LINCOLN BENEFIT LIFE VARIABLE ANNUITY ACCOUNT, 485APOS, 1997-02-28

LINCOLN BENEFIT LIFE VARIABLE ANNUITY ACCOUNT
485APOS, 1997-02-28

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<PAGE>

As filed with the Securities and Exchange Commission on
March 1, 1997
'33 Act File No. 33-66786
'40 Act File No. 811-7924

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1993 [_]

Pre-Effective Amendment No. [_]
----------
Post-Effective Amendment No. 7 [X]
----------

REGISTRATION STATEMENT UNDER THE INVESTMENT ACT OF 1940 [_]

Amendment No. 9 [X]
-----------

LINCOLN BENEFIT LIFE VARIABLE ANNUITY ACCOUNT

LINCOLN BENEFIT LIFE COMPANY
Depositor

206 South 13/th/ Street
Lincoln, Nebraska 68508

--------

JOHN MORRIS
Lincoln Benefit Life Company
206 South 13/th/ Street
Lincoln, Nebraska 68508

Approximate Date of Proposed Public Offering: As soon as practicable after
effective date.

It is proposed that this filling will become effective:

immediately upon filing pursuant to paragraph (b) of Rule 485
-----
on May 1, 1997 pursuant to paragraph (b) of Rule 485
-----
60 days after filing pursuant to paragraph (a) of Rule 485
-----
x on May 1, 1997 pursuant to paragraph (a) of Rule 485
-----

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has registered an indefinite amount of securities under the Securities Act of
1933. A 24F-2 notice for the fiscal year ending December 31, 1996 was filed on
February 26, 1997.
<PAGE>
<TABLE>
<CAPTION>
LINCOLN BENEFIT LIFE VARIABLE ANNUITY ACCOUNT

CROSS REFERENCE SHEET

ITEM NUMBER IN FORM N-4 CAPTION
- ----------------------- -------
PART A - PROSPECTUS
-------------------
<S> <C>
1. Cover Page..................................... Cover Page

2. Definitions.................................... Definitions

3. Synopsis....................................... Questions & Answers About the Contract

4. Condensed Financial Information................ Condensed Financial Information

5. General Description of Registrant,............. Description of Lincoln Benefit Life
Depositor & Portfolio Companies Company & the Separate Account;
Separate Account Investments

6. Deductions..................................... Contract Charges

7. General Description of Variable................ Description of the Contracts; Annuity
Period; Purchases, Withdrawals &
Contract Value; Administration

8. Annuity Period................................. Annuity Period

9. Death Benefit.................................. Description of the Contracts; Annuity
Period

10. Purchases & Contract Value..................... Purchases, Withdrawals & Contract Value

11. Redemptions.................................... Questions & Answers About the Contract;
Purchases, Withdrawals & Contract Value

12. Taxes.......................................... Taxes

13. Legal Proceedings.............................. Legal Proceedings

14. Table of Contents of the Statement............. Additional Information about the
of Additional Information Separate Account
</TABLE>

i
<PAGE>

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 CAPTION
- ----------------------- -------
<S> <C>
15. Cover Page................................... Cover Page

16. Table of Contents............................ Table of Contents

17. General Information & History................ Description of Lincoln Benefit Life Company
& the Separate Account (P); Separate
Account Investments (P)

18. Services..................................... Contract Charges (P); Custodian (P);
Financial Statements

19. Purchase of Securities Being Offered......... Purchases, Withdrawals & Contract
Value (P); Contract Charges (P)

20. Underwriters................................. Distribution of Contracts (P)

21. Calculation of Performance Data.............. Separate Account Performance

22. Annuity Payments............................. The Contract

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.

ii
<PAGE>

FLEXIBLE PREMIUM
INDIVIDUAL
DEFERRED VARIABLE ANNUITY CONTRACTS
issued by
LINCOLN BENEFIT LIFE COMPANY
in connection with
LINCOLN BENEFIT LIFE VARIABLE ANNUITY ACCOUNT
Street Address: 206 South 13th St., Lincoln, NE 68508-1993
Mailing Address: P. O. Box 82532, Lincoln, NE 68501-2532
Telephone Number: 1-800-865-5237

This prospectus describes a Flexible Premium Individual Deferred Variable
Annuity Contract ("Contract") offered by Lincoln Benefit Life Company
("Company"). The Contract is a deferred annuity designed to aid you in long-term
financial planning. It is offered to you on either a tax qualified or non-tax
qualified basis.

The Company is a wholly owned subsidiary of Allstate Life Insurance Company.
Contract values will be allocated to the Lincoln Benefit Life Variable Annuity
Account ("Separate Account") and/or the Fixed Account, discussed further on
pages 10 and 12. The Separate Account has a series of subaccounts which
currently invest in shares of these mutual funds:

Janus Aspen Series: Flexible Income Portfolio; Balanced Portfolio; Growth
Portfolio; Aggressive Growth Portfolio; Worldwide Growth Portfolio

Fidelity's Variable Insurance Products Fund: Money Market Portfolio; Equity-
Income Portfolio; Growth Portfolio; Overseas Portfolio

Fidelity's Variable Insurance Products Fund II: Asset Manager Portfolio;
Contrafund Portfolio

IAI Retirement Funds, Inc.: IAI Regional Portfolio; IAI Balanced Portfolio; IAI
Reserve Portfolio

Federated Insurance Management Series: Federated Utility Fund II; Federated Fund
for U.S. Government Securities II; Federated High Income Bond Fund II

Scudder Variable Life Investment Fund: Bond Portfolio; Balanced Portfolio

Other investment options may be made available in the future.

A Contract may not be issued to a prospective Contract Owner if either you or
the Annuitant has attained age 86 prior to the time the application is received
by the Company.

This prospectus sets forth the information you ought to know before investing.
You should read it and keep it for future reference.

A Statement of Additional Information, which has the same date as this
Prospectus, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. You can obtain a free copy of it from us by
writing us or calling us at the telephone number given above. The Table of
Contents of the Statement of Additional Information appears on page 24 of this
prospectus.

This prospectus is valid only when accompanied or preceded by current
prospectuses for the Janus Aspen Series; the Fidelity's Variable Insurance
Products Fund and Variable Insurance Products Fund II; the IAI Retirement Funds,
Inc.; the Federated Insurance Management Series; and the Scudder Variable Life
Investment Fund.

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

PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR YOUR FUTURE REFERENCE.

The date of this prospectus is May 1, 1997.

1
<PAGE>

TABLE OF CONTENTS
<S> <C>
Definitions........................................................ 3
Questions and Answers About the Contract........................... 4
Fee Tables......................................................... 6
Examples........................................................... 7
Explanation of Fee Tables and Examples............................. 8
Condensed Financial Information.................................... 8
Description of Lincoln Benefit Life Company and
the Investment Options.......................................... 10
Lincoln Benefit Life Company................................ 10
Separate Account............................................ 10
Separate Account Investments....................................... 10
The Portfolios.............................................. 10
Voting Rights............................................... 12
Substitution of Securities.................................. 12
The Fixed Account.................................................. 12
Contract Charges................................................... 13
Mortality and Expense Risk Charge........................... 13
Administrative Charges...................................... 13
Contract Administration Charge...................... 13
Administrative Expense Charge....................... 13
Transfer Fee........................................ 13
Sales Charges............................................... 13
Withdrawal Charge................................... 13
Free Withdrawal..................................... 14
Waiver of Withdrawal Charge for
Certain Qualified Plan
Withdrawals......................................... 15
Premium Taxes............................................... 15
Deduction for Separate Account
Income Taxes.............................................. 15
Other Expenses.............................................. 15
Description of the Contracts....................................... 15
Summary..................................................... 15
Contract Owner.............................................. 15
Annuitant................................................... 15
Modification of the Contract................................ 15
Assignment.................................................. 15
Death Benefit............................................... 16
Beneficiary................................................. 16
Voting Rights of Contract Owners............................ 16
Purchases, Withdrawals and Contract Value.......................... 16
Minimum Purchase Payment.................................... 16
Automatic Payment Plan...................................... 16
Automatic Dollar Cost Averaging
Program............................................. 16
Portfolio Rebalancing....................................... 17
Contract Value.............................................. 17
Separate Account Accumulation
Unit Value.......................................... 17
Allocation of Purchase Payments............................. 18
Transfer During Accumulation Period......................... 18
Transfers Authorized by Telephone........................... 18
Contract Loans for 401(a), 401(k),
and 403(b) Contracts ............................... 19
Withdrawals (Redemptions)................................... 19
Systematic Withdrawal Program............................... 20
ERISA Plans................................................. 20
Minimum Contract Value...................................... 20
Annuity Period..................................................... 20
Annuity Date................................................ 20
Deferment of Payments....................................... 20
Annuity Options............................................. 21
Other Options............................................... 21
Death Benefit During Annuity Period......................... 21
Variable Annuity Payments................................... 21
Administration..................................................... 22
Taxes.............................................................. 22
General..................................................... 22
Withholding Tax on Distributions............................ 22
Tax Treatment of Assignments................................ 23
Tax Treatment of Withdrawals................................ 23
Qualified Plans..................................... 23
Non-Qualified Plans................................. 23
Distribution of Contracts.......................................... 24
Legal Proceedings.................................................. 24
Legal Matters...................................................... 24
Registration Statement............................................. 24
Financial Statements .............................................. 24
Additional Information About
the Separate Account........................................ 24
Table of Contents of Statement of
Additional Information...................................... 24
Appendix--Portfolios and Performance Data.......................... 24

</TABLE>

- ----------------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS.
- ----------------------------------------------------------------------------

2
<PAGE>

DEFINITIONS

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

Accumulation Period - The period between the Issue Date and the Annuity Date,
the build-up phase under the Contract.

Accumulation Unit - A unit of measurement which we use to calculate Contract
Value.

Annuitant - The natural person on whose life the annuity benefits under a
Contract are based.

Annuitization - The process by which you convert from the Accumulation Period to
the Annuity Period. Upon Annuitization, the Contract is converted from the
build-up phase to the phase during which you or other payee(s) receive periodic
annuity payments.

Annuity Date - The date on which annuity payments are to begin.

Annuity Period - The period starting on the Annuity Date, the payout phase under
the Contract.

Annuity Unit - A unit of measurement which we use to calculate the amount of
Variable Annuity payments.

Beneficiary(ies) - The person(s) designated to receive any death benefits under
the Contract.

Code - The Internal Revenue Code.

Company ("we," "us," "our," "Lincoln Benefit Life") - Lincoln Benefit Life
Company.

Contract Anniversary - The anniversary of the Issue Date in subsequent years.

Contract Owner ("You") - The person(s) having the privileges of ownership
defined in the Contract. Such privileges may be restricted by a retirement plan
pursuant to which the Contract is issued.

Contract Value - The sum of the values of your interests in the Subaccounts of
the Separate Account and the Fixed Account.

Contract Year - A twelve-month period beginning on the Issue Date or any
Contract Anniversary.

Contribution Year - A twelve-month period beginning on the date a Purchase
Payment is applied to a Subaccount, or any anniversary of that date.

Due Proof of Death - (1) A certified original copy of the Death Certificate; or
(2) a certified copy of a decree of a court of competent jurisdiction as to the
finding of death; or (3) a written statement by a medical doctor who attended
the deceased at the time of death; or (4) any other proof satisfactory to the
Company.

Fixed Account - The portion of the Contract Value invested in our general
account.

Fixed Annuity - A series of payments made during the Annuity Period to a payee
under a Contract that are fixed in amount.

Issue Date - The date when the Contract becomes effective if the annuitant is
then living and the initial Purchase Payment has been paid.

Latest Annuity Date - The later of ten years from Issue Date or tenth day of the
month following the Annuitant's 90th birthday. In the case of Contracts issued
in connection with Qualified Plans, the Code generally requires that a minimum
distribution is taken by the later of separation from service or April 1 of the
calendar year following the calendar year in which you attain age 70 1/2.
Accordingly, if you are in a Qualified Plan, we may require you to annuitize by
such date unless you demonstrate that the minimum distribution is otherwise
being made.

Loan Account - An account established for amounts transferred from the
Subaccounts or the Fixed Account as security for outstanding Contract loans.

Net Investment Factor - The factor for a particular Subaccount used to determine
the value of an Accumulation Unit and Annuity Unit in any Valuation Period.

Non-Qualified Plan - A retirement plan which does not receive special tax
treatment under Sections 401, 403(b), 408 or 457 of the Internal Revenue Code.

Portfolio(s) - The underlying mutual fund(s) (or investment series thereof) in
which the Subaccounts invest.

Purchase Payments - Amounts paid to us as premium for the Contract by you or on
your behalf.

Qualified Plan - A retirement plan which receives special tax treatment under
Sections 401, 403(b), 408 or a state and local government or other Tax Exempt
Organization Deferred Compensation Plan under Section 457 of the Internal
Revenue Code.

Separate Account - A segregated investment account of the Company entitled
Lincoln Benefit Life Variable Annuity Account.

Subaccount - A subdivision of the Separate Account invested wholly in shares of
one of the Portfolios.

Surrender Value - The amount paid upon surrender of the Contract, equal to the
Contract Value less any applicable premium tax charges, withdrawal charges and
the Contract Administration Charge.

Valuation Date - Each day the New York Stock Exchange is open for business.

Valuation Period - The period commencing at the close of normal trading on the
New York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern time) on each
Valuation Date and ending at the close of the NYSE on the next succeeding
Valuation Date.

Variable Annuity - A series of payments made during the Annuity Period to a
payee under a Contract which vary in amount in accordance with the investment
experience of the Subaccounts to which Contract Values have been allocated.

3
<PAGE>

Withdrawal Charge - The contingent deferred sales charge assessed against
certain withdrawals.

QUESTIONS & ANSWERS
ABOUT THE CONTRACT

The following is a compilation of answers to selected questions that you might
have about some of the most important features of the Contract. The remainder of
the prospectus, which follows immediately afterwards, contains a more complete
discussion of these and other matters.

1. What is the purpose of the Contract?

This Contract is designed for tax deferred retirement investing. Contract Values
accumulate based on the experience of the underlying funds and the Fixed
Account. You may receive annuity payments on a fixed or variable basis. The
Contract is available for non-qualified or qualified plans. You can allocate
Purchase Payments to the Fixed Account or to any of the Subaccounts of the
Separate Account, each of which will invest in a mutual fund or separate
investment Portfolio thereof. You bear the entire investment risk during the
Accumulation Period on amounts allocated to the Separate Account. You will also
bear the entire investment risk during the Annuity Period if you choose to
receive annuity payments on a variable basis.

2. In which mutual funds does the Separate Account invest?

The Separate Account currently invests exclusively in shares of these mutual
funds:
<TABLE>
<CAPTION>

<S> <C>
Fund Portfolio(s)
---- ------------

Janus Aspen Series Flexible Income Portfolio
Balanced Portfolio
Growth Portfolio
Aggressive Growth Portfolio
Worldwide Growth Portfolio
- -------------------------------------------------------
Fidelity's Variable Money Market Portfolio
Insurance Equity-Income Portfolio
Products Fund Growth Portfolio
Overseas Portfolio
- -------------------------------------------------------
Fidelity's Variable Asset Manager Portfolio
Insurance Contrafund Portfolio
Products Fund II
- -------------------------------------------------------
IAI Retirement IAI Regional Portfolio
Funds, Inc. IAI Balanced Portfolio
IAI Reserve Portfolio
- -------------------------------------------------------
Federated Insurance Federated Utility Fund II
Management Series Federated U.S. Government
Securities II
Federated High Income Bond
Fund II
- -------------------------------------------------------
Scudder Variable Life Bond Portfolio Class A
Investment Fund Balanced Portfolio Class A
- -------------------------------------------------------
</TABLE>
The assets of each Portfolio are held separately from the other Portfolios and
each has distinct investment objectives and policies which are described in the
accompanying prospectuses for the funds.

3. How do I buy a Contract?

You must pay at least $1,200 during the first Contract Year. Subsequent Purchase
Payments must be $100 ($25 under an automatic payment plan (see page 16)). We
may lower these minimums at our sole discretion. A Contract may not be issued if
either you or the Annuitant has attained age 86 before we receive your
application.

4. How is my Purchase Payment allocated?

You allocate your Purchase Payment among the Subaccounts and the Fixed Account
in states where it is available when you apply for the Contract. Percentages
must be in whole numbers and the total allocation must equal 100%. When you make
subsequent Purchase Payments, you should again specify how you want your
payments allocated. If you do not, we will automatically allocate the payment
based on the then current Purchase Payment allocation (see page 18).

5. Can I transfer my Contract Values among Subaccounts and the Fixed Account?

Yes, during the Accumulation Period. You may transfer Contract Values by written
request or telephone authorization. No such transfers are permitted after the
Annuity Date. There are additional transfer restrictions for the Fixed Account.
(See page 18).

You may also want to take advantage of our automatic dollar cost averaging or
portfolio rebalancing programs. Under the dollar cost averaging program, your
values are automatically transferred from the Fixed Account or a Subaccount of
your choosing to up to eight options, including other Subaccounts or the Fixed
Account, at regular intervals. Transfers may be made monthly, quarterly, or
annually. (See "Automatic Dollar Cost Averaging Program" page 16.)

Under the portfolio rebalancing program, you can maintain the percentage of your
Contract Value allocated to each Subaccount at a pre-set level prior to
annuitization. Investment results will shift this balance of your Contract Value
allocations. If you elect rebalancing, we will automatically transfer your
Contract Value back to the pecentages at the frequency (monthly, quarterly,
semiannually, annually) that you specify. (See "Portfolio Rebalancing" page 17.)

6. How can I withdraw my funds?

All or part of the Contract Value may be withdrawn before the Annuity Date, the
owner's death, or if the owner is not a natural person, the Annuitant's death.
Each year, free of charge, you may withdraw the greater of 15% of new Purchase
Payments (Purchase Payments made less than seven years before the withdrawal
date) or earnings not previously withdrawn. In the event withdrawals of 15% of
new Purchase Payments are not

4
<PAGE>

approved in your state, the applicable percentage will be 10% of new Purchase
Payments. You may also withdraw free of charge any old Purchase Payments
(Purchase Payments made more than seven years before the withdrawal date) not
previously withdrawn. The withdrawal charge may be waived under the terms of our
confinement waiver benefit. (This benefit is not available in all states.) (See
"Free Withdrawal" page 14.)

Other withdrawals may be subject to a withdrawal charge, which is a contingent
deferred sales charge. The withdrawal charge will vary depending on the year the
Purchase Payment(s) and withdrawals are made. (See "Withdrawal Charge" page 13.)
Additional restrictions may apply to Contracts issued in connection with
Qualified Plans (see "Taxes" page 22).

7. What are my Contract charges and deductions?

Charges against the Separate Account consist of an annual mortality and expense
risk charge of 1.25% of net asset value and an annual administrative expense
charge of 0.15% of net asset value. These charges are assessed on a daily basis
during both the Accumulation Period and Annuity Period. An annual contract
administration charge of $25 is assessed during the Accumulation Period only. We
cannot increase the amount of these charges. A transfer fee of $25 may be
assessed after the first transfer in each calendar month. We currently are
waiving this fee. Any applicable premium taxes are deducted from the Contract
Value upon surrender, death, or annuitization. Premium taxes generally range
from 0% to 3.5%. Finally, the withdrawal charge, a contingent deferred sales
load, is referenced above. (See "Contract Charges" page 13.)

8. What is the death benefit?

The death benefit is payable while the Contract is in force and before the
Annuity Date if the Contract Owner dies, or the Annuitant dies and the Contract
Owner is not a natural person. We must receive Due Proof of Death.

The death benefit is the greater of 1) all Purchase Payments less prior
withdrawals accumulated at 4% per year prior to the Contract Anniversary next
following your 75th birthday and at 0% per year thereafter (the "floor value"
calculation) or 2) the Contract Value less any premium tax. If the Contract
Value exceeds the floor value on the seventh Contract Anniversary, the floor
value will be raised to the level of the Contract Value. In such event, floor
values for years 8 and beyond will be calculated using the "stepped up" value on
the seventh anniversary.

9. Can I return this Contract after it has been delivered?

You may return the Contract to us within 10 days (or longer period if required
by state law) after you receive it by delivering or mailing it to us. If the
Contract is returned, it will be terminated and, unless otherwise required by
state law, we will pay an amount equal to the Contract Value on the date we
receive the Contract. The Contract Value may be more or less than the Purchase
Payments made. Since state laws differ as to the consequences of returning a
Contract, you should refer to your Contract for information about your
circumstances.

