
<PAGE>

subject to certain limitations, to exclude the amount of premium payments from
gross income for federal income tax purposes. Purchasers of the Contracts for
use as a "Section 403(b) Annuity Contract" should seek competent advice as to
eligibility, limitations on permissible amounts of Purchase Payments and other
tax consequences associated with such Contracts. In particular, purchasers and
their advisors should consider that this Contract provides an Enhanced Death
Benefit that in certain circumstances may exceed the greater of the Purchase
Payments and the Contract Value. It is possible that this Enhanced Death
Benefit could be characterized as an incidental death benefit. If the Enhanced
Death Benefit were so characterized, this could result in currently taxable
income to purchasers. In addition, there are limitations on the amount of
incidental death benefits that may be provided under a Section 403(b) Annuity
Contract. Even if the Enhanced Death Benefit under the Contract were
characterized as an incidental death benefit, it is unlikely to violate those
limits unless the purchaser also purchases a life insurance contract as part
of his or her section 403(b) plan.

Section 403(b) Annuity Contracts contain restrictions on withdrawals of (i)
contributions made pursuant to a salary reduction agreement in years beginning
after December 31, 1988, (ii) earnings on those contributions, and (iii)
earnings after 1988 on amounts attributable to salary reduction contributions
(and earnings on those contributions) held as of the last year beginning
before January 1, 1989. These amounts can be paid only if the employee has
reached age 59 1/2, separated from service, died, or become disabled (within
the meaning of the tax law), or in the case of hardship. Amounts permitted to
be distributed in the event of hardship are limited to actual contributions;
earnings thereon cannot be distributed on account of hardship. (These
limitations on withdrawals do not apply to the extent PaineWebber Life is
directed to transfer some or all of the Contract Value as a tax-free direct
transfer to the issuer of another Section 403(b) Annuity Contract or into a
section 403(b)(7) custodial account subject to withdrawal restrictions which
are at least as stringent.)

Deferred Compensation Plans of State and Local Governments and Tax-Exempt
Organizations. Section 457 of the Code permits employees of state and local
governments and tax-exempt organizations to defer a portion of their
compensation without paying current taxes. The employees must be participants
in an eligible deferred compensation plan. Generally, a Contract purchased by
a state or local government or a tax-exempt organization will not be treated
as an annuity contract for federal income tax purposes. Those who intend to
use the Contracts in connection with such plans should seek competent advice.

DIRECT ROLLOVERS AND FEDERAL INCOME TAX WITHHOLDING FOR "ELIGIBLE ROLLOVER
DISTRIBUTIONS"--In the case of an annuity contract used in connection with a
Qualified Plan that is qualified under sections 401(a), 403(a), or 403(b) of
the Code, any "eligible rollover distribution" from the contract will be
subject to direct rollover and mandatory withholding requirements. An eligible
rollover distribution generally is the taxable portion of any distribution
from such Qualified Plans, excluding certain amounts such as minimum
distributions required under section 401(a)(9) of the Code and certain
distributions which are part of a "series of substantially equal periodic
payments" made not less frequently than annually for the life (or life
expectancy) of the employee, or for the joint lives (or joint life
expectancies) of the employee and the employee's designated beneficiary
(within the meaning of the tax law), or for a specified period of 10 years or
more.

Under these requirements, federal income tax equal to 20% of the eligible
rollover distribution will be withheld from the amount of the distribution.
Unlike withholding on certain other amounts distributed from a contract,
discussed below, the taxpayer cannot elect out of withholding with respect to
an eligible rollover distribution. However, this 20% withholding will not
apply to that portion of the eligible rollover distribution which, instead of
receiving, the taxpayer elects to have directly transferred to certain
eligible retirement plans (such as to this Contract when issued as an IRA).

If this Contract is issued in connection with a Qualified Plan that is
qualified under sections 401(a), 403(a), or 403(b) of the Code, then, prior to
receiving an eligible rollover distribution, the Contract

PWD 32
<PAGE>

Owner will receive a notice (from the plan administrator or PaineWebber Life)
explaining generally the direct rollover and mandatory withholding
requirements and how to avoid the 20% withholding by electing a direct
rollover.

FEDERAL INCOME TAX WITHHOLDING--PaineWebber Life will withhold and remit to
the federal government a part of the taxable portion of each distribution made
under a Contract unless the distributee notifies PaineWebber Life at or before
the time of the distribution that he or she elects not to have any amounts
withheld. In certain circumstances, however, PaineWebber Life may be required
to withhold tax in any event. The withholding rates applicable to the taxable
portion of periodic Annuity payments (other than eligible rollover
distributions) are the same as the withholding rates generally applicable to
payments of wages. In addition, the withholding rate applicable to the taxable
portion of non-periodic payments (including withdrawals prior to the Annuity
Date) is 10%. Regardless of whether an election is made to have federal income
tax withheld, the Contract Owner is still liable for payment of federal income
tax on the taxable portion of the payment. As discussed above, the withholding
rate applicable to eligible rollover distributions is 20%.

HOW TO PURCHASE A CONTRACT

A Contract may be purchased by completing the application form and forwarding
it, along with the Purchase Payment, to the person from whom you received the
prospectus. Contracts may be sold only by broker-dealers who are licensed
insurance agents of PaineWebber Life, either individually or through an
insurance agency. Sales commissions are paid by PaineWebber Life on the sale
of Contracts. The commissions paid to dealers range up to a maximum of 2% of
Purchase Payments made, and the selling compensation paid in turn to an agent
may be up to the amount paid to dealers. Selling agents may also receive
service fees and/or additional compensation based on persistency or other
Contract related features up to a maximum of 1.00% of the value of the
Contract per year beginning in the second Contract year, as well as non-cash
compensation, each in accordance with applicable rules of the National
Association of Securities Dealers, Inc. (the "NASD").

