INHERITAGE ACCOUNT OF ALLMERIC FINANCIAL LIFE INS & ANN CO, 485BPOS, 1996-04-26

INHERITAGE ACCOUNT OF ALLMERIC FINANCIAL LIFE INS & ANN CO
485BPOS, 1996-04-26

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<PAGE>

Registration Number 33-70948
811-8120

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-6

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2

Post-Effective Amendment No. 4

INHEIRITAGE ACCOUNT OF ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(Exact Name of Registrant)

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
440 Lincoln Street
Worcester MA 01653
(Address of Principal Executive Office)

Abigail M. Armstrong, Esq.
440 Lincoln Street
Worcester MA 01653
(Name and Address of Agent for Service of Process)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
----
X on April 30, 1996 pursuant to paragraph (b)
----
60 days after filing pursuant to paragraph (a) (1)
----
on (date) pursuant to paragraph (a) (1)
----
on (date) pursuant to paragraph (a) (2) of Rule 485
----

FLEXIBLE PREMIUM VARIABLE LIFE

Pursuant to Reg. Section 270.24f-2 of the Investment Company Act of 1940,
Registrant hereby declares that an indefinite amount of its securities is being
registered under the Securities Act of 1933. The Rule 24f-2 Notice for the
issuer's fiscal year ended December 31, 1995 was filed on February 29, 1996.

<PAGE>

RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS

Item No. of
Form N-8B-82 Caption in Prospectus
- ------------ ---------------------

1. . . . . . . . . . . . . . . . Cover Page
2. . . . . . . . . . . . . . . . Cover Page
3. . . . . . . . . . . . . . . . Not Applicable
4. . . . . . . . . . . . . . . . Distribution
5. . . . . . . . . . . . . . . . The Company, The Inheiritage Account
6. . . . . . . . . . . . . . . . The Inheiritage Account
7. . . . . . . . . . . . . . . . Not Applicable
8. . . . . . . . . . . . . . . . Not Applicable
9. . . . . . . . . . . . . . . . Legal Proceedings
10 . . . . . . . . . . . . . . . Summary; Description of the Company, The
Inheiritage Account, Allmerica Investment
Trust, Variable Insurance Products Fund,
Variable Insurance Product Fund II, T. Rowe
Price International Series, Inc. and Delaware
Group Premium Fund; The Policy; Policy
Termination and Reinstatement; Other Policy
Provisions
11 . . . . . . . . . . . . . . . Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; Variable
Insurance Products Fund II; T. Rowe Price
International Series, Inc.; Delaware Group
Premium Fund, Inc.; Investment Objectives and
Policies
12 . . . . . . . . . . . . . . . Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; Variable
Insurance Products Fund II; T. Rowe Price
International Series, Inc.; Delaware Group
Premium Fund, Inc.
13 . . . . . . . . . . . . . . . Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; Variable
Insurance Products Fund II; T. Rowe Price
International Series, Inc.; Delaware Group
Premium Fund, Inc.; Investment Advisory
Services to the Trust; Investment Advisory
Services to Variable Insurance Products Fund;
Investment Advisory Services to Variable
Insurance Products Fund II; Investment
Advisory Services to T. Rowe Price
International Series, Inc.; Investment
Advisory Services to Delaware Group
Premium Fund, Inc.; Charges and
Deductions
14 . . . . . . . . . . . . . . . Summary; Application for a Policy
15 . . . . . . . . . . . . . . . Summary; Application for a Policy;
Premium Payments; Allocation of Net
Premiums
16 . . . . . . . . . . . . . . . The Inheiritage Account; Allmerica
Investment Trust; Variable Insurance
Products Fund; Variable Insurance Products
Fund II; T. Rowe Price International Series,
Inc.; Delaware Group Premium Fund, Inc.;
Premium Payments; Allocation of Net Premiums
17 . . . . . . . . . . . . . . . Summary; Surrender; Partial Withdrawal;
Charges and Deductions; Policy

<PAGE>

Termination and Reinstatement
18 . . . . . . . . . . . . . . . The Inheiritage Account; Allmerica
Investment Trust; Variable Insurance
Products Fund; Variable Insurance Products
Fund II; T. Rowe Price International Series,
Inc.; Delaware Group Premium Fund, Inc.;
Premium Payments
19 . . . . . . . . . . . . . . . Reports; Voting Rights
20 . . . . . . . . . . . . . . . Not Applicable
21 . . . . . . . . . . . . . . . Summary; Policy Loans; Other Policy
Provisions
22 . . . . . . . . . . . . . . . Other Policy Provisions
23 . . . . . . . . . . . . . . . Not Required
24 . . . . . . . . . . . . . . . Other Policy Provisions
25 . . . . . . . . . . . . . . . The Company
26 . . . . . . . . . . . . . . . Not Applicable
27 . . . . . . . . . . . . . . . The Company
28 . . . . . . . . . . . . . . . Directors and Principal Officers of the
Company
29 . . . . . . . . . . . . . . . The Company
30 . . . . . . . . . . . . . . . Not Applicable
31 . . . . . . . . . . . . . . . Not Applicable
32 . . . . . . . . . . . . . . . Not Applicable
33 . . . . . . . . . . . . . . . Not Applicable
34 . . . . . . . . . . . . . . . Not Applicable
35 . . . . . . . . . . . . . . . Distribution
36 . . . . . . . . . . . . . . . Not Applicable
37 . . . . . . . . . . . . . . . Not Applicable
38 . . . . . . . . . . . . . . . Summary; Distribution
39 . . . . . . . . . . . . . . . Summary; Distribution
40 . . . . . . . . . . . . . . . Not Applicable
41 . . . . . . . . . . . . . . . The Company, Distribution
42 . . . . . . . . . . . . . . . Not Applicable
43 . . . . . . . . . . . . . . . Not Applicable
44 . . . . . . . . . . . . . . . Premium Payments; Policy Value and Cash
Surrender Value
45 . . . . . . . . . . . . . . . Not Applicable
46 . . . . . . . . . . . . . . . Policy Value and Cash Surrender Value;
Federal Tax Considerations
47 . . . . . . . . . . . . . . . The Company
48 . . . . . . . . . . . . . . . Not Applicable
49 . . . . . . . . . . . . . . . Not Applicable
50 . . . . . . . . . . . . . . . The Inheiritage Account
51 . . . . . . . . . . . . . . . Cover Page; Summary; Charges and
Deductions; The Policy; Policy Termination
and Reinstatement; Other Policy Provisions
52 . . . . . . . . . . . . . . . Addition, Deletion or Substitution of
Investments
53 . . . . . . . . . . . . . . . Federal Tax Considerations
54 . . . . . . . . . . . . . . . Not Applicable
55 . . . . . . . . . . . . . . . Not Applicable
56 . . . . . . . . . . . . . . . Not Applicable
57 . . . . . . . . . . . . . . . Not Applicable
58 . . . . . . . . . . . . . . . Not Applicable
59 . . . . . . . . . . . . . . . Not Applicable

<PAGE>

This prospectus describes individual joint survivorship flexible premium
variable life insurance policies ("Policies") offered by Allmerica Financial
Life Insurance and Annuity Company (formerly SMA Life Assurance Company
("Company") to applicants Age 80 or under respecting the younger Insured and
Age 85 or under respecting the older Insured. Life insurance coverage is
provided for two Insureds, with death proceeds payable at death of the last
surviving Insured. Within limits, the Policy owner may choose the amount of
initial premium desired and the initial Sum Insured. The Policy owner has
the flexibility to vary the frequency and amount of premium payments, subject
to certain restrictions and conditions. The Policy owner may withdraw a
portion of the Policy's surrender value, or the Policy may be fully
surrendered at any time, subject to certain limitations. Because of the
substantial nature of the surrender charge, the Policy is not suitable for
short-term investment purposes. A Policy owner contemplating surrender of a
Policy should pay special attention to the limitation of deferred sales
charges on surrenders in the first two years following issuance or Face
Amount increase.

The Policies permit the Policy owner to allocate net premiums among up to seven
of eighteen sub-accounts ("Sub-Accounts") of the Inheiritage Account, a separate
account of the Company, and a fixed interest account ("General Account") of the
Company (together "Accounts"). Each Sub-Account invests its assets in a
corresponding investment portfolio of Allmerica Investment Trust ("Trust"),
Variable Insurance Products Fund ("VIP"), Variable Insurance Products Fund II
("VIP II"), T. Rowe Price International Series, Inc. ("T. Rowe Price") or
Delaware Group Premium Fund, Inc. ("DGPF"). The Trust is managed by Allmerica
Investment Management Company, Inc. ("Allmerica Investment"). VIP and VIP II
are managed by Fidelity Management & Research Company ("Fidelity Management").
T. Rowe Price is managed by Rowe Price-Fleming International, Inc. ("Price-
Fleming"). The International Equity Series, which is the only investment
portfolio of DGPF available under the Policies, is managed by Delaware
International Advisers Ltd. ("Delaware International").

In certain circumstances, a Policy may be considered a "modified endowment
contract." Under the Internal Revenue Code, any policy loan, partial withdrawal
or surrender from a modified endowment contract may be subject to tax and tax
penalties. See "FEDERAL TAX CONSIDERATIONS - Modified Endowment Contracts."

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

IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
AS A REPLACEMENT FOR THE POLICY OWNER'S CURRENT LIFE INSURANCE OR IF THE POLICY
OWNER ALREADY OWNS A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES OF THE
ALLMERICA INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, T. ROWE PRICE INTERNATIONAL SERIES, INC. AND DELAWARE GROUP
PREMIUM FUND, INC. THE HIGH INCOME PORTFOLIO INVESTS IN HIGHER YIELDING, HIGHER
RISK, LOWER RATED DEBT SECURITIES (SEE "INVESTMENT OBJECTIVES AND POLICIES" IN
THIS PROSPECTUS). INVESTORS SHOULD RETAIN A COPY OF THIS PROSPECTUS FOR FUTURE
REFERENCE.

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

THE POLICIES ARE OBLIGATIONS OF ALLMERICA FINANCIAL LIFE INSURANCE AND
ANNUITY COMPANY AND ARE DISTRIBUTED BY ALLMERICA INVESTMENTS, INC. THE
POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK OR CREDIT UNION. THE POLICIES ARE NOT INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), OR ANY OTHER
FEDERAL AGENCY. INVESTMENTS IN THE CONTRACTS ARE SUBJECT TO VARIOUS RISKS,
INCLUDING THE FLUCTUATION OF VALUE AND POSSIBLE LOSS OF PRINCIPAL.

Dated April 30, 1996
440 Lincoln Street
Worcester, Massachusetts 01653
(508) 855-1000

<PAGE>

(Continued from cover page)

The Trust, VIP, VIP II, T. Rowe Price and DGPF are open-end, diversified series
investment companies. Eleven different investment portfolios of the Trust are
available under the Policies: the Growth Fund, Investment Grade Income Fund,
Money Market Fund, Equity Index Fund, Select International Equity Fund,
Government Bond Fund, Select Aggressive Growth Fund, Select Capital Appreciation
Fund, Select Growth Fund, Select Growth and Income Fund and Small Cap Value Fund
(the "Funds"). Four different investment portfolios of VIP are available under
the Policies: High Income Portfolio, Equity-Income Portfolio, Growth Portfolio,
and Overseas Portfolio ("Portfolios"). One investment portfolio of VIP II
("Portfolio") is available under the Policies: the Asset Manager Portfolio. One
investment portfolio of T. Rowe Price ("Portfolio") is available under the
Policies: the International Stock Portfolio. One investment portfolio of DGPF
("Series") is available under the Policies: the International Equity Series.
Each Fund, Portfolio and Series has its own investment objectives. The
accompanying prospectuses of the Trust, VIP, VIP II, T. Rowe Price and DGPF
describe the investment objectives and certain attendant risks of each
Underlying Fund. The International Stock Portfolio of T. Rowe Price is not
available in all states.

There is no guaranteed minimum Policy value. The value of a Policy will vary up
or down to reflect the investment experience of allocations to the Sub-Accounts
and the fixed rates of interest earned by allocations to the General Account.
The Policy value will also be adjusted for other factors, including the amount
of charges imposed. The Policy will remain in effect so long as the Policy
value less any surrender charges and less any outstanding debt is sufficient to
pay certain monthly charges imposed in connection with the Policy. The Policy
value may decrease to the point where the Policy will lapse and provide no
further death benefit without additional premium payments.

If the Policy is in effect at the death of the last surviving Insured, the
Company will pay a death benefit (the "Death Proceeds") to the beneficiary.
Prior to the Final Premium Payment Date, the Death Proceeds equal the Sum
Insured, less any debt, partial withdrawals, and any due and unpaid charges.
The Policy owner may choose either Sum Insured Option 1 (the Sum Insured is
fixed in amount) or Sum Insured Option 2 (the Sum Insured includes the Policy
value in addition to a fixed insurance amount). A Policy owner has the right to
change the Sum Insured option, subject to certain conditions. A guideline
minimum Sum Insured, equivalent to a percentage of the Policy value, will apply
if greater than the Sum Insured otherwise payable under Option 1 or Option 2.

The Policy provides a Paid-Up Insurance option. IF THIS OPTION IS ELECTED,
CERTAIN POLICY OWNER RIGHTS DISCLOSED IN THIS PROSPECTUS WILL NOT APPLY. The
Policy owner who has elected the Paid-Up Insurance option may not pay additional
premiums, select Sum Insured Option 2, increase or decrease the Face Amount or
make partial withdrawals. Policy Value in the Inheiritage Account will be
transferred to the General Account on the date the Company receives written
request to exercise the option and transfers of Policy Value back to the
Inheiritage Account will not be permitted. Riders will continue only with the
consent of the Company. Surrender value and loan value are calculated
differently. See "THE POLICY - Paid-Up Insurance Option."