5
<PAGE>

Fee Tables
Contract Owner Transaction Expenses

Contingent Deferred Sales Charge-Withdrawal Charge (as a percentage of Purchase
Payments)

<TABLE>
<CAPTION>
Contribution Applicable Contribution Applicable
Year Charge Year Charge
---- ------ ---- ------
<S> <C> <C> <C>
1-2 7% 6 3%
3 6% 7 2%
4 5% 8+ 0%
5 4%
</TABLE>

Annual Contract Administration Charge................................ $25.00

Transfer Fee (Applies solely to the second and subsequent transfers
within a calendar month. We are currently waiving the transfer fee).. $25.00

Separate Account Expenses (as a percentage of daily net asset value deducted
from each of the Subaccounts of the Separate Account)

Mortality Risk Charge 0.85%
Expense Risk Charge 0.40%
Administrative Expense Charge 0.15%
-----
Total Separate Account Annual Expenses 1.40%

Portfolio Company Annual Expenses (As a percentage of Portfolio average net
assets)

<TABLE>
<CAPTION>
Janus Aspen Flexible Aggressive Worldwide
Series: Income Balanced* Growth* Growth* Growth*
-------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
Management: 0.65% 0.79% 0.72% 0.65% 0.66%
Other: 0.19% 0.15% 0.04% 0.04% 0.14%
----- ----- ----- ----- -----
Total: 0.84% 0.94% 0.76% 0.69% 0.80%

Fidelity's Variable Money Equity
Insurance Products Fund Market Income** Growth** Overseas**
------ -------- -------- ----------
Management: 0.21% 0.51% 0.61% 0.76%
Other: 0.09% 0.07% 0.08% 0.17%
----- ----- ----- -----
Total: 0.30% 0.58% 0.69% 0.93%

Fidelity's Variable Asset
Insurance Products Fund II Manager** Contrafund**
--------- ------------
Management: 0.64% 0.61%
Other: 0.10% 0.13%
----- -----
Total: 0.74% 0.74%

IAI Retirement Funds, IAI IAI IAI
Inc.: Regional Balanced*** Reserve***
-------- ----------- ----------
Management: 0.65% 0.65% 0.45%
Other: 0.60% 0.60% 0.40%
----- ----- -----
Total: 1.25% 1.25% 0.85%

Federated Insurance U.S. Gov't High Income
Management Series: Utility+ Securities+ Bond
-------- ----------- -----------
Management: 0.24% 0.00% 0.01%
Other: 0.61% 0.80% 0.79%
----- ----- -----
Total: 0.85% 0.80% 0.80%

Scudder Variable
Life Investment Fund Bond Balanced
------ --------
Management: 0.475% 0.475%
Other: 0.135% 0.125%
------ ------
Total: 0.61% 0.60%

</TABLE>
* The expense figures shown are net of certain expense waivers or fee reductions
from Janus Capital Corporation. Without such waivers or reductions, Management
Fees, Other Expenses, and Total Portfolio Annual Expenses for the Portfolios for
the fiscal year ended December 31, 1996, would have been: 0.92%, 0.15% and
1.07%, respectively, for Balanced Portfolio; 0.79%, 0.04% and 0.83%,
respectively, for Aggressive Growth Portfolio; 0.79%, 0.04% and 0.83%,
respectively, for Growth Portfolio; 0.77%, 0.14% and 0.91%, respectively, for
Worldwide Growth Portfolio.

** A portion of the brokerage commissions the fund paid was used to reduce its
expenses. Without this reduction total operating expenses would have been for
Equity Income--0.56%, for Growth--0.67%, for Overseas--0.92%, for Asset
Manager--0.73%, and for Contrafund--0.71%.

*** The expense figures shown are net of expense reimbursements from Investment
Advisers, Inc. Without such reimbursements, Management Fees and Total Portfolio
Expenses for the Portfolios are estimated as follows: 0.65% and 1.96% for
Balanced Portfolio, and 0.45% and 1.81% for Reserve Portfolio.

+ The expense figures shown reflect the voluntary waiver of all or a portion of
the Management Fee. The maximum Management Fees for the indicated Portfolios and
the Total Portfolio Expenses absent the voluntary waiver are as follows: 0.75%
and 1.60%, respectively, for the Utility Fund II; 0.60% and 1.81%, respectively,
for the U.S. Government Securities II; and 0.60% and 1.39%, respectively, for
the High Income Bond Fund. The expense figures for U.S. Government Securities II
are also net of expense reimbursements from the investment advisor.

<PAGE>

Examples

If you surrender your contract at the end of the period you would pay the
following expenses on a $1,000 investment in each indicated Subaccount assuming
5% annual return on assets:

<TABLE>
<CAPTION>
Janus Janus Janus Fidelity Fidelity
Flexible Janus Janus Aggressive Worldwide Money Equity- Fidelity Fidelity Fidelity
Income Balanced Growth Growth Growth Market Income Growth Overseas Contrafund
-------- -------- ------ ---------- --------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $89 $90 $87 $88 $88 $84 $86 $87 $89 $88
3 years 132 135 128 130 131 117 125 128 135 129
5 years 165 170 157 161 163 137 152 157 170 160
10 years 267 278 252 259 263 211 241 252 277 257

Fidelity Federated
Asset IAI IAI IAI Federated Federated High Income Scudder Scudder
Manager Regional Balanced Reserve Utility U.S. Securities Bond Bond Balanced
-------- -------- ------- ------- --------- --------------- ----------- ------- --------
1 year $88 $92 $92 $89 $89 $88 $88 $86 $86
3 years 129 144 144 132 132 131 131 126 125
5 years 160 186 186 165 165 163 163 153 153
10 years 257 308 308 268 268 263 263 244 243
</TABLE>
If you annuitize* at the end of the period you would pay the following expenses
on a $1,000 investment in each indicated Subaccount assuming 5% annual return on
assets:
<TABLE>
<CAPTION>
Janus Janus Janus Fidelity Fidelity
Flexible Janus Janus Aggressive Worldwide Money Equity- Fidelity Fidelity Fidelity
Income Balanced Growth Growth Growth Market Income Growth Overseas Contrafund
-------- -------- ------ ---------- --------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $24 $25 $22 $23 $23 $18 $21 $22 $25 $23
3 years 73 76 68 71 72 57 65 68 76 70
5 years 125 130 117 121 123 97 112 117 130 120
10 years 267 278 252 259 263 211 241 252 277 257

Fidelity Federated
Asset IAI IAI IAI Federated Federated High Income Scudder Scudder
Manager Regional Balanced Reserve Utility U.S. Securities Bond Bond Balanced
-------- -------- ------- ------- --------- --------------- ----------- ------- --------
1 year $23 $28 $28 $24 $24 $23 $23 $21 $21
3 years 70 85 85 73 73 72 72 66 66
5 years 120 146 146 125 125 123 123 113 113
10 years 257 308 308 268 268 263 263 244 243
</TABLE>
If you do not surrender your contract you would pay the following expenses on a
$1,000 investment in each indicated Subaccount assuming 5% annual return on
assets:
<TABLE>
<CAPTION>
Janus Janus Janus Fidelity Fidelity
Flexible Janus Janus Aggressive Worldwide Money Equity- Fidelity Fidelity Fidelity
Income Balanced Growth Growth Growth Market Income Growth Overseas Contrafund
-------- -------- ------ ---------- ------ ---------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $24 $25 $22 $23 $23 $18 $21 $22 $25 $23
3 years 73 76 68 71 72 57 65 68 76 70
5 years 125 130 117 121 123 97 112 117 130 120
10 years 267 278 252 259 263 211 241 252 277 257

7
<PAGE>

EXPLANATION OF FEE TABLES AND EXAMPLES

1. The purpose of the foregoing table and examples is to assist you in
understanding the various costs and expenses that you will bear directly or
indirectly by investing in the Separate Account. The table reflects expenses of
the Separate Account as well as the Portfolios. For additional information see
"Contract Charges," beginning on Page 13 of this prospectus; see also the
sections relating to management of the Portfolios in their respective
prospectuses. The examples do not illustrate the tax consequences of
surrendering a Contract.

2. The examples assume that there were no transactions which would result in
the imposition of the transfer fee. We are currently waiving this fee, but
reserve the right to charge $25 to the second and each subsequent transfer
within a calendar month. Premium taxes are not reflected. Presently, premium
taxes (which range from 0% to 3.5%) are deducted from Contract Value upon full
surrender, death or annuitization.

3. For purposes of the amounts reported in the Examples, the Contract
Administration Charge is reflected by applying a percentage equivalent charge,
obtained by dividing the total amount of such charges anticipated to be
collected during the year by the total estimated average net assets of the
Subaccounts and the Fixed Account attributable to the Contracts.

4. The Examples reflect any Free Withdrawal Amounts.

5. NEITHER THE FEE TABLES NOR THE EXAMPLES ARE REPRESENTATIONS OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

CONDENSED FINANCIAL INFORMATION

The following tables present condensed financial information with respect to
each Subaccount of the Separate Account. The information in the tables is
included in the Separate Account's financial statements that have been audited
by Deloitte & Touche LLP, independent public accountants. The table should be
read in conjunction with the Separate Account's financial statements, which are
in the Separate Account's Annual Report dated as of December 31, 1996, contained
in the Statement of Additional Information.

Selected Accumulation Unit Value/1/ information throughout each period indicated
is as follows:

<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF UNITS
UNIT VALUE/1/ UNIT VALUE/1/ OUTSTANDING AT
FUND BEGINNING ENDING END OF YEAR YEAR
$ $
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Money Market 10.72 11.14 1,493,297 1996
10.27 10.72 1,063,044 1995
10.00 10.27 249,473 1994
- --------------------------------------------------------------------------------
Fidelity Growth 12.98 14.68 1,822,777 1996
9.73 12.98 1,028,768 1995
10.00 9.73 247,556 1994
- --------------------------------------------------------------------------------
Fidelity Equity-Income 13.70 15.44 2,157,454 1996
10.28 13.70 1,025,219 1995
10.00 10.28 145,290 1994
- --------------------------------------------------------------------------------
Fidelity Overseas 10.49 11.71 944,146 1996
9.70 10.49 599,989 1995
10.00 9.70 166,871 1994
- --------------------------------------------------------------------------------
Fidelity Asset Manager 10.49 11.85 921,269 1996
9.09 10.49 593,918 1995
10.00 9.09 226,936 1994
- --------------------------------------------------------------------------------
Fidelity Contrafund* 10.00 11.15 497,571 1996
- --------------------------------------------------------------------------------
Scudder Bond 10.81 10.96 203,879 1996
9.27 10.81 134,527 1995
10.00 9.27 4,615 1994
- --------------------------------------------------------------------------------
Scudder Balanced 11.85 13.07 460,749 1996
9.48 11.85 209,087 1995
10.00 9.48 55,482 1994
- --------------------------------------------------------------------------------
</TABLE>

8
<PAGE>

ACCUMULATION ACCUMULATION NUMBER OF UNITS
UNIT VALUE/1/ UNIT VALUE/1/ OUTSTANDING AT
FUND BEGINNING ENDING END OF YEAR YEAR
$ $
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Janus Flexible Income 11.77 12.67 280,447 1996
9.64 11.77 145,173 1995
10.00 9.64 9,271 1994
- -----------------------------------------------------------------------------------------------------------------------
Janus Balanced 11.91 13.65 608,590 1996
9.68 11.91 204,556 1995
10.00 9.68 54,218 1994
- -----------------------------------------------------------------------------------------------------------------------
Janus Growth 12.64 14.77 1,200,179 1996
9.85 12.64 529,026 1995
10.00 9.85 91,020 1994
- -----------------------------------------------------------------------------------------------------------------------
Janus Aggressive Growth 14.58 15.52 1,010,157 1996
11.60 14.58 545,594 1995
10.00 11.60 78,193 1994
- -----------------------------------------------------------------------------------------------------------------------
Janus Worldwide Growth 12.15 15.46 1,649,612 1996
9.67 12.15 520,639 1995
10.00 9.67 109,298 1994
- -----------------------------------------------------------------------------------------------------------------------
Federated High Income Bond II 11.28 12.72 407,045 1996
9.50 11.28 210,460 1995
10.00 9.50 28,352 1994
- -----------------------------------------------------------------------------------------------------------------------
Federated Utility Fund II 11.64 12.80 315,710 1996
9.50 11.64 197,013 1995
10.00 9.50 44,207 1994
- -----------------------------------------------------------------------------------------------------------------------
Federated U.S. Gov't. Securities II 10.83 11.13 208,602 1996
10.10 10.83 106,437 1995
10.00 10.10 36,563 1994
- -----------------------------------------------------------------------------------------------------------------------
Investment Advisors, Inc. Regional 13.80 15.23 646,379 1996
10.48 13.80 325,443 1995
10.00 10.48 71,368 1994
- -----------------------------------------------------------------------------------------------------------------------
Investment Advisors, Inc. Reserve 10.46 10.82 39,968 1996
10.09 10.46 67,843 1995
10.00 10.09 51,928 1994
- -----------------------------------------------------------------------------------------------------------------------
Investment Advisors, Inc. Balanced 11.56 12.52 103,719 1996
10.09 11.56 60,190 1995
10.00 10.09 18,173 1994
- ---------------------------------------------------------------------------------------------------------------------------

</TABLE>
/1/Accumulation Unit Value: unit of measure used to calculate the value of a
Contract Owner's interest in a Subaccount for any Valuation Period. An
Accumulation Unit Value does not reflect deduction of certain charges under the
Contract that are deducted from your Contract Value, such as the Contract
Administration Charge, and Administrative Expense Charge.

A brief explanation of how performance of the Subaccounts is calculated may be
found in the Statement of Additional Information.

9
<PAGE>

LINCOLN BENEFIT LIFE COMPANY AND THE INVESTMENT OPTIONS

Lincoln Benefit Life Company

Lincoln Benefit Life Company is a stock life insurance company organized under
the laws of the state of Nebraska in 1938. Its legal domicile and principal
business address is 206 South 13th Street, Lincoln, Nebraska. Lincoln Benefit
Life is a wholly-owned subsidiary of Allstate Life Insurance Company, a stock
life insurance company incorporated under the laws of the State of Illinois.
Allstate Life Insurance Company is a wholly-owned subsidiary of Allstate
Insurance Company ("Allstate"), a stock property-liability insurance company
incorporated under the laws of Illinois. All outstanding Capital stock of
Allstate is owned by the Allstate Corporation ("Corporation").

We are admitted to conduct life insurance and annuity business in the District
of Columbia, Guam and in all states except New York. The Contract will be
marketed in all of the jurisdictions in which we are admitted to conduct
variable annuity business. The Contracts offered by this prospectus are issued
by us and will be funded in the Separate Account and/or the Fixed Account.

Lincoln Benefit Life Company is highly rated by independent agencies, including
A.M. Best, Moody's, and Standard & Poor's. These ratings are based on the
Company's reinsurance agreement with Allstate Life Insurance Company, as
explained below, and reflect financial soundness and strong operating
performance. The ratings are not intended to reflect the financial strength or
investment experience of the Separate Account. We may from time to time
advertise these ratings in our sales literature.

We receive our ratings through Allstate Life, which reinsures all net new
business from the Lincoln Benefit Life fixed account. Through the reinsurance
agreement, all of the assets backing Lincoln Benefit Life's reinsured
liabilities are owned by Allstate Life Insurance Company. These assets represent
our fixed account and are invested and managed by Allstate Life Insurance
Company. While the reinsurance agreement provides Lincoln Benefit Life with
financial backing from Allstate Life, it does not create any direct contractual
relationship with individual Lincoln Benefit Life policyholders.

Separate Account

Lincoln Benefit Life Variable Annuity Account was originally established by
Lincoln Benefit on August 3, 1992, pursuant to the provisions of Nebraska law,
as a segregated asset account of the Company. The Separate Account meets the
definition of a "separate account" under the federal securities laws and is
registered with the Securities and Exchange Commission as a unit investment
trust under the Investment Company Act of 1940. This registration does not
involve supervision of the management of the Separate Account or the Company by
the Securities and Exchange Commission.

The assets of the Separate Account are our property. However, the assets of the
Separate Account, equal to its reserves and other contract liabilities, are not
chargeable with liabilities arising out of any other business we may conduct.
Our obligations arising under the Contracts are general corporate obligations of
Lincoln Benefit Life.

Income, gains, and losses, whether or not realized, from assets allocated to the
Separate Account are credited to or charged against the Separate Account without
regard to our other income, gains, or losses.

The Separate Account is divided into Subaccounts, with the assets of each
Subaccount invested in the shares of one of the Portfolios. We do not guarantee
the investment performance of the Separate Account, its Subaccounts or the
Portfolios. Values allocated to the Separate Account and the amount of Variable
Annuity payments will vary with the values of shares of the Portfolios, and are
also reduced by Contract charges. The Separate Account may also fund other
annuity contracts issued by Lincoln Benefit Life, which will be accounted for
separately.

SEPARATE ACCOUNT INVESTMENTS

The Portfolios

Each of the Subaccounts of the Separate Account invests in the shares of one of
the Portfolios, which are open-end management investment companies ("Funds")
registered under the Investment Company Act of 1940 (commonly known as "mutual
funds"), or separate investment series of such Funds. Following is a summary
description of the Portfolios in which the Subaccounts invest. More detailed
information concerning the Portfolios appears in the respective accompanying
prospectuses for the Funds. The Appendix on page 24 contains a description of
how advertised performance data for the Subaccounts are computed.

Janus Aspen Series (investment adviser: Janus Capital Corporation)

Flexible Income Portfolio seeks to maximize total return from a combination of
current income and capital appreciation, with an emphasis on the income
component of total return. Flexible Income Portfolio invests in all types of
income-producing securities. This Portfolio may have substantial holdings of
debt securities rated below investment grade. Investments in such securities
present special risks; you are urged to carefully read the risk disclosure in
the accompanying prospectus relating to the Portfolio before allocating amounts
to the Janus Flexible Income Subaccount.

Balanced Portfolio seeks both growth of capital and current income. Balanced
Portfolio normally invests 40-60% of its assets in securities selected primarily
for their growth potential and 40-60% of its assets in securities selected
primarily for their income potential.

Growth Portfolio seeks long-term growth of capital by investing primarily in a
diversified portfolio of common

10
<PAGE>

stocks of a large number of issuers of any size. Generally, this Portfolio
emphasizes issuers with larger market capitalizations.

Aggressive Growth Portfolio seeks long-term growth of capital. The Portfolio is
a non-diversified fund that pursues its objective by normally investing at least
50% of its equity assets in securities issued by medium-sized companies, those
whose market capitalizations fall within the range of companies in the S&P
MidCap 400 Index (the "MidCap Index"). Companies whose capitalization falls
outside this range after the Portfolio's initial purchase continue to be
considered medium-sized companies for the purpose of this policy. The range of
the MidCap Index is expected to change on a regular basis. Subject to the above
policy, the Portfolio may also invest in smaller or larger issuers.

Worldwide Growth Portfolio seeks long-term growth of capital by investing in a
diversified portfolio of common stocks of foreign and domestic issuers of any
size. Worldwide Growth Portfolio normally invests in issuers from at least five
different countries including the United States.

Fidelity's Variable Insurance Products Fund (investment adviser: Fidelity
Management & Research Company)

Money Market Portfolio seeks to obtain as high a level of current income as is
consistent with preserving capital and providing liquidity. The Portfolio will
limit its investments to securities with remaining maturities of 397 days or
less.

Equity-Income Portfolio seeks reasonable income by investing primarily in
income-producing equity securities. The goal is to achieve a yield in excess of
the composite yield of the S&P 500 Composite Stock Price Index. At least 65% of
the Portfolio's assets will be invested in income producing common or preferred
stock. The remainder will normally be invested in convertible and non-
convertible debt obligations.

Growth Portfolio seeks to achieve capital appreciation. The Portfolio normally
purchases common stocks, although its investments are not restricted to any one
type of security.

Overseas Portfolio seeks long-term growth of capital primarily through
investments in foreign securities. At least 65% of the Portfolio's assets will
be invested in securities of issuers outside of North America. Most issuers will
be located in developed countries in the Americas, the Far East and Pacific
Basin, Scandinavia and Western Europe.

Fidelity's Variable Insurance Products Fund II (investment adviser: Fidelity
Management & Research Company)

Asset Manager Portfolio seeks to obtain high total return with reduced risk over
the long term by allocating its assets among domestic and foreign stocks, bonds,
and short-term fixed-income securities. Normally, the Portfolio's assets will be
allocated within the following investment parameters: 30-70% in stocks
(equities); 20-60% in bonds (intermediate to long-term); and 0-50% in short-term
instruments.

Contrafund Portfolio seeks capital appreciation by investing mainly in equity
securities of companies that Fidelity Management and Research Company believes
to be undervalued due to an overly pessimistic appraisal by the public. The fund
usually invests primarily in common stock and securities convertible into common
stock, but it has the flexibility to invest in any type of security that may
produce capital appreciation.

IAI Retirement Funds, Inc. (investment adviser: Investment Advisers, Inc.)

IAI Regional Portfolio pursues its objective of capital appreciation by
investing at least 80% of its equity investments in companies which have their
headquarters in Minnesota, Wisconsin, Iowa, Illinois, Nebraska, Montana, North
Dakota or South Dakota.