PaineWebber Incorporated ("PWI"), located at 1285 Avenue of the Americas, New
York, New York 10019 serves as distributor of the Contracts pursuant to a
principal underwriting (distribution) agreement. PWI is registered as a
broker-dealer under the Securities Exchange Act of 1934, as amended, and is a
member of the NASD. PWI has entered into a Principal Underwriter Agreement
with PaineWebber Life to accomplish the retail distribution of Contracts.

VOTING RIGHTS

Unless otherwise restricted by the retirement plan pursuant to which a
Contract is issued, each Contract Owner invested in Divisions of the Separate
Account will have the right to instruct PaineWebber Life with respect to
voting the shares of the Fund which are the assets underlying his or her
interest in the Separate Account at all shareholders meetings. A quorum of
Fund shareholders shall be the lesser of (1) 67% or more of the voting
securities present in person or by proxy at a shareholder meeting, if the
holders of more than 50% of the outstanding voting securities are present or
represented by proxy, or (2) more than 50% of the outstanding voting
securities.

The number of Fund shares which may be voted pursuant to the instructions of a
Contract Owner is based on the number of units owned as of the record date of
the meeting. Shares for which no instructions are received will be voted in
the same proportion as the shares for which instructions have been received.
Contract Owners will periodically receive various materials which relate to
voting Fund shares such as proxy materials and voting instruction forms.
Contract Owners will also receive periodic reports relating to the Fund
Portfolio in which they have an interest.

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<PAGE>

LEGAL PROCEEDINGS

There are no material legal proceedings to which PaineWebber Life, the Separate
Account or any of their property is subject.

The principal underwriter, PWI, is not engaged in any litigation of any
material nature to which the Separate Account is a party or to which any of its
property is subject.

PWD 34
<PAGE>

TABLE OF CONTENTS

STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
TOPIC PAGE
<S> <C>
PaineWebber Life Insurance Company......................................... B-1
The Separate Account....................................................... B-1
The Fund................................................................... B-1
The Contract............................................................... B-2
Accumulation Provisions.................................................. B-2
Annuity Payments......................................................... B-2
Distribution Contracts................................................... B-3
Other Information.......................................................... B-7
Administrative Services.................................................. B-7
Safekeeping of Assets.................................................... B-7
Independent Auditors..................................................... B-7
Registration Statement................................................... B-7
Separate Account Performance............................................... B-8
Performance................................................................ B-10
Financial Statements....................................................... B-11
</TABLE>

PWD 35
<PAGE>

APPENDIX A SOME QUESTIONS AND ANSWERS ABOUT THE CONTRACT

1. For whom is the Contract designed?

The Contract is designed for anyone seeking to accumulate retirement income
through managed investments. The Contract can be used for either private
(non-qualified) plans or tax-qualified retirement plans. The Contract Owner
may designate himself, herself or another person to be the Annuitant.

2. How do you purchase a Contract?

A Contract may be purchased through persons who are licensed to sell
insurance products and securities on agreement with PaineWebber Life and
PaineWebber Incorporated, the underwriter for the Contract. A prospective
purchaser must deliver a completed application, such other completed forms
as required and the initial Purchase Payment to the licensed salesperson,
who then forwards such payment and forms to PaineWebber Life for acceptance.
See "How to Purchase a Contract."

3. What type of annuity is the Contract?

The Contract provides an accumulation period with variable Allocation
Options and offers a choice of either fixed or variable annuity payments
after the Annuity Date. The Contract Value invested in a variable option
during either the accumulation period or annuity payment period varies to
reflect the investment performance of the Division(s) corresponding to the
Allocation Options to which that Contract's Values are allocated. Thus, the
investment risk is borne by the Contract Owner.

When a variable annuity payment option is chosen, only the first monthly
payment under the Contract is guaranteed in amount with subsequent payments
varying with the investment performance of the Division(s) to which Contract
Values are allocated.

When a fixed annuity payment option is chosen, the amount of each payment is
determined on the Annuity Date and does not vary.

4. What expenses are charged under the Contract?

No initial sales charge is deducted from Purchase Payments nor will any
early withdrawal charge be deducted upon partial or complete withdrawal.

There is a withdrawal transaction charge equal to the lesser of $25 or 2% of
the amount withdrawn for each withdrawal in excess of two in any contract
year. This charge is not applied to withdrawals made in connection with a
systematic withdrawal program. See "Systematic Withdrawal Program".

Under this Contract, PaineWebber Life deducts a distribution expense charge
daily from each Division, at an annual rate of 0.40% of the total net assets
of such Division, which is included in the 1.77% charge discussed below. The
amount of any sales charge imposed (which includes the distribution expense
charge) will not exceed 8.5% of all Purchase Payments. See "Distribution
Expense Charge."

Charges totaling 1.77%, on a yearly basis, of each Division's total net
assets are deducted from each Division. These charges consist of the
distribution expense charge discussed above (0.40%) plus an additional 1.25%
to reimburse PaineWebber Life for undertaking the mortality risk and expense
risk in connection with the Contract, and .12% which represents a premium
for the Enhanced Death Benefit. See "Contract Charges and Deductions."