<PAGE>

TABLE OF CONTENTS

SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . .15
DESCRIPTION OF THE COMPANY, THE INHEIRITAGE ACCOUNT, ALLMERICA
INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, T. ROWE PRICE INTERNATIONAL SERIES,
INC. AND DELAWARE GROUP PREMIUM
FUND, INC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
INVESTMENT OBJECTIVES AND POLICIES. . . . . . . . . . . . . . . . .19
INVESTMENT ADVISORY SERVICES. . . . . . . . . . . . . . . . . . . .21
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS . . . . . . . . .24
VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . .25

THE POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
APPLICATION FOR A POLICY. . . . . . . . . . . . . . . . . . . . . .26
FREE LOOK PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . .26
CONVERSION PRIVILEGES . . . . . . . . . . . . . . . . . . . . . . .27
PREMIUM PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . .27
INCENTIVE FUNDING DISCOUNT. . . . . . . . . . . . . . . . . . . . .27
ALLOCATION OF NET PREMIUMS. . . . . . . . . . . . . . . . . . . . .28
TRANSFER PRIVILEGE. . . . . . . . . . . . . . . . . . . . . . . . .28
DEATH PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . .29
SUM INSURED OPTIONS . . . . . . . . . . . . . . . . . . . . . . . .29
CHANGE IN SUM INSURED OPTION. . . . . . . . . . . . . . . . . . . .32
CHANGE IN FACE AMOUNT . . . . . . . . . . . . . . . . . . . . . . .33
POLICY VALUE AND SURRENDER VALUE. . . . . . . . . . . . . . . . . .34
PAYMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . .35
OPTIONAL INSURANCE BENEFITS . . . . . . . . . . . . . . . . . . . .35
SURRENDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
PARTIAL WITHDRAWAL. . . . . . . . . . . . . . . . . . . . . . . . .35
PAID-UP INSURANCE OPTION. . . . . . . . . . . . . . . . . . . . . .36

CHARGES AND DEDUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . .36
TAX EXPENSE CHARGE. . . . . . . . . . . . . . . . . . . . . . . . .36
PREMIUM EXPENSE CHARGE. . . . . . . . . . . . . . . . . . . . . . .36
MONTHLY DEDUCTION FROM POLICY VALUE . . . . . . . . . . . . . . . .36
CHARGES AGAINST ASSETS OF THE INHEIRITAGE ACCOUNT . . . . . . . . .38
SURRENDER CHARGE. . . . . . . . . . . . . . . . . . . . . . . . . .39
CHARGES ON PARTIAL WITHDRAWAL . . . . . . . . . . . . . . . . . . .40
TRANSFER CHARGES. . . . . . . . . . . . . . . . . . . . . . . . . .41
CHARGE FOR INCREASE IN FACE AMOUNT. . . . . . . . . . . . . . . . .41
OTHER ADMINISTRATIVE CHARGES. . . . . . . . . . . . . . . . . . . .41

POLICY LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

POLICY TERMINATION AND REINSTATEMENT . . . . . . . . . . . . . . . . . .42

OTHER POLICY PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . .43

<PAGE>

DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY. . . . . . . . . . . . .45

DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . .48

FURTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . .48

INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . .48

FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . .49
THE COMPANY AND THE INHEIRITAGE ACCOUNT . . . . . . . . . . . . . .49
TAXATION OF THE POLICIES. . . . . . . . . . . . . . . . . . . . . .49
MODIFIED ENDOWMENT CONTRACTS. . . . . . . . . . . . . . . . . . . .50
ESTATE AND GENERATION SKIPPING TAXES. . . . . . . . . . . . . . . .50

MORE INFORMATION ABOUT THE GENERAL ACCOUNT . . . . . . . . . . . . . . .51
THE POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS . . . .52

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .52

APPENDIX A - OPTIONAL BENEFITS . . . . . . . . . . . . . . . . . . . . .82

APPENDIX B - PAYMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . .82

APPENDIX C - ILLUSTRATIONS OF SUM INSURED, POLICY VALUES AND
ACCUMULATED PREMIUMS . . . . . . . . . . . . . . . . . . . . . . . . . .84

APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES. . . . . . . . . .90

4
<PAGE>

SPECIAL TERMS

ACCUMULATION UNIT: A measure of the Policy owner's interest in a Sub-Account.

AGE: An Insured's age as of the nearest birthday measured from a Policy
anniversary.

BENEFICIARY: The person(s) designated by the owner of the Policy to receive the
insurance proceeds upon the death of the last surviving Insured.

COMPANY: Allmerica Financial Life Insurance and Annuity Company.

DATE OF ISSUE: The date set forth in the Policy used to determine the Monthly
Payment Date, Policy months, Policy years, and Policy anniversaries.

DEATH PROCEEDS: Prior to the Final Premium Payment Date, the Death Proceeds
equal the amount calculated under the applicable Sum Insured Option (Option 1 or
Option 2), less Debt outstanding at death of the last surviving Insured, partial
withdrawals, if any, partial withdrawal charges, and any due and unpaid Monthly
Deductions. After the Final Premium Payment Date, the Death Proceeds equal the
Surrender Value of the Policy.

DEBT: All unpaid Policy loans plus interest due or accrued on such loans.

DELIVERY RECEIPT: An acknowledgment, signed by the Policy owner and returned to
the Company's Principal Office, that the Policy owner has received the Policy
and the Notice of Withdrawal Rights.

EVIDENCE OF INSURABILITY: Information, including medical information
satisfactory to the Company, that is used to determine the Insureds' Premium
Class.

FACE AMOUNT: The amount of insurance coverage applied for. The Face Amount of
each Policy is set forth in the specification pages of the Policy.

FINAL PREMIUM PAYMENT DATE: The Policy anniversary nearest the younger
Insured's 95th birthday. The Final Premium Payment Date is the latest date on
which a premium payment may be made. After this date, the Death Proceeds equal
the Surrender Value of the Policy.

GENERAL ACCOUNT: All the assets of the Company other than those held in a
separate account.

GUIDELINE ANNUAL PREMIUM: The annual amount of premium that would be payable
through the Final Premium Payment Date of a Policy for the specified Sum
Insured, if premiums were fixed by the Company as to both timing and amount, and
monthly cost of insurance charges were based on the 1980 Commissioners Standard
Ordinary Mortality Tables (Mortality Table D, Smoker or Non-Smoker, for unisex
Policies), net investment earnings at an annual effective rate of 5%, and fees
and charges as set forth in the Policy and any Policy riders. The Sum Insured
Option 1 Guideline Annual Premium is used when calculating the maximum surrender
charge.

GUIDELINE MINIMUM SUM INSURED: The minimum Sum Insured required to qualify the
Policy as "life insurance" under Federal tax laws. The Guideline Minimum Sum
Insured varies by Age. It is calculated by multiplying the Policy Value by a
percentage determined by the younger Insured's Age.

INHEIRITAGE ACCOUNT: A separate account of the Company to which the Policy owner
may make Net Premium allocations.

INSURANCE AMOUNT AT RISK: The Sum Insured less the Policy Value.

INSUREDS: The two persons covered under the Policy.

LOAN VALUE: The maximum amount that may be borrowed under the Policy.

MINIMUM MONTHLY FACTOR: A monthly premium amount calculated by the Company
and specified in the Policy. If the Policy owner pays this amount, the
Company guarantees that the Policy will not lapse prior to the 49th Monthly
Deduction after the Date of Issue or the effective date of an increase in the
Face Amount. However, making payments at least equal to the Minimum Monthly
Factors will not prevent the Policy from lapsing if (a) Debt exceeds Policy
Value less surrender charges or (b) partial withdrawals and partial
withdrawal charges have reduced premium payments below an amount equal to the
Minimum Monthly Factor multiplied by the number of months since the Date of
Issue or the effective date of an increase.

MONTHLY DEDUCTION: Charges deducted monthly from the Policy Value of a Policy
prior to the Final Premium Payment Date.

<PAGE>

The charges include the monthly cost of insurance, the monthly cost of any
benefits provided by riders, and the monthly administrative charge.

MONTHLY PAYMENT DATE: The date on which the Monthly Deduction is deducted from
Policy Value.

NET PREMIUM: An amount equal to the premium less a tax expense charge and
premium expense charge.

PAID-UP INSURANCE: Joint survivorship insurance coverage for the lifetime of
the Insureds, with no further premiums due.

POLICY CHANGE: Any change in the Face Amount, the addition or deletion of a
rider, or a change in the Sum Insured Option.

POLICY VALUE: The total amount available for investment under a Policy at any
time. It is equal to the sum of (a) the value of the Accumulation Units
credited to a Policy in the Sub-Accounts and (b) the accumulation in the General
Account credited to that Policy.

PREMIUM CLASS: The risk classification that the Company assigns the Insureds
based on the information in the application and any other Evidence of
Insurability considered by the Company. The Insureds' Premium Class will affect
the cost of insurance charge and the amount of premium required to keep the
Policy in force.

PRINCIPAL OFFICE: The Company's office, located at 440 Lincoln Street,
Worcester, Massachusetts 01653.

PRO RATA ALLOCATION: In certain circumstances, the Policy owner may specify
from which Sub-Account certain deductions will be made or to which
Sub-Account Policy Value will be allocated. If the Policy owner does not,
the Company will allocate the deduction or Policy Value among the General
Account and the Sub-Accounts in the same proportion that the Policy Value in
the General Account and the Policy Value in each Sub-Account bear to the
total Policy Value on the date of deduction or allocation.

SEPARATE ACCOUNT: A separate account consists of assets segregated from the
Company's other assets. The investment performance of the assets of each
separate account is determined separately from the other assets of the Company.
The assets of a separate Account which are equal to the reserves and other
contract liabilities are not chargeable with liabilities arising out of any
other business which the Company may conduct.

SUB-ACCOUNT: A division of the Inheiritage Account. Each Sub-Account invests
exclusively in the shares of a corresponding Fund of the Allmerica Investment
Trust, a corresponding Portfolio of the Variable Insurance Products Fund or the
Variable Insurance Products Fund II, the International Stock Portfolio of T.
Rowe Price International Series, Inc. or the International Equity Series of the
Delaware Group Premium Fund, Inc.

SUM INSURED: The amount payable upon the death of the last surviving Insured,
before the Final Premium Payment Date, prior to deductions for Debt outstanding
at the death of the last surviving Insured, partial withdrawals and partial
withdrawal charges, if any, and any due and unpaid Monthly Deductions. The
amount of the Sum Insured will depend on the Sum Insured Option chosen, but will
always be at least equal to the Face Amount.

SURRENDER VALUE: The amount payable upon a full surrender of the Policy. It is
the Policy Value less any Debt and applicable surrender charges.

UNDERLYING FUNDS: The Funds of the Allmerica Investment Trust, the Portfolios of
the Variable Insurance Products Fund and the Variable Insurance Products Fund
II, the Portfolio of T. Rowe Price International Series, Inc. and the Series of
the Delaware Group Premium Fund, Inc. available under the Policies.

UNDERLYING INVESTMENT COMPANIES: Allmerica Investment Trust, Variable Insurance
Products Fund, Variable Insurance Products Fund II, T. Rowe Price International
Series, Inc. and Delaware Group Premium Fund, Inc.

VALUATION DATE: A day on which the net asset value of the shares of any of the
Underlying Funds is determined and Accumulation Unit values of the Sub-Accounts
are determined. Valuation Dates currently occur on each day on which the New
York Stock Exchange is open for trading, and on such other days (other than a
day during which no payment, partial withdrawal, or surrender of a Policy is
received) when there is a sufficient degree of trading in an Underlying Fund's
securities such that the current net asset value of the Sub-Accounts may be
materially affected.

VALUATION PERIOD: The interval between two consecutive Valuation Dates.

WRITTEN REQUEST: A request by the Policy owner in writing, satisfactory to the
Company.

SUMMARY

<PAGE>

THE POLICY - The flexible premium variable life policy (the "Policy") offered by
this prospectus allows the Policy owner, subject to certain limitations, to make
premium payments in any amount and frequency. As long as the Policy remains in
force, it will provide for: (1) life insurance coverage on the named Insureds;
(2) Policy Value; (3) surrender rights and partial withdrawal rights; (4) loan
privileges; and (5) in some cases, additional insurance benefits available by
rider for an additional charge.

The Policies are life insurance contracts, with death benefits, Policy Value,
and other features traditionally associated with life insurance. They are
"joint survivorship" Policies because Death Proceeds are payable, not on the
death of the first Insured to die, but on the death of the last surviving
Insured. The Policies are "variable" because, unlike the fixed benefits of
ordinary whole life insurance, the Policy Value will, and under certain
circumstances the Death Proceeds may, increase or decrease depending on the
investment experience of the Sub-Accounts of the Inheiritage Account. They are
"flexible premium" policies, because, unlike traditional insurance policies,
there is no fixed schedule for premium payments. Although the Policy owner may
establish a schedule of premium payments ("planned premium payments"), failure
to make the planned premium payments will not necessarily cause a Policy to
lapse nor will making the planned premium payments guarantee that a Policy will
remain in force. Thus, the Policy owner may, but is not required to, pay
additional premiums.

The Policy will remain in force until the Surrender Value is insufficient to
cover the next Monthly Deduction and loan interest accrued, if any, and a grace
period of 62 days has expired without adequate payment being made by the Policy
owner. During the first 48 Policy months after the Date of Issue or the
effective date of an increase in Face Amount, the Policy will not lapse if the
total premiums paid less debt, partial withdrawals and withdrawal charges are
equal to or exceed the sum of the Minimum Monthly Factors for the number of
months the Policy, increase, or a Policy Change which causes a change in the
Minimum Monthly Factor has been in force. However, even during these periods
making payments at least equal to the Minimum Monthly Factors will not prevent
the Policy from lapsing if Debt equals or exceeds Policy Value less surrender
charges.