IAI Balanced Portfolio's investment objective is to maximize total return to
investors. Balanced Portfolio pursues its objective by investing in a broadly
diversified portfolio of stocks, bonds and short-term instruments. The
Portfolio's assets will be allocated among these three classes of assets. Under
normal market conditions, the Portfolio will hold between 25% and 75% of its
assets in stocks and other equity securities, between 25% and 75% of its assets
in bonds and other fixed income securities, and up to 50% of its assets in short
term instruments.

IAI Reserve Portfolio's investment objectives are to provide its shareholders
with high levels of capital stability and liquidity and, to the extent
consistent with these primary objectives, a high level of current income.
Reserve Portfolio pursues its investment objectives by investing primarily in a
diversified portfolio of investment grade bonds and other debt securities of
similar quality. Reserve Portfolio's dollar weighted average maturity will not
exceed twenty-five (25) months.

Federated Insurance Management Series (investment adviser: Federated Advisers)

Federated Utility Fund II's investment objective is to achieve high current
income and moderate capital appreciation. The Fund endeavors to achieve its
objective by investing primarily in equity and debt securities of utility
companies that produce, transmit, or distribute gas and electric energy, as well
as those companies that provide communications facilities, such as telephone and
telegraph companies.

Federated Fund for U.S. Government Securities II's investment objective is to
provide current income. The Fund invests in securities which are primary or
direct obligations of the U.S. Government or its agencies or instrumentalities,
or which are guaranteed by the U.S. Government, its agencies, or
instrumentalities. The Fund may also invest in certain collateralized mortgage
obligations ("CMOs") and repurchase agreements.

11
<PAGE>

Federated High Income Bond Fund II's investment objective is to seek high
current income. The Fund endeavors to achieve its objective by investing at
least 65% of its assets in lower rated corporate debt obligations, such as
preferred stocks, bonds, debentures, notes, equipment lease certificates and
equipment trust certificates. Some of these fixed income securities may involve
equity features. Under normal circumstances, the Fund will not invest more than
10% of the value of its total assets in equity securities.

Scudder Variable Life Investment Fund (investment adviser: Scudder, Stevens &
Clark, Inc.) The Scudder Variable Life Investment Fund has two classes of
shares. The Subaccounts invest in Class A shares which do not impose
distribution fees.

Bond Portfolio seeks high income from a high quality portfolio of debt
securities. Under normal circumstances, Bond Portfolio invests at least 65% of
its assets in bonds including those of the U.S. Government and its agencies and
those of corporations and other notes and bonds paying high current income. The
Portfolio is actively managed and can invest in a broad range of short,
intermediate and long term securities.

Balanced Portfolio seeks a balance of growth and income from a diversified
portfolio of equity and fixed income securities. The Portfolio also seeks long-
term preservation of capital through a quality oriented investment approach that
is designed to reduce risk. The assets of this Portfolio will be invested in the
following three market sectors: 1) common stock, preferred stock and other
equity securities; 2) bonds and other debt securities with maturities generally
exceeding one year; and 3) money market instruments and other debt securities
with maturities generally not exceeding thirteen months. Not more than 75% of
Balanced Portfolio's net assets may be invested in stocks or other equity
investments. Generally, 25% - 50% are invested in bonds. For defensive purposes
the Portfolio may invest up to 100% in cash or money market instruments.

There is no assurance that the investment objective of any of the Portfolios
will be met. Detailed information about the Portfolios is contained in the
accompanying current prospectuses of the Funds. You should carefully review
those prospectuses before allocating amounts to be invested in the Subaccounts
of the Separate Account.

Voting Rights

To the extent required by applicable law, we will vote the shares of the
Portfolios held in the Separate Account at meetings of the shareholders of the
Funds in accordance with instructions received from persons having the voting
interest in the corresponding Subaccounts. We will vote shares for which we have
not received instructions in the same proportion as we vote shares for which we
have received instructions.

The number of shares which a person has a right to vote will be determined as of
a date to be chosen by the relevant Fund prior to the meeting of the respective
Fund's shareholders. Voting instructions will be solicited by written
communication in advance of such meeting. Except as may be limited by the terms
of the retirement plan pursuant to which the Contract was issued, the person
having such voting rights before the Annuity Date will be you; thereafter the
payee entitled to receive payments under the Contract.

Substitution of Securities

If the shares of any of the Portfolios should no longer be available for
investment by the Separate Account or if, in the judgment of our Board of
Directors, further investment in the shares of a Portfolio is no longer
appropriate in view of the purposes of the Contract, we may substitute shares of
another mutual fund (or series thereof) for Portfolio shares already purchased
and/or to be purchased in the future by Purchase Payments under the Contract. No
such substitution of securities may take place without prior approval of the
Securities and Exchange Commission and under such conditions as the Commission
may impose.

THE FIXED ACCOUNT

The portion of the Contract relating to the Fixed Account is not registered
under the Securities Act of 1933 ("1933 Act") and the Fixed Account is not
registered as an Investment Company under the Investment Company Act of 1940
("1940 Act"). Accordingly, neither the Fixed Account nor any interests therein
are subject to the provisions or restrictions of the 1933 Act or the 1940 Act,
and the disclosure regarding the Fixed Account has not been reviewed by the
staff of the Securities and Exchange Commission. The following disclosure about
the Fixed Account may be subject to certain generally applicable provisions of
the federal securities laws regarding the accuracy and completeness of
disclosure.

You may allocate part or all of your Purchase Payments to the Fixed Account in
states where it is available, and any such amounts become part of the general
assets of Lincoln Benefit. Pursuant to the reinsurance agreement discussed on
page 10, Allstate Life invests the assets of the general account in accordance
with applicable laws governing the investments of insurance company general
accounts.

We guarantee that the interest rate credited to the Fixed Account will be at
least an annual effective rate of 3%. We may credit interest above the minimum
rate at 3%, but we are not obligated to do so. Any interest credited to the
Fixed Account in excess of the minimum guaranteed rate will be determined by us
at our sole discretion. You assume the risk that interest credited to the Fixed
Account may not exceed the minimum guaranteed rate of 3%.

Transfers from the Fixed Account are subject to certain limitations (see
Transfers, page 18). Also, we reserve the right to limit payment of partial
withdrawals or Surrender Value from the Fixed Account for up to 6 months (see
page 20).

12
<PAGE>

CONTRACT CHARGES

As is more fully described below, charges under the Contract offered by this
prospectus are assessed in three ways: (1) as deductions for Contract
administrative charges and, if applicable, for premium taxes; (2) as charges
against the assets of the Separate Account for administrative expenses or for
the assumption of mortality and expense risks; and (3) as Withdrawal Charges
(contingent deferred sales charges). In addition, certain deductions are made
from the assets of the Portfolios for investment management fees and expenses;
those fees and expenses, which are summarized in the Fee Tables on page 6, are
described more fully in the Prospectuses and Statements of Additional
Information for the Funds.

Mortality and Expense Risk Charge

We deduct a Mortality and Expense Risk Charge from each Subaccount during each
Valuation Period. The aggregate Mortality and Expense Risk Charge is equal, on
an annual basis, to 1.25% of the net asset value of each Subaccount
(approximately 0.85% is for mortality risks and approximately 0.40% is for
expense risks). The mortality risks which we assume arise from our contractual
obligations: (1) to make annuity payments after the Annuity Date for the life of
the Annuitant(s); (2) to waive the Withdrawal Charge in the event of your death;
and (3) to provide the Death Benefit prior to the Annuity Date. A detailed
explanation of the Death Benefit may be found under "Description of the
Contracts - Death Benefit," on page 16.

The expense risk which we assume is that the costs of administering the
Contracts and the Separate Account will exceed the amount received from the
Contract Administration Charge and the Administrative Expense Charge. (See
"Administrative Charges" below.) We guarantee the Expense Risk Charge and it
cannot be increased. The Mortality and Expense Risk Charge is assessed during
both the Accumulation Period and the Annuity Period.

Administrative Charges

Contract Administration Charge

An annual Contract Administration Charge of $25 is charged against each
Contract. The amount of this charge is guaranteed and will not increase. This
charge reimburses us for expenses incurred in maintaining your Contract. The
Contract Administration Charge will be assessed on each Contract Anniversary
that occurs on or prior to the Annuity Date. In the event that a total surrender
of Contract Value is made, the Charge will be assessed as of the date of
surrender without proration. This Charge is not assessed during the Annuity
Period.

The total Contract Administration Charge is allocated between the Subaccounts
and the Fixed Account in proportion to the respective Contract Values similarly
allocated.

The Contract Administration Charge will be waived if on any Contract Anniversary
the Contract Value is $75,000 or greater.

Administrative Expense Charge

We deduct an Administrative Expense Charge from each Subaccount during each
Valuation Period which is equal, on an annual basis, to 0.15% of the net asset
value of the Subaccount. This charge is designed to compensate us for the cost
of administering the Contracts and the Separate Account. The Administrative
Expense Charge is assessed during both the Accumulation Period and the Annuity
Period.

Transfer Fee

In general, a transfer fee of $25 may be assessed on the second and each
subsequent transaction in each calendar month in which transfer(s) are effected
between Subaccount(s) and/or the Fixed Account. We currently are waiving this
fee.

The transfer fee will be deducted from Contract Values which remain in the
Subaccount(s) or Fixed Account from which the transfer was made. If such
remaining Contract Value is insufficient to pay the transfer fee, then the fee
will be deducted from transferred Contract Values.

Sales Charges

Withdrawal Charge

Withdrawals may be subject to penalties or income tax. Additional restrictions
may apply to Contracts held in Qualified Plans. Subject to those limitations,
the Contract Value may be withdrawn at any time during the Accumulation Period.
You should consult your own tax counsel or other tax advisers regarding any
withdrawals. (See "Taxes - Tax Treatment of Withdrawals" on page 23.)

A contingent deferred sales charge, which is referred to as the Withdrawal
Charge, may be imposed upon certain withdrawals. No withdrawal charge is applied
in the following situations: (1) On annuitization (unless the settlement option
chosen is payment over a period certain of less than 5 years); (2) the payment
of a death benefit; (3) Withdrawal of an Old Purchase Payment or an amount
available as a free withdrawal (see p. 14); (4) Certain withdrawals for
Contracts issued under 403(b) plans or 401 plans under our prototype (See Waiver
of Withdrawal Charge for Certain Qualified Plan Withdrawals, p. 15); (5)
Withdrawal under Contracts issued to employees of Lincoln Benefit Life Company
or its affiliates or issued to spouses or minor children of such employees.

In no event will a withdrawal charge be waived or eliminated where such waiver
or elimination would be unfairly discriminatory to any person or where it is
prohibited by state law.

The Withdrawal Charge is a percentage of Purchase Payments withdrawn that are
less than seven years old and not eligible for a free withdrawal, in accordance
with the Withdrawal Charge Table shown below:

13
<PAGE>

WITHDRAWAL CHARGE TABLE

Contribution Withdrawal Charge
Year Percentage
---- ----------

First and Second 7
Third 6
Fourth 5
Fifth 4
Sixth 3
Seventh 2
Eighth and later 0

The Withdrawal Charge is deducted from the remaining Contract Value so that the
actual reduction in Contract Value as a result of the withdrawal will be greater
than the withdrawal amount requested and paid.

For purposes of determining the Withdrawal Charge, the Contract Value is deemed
to be withdrawn in the following order:

First. Earnings-- the amount of Contract Value in excess of all Purchase
Payments that have not previously been withdrawn;

Second. "Old Purchase Payments" - Purchase Payments received by us more than
seven years prior to the date of withdrawal which have not been previously
withdrawn;

Third. Any additional amounts available as a "Free Withdrawal," as described
below;

Fourth. "New Purchase Payments" - Purchase Payments received by us less than
seven years prior to the date of withdrawal. These Payments are deemed to be
withdrawn on a first-in, first-out basis.

The amounts obtained from the Withdrawal Charge will be used to pay
sales commissions and other promotional or distribution expenses associated with
the marketing of the Contracts. To the extent that the Withdrawal Charge is
insufficient to cover all sales commissions and other promotional or
distribution expenses, we may use any of our corporate assets, including
potential profit which may arise from the Mortality and Expense Risk Charge,
above, to make up any difference.

Free Withdrawal

Withdrawals of the following amounts are never subject to the Withdrawal Charge:

a. In any Contract Year, the greater of earnings not previously withdrawn or 15
percent of New Purchase Payments; and

b. Any Old Purchase Payments which have not been previously withdrawn.

However, see "Tax Treatment of Withdrawals," on page 23.

In the event withdrawals of 15% are not approved in your state, the applicable
percentage will be 10% of new Purchase Payments.

In addition, in states where available, a Confinement Waiver benefit provides
that any applicable Withdrawal Charge will be waived if the following conditions
are satisfied:

1. The Annuitant must be confined to a Long Term Care Facility or a Hospital for
at least 60 consecutive days. Confinement must begin after the Issue Date;

2. You must request the withdrawal no later than 90 days following the date that
confinement has ceased. Written proof of confinement must accompany the
withdrawal request; and

3. For confinements in a Long Term Care Facility, confinement must be prescribed
by a physician and be medically necessary.

Long Term Care Facility means a facility located in the United States of America
which is licensed by the jurisdiction in which it is located and operated as a
Custodial Care Facility or other facility which provides a level of care and
services at least as great as those provided by a Custodial Care Facility. Long
Term Care Facility does not include any place owned or operated by a member of
the insured's immediate family.

Custodial Care Facility means a facility which:

1. Provides custodial care under the supervision of a Registered Nurse; and

2. Can accommodate three or more persons at those persons' expense.

Hospital means a facility which:

1. Is licensed by the jurisdiction in which it is located and operated as a
hospital;

2. Is supervised by a staff of licensed physicians;

3. Provides continuous nursing service 24 hours a day by or under the
supervision of a Registered Nurse;

4. Operates primarily for the care and treatment of sick or injured persons as
inpatients for a charge; and

5. Has medical, diagnostic and major surgical facilities or has access to such
facilities.

Medically Necessary means confinement, care or treatment which is appropriate
and consistent with the diagnosis in accordance with accepted standards of
practice, and which could not have been omitted without adversely affecting the
insured's condition.

Physician means a licensed medical doctor (M.D.) or a licensed doctor of
osteopathy (D.O.) operating within the scope of his or her license. The term
does not include the insured or a member of the insured's immediate family.

Registered Nurse means a registered graduate professional nurse (R.N.).

Immediate Family means the insured's spouse, children, parents, grandparents,
grandchildren, siblings, or corresponding in-laws.

14
<PAGE>

This benefit will not be applicable to the extent it does not comply with the
provisions of the Qualified Plan for which the Contract is issued. Also see
"Taxes" on page 22 for a discussion of the tax issues involved.

Waiver of Withdrawal Charge for Certain Qualified Plan Withdrawals

For contracts issued under a 403 (b) plan or a 401 plan under our prototype, we
will waive the Withdrawal Charge when: (1) the annuitant becomes disabled (as
defined in Code Section 72(m) (7)); or (2) the annuitant attains age 59 1/2 and
at least 5 Contract Years have elapsed; or (3) at least 15 Contract Years have
elapsed. Our prototype is a Section 401 Defined Contribution Qualified
Retirement plan. This is a prototype plan which may be established as a Money
Purchase plan, a Profit Sharing plan, or a paired plan (Money Purchase and
Profit Sharing).

Premium Taxes

Premium taxes or other taxes payable to a state or other governmental entity
will be charged against the Contract Values, including Contract Values that
result from funds transferred from existing policies (Section 1035 exchange)
issued by this Company or any other company. Some states assess premium taxes at
the time Purchase Payments are made; others assess premium taxes at the time
annuity payments begin. We will deduct any applicable premium taxes upon full
surrender, death, or annuitization. Premium taxes generally range from 0% to
3.5%.

Deduction for Separate Account Income Taxes

While we are not currently maintaining a provision for taxes, we have reserved
the right to establish such a provision for taxes in the future if we determine,
in our sole discretion, that we will incur a tax as a result of the operation of
the Separate Account. We will deduct for any taxes we incur as a result of the
operation of the Separate Account whether or not there was a provision for taxes
and whether or not it was sufficient. (See "Taxes," Page 22.)

Other Expenses

The charges and expenses applicable to the various Portfolios are borne
indirectly by Contract Owners having Contract Values allocated to the
Subaccounts that invest in the respective Funds. For a summary of current
estimates of those charges and expenses, see "Fee Tables," Page 6. For more
detailed information about those charges and expenses, please refer to the
prospectuses for the appropriate Fund(s). Lincoln Benefit Life may receive
compensation from the investment advisors or administrators in connection with
administrative service and cost savings experienced by the investment advisors
or administrators.

DESCRIPTION OF THE CONTRACTS

Summary

The Contracts provide for the accumulation of Contract Values during the
Accumulation Period. See "Purchases, Withdrawals and Contract Value," beginning
at Page 16. Upon Annuitization, benefits are payable under the Contracts in the
form of an annuity, either for the life of the Annuitant or for a fixed number
of years. See, "Annuity Period - Annuity Options," Page 21.

Contract Owner

The Contract Owner ("You") is the person normally entitled to exercise all
rights of ownership under the Contracts. You are also normally the person
entitled to receive benefits under the Contract, although you may, subject to
limitations in the case of Qualified Plans, designate an alternative payee.

Annuitant

The Annuitant is the natural person on whose life annuity payments under a
Contract depend. You may change the designated Annuitant at any time prior to
the Annuity Date. In the case of a Contract issued in connection with a plan
qualified under Section 403(b) or 408 of the Code, you are the Annuitant. You
may also designate a second person on whose life, together with that of the
Annuitant, annuity payments depend. Additional restrictions may apply in the
case of Qualified Plans (See "Taxes," page 22). If you are not the Annuitant and
the Annuitant dies before the Annuity Date, then you become the new Annuitant
unless you name another person as the new Annuitant. You must attest to the
Annuitant being alive before we will annuitize a Contract.

Modification of the Contract

Only a Lincoln Benefit Life officer may approve a change in or waive any
provisions of the Contract. Any change or waiver must be in writing. No agent
has the authority to change or waive the provisions of the Contract.

We reserve the right to change the terms of the Contract as may be necessary to
comply with changes in applicable law. If a provision or provisions of the
Contract are inconsistent with state law, state law will control.

Assignment

You may assign Contracts issued pursuant to Non-Qualified Plans that are not
subject to Title 1 of the Employee Retirement Income Security Act of 1974
("ERISA") at any time during the lifetime of the Annuitant prior to the Annuity
Date. We will not be bound by any assignment until we receive written notice of
it. We are not responsible for the validity of any assignment. An assignment
will not affect any payments we may make or actions we may take before we
receive notice of the assignment.

If the Contract is issued pursuant to a Qualified Plan (or a Non-Qualified Plan
that is subject to Title 1 of ERISA), it may not be assigned, pledged or
otherwise transferred except under such conditions as may be allowed under
applicable law.

BECAUSE AN ASSIGNMENT MAY BE A TAXABLE EVENT, YOU SHOULD CONSULT A COM-

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PETENT TAX ADVISER SHOULD YOU WISH TO ASSIGN YOUR CONTRACT.

Death Benefit

We will pay the Death Benefit when due proof of death is received while the
Contract is in force and before the Annuity Date, if:

the Contract Owner dies; or

the Annuitant dies and the Contract Owner is not a natural person.

The Beneficiary will become the new Contract Owner and may elect, within 60 days
of the date of death, to receive the Death Benefit in a lump sum or apply the
Death Benefit to receive a series of equal payments over the life of the
Beneficiary or a period not to exceed the life expectancy of the Beneficiary.
Lifetime or life expectancy payments must begin within one year of the deceased
Contract Owner's death.

If there is only one Beneficiary, he or she may elect to defer payment of the
Contract Value for up to five years from the date of death. Any remaining funds
must be distributed at the end of the five year period. An Annuitant is
necessary to continue the Contract between the date of death and the final
distribution. If there is no Annuitant at that time, the Beneficiary will be the
new Annuitant.

If the Beneficiary is the Contract Owner's spouse, then the Contract can
continue as if death had not occurred. If there is no Annuitant at that time,
the new Annuitant will be the surviving spouse. The surviving spouse may also
select one of the options listed above.

If the Beneficiary is not a natural person, then the Beneficiary must receive
the Death Benefit in a lump sum, and the options listed above are not available.

Similar rules may apply to Contracts issued in connection with Qualified Plans.

The Death Benefit is calculated as of the date of settlement. At a minimum, the
Death Benefit is the greater of:

(1) All Purchase Payments less prior withdrawals, accumulated at 4% per year
prior to the Contract Anniversary next following your 75th birthday, and at 0%
per year thereafter (This is called the "Floor Value" calculation); or

(2) The Contract Value less any applicable premium tax. In addition, if the
Contract Value on the 7th Contract Anniversary is greater than the Floor Value
at that time, the Floor Value will be raised to the level of the Contract Value.
In such event, Floor Values for years 8 and beyond will be calculated using the
"stepped-up" value on the seventh anniversary.

Beneficiary

The Beneficiary will receive the Death Benefit when the Contract Owner dies. The
Beneficiary is as stated in the application unless changed.