PWD 36

<PAGE>

During the accumulation period, each Contract is assessed an annual contract
maintenance charge of $30. This charge, which is guaranteed never to
increase, is designed to reimburse PaineWebber Life for the cost of
administering the Contract. See "Contract Maintenance Charge."

Transfers among the Allocation Options and withdrawals are currently
permitted without limit in number. The Contract provides that each transfer
in excess of 12 in a Contract Year is subject to a charge of $10.
PaineWebber Life has waived this transfer charge until further notice. See
"Transfer Charges."

The Fund is also subject to certain charges and operating expenses. Mitchell
Hutchins serves as investment adviser to the Fund in return for a fee which
is accrued daily and paid monthly and is based on an annual percentage of
the net assets of each Portfolio of the Fund. See "The Fund" and the
accompanying prospectus for the Fund.

Any premium taxes with respect to a Contract will be paid when due.
PaineWebber Life may advance the amount of such taxes and deduct them
subsequently. See "Premium and Other Taxes".

5. May the Contract Owner withdraw all or a portion of the Contract Value?

All or a portion of the Net Contract Value may be withdrawn at any time
during the accumulation period, with the following limits: (a) the minimum
permissible amount of partial withdrawal is $500, and (b) no partial
withdrawal may be made if it would result in a remaining Contract Value of
less than the greater of: (i) $1,000, or (ii) the amount of any unassessed
premium taxes. Withdrawals from Tax-sheltered Annuities described in section
403(b) of the Code are subject to special restrictions imposed by the Code.
Subject to these limitations, the Contract Owner may make as many partial
withdrawals as he or she wishes. There is, however, a withdrawal transaction
charge equal to the lesser of $25 or 2% of the amount withdrawn for each
withdrawal in excess of two in any policy year. See "Withdrawals."

No withdrawal is permitted following the commencement of annuity payments
with the exception of Option 1 when taken as a variable annuity payment
which allows for a lump sum payment of the present value of the remaining
payments. See "General Annuity Options."

It should also be noted that a penalty tax may be imposed by the Code upon
premature withdrawal of amounts accumulated under the Contract. For federal
income tax consequences of partial or complete withdrawals, see "Exercise of
Rights under the Contract," "Withdrawals," and "Federal Income Tax Status."

6. How are the amounts of the variable annuity payments determined?

The Contract Value available on the Annuity Date is used to provide annuity
payments. The Contract Value may be reduced by premium taxes. The Contract
Owner's values in the Divisions will be converted to Annuity Units. The
Annuitant will receive annuity payments based on the Contract Value
available, the annuity tables guaranteed by the Contract and the Annuity
option selected. See "General Annuity Options." There can be no assurance
that the Contract Value during the accumulation period or the aggregate
amount of annuity payments after the Annuity Date will equal or exceed the
aggregate Purchase Payments.

7. What if the Owner dies during the accumulation period?

If the Owner dies prior to the Annuity Date, PaineWebber Life will pay the
designated beneficiaries a minimum (enhanced) death benefit equal to the
greatest of (a), (b), or (c) as follows:

(a) The Contract Value; or

PWD 37
<PAGE>

(b) The greatest of the Contract Values on the first Valuation Day of
each 5 year period less any partial withdrawals, transfer charges, and
withdrawal transaction charges, since the beginning of the 5 year
period. The first 5 year period begins on the 5th Contract Anniversary;

(c) The sum of all amounts invested in the Separate Account Divisions,
accumulated at interest, less any partial withdrawals, transfer charges,
and withdrawal transaction charges accumulated at interest.

For Single Life Death Benefit Options, the interest is at an effective
annual rate of 4% for Divisions other than the Money Market Division and
at a rate equal to the Net Investment Factor for each Valuation Period
for the Money Market Division.

If this Contract has Joint Spousal Owners and a Joint Life Death Benefit
Option has been selected, the interest accumulates at an effective
annual rate of 6% for Divisions other than the Money Market Division and
at a rate equal to the Net Investment Factor for each Valuation Period
for the Money Market Division.

The maximum death benefit under this paragraph (c) is the sum of all Net
Purchase Payments, each accumulated at the interest rate for Divisions
other than the Money Market Division to a maximum of two times each Net
Purchase Payment, less any partial withdrawals, transfer charges, and
withdrawal transaction charges, each accumulated at the interest rate
for Divisions other than the Money Market Division to two times each
withdrawal or deducted charge.

The Death Benefit is determined as of the Valuation Day on which PaineWebber
Life receives due proof of the Owner's death and an election of the method
ofpayment from the Beneficiary at its Administrative Office at 601 Sixth
Avenue, Des Moines, Iowa 50309.

If the Owner is not a natural person, the Annuitant will be treated as the
Owner for the purposes of determining if a Death Benefit is payable.

8. What are the mortality risks assumed under the Contract by PaineWebber
Life?

Under the Contract, PaineWebber Life guarantees that during the accumulation
period the death benefit will be the amounts as determined in response to
question 7 above. PaineWebber Life further guarantees that annuity payments
will not be affected by a change in the death rate assumed in establishing
its obligation to provide annuity payments under the Contract. This means
that the Annuitant under a life option will continue to receive annuity
payments no matter how long he or she lives.

9. What is the nature of the security described in the prospectus?

Because the value of an Accumulation Unit of each Division of the Separate
Account during the accumulation period is based upon the changing net asset
value of the shares of the underlying Fund Portfolio, the Contract Owner
bears the investment risks and rewards. Therefore, the Contract is
considered a security under federal law and interests therein are required
to be registered under the Securities Act of 1933. In addition, the Separate
Account is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 as a unit investment trust.