SURRENDER CHARGES - At any time that a Policy is in effect, a Policy owner may
elect to surrender the Policy and receive its Surrender Value. A surrender
charge is calculated upon issuance of the Policy and upon each increase in Face
Amount. The duration of the surrender charge is 15 years. The surrender charge
is only imposed if, during its duration, the Policy owner requests a full
surrender or a decrease in Face Amount.

The maximum surrender charge calculated upon issuance of the Policy is equal to
the sum of (a) plus (b) where (a) is a deferred administrative charge equal to
$8.50 per thousand dollars of the initial Face Amount and (b) is a deferred
sales charge of 48% of premiums received up to a maximum number of Guideline
Annual Premiums subject to the deferred sales charge that varies by average
issue Age from 1.95 (for average issue Ages 5 through 75) to 1.31 (for average
issue Age 82). In accordance with limitations under state insurance
regulations, the amount of the maximum surrender charge will not exceed a
specified amount per $1,000 of initial Face Amount, as indicated in "APPENDIX D
- - CALCULATION OF MAXIMUM SURRENDER CHARGES." The maximum surrender charge
remains level for the first 40 Policy months and reduces by 0.5% or more per
month thereafter, as described in "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER
CHARGES." If the Policy owner surrenders the Policy during the first two Policy
years following the Date of Issue before making premium payments associated with
the initial Face Amount which are at least equal to one Guideline Annual
Premium, the deferred administrative charge will be $8.50 per thousand dollars
of initial Face Amount, as described above, but the deferred sales charge will
not exceed 25% of premiums received. See "THE POLICY - Surrender" and "CHARGES
AND DEDUCTIONS - Surrender Charge."

A separate surrender charge will apply to and is calculated for each increase in
Face Amount. The maximum surrender charge for the increase is equal to the sum
of (a) plus (b) where (a) is equal to $8.50 per thousand dollars of increase,
and (b) is a deferred sales charge of 48% of premiums associated with the
increase, up to a maximum number of Guideline Annual Premiums (for the increase)
subject to the deferred sales charge that varies by average Age (at the time of
increase) from 1.95 (for average Ages 5 through 75) to 1.31 (for average Age
82). In accordance with limitations under state insurance regulations, the
amount of the surrender charge will not exceed a specified amount per $1,000 of
increase, as indicated in "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER
CHARGES." As is true for the initial Face Amount, (a) is a deferred
administrative charge and (b) is a deferred sales charge. This maximum
surrender charge remains level for the first 40 Policy months following the
increase and reduces by 0.5% or more per month thereafter, as described in
"APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES." If the Policy owner
surrenders the Policy during the first two Policy years following an increase in
Face Amount before making premium payments associated with the increase in Face
Amount which are at least equal to one Guideline Annual Premium, the deferred
administrative charge will be $8.50 per thousand dollars of Face Amount
increase, as described above, but the deferred sales charge will not exceed 25%
of premiums associated with the increase. See "THE POLICY - Surrender" and
"CHARGES AND DEDUCTIONS - Surrender Charge."

In the event of a decrease in Face Amount, the surrender charge imposed is
proportional to the charge that would apply to a full surrender. See "THE
POLICY - Surrender" and "CHARGES AND DEDUCTIONS - Surrender Charge."

<PAGE>

PREMIUM EXPENSE CHARGE - A charge of 1% of premiums will be deducted from each
premium payment to partially compensate the Company for sales expenses related
to the Policies. See CHARGES AND DEDUCTIONS - Premium Expense Charge."

MONTHLY DEDUCTIONS FROM POLICY VALUE - On the Date of Issue and each Monthly
Payment Date thereafter prior to the Final Premium Payment Date, certain charges
("Monthly Deductions") will be deducted from the Policy Value. The Monthly
Deduction consists of a charge for cost of insurance, a charge for the cost of
any additional benefits provided by rider, and a charge for administrative
expenses. The Policy owner may instruct the Company to deduct the Monthly
Deduction from one specific Sub-Account. If the Policy owner does not, the
Company will make a Pro Rata Allocation of the charge. No Monthly Deductions
are made on or after the Final Premium Payment Date.

The monthly cost of insurance charge is determined by multiplying the Insurance
Amount at Risk (the Sum Insured minus the Policy Value) for each Policy month by
the applicable cost of insurance rate or rates. The Insurance Amount at Risk
will be affected by any decreases or increases in the Face Amount.

As noted above, certain additional insurance rider benefits are available under
the Policy for an additional monthly charge. See "APPENDIX A - Optional
Benefits."

The monthly administrative charge is described in "CHARGES AND DEDUCTIONS -
Monthly Deduction From Policy Value."

POLICY ADMINISTRATIVE CHARGES - Each of the charges listed below is designed to
reimburse the Company for actual Policy administrative costs incurred. None of
these charges is designed to result in a profit to the Company.

DEFERRED ADMINISTRATIVE CHARGE - A component of the surrender charge is a charge
for administrative expenses. This deferred administrative charge is $8.50 per
thousand dollars of the initial Face Amount or of an increase in Face Amount.
The charge is designed to reimburse the Company for administrative costs
associated with product research and development, underwriting, policy
administration, decreasing the Face Amount, and surrendering a Policy. Because
the maximum surrender charge reduces by 0.5% or more per month after the 40th
Policy month from the Date of Issue or the effective date of an increase in Face
Amount, in certain situations some or all of the deferred administrative charge
may not be assessed upon surrender of the Policy. See "THE POLICY - Surrender"
and "CHARGES AND DEDUCTIONS - Surrender Charge."

MONTHLY ADMINISTRATIVE CHARGES - A component of the Monthly Deduction from
Policy Value is a charge for administrative expenses. Prior to the Final
Premium Payment Date, the charge is $6 per month. The charges are designed to
reimburse the Company for the costs associated with issuing and administering
the Policies, such as processing premium payments, policy loans and loan
repayments, change in Sum Insured Options, and death claims. These charges also
help cover the cost of providing annual statements and responding to
Policyholder inquiries. See "CHARGES AND DEDUCTIONS- Monthly Deduction From
Policy Value."

TRANSACTION CHARGE ON PARTIAL WITHDRAWALS - A transaction charge, which is the
smaller of 2% of the amount withdrawn or $25, is assessed at the time of each
partial withdrawal to reimburse the Company for the cost of processing the
withdrawal. In addition to the transaction charge, a partial withdrawal charge
may also be made under certain circumstances. See "CHARGES AND DEDUCTIONS -
Charges On Partial Withdrawal."

CHARGE FOR INCREASE IN FACE AMOUNT - For each increase in Face Amount, a charge
of $50 will be deducted from Policy Value. This charge is designed to reimburse
the Company for underwriting and administrative costs associated with the
increase. See "THE POLICY - Change In Face Amount" and "CHARGES AND DEDUCTIONS
- - Charge For Increase In Face Amount."

TRANSFER CHARGE - The first six transfers of Policy Value in a Policy year will
be free of charge. Thereafter, with certain exceptions, a transfer charge of
$10 will be imposed for each transfer request to reimburse the Company for the
costs of processing the transfer. See "THE POLICY - Transfer Privilege" and
"CHARGES AND DEDUCTIONS - Transfer Charges."

OTHER ADMINISTRATIVE CHARGES - The Company reserves the right to impose a charge
for the administrative costs associated with changing the Net Premium allocation
instructions, for changing the allocation of any Monthly Deductions among the
various Sub-Accounts, or for a projection of values. See "CHARGES AND
DEDUCTIONS - Other Administrative Charges."

<PAGE>

CHARGES AGAINST THE INHEIRITAGE ACCOUNT - A daily charge equivalent to an
effective annual rate of 1.15% of the average daily net asset value of each
Sub-Account of the Inheiritage Account is imposed to compensate the Company for
its assumption of certain mortality and expense risks and for administrative
costs associated with the Inheiritage Account. The rate is 0.90% for the
mortality and expense risk and 0.25% for the Inheiritage Account administrative
charge, which administrative charge is eliminated after the fifteenth Policy
year. See "CHARGES AND DEDUCTIONS - Charges Against Assets Of The Inheiritage
Account."

CHARGES OF THE UNDERLYING INVESTMENT COMPANIES - In addition to the charges
described above, certain fees and expenses are deducted from the assets of the
Underlying Investment Companies. See "CHARGES AND DEDUCTIONS - Charges Against
Assets Of The Inheiritage Account." The levels of fees and expenses vary among
the Underlying Investment Companies.

POLICY VALUE AND SURRENDER VALUE - The Policy Value is the total amount
available for investment under a Policy at any time. It is the sum of the value
of all Accumulation Units in the Sub-Accounts of the Inheiritage Account and all
accumulations in the General Account of the Company credited to the Policy. The
Policy Value reflects the amount and frequency of Net Premiums paid, charges and
deductions imposed under the Policy, interest credited to accumulations in the
General Account, investment performance of the Sub-Account(s) to which Policy
Value has been allocated, and partial withdrawals. The Policy Value may be
relevant to the computation of the Death Proceeds. The Policy owner bears the
entire investment risk for amounts allocated to the Inheiritage Account. The
Company does not guarantee a minimum Policy Value. See "SUMMARY - Minimum
Monthly Factor."

The Surrender Value will be the Policy Value less any Debt and applicable
surrender charges. The Surrender Value is relevant, for example, to the
continuation of the Policy and in the computation of the amounts available upon
partial withdrawals, Policy loans or surrender.

DEATH PROCEEDS - The Policy provides for the payment of certain Death Proceeds
to the named Beneficiary upon the death of the last surviving Insured. There
are no Death Proceeds payable on death of the first Insured to die. Prior to
the Final Premium Payment Date, the Death Proceeds will be equal to the Sum
Insured, reduced by any outstanding Debt, partial withdrawals, partial
withdrawal charges, and any Monthly Deductions due and not yet deducted through
the policy month in which the last surviving Insured dies. Two Sum Insured
Options are available. Under Option 1, the Sum Insured is the greater of the
Face Amount of the Policy or the Guideline Minimum Sum Insured. Under Option 2,
the Sum Insured is the greater of the Face Amount of the Policy plus the Policy
Value or the Guideline Minimum Sum Insured. The Guideline Minimum Sum Insured
is equivalent to a percentage (determined each month based on the younger
Insured's Age) of the Policy Value. On or after the Final Premium Payment Date,
the Death Proceeds will equal the Surrender Value. See "THE POLICY - Death
Proceeds."

The Death Proceeds under the Policy may be received in a lump sum or under one
of the Payment Options described in the Policy. See "APPENDIX B - Payment
Options."

FLEXIBILITY TO ADJUST SUM INSURED - Subject to certain limitations, the Policy
owner may adjust the Sum Insured, and thus the Death Proceeds, at any time prior
to the Final Premium Payment Date, by increasing or decreasing the Face Amount
of the Policy. Any change in the Face Amount will affect the monthly cost of
insurance charges and the amount of the surrender charge. If the Face Amount is
decreased, a pro rata surrender charge may be imposed. The Policy Value is
reduced by the amount of the charge. See "THE POLICY - Change In Face Amount."
The minimum increase in Face Amount is $100,000, and any increase may also
require additional Evidence of Insurability satisfactory to the Company. The
increase is subject to a "free look period" and, during the first 24 months
after the increase, to a conversion privilege. See "THE POLICY - Free Look
Period - Conversion Privileges."

ADDITIONAL INSURANCE BENEFITS - The Policy owner has the flexibility to add
additional insurance benefits by rider. These include the Split Option Rider,
Other Insured Rider and Four-Year Term Rider. See "APPENDIX A - Optional
Benefits." The cost of these optional insurance benefits will be deducted from
Policy Value as part of the Monthly Deduction. See "CHARGES AND DEDUCTIONS -
Monthly Deduction From Policy Value."

POLICY ISSUANCE - If at the time of application the Policy owner makes a payment
equal to at least one Minimum Monthly Factor for the Policy as applied for, the
Company will provide conditional insurance, equal to the amount applied for but
not to exceed $500,000. If the application is approved, the Policy will be
issued as of the date the terms of the conditional insurance agreement are met.
If the Policy owner does not wish to make any payment at the time of
application, insurance coverage will not be in force until delivery of the
Policy and payment of sufficient premium during the lifetime of the Insureds.

If any premiums are paid prior to the issuance of the Policy, such premiums will
be held in the Company's General Account. If the Policy owner's application is
approved and the Policy is issued and accepted, the initial premiums held in the
General Account will be credited with interest at a specified rate beginning not
later than the date of receipt of the premiums at the Company's Principal
Office. IF A POLICY IS NOT ISSUED AND ACCEPTED, THE INITIAL PREMIUMS WILL BE

<PAGE>

RETURNED TO THE POLICY OWNER WITHOUT INTEREST.

Upon completion of issuance procedures, delivery of the Policy, and receipt of
any additional premiums, if less than $10,000 of initial Net Premiums have been
received by the Company, such Net Premiums will be allocated to the Sub-Accounts
according to the Policy owner's instructions. If initial Net Premiums equal or
exceed $10,000, or if the Policy provides for planned premium payments during
the first year equal to or exceeding $10,000 annually, $5,000 semi-annually,
$2,500 quarterly or $1,000 monthly, the entire Net Premium plus any interest
earned will be allocated to the Sub-Accounts upon return to the Company of a
Delivery Receipt. See "THE POLICY - Application For A Policy."