If a Beneficiary is not named or if the Beneficiary named is no longer living,
the beneficiary will be:

the Contract Owner's spouse if living, otherwise;

the Contract Owner's children equally if living, otherwise;

the Contract Owner's estate.

If there is more than one Beneficiary, the Company will pay the Death Benefit to
the Beneficiaries according to the most recent written instructions received
from you. If there are no written instructions the Company will pay the Death
Benefit in equal shares to the Beneficiaries who are to share the funds. If one
of the Beneficiaries predeceases the Contract Owner, the Death Benefit will be
paid to the surviving Beneficiaries.

You may name new Beneficiaries. We will provide a form to be signed and filed
with us. Upon receipt, it is effective as of the date you signed the form,
subject to any action we have taken before it was received.

Other rules may apply to Contracts issued in connection with Qualified Plans.

Voting Rights of Contract Owners

Except to the extent restricted by the retirement plan pursuant to which a
Contract was issued, you have a voting interest in each Subaccount to which you
have allocated your Contract Value. The voting interest in a Subaccount is based
upon your proportionate interest in the Subaccount as measured by Accumulation
and Annuity Units. (See "Separate Account Investments--Voting Rights," Page
12, and "Purchases, Withdrawals and Contract Value-Allocation of Purchase
Payments," Page 18).

PURCHASES, WITHDRAWALS AND
CONTRACT VALUE

Minimum Purchase Payment

The minimum initial Purchase Payment for a Contract is $1,200 (payable over the
first Contract Year) and the total of all Purchase Payments may not exceed $1
million without our prior approval. Minimum subsequent Purchase Payments may be
made in amounts of $100 or more ($25 or more if made in connection with an
Automatic Payment Plan, described below). We may lower these minimums at our
sole discretion. We reserve the right to refuse any Purchase Payment at any
time. We may not issue a Contract to a Purchaser who has attained age 86, or
where the Annuitant has attained age 86.

Automatic Payment Plan

You may make scheduled subsequent Purchase Payments of $25.00 or more per month
by automatic payment through your bank account. An enrollment form for this
program is available through us.

Automatic Dollar Cost Averaging Program

Owners who wish to purchase units of the Subaccounts or the Fixed Account over a
period of time may be able

<PAGE>

to do so through the Automatic Dollar Cost Averaging ("DCA") Program. Under this
program, you may authorize the automatic transfer of a fixed dollar amount from
the Fixed Account or a Subaccount of your choosing (the "Source Subaccount") to
up to eight options, including other Subaccounts or the Fixed Account, at the
unit values determined on the dates of the transfers. The interval between
transfers may be monthly, quarterly, or annually, at your option. The transfers
will continue until you instruct otherwise, or until there is not enough money
in the Source Subaccount to make the transfer, whichever is earlier. Currently,
the minimum transfer amount from the Source Subaccount is $100, subject to the
company's discretion. If you elect DCA, the first DCA will occur one period
after your issue date. Your request for DCA will be effective when we receive it
in good form. Special DCA considerations apply with respect to transfers from
the Fixed Account. (See Transfers, Page 18.)

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, when purchases are made at
fluctuating prices, 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 you of a greater profit from
your purchases under the Program; nor will it prevent or necessarily alleviate
losses in a declining market. You may not use dollar cost averaging and
portfolio rebalancing at the same time.

You may elect to increase, decrease or change the frequency or amount of
Purchase Payments under a Dollar Cost Averaging Program. The application and any
Purchase Payments should be sent to Lincoln Benefit Life Company, P.O. Box
82532, Lincoln, Nebraska 68501-2532.

Portfolio Rebalancing

Portfolio rebalancing allows you to maintain the percentage of your Contract
Value allocated to each Subaccount at a pre-set level prior to annuitization.
For example, you could specify that 30% of your Contract Values should be in the
Balanced Portfolio, 40% in the Growth Portfolio-Janus Aspen Series and 30% in
Federated High Income Bond Fund II. Over time, the variations in each
Subaccount's investment results will shift this balance of your Contract Value
allocations. If you elect the portfolio rebalancing feature, we will
automatically transfer your Contract Value, including new premium (unless you
specify otherwise), back to the percentages you specify, but only if investment
results shift greater than minimum requirements that we establish.

You may choose to have rebalances made monthly, quarterly, semi-annually, or
annually until your Annuity Date; portfolio rebalancing is not available after
you annuitize. No Transfer Fees will be charged for portfolio rebalancing. No
more than eight Subaccounts can be included for portfolio rebalancing at any
time. If you include the Fixed Account for Portfolio Rebalancing, you may not
make more than two changes in any given twelve month period to the allocation
percentages with the net cumulative change to the Fixed Account being adjusted
during the period no more than 20%. The Company reserves the right to waive this
restriction.

Procedures for selecting portfolio rebalancing are generally the same as those
discussed in detail above for selecting dollar cost averaging. When you
establish Portfolio Rebalancing, the restrictions described under Fixed Account
will apply. You may make your request at any time prior to your Annuity Date,
and it will be effective when we receive the request in good form. If you stop
portfolio rebalancing, you must wait 30 days to begin again. You may specify a
date for your first rebalance, or your first rebalancing, and all rebalancing
thereafter will occur on the day of the month (following receipt of your
request) that coincides with the same day of the month as your Contract
Anniversary date. If you specify a date fewer than 30 days after your Issue
Date, your first rebalance will be delayed one month and if you request
rebalancing on your application but do not specify a date for the first
rebalance, it will occur one period after your Issue Date. If those Subaccounts,
collectively, selected for rebalancing fall below any minimum value that we may
establish, we have the right, at our option, to prohibit or limit the use of
portfolio rebalancing. You may not use dollar cost averaging and portfolio
rebalancing at the same time. We may change, terminate, limit, or suspend
portfolio rebalancing at any time.

Contract Value

We will establish an account for you and will maintain your account during the
Accumulation Period. The value of a Contract for any Valuation Period is equal
to the sum of the variable Accumulation Unit Values of the Subaccounts for that
Valuation Period, plus the value of the Fixed Account.

Separate Account Accumulation Unit Value

Accumulation Unit Value is determined Monday through Friday on each day that the
New York Stock Exchange is open for business.

A separate Accumulation Unit Value is determined for each Subaccount.
If we elect or are required to assess a charge for taxes, a separate
Accumulation Unit Value may be calculated for Contracts issued in connection
with Non-Qualified and Qualified Plans, respectively, within each Subaccount.

The Accumulation Unit Value for each Subaccount will vary with the price of a
share in the Portfolio the Subaccount invests in, and in accordance with the
Mortality and Expense Risk Charge, Administrative Expense Charge, and any
provision for taxes. Assessments of Withdrawal Charges, transfer fees and
Contract Administration Charges are made separately for each Contract. They are
effected by redemption of Accumulation Units and do not affect Accumulation Unit
Value.

The Accumulation Unit Value of a Subaccount for any Valuation Period equals the
Accumulation Unit Value as

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of the immediately preceding Valuation Period, multiplied by the Net Investment
Factor for that Subaccount for the current Valuation Period. The Net Investment
Factor is a number representing the change on successive Valuation Dates in
value of Subaccount assets due to investment income, realized or unrealized
capital gains and losses, deductions for taxes, if any, and deductions for the
Mortality and Expense Risk Charge and Administrative Expense Charge. If the Net
Investment Factor for a Subaccount is greater than one, the Accumulation Unit
Value of that Subaccount has increased. If the Net Investment Factor is less
than one, the Subaccount's Accumulation Unit value has decreased.

ALLOCATION OF PURCHASE PAYMENTS

Purchase Payments are allocated to the Subaccount(s)and Fixed Account as
you have selected. When you make your initial Purchase Payment, you must specify
your allocation on the application for a Contract. Percentages must be in whole
numbers and the total allocation must equal 100%. If the application is in good
order, we will allocate Purchase Payments, as you have selected, and issue the
Contract within two business days of receipt at the Company's P.O. Box
identified on the first page of this prospectus. The number of Accumulation
Units in a Subaccount is determined by dividing that portion which is allocated
to the Subaccount by that Subaccount's Accumulation Unit value as of the end of
the Valuation Period when the allocation occurs. If state law requires us to
return at least your Purchase Payment during the "free-look" period, initial
Purchase Payments may be allocated to the Fidelity Money Market Subaccount for
twenty days following the Issue Date, or longer if required by state law. They
will then be allocated to the Fixed Account and/or Subaccounts you have
selected.

If the application for a Contract is not in good order, we will attempt
to rectify it within five business days of our receipt. An example of an
application not being in good order would be one in which no allocation was
specified. We will credit the initial Purchase Payment within two business days
after the application has been rectified. Unless the prospective Contract Owner
consents otherwise, the application and the initial Purchase Payment will be
returned if the application cannot be put in good order within five business
days of such receipt.

When you make subsequent Purchase Payments, you should specify how you
want your payments allocated. Otherwise, we will automatically process the
purchase payment based on the then current Purchase Payment allocation.

TRANSFER DURING ACCUMULATION PERIOD

During the Accumulation Period, you may transfer Contract Values among
the Fixed Account and Subaccounts by written request or telephone authorization.
NO SUCH TRANSFERS ARE PERMITTED AFTER THE ANNUITY DATE. Currently, there is no
minimum transfer amount required. We reserve the right to impose a minimum
amount that may be transferred among the investment options under the Contract.
Request for transfers will be effective on the date of receipt if it is a
Valuation Date and a date that we are open for business. Additional restrictions
apply to transfers from/to the Fixed Account as described below.

Transfers from the Fixed Account to the Subaccounts may only be made
during the 60 day period beginning on the issue date or the Contract Anniversary
unless the transfer is made by Dollar Cost Averaging or Portfolio Rebalancing.
The maximum amount which may be transferred from the Fixed Account during a
Contract Year is the greater of 30% of the Fixed Account balance as of the last
Contract Anniversary or the greatest amount of any prior transfer from the Fixed
Account. If desired, you may elect to have the above amount transferred
quarterly or monthly via Dollar Cost Averaging. Alternatively, you may elect to
transfer the entire Fixed Account balance to the Subaccount(s) via Dollar Cost
Averaging. The maximum monthly amount allowed would be 1/36 of the Fixed
Account Balance at the time of the first transfer. The Company reserves the
right to waive or modify this restriction. No additional transfers or payments
may be made into the Fixed Account if transfers are being made out via Dollar
Cost Averaging.

Notwithstanding the above, we will allow 100% of the Fixed Account
balance to be transferred to the Subaccount(s) if either (a) or (b) occurs:

(a) If, on the last Contract Anniversary, the interest rate credited to
the Fixed Account is less than it was on the immediately preceding anniversary
(or on the issue date for the first Contract Anniversary).

(b) The credited interest rate on the last Contract Anniversary is less
than 4%.

This offer will apply for 60 days following the date we mail notification to
you.

We reserve the right to defer transfers from the Fixed Account for up to
six months from the date you ask us. Also, we reserve the right to restrict
transfers from the Subaccounts to the Fixed Account each Contract Year to no
more than 30% of the Separate Account balances as of the last Contract
Anniversary. We currently are not imposing this restriction.

TRANSFERS AUTHORIZED BY TELEPHONE

Telephone calls authorizing transfers must be completed by 4:00 p.m.
Eastern time on both a day that the Company is open for business and a Valuation
Date in order to be effected at the price determined on such Date. Transfer
authorizations, whether written or by telephone, which are received after 4:00
p.m. Eastern time will be processed as of the next Valuation Date. A proper
telephone authorization form for transfers must be on file. A transfer fee may
be assessed in connection with transfers (see "Contract Charges - Administrative
Charges - Transfer Fee," Page 13). Also, the telephone transfer privilege may
be suspended, modified or terminated at any time without notice.

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We utilize procedures that we believe provide reasonable assurance that
telephone authorized transfers are genuine. Such procedures include taping of
telephone conversations with persons purporting to authorize such transfers and
requesting identifying information from such persons. Accordingly, we disclaim
any liability for losses resulting from such transfers by reason of their
allegedly not having been properly authorized. However, if we do not take
reasonable steps to help ensure that such authorizations are valid, we may be
liable for such losses.

CONTRACT LOANS FOR 401(A), 401(K), AND 403(B) CONTRACTS

During the Accumulation Period but after the "free look" period, the Owner of a
Contract used in connection with a Tax Sheltered Annuity Plan ("TSA Plan") under
Section 403(b) of the Code, or an Owner of a Contract purchased by a pension,
profit-sharing, or other similar plan qualified under Section 401(a) of the Code
(a "401 Plan"), including a Section 401(k) plan, where a plan trustee is the
Owner, may receive a loan from the Surrender Value subject to the terms of the
Contract, the Plan, and the Code, which impose restrictions on loans.

The loan amount cannot exceed an amount which when added to any existing loan
exceeds the Surrender Value on the date of the loan. In addition, the total
loan, when added to the outstanding loan balance under all other plans of the
participant, may not exceed the lesser of (a) or (b) where:

(a) is $50,000 reduced by the excess of the highest outstanding loan balance
during the prior 12 month period over the outstanding balance of loans; and

(b) is the greater of $10,000 or 1/2 of the Surrender Value.

The minimum loan amount is $1,000.

A written request must be sent to us for a loan. The Owner has the sole
responsibility for requesting loans and making loan repayments that comply with
applicable tax requirements. Loans must comply with the applicable provisions
of Section 72 of the Code and Title 1 of ERISA. Please seek advice from your
plan administrator or tax advisor.

When a loan is made, a portion of the Surrender Value sufficient to secure the
loan will be transferred to the Loan Account reducing the Contract Value in the
Separate Acccount and/or the Fixed Account. Unless instructed to the contrary by
the Contract Owner, we will first transfer to the Loan Account amounts from the
Separate Account in proportion to the assets in each Subaccount until the
required balance is reached or all such variable units are exhausted. The
remaining required collateral will next be transferred from the Fixed Account.
No withdrawal charges are deducted at the time of the loan, or on the transfer
from the Variable Account to the Fixed Account.

Amounts transferred to the Loan Account will accrue interest at an annual rate
2.25% less than the loan interest rate fixed by us for the term of the loan.
However, the interest rate credited to the Loan Account will never be less than
the Fixed Account guaranteed rate of 3%. Amounts transferred to the Loan Account
will no longer be affected by the investment experience of the Separate Account.

The Death Benefit and Contract Value available for partial withdrawal or
surrender, as well as the amount applied on the Annuity Date to provide annuity
payments will be reduced by the amount of the loan outstanding plus accrued
interest.

You must repay any loan within five years of the date the loan is made.
Scheduled payments must be level, amortized over the repayment period, and made
at least quarterly. A repayment period of 15 or 30 years is acceptable if the
loan proceeds are used to acquire a dwelling unit which is to be used by you as
a principal residence. Other repayment periods may be available at our
discretion.

Loan repayments must be identified as such; otherwise, they may be credited to
the Contract as Purchase Payments.

If a loan payment is not made when due, interest will continue to accrue. We
will declare the entire loan in default. The defaulted loan balance plus accrued
interest will be deducted from any future Distribution under the Contract and
paid to us. Any defaulted amount plus interest will be treated as a Distribution
(as permitted by law) and may be taxable to the borrower, may be subject to the
early withdrawal tax penalty, and will be subject to the mandatory 20% federal
withholding.

If the total loan amount exceeds the Surrender Value, we will mail written
notice to your last known address. The notice will state the amount needed to
maintain the Contract in force. If payment of this amount is not received within
31 days after the date this notice is mailed, the Contract will terminate.
We reserve the right to defer making any loan for 6 months after you ask
us for it, unless the loan is to pay a premium to us.

WITHDRAWALS (REDEMPTIONS)

Except as explained below,you may redeem a Contract for all or a portion
of its Contract Value during the Accumulation Period. Withdrawal Charges may be
applicable, however, which would reduce the Contract Value upon redemption.
(See "Contract Charges - Withdrawal Charge" on Page 13 for additional
information.)

Withdrawals and distributions from Contracts issued in connection with certain
Qualified Plans may be subject to a mandatory 20% withholding requirement. See
"Taxes -- Withholding Tax on Distributions," on Page 22.

Withdrawals of amounts attributable to contributions made pursuant to a salary
reduction agreement (in accordance with Section 403(b)(11) of the Code) are
limited to circumstances only: when you attain age 59 1/2, separate

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from service, die, become disabled (within the meaning of Section 72(m)(7) of
the Code), or in the case of hardship. Withdrawals for hardship are restricted
to the portion of the Contract Value which represents your contributions and
does not include any investment results. These limitations on withdrawals apply
to: (1) salary reduction contributions made after December 31, 1988; (2) income
attributable to such contributions; and (3) income attributable to amounts held
as of December 31, 1988. The limitations on withdrawals do not affect transfers
between certain Qualified Plans. Additional restrictions and limitations may
apply to distributions from any Qualified Plan. Tax penalties may also apply.
You should seek competent tax advice regarding any withdrawals or distributions
from Qualified Plans. (See "Tax Treatment of Withdrawals," beginning at Page
23.) Except in connection with a Systematic Withdrawal Program, described below,
the minimum partial withdrawal amount is $250, or, if less, your entire interest
in the Subaccount from which a withdrawal is requested.

A written withdrawal request or systematic withdrawal program enrollment form,
as the case may be, must be sent to us. For partial withdrawals, you may
allocate the amount among the Subaccounts of the Separate Account. The required
program form will not be in good order unless it includes your Tax I.D. Number
(e.g., Social Security Number) and provides instructions regarding withholding
of income taxes. We provide the required forms. The amount of the partial
withdrawal will be allocated proportionately from the Subaccounts and the Fixed
Account, unless you specify otherwise.

If the request is for total withdrawal, the Contract must be submitted. The
Surrender Value is determined on the basis of the Contract Value next computed
following receipt of a request in proper order. The Surrender Value will
normally be paid within seven days after the day we receive a proper request.
However, we may suspend the right of withdrawal from the Separate Account or
delay payment for such withdrawal more than seven days: (1) during any period
when the New York Stock Exchange ("NYSE") is closed (other than customary
weekend and holiday closings); (2) when trading on the NYSE is restricted or an
emergency exists as determined by the Securities and Exchange Commission so that
disposal of the Separate Account's investments or determination of Accumulation
Unit values is not reasonably practicable; or (3) for such other periods as the
Securities and Exchange Commission, by order, may permit for your protection. In
addition, we may delay payment of the Surrender Value in the Fixed Account for
up to 6 months (or a shorter period if required by applicable law).

Systematic Withdrawal Program

Owners of Contracts issued in connection with Non-Qualified Plans and IRAs may
choose to participate in a Systematic Withdrawal Program. You must complete an
enrollment form and send it to us. The withholding election section of the
enrollment form must be complete before the Systematic Withdrawals will begin.
Systematic Withdrawals of a flat dollar amount, earnings, or a percentage of
Purchase Payments are available. Systematic Withdrawals are treated the same as
partial withdrawals for purposes of determining if a withdrawal charge applies.
Systematic Withdrawals are offered on a monthly, quarterly, semi-annual, or
annual basis.

Depending on fluctuations in the net asset value of the Subaccounts and the
value of the Fixed Account, Systematic Withdrawals may reduce or even exhaust
the Contract Value. The minimum amount of each Systematic Withdrawal is $50.

Systematic Withdrawal payments are made to you or your designated payee. We
reserve the right to modify or suspend the Systematic Withdrawal Program and to
charge a processing fee for the service. If we modify or suspend the Systematic
Withdrawal Program, existing Systematic Withdrawal payments will not be
affected.

Erisa Plans

Spousal consent may be required when a married Participant seeks a distribution
from a Contract that has been issued in connection with a Qualified Plan (or a
Non-Qualified Plan that is subject to Title 1 of ERISA). You should obtain
competent advice.

Minimum Contract Value

If the Contract Value is less than $250 and no Purchase Payments have been made
during the previous three full calendar years, we reserve the right, after 60
days written notice to you, to terminate the Contract and distribute its
Surrender Value to you. This privilege will be exercised only if the Contract
Value has been reduced to less than $250 as a result of withdrawals, and state
law permits. In no instance shall such termination occur if the value has fallen
below $250 due to either decline in Accumulation Unit value or the imposition of
fees and charges. Other rules may apply to Contracts issued in connection with
Qualified Plans.

ANNUITY PERIOD

Annuity Date

You select an Annuity Date (the date on which annuity payments are to begin) at
the time of application. The Annuity Date must always be the tenth day of a
calendar month. Also, we reserve the right to require the Annuity Date be at
least two years from the Issue Date, unless an earlier date is required by law.
Annuity payments will begin in any event no later than the Latest Annuity Date.
If no Annuity Date is selected, the Annuity Date will be the Latest Annuity
Date. You may change the Annuity Date at any time at least seven days prior to
the Annuity Date then indicated on our records by sending written notice to us.

Deferment of Payments

We may defer for up to 15 days the payment of any amount attributable to a
Purchase Payment made by check to allow the check reasonable time to clear. We

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may defer making Fixed Annuity payments for a period of up to six months or such
lesser time as state law may require. Interest, subject to state law
requirements, will be credited during the deferral period.