PWD 38

<PAGE>

10. Does a Contract purchaser have the right to examine and reject the
Contract?

Unless state law requires otherwise, if after receiving the Contract the
purchaser is not satisfied with it and returns it within ten days after
receipt, PaineWebber Life will refund to the Contract Owner his or her
Contract Value.

11. May additional payments be made under a Contract after it is established?

Yes, additional payments of at least $50 for Contracts issued under
Qualified Plans and $500 under other Contracts may be made at any time prior
to the Annuity Date. PaineWebber Life may waive these minimum payments for
certain plans, including automatic payment plans.

12. Can transfers be made among the Separate Account Divisions?

Transfers among Separate Account Divisions can currently be made at any time
free of charge. See "Transfer Charges."

13. How can Contract inquiries be made?

For further information concerning the Contract, write the Administrative
Office for PaineWebber Life at 601 6th Avenue, Des Moines, Iowa 50309 or
call at 1-800-986-0088. American Republic Insurance Company, which is
located at that address, serves as the third party administrator for the
Contracts pursuant to a contract with PaineWebber Life.

PWD 39

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

MAY 1, 1997

PAINEWEBBER LIFE VARIABLE ANNUITY ACCOUNT
(WITHOUT EARLY WITHDRAWAL CHARGE)

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

MILESTONES

AN INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT

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

PAINEWEBBER LIFE INSURANCE COMPANY

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

This Statement of Additional Information is not a prospectus. It should be
read only in conjunction with the PaineWebber Life Variable Annuity Account
prospectus dated May 1, 1997, a copy of which may be obtained without charge
by writing to PaineWebber Life Insurance Company's Administrative Office at
601 6th Avenue, Des Moines, Iowa 50309.
<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
PAINEWEBBER LIFE INSURANCE COMPANY.......................................... B-1
THE SEPARATE ACCOUNT........................................................ B-1
THE FUND.................................................................... B-1
THE CONTRACT................................................................ B-1
Accumulation Provisions................................................... B-1
Annuity Payments.......................................................... B-2
Distribution of Contracts................................................. B-2
OTHER INFORMATION........................................................... B-3
Administrative Services................................................... B-3
Safekeeping of Assets..................................................... B-3
Independent Auditors...................................................... B-3
Registration Statement.................................................... B-3
SEPARATE ACCOUNT PERFORMANCE................................................ B-3
PERFORMANCE................................................................. B-5
FINANCIAL STATEMENTS........................................................ B-5
</TABLE>
<PAGE>

PAINEWEBBER LIFE INSURANCE COMPANY

PaineWebber Life Insurance Company ("PaineWebber Life" or the "Company") is
a stock life insurance company organized under the laws of the State of
California as Pacific Fidelity Life Insurance Company ("PFLIC"). PFLIC was
acquired by PaineWebber Life Holdings Inc. ("PWL Holdings") in a transaction
effected December 31, 1992 when PWL Holdings acquired all the outstanding
voting securities of PFLIC from AUSA Life Insurance Company and changed the
company's name to PaineWebber Life Insurance Company. Prior to the acquisition
by PWL Holdings, all of the insurance in force of PFLIC was assumptively
reinsured by affiliated life insurance companies.

The Administrative Office of the Company is located at 601 6th Avenue, Des
Moines, Iowa 50309. The executive offices are located at 1200 Harbor
Boulevard, Weehawken, New Jersey 07087. PaineWebber Life is a wholly owned
subsidiary of PWL Holdings, which in turn is a wholly owned subsidiary of
PaineWebber Group, Inc. PWL Holdings and PaineWebber Group, Inc. are holding
companies for the PaineWebber group of financial services entities.
PaineWebber Group, Inc. is a publicly-held company whose shares are traded on
the New York Stock Exchange.

The employees of the Company are covered under a life insurance company
blanket bond covering the Company and its affiliates in the aggregate amount
of $100 million.

THE SEPARATE ACCOUNT

PaineWebber Life Variable Annuity Account (the "Separate Account") was
established by the Company in December, 1992, pursuant to the provisions of
California law, as a segregated investment account of the Company. The
Separate Account currently has nine available Divisions, each of which invests
in shares of a designated Portfolio (a "Portfolio") of the PaineWebber Series
Trust (the "Fund"). The Separate Account is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company
Act of 1940 ("1940 Act"). Such registration does not involve supervision of
the management of the Separate Account or the Company by the Securities and
Exchange Commission.

THE FUND

The Fund was organized in 1986 as a Massachusetts business trust and is
registered as an open-end management investment company under the 1940 Act.
Portfolio assets are segregated and a Contract Owner's interest is limited to
the Portfolio(s) in which the Contract Owner's Purchase Payments are invested.

Each Portfolio has, and is subject to, certain investment objectives and
restrictions which may not be changed without a majority vote of shareholders
in that Portfolio.

The Fund will offer its shares to insurance company separate accounts only.

THE CONTRACT

ACCUMULATION PROVISIONS

ACCUMULATION UNITS--The number of a Division's Accumulation Units purchased
by a Contract Owner with respect to his or her initial Purchase Payment is
determined by dividing the amount credited to the Division by the Accumulation
Unit value for that Division next computed following acceptance of the
application (generally the next business day after receipt of the Purchase
Payment by the Company). The number of Accumulation Units purchased with
respect to subsequent Purchase Payments is determined by dividing the amount
credited to the Division by the applicable Accumulation Unit value for the
Valuation Period next determined following receipt of the Purchase Payment by
the Company. The Accumulation Unit value of each Division varies in accordance
with the investment experience of that Division.