MINIMUM MONTHLY FACTOR - The Policy is guaranteed not to lapse prior to the
49th Monthly Deduction after Date of Issue or the effective date of an
increase in the Face Amount, if the Policy owner makes premium payments, less
partial withdrawals and partial withdrawal charges, at least equal to the sum
of the Minimum Monthly Factors for the number of months the Policy increase,
or Policy Change which causes a change in the Minimum Monthly Factor, has
been in force. Policy Changes which cause a change in the Minimum Monthly
Factor are changes in Face Amount and the addition or deletion of a rider.
However, at all other times, payments of such premiums do not guarantee that
the Policy will remain in force. See "THE POLICY - Premium Payments."
Moreover, even during the 48 month periods, if Debt exceeds Policy Value less
surrender charges, then making payments at least equal to the Minimum Monthly
Factors will not prevent the Policy from lapsing.

ALLOCATION OF NET PREMIUMS - Net premiums are the premiums paid less the tax
expense charge and premium expense charge. Net premiums may be allocated to
one or more Sub-Accounts of the Inheiritage Account, to the General Account,
or to any combination of Accounts. The Policy owner bears the investment
risk of Net Premiums allocated to the Sub-Accounts. Allocations may be made
to no more than seven Sub-Accounts at any one time. The minimum allocation
is 1% of Net Premium. All allocations must be in whole numbers and must
total 100%. See "THE POLICY - Allocation Of Net Premiums."

Premiums allocated to the Company's General Account will earn a fixed rate of
interest. Net premiums and minimum interest are guaranteed by the Company.
For more information, see "MORE INFORMATION ABOUT THE GENERAL ACCOUNT."

INVESTMENT OPTIONS - The Policies permit Net Premiums to be allocated either to
the Company's General Account or to the Inheiritage Account. The Inheiritage
Account is currently comprised of eighteen Sub-Accounts ("Sub-Accounts"). Each
Sub-Account invests exclusively in a corresponding Underlying Fund of the
Allmerica Investment Trust ("Trust") managed by Allmerica Investment, the
Variable Insurance Products Fund ("VIP") or the Variable Insurance Products Fund
II ("VIP II") managed by Fidelity Management, T. Rowe Price International
Series, Inc. ("T. Rowe Price") managed by Rowe Price-Fleming International, Inc.
with respect to the International Stock Portfolio or the Delaware Group Premium
Fund, Inc. ("DGPF") managed by Delaware International with respect to the
International Equity Series. In some states, insurance regulations may restrict
the availability of particular Underlying Funds. The Policies permit the Policy
owner to transfer Policy Value among the available Sub-Accounts and between the
Sub-Accounts and the General Account of the Company, subject to certain
limitations described under "THE POLICY - Transfer Privilege."

The Trust, VIP, VIP II, T. Rowe Price and DGPF are open-end, diversified series
management investment companies. Ten different Underlying Funds of the Trust
(each a "Fund") are available under the Policies: the Growth Fund, Investment
Grade Income Fund, Money Market Fund, Equity Index Fund, Government Bond Fund,
Select International Equity Fund, Select Aggressive Growth Fund, Select Growth
Fund, Select Growth and Income Fund and Small Cap Value Fund. Four different
Underlying Funds of VIP (each a "Portfolio") are available under the Policies:
the High Income Portfolio, Equity-Income Portfolio, Growth Portfolio and
Overseas Portfolio. One Underlying Fund of VIP II ("Portfolio") is available
under the Policies: the Asset Manager Portfolio. One Underlying Fund of T. Rowe
Price ("Portfolio") is available under the Policies: the International Stock
Portfolio. One Underlying Fund of DGPF ("Series") is available under the
Policies: the International Equity Series.

Each of the Underlying Funds has its own investment objectives. However,
certain Portfolios have investment objectives similar to certain Funds or
Series. Certain of the Underlying Funds may not be available in all states.

The value of each Sub-Account will vary daily depending upon the performance of
the Underlying Fund in which it invests. Each Sub-Account reinvests dividends
or capital gains distributions received from an Underlying Fund in additional
shares of that Underlying Fund.

There can be no assurance that the investment objectives of the Underlying Funds
can be achieved. For more information, see "DESCRIPTION OF THE COMPANY, THE
INHEIRITAGE ACCOUNT, ALLMERICA INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS
FUND, VARIABLE INSURANCE PRODUCTS FUND II, T. ROWE PRICE INTERNATIONAL SERIES,
INC. AND DELAWARE GROUP PREMIUM FUND, INC."

<PAGE>

the application for the Policy is signed, (b) 10 days after the Policy
owner receives the Policy, or (c) 10 days after the Company mails or personally
delivers a Notice of Withdrawal Rights to the Policy owner.

Upon return of the Policy, the Company will refund an amount equal to the sum
of (a) the difference between the premium, including fees and charges paid,
and any amount allocated to the Inheiritage Account, (b) the value of the
amounts allocated to the Inheiritage Account at the date the Policy is
returned, and (c) any fees or charges imposed on the amounts allocated to the
Inheiritage Account. The amount refunded in (a) above includes any premiums
allocated to the General Account. However, where required by state law, the
Company will refund the entire amount of premiums paid. A free look
privilege also applies after a requested increase in Face Amount. See "THE
POLICY - Free Look Period."

CONVERSION PRIVILEGES - During the first 24 Policy months after the Date of
Issue, subject to certain restrictions, the Policy owner may convert this Policy
to a flexible premium fixed adjustable joint survivorship life insurance policy
by simultaneously transferring all accumulated value in the Sub-Accounts to the
General Account and instructing the Company to allocate all future premiums to
the General Account. A similar conversion privilege is in effect for 24 Policy
months after the date of an increase in Face Amount. Where required by state
law, and at the Policy owner's request, the Company will issue a flexible
premium adjustable joint survivorship life insurance policy. The new policy
will have the same face amount, issue ages, date of issue and risk
classifications as the original Policy. See "THE POLICY - Conversion
Privileges."

PARTIAL WITHDRAWAL - After the first Policy year, the Policy owner may make
partial withdrawals in a minimum amount of $500 from the Policy Value. Under
Option 1, the Face Amount is reduced by the amount of the partial withdrawal,
and a partial withdrawal will not be allowed if it would reduce the Face Amount
below $100,000.

A transaction charge which is described in "CHARGES AND DEDUCTIONS - Charges On
Partial Withdrawal," will be assessed to reimburse the Company for the cost of
processing each partial withdrawal. A partial withdrawal charge may also be
imposed upon a partial withdrawal. Generally, amounts withdrawn during each
Policy year in excess of 10% of the Policy Value ("excess withdrawal") are
subject to the partial withdrawal charge. The partial withdrawal charge is
equal to 5% of the excess withdrawal up to the surrender charge on the date of
withdrawal. If no surrender charge is applicable at the time of withdrawal, no
partial withdrawal charge will be deducted. The Policy's outstanding surrender
charge will be reduced by the amount of the partial withdrawal charge deducted.
See "THE POLICY - Partial Withdrawal" and "CHARGES AND DEDUCTIONS - Charges On
Partial Withdrawal."

PAID-UP INSURANCE OPTION - The Policy owner who elects this option will have,
without further premiums due, joint survivorship insurance coverage for the
lifetime of the Insureds, with the Death Proceeds payable on the death of the
last surviving Insured. The amount of Paid-Up Insurance, the basis of values,
and the effect on other Policy rights are stated in "THE POLICY - Paid-Up
Insurance Option."

LOAN PRIVILEGE - The Policy owner may borrow against the Policy Value. The
total amount the Policy owner may borrow is the Loan Value. Loan Value in the
first Policy Year is 75% of an amount equal to Policy Value less surrender
charge, Monthly Deductions, and interest on Debt to the end of the Policy year.
Thereafter, Loan Value is 90% of an amount equal to Policy Value less the
surrender charge.

Policy loans will be allocated among the General Account and the Sub-Accounts
in accordance with the Policy owner's instructions. If no allocation is made
by the Policy owner, the Company will make a Pro Rata Allocation among the
Accounts. In either case, Policy Value equal to the Policy loan will be
transferred from the appropriate Sub-Account(s) to the General Account, and
will earn monthly interest at an effective annual rate of at least 6%.
Therefore, a Policy loan may have a permanent impact on the Policy Value even
though it is eventually repaid. Although the loan amount is a part of the
Policy Value, the Death Proceeds will be reduced by the amount of outstanding
Debt at the death of the last surviving Insured. Policy loans will bear
interest at a fixed rate of 8% per year, due and payable in arrears at the
end of each Policy year. If interest is not paid when due, it will be added
to the loan balance. Policy loans may be repaid at any time. The Policy
owner must notify the Company if a payment is a loan repayment; otherwise, it
will be considered a premium payment. Any partial or full repayment of Debt
by the Policy owner will be allocated to the General Account or Sub-Accounts
in accordance with the Policy owner's instructions. If the Policy owner does
not specify an allocation, the Company will allocate the loan repayment in
accordance with the Policy owner's most recent premium allocation
instructions. See "POLICY LOANS."

POLICY LAPSE AND REINSTATEMENT - The failure to make premium payments will
not cause a Policy to lapse unless: (a) the Surrender Value is insufficient
to cover the next Monthly Deduction plus loan interest accrued, if any, or
(b) Debt exceeds Policy Value less surrender charges. A 62-day grace period
applies to each situation. Except for the situation described in (b) above,
the Policy will not lapse prior to the 49th Monthly Deduction following the
Date of Issue or the effective date of an increase in Face Amount, if the
Policy owner makes premium payments, less Debt, partial withdrawals and
partial withdrawal charges, at least equal to the sum of the Minimum Monthly
Factors for the number of months the Policy, increase, or Policy Change which
causes a change in the Minimum Monthly Factor, has been in force. Subject to
certain conditions (including Evidence of Insurability showing that the
Insureds are insurable according to the Company's underwriting rules and the
payment of sufficient premium), a Policy may be reinstated at any time within
3 years

<PAGE>

after the expiration of the grace period and prior to the Final Premium
Payment Date. The Company Reserves the right to increase the Minimum Monthly
Factor upon reinstatement. See "POLICY TERMINATION AND REINSTATEMENT."

TAX TREATMENT - A Policy is generally subject to the same federal income tax
treatment as a conventional fixed benefit life insurance policy. Under current
tax law, to the extent there is no change in benefits, the Policy owner will be
taxed on Policy Value withdrawn from the Policy only to the extent that the
amount withdrawn exceeds the total premiums paid. Withdrawals in excess of
premiums paid will be treated as ordinary income. During the first 15 Policy
years, however, an "interest first" rule applies to any distribution of cash
that is required under Section 7702 of the Internal Revenue Code because of a
reduction of benefits under the Policy. Death Proceeds under the Policy are
excludable from the gross income of the Beneficiary, but in some circumstances
the Death Proceeds or the Policy Value may be subject to federal estate tax.
See "FEDERAL TAX CONSIDERATIONS - Taxation Of The Policies."

A Policy offered by this prospectus may be considered a "modified endowment
contract" if it fails a " 7 - pay " test. A Policy fails to satisfy the 7 - pay
test if the cumulative premiums paid under the Policy at any time during the
first seven policy years exceeds the sum of the net level premiums that would
have been paid, had the Policy provided for paid-up future benefits after the
payment of seven level premiums. If the Policy is considered a modified
endowment contract, all distributions (including policy loans, partial
withdrawals, surrenders or assignments) will be taxed on an "income-first"
basis. In addition, with certain exceptions, an additional 10% penalty will be
imposed on the portion of any distribution that is includible in income. For
more information, see "FEDERAL TAX CONSIDERATIONS - Modified Endowment
Contracts."

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

The purpose of the Policy is to provide insurance protection for the Beneficiary
named therein. This Summary is intended to provide only a very brief overview
of the more significant aspects of the Policy. Further detail is provided in
this prospectus and in the Policy. No claim is made that the Policy is in any
way similar or comparable to a systematic investment plan of a mutual fund. The
Policy together with its attached application constitutes the entire agreement
between the Company and the Policy owner.

PERFORMANCE INFORMATION

The Policies were first offered to the public in 1994. However, the Company may
advertise "Total Return" and "Average Annual Total Return" performance
information based on the periods that the Underlying Funds have been in
existence. The results for any period prior to the Policies being offered will
be calculated as if the Policies had been offered during that period of time,
with all charges assumed to be those applicable to the Sub-Accounts, the
Underlying Funds, and (in Table I) under a "representative" Policy that is
surrendered at the end of the applicable period. FOR MORE INFORMATION ON
CHARGES UNDER THE POLICIES, SEE CHARGES AND DEDUCTIONS.

In each Table below, "One-Year Total Return" refers to the total of the income
generated by a sub-account, based on certain charges and assumptions as
described in the respective tables, for the one-year period ended December 31,
1994. "Average Annual Total Return" is based on the same charges and
assumptions, but reflects the hypothetical annually compounded return that would
have produced the same cumulative return if the Sub-Account's performance had
been constant over the entire period. Because average annual total returns tend
to smooth out variations in annual performance return, they are not the same as
actual year-by-year results.

TABLE I: SUB-ACCOUNT PERFORMANCE
NET OF ALL CHARGES AND ASSUMING SURRENDER OF THE POLICY
-------------------------------------------------------

The following performance information is based on the periods that the
Underlying Funds have been in existence. The data is net of expenses of the
Underlying Funds, all Sub-Account charges, and all Policy charges (including
surrender charges) for a representative Policy. It is assumed that the Insureds
are male, Age 45, standard (nonsmoker) Premium Class, and female, Age 43,
standard (nonsmoker) Premium Class, that the Face Amount of the Policy is
$500,000, that an annual premium payment of $5,500 (approximately one Guideline
Annual Premium) was made at the beginning of each Policy year, that ALL premiums
were allocated to EACH Sub-Account individually, and that there was a full
surrender of the Policy at the end of the applicable period.