Annuity Options

No lump sum settlement option is available under the contract. You may surrender
the contract prior to the Annuity Date; however, any applicable withdrawal
charge will be deducted from the Contract Value. You may elect an Annuity Option
at any time prior to the Annuity Date. A change of Annuity Option is permitted
if made at least seven days before the Annuity Date. If no other Annuity Option
is elected, monthly annuity payments will be made in accordance with Option B
below, with 10 years (120 months) guaranteed (or Option C in the case where
payments are to be made for the joint lives of the Annuitant and a designated
second person and for the life of the survivor). Annuity payments will be made
in monthly, quarterly, semi-annual or annual installments as you select.
However, if the amount available to apply under an Annuity Option is less than
$5,000, and state law permits, we have the right to pay the annuity in one lump
sum. In addition, if the first payment provided would be less than $50, and
state law permits, we shall have the right to require the frequency of payments
be at quarterly, semi-annual or annual intervals so as to result in an initial
payment of at least $50.

NO WITHDRAWALS OF CONTRACT VALUE ARE PERMITTED DURING THE ANNUITY PERIOD FOR ANY
ANNUITY OPTION INVOLVING LIFE CONTINGENCIES.

The following Annuity Options are generally available under the Contract. Each
is available in the form of either a Fixed Annuity or a Variable Annuity (or a
combination of both Fixed and Variable Annuity). Fixed Account Contract Values
will be applied to provide a Fixed Annuity. However, there may be restrictions
in the retirement plan pursuant to which a Contract has been purchased. Annuity
payments are made on the Valuation Date on or immediately following the tenth of
the month, beginning on the Annuity Date.

Option A, Life Annuity. Monthly payments are made during the Annuitant's life,
starting with the Annuity Date. No payments will be made after the Annuitant
dies. It is possible for the payee to receive only one payment under this
option, if the Annuitant dies before the second payment is due.

Option B, Life Annuity with Payments Guaranteed for 5 to 20 Years. Monthly
payments are made starting on the Annuity Date. Payments will continue as long
as the Annuitant lives. If the Annuitant dies before all of the guaranteed
payments have been made, we will continue installments of the guaranteed
payments to the Beneficiary.

Option C, Joint and Full Survivor Annuity. Monthly payments are made starting
with the Annuity Date. Payments will continue as long as either the Annuitant or
the joint Annuitant is alive. Payments will stop when both the Annuitant and the
joint Annuitant have died. It is possible for the payee or payees under this
option to receive only one payment, if both Annuitants die before the second
payment is due.

Option D, Payments for a Specified Period Certain, 5 Years to 25 Years. Monthly
payments are made starting on the Annuity Date, and continuing for the specified
period of time, as elected. If the Annuitant dies before all of the guaranteed
payments have been made, we will continue installments of the guaranteed
payments to the Beneficiary.

Other Options

We may have other annuity options available. Information about them may be
obtained by writing or calling us.

With respect to Contracts issued under Sections 401, 403(b) or 408 of the
Internal Revenue Code, any payments will be made only to you and/or your spouse.

Death Benefit During Annuity Period

If the Annuitant dies after the Annuity Date while the Contract is in force, the
death proceeds, if any, will depend upon the Annuity Option in effect at the
time of the payee's death. If the Annuitant dies after the Annuity Date and
before the entire interest in the Contract has been distributed, the remaining
interest, if any, as provided for in the Option elected, will be distributed at
least as rapidly as under the method of distribution in effect at the
Annuitant's death.

Variable Annuity Payments

The basic objective of a Variable Annuity Contract is to provide Variable
Annuity payments which will be to some degree responsive to changes in the
economic environment. The amount of Variable Annuity Payments ("Payments")
depends upon the investment experience of the Portfolios you have selected, any
premium taxes, the age and sex of the Annuitant, and the Annuity Option chosen.
We guarantee that the Payments will not be affected by (1) actual mortality
experience and (2) the amount of our administration expenses.

The Contracts offered by this prospectus (except in states which require unisex
annuity tables) contain life annuity tables that provide for different benefit
payments to men and women of the same age. Nevertheless, in accordance with the
U.S. Supreme Court's decision in Arizona Governing Committee v. Norris, in
certain employment-related situations, annuity tables that do not vary on the
basis of sex may be used. Accordingly, if the Contract is to be used in
connection with an employment-related retirement or benefit plan, consideration
should be given, in consultation with legal counsel, to the impact of Norris on
any such plan before making any contributions under these Contracts.

The Payments may be more or less than the total Purchase Payments made because
(a) Payments vary with the investment results of the underlying Portfolios; (b)
you
21
<PAGE>

bear the investment risk with respect to all amounts allocated to the Separate
Account, and (c) Annuitants may die before the actuarial life expectancy is
achieved. As such, the amount of the Payments cannot be predicted.

The duration of the Annuity Option will affect the dollar amounts of each
Payment. For example, if an annuity option guaranteed for life is chosen, the
Payments will be greater than Payments under an annuity option for a minimum
specified period and guaranteed thereafter for life.

If the actual net investment experience is less than the assumed investment
rate, then the dollar amount of the Payments will decrease. The dollar amount of
the Payments will stay level if the net investment experience equals the assumed
investment rate and the dollar amount of the Payments will increase if the net
investment experience exceeds the assumed investment rate. The assumed annual
investment rate is 3 1/2%.

ADMINISTRATION

We have primary responsibility for all administration of the Contracts and the
Separate Account. Our mailing address is P.O. Box 82532, Lincoln, Nebraska 68
501-2532, and our telephone number is 1-800-865-5237.

The administrative services provided include, but are not limited to: issuance
of the Contracts; maintenance of Contract Owner records; Contract Owner
services; calculation of unit values; and preparation of Contract Owner reports.

Contract statements and transaction confirmations are mailed to you at least
quarterly. You should therefore give us prompt written notice of any address
change. You should read your statements and confirmations carefully and verify
their accuracy. Questions about periodic statements should be communicated to us
promptly. We will investigate all complaints and make any necessary adjustments
retroactively, provided that we have received notice of a potential error within
a reasonable time period after the date of the questioned statement. If we have
not received notice of a potential error within this time, any adjustment shall
be made as of the date that we receive notice of the potential error.

We will also provide you with such additional periodic and other reports,
information and prospectuses as may be required by federal securities laws.

TAXES

NOTE: The following description is based upon our understanding of current
federal income tax law applicable to annuities in general. We cannot predict the
probability that any changes in such laws will be made. Purchasers are cautioned
to seek competent tax advice regarding the possibility of such changes. We do
not guarantee the tax status of the Contracts. Purchasers bear the complete risk
that the Contracts may not be treated as "annuity contracts" under federal
income tax laws.

General

Section 72 of the Internal Revenue Code of 1986, as amended (the "Code") governs
taxation of annuities in general. A Contract Owner who is a natural person is
not taxed on increases in the value of a Contract until distribution occurs,
either in the form of a non-annuity distribution or as annuity payments under
the Annuity Option elected. For a lump sum payment received as a total surrender
(total redemption), the recipient is taxed on the portion of the payment that
exceeds the cost basis of the Contract. For a payment received as a withdrawal
(partial redemption), federal tax liability is determined on a last-in, first-
out basis, meaning taxable income is withdrawn before the cost basis of the
Contract is withdrawn. For Contracts issued in connection with Non-Qualified
Plans, the cost basis is generally the Purchase Payments, while for Contracts
issued in connection with Qualified Plans there may be no cost basis. The
taxable portion of the lump sum payment is taxed at ordinary income tax rates.
Tax penalties may also apply.

For annuity payments, the taxable portion is determined by a formula which
establishes the ratio that the cost basis of the Contract bears to the total
value of annuity payments for the term of the annuity Contract. The taxable
portion is taxed at ordinary income tax rates. Contract Owners, Annuitants and
Beneficiaries under the Contracts should seek competent financial advice about
the tax consequences of distributions under the retirement plan under which the
Contracts are purchased.

All Non-Qualified annuity Contracts that are issued by the Company (or its
affiliates) to the same Owner during any calendar year will be aggregated and
treated as one annuity Contract for purposes of determining the amount
includable in gross income under section 72(e) of the Code. Accordingly, an
Owner should consult a competent tax adviser before purchasing more than one
Non-Qualified annuity Contract. Further, if a Non-Qualified Contract has an
Owner who is not a natural person, a change of Annuitant will cause the Contract
to be treated as if the Contract Owner died.

A transfer of ownership of a Contract, the designation of an Annuitant or other
Beneficiary who is not also the Owner, an assignment of a Contract or the
exchange of a Contract may result in certain tax consequences to the Owner that
are not discussed herein. An Owner contemplating any such transfer, assignment,
or exchange of a Contract should contact a competent tax adviser with respect to
the potential tax effects of such a transaction.

For a contract to be treated as an annuity for federal income tax purposes, the
investments in the Separate Account must be "adequately diversified" in
accordance with the standards provided in the Treasury Department regulations.
If the investments in the Separate Account are not adequately diversified, then
the contract will not be treated as an annuity contract for federal income tax
purposes and the income on the contract will be taxed as ordinary income
received or accrued by the owner during the taxable year. Although the Company
does not have

22
<PAGE>

control over the Portfolios or their investments, the Company expects the
Portfolios to meet the diversification requirements.

If the contract's scheduled maturity date is at a time when the annuitant has
reached an advanced age, e.g., past age 85, it is possible that the contract
would not be treated as an annuity. In that event, the income and gains under
the contract would be currently includible in the owner's income.

We are taxed as a life insurance company under the Code. For federal income tax
purposes, the Separate Account is not a separate entity from us and its
operations form a part of the Company.

Withholding Tax on Distributions

The Code generally requires us (or, in some cases, a plan administrator) to
withhold tax on the taxable portion of any distribution or withdrawal from a
Contract. For "eligible rollover distributions" from Contracts issued under
certain types of Qualified Plans, 20% of the distribution must be withheld,
unless the payee elects to have the distribution "rolled over" to another
eligible plan in a direct "trustee to trustee" transfer. This requirement is
mandatory and cannot be waived by the Contract Owner. Withholding on other types
of distributions can be waived. An "eligible rollover distribution" is the
estimated taxable portion of any amount received by a covered employee from a
plan qualified under Section 401(a) or 403(a) of the Code (these rules do not
apply to Section 408(b) Contracts), or from a tax-sheltered annuity qualified
under section 403(b) of the Code (other than (1) annuity payments for the life
(or life expectancy) of the employee, or joint lives (or joint life
expectancies) of the employee and his or her designated beneficiary, or for a
specified period of ten years or more; and (2) distributions required to be made
under the Code). Failure to "roll over" the entire amount of an eligible
rollover distribution (including an amount equal to the 20% portion of the
distribution that was withheld) could have adverse tax consequences, including
the imposition of a penalty tax on premature withdrawals, described later in
this section.

Withdrawals or distributions from a Contract other than eligible rollover
distributions are also subject to withholding on the estimated taxable portion
of the distribution, but the Contract Owner may elect in such cases to waive the
withholding requirement. If not waived, withholding is imposed (1) for periodic
payments, at the rate that would be imposed if the payments were wages, or (2)
for other distributions, at the rate of 10%. If no withholding exemption
certificate is in effect for the payee, the rate under (1) above is computed by
treating the payee as a married individual claiming 3 withholding exemptions.

In addition, some states may require that state income tax be withheld.

Tax Treatment of Assignments

An assignment of a Contract may have tax consequences, and may also be
prohibited by ERISA in some circumstances. Owners should therefore consult
competent legal advisers should they wish to assign their Contracts.

Tax Treatment of Withdrawals

Qualified Plans

Section 72(t) of the Code imposes a 10% penalty tax on the taxable portion of
any early distribution from qualified retirement plans, including contracts
issued and qualified under Code Sections 401 (H.R. 10 and Corporate Pension and
Profit Sharing Plans), 403(b) (Tax-Sheltered Annuities) and 408(b) (IRAs).

The tax penalty will not apply to the following distributions: (1) if
distribution is made on or after the date on which the Contract Owner reaches
age 59 1/2; (2) distributions following the death or disability of the Contract
Owner or Annuitant (as applicable) (for this purpose "disability" is defined in
Section 72(m)(7) of the Code); (3) distributions that are part of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the Contract Owner or Annuitant (as applicable) or the joint
lives (or joint life expectancies) of such Contract Owner or Annuitant (as
applicable) and his or her designated beneficiary; (4) distributions to a
Contract Owner or Annuitant (as applicable) who has separated from service after
he or she has attained age 55; (5) distributions made to the Contract Owner or
Annuitant (as applicable) to the extent such distributions do not exceed the
amount allowable as a deduction under Code Section 213 to the Contract Owner or
Annuitant (as applicable) for amounts paid during the taxable year for medical
care; and (6) distributions made to an alternate payee pursuant to a qualified
domestic relations order.

The exceptions stated in items (4), (5) and (6) above do not apply in the case
of an IRA.

Limitations imposed by the Code on withdrawals from tax-sheltered annuities are
described above under "Purchases, Withdrawals and Contract Value -- Withdrawals
(Redemptions)," on Page 19.

The taxable portion of a withdrawal or distribution from Contracts issued under
certain types of plans may, under some circumstances, be "rolled over" into
another eligible plan so as to continue to defer income tax on the taxable
portion. Effective January 1, 1993, such treatment is available for any
"eligible rollover distribution" made by certain types of plans (as described
above under "Taxes -- Withholding Tax on Distributions," page 22) that is
transferred within 60 days of receipt into a plan qualified under section 401(a)
or 403(a) of the Code, a tax-sheltered annuity, an IRA, or an individual
retirement account described in section 408(a) of the Code. Plans making such
eligible rollover distributions are also required, with some exceptions
specified in the Code, to provide for a direct "trustee to trustee" transfer of
the

23
<PAGE>

distribution to an eligible transferee plan designated by the recipient.

Amounts received from IRAs may also be rolled over into other IRAs, individual
retirements accounts or certain other plans, subject to limitations set forth in
the Code.

Non-Qualified Plans

Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate Purchase
Payments made, any amount withdrawn not in the form of an annuity payment will
be treated as coming first from the earnings and then, only after the income
portion is exhausted, as coming from the principal. Withdrawn earnings are
includable in a taxpayer's gross income. Section 72 further provides that a 10%
penalty will apply to the income portion of any premature distribution. The
penalty is not imposed on amounts received: (1) after the taxpayer reaches 59
1/2; (2) upon the death of the Contract Owner or Annuitant (as applicable); (3)
if the taxpayer is totally disabled; (4) in a series of substantially equal
periodic payments made for the life of the taxpayer or for the joint lives of
the taxpayer and his Beneficiary; (5) under an immediate annuity; or (6) which
are allocable to purchase payments made prior to August 14, 1982.

Separate tax withdrawal penalties and restrictions apply to Qualified Plan
Contracts.

DISTRIBUTION OF CONTRACTS

Contracts are sold by registered representatives of broker-dealers who are our
licensed insurance agents, either individually or through an incorporated
insurance agency. Commissions paid to broker-dealers may vary, but in the
aggregate are not anticipated to exceed 6% of all Purchase Payments (on a
present value basis). From time to time, additional sales incentives (up to 1%
of Purchase Payments) may be provided to broker-dealers maintaining certain
sales volume levels.

Lincoln Benefit Financial Services, Inc. ("LBFS") located at 206 South 13th
Street, Lincoln, Nebraska 68508-1993 serves as distributor of the Contracts.
LBFS is a wholly-owned subsidiary of Lincoln Benefit Life Company. It is
registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended, and is a member of the National Association of Securities Dealers, Inc.

LEGAL PROCEEDINGS

There are no pending legal proceedings affecting the Separate Account. The
Company and its subsidiaries are engaged in various kinds of routine litigation
which, in management's judgment, is not of material importance to their
respective total assets or material with respect to the Separate Account.

LEGAL MATTERS

Legal matters relating to the federal securities laws in connection with the
Contracts described herein are being passed upon by the law firm of Katten
Muchin & Zavis, 1025 Thomas Jefferson St., East Lobby-Suite 700, Washington,
D.C. 20007-5201.

REGISTRATION STATEMENT

A registration statement has been filed with the Securities and Exchange
Commission, Washington, D.C., under the Securities Act of 1933 as amended, with
respect to the Contracts offered by this prospectus. This prospectus does not
contain all the information set forth in the registration statement and the
exhibits filed as part of the registration statement, to all of which reference
is hereby made for further information concerning the Separate Account, the
Company, and the Contracts. Statements found in this prospectus as to the terms
of the Contracts and other legal instruments are summaries, and reference is
made to such instruments as filed.

FINANCIAL STATEMENTS

The financial statements for Lincoln Benefit Life Company and the Separate
Account are set forth in the Statement of Additional Information.

ADDITIONAL INFORMATION ABOUT
THE SEPARATE ACCOUNT

Additional information concerning the operations of the Separate Account is
contained in a Statement of Additional Information, which is available without
charge upon written request addressed to us. The contents of the Statement of
Additional Information are tabulated below.

TABLE OF CONTENTS
OF STATEMENT
OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>

<S> <C>
The Contract............................... 3
Annuity Payments..................... 3
Annuity Unit Value................... 3
Variable Annuity Payments
--Illustrative Example............... 4
Additional Federal Income Tax Information.. 5
Diversification--Separate
Account Investments.................. 5
Multiple Contracts................... 6
Qualified Plans...................... 6
Separate Account Performance............... 7
Financial Statements....................... 12
</TABLE>
APPENDIX

Portfolios and Performance Data

PERFORMANCE DATA

From time to time the Separate Account may advertise the Fidelity Money Market
Subaccount's "yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future

24
<PAGE>

performance. The "yield" of the Fidelity Money Market Subaccount refers to the
net income earned by the Subaccount over a seven-day period (which period will
be stated in the advertisement). This income is then "annualized." That is, the
amount of income earned during that week is assumed to be generated each week
over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by the investment is assumed to be reinvested at the end of each seven-
day period. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. Neither the
yield nor the effective yield takes into consideration the effect of any capital
changes that might have occurred during the seven day period, nor do they
reflect the impact of premium taxes or any Withdrawal Charges. The impact of
other, recurring charges on both yield figures is, however, reflected in them to
the same extent it would effect the yield (or effective yield) for a Contract of
average size.

In addition, the Separate Account may advertise an annualized 30-day (or one
month) yield figure for Subaccounts other than the Fidelity Money Market
Subaccount. These yield figures are based upon the actual performance of the
Subaccount over a 30-day (or one month) period ending on a date specified in the
advertisement. Like the total return data described above, the 30-day (or one
month) yield data will reflect the effect of all recurring Contract charges (but
will not reflect any Withdrawal charges or premium taxes). The yield figure is
derived from net investment gain (or loss) over the period expressed as a
fraction of the investment's value at the end of the period.

The Separate Account may also advertise standardized and non-standardized "total
return" data for its Subaccounts. Like the yield figures described above, total
return figures are based on historical data and are not intended to indicate
future performance. The standardized "total return" compares the value of a
hypothetical investment made at the beginning of the period, to the value of the
same hypothetical investment at the end of the period (assuming the deduction
of any withdrawal charge imposed upon a complete redemption of the Contract at
the end of the period). Recurring Contract charges are reflected in the
standardized total return figures in the same manner as they are reflected in
the yield data for Contracts funded through the Money Market Subaccount. The
effect of applicable Withdrawal Charges are reflected in the standardized return
figures.

In addition to the standardized "total return," the Separate Account may
advertise non-standardized "total return." Non-standardized total return is
calculated in a similar manner and for the same time periods as the standardized
total return except that the Withdrawal Charge is not deducted. Further, an
initial hypothetical investment of $20,000 is assumed (rather than the initial
hypothetical investment of $1,000 used in computing standardized total return),
since $20,000 is closer to the average Purchase Payment of a Contract which we
expect to write.

The Separate Account may also disclose yield, standardized total return and non-
standardized total return for time periods before the date the Separate Account
commenced operations. In this case, performance data for the Subaccounts is
calculated based on the performance of the Underlying Funds and assumes that the
Subaccounts existed during the same time period as those of the Underlying
Funds, with recurring contract charges equal to those currently assessed against
the Subaccounts.

Advertisements we distribute may also compare the performance of our Subaccounts
with: (a) certain unmanaged market indices, including but not limited to the Dow
Jones Industrial Average, the Standard & Poor's 500, and the Shearson Lehman
Bond Index; and/or (b) other management investment companies with investment
objectives similar to the underlying funds being compared. This may include the
performance ranking assigned by various publications, including but not limited
to the Wall Street Journal, Forbes, Fortune, Money, Barron's, Business Week, USA
Today, and statistical services, including but not limited to Lipper Analytical
Services Mutual Fund Survey, Lipper Annuity and Closed End Survey, the Variable
Annuity Research Data Survey, and SEI.

For a more complete description of Contract charges, see "Contract Charges,"
beginning at Page 13. More detailed information on the computation of advertised
performance data for the Separate Account is contained in the Statement of
Additional Information.