B-1
<PAGE>

VALUE OF AN ACCUMULATION UNIT--The value of an Accumulation Unit of each
Division was arbitrarily set at $10 when the Division was established. The
value may increase or decrease from one Valuation Period to the next. The
value of an Accumulation Unit is determined by multiplying the value of an
Accumulation Unit for the last Valuation Period by the net investment factor
for that Division for the current Valuation Period. The Contract Owner bears
the investment risk that the Contract Value may at any time be less than,
equal to, or more than the amounts invested in the Separate Account.

ANNUITY PAYMENTS

ANNUITY PAYMENTS--The Contract Owner's value in the Allocation Options may
be applied to provide either a Variable Annuity or a Fixed Annuity as selected
by the Contract Owner. The dollar amount of Variable Annuity payments will
reflect the investment experience of the Separate Account Division(s) in which
the Contract Owner is invested but will not be affected by adverse mortality
experience (which may exceed the mortality risk charge provided for under the
Contract).

1. FIRST ANNUITY PAYMENT: The amount used to establish the first monthly
payment consists of the Contract Owner's values in the Allocation Options
as of the first Valuation Day on or after the Annuity Date adjusted for
charges and deductions. The Contract contains tables showing monthly
payment factors and annuity premium rates per $1,000 of the amount applied.

At the time the first monthly Variable Annuity payment is determined, a
number of Annuity Units for each Division is established for the Owner by
dividing the monthly payment derived from the tables by the Annuity Unit
value for the Division as of the date the first Annuity payment is due. The
number of Annuity Units forming the basis of an Annuity payment will not
change during the Annuity period unless Annuity Units are transferred to or
from another Division. The value of the Annuity Units, however, will change
based upon investment results.

2. SUBSEQUENT VARIABLE ANNUITY PAYMENTS: The amount of monthly payments
after the first for any Division will be determined by multiplying the
number of Annuity Units for that Division determined for the first payment
(adjusted for transfers, if any) by the Annuity Unit value for that
Division for the Valuation Period immediately preceding the Valuation
Period in which the subsequent payment is made. It will be the Company's
practice to mail Variable Annuity payments no later than 7 days after the
last day of the Valuation Period upon which they are based or the monthly
anniversary thereof.

ASSUMED INVESTMENT RATE--The tables set forth in the Contract are based upon
the 1983 Table "a" for Individual Annuity Valuation, with an assumed
investment rate of 4%. Variable Annuity payments will vary from payments based
on the assumed investment rate depending on whether the investment experience
of the Division(s) in which the Contract Owner is invested is better or worse
than the assumed investment rate. Over a period of time, if the Division(s)
achieved a net investment result equal to the assumed investment rate, the
Annuity Units would not change in value, and the amount of the Annuity
payments would be level. However, if the Division(s) achieved a net investment
result greater than the assumed investment rate, the Annuity Units would
increase in value and the amount of the Annuity payments would increase.
Similarly, if the Division(s) achieved a net investment result smaller than
the assumed investment rate, the Annuity Units would decrease in value and the
amount of the Annuity payments would decrease.

ELECTION OF ANNUITY DATE AND FORM OF ANNUITY--The Annuity Date and the form
of Annuity payment are elected by the Contract Owner. Unless a different
Annuity Date is elected, Annuity payments will begin on the first day of the
month following the Annuitant's 85th birthday. Contracts issued under
Qualified Plans may require an earlier Annuity Date. To the extent not
prohibited by any Qualified Plan requirements, an optional Annuity Date may be
elected; such date may be the first day of any month prior to the normal
Annuity Date. The election must be made at least 30 days before the optional
Annuity Date elected.

DISTRIBUTION OF CONTRACTS

Contracts are offered on a continuous basis through licensed insurance
agents of the Company (who are also either broker-dealers or persons
associated with broker-dealers), either individually or through an insurance
agency.

B-2
<PAGE>

PaineWebber Incorporated ("PWI"), located at 1285 Avenue of the Americas,
New York, New York 10019, serves as the principal underwriter of the Contracts
pursuant to an underwriting (distribution) agreement ("Underwriting
Agreement"). The Company and PWI are both indirect wholly-owned subsidiaries
of PaineWebber Group, Inc. The Company is registered as a broker-dealer under
the Securities Exchange Act of 1934, and is a member of the National
Association of Securities Dealers, Inc. ("NASD"). The Company may accomplish
the retail distribution of Contracts itself or enter into Dealer Agreements
with other registered broker- dealers to do so. The Contracts will be offered
for sale by PWI and its correspondent firms.

The Underwriting Agreement may be terminated by the Company on behalf of the
Separate Account at any time on 60 days' written notice without payment of any
penalty. The Underwriting Agreement may be terminated at any time by PWI
without payment of any penalty on 60 days' written notice to the Separate
Account and the Company. The Underwriting Agreement automatically terminates
in the event of its assignment. PWI received underwriting compensation from
the Company of $3,494,777 in 1994, $700,176 in 1995 and $194,010 in 1996.

OTHER INFORMATION

ADMINISTRATIVE SERVICES

The Company has entered into a contract with American Republic Insurance
Company under which the latter has agreed to perform certain of the
administrative services relating to the Contract. Such administrative services
include: issuing Contracts, maintaining Contract Owner records (accounting,
valuation and reporting services) and issuing reports. The address of the
administrative office is 601 6th Avenue, Des Moines, Iowa 50309.