<PAGE>

Average Annual Total Return as of 12/31/95
- ------------------------------------------------------------------------------------------------------
Ten Years
Underlying One-Year 3 years 5 years or Since Years Since
Fund Total return Inception Inception*
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth -73.63% -14.32% 7.05% 12.28% 10.00
Investment Grade -87.72% -19.89% -0.52% 6.18% 10.00
Money Market -99.02% -25.36% -6.98% 2.37% 10.00
Equity Index -70.45% -11.31% -0.29% 8.37% 5.26
Government Bond -92.22% -22.36% N/A -6.86% 4.35
Select Aggressive Growth -74.12% -10.10% N/A -0.41% 3.36
Select Growth -81.37% -21.05% N/A -13.30% 3.36
Select Growth and Income -75.97% -13.26% N/A -11.15% 3.36
Small Cap Value -87.94% N/A N/A -21.73% 2.67
Select Int'l Equity N/A N/A N/A -53.39% 1.67
Select Cap. Appreciation N/A N/A N/A -77.13% 0.67
VIP High Income -85.01% -13.94% 9.96% 8.56% 10.00
VIP Equity Income -71.48% -4.98% 12.66% 9.80% 9.23
VIP Growth -71.22% -7.85% 12.06% 11.38% 9.23
VIP Overseas -95.40% -10.49% -2.64% 3.21% 8.92
VIP II Asset Manager -88.55% -17.46% 2.87% 4.55% 6.32
T. Rowe Price Int'l Stock -93.99% N/A N/A -60.72% 1.58
DGPF Int'l Equity -91.60% N/A N/A -17.20% 3.17
- ------------------------------------------------------------------------------------------------------
</TABLE>

Performance information reflects only the performance of a hypothetical
investment during the particular time period on which the calculations are
based. One-Year total return and average annual total return figures are based
on historical earnings and are not intended to indicate future performance.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio of the
Underlying Fund in which a Sub-Account invests and the market conditions during
the given time period, and should not be considered as a representation of what
may be achieved in the future.

TABLE II: SUB-ACCOUNT PERFORMANCE
EXCLUDING MONTHLY POLICY CHARGES AND SURRENDER CHARGES
------------------------------------------------------

The following performance information is based on the periods that the
Underlying Funds have been in existence. The performance information is net of
total Underlying Fund expenses, all Sub-Account charges, and premium tax and
expense charges. THE DATA DOES NOT REFLECT MONTHLY CHARGES UNDER THE POLICIES
OR SURRENDER CHARGES. It is assumed that an annual premium payment of $5,500
(approximately one Guideline Annual Premium) was made at the beginning of each
Policy year and that ALL premiums were allocated to EACH Sub-Account
individually.

Average Annual Total Return as of 12/31/95
- ------------------------------------------------------------------------------------------------------

10 Years
Underlying One-Year 3 years 5 years or Since Years Since
Fund Total return Inception Inception*
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth 31.26% 11.06% 15.02% 14.03% 10.00
Investment Grade 16.47% 6.95% 8.61% 8.27% 10.00
Money Market 4.61% 3.04% 3.34% 4.73% 10.00
Equity Index 34.60% 13.33% 8.80% 15.56% 5.26
Government Bond 11.75% 5.17% N/A 6.47% 4.35
Select Aggressive Growth 30.75% 14.25% N/A 18.77% 3.36
Select Growth 23.14% 6.11% N/A 8.73% 3.36
Select Growth and Income 28.81% 11.85% N/A 10.36% 3.36
Small Cap Value 16.24% N/A N/A 8.86% 2.67
Select Int'l Equity 18.24% N/A N/A 7.74% 1.67
Select Capital Appreciation N/A N/A N/A 38.47% 0.67
VIP High Income 19.32% 11.34% 17.54% 10.50% 10.00
VIP Equity Income 33.52% 18.21% 19.91% 12.01% 9.23
VIP Growth 33.79% 15.98% 19.38% 13.50% 9.23
VIP Overseas 8.41% 13.95% 6.86% 6.06% 8.92
VIP II Asset Manager 15.60% 8.73% 11.45% 9.95% 6.32
T. Rowe Price Int'l Stock 9.89% N/A N/A 6.06% 1.58
DGPF Int'l Equity 12.40% N/A N/A 7.45% 3.17
- ------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Performance information reflects only the performance of a hypothetical
investment during the particular time period on which the calculations are
based. One-year total return and average annual total return figures are based
on historical earnings and are not intended to indicate future performance.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the portfolio of the
Underlying Fund in which a Sub-Account invests and the market conditions during
the given time period, and should not be considered as a representation of what
may be achieved in the future.

- - - -

*The inception dates for the Underlying Funds are: 4/29/85 for Growth,
Investment Grade and Money Market; 9/28/90 for Equity Index; 8/26/91 for
Government Bond; 8/21/92 for Select Aggressive Growth, Select Growth, and
Select Growth and Income; 4/30/93 for Small Cap Value; 5/01/94 for Select
International Equity; 4/28/95 for Select Capital Appreciation, 10/09/86 for
VIP Equity-Income and VIP Growth; 9/19/85 for VIP High Income; 1/28/87 for
VIP Overseas; 9/06/89 for VIP II Asset Manager; 10/29/92 for DGPF
International Equity; and 3/31/94 for the T. Rowe Price International Stock.

Performance information may be compared, in reports and promotional literature,
to: (i) the Standard & Poor's 500 Stock Index ("S & P 500"), Dow Jones
Industrial Average ("DJIA"), Shearson Lehman Aggregate Bond Index or other
unmanaged indices so that investors may compare results with those of a group of
unmanaged securities widely regarded by investors as representative of the
securities markets in general; (ii) other groups of variable life separate
accounts or other investment products tracked by Lipper Analytical Services, a
widely used independent research firm which ranks mutual funds and other
investment products by overall performance, investment objectives, and assets,
or tracked by other services, companies, publications, or persons, such as
Morningstar, Inc., who rank such investment products on overall performance or
other criteria; or (iii) the Consumer Price Index (a measure for inflation) to
assess the real rate of return from an investment. Unmanaged indices may assume
the reinvestment of dividends but generally do not reflect deductions for
administrative and management costs and expenses.

The Company may provide information on various topics of interest to Policy
owners and prospective Policyowners in sales literature, periodic publications
or other materials. These topics may include the relationship between sectors of
the economy and the economy as a whole and its effect on various securities
markets, investment strategies and techniques (such as value investing, market
timing, dollar cost averaging, asset allocation, constant ratio transfer and
account rebalancing), the advantages and disadvantages of investing in tax-
deferred and taxable investments, customer profiles and hypothetical purchase
and investment scenarios, financial management and tax and retirement planning,
and investment alternatives to certificates of deposit and other financial
instruments.

<PAGE>

DESCRIPTION OF THE COMPANY, THE INHEIRITAGE ACCOUNT,
ALLMERICA INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II
T. ROWE PRICE INTERNATIONAL SERIES, INC. AND
DELAWARE GROUP PREMIUM FUND, INC.

THE COMPANY - The Company is a life insurance company organized under the
laws of Delaware in July, 1974. Its Principal Office is located at 440
Lincoln Street, Worcester, Massachusetts 01653, Telephone 508-855-1000. The
Company is subject to the laws of the state of Delaware governing insurance
companies and to regulation by the Commissioner of Insurance of Delaware. In
addition, the Company is subject to the insurance laws and regulations of
other states and jurisdictions in which it is licensed to operate. As of
December 31, 1995, the Company had over $5 billion in assets and over $18
billion of life insurance in force.

Effective October 1, 1995, the Company changed its name from SMA Life Assurance
Company to Allmerica Financial Life Insurance and Annuity Company. The Company
is an indirect wholly-owned subsidiary of First Allmerica Financial Life
Insurance Company ("First Allmerica"), which in turn is a wholly-owned
subsidiary of Allmerica Financial Corporation ("AFC"). First Allmerica,
originally organized under the laws of Massachusetts in 1844 as a mutual life
insurance company and known as State Mutual Life Assurance Company of America,
converted to a stock life insurance company on October 16, 1995 and adopted its
present name. First Allmerica is the fifth oldest life insurance company in
America. As of December 31, 1995 First Allmerica and its subsidiaries
(including the Company) had over $ 11 billion in combined assets and over
$ 35.2 billion in life insurance in force.

THE INHEIRITAGE ACCOUNT - The Inheiritage Account was authorized by vote of the
Board of Directors of the Company on September 15, 1993. The Inheiritage
Account is registered with the Securities and Exchange Commission ("Commission")
as a unit investment trust under the Investment Company Act of 1940 ("1940
Act"). Such registration does not involve the supervision of its management or
investment practices or policies of the Inheiritage Account or the Company by
the Commission.

The assets used to fund the variable portion of the Policies are set aside in
the Inheiritage Account and are kept separate from the general assets of the
Company. Under Delaware law, assets equal to the reserves and other liabilities
of the Inheiritage Account may not be charged with any liabilities arising out
of any other business of the Company. The Inheiritage Account currently has
eighteen Sub-Accounts. Each Sub-Account is administered and accounted for as
part of the general business of the Company, but the income, capital gains, or
capital losses of each Sub-Account are allocated to such Sub-Account, without
regard to other income, capital gains, or capital losses of the Company or the
other Sub-Accounts. Each Sub-Account invests exclusively in a corresponding
investment portfolio ("Underlying Fund") of the Allmerica Investment Trust, the
Variable Insurance Products Fund, the Variable Insurance Products Fund II, T.
Rowe Price International Series, Inc. or the Delaware Group Premium Fund, Inc.
("Underlying Investment Companies"). The assets of each Underlying Fund are
held separate from the assets of the other Underlying Funds. Each Underlying
Fund operates as a separate investment vehicle and the income or losses of one
Underlying Fund generally have no effect on the investment performance of
another Underlying Fund. Shares of each Underlying Fund are not offered to
the general public but solely to separate accounts of life insurance companies,
such as the Inheiritage Account. Each Sub-Account has two sub-divisions. One
sub-division applies to Policies during their first fifteen Policy years, which
are subject to a Inheiritage Account administrative charge. See "CHARGES AND
DEDUCTIONS - Charges Against Assets of the Inheiritage Account." Thereafter,
such Policies are automatically allocated to the second sub-division to account
for the elimination of the Inheiritage Account administrative charge.

The Company reserves the right, subject to compliance with applicable law, to
change the names of the Sub-Accounts and Inheiritage Account.

ALLMERICA INVESTMENT TRUST - Allmerica Investment Trust (the "Trust") is an
open-end, diversified management investment company registered with the
Commission under the 1940 Act. Such registration does not involve supervision
by the Commission of the investments or investment policy of the Trust or its
separate investment Funds.

The Trust was established as a Massachusetts business trust on October 11,
1984, for the purpose of providing a vehicle for the investment of assets of
various separate accounts established by First Allmerica, the Company, or
other affiliated insurance companies. Eleven investment portfolios ("Funds")
of the Trust are available under the Policies, each issuing a series of
shares: the Growth Fund, Investment Grade Income Fund, Money Market Fund,
Equity Index Fund, Government Bond Fund, Select International Equity Fund,
Select Aggressive Growth Fund, Select Capital Appreciation Fund, Select
Growth Fund, Select Growth and Income Fund, and Small Cap Value Fund.
Certain of the Funds may not be available in all states.

Allmerica Investment Management Company, Inc. ("Allmerica Investment") serves
as investment adviser of the Trust and has entered into

15
<PAGE>

sub-advisory agreements with other investment managers ("Sub-Advisers") who
manage the investments of the Funds. See "INVESTMENT ADVISORY SERVICES TO
THE TRUST."

VARIABLE INSURANCE PRODUCTS FUND - Variable Insurance Products Fund ("VIP"),
managed by Fidelity Management & Research Company ("Fidelity Management"), is
an open-end, diversified, management investment company organized as a
Massachusetts business trust on November 13, 1981 and registered with the
Commission under the 1940 Act. Four of its investment portfolios are
available under the Policies: High Income Portfolio, Equity-Income Portfolio,
Growth Portfolio and Overseas Portfolio.

Various Fidelity companies perform certain activities required to operate
VIP. Fidelity Management, a registered investment adviser under the
Investment Advisers Act of 1940, is one of America's largest investment
management organizations and has its principal business address at 82
Devonshire Street, Boston MA. It is composed of a number of different
companies, which provide a variety of financial services and products.
Fidelity Management is the original Fidelity company, founded in 1946. It
provides a number of mutual funds and other clients with investment research
and portfolio management services. The Portfolios of VIP as part of their
operating expenses pay an investment management fee to Fidelity Management.
See "INVESTMENT ADVISORY SERVICES TO VIP AND VIP II."

VARIABLE INSURANCE PRODUCTS FUND II - Variable Insurance Products Fund II
("VIP II"), managed by Fidelity Management (see discussion under "VARIABLE
INSURANCE PRODUCTS FUND"), is an open-end , diversified, management
investment company organized as a Massachusetts business trust on March 21,
1988 and registered with the Commission under the 1940 Act. One of its
investment portfolios is available under the Policies: the Asset Manager
Portfolio.

T. ROWE PRICE INTERNATIONAL SERIES, INC. - T. Rowe Price International
Series, Inc. ("T. Rowe Price"), managed by Rowe Price-Fleming International,
Inc. ("Price-Fleming") (See "INVESTMENT ADVISORY SERVICES TO T. ROWE PRICE"),
is an open-end, diversified, management investment company organized as a
Maryland corporation in 1994 and registered with the Commission under the
1940 Act. One of its investment portfolios is available under the Policies:
the International Stock Portfolio.