25
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------

Flexible Premium Individual Deferred Variable Annuity Contracts

LINCOLN BENEFIT LIFE VARIABLE ANNUITY ACCOUNT

Depositor: LINCOLN BENEFIT LIFE COMPANY

This Statement of Additional Information is not a prospectus; it should
be read with the prospectus relating to the annuity contracts described above, a
copy of which may be obtained without charge by written request addressed to:

Lincoln Benefit Life Company
P.O. Box 82532
Lincoln, Nebraska 68501-2532

THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION
AND OF THE RELATED PROSPECTUS IS: MAY 1, 1997.

LBL-1610, Rev. 2/97 1
<PAGE>

TABLE OF CONTENTS

Page
----

THE CONTRACT 3
ANNUITY PAYMENTS................................................... 3
ANNUITY UNIT VALUE................................................. 3
VARIABLE ANNUITY PAYMENTS
- ILLUSTRATIVE EXAMPLE............................................ 4
ADDITIONAL FEDERAL INCOME TAX INFORMATION 5
DIVERSIFICATION - SEPARATE ACCOUNT INVESTMENTS..................... 5
MULTIPLE CONTRACTS................................................. 6
QUALIFIED PLANS.................................................... 6

SEPARATE ACCOUNT PERFORMANCE............................................ 8

FINANCIAL STATEMENTS.................................................... 13

2
<PAGE>

THE CONTRACT

ANNUITY PAYMENTS

INITIAL MONTHLY ANNUITY PAYMENT

The initial annuity payment is determined by applying the Contract Value on the
Valuation Date next preceding the Annuity Date, less any state premium tax
payable and any applicable Withdrawal Charges, to the annuity table specified in
the Contract (or, if more favorable to the payee, the annuity tables in effect
as of the Annuity Date for similar immediate annuity contracts issued by the
Company). Those tables are based on a set amount per $1,000 of proceeds applied.
The appropriate rate must be determined by the sex (except where, as in the case
of certain Qualified Plans and other employer-sponsored retirement plans, such
classification is not permitted) and age of the Annuitant and designated second
person, if any.

The dollars applied are then divided by 1,000 and the result multiplied by the
appropriate annuity factor appearing in the table to compute the amount of the
first monthly annuity payment. In the case of a Variable Annuity, that amount is
divided by the value of an Annuity Unit as of the Valuation Date next preceding
the Annuity Date to establish the number of Annuity Units representing each
Variable Annuity payment (a separate computation is made for each Subaccount
funding the Variable Annuity). The number of Annuity Units for each Subaccount
determined for the first Variable Annuity payment remains constant for the
second and subsequent monthly Variable Annuity payments from that Subaccount.

SUBSEQUENT MONTHLY PAYMENTS

For a Fixed Annuity, the amount of the second and each subsequent monthly
annuity payment is the same as that determined above for the first monthly
payment.

The amount of the second and each subsequent monthly Variable Annuity payment
from each Subaccount is determined by multiplying the number of Annuity Units,
as determined in connection with the determination of the initial monthly
payment, above, by the Annuity Unit Value of the Subaccount as of the Valuation
Period next preceding the date on which each annuity payment is due.

ANNUITY UNIT VALUE

The value of an Annuity Unit is determined independently for each Subaccount,
but was initially set at $100.00.

The annuity tables contained in the Contract are based on a 3.5% per annum
assumed investment rate. If the actual net investment rate experienced by a
Subaccount exceeds 3.5%, Variable Annuity payments derived from allocations to
that Subaccount will increase over time. Conversely, if the actual rate is less
than 3.5%, the Variable Annuity payments will decrease over time. If the net
investment rate equals 3.5%, the Variable Annuity payments will remain constant.
If a higher assumed investment rate had been used, the initial monthly payment
would be higher, but the actual net investment rate would also have to be higher
in order for annuity payments to increase (or not to decrease).

The payee receives the value of a fixed number of Annuity Units each month from
each Subaccount funding the Variable Annuity. The value of a fixed number of
Annuity Units will reflect the investment performance of the Subaccounts
elected, and the amount of each annuity payment will vary accordingly.

For each Subaccount, the value of an Annuity Unit for any Valuation Period is
determined by multiplying the Annuity Unit Value for the immediately preceding
Valuation Period by the Net Investment Factor for the Valuation Period for which
the Annuity Unit Value is being calculated. The result is then divided by a
second factor which offsets the effect of the assumed net investment rate of
3.5% per annum which is built into the annuity tables contained in the Contract.
The Net Investment Factor is described below.

NET INVESTMENT FACTOR

The Net Investment Factor is an index applied to measure the net investment
performance of a Subaccount from one Valuation Date to the next. The Net
Investment Factor may be greater or less than or equal to one; therefore, the
value of an Annuity Unit may increase, decrease or remain the same.

3
<PAGE>

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

(a) is the net result of:

(1) the net asset value of of the Valuation Date at a Portfolio share
held the end of the Valuation in the Subaccount Period, plus
determined as

(2) the per share amount Portfolio if the or minus of any dividend or
"ex-dividend" date other distribution occurs during the declared
by the Valuation Period, plus

(3) a per share credit or which we reserved during to be attributable
to are applicable charge with respect to the Valuation Period the
operation of the under present law); any taxes which we which are
determined by Subaccount (no paid or for us federal income taxes

(b) is the net asset value of the the Valuation Date at Portfolio share
held in the the end of the preceding Subaccount determined as of
Valuation Period; and

(c) is the asset charge factor we charges for assuming the determine for
the Valuation mortality and expense Period to reflect the risks and
for the administrative expense charge.

ILLUSTRATIVE EXAMPLE

Assume that one share of a given Subaccount's underlying Portfolio had a net
asset value of $11.46 as of the close of the New York Stock Exchange ("NYSE") on
a Tuesday; that its net asset value had been $11.44 at the close of the NYSE on
Monday, the day before; and that no dividends or other distributions on that
share had been made during the intervening Valuation Period. The Net Investment
Factor for the Valuation Period (ending on Tuesday's close of the NYSE) is:

Net Investment Factor = ($11.46/$11.44) - 0.0000384 = 1.0017099

The amount subtracted from the ratio of the two net asset values (0.0000384) is
the daily equivalent of the annual asset charge against the Subaccount of 1.40%.

In the example given above, if the Annuity Unit value for the Subaccount was
$101.03523 on Monday, the Annuity Unit Value on Tuesday would have been:

$101.03523 x 1.0017099 = $101.19845
----------------------
1.0000943

VARIABLE ANNUITY PAYMENTS -- ILLUSTRATIVE EXAMPLE

Assume that a male Contract owner, P, owns a Contract in connection with which P
has allocated all of his Contract Value to a single Subaccount. P is also the
sole Annuitant and, at age 60, has elected to annuitize his Contract under
Option B, Life and 10 Years Certain. As of the last Valuation Date preceding the
Annuity Date, P's Account was credited with 7543.2456 Accumulation Units each
having a value of $15.432655. (i.e., P's Account Value at that Date is equal to
7543.2456 x $15.432655 = $116,412.31). There are no premium taxes payable upon
annuitization and no Withdrawal Charges are applicable. Assume also that the
Annuity Unit value for the Subaccount at that same Date is $132.56932, and that
the Annuity Unit value on the Valuation Date immediately prior to the second
annuity payment date is $133.27695.

P's first Variable Annuity payment is determined from the annuity rate tables in
P's Contract, using the information assumed above. From the tables, which supply
monthly annuity payments for each $1,000 of applied Contract Value, P's first
Variable Annuity payment is determined by multiplying the monthly installment of
$5.44 by the result of dividing P's Account Value by $1,000:

First Payment = $5.44 x ($116,412.31/$1,000) = $633.28

The number of P's Annuity Units is also determined at this time and is equal to
the amount of the first Variable Annuity payment divided by the value of an
Annuity Unit at the Valuation Date immediately prior to annuitization:

4
<PAGE>

Annuity Units = $633.28 / $132.56932 = 4.77697

P's second Variable Annuity payment is determined by multiplying the number of
Annuity Units by the Annuity Unit value as of the Valuation Date immediately
prior to the second payment due date:

Second Payment = 4.77697 x $133.27695 = $636.66

The third and subsequent Variable Annuity payments are computed in a manner
similar to the second Variable Annuity payment.

Note that the amount of the first Variable Annuity payment depends on the
Contract Value in the relevant Subaccount on the Annuity Date and thus reflects
the investment performance of the Subaccount net of fees and charges during the
Accumulation Period. The amount of that payment determines the number of Annuity
Units, which will remain constant during the Annuity Period. The net investment
performance of the Subaccount during the Annuity Period is reflected in
continuing changes during that Period in the Annuity Unit value, which
determines the amounts of the second and subsequent Variable Annuity payments.

ADDITIONAL FEDERAL INCOME TAX INFORMATION

DIVERSIFICATION - SEPARATE ACCOUNT INVESTMENTS

Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified, in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Contract Owner with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contracts meet the
diversification requirements if, as of the close of each quarter, the underlying
assets meet the diversification standards for a regulated investment company,
and no more than 55% of the total assets consist of cash, cash items, U.S.
Government securities and securities of other regulated investment companies.
For purposes of determining whether or not the diversification standards imposed
on the underlying assets of variable contracts by Section 817(h) of the Code
have been met, each United States government agency or instrumentality is
treated as a separate issuer.

The Treasury Department has issued Regulations that establish diversification
requirements for the investment accounts underlying variable contracts such as
the Contracts. The Regulations amplify the diversification requirements for
variable contracts set forth in the Code and provide an alternative to the safe
harbor provision described above. Under the Regulations, an investment account
will be deemed adequately diversified if (1) no more than 55% of the value of
the total assets of the account is represented by any one investment; (2) no
more than 70% of the value of the total assets of the account is represented by
any two investments; (3) no more than 80% of the value of the total assets of
the account is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the account is represented by any four
investments. These diversification standards are applied to each Subaccount of
the Separate Account by applying them to the investments of the Portfolio
underlying the Subaccount.

The Company intends that each of the Portfolios will be managed by its
respective investment adviser in such a manner as to comply with these
diversification requirements.

In connection with the issuance of the regulations on diversification
requirements, the Treasury announced that such regulations do not provide
guidance concerning the extent to which Owners may direct their investments
among Subaccounts of a Variable Account. The Internal Revenue Service has
previously stated in published rulings that a variable contract owner will be
considered the owner of separate account assets if the owner possesses incidents
of ownership in those assets such as the ability to exercise investment control
over the assets. At the time of the issuance of the diversification regulations,
the Treasury announced that guidance would be issued in the future on the extent
to which owners could direct their investments among subaccounts without being
treated as owners of the underlying assets of the Variable Account. As of the
date of this prospectus, no such guidance has been issued. It is possible that
the Treasury's position, when

5
<PAGE>

announced, may adversely affect the tax treatment of existing contracts. The
Company, therefore, reserves the right to modify the contract as necessary to
attempt to prevent the Owner from being considered the owner of the assets of
the Variable Account or otherwise to attempt to qualify the contract for
favorable tax treatment.

MULTIPLE CONTRACTS

Federal tax law provides that multiple annuity contracts which are issued within
a calendar year to the same contract owner by one company or its affiliates are
treated as one annuity contract for purposes of determining the tax consequences
of any distribution. Such treatment may result in adverse tax consequences
including more rapid taxation of the distributed amounts from such multiple
contracts. Contract Owners should consult a tax adviser prior to purchasing more
than one annuity contract in any calendar year.

QUALIFIED PLANS

The Contracts offered by this prospectus are designed to be suitable for use
under various types of Qualified Plans. Taxation of Contract Owners in Qualified
Plans varies with the type of plan and terms and conditions of each specific
plan. Contract Owners, Annuitants and Beneficiaries are cautioned that benefits
under a Qualified Plan may be subject to the terms and conditions of the Plan,
regardless of the terms and conditions of the Contracts issued pursuant to the
plan.

Following are general descriptions of the types of Qualified Plans with which
the Contracts may be used. Such descriptions are not exhaustive and are for
general information purposes only. The tax rules regarding Qualified Plans are
very complex and will have differing applications depending on individual facts
and circumstances. Each purchaser should obtain competent tax advice prior to
purchasing a Contract issued under a Qualified Plan.

Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this prospectus. Generally, Contracts issued pursuant to Qualified Plans are
not transferable except upon surrender or annuitization. Various penalty and
excise taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Contracts issued under Qualified
Plans.

(a) H.R. 10 PLANS

Section 401 of the Code permits self-employed individuals to
establish Qualified Plans for themselves and their employees, commonly
referred to as "H.R. 10" or "Keogh" Plans. Contributions made to the Plan
for the benefit of the employees will not be included in the gross income
of the employees until distributed from the Plan. The tax consequences to
employers may vary depending upon the particular Plan design. However, the
Code places limitations and restrictions on all Plans on such items as:
amounts of allowable contributions; form, manner and timing of
distributions; vesting and nonforfeitability of interests;
nondiscrimination in eligibility and participation; and the tax treatment
of distributions, withdrawals and surrenders. Purchasers of Contracts for
use with an H.R. 10 Plan should obtain competent tax advice as to the tax
treatment and suitability of such an investment.

(b) TAX-SHELTERED ANNUITIES

Section 403(b) of the Code permits the purchase of "Tax-Sheltered
Annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts for the
benefit of their employees. Such contributions are not includible in the
gross income of the employee until the employee receives distributions from
the Contract. The amount of contributions to the Tax-Sheltered Annuity is
limited to certain maximums imposed by the Code. Furthermore, the Code sets
forth additional restrictions governing such items as transferability,
distributions, nondiscrimination and withdrawals. Any employee should
obtain competent tax advice as to the tax treatment and suitability of such
an investment.

6
<PAGE>

Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed
to an IRA which will be deductible from the individual's gross income.
These IRAs are subject to limitations on eligibility, contributions,
transferability and distributions. Sales of Contracts for use with IRAs are
subject to special requirements imposed by the Code, including the
requirement that certain informational disclosure be given to persons
desiring to establish an IRA. Purchasers of Contracts to be qualified as
IRAs should obtain competent tax advice as to the tax treatment and
suitability of such an investment.

(d) SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE PLANS)

Sections 408(p) and 401(k) of the Code allow employers with 100 or fewer
employees to establish SIMPLE retirement plans for their employees. SIMPLE
plans may be structured as a SIMPLE retirement account using an employee's
IRA to hold the assets or as a Section 401(k) qualified cash or deferred
arrangement. In general, a SIMPLE plan consists of a salary deferral
program for eligible employees and matching or nonelective contributions
made by employers. Employers intending to use the contract in conjunction
with SIMPLE plans should seek competent tax and legal advice.

(e) SIMPLIFIED EMPLOYEE PENSION PLANS

Section 408(k) of the Code allows employers to establish simplified
employee pension plans for their employees using the employees' individual
retirement annuities if certain criteria are met. Under these plans the
employer may, within specified limits, make deductible contributions on
behalf of the employees to their individual retirement annuities. Employers
intending to use the contract in connection with such plans should seek
comptetent advice. In particular, employers should consider that an IRA
generally may not provide life insurance, but it may provide a death
benefit that equals the greater of the premiums paid and the contract's
cash value. The contract provides a death benefit that in certain
circumstances may exceed the greater of the payments and the contract
value. It is possible that the 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.

(f) CORPORATE PENSION AND PROFIT-SHARING PLANS

Sections 401(a) and 401(k) of the Code permit corporate employers to
establish various types of retirement plans for employees. These retirement
plans may permit the purchase of the Contracts to provide benefits under
the plan. Contributions to the plan for the benefit of employees will not
be includible in the gross income of the employee until distributed from
the plan. The tax consequences to employers may vary depending upon the
particular plan design. However, the Code places limitations on all plans
on such items as amount of allowable contributions; form, manner and timing
of distributions; vesting and nonforfeitability of interests;
nondiscrimination in eligibility and participation; and the tax treatment
of distributions, withdrawals and surrenders. Purchasers of Contracts for
use with corporate pension or profit sharing plans should obtain competent
tax advice as to the tax treatment and suitability of such an investment.

(g) DEFERRED COMPENSATION PLANS - SECTION 457

Section 457 of the Code, while not actually providing for a Qualified Plan
as that term is normally used, provides that governmental and certain other
tax exempt employers may establish deferred compensation plans for the
benefit of their employees which may invest in annuity contracts. The Code,
as in the case of Qualified Plans, establishes limitations and restrictions
on eligibility, contributions, and distributions. Under these plans,
contributions made for the benefit of the employees will not be includible
in the employees' gross income until distributed from the plan. However,
under a 457 plan all the compensation deferred under the plan must remain
solely the property of the employer, subject only to the claims of the
employer's general creditors, until such time as made available to an
employee or a beneficiary.

7
<PAGE>

SEPARATE ACCOUNT PERFORMANCE

Performance data for the various Subaccounts are computed in the manner
described below.

FIDELITY MONEY MARKET SUBACCOUNT

Current yield is computed by first determining the Base Period Return
attributable to a hypothetical Contract having a balance of one Accumulation
Unit at the beginning of a 7 day period using the formula:

Base Period Return = (EV-SV)/(SV)

where:

SV = value of one Accumulation Unit at the start of a 7 day period
EV = value of one Accumulation Unit at the end of the 7 day period

The value of the Accumulation Unit at the end of the period (EV) is determined
by (1) adding, to the value of the Unit at the beginning of the period (SV), the
investment income from the underlying Variable Insurance Products Fund Money
Market Portfolio attributed to the Unit over the period, and (2) subtracting,
from the result, the sum of (a) the portion of the annual Mortality and Expense
Risk and Administrative Expense Charges allocable to the 7 day period (obtained
by multiplying the annually-based charges by the fraction 7/365), and (b) a
prorated portion of the annual Contract Administration Charge of $25 per
contract. The total Contract Administration Charge is allocated between the
Subaccounts in proportion to the respective Contract Values similarly allocated.
The Charge is further reduced, for purposes of the yield computation, by
multiplying it by the ratio that the value of the hypothetical Contract bears to
the value of an account of average size for Contracts funded by the Fidelity
Money Market Subaccount. Finally, as is done with the other charges discussed
above, the result is multiplied by the fraction 7/365 to arrive at the portion
attributable to the 7 day period. The current yield is then obtained by
annualizing the Base Period Return:

Current Yield = (Base Period Return) x (365/7)

The Fidelity Money Market Subaccount also quotes an "effective yield" that
differs from the current yield given above in that it takes into account the
effect of dividend reinvestment in the Variable Insurance Products Fund Money
Market Portfolio. The effective yield, like the current yield, is derived from
the Base Period Return over a 7 day period. However, the effective yield
accounts for dividend reinvestment by compounding the current yield according to
the formula:

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

Net investment income for yield quotation purposes will not include either
realized capital gains and losses or unrealized appreciation and depreciation,
whether reinvested or not. The yield quotations also do not reflect any impact
of premium taxes, transfer fees, or Withdrawal Charges.

The yields quoted should not be considered a representation of the yield of the
Fidelity Money Market Subaccount in the future since the yield is not fixed.
Actual yields will depend not only on the type, quality and maturities of the
investments held by the Variable Insurance Products Fund Money Market Portfolio
and changes in interest rates on such investments, but also on factors such as a
Contract Owner's account size (since the impact of fixed dollar charges will be
greater for small accounts than for larger accounts).

Yield information may be useful in reviewing the performance of the Fidelity
Money Market Subaccount and for providing a basis for comparison with other
investment alternatives. However, the Fidelity Money Market Subaccount's yield
fluctuates, unlike bank deposits or other investments that typically pay a fixed
yield for a stated period of time.

OTHER SUBACCOUNTS

Subaccounts of the Separate Account other than the Money Market Subaccount
compute their performance data in terms of an annualized "yield" and/or as
"total return".

8
<PAGE>

Yield

Yield will be expressed as an annualized percentage derived from the
Subaccount's performance over a stated 30-day (or one month) period. Like the
yield figures for the Fidelity Money Market Subaccount, the 30-day (or one
month) annualized yield figures will reflect all recurring Contract charges and
will not reflect Withdrawal Charges, transfer fees or premium taxes. To arrive
at the yield percentage over the 30-day (or one month) period, the net income
per Accumulation Unit of the Subaccount during the period is divided by the
value of an Accumulation Unit as of the end of the period. The yield figure is
then annualized by assuming monthly compounding of the 30-day (or one month)
figure over a six month period and then doubling the result.

The formula used in computing the yield figure is:

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

where:

a = net investment income earned during the period by the underlying
Portfolio attributable to its shares held in the Subaccount;
b = expenses accrued for the period (net of reimbursements);
c = average daily number of Accumulation Units outstanding during the
period; and
d = the net asset value of an Accumulation Unit on the last day of the
period.

The yield figures for the Subaccounts other than the Fidelity Money Market
Subaccount reflect all recurring Contract charges, as described in the
explanation of the yield computation for the Fidelity Money Market Subaccount.
Like the Fidelity Money Market Subaccount's yield figures, the yield figures for
the other Subaccounts are derived from past performance and should not be taken
as predictive of future results.