SAFEKEEPING OF ASSETS

The Company maintains custody of the assets of the Separate Account. The
Fund shares owned by the Separate Account will be held in "book" form. That
is, actual certificates will not be issued by the Fund, rather, the record of
shares issued to the Separate Account will be recorded on the books of the
Fund by the Fund's transfer agent. The Company also maintains the records of
portfolio transactions of the Separate Account.

INDEPENDENT AUDITORS

serves as independent auditors for the Separate Account and the
Company and performs audit and accounting services for the Separate Account
and the Company.

REGISTRATION STATEMENT

A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, with respect to the Contract. The
Prospectus and this Statement of Additional Information do not contain all
information set forth in the registration statement, its amendments and
exhibits, reference to which is made for further information concerning the
Separate Account, the Company and the Contract. Statements contained in this
Statement of Additional Information and the related Prospectus as to the
content of the Contract and other legal instruments are summaries. For a
complete statement of the terms thereof, reference is made to such instruments
as filed.

SEPARATE ACCOUNT PERFORMANCE

From time to time the Separate Account may advertise the individual Division
"yields," "effective yields," or "average total return." These figures will be
based on historical earnings and are not intended to indicate future
performance.

(a) YIELD--The yield quotation is based on a seven-day period. If the
seven-day period falls on a non-valuation day, a calculation will be made
as if the seventh day were a valuation day for this purpose only. The yield
is computed by determining the net change, exclusive of capital changes, in
the value of a

B-3
<PAGE>

hypothetical pre-existing account having a balance of one accumulation unit
of the Division at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from contract owner accounts, and dividing the
difference by the value of the Division at the beginning of the base period
to obtain the base period return, and then multiplying the base period
return by 365/7 with the resulting yield figure carried to at least the
nearest hundredth of one percent. Recurring charges are prorated among the
Divisions by multiplying the flat fee by a fraction, the numerator of which
is the average number of contract owner accounts that have money allocated
to the Division and the denominator of which is the sum of the average
number of contract owner accounts that have money allocated to each of the
Divisions. A Division's prorated flat fee is divided by the average number
of accumulation units per contract owner in that Division in order to
equate the flat fee to a one-unit basis.

(b) EFFECTIVE YIELD--The effective yield quotation is based on a seven-
day period. If the seven-day period falls on a non-valuation day, a
calculation will be made as if the seventh day were a valuation day for
this purpose only. The effective yield is computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one accumulation unit of the Division
at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from contract owner accounts, and dividing the
difference by the value of the Division at the beginning of the base period
to obtain the base period return, and then compounding the base period
return by adding 1, raising the sum to a power equal to 365 divided by 7,
and subtracting 1 from the result.

(c) TOTAL RETURN--The total return quotation is based on annual periods
or from inception to the end of the Division's first fiscal year. In
general, the total return is computed by finding the average annual
compounded rates of return over the 1-, 5-, and 10-year periods or from the
effective date if the Division has been in effect less than the stated
periods, that would equate the initial amount invested to the ending
redeemable value.

Recurring charges are prorated among the Divisions by multiplying the
flat fee by a fraction, the numerator of which is the average number of
Contract Owner accounts that have money allocated to the Division and the
denominator of which is the sum of the average number of Contract Owner
accounts that have money allocated to each of the Divisions. A Division's
prorated flat fee is divided by the average account value per $1,000 per
Contract Owner in that Division in order to equate the flat fee to a $1,000
account size basis.

(d) TOTAL RETURN NOT INCLUDING EARLY WITHDRAWAL CHARGES--The total return
does not include a early withdrawal charge since none are assessed under
this Contract. The quotation is based on the periods from inception to the
end of its first fiscal year and each full year thereafter. In general, the
total return is computed by finding the average annual compounded rates of
return over the 1-, 5- and 10-year periods or from the effective date if
the account has been in effect less than the stated periods, that would
equate the initial amount invested to an ending value.

Performance information for a Division may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, or other indices measuring performance of a pertinent
group of securities so that investors may compare a Division's results with
those of a group of securities widely regarded by investors as representative
of the securities markets in general; (ii) other variable annuity separate
accounts or other investment products tracked by Lipper Analytical Services, a
widely used independent research firm which ranks mutual funds and other
investment companies by overall performance, investment objectives, and
assets, or tracked by other ratings services, companies, publications, or
persons such as Variable Annuity Research and

B-4
<PAGE>

Data Service ("VARDS") and Morningstar who rank separate accounts or other
investment products on overall performance or other criteria; and (iii) the
Consumer Price Index (measure for inflation) to assess the real rate of return
from an investment in the Contract. Unmanaged indices may assume the
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.

From time to time the Separate Account may seek to illustrate performance of
the Milestones Asset Allocation Program ("MAAP"). Such illustration may take
the form of a comparative investment in the S&P 500, 10-year Government Bonds
and 13-week Treasury bills indices simultaneously in the proportions
recommended by the PaineWebber Asset Allocator Programs since 1973, the date
of its inception.

Any such illustration will disclose that MAAP does not involve investments
in a specific index but rather in the three Milestones portfolios and that the
performance of the indices does not necessarily correspond to the three
Milestones portfolios. In addition, it will be noted that certain fees,
charges and transaction costs are assessed with the Milestones annuity
contract, which are not reflected in the illustration.

PERFORMANCE

Money Market Division Yield and Effective Yield for the seven-day period
ended December 31, 1996 were 2.55% and 2.59%, respectively.