DELAWARE GROUP PREMIUM FUND, INC.- Delaware Group Premium Fund, Inc. ("DGPF")
is an open-end, diversified management investment company registered with the
Commission under the 1940 Act. Such registration does not involve
supervision by the Commission of the investments or investment policy of DGPF
or its separate investment series.

DGPF was established to provide a vehicle for the investment of assets of
various separate accounts supporting variable insurance policies. One
investment portfolio ("Series") is available under the Policies, the
International Equity Series, which may not be available in all states.

The Investment adviser for the International Equity Series is Delaware
International Advisers Ltd. ("Delaware International"). See "INVESTMENT
ADVISORY SERVICES TO DGPF."

INVESTMENT OBJECTIVES AND POLICIES - A summary of investment objectives of
each of the Underlying Funds is set forth below. MORE DETAILED INFORMATION
REGARDING THE INVESTMENT OBJECTIVES, RESTRICTIONS AND RISKS, EXPENSES PAID BY
THE UNDERLYING FUNDS AND OTHER RELEVANT INFORMATION REGARDING THE UNDERLYING
INVESTMENT COMPANIES MAY BE FOUND IN THEIR RESPECTIVE PROSPECTUSES, WHICH
ACCOMPANY THIS PROSPECTUS AND SHOULD BE READ CAREFULLY BEFORE INVESTING. The
Statements of Additional Information of the Underlying Funds are available
upon request. There can be no assurance that the investment objectives of
the Underlying funds can be achieved.

GROWTH FUND - The Growth Fund of the Trust is invested in common stocks and
securities convertible into common stocks that are believed to represent
significant underlying value in relation to current market prices. The
objective of the Growth Fund is to achieve long-term growth of capital.
Realization of current investment income, if any, is incidental to this
objective.

INVESTMENT GRADE INCOME FUND - The Investment Grade Income Fund of the Trust
is invested in a diversified portfolio of fixed income securities with the
objective of seeking as high a level of total return (including both income
and realized and unrealized capital gains) as is consistent with prudent
investment management.

MONEY MARKET FUND - The Money Market Fund of the Trust is invested in a
diversified portfolio of high-quality, short-term debt instruments with the
objective of obtaining maximum current income consistent with the
preservation of capital and liquidity.

EQUITY INDEX FUND - The Equity Index Fund of the Trust seeks to provide
investment results that correspond generally to the composite price and yield
performance of United States publicly traded common stocks. The Equity Index
Fund seeks to achieve its objective by attempting to replicate the composite
price and yield performance

16
<PAGE>

of the Standard & Poor's 500 Composite Stock Price Index.

GOVERNMENT BOND FUND - The Government Bond Fund of the Trust has the
investment objectives of seeking high income, preservation of capital and
maintenance of liquidity, primarily through investments in debt instruments
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.

SELECT AGGRESSIVE GROWTH FUND - The Select Aggressive Growth Fund of the
Trust seeks above-average capital appreciation by investing primarily in
common stocks of companies which are believed to have significant potential
for capital appreciation.

SELECT GROWTH FUND - The Select Growth Fund of the Trust seeks to achieve
growth of capital by investing in a diversified portfolio consisting
primarily of common stocks selected on the basis of their long-term growth
potential.

SELECT GROWTH AND INCOME FUND - The select Growth and Income Fund of the
Trust seeks a combination of long-term growth of capital and current income.
The Fund will invest primarily in dividend-paying common stocks and
securities convertible into common stocks.

SMALL CAP VALUE FUND - The Small Cap Value Fund of the Trust seeks long-term
growth by investing principally in a diversified portfolio of common stocks
of smaller, faster-growing companies considered to be attractively valued in
the smaller company sector of the market.

SELECT INTERNATIONAL EQUITY FUND - The Select International Equity Fund of
the Trust seeks maximum long-term total return (capital appreciation and
income) primarily by investing in common stocks of established non-U.S.
companies.

SELECT CAPITAL APPRECIATION FUND - The Select Capital Appreciation Fund of
the Trust seeks long-term growth of capital in a manner consistent with the
preservation of capital. Realization of income is not a significant
investment consideration and any income realized on the Fund's investments
will be incidental to its primary objective. The Fund will invest primarily
in common stock of industries and companies which are experiencing favorable
demand for their products and services, and which operate in a favorable
competitive environment and regulatory climate. The Sub-Adviser for the
Select Capital Appreciation Fund is Janus Capital Corporation.

HIGH INCOME PORTFOLIO - The High Income Portfolio of VIP seeks to obtain a
high level of current income by investing primarily in high-yielding,
lower-rated fixed-income securities (commonly referred to as "junk bonds"),
while also considering growth of capital. These securities are often
considered to be speculative and involve greater risk of default or price
changes than securities assigned a high quality rating. For more information
about these lower-rated securities, see "Risks of Lower-Rated Debt
Securities" in the VIP prospectus.

EQUITY-INCOME PORTFOLIO - The Equity-Income Portfolio of VIP seeks reasonable
income by investing primarily in income-producing equity securities. In
choosing these securities, the Portfolio will also consider the potential for
capital appreciation. The Portfolio's goal is to achieve a yield which
exceeds the composite yield on the securities comprising the Standard &
Poor's 500 Composite Stock Price Index. The Portfolio may invest in high
yielding, lower-rated fixed-income securities (commonly referred to as "junk
bonds") which are subject to greater risk than investments in higher-rated
securities. For a further discussion of lower-rated securities, please see
"Risks of Lower-Rated Debt Securities" in the VIP prospectus.

GROWTH PORTFOLIO - The Growth Portfolio of VIP seeks to achieve capital
appreciation. The Portfolio normally purchases common stocks, although its
investments are not restricted to any one type of security. Capital
appreciation may also be found in other types of securities, including bonds
and preferred stocks.

OVERSEAS PORTFOLIO - The Overseas Portfolio of VIP seeks long-term growth of
capital primarily through investments in foreign securities and provides a
means for aggressive investors to diversify their own portfolios by
participating in companies and economies outside of the United States.

ASSET MANAGER PORTFOLIO - The Asset Manager Portfolio of VIP II seeks high
total return with reduced risk over the long-term by allocating its assets
among stocks, bonds and short-term fixed-income instruments.

INTERNATIONAL STOCK PORTFOLIO - The International Stock Portfolio of T. Rowe
Price seeks long-term growth of capital through investments primarily in
common stocks of established, non-U.S. companies.

INTERNATIONAL EQUITY SERIES - The International Equity Series of DGPF seeks
long-term growth without undue risk to principal by investing primarily in
equity securities of foreign issuers providing the potential for capital
appreciation and income.

17
<PAGE>

CERTAIN PORTFOLIOS HAVE INVESTMENT OBJECTIVES AND/OR POLICIES SIMILAR TO
THOSE OF CERTAIN FUNDS OR SERIES. THEREFORE, TO CHOOSE THE SUB-ACCOUNTS
WHICH WILL BEST MEET THE POLICY OWNER'S NEEDS AND OBJECTIVES, CAREFULLY READ
THE PROSPECTUSES OF THE TRUST, VIP, VIP II, T. ROWE PRICE AND DGPF ALONG WITH
THIS PROSPECTUS. IN SOME STATES, INSURANCE REGULATIONS MAY RESTRICT THE
AVAILABILITY OF PARTICULAR SUB-ACCOUNTS.

If required in the Policy owner's state, in the event of a material change in
the investment policy of a Sub-Account or the Underlying Fund in which it
invests, the Policy owner will be notified of the change. If the Policy
owner has Policy Value in that Sub-Account, the Company will transfer it
without charge on written request by the Policy owner to another Sub-Account
or to the General Account. The Company must receive the Policy owner's
written request within sixty (60) days of the later of (a) the effective date
of such change in the investment policy or (b) the receipt of the notice of
the Policy owner's right to transfer. The Policy owner may then change the
premium and deduction allocation percentages.

INVESTMENT ADVISORY SERVICES TO THE TRUST - The overall responsibility for
the supervision of the affairs of the Trust vests in the Trustees. The
Trustees have entered into a Management Agreement with Allmerica Investment
Management Company, Inc. ("Allmerica Investment"), an indirect wholly-owned
subsidiary of First Allmerica, to handle the day-to-day affairs of the Trust.
Allmerica Investment, subject to review by the Trustees, is responsible for
the general management of the Funds. Allmerica Investment is also obligated
to perform certain administrative and management services for the Trust,
furnishes to the Trust all necessary office space, facilities, and equipment,
and pays the compensation, if any, of officers and Trustees who are
affiliated with Allmerica Investment.

Other than the expenses specifically assumed by Allmerica Investment under
the Management Agreement, all expenses incurred in the operation of the Trust
are borne by it, including fees and expenses associated with the registration
and qualification of the Trust's shares under the Securities Act of 1933,
other fees payable to the Commission, independent public accountant, legal
and custodian fees, association membership dues, taxes, interest, insurance
premiums, brokerage commission, fees and expenses of the Trustees who are not
affiliated with Allmerica Investment, expenses for proxies, prospectuses, and
reports to shareholders, and other expenses.

18
<PAGE>

The Sub-Advisers of each of the Funds are as follows:

For providing its services under the Management Agreement, Allmerica Investment
will receive a fee, computed daily at an annual rate based on the average daily
net asset value of each Fund as follows:

<TABLE>
<CAPTION>
Fund Net Asset Value Rate
---- --------------- ----
<S> <C> <C>
Growth First $50 million 0.60%
$50 - 250 million 0.50%
Over $250 million 0.35%

Investment Grade Income First $50 million 0.50%
$50 - 250 million 0.35%
Over $250 million 0.25%

Money Market First $50 million 0.35%
$50 - 250 million 0.25%
Over $250 million 0.20%

Equity Index First $50 million 0.35%
$50 - 250 million 0.30%
Over $250 million 0.25%

Government Bond * 0.50%

Select International Equity * 1.00%

Select Aggressive Growth * 1.00%

Select Capital Appreciation * 1.00%

Select Growth * 0.85%

Select Growth and Income * 0.75%

Small Cap Value * 0.85%
</TABLE>

* For the Government Bond Fund, Select International Equity Fund, Select
Aggressive Growth Fund, Select Capital Appreciation Fund, Select Growth Fund,
Select Growth and Income Fund and Small Cap Value Fund, each rate applicable to
Allmerica Investment does not vary according to the level of assets in the Fund.

19
<PAGE>

Allmerica Investment's fee computed for each Fund will be paid from the assets
of such Fund. Allmerica Investment is solely responsible for the payment of all
fees for investment management services to the Sub-Advisers, who will receive
from Allmerica Investment a fee, computed daily at an annual rate based on the
average daily net asset value of each Fund as follows:

<TABLE>
<CAPTION>
Sub-Adviser Fund Net Asset Value Rate
----------- ---- --------------- ----
<S> <C> <C> <C>
Miller, Anderson Growth * *
& Sherrerd

Allmerica Asset Investment Grade ** 0.20%
Management, Inc. Income

Allmerica Asset Money Market ** 0.10%
Management, Inc.

Allmerica Asset Equity Index ** 0.10%
Management, Inc.

Allmerica Asset Government Bond ** 0.20%
Management, Inc.

Bank of Ireland Select First $50 million 0.45%
Asset Management International Next $50 million 0.40%
Limited Equity Fund Over $100 million 0.30%

Nicholas-Applegate Select Aggressive ** 0.60%
Capital Growth
Management

Janus Capital Select Capital First $100 million 0.60%
Corporation Appreciation Over $100 million 0.55%

United Asset Select Growth First $50 million 0.50%
Management $50 - 100 million 0.45%
Corporation $150 - 250 million 0.35%
$250 - 350 million 0.30%
Over $350 million 0.25%

John A. Levin & Select Growth and First $100 million 0.40%
Co., Inc. Income Next $200 million 0.25%
Over $300 million 0.30%

David L. Babson Small Cap Value ** 0.50%
& Co. Inc.

</TABLE>

* Allmerica Investment will pay a fee to Miller, Anderson & Sherrerd based on
the aggregate assets of the Growth Fund and certain other accounts of First
Allmerica and its affiliates (collectively, the "Affiliated Accounts") which are
managed by Miller, Anderson & Sherrerd, under the following schedule:

<TABLE>
<CAPTION>
Aggregate Average Assets Rate
------------------------ ----
<S> <C>
First $50 million 0.500%
$50 - 100 million 0.375%
$100 - 500 million 0.250%
$500 - 850 million 0.200%
Over $850 million 0.150%

</TABLE>

** For the Investment Grade Income Fund, Money Market Fund, Equity Index Fund,
Government Bond Fund, Select Aggressive Growth Fund and Small Cap Value Fund,
each rate applicable to the Sub-Advisers does not vary according to the level of
assets in the Fund.

20
<PAGE>

The prospectus of the Trust contains additional information concerning the
Funds, including information concerning additional expenses paid by the Funds,
and should be read in conjunction with this prospectus.

INVESTMENT ADVISORY SERVICES TO VIP AND VIP II- For managing investments and
business affairs, each Portfolio pays a monthly fee to Fidelity Management.

The prospectuses of VIP and VIP II contain additional information concerning the
Portfolios, including information concerning additional expenses paid by the
Portfolios, and should be read in conjunction with this prospectus.

VIP AND VIP II PORTFOLIOS - The High Income Portfolio pays a monthly fee to
Fidelity Management at an annual fee rate made up of the sum of two components:

1. A group fee rate based on the monthly average net assets of all the
mutual funds advised by Fidelity Management. On an annual basis this
rate cannot rise above 0.37%, and drops as total assets in all these
funds rise.

2. An individual fund fee rate of 0.45% of the High Income Portfolio's
average net assets throughout the month. One-twelfth of the annual
management fee rate is applied to net assets averaged over the most
recent month, resulting in a dollar amount which is the management fee
for that month.