Standardized Total Return

Standardized total return for a Subaccount represents a single computed annual
rate of return that, when compounded annually over a specified time period (one,
five, and ten years, or since inception) and applied to a hypothetical initial
investment in a Contract funded by that Subaccount made at the beginning of the
period, will produce the same Contract Value at the end of the period that the
hypothetical investment would have produced over the same period. The
standardized total rate of return (T) is computed so that it satisfies the
formula:

P(1+T)/n/ = ERV

where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the one, five, or ten year period as of the end
of the period (or fractional portion thereof).

The standardized total return figures reflect the effect of both non-recurring
and recurring charges, as discussed herein. Recurring charges are taken into
account in a manner similar to that used for the yield computations for the
Fidelity Money Market Subaccount, described above. The applicable Withdrawal
Charge (if any) is deducted as of the end of the period, to reflect the effect
of the assumed complete redemption. Because the impact of Contract
Administration Charges on a particular Contract Owner's account will generally
differ from that assumed in the computation, due to differences between most
actual allocations and the assumed one, as well as differences due to varying
account sizes, the total return experienced by an actual Subaccount over the
same time periods would generally have been different from those produced by the
computation. As with the Fidelity Money Market and other Subaccount yield
figures, standardized total return figures are derived from historical data and
are not intended to be a projection of future performance.

9
<PAGE>

Non-Standardized Total Return

Non-standardized total return for a Subaccount represents a single computed
annual rate of return that, when compounded annually over a specified time
period (one, five, and ten years, or since inception) and applied to a
hypothetical initial investment in a Contract funded by that Subaccount made at
the beginning of the period, will produce the same Contract Value at the end of
the period that the hypothetical investment would have produced over the same
period. The total rate of return (T) is computed so that it satisfies the
formula:

P(1+T)/n/=ERV

where: P = a hypothetical initial payment of $20,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $20,000 payment made at
the beginning of the one, five, or ten year period as of the end
of the period (or fractional portion thereof).

An initial hypothetical investment of $20,000 is assumed (rather than the
initial hypothetical investment of $1,000 used in computing standardized total
return) since $20,000 is closer to the average Purchase Payment of a Contract
which we expect to write. The non-standardized total return figures reflect the
effect of recurring charges, as discussed herein. Because the impact of Contract
Administration Charges on a particular Contract Owner's account will generally
differ from that assumed in the computation, due to differences between most
actual allocations and the assumed one, as well as differences due to varying
account sizes, the total return experienced by the actual Subaccount over the
same time periods would generally have been different from those produced by the
computation. As with the standardized total return figures, non-standardized
total return figures are derived from historical data and are not intended to be
a projection of future performance.

Time Periods Before the Date the Separate Account Commenced Operations

10
<PAGE>

TOTAL RETURN -- AS OF DECEMBER 31, 1996 -- ASSUMING CONTRACT SURRENDERED

<TABLE>
<CAPTION>
-------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN/3/
-------------------------------------------------------------
1 Year 5 Year 10 Years Since Inception
Inception Date/2/ % % % %
----------------- -------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
FIDELITY
Money Market/1/ 4/1/82 n/a n/a n/a n/a
Growth 10/9/86 10.73 13.17 n/a 13.14
Equity-Income 10/9/86 10.00 15.88 n/a 11.66
Overseas 1/28/87 7.74 7.08 n/a 7.63
Asset Manager 9/6/89 8.99 9.14 n/a 10.20
Contrafund 1/3/95 n/a n/a n/a n/a

SCUDDER
Bond 7/16/85 -2.19 4.80 6.11 6.48
Balanced 7/16/85 7.40 7.82 8.63 9.25

JANUS
Flexible Income 9/13/93 1.65 n/a n/a 6.41
Balanced 9/13/93 8.78 n/a n/a 10.00
Growth 9/13/93 11.30 n/a n/a 12.44
Aggressive Growth 9/13/93 1.67 n/a n/a 14.20
Worldwide Growth 9/13/93 21.76 n/a n/a 15.78

FEDERATED
High Income Bond Fund II 3/1/94 6.39 n/a n/a 7.00
Utility Fund II 2/11/94 3.71 n/a n/a 6.11
U.S. Gov't. Securities II 3/28/94 -3.82 n/a n/a 1.92

INVESTMENT ADVISERS, INC. (IAI)
Regional 1/31/94 4.92 n/a n/a 12.36
Reserve 4/7/94 -3.33 n/a n/a 0.85
Balanced 2/3/94 1.99 n/a n/a 5.56
</TABLE>

1 An investment in Fidelity Money Market is neither insured nor guaranteed by
the U.S. Government and there can be no assurance that Fidelity Money Market
will maintain a stable $1.00 share price.

2 Some of the underlying investment options were active before January 2,
1994, the effective date of the Investor's Select Separate Account. Where
applicable, performance includes hypothetical performance for periods before the
investment option was available in Investor's Select, applying contract charges
assessed at the Separate Account level to approximate the performance the
investment option would have achieved inside the Separate Account.

3 Total returns include change in share price, reinvestment of dividends, and
capital gains. The performance figures: (1) represent past performance and
neither guarantee nor predict future investment results; (2) assume an initial
hypothetical investment of $1,000 as required by the Securities and Exchange
Commission (SEC); and (3) reflect the deduction of 1.4% annual asset charges, a
$25 annual contract administration charge, and a maximum 7% contingent deferred
sales charge (declining after two years). The investment return and value of an
Investor's Select contract will fluctuate so that a contract, when surrendered,
may be worth more or less than the amount of its purchase payments.

n/a- Performance data has not been available for some investment options for the
full 1, 5, or 10 year periods (see Inception Date). Investment options with a
9/13/93 inception date or later will not have meaningful performance to report
for many of the periods indicated.

11
<PAGE>

TOTAL RETURN -- AS OF DECEMBER 31, 1996 -- ASSUMING CONTRACT NOT SURRENDERED
---

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN/5/
---------------------------------
Monthly Return/5/ Total Return YTD/5/ 1 Year 5 Year Since Inception
INVESTMENT OPTIONS Inception Date/4/ % % % % %
----------------- ----------------- ------------------- ------ ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
FIDELITY
Money Market/1/ 4/1/82 n/a n/a n/a n/a n/a
Growth 10/9/86 -3.21 12.97 12.97 13.42 13.14
Equity-Income 10/9/86 -1.76 12.55 12.55 16.19 11.66
Overseas 1/28/87 0.40 11.50 11.50 7.50 7.63
Asset Manager 9/6/89 -1.58 12.87 12.87 9.57 10.20
Contrafund 1/3/95 -0.73 19.47 19.47 n/a 28.37
SCUDDER
Bond 7/16/85 -0.87 1.26 1.26 5.21 6.48
Balanced 7/16/85 -2.48 10.19 10.19 8.13 9.25
JANUS
Flexible Income/2/ 9/13/93 -0.14 7.54 7.54 n/a 7.70
Balanced 9/13/93 -0.46 14.43 14.43 n/a 11.20
Growth 9/13/93 -1.40 16.66 16.66 n/a 13.58
Aggressive Growth 9/13/93 -2.22 6.32 6.32 n/a 15.30
Worldwide Growth 9/13/93 -0.18 27.09 27.09 n/a 16.85
FEDERATED
High Income Bond II/3/ 3/1/94 1.47 12.58 12.58 n/a 8.84
Utility Fund II/3/ 2/11/94 1.51 9.88 9.88 n/a 7.94
U.S. Gov't. Securities II/3/ 3/28/94 -0.83 2.63 2.63 n/a 3.98
INVESTMENT ADVISERS, INC. (IAI)
Regional 1/31/94 1.29 10.19 10.19 n/a 13.98
Reserve 4/7/94 0.26 3.35 3.35 n/a 2.97
Balanced 2/3/94 -0.91 8.14 8.14 n/a 7.39

</TABLE>
<TABLE>
<CAPTION>
Cumulative/5/ SEC 7-Day SEC CALENDAR YEAR RETURN/5/
Total Return Effective 7-Day -----------------------
Inception/4/ Since Inception Yield Yield 1993 1994 1995
INVESTMENT OPTIONS Date % % % % % %
------------ --------------- --------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY
Money Market/1/ 4/1/82 n/a 3.61 3.68 n/a n/a n/a
Growth 10/9/86 253.68 17.56 -1.52 33.32
Equity-Income 10/9/86 209.10 16.50 5.44 33.03
Overseas 1/28/87 107.50 35.27 0.20 8.02
Asset Manager 9/6/89 103.55 19.40 -7.52 15.18
Contrafund 1/3/95 64.51 n/a n/a n/a
SCUDDER
Bond 7/16/85 105.44 10.68 -6.23 16.39
Balanced 7/16/85 175.66 5.82 -3.53 24.75
JANUS
Flexible Income/2/ 9/13/93 27.73 n/a -2.40 21.99
Balanced 9/13/93 41.94 n/a -0.70 22.90
Growth 9/13/93 52.22 n/a 1.21 28.18
Aggressive Growth 9/13/93 59.96 n/a 14.56 25.56
Worldwide Growth 9/13/93 67.17 n/a -0.01 25.44
FEDERATED
High Income Bond II/3/ 3/1/94 27.17 n/a n/a 18.53
Utility Fund II/3/ 2/11/94 24.67 n/a n/a 22.28
U.S. Gov't. Securities II/3/ 3/28/94 11.39 n/a n/a 7.11
INVESTMENT ADVISERS, INC. (IAI)
Regional 1/31/94 46.46 n/a n/a 31.29
Reserve 4/7/94 8.33 n/a n/a 3.67
Balanced 2/3/94 23.05 n/a n/a 14.42

</TABLE>

The performance figures represent past performance and neither guarantee nor
predict future investment results.

1 An investment in Fidelity Money Market is neither insured nor guaranteed by
the U.S. Government and there can be no assurance that Fidelity Money Market
will maintain a stable $1.00 share price.

2,3 Total returns reflect the investment adviser waived all or part of its fee
or reimbursed the investment options for a portion of its expenses. Otherwise,
total returns would have been lower.

4 Some of the underlying investment options were active before January 2,
1994, the effective date of the Investor's Select Separate Account. Where
applicable, performance includes hypothetical performance for periods before the
investment option was available in Investor's Select, applying contract charges
assessed at the Separate Account level to approximate the performance the
investment option would have achieved inside the Separate Account.

5 Total returns include change in share price, reinvestment of dividends, and
capital gains. An initial hypothetical investment of $20,000 is assumed since
this is closer to the average purchase payment of a contract expected to be
written than the $1,000 assumed for SEC required returns shown on page 10.
Returns reflect deductions of 1.4% annual asset charges and a $25.00 annual
contract administration charge, but do not include the applicable contingent
deferred sales charge. The impact of the annual contract administration charge
on investment returns will vary depending on the size of the contract.

n/a- Performance data is not available for all or part of the period indicated
(see Inception Date). Investment options with a 9/13/93 inception date or later
will not have meaningful performance to report for the periods indicated.

12
<PAGE>

FINANCIAL STATEMENTS*

The financial statements of the Separate Account and for Lincoln Benefit Life
Company appearing in this Statement of Additional Information have been audited
by Deloitte & Touche LLP, independent certified public accountants, as stated in
their reports. Such financial statements have been included herein in reliance
upon the reports of Deloitte & Touche LLP. The Company's financial statements
should be considered only as bearing upon the ability of Lincoln Benefit Life
Company to meet its obligations under the Contracts. The amounts of the Variable
Annuity payments under a Contract are not dependent upon the financial condition
of Lincoln Benefit Life Company and are not guaranteed by Lincoln Benefit Life
Company.

* To be filed by Post-Effective Amendment

13
<PAGE>

PART C
------

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

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------

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

The following financial statements are included in Part A of the
Registration Statement:

None

The following financial statements are included in Part B of the
Registration Statement:

None**

The following financial statements are included in Part C of the
Registration Statement:

None
<TABLE>
<CAPTION>
<S> <C>

(b) Exhibits
- --- --------

(1) Resolution Establishing Separate Account................*
(2) Custody Agreements......................................Not Applicable
(3) (a) Form of Underwriting Agreement......................*
(b) Form of Selling Agreement...........................Herewith
(4) Variable Annuity Contract...............................*
(5) application for Contract................................Herewith
(6) Depositor - Corporate Documents
(a) Articles of Incorporation..........................*
(b) By-Laws............................................*
(7) Reinsurance Contract....................................*
(8) Forms of Fund Participation Agreement:
(a) Janus Aspen Series.................................*
(b) Variable Insurance Products Fund...................*
(c) Variable Insurance Products Fund II................*
(d) IAI Retirement Funds, Inc..........................*
(e) Federated Insurance Fund Management Series.........*
(f) Scudder Variable Life Investment Fund..............*
(9) Opinion of Counsel......................................*
(10) Consent of Independent Accountant.......................*
(11) Financial Statements Omitted from Item 23...............Not Applicable
(12) Initial Capitalization Agreement........................*
(13) Performance Computations................................Herewith
(14) Financial Data Schedules................................Herewith
</TABLE>
* Previously Filed
** To be filed by Post Effective Amendment

A
<PAGE>

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
- ------------------------------------------------
The directors and principal officers of Lincoln Benefit Life Company are
listed below. Their principal business address is 206 South 13th Street,
Lincoln, Nebraska 68508.

NAME POSITION/OFFICE WITH DEPOSITOR
---- ------------------------------
Louis G. Lower, III Chairman of the Board of Directors and
Chief Executive Officer
Peter H. Heckman Vice Chairman of the Board of Directors
B. Eugene Wraith Director, President and Chief Operating Officer
Douglas F. Gaer Director, Senior Vice President
Janet P. Anderbery Vice President and Controller
William F. Krueger Director and Senior Vice President
John J. Morris Director, Senior Vice President and Secretary
Lawrence Pollock Director
Robert E. Rich Director, Executive Vice President and
Assistant Secretary
Theodore A. Schnell Director
Kevin Slawin Director
Stephen W. Sutton Director and Senior Vice President
Michael J. Velotta Director
Randy J. Von Fumetti Director, Senior Vice President & Treasurer
Carol S. Watson Director, Senior Vice President
and General Counsel
Thomas R. Ashley Vice President
David A. Behrens Vice President
Thomas J. Berney Vice President
John H. Coleman III Vice President
Marvin P. Ehly Vice President
Kenny L. Gettman Vice President
Rodger A. Hergenrader Vice President
Thomas S. Holt Vice President
Noel C. Jensen Vice President
Sharyn L. Jensen Vice President
Theodore J. Kooser Vice President
Shirley A. Overly Vice President
Stanley G. Shelley Vice President
Mark A. Walker Vice President
Dean M. Way Vice President
Patrick A. Weigel Vice President

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR
- -------------------------------------------------------------------------
REGISTRANT
- ----------
See 10-K Commission File #1-11840, The Allstate Corporation

ITEM 27. NUMBER OF CONTRACT OWNERS
- -----------------------------------
As of February 12, 1997, the Registrant has 4,150 qualified contract
owners and 2,893 non-qualified contract owners.

ITEM 28. INDEMNIFICATION
- -------------------------
The Articles of Incorporation of Lincoln Benefit Life Company (Depositor)
provide for the indemnification of its directors and officers against
expenses, judgments, fines and amounts paid in settlement as incurred by
such person, so long as such person shall not have been adjudged to be
liable for negligence or misconduct in the performance of a duty to the
Company. This right of indemnity is not exclusive of other rights to
which a director or officer may otherwise be entitled.

B
<PAGE>

The by-laws of Lincoln Benefit Financial Services, Inc. (Distributor)
provide that the corporation will indemnify a director, officer, employee
or agent of the corporation to the full extent of Delaware law. In
general, Delaware law provides that a corporation may indemnify a
director, officer, employee or agent against expenses, judgments, fines
and amounts paid in settlement if that individual acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. No indemnification shall be made for expenses,
including attorney's fees, if the person shall have been judged to be
liable to the corporation unless a court determines such person is
entitled to such indemnity. Expenses incurred by such individual in
defending any action or proceeding may be advanced by the corporation so
long as the individual agrees to repay the corporation if it is later
determined that he or she is not entitled to such indemnification.

Under the terms of the form of Underwriting Agreement, the Depositor
agrees to indemnify the Distributor for any liability that the latter may
incur to a Contract owner or party-in-interest under a Contract, (a)
arising out of any act or omission in the course of or in connection with
rendering services under such Agreement, or (b) arising out of the
purchase, retention or surrender of a Contract; provided, that the
Depositor will not indemnify the Distributor for any such liability that
results from the latter's willful misfeasance, bad faith or gross
negligence, or from the reckless disregard by the latter of its duties
and obligations under the Underwriting Agreement.

Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the forgoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, 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 Act and will be governed by the final
adjudication of such issue.

C
<PAGE>

ITEM 29. PRINCIPAL UNDERWRITER
- -------------------------------

Lincoln Benefit Financial Services, Inc. serves as distributor for the
Registrant. The following are the directors and officers of Lincoln Benefit
Financial Services, Inc. Their principal business address is 206 South 13th
Street, Lincoln, Nebraska 68508.

NAME POSITION WITH DISTRIBUTOR
---- -------------------------

B. Eugene Wraith Chairman of the Board of Directors
Carol S. Watson Director and President
Janet P. Anderbery Vice President & Controller
David A. Behrens Vice President
Darla J. Goodrich Chief Compliance Officer
William F. Krueger Director and Vice President
John J. Morris Director, Vice President and Secretary
Douglas F. Gaer Director
Robert E. Rich Director
Randy J. Von Fumetti Director

The following commissions and other compensation were received by each
principal underwriter, directly or indirectly, from the Registrant during
the Registrant's last fiscal year:
<TABLE>
<CAPTION>

NET
UNDERWRITING
DISCOUNTS COMPENSATION
NAME OF AND ON BROKERAGE
PRINCIPAL UNDERWRITER COMMISSIONS REDEMPTION COMMISSIONS COMPENSATION
<S> <C> <C> <C> <C>

LINCOLN BENEFIT FINANCIAL $6,729,301
SERVICES, INC.
</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
- ------------------------------------------

The Depositor, Lincoln Benefit Life Company, is located at 206 South 13th
Street, Lincoln, Nebraska 68508.

The Distributor, Lincoln Benefit Financial Services, Inc., is located at 134
South 13th Street, Lincoln, Nebraska 68508.

Each company maintains those accounts and records required to be maintained
pursuant to Section 31(a) of the Investment Company Act and the rules
promulgated thereunder.

ITEM 31. MANAGEMENT SERVICES
- -----------------------------

None.

D
<PAGE>

ITEM 32. UNDERTAKINGS
- ----------------------

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 remove 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 Form N-4 promptly upon written or
oral request.

REPRESENTATIONS
- ---------------

The Company hereby represents that it is relying upon a No Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) 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 (a) 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 contract value.

The Company further represents that 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 the
Company.

E
<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(a) for effectiveness of this Post-Effective Amendment to the
Registration Statement and has duly caused this Post-Effective Amendment to the
Registration Statement to be signed on its behalf, in the City of Lincoln, and
the State of Nebraska, on this 27th day of February, 1997.

LINCOLN BENEFIT LIFE VARIABLE
ANNUITY ACCOUNT
(Registrant)

By: LINCOLN BENEFIT LIFE COMPANY
(Depositor)

By: /s/ B. Eugene Wraith
-----------------------------------
B. Eugene Wraith, President
and Chief Operating Officer

As required by the Securities Act of 1933, this Post-Effective Amendment to
the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

SIGNATURE TITLE DATE
--------- ----- ----

/s/ B. Eugene Wraith President, Chief Operating February 27, 1997
- ------------------------ Officer and Director ------------------
B. Eugene Wraith (Principal Executive Officer)

/s/ Robert E. Rich Executive Vice President February 27, 1997
- ------------------------ and Director ------------------
Robert E. Rich

/s/ Randy J. Von Fumetti Senior Vice President February 27, 1997
- ------------------------ Treasurer & Director ------------------
Randy J. Von Fumetti (Principal Financial Officer)

/s/ Janet P. Anderbery Vice President and February 27, 1997
- ------------------------ Controller (Principal ------------------
Janet P. Anderbery Accounting Officer)
<PAGE>

SIGNATURE TITLE DATE
--------- ----- ----

- ------------------------ Director -------------------
Peter H. Heckman

/s/ William F. Krueger February 27, 1997
- ------------------------ Director ------------------
William F. Krueger

- ------------------------ Director ------------------
Louis G. Lower, II

/s/ John J. Morris Director February 27, 1997
- ------------------------ ------------------
John J. Morris

/s/ Lawrence Pollock Director
- ------------------------ -----------------
Lawrence Pollock

/s/ Douglas F. Gaer Director February 27, 1997
- ------------------------ ------------------
Douglas F. Gaer

- ------------------------ Director ------------------
Theodore A. Schnell

- ------------------------ Director ------------------
Kevin Slawin

/s/ Stephen W. Sutton Director February 27, 1997
- ------------------------ ------------------
Stephen W. Sutton

- ------------------------ Director ------------------
Michael J. Velotta

/s/ Carol S. Watson February 27, 1997
- ------------------------ Director ------------------
Carol S. Watson
<PAGE>

INDEX TO EXHIBITS

FOR

REGISTRATION STATEMENT ON FORM N-4

Lincoln Benefit Life Variable Annuity Account

Exhibit No. Sequential Page No.
- ----------- -------------------

(3) (b) Form of Selling Agreement
(5) Application for Contract
(13) Performance Computations
(14) Financial Data Schedules

<PAGE>

Exhibit 3(b)

COMMISSION SCHEDULE ADDENDUM

The following revisions are made to add Option C (Option A & B currently
available) to the Commission Schedules that are a part of the Registered
Representative Agreement. The commissions provided in the schedule shall be
reduced by the amount of commissions the Company pays to subagents. The payment
of commissions for this plan is subject to the rules of LBL and LBFS. By
submission of an application or the acceptance of commissions you agree to be
bound by the provisions of this addendum.