The average total return for all the Divisions, except the Money Market, of
the Separate Account for the one-, and where applicable, five-year periods
ending on December 31, 1996, and from inception are as follows:

AVERAGE ANNUAL TOTAL RETURN

PERIOD ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
INCEPTION SINCE
DIVISION DATE(1) 1 YEAR 5 YEARS INCEPTION(1)
-------- --------- ------ ------- ------------
<S> <C> <C> <C> <C>
Strategic Fixed Income.......................... 11/15/93 1.89% 4.89% 5.82%
High Grade Fixed Income......................... 11/5/93 -0.44% N/A -0.16%
Global Income................................... 9/15/93 4.63% 4.34% 6.13%
Balanced (formerly Asset Allocation)............ 10/29/93 14.48% 7.66 7.95%
Growth and Income............................... 9/15/93 19.65% 6.65 6.64%
Growth.......................................... 10/29/93 16.25% 9.88% 11.73%
Aggressive Growth............................... 11/1/93 22.65% N/A 10.76%
Global Growth................................... 9/15/93 12.97% 2.94% 4.41%
</TABLE>
- --------

(1) The various Divisions of the Separate Account first became operational
beginning in September 1993. Except for the High Grade Fixed Income and
Aggressive Growth Portfolios, the PaineWebber Series Trust which funds the
Contracts became operational on earlier dates. Thus, the performance shown
for periods prior to the inception date of a particular Division is the
performance of the various Portfolios of PaineWebber Series Trust for
those periods less the charges at the Contract level.

FINANCIAL STATEMENTS

The financial statements of the Company contained herein should be
considered only for the purposes of informing investors as to its ability to
carry out contractual obligations as a sponsor under the Contracts as
described elsewhere herein and in the Prospectus. The financial statements of
the Separate Account are also included in this Statement of Additional
Information.

B-5
<PAGE>

PART C
------

OTHER INFORMATION
-----------------

Item 24. Financial Statements and Exhibits
- ------------------------------------------

(a) Financial Statements
--------------------

The following financial statements will be included in Part B of the
Registration Statement by amendment:

Financial Statements of PaineWebber Life Insurance Company

Balance Sheets
Statements of Operations
Statements of Changes in Stockholder's Equity
Statements of Cash Flows
Notes to Financial Statements

Financial Statements of PaineWebber Life Variable Annuity Account

Statement of Net Assets
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements

(b) Exhibits
--------
<C> <S> <C>
(1) Resolution Establishing Separate Account................ *
(2) Custody Agreements........................ Not Applicable
(3) Form of Distribution Contract.......................... **
(4) Variable Annuity Contract.............................. **
(5) Application for Contract................................**
(6) Depositor - Corporate Documents
(a) Certificate of Incorporation...................... *
(b) By-Laws........................................... **
(c) Certificate of Authority.......................... **
(7) Form of Reinsurance Contracts.......................... **
(8) (a) Form of Fund Participation Agreement.............. **
(b) Forms of Corporate Administration Agreement
and "Third Party Administrator" Agreement........... *
(9) Opinion of Counsel.................................... **
Consent of Counsel.................................... **
(10) Consent of Independent Auditors...................... ***
(11) Financial Statements Omitted from Item 23.. Not Applicable
(12) Initial Capitalization Agreement........... Not Applicable
(13) Performance Computations............................... *
</TABLE>
C-1
<PAGE>

(14) Diagram and Listing of All Persons directly
or indirectly controlled by or under common
control with PaineWebber Life Insurance
Company, the Depositor of Registrant................... **

(15) Financial Data Schedule............................... ***

* Previously filed with registration statement 33-58808 on April 22, 1993.
** Previously filed with Pre-Effective Amendment No. 1 on June 25, 1993.

*** To be filed by amendment

Item 25. Directors and Officers of the Depositor
- -------------------------------------------------

The directors and principal officers of PaineWebber Life Insurance Company
(the "Depositor") are listed below. Their principal business address is 1200
Harbor Boulevard, Weehawken, New Jersey 07087.

Name Title
---- -----

Dennis J. Hess Director, Chairman of the Board and President

Robert J. Bethoney Director and Executive Vice President

Allan P. Golotko Vice President

Gerianne J. Silva Vice President and Assistant Secretary

Pierce R. Smith Treasurer

Richard J. Tucker Director, Senior Vice President, and Secretary

Item 26. Persons Controlled by or under Common Control with Depositor or
- -------------------------------------------------------------------------
Registrant
- ----------

The Registrant is a separate account of the Depositor. For a complete
listing and diagram of all persons directly or indirectly controlled by or under
common control with the Depositor, see Exhibit 14 to Pre-Effective Amendment No.
1 to the Registration Statement filed on June 25, 1993.

Item 27. Number of Contract Owners
- -----------------------------------

_____ as of March 31, 1997.

Item 28. Indemnification
- -------------------------

Paine Webber Group, Inc., the ultimate parent of the Depositor and
PaineWebber Incorporated ("PWI"), (the depositor and principal underwriter for
the Registrant, respectively)

C-2
<PAGE>

maintains directors and officers liability and corporate reimbursement insurance
for itself and all subsidiaries. This insurance provides for coverage against
loss arising from claims made against directors and officers in their capacity
as such. The general scope of coverage is any breach of duty, neglect, error,
misstatement, misleading statement or omission. In addition, the Distribution
Contract (Exhibit 3 hereto) between Depositor and PWI generally provides that
each such party indemnifies the other party against any and all losses, claims,
liabilities, expenses and damages insofar as such matters arise or are based on
material misstatements or omissions in this registration statement (or
allegations thereof) made in reliance upon information furnished in writing to
the indemnitee by the indemnitor.

Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons, or
otherwise, the Registrant has been advised that in the opinion of the Commission
such indemnification may be against public policy as expressed in that Act and
may be, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.

Item 29. Principal Underwriter
- -------------------------------

PWI serves as principal underwriter for the Registrant. In addition to the
registrant, PWI serves as principal underwriter for the following investment
companies:
Liquid Institutional Reserves
PaineWebber Cashfund, Inc.
PaineWebber Managed Municipal Trust
PaineWebber Municipal Money Market Series
PaineWebber RMA Money Fund, Inc.
PaineWebber RMA Tax-Free Fund, Inc.

The following are the directors and officers of PWI. Their principal
business address is 1285 Avenue of the Americas, New York, New York 10019.

Officers
- --------

Name Title
---- -----

Donald B. Marron Chairman & Chief Executive Officer

Margo N. Alexander Executive Vice President

C-3
<PAGE>

Terry L. Atkinson Managing Director & Director, Municipal Securities
Group

Geraldine L. Banyai Assistant Secretary

Brian Barefoot Executive Vice President & Director, Investment
Banking

Steven P. Baum Executive Vice President & Director, Global Fixed
Income

Timothy E. Cronin Executive Vice President & Global Risk Strategist

Anthony M. DiIorio Executive Vice President & Controller

Regina A. Dolan Executive Vice President & Chief Financial Officer

Joseph J. Grano, Jr. President

Dorothy F. Haughey Secretary

Theodore A. Levine Executive Vice President

Jerome A. Lichtstein Executive Vice President & Director, Retail
Branches

James P. MacGilvray Executive Vice President & Director, Global
Equities & Transaction Services

Ronald M. Schwartz Executive Vice President & Chief Administrative
Officer

Robert H. Silver Executive Vice President & Director, Operations &
Systems

Pierce R. Smith Executive Vice President & Treasurer

Mark B. Sutton Executive Vice President & Director, Private Clients
Group

C-4
<PAGE>

Directors
- ---------

Margo N. Alexander Edward M. Kerschner
Terry L. Atkinson Jerome A. Lichtstein
Brian Barefoot James P. MacGilvray
Steven P. Baum Donald B. Marron
Timothy E. Cronin Ronald M. Schwartz
Regina A. Dolan Robert H. Silver
Joseph J. Grano, Jr. Mark B. Sutton

Item 30. Location of Accounts and Records
- ------------------------------------------

The Administrative Office of the Depositor is located at 601 6th Avenue,
Des Moines, Iowa 50309. PWI, the principal underwriter of the Contracts, is
located at 1285 Avenue of the Americas, New York, New York 10019. Each
maintains those accounts and records required to be maintained by it pursuant to
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder.

Item 31. Management Services
- -----------------------------

Not Applicable.

Item 32. Undertakings
- ----------------------

The Registrant undertakes:

1. to file post-effective amendments to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than 16 months
old for so long as payments under the variable annuity contracts may
be accepted;

2. to include either (A) as part of any application to purchase a
Contract offered by the prospectus forming part of this registration
statement, a space that an applicant can check to request a Statement
of Additional Information, or (B) a post card or similar written
communication affixed to or included in the prospectus that the
applicant can receive to send for a Statement of Additional
Information; and

3. to deliver any Statement of Additional Information and any financial
statements required to be made available under this registration
statement promptly upon written or oral request.

C-5
<PAGE>

Representations.
- ----------------

PaineWebber Life Insurance Company hereby represents that the fees and
charges deducted under the Contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by PaineWebber Life Insurance Company.

The Registrant hereby represents that it is relying upon a No-Action Letter
issued to the American Council of Life Insurance (pub. avail. November 28, 1988)
and that the following provisions have been complied with:

1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement,
including the prospectus, used in connection with the offer of the
contract;

2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in
connection with the offer of the contract;

3. Instruct sales representatives who solicit participants to purchase
the contract specifically to bring the redemption restrictions imposed
by Section 403(b)(11) to the attention of the potential participants;

4. Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of (1) the
restrictions on redemption imposed by Section 403(b)(11), and (2)
other investment alternatives available under the employer's Section
403(b) arrangement to which the participant may elect to transfer his
or her contract value.

C-6
<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has duly caused this registration statement to be signed
on its behalf, in the City of Weehawken, and the State of New Jersey on this
24th day of February, 1997.

PaineWebber Life Variable Annuity Account
-----------------------------------------
(REGISTRANT)

By: PaineWebber Life Insurance Company
--------------------------------------
(DEPOSITOR)

By: /s/ Dennis J. Hess*
-------------------------------------
DENNIS J. HESS
PRESIDENT

As required by the Securities Act of 1933, this amended Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:

SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman of the February 24, 1997
/s/ Dennis J. Hess* Board of Directors
- ------------------------------------- and President
DENNIS J. HESS (Principal
Executive Officer)

Principal Financial February 24, 1997
/s/ Pierce R. Smith* and Principal
- ------------------------------------- Accounting Officer
PIERCE R. SMITH

Director and February 24, 1997
/s/ Robert J. Bethoney* Executive Vice
- ------------------------------------- President
ROBERT J. BETHONEY

Director, Senior February 24, 1997
/s/ Richard J. Tucker Vice President and
- ------------------------------------- Secretary
RICHARD J. TUCKER
</TABLE>

*Signed by Richard J. Tucker pursuant to power of attorney