The Equity-Income, Growth, Asset Manager, and Overseas Portfolios' fee rates are
each made of two components:

1. A group fee rate based on the monthly average net assets of all of the
mutual funds advised by Fidelity Management. On an annual basis, this
rate cannot rise above 0.52%, and drops as total assets in all these
mutual funds rise.

2. An individual Portfolio fee rate of 0.20% for the Equity-Income
Portfolio, 0.30% for the Growth Portfolio, 0.40% for the Asset Manager
Portfolio, and 0.45% for the Overseas Portfolio.

One-twelfth of the sum of these two rates is applied to the respective
Portfolio's net assets averaged over the most recent month, giving a dollar
amount which is the fee for that month.

Thus, the High Income Portfolio may have a fee of as high as 0.82% of its
average net assets. The Equity-Income Portfolio may have a fee of as high as
0.72% of its average net assets. The Growth Portfolio may have a fee of as high
as 0.82% of its average net assets. The Asset Manager Portfolio may have a fee
as high as 0.92% of its average net assets. The Overseas Portfolio may have a
fee of as high as 0.97% of its average net assets. The actual fee rate may be
less depending on the total assets in the funds advised by Fidelity Management.

INVESTMENT ADVISORY SERVICES TO T. ROWE PRICE - The Investment Adviser for
the T. Rowe Price International Stock Portfolio is Rowe Price-Fleming
International, Inc. ("Price-Fleming"). Price-Fleming, founded in 1979 as a
joint venture between T. Rowe Price Associates, Inc. and Robert Fleming
Holdings, Limited, is one of America's largest international mutual fund
asset managers with approximately $20 billion under management in its offices
in Baltimore, London, Tokyo and Hong Kong. To cover investment management and
operating expenses, the International Stock Portfolio pays Price-Fleming a
single, all-inclusive fee of 1.05% of its average daily net assets.

INVESTMENT ADVISORY SERVICES TO DGPF - Each Series of DGPF pays an investment
adviser an annual fee for managing the portfolios and making the investment
decisions for the Series. The investment adviser for the International Equity
Series is Delaware International Advisers Ltd. ("Delaware International"). The
annual fee paid by the International Equity Series to Delaware International is
equal to 0.75% of the average daily net assets of the Series.

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS - The Company reserves the
right, subject to applicable law, to make additions to, deletions from, or
substitutions for the shares that are held in the Sub-Accounts or that the
Sub-Accounts may purchase. If the shares of any Underlying Fund are no longer
available for investment or if in the Company's judgment further investment in
any Underlying Fund should become inappropriate in view of the purposes of the
Inheiritage Account or the affected Sub-Account, the Company may redeem the
shares of that Underlying Fund and substitute shares of another registered
open-end management company. The Company will not substitute any shares
attributable to a Policy interest in a Sub-Account without notice to the Policy
owner and prior approval of the Commission and state insurance authorities, to
the extent required by the 1940 Act or other applicable law. The Inheiritage
Account may, to the extent permitted by law, purchase other securities for other
policies or permit a conversion between policies upon request by a Policy owner.

21
<PAGE>

discretion, establish new Sub-Accounts or eliminate one or more Sub-Accounts
if marketing needs, tax considerations or investment conditions warrant. Any
new Sub-Accounts may be made available to existing Policyowners on a basis to
be determined by the Company.

Shares of the Funds of the Trust are also issued to separate accounts of the
Company and its affiliates which issue variable annuity contracts ("mixed
funding"). Shares of the Portfolios of VIP and VIP II, the portfolio of T. Rowe
Price and the Series of DGPF are also issued to other unaffiliated insurance
companies ("shared funding"). It is conceivable that in the future such mixed
funding or shared funding may be disadvantageous for variable life Policyowners
or variable annuity Policyowners. Although the Company and the Underlying
Investment Companies do not currently foresee any such disadvantages to either
variable life insurance Policyowners or variable annuity Policyowners, the
Company and the respective Trustees intend to monitor events in order to
identify any material conflicts between such Policyowners and to determine what
action, if any, should be taken in response thereto. If the Trustees were to
conclude that separate funds should be established for variable life and
variable annuity separate accounts, the Company will bear the attendant
expenses.

If any of these substitutions or changes are made, the Company may by
appropriate endorsement change the Policy to reflect the substitution or change
and will notify Policyowners of all such changes. If the Company deems it to be
in the best interest of Policyowners, and subject to any approvals that may be
required under applicable law, the Inheiritage Account or any Sub-Account(s) may
be operated as a management company under the 1940 Act, may be deregistered
under the 1940 Act if registration is no longer required, or may be combined
with other Sub-Accounts or other separate accounts of the Company.

VOTING RIGHTS - To the extent required by law, the Company will vote Underlying
Fund shares held by each Sub-Account in accordance with instructions received
from Policyowners with Policy Value in such Sub-Account. If the 1940 Act or any
rules thereunder should be amended or if the present interpretation of the 1940
Act or such rules should change, and as a result the Company determines that it
is permitted to vote shares in its own right, whether or not such shares are
attributable to the Policies, the Company reserves the right to do so.

Each person having a voting interest will be provided with proxy materials of
the respective Underlying Fund together with an appropriate form with which to
give voting instructions to the Company. Shares held in each Sub-Account for
which no timely instructions are received will be voted in proportion to the
instructions received from all persons with an interest in such Sub-Account
furnishing instructions to the Company. The Company will also vote shares held
in the Inheiritage Account that it owns and which are not attributable to
Policies in the same proportion.

The number of votes which a Policy owner has the right to instruct will be
determined by the Company as of the record date established for the Underlying
Fund. This number is determined by dividing each Policy owner's Policy Value in
the Sub-Account, if any, by the net asset value of one share in the
corresponding Underlying Fund in which the assets of the Sub-Account are
invested.

The Company may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as (a) to cause a change in the subclassification or investment
objective of one or more of the Underlying Funds or (b) to approve or disapprove
an investment advisory contract for the Underlying Funds. In addition, the
Company may disregard voting instructions in favor of any change in the
investment policies or in any investment adviser or principal underwriter
initiated by Policyowners or the Trustees. The Company's disapproval of any
such change must be reasonable and, in the case of a change in investment
policies or investment adviser, based on a good faith determination that such
change would be contrary to state law or otherwise is inappropriate in light of
the objectives and purposes of the Underlying Funds. In the event the Company
does disregard voting instructions, a summary of that action and the reasons for
that action will be included in the next periodic report to Policyowners.

THE POLICY

APPLICATION FOR A POLICY - Upon receipt at its Principal Office of a completed
application from a prospective Policy owner, the Company will follow certain
insurance underwriting procedures designed to determine whether the proposed
Insureds are insurable. This process may involve such verification procedures
as medical examinations and may require that further information be provided by
the proposed Policy owner before a determination of insurability can be made. A
Policy cannot be issued until this underwriting procedure has been completed.
The Company reserves the right to reject an application which does not meet the
Company's underwriting guidelines, but in underwriting insurance, the Company
shall comply with all applicable federal and state prohibitions concerning
unfair discrimination.

If at the time of application a prospective Policy owner makes a payment equal
to at least one Minimum Monthly Factor for the Policy as applied for, pending
underwriting approval, the Company will provide fixed conditional insurance
pursuant to a Conditional Insurance Agreement in the amount of insurance applied
for, up to a maximum of $500,000. This coverage will generally continue for a
maximum of 90 days from the date of the application or the completion of a
medical exam, should one be required. In no event will any insurance proceeds
be paid under the Conditional Insurance Agreement if the death of either Insured
is by suicide.

22
<PAGE>

If the application is approved, the Policy will be issued as of the date the
terms of the Conditional Insurance Agreement were met. If no Conditional
Insurance Agreement is in effect because the prospective Policy owner does not
wish to make any payment until the Policy is issued or has paid an initial
premium that is not sufficient to place the Policy in force, upon delivery of
the Policy the Company will require payment of sufficient premium to place the
insurance in force.

Pending completion of insurance underwriting and Policy issuance procedures, the
initial premium will be held in the Company's General Account. If the
application is approved and the Policy is issued and accepted, the initial
premium held in the General Account will be credited with interest not later
than the date of receipt of the premium at the Company's Principal Office. IF A
POLICY IS NOT ISSUED, THE PREMIUMS WILL BE RETURNED TO THE POLICY OWNER WITHOUT
INTEREST.

If the Policy is issued to the Trustee of an employee benefit plan, the amounts
held in the Company's General Account will be allocated to the Sub-Accounts
according to the Policy owner's instructions, upon return of a Delivery Receipt
to the Principal Office. For all other Policyowners, if the initial net
premiums are less than $10,000, the amounts held in the Company's General
Account will be allocated to the Sub-Accounts (according to the Policy owner's
instructions) not later than three days after underwriting approval of the
Policy. If the initial net premiums equal or exceed $10,000, or if the Policy
provides for planned premium payments during the first year equal to or
exceeding $10,000 annually, $5,000 semi-annually, $2,500 quarterly or $1,000
monthly, the entire Net Premium plus any interest earned will remain in the
General Account until return of a Delivery Receipt to the Principal Office. The
entire amount held in the General Account for allocation to the Inheiritage
Account will then be allocated to the Sub-Accounts according to the Policy
owner's instructions. Amounts remaining in the General Account will continue to
be credited interest from date of receipt of the premium at the Principal
Office.

FREE LOOK PERIOD - The Policy provides for an initial Free Look Period. The
Policy owner may cancel the Policy by mailing or delivering the Policy to the
Principal Office or an agent of the Company on or before the latest of (a) 45
days after the application for the Policy is signed, (b) 10 days after the
Policy owner receives the Policy, or (c) 10 days after the Company mails or
personally delivers a notice of withdrawal rights to the Policy owner.

When the Policy owner returns the Policy, the Company will mail within 7 days a
refund equal to the sum of (a) the difference between the premiums, including
fees and charges paid, and any amounts allocated to the Inheiritage Account, and
(b) the value of the amounts allocated to the Inheiritage Account at the date
the Policy is returned, and (c) any fees or charges imposed on the amounts
allocated to the Inheiritage Account. The amount refunded in (a) above includes
any premiums allocated to the General Account. Where required by state law, the
refund will equal the premiums paid. The refund of any premium paid by check,
however, may be delayed until the check has cleared the bank.

After an increase in Face Amount, the Company will mail or personally deliver a
notice of a "Free Look" with respect to the increase. The Policy owner will
have the right to cancel the increase before the latest of (a) 45 days after the
application for the increase is signed, (b) 10 days after the Policy owner
receives the new specification pages issued for the increase, or (c) 10 days
after the Company mails or delivers a notice of withdrawal rights to the Policy
owner. Upon canceling the increase, the Policy owner will receive a credit to
the Policy Value of charges which would not have been deducted but for the
increase. The amount to be credited will be refunded if the Policy owner so
requests. The Company will also waive any surrender charge calculated for the
increase.

CONVERSION PRIVILEGES - Once during the first 24 months after the Date of Issue
or after the effective date of an increase in Face Amount, while the Policy is
in force, the Policy owner may convert the Policy without Evidence of
Insurability to a flexible premium adjustable joint survivorship life insurance
Policy with fixed and guaranteed minimum benefits. Assuming that there have
been no increases in the initial Face Amount, the Policy owner can accomplish
this within 24 months after the Date of Issue by transferring, without charge,
the Policy Value in the Inheiritage Account to the General Account and by
simultaneously changing the premium allocation instructions to allocate future
premium payments to the General Account. Within 24 months after the effective
date of each increase, the Policy owner can transfer, without charge, all or
part of the Policy Value in the Inheiritage Account to the General Account and
simultaneously change the premium allocation instructions to allocate all or
part of future premium payments to the General Account.

Where required by state law, and at the Policy owner's request, the Company will
issue a flexible premium adjustable joint survivor life insurance policy to the
Policy owner. The new policy will have the same face amount, issue ages, date
of issue and risk classifications as the original Policy.

PREMIUM PAYMENTS - Premium Payments are payable to the Company, and may be
mailed to the Principal Office or paid through an authorized agent of the
Company. All premium payments after the initial premium payment are credited to
the Inheiritage Account or General Account as of date of receipt at the
Principal Office.

The Policy owner may establish a schedule of planned premiums which will be
billed by the Company at regular intervals.

23
<PAGE>

Failure to pay planned premiums, however, will not itself cause the Policy to
lapse. The Policy owner may also make unscheduled premium payments at any
time prior to the Final Premium Payment Date or skip planned premium
payments, subject to the maximum and minimum premium limitations described
below. Therefore, unlike conventional insurance policies, a Policy does not
obligate the Policy owner to pay premiums in accordance with a rigid and
inflexible premium schedule.

The Policy owner may also elect to pay premiums by means of a monthly automatic
payment ("MAP") procedure. Under a MAP procedure, amounts will be deducted each
month, generally on the Monthly Payment Date, from the Policy owner's checking
account and applied as a premium under a Policy. The minimum payment permitted
under MAP is $50.

Premiums are not limited as to frequency and number. However, no premium
payment may be less than $100 without the Company's consent. Moreover, premium
payments must be sufficient to provide a positive Surrender Value at the end of
each Policy month, or the Policy may lapse. See "POLICY TERMINATION AND
REINSTATEMENT." If, in the first 48 policy months following issue or an
increase in the Face Amount, the Policy owner makes premium payments, less
partial withdrawals and partial withdrawal charges, at least equal to the sum of
the Minimum Monthly Factors for the number of months the Policy, increase in
Face Amount, or Policy Change which causes a change in the Minimum Monthly
Factor has been in force, the Policy is guaranteed not to lapse during that
period. EXCEPT FOR THE 48 POLICY MONTHS AFTER THE DATE OF ISSUE OR THE
EFFECTIVE DATE OF AN INCREASE IN FACE AMOUNT, MAKING MONTHLY PAYMENTS AT LEAST
EQUAL TO THE MINIMUM MONTHLY FACTORS DOES NOT GUARANTEE THAT THE POLICY WILL
REMAIN IN FORCE.