<TABLE>
<CAPTION>
First Year Commissions Trail Commissions
Plan Plan # (% of premiums received) (year 2+)
- ---- ------ ------------------------ ---------
<S> <C> <C> <C>

Investors Select
Variable Annuity VAP-9330

Option A 4.75 0
Option B 3.75 .25*
Option C 1.75 .5*
</TABLE>

*Under Option B or C, the trail commission will be paid quarterly at a rate of
..0625% or .125%, respectively, of the contract value for all contracts at least
15 months old. You may elect to receive trail commissions. If neither Option A,
B nor C is elected, you will be paid under Option B.

Effective date: Date of Agreement

Lincoln Benefit Life Company

LBFS-1943-02AA
<PAGE>

COMMISSION SCHEDULE ADDENDUM

<TABLE>
<CAPTION>
First Year Commissions Trail Commissions
Plan Plan # (% of premiums received) (year 2+)
- ---- ------ ------------------------ ---------
<S> <C> <C> <C>

Investors Select
Variable Annuity VAP-9330

Option A 4.75 0
Option B 3.75 .25*
Option C 1.75 .5*
</TABLE>

Effective date: Date of Agreement

Lincoln Benefit Life Company

LBFS-1942-02

<PAGE>

COMMISSION SCHEDULE ADDENDUM

The following revisions are made to add Option C (Option A & B currently
available) to the Commission Schedules that are a part of the Selling Agreement.
The commissions provided in the schedule shall be reduced by the amount of
commissions the Company pays to subagents. The payment of commissions for this
plan is subject to the rules of LBL and LBFS. By submission of an application or
the acceptance of commissions you agree to be bound by the provisions of this
addendum.

<TABLE>
<CAPTION>
First Year Commissions Trail Commissions
Plan Plan # (% of premiums received) (year 2+)
- ---- ------ ------------------------ ---------
<S> <C> <C> <C>

Investors Select
Variable Annuity VAP-9330

Option A 5.5 0
Option B 4.5 .25*
Option C 2.5 .5*
</TABLE>

Effective date: Date of Agreement

Lincoln Benefit Life Company

LBFS-1942-09

<PAGE>

COMMISSION SCHEDULE ADDENDUM

<TABLE>
<CAPTION>
First Year Commissions Trail Commissions
Plan Plan # (% of premiums received) (year 2+)
- ---- ------ ------------------------ ---------
<S> <C> <C> <C>

Investors Select
Variable Annuity VAP-9330

Option A 6.0 0
Option B 5.0 .25*
Option C 3.0 .5*
</TABLE>

Effective date: Date of Agreement

Lincoln Benefit Life Company

LBFS-1942-10

<PAGE>

COMMISSION SCHEDULE ADDENDUM

The following revisions are made to add Option C (Option A & B currently
available) to the Commission Schedules that are a part of the Executive
Agreement. The commissions provided in the schedule shall be reduced by the
amount of commissions the Company pays to subagents. The payment of commissions
for this plan is subject to the rules of LBL and LBFS. By submission of an
application or the acceptance of commissions you agree to be bound by the
provisions of this addendum.

<TABLE>
<CAPTION>
First Year Commissions Trail Commissions
Plan Plan # (% of premiums received) (year 2+)
- ---- ------ ------------------------ ---------
<S> <C> <C> <C>

Investors Select
Variable Annuity VAP-9930

Option A 6.25 0
Option B 5.25 .25*
Option C 3.25 .5*
</TABLE>

Effective date: Date of Agreement

Lincoln Benefit Life Company

LBFS-1942-15

<PAGE>

COMMISSION SCHEDULE ADDENDUM

The following revisions are made to add Option C (Option A & B currently
available) to the Commission Schedules that are a part of the Master
Wholesaling Agreement. The commissions provided in the schedule shall be
reduced by the amount of commissions the Company pays to subagents. The payment
of commissions for this plan is subject to the rules of LBL and LBFS. By
submission of an application or the acceptance of commissions you agree to be
bound by the provisions of this addendum.

<TABLE>
<CAPTION>
First Year Commissions Trail Commissions
Plan Plan # (% of premiums received) (year 2+)
- ---- ------ ------------------------ ---------
<S> <C> <C> <C>

Investors Select
Variable Annuity VAP-9330

Option A 6.5 0
Option B 5.5 .25*
Option C 3.5 .5*
</TABLE>

A bonus commission of .10% of policy value net of any policy loans value will
be paid each year based upon the year end account values of all Variable
Universal Life (VUL9390) policies in-force for at least one year, but less than
twenty (20) years.

Effective date: Date of Agreement

Lincoln Benefit Life Company

LBFS-1942-20

<PAGE>

Exhibit 5
- -------------------------------------------------------------------------------
APPLICATION FOR FLEXIBLE PREMIUM VARIABLE ANNUITY
LINCOLN BENEFIT LIFE COMPANY, LINCOLN BENEFIT LIFE CENTRE,
LINCOLN, NE 68501-0469
- -------------------------------------------------------------------------------
ANNUITANT: Name ______________ Birth Date ___-___-___ Soc. Sec. No. ___-___-___
Street Address _______________ City, State, Zip _______________________________
- -------------------------------------------------------------------------------
OWNER (IF OTHER): Name ______________________________ Soc. Sec. No. ___-___-___
Street Address _______________ City, State, Zip _______________________________
Birth Date ___-___-___ Relationship to Annuitant ______________________________
- -------------------------------------------------------------------------------
PRIMARY BENEFICIARY: Name ___________________________ Soc. Sec. No. ___-___-___
Street Address _______________ City, State, Zip _______________________________
Relationship to Owner _______________________________ Birth Date ____-____-____
- -------------------------------------------------------------------------------
CONTINGENT BENEFICIARY: Name ________________________ Soc. Sec. No. ___-___-___
Street Address _______________ City, State, Zip _______________________________
Relationship to Owner _______________________________ Birth Date ____-____-____
- -------------------------------------------------------------------------------
PURCHASE PAYMENT INFORMATION: First Purchase Payment of $____________ submitted
herewith (Check or Money Order should be payable to Lincoln Benefit Life Co.). A
copy of this application duly signed by the agent will constitute receipt for
such amount. If this application is declined, there will be no liability on the
part of the Company, and any sums submitted with this application will be
refunded. The Contract Owner intends to make subsequent purchase payments of
$__________ on a [_] monthly (PAM) [_] quarterly [_] semi-annually [_] annual
bases [_] single payment.
- -------------------------------------------------------------------------------
PURCHASE PAYMENT ALLOCATION: (whole percentages only and must equal 100%)
<TABLE>
<CAPTION>
<S> <C> <C>
Janus Aspen Series Fidelity Variable Insurance Federated Insurance Management Series
_________ % Flexible Income Products Fund _________ % High Income Bond Fund
_________ % Balanced _________ % Money Market _________ % Utility Fund
_________ % Growth _________ % Equity Income _________ % Fund for U.S. Govt. Securities
_________ % Aggressive Growth _________ % Overseas
_________ % Worldwide Growth _________ % Growth Scudder Variable Life Investment Fund
_________ % Bond
IAI Retirement Funds, Inc. Fidelity Variable Insurance _________ % Balanced
_________ % IAI Regional Products Fund II
_________ % IAI Reserve _________ % Asset Manager Fixed Account
_________ % IAI Balanced _________ % Contrafund _________ %

</TABLE>
- -------------------------------------------------------------------------------
Will this annuity replace or change any existing policy? [_] Yes [_] No If Yes
give name of company, policy issue date, policy number and cost basis.
___________________________________________________________
- -------------------------------------------------------------------------------
TAX QUALIFIED? [_] IRA [_] SEP-IRA [_] 403(b) [_] Other _________________
[_] 401(a) {[_] LBL Prototype [_] Funding Vehicle}
[_] 401(k) {[_] LBL Prototype [_] Funding Vehicle}
Tax Year for which contribution is to be applied ______________
- -------------------------------------------------------------------------------
ADDITIONAL BENEFICIARY INSTRUCTIONS OR OTHER REMARKS IF ANY:

- -------------------------------------------------------------------------------
HOME OFFICE ENDORSEMENTS:

- -------------------------------------------------------------------------------
I declare: To the best of my knowledge and belief, all statements and answers
are true, complete and correctly reported. Lincoln Benefit Life may correct or
endorse this application. No change shall be made in the annuity amount or plan
or issue age by such endorsement or correction. Under penalties of perjury, I
certify that the Social Security Number stated herein is my correct taxpayer ID
number, and I am not subject to backup withholding. I UNDERSTAND THAT ANNUITY
PAYMENTS AND SURRENDER VALUES PROVIDED UNDER THE SEPARATE ACCOUNT ARE VARIABLE
AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT. RECEIPT OF A CURRENT
VARIABLE ANNUITY PROSPECTUS IS HEREBY ACKNOWLEDGED. [_] Please send me a copy of
the Statement of Additional Information to the prospectus.

Signed at ______________ On (date) ___-___-___ Owner's Signature ______________

Agent Name ___________________________________ Agent Signature ________________

<PAGE>

PAM (Pre-Authorized Method) I authorize the Company to collect $ _____________,
on the due date specified, by initiating electronic debit entries to my account.
A balance must exist before the program can commence. ATTACH VOIDED CHECK.
(Credit unions and savings accounts may not be eligible.)

Signature of Authorized Account Owner ___________________________ Date _________
- --------------------------------------------------------------------------------
TO THE CONTRACT OWNER:

TRANSFER AUTHORIZATION:
[_] I authorize Lincoln Benefit Life Company ("LBL") to act upon the written or
telephone instructions from the person named below to 1) change the
allocation of payments and deductions between and among the subaccounts;
and 2) transfer amounts among the subaccounts. Neither LBL nor any person
authorized by us will be responsible for any claim, loss, liability or
expense in connection with such transfer authorization if LBL, or its
employees, acts upon transfer instructions in good faith. LBL may establish
procedures to determine the proper identification of the person requesting
a transfer.
Name and Relationship of Authorized Person:

Name:___________________________Relationship_______________SS#__________________

DOLLAR COST AVERAGING/PORTFOLIO REBALANCING:
Select only one. You may not use Dollar Cost Averaging and Portfolio
Rebalancing at the same time.

[_] Dollar Cost Averaging (DCA):
Please dollar cost average in the amount of $___________
($100 minimum transfer) from ___________________________
Source Subaccount (only one Source Subaccount may be chose)
to the following Subaccounts (eight maximum) dollar amounts only:
Frequency: [_] Monthly [_] Quarterly [_] Annual

Janus Aspen Series Fidelity VIPF
DCA PR DCA PR
$_______ _______% Flexible Income $_______ _______% Money Market
$_______ _______% Balanced $_______ _______% Equity-Income
$_______ _______% Growth $_______ _______% Overseas
$_______ _______% Aggressive Growth $_______ _______% Growth
$_______ _______% Worldwide Growth

Scudder Variable Life Investment Fund Fidelity VIPF II
DCA PR DCA PR
$_______ _______% Bond $_______ _______% Asset Manager
$_______ _______% Balanced $_______ _______% Contrafund

Fixed Account
DCA PR
$_______ _______% (Restrictions apply for DCA--see prospectus for details)

[_] Portfolio Rebalancing (PR):
Please rebalance in the percentages specified below:
Frequency: [_] Monthly [_] Semiannual
[_] Quarterly [_] Annual
Date of First Rebalance - -
______________________________
MO DA YR
If no date selected, the first rebalance will occur one
period after issue date.

Federated Insurance Management Series
DCA PR
$_______ _______% Utility Fund
$_______ _______% Fund for U.S. Gov't. Securities
$_______ _______% High Income Bond Fund

IAI Retirement Funds, Inc.
DCA PR
$_______ _______% IAI Regional
$_______ _______% IAI Balanced
$_______ _______% IAI Reserve

SYSTEMATIC WITHDRAWALS ($50.00 minimum withdrawal)

I authorize systematic withdrawals of [_] $_____________, or [_] Interest
Earnings, or [_] ____% Percentage of Purchase Payments from my contract value to
commence during the month of ________________________. Withdrawals may be
subject to penalties and/or a Deferred Sales Charge. Additional restrictions may
apply to contracts held as a Qualified Plan.

Frequency: [_] Monthly [_] Quarterly [_] Semi-Annual [_] Annual

Please indicate the amount or percentage of the withdrawal from the chosen
Subaccount(s) [_] Dollar Amount Specified [_] Percentage Specified
JANUS ASPEN SERIES _________Flexible Income__________Balanced___________Growth
_________Aggressive Growth___________Worldwide Growth
IAI RETIREMENT FUNDS, INC________IAI Regional_______IAI Reserve_______IAI
Balanced
FIDELITY VIPF_______Money Market__________Equity Income________Overseas ________
Growth
FIDELITY VIPR II________Asset Manager___________Contrafund
FEDERATED INSURANCE MANAGEMENT SERIES________High Income Bond Fund____________
Utility Fund
SCUDDER VARIABLE LIFE INVESTMENT FUND_________Bond_________Balanced FIXED
ACCOUNT_________

PLEASE [_] WITHHOLD [_] DO NOT WITHHOLD FEDERAL INCOME TAXES

Signature of Owner______________________________________Date____________________
Contract Owner's Signature required for Transfer
Authorization or authorization of DCA or SW
- --------------------------------------------------------------------------------
TO THE AGENT: To the best of your knowledge will this annuity replace or change
any existing life insurance or annuity in this or any other company?
[_] Yes [_] No

Print Agent's Name ________________________ Agent Number_______________________

Signature of Agent _________________________ Agent's Phone No.__________________
- --------------------------------------------------------------------------------

TO THE REGISTERED REPRESENTATIVE/BROKER-DEALER: Choose option: [_] OPTION A
[_] OPTION B [_] OPTION C

Broker/Dealer___________________________Telephone______________________________

VAA-9330, Rev. 3/97, Page 2

<PAGE>

Exhibit 13

Janus
Flexible
Income

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.637075 0.129707
31-Dec-95 1.25 11.77092 0.106194
31-Dec-96 1.25 12.67321 0.098633

Resulting Value 31-Dec-96 12.67321 99.66547 1263.082

1203.082
annualized 6.52%
cumulative 20.31%

<PAGE>

Janus

Balanced

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.68186 0.129107
31-Dec-95 1.25 11.91423 0.104917
31-Dec-96 1.25 13.6489 0.091582

Resulting Value 31-Dec-96 13.6489 99.67439 1360.446

1300.446
annualized 9.38%
cumulative 30.04%

<PAGE>

Janus

Growth

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.848368 0.126925
31-Dec-95 1.25 12.6419 0.098878
31-Dec-96 1.25 14.76547 0.084657

Resulting Value 31-Dec-96 14.76547 99.68954 1471.963

1411.963
annualized 12.50%
cumulative 41.20%

<PAGE>

Janus
Aggressive
Growth

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 11.60132 0.107746
31-Dec-95 1.25 14.58482 0.085706
31-Dec-96 1.25 15.52428 0.080519

Resulting Value 31-Dec-96 15.52428 99.72603 1548.175

1488.175
annualized 14.54%
cumulative 48.82%

<PAGE>

Janus
Worldwide
Growth

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.672953 0.129226
31-Dec-95 1.25 12.14948 0.102885
31-Dec-96 1.25 15.45837 0.080862

Resulting Value 31-Dec-96 15.45837 99.68703 1540.999

1480.999
annualized 14.35%
cumulative 48.10%

<PAGE>

IAI

Regional

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 10.48355 0.119234
31-Dec-95 1.25 13.80249 0.090563
31-Dec-96 1.25 15.22638 0.082094

Resulting Value 31-Dec-96 15.22638 99.70811 1518.193

1458.193
annualized 13.75%
cumulative 45.82%

<PAGE>

IAI

Reserve

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 10.09393 0.123837
31-Dec-95 1.25 10.46035 0.119499
31-Dec-96 1.25 10.82304 0.115494

Resulting Value 31-Dec-96 10.82304 99.64117 1078.42

1024.42
annualized 0.83%
cumulative 2.44%

<PAGE>

IAI

Balanced

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 10.08868 0.123901
31-Dec-95 1.25 11.56131 0.108119
31-Dec-96 1.25 12.51724 0.099862

Resulting Value 31-Dec-96 12.51724 99.66812 1247.57

1187.57
annualized 6.05%
cumulative 18.76%

<PAGE>

Fidelity
Money
Market

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 10.26692 0.12175
31-Dec-95 1.25 10.7189 0.116616
31-Dec-96 1.25 11.14033 0.112205

Resulting Value 31-Dec-96 11.14033 99.64943 1110.127

1050.127
annualized 1.68%
cumulative 5.01%

<PAGE>

FIDELITY
EQUITY
INCOME

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 10.28265 0.121564
31-Dec-95 1.25 13.69857 0.09125
31-Dec-96 1.25 15.4363 0.080978

Resulting Value 31-Dec-96 15.4363 99.70621 1539.095

1479.095
annualized 14.30%
cumulative 47.91%

<PAGE>

Fidelity

Growth

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.726292 0.128518
31-Dec-95 1.25 12.98345 0.096276
31-Dec-96 1.25 14.68445 0.085124

Resulting Value 31-Dec-96 14.68445 99.69008 1463.894

1403.894
annualized 12.28%
cumulative 40.39%

<PAGE>

Fidelity

Overseas

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.697194 0.128903
31-Dec-95 1.25 10.48805 0.119183
31-Dec-96 1.25 11.70823 0.106763

Resulting Value 31-Dec-96 11.70823 99.64515 1166.668

1106.668
annualized 3.52%
cumulative 10.67%

<PAGE>

Fidelity
Asset
Manager

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.093297 0.137464
31-Dec-95 1.25 10.48761 0.119188
31-Dec-96 1.25 11.85119 0.105475

Resulting Value 31-Dec-96 11.85119 99.63787 1180.827

1120.827
annualized 3.97%
cumulative 12.08%

<PAGE>

Federated
Corporate
Bond

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.503301 0.131533
31-Dec-95 1.25 11.28137 0.110802
31-Dec-96 1.25 12.7158 0.098303

Resulting Value 31-Dec-96 12.7158 99.65936 1267.249

1207.249
annualized 6.64%
cumulative 20.72%

<PAGE>

Federated

Utility

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.502484 0.131545
31-Dec-95 1.25 11.63673 0.107419
31-Dec-96 1.25 12.80087 0.097652

Resulting Value 31-Dec-96 12.80087 99.66339 1275.778

1215.778
annualized 6.90%
cumulative 21.58%

<PAGE>

Federated

US Govt

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 10.09947 0.123769
31-Dec-95 1.25 10.83261 0.115392
31-Dec-96 1.25 11.12998 0.112309

Resulting Value 31-Dec-96 11.12998 99.64853 1109.087

1049.087
annualized 1.65%
cumulative 4.91%

<PAGE>

Scudder

Bond

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.273991 0.134786
31-Dec-95 1.25 10.80714 0.115664
31-Dec-96 1.25 10.95609 0.114092

Resulting Value 31-Dec-96 10.95609 99.63546 1091.615

1037.615
annualized 1.27%
cumulative 3.76%

<PAGE>

Scudder

Balanced

fee allocation 1.25 From 27-Jan-94
to 31-Dec-96

# of years 2.928767

$ Value Unit Value # Units End Value
Initial Deposit 27-Jan-94 1000 10 100
fee 31-Dec-94 1.25 9.483422 0.131809
31-Dec-95 1.25 11.84589 0.105522
31-Dec-96 1.25 13.06873 0.095648

Resulting Value 31-Dec-96 13.06873 99.66702 1302.521

1242.521
annualized 7.70%
cumulative 24.25%

<PAGE>

Fidelity

Contrafund

fee allocation 1.25 From 01-May-96
to 31-Dec-96

# of years 0.668493

$ Value Unit Value # Units End Value
Initial Deposit 01-May-96 1000 10 100
fee 31-Dec-96 1.25 11.14544 0.112154

Resulting Value 31-Dec-96 11.14544 99.88785 1113.294

1043.294
annualized 6.55%
cumulative 4.33%