In no event may the total of all premiums paid exceed the current maximum
premium limitations set forth in the Policy, which are required by Federal tax
laws. These maximum premium limitations will change whenever there is any
change in the Face Amount, the addition or deletion of a rider, or a change in
the Sum Insured Option. If a premium is paid which would result in total
premiums exceeding the current maximum premium limitations, the Company will
only accept that portion of the premiums which shall make total premiums equal
the maximum. Any part of the premiums in excess of that amount will be returned
and no further premiums will be accepted until allowed by the current maximum
premium limitation prescribed by Internal Revenue Service rules. However,
notwithstanding the current maximum premium limitations, the Company will accept
a premium which is needed in order to prevent a lapse of the Policy during a
policy year. See "POLICY TERMINATION AND REINSTATEMENT."

INCENTIVE FUNDING DISCOUNT - The Company will lower the cost of insurance
charges by 5% during any Policy year for which the Policy owner qualifies for an
incentive funding discount. To qualify, total premiums paid under the Policy,
less any debt, withdrawals and withdrawal charges, and transfers from other
policies issued by the Company, must exceed 90% of the guideline level premiums
(as defined in Section 7702 of the Internal Revenue Code) accumulated from the
Date of Issue to the date of qualification.

Qualification for the incentive funding discount is determined on the Date of
Issue for the first Policy year and on each Policy anniversary for each
subsequent Policy year. However, if the Company receives the proceeds from a
policy issued by an unaffiliated company to be exchanged for the Policy, the
qualification for the incentive funding discount for the first Policy year will
be determined on the date the proceeds are received by the Company and only
insurance charges becoming due after the date such proceeds are received will be
eligible for the incentive funding discount. The incentive funding discount is
not available for Policies issued and delivered in New York.

ALLOCATION OF NET PREMIUMS - The Net Premium equals the premium paid less the
tax expense charge and the premium expense charge. In the application for a
Policy, the Policy owner indicates the initial allocation of Net Premiums among
the General Account and the Sub-Accounts of the Inheiritage Account. The Policy
owner may allocate premiums to one or more Sub-Accounts, but may not have Policy
Value in more than seven (7) Sub-Accounts at any one time. The minimum amount
which may be allocated to a Sub-Account is 1% of Net Premium paid. Allocation
percentages must be in whole numbers (for example, 33 1/3% may not be chosen)
and must total 100%.

The Policy owner may change the allocation of future Net Premiums at any time
pursuant to written or telephone request. A properly completed authorization
form must be on file before telephone requests will be honored. The change will
be effective as of the date of receipt of the notice at the Principal Office.
No charge is currently imposed for changing premium allocation instructions.
The Company reserves the right to impose such a charge in the future, but
guarantees that the charge will not exceed $25.

The Policy Value in the Sub-Accounts will vary with their investment experience;
the Policy owner bears this investment risk. The investment performance may
affect the Death Proceeds as well. Policyowners should periodically review
their allocations of premiums and Policy Value in light of market conditions and
overall financial planning requirements.

TRANSFER PRIVILEGE - Subject to the Company's then current rules, the Policy
owner may at any time transfer the Policy Value among the Sub-Accounts or
between a Sub-Account and the General Account. However, the Policy Value held
in the General Account to secure a Policy loan may not be transferred.

<PAGE>

All requests for transfers must be made to the Principal Office. The amount
transferred will be based on the Policy Value in the Account(s) next computed
after receipt of the transfer order. The Company will make transfers pursuant
to written or telephone request. A properly completed authorization form must
be on file at the Principal Office before telephone instructions will be
honored.

Transfers involving the General Account are currently permitted only if:

(a) There has been at least a ninety (90) day period since the last
transfer from the General Account; and

(b) The amount transferred from the General Account in each transfer does
not exceed the lesser of $100,000 or 25% of the Accumulated Value
under the Policy.

These rules are subject to change by the Company.

The Policy owner may have automatic transfers of at least $100 a month made on a
periodic basis from (a) Sub-Account 3 or Sub-Account 5 (which invest in the
Money Market Fund and Government Bond Fund of the Trust, respectively) to one or
more of the other Sub-Accounts or (b) automatically reallocate Policy Value
among the Sub-Accounts. Automatic transfers may be made on a monthly,
bimonthly, quarterly, semiannual or annual schedule. All transfers will be
processed on the 15th of each scheduled month. If the 15th is not a business day
or is the Monthly Payment Date, the automatic transfer will be processed on the
next business day.

The transfer privilege is subject to the consent of the Company. The Company
reserves the right to impose limitations on transfers including, but not limited
to: (1) the minimum amount that may be transferred, (2) the minimum amount
that may remain in a Sub-Account following a transfer from that Sub-Account, (3)
the minimum period of time between transfers involving the General Account, and
(4) the maximum amount that may be transferred each time from the General
Account.

The first six transfers in a Policy year will be free of any charge. Thereafter
a $10 transfer charge will be deducted from the amount transferred for each
transfer in that Policy year. The Company may increase or decrease this charge,
but it is guaranteed never to exceed $25. The first automatic transfer counts
as one transfer towards the six free transfers allowed in each policy year; each
subsequent automatic transfer is without charge and does not reduce the
remaining number of transfers which may be made free of charge. Any transfers
made with respect to a conversion privilege, Policy loan or material change in
investment policy will not count towards the six free transfers.

DEATH PROCEEDS - The Policy provides for the payment of the Death Proceeds of
the Policy to the named Beneficiary on the death of the last surviving Insured.
There are no Death Proceeds payable on the death of the first Insured to die.
Within 90 days of the death of the first Insured to die, or as soon thereafter
as is reasonably possible, the Policy owner must mail to the Principal Office
due proof of such death. As long as the Policy remains in force (see "POLICY
TERMINATION AND REINSTATEMENT"), the Company will, upon due proof of the death
of the last surviving Insured, pay the Death Proceeds of the Policy to the named
Beneficiary. The Company will normally pay the Death Proceeds within seven days
of receiving due proof of the death of the last surviving Insured, but the
Company may delay payments under certain circumstances. See "OTHER POLICY
PROVISIONS - Postponement Of Payments." The Death Proceeds may be received by
the Beneficiary in cash or under one or more of the payment options set forth in
the Policy. See "APPENDIX B - PAYMENT OPTIONS."

Prior to the Final Premium Payment Date, the Death Proceeds are: (a) The Sum
Insured provided under Option 1 or Option 2, whichever is elected and in effect
on the date of death of the last surviving Insured; plus (b) any additional
insurance on the Insureds' lives that is provided by rider; minus (c) any
outstanding Debt, any partial withdrawals and partial withdrawal charges, and
any Monthly Deductions due and unpaid through the Policy month in which the last
surviving Insured dies. After the Final Premium Payment Date, the Death
Proceeds equal the surrender Value of the Policy. The amount of Death Proceeds
payable will be determined as of the date of the Company's receipt of due proof
of death of the last surviving Insured.

SUM INSURED OPTIONS - The Policy provides two Sum Insured Options: Option 1 and
Option 2, as described below. The Policy owner designates the desired Sum
Insured Option in the application. The Policy owner may change the option once
per Policy year by written request. There is no charge for a change in option.

Under Option 1, the Sum Insured is equal to the greater of the Face Amount of
insurance or the Guideline Minimum Sum Insured.

Under Option 2, the Sum Insured is equal to the greater of the Face Amount of
insurance plus the Policy Value or the Guideline Minimum Sum Insured.

25
<PAGE>

Table 2 applies). The Guideline Minimum Sum Insured is determined in accordance
with Internal Revenue Code regulations to ensure that the Policy qualifies as a
life insurance contract and that the insurance proceeds will be excluded from
the gross income of the Beneficiary.

GUIDELINE MINIMUM SUM INSURED TABLE
<TABLE>
<CAPTION>
Age of Younger Insured
on Death of Last Surviving Insured Percentage of
Policy Value
<S> <C>
60 and under . . . . . . . . . . . . . 300%
61 . . . . . . . . . . . . . . . . . . 293%
62 . . . . . . . . . . . . . . . . . . 286%
63 . . . . . . . . . . . . . . . . . . 279%
64 . . . . . . . . . . . . . . . . . . 272%
65 . . . . . . . . . . . . . . . . . . 265%
66 . . . . . . . . . . . . . . . . . . 258%
67 . . . . . . . . . . . . . . . . . . 251%
68 . . . . . . . . . . . . . . . . . . 244%
69 . . . . . . . . . . . . . . . . . . 237%
70 . . . . . . . . . . . . . . . . . . 230%
71 . . . . . . . . . . . . . . . . . . 223%
72 . . . . . . . . . . . . . . . . . . 217%
73 . . . . . . . . . . . . . . . . . . 211%
74 . . . . . . . . . . . . . . . . . . 205%
75 . . . . . . . . . . . . . . . . . . 198%
76 . . . . . . . . . . . . . . . . . . 192%
77 . . . . . . . . . . . . . . . . . . 186%
78 . . . . . . . . . . . . . . . . . . 180%
79 . . . . . . . . . . . . . . . . . . 173%
80 . . . . . . . . . . . . . . . . . . 167%
81 . . . . . . . . . . . . . . . . . . 163%
82 . . . . . . . . . . . . . . . . . . 159%
83 . . . . . . . . . . . . . . . . . . 155%
84 . . . . . . . . . . . . . . . . . . 151%
85 . . . . . . . . . . . . . . . . . . 147%
86 . . . . . . . . . . . . . . . . . . 143%
87 . . . . . . . . . . . . . . . . . . 139%
88 . . . . . . . . . . . . . . . . . . 135%
89 . . . . . . . . . . . . . . . . . . 130%
90 . . . . . . . . . . . . . . . . . . 125%
91 . . . . . . . . . . . . . . . . . . 120%
92 . . . . . . . . . . . . . . . . . . 115%
93 . . . . . . . . . . . . . . . . . . 110%
94 . . . . . . . . . . . . . . . . . . 105%
95 and above . . . . . . . . . . . . . 100%
</TABLE>

26
<PAGE>

For all Policies issued in Pennsylvania and for certain other Policies*
described below, GUIDELINE MINIMUM SUM INSURED TABLE 2 applies, as follows:

GUIDELINE MINIMUM SUM INSURED
TABLE 2
<TABLE>
<CAPTION>
Age Percentage Age Percentage
- ----------------------------------------------
<S> <C> <C> <C>
thru 40 250% 60 130%
41 243% 61 128%
42 236% 62 126%
43 229% 63 124%
44 222% 64 122%
45 215% 65 120%
46 209% 66 119%
47 203% 67 118%
48 197% 68 117%
49 191% 69 116%
50 185% 70 115%
51 178% 71 113%
52 171% 72 111%
53 164% 73 109%
54 157% 74 107%
55 150% 75 thru 90 105%
56 146% 91 104%
57 142% 92 103%
58 138% 93 102%
59 134% 94 101%
95 100%
</TABLE>

*For a period of ninety days after a state insurance department has approved the
use of GUIDELINE MINIMUM SUM INSURED TABLE 2, the Company will permit Policy
Owners in that state to endorse the Policy to elect GUIDELINE MINIMUM SUM
INSURED TABLE 2. After a state insurance department has approved its use, all
new Policies issued in that state will utilize GUIDELINE MINIMUM SUM INSURED
TABLE 2.

Under both Option 1 and Option 2 the Sum Insured provides insurance protection.
Under Option 1, the Sum Insured remains level unless the applicable percentage
of Policy Value under Guideline Minimum Sum Insured exceeds the Face Amount, in
which case the Sum Insured will vary as the Policy Value varies. Under Option
2, the Sum Insured varies as the Policy Value changes.

For any Face Amount, the amount of the Sum Insured and thus the Death Proceeds
will be greater under Option 2 than under Option 1, since the Policy Value is
added to the specified Face Amount and included in the Death Proceeds only under
Option 2. However, the cost of insurance included in the Monthly Deduction will
be greater, and thus the rate at which Policy Value will accumulate will be
slower, under Option 2 than under Option 1 (assuming the same specified Face
Amount and the same actual premiums paid). See "CHARGES AND DEDUCTIONS -
Monthly Deduction From Policy Value." If the Policy owner desires to have
premium payments and investment performance reflected in the amount of the Sum
Insured, the Policy owner should choose Option 2. If the Policy owner desires
premium payments and investment performance reflected to the maximum extent in
the Policy Value, the Policy owner should select Option 1.

ILLUSTRATION OF OPTION 1 - For purposes of this illustration, assume that the
younger Insured is under the Age of 40, and that there is no outstanding Debt.

Under Option 1, a Policy with a $300,000 Face Amount will generally have a Sum
Insured equal to $300,000. However, because the Sum Insured must be equal to or
greater than 300% of Policy Value, if at any time the Policy Value exceeds
$100,000, the Sum Insured will exceed the $300,000 Face Amount. In this
example, each additional dollar of Policy Value above $100,000 will increase the
Sum Insured by $3.00. For example, a Policy with a Policy Value of $125,000
will have a Guideline Minimum Sum Insured of $375,000 ($125,000 x 3.00); Policy
Value of $150,000 will produce a Guideline Minimum Sum Insured of $450,000
($150,000 x 3.00); and Policy Value of $200,000 will produce a Guideline Minimum
Sum Insured of $600,000 ($200,000 x 3.00).

27
<PAGE>

charges or negative investment performance, the Sum Insured will be reduced
from $375,000 to $300,000. If at any time, however, the Policy Value
multiplied by the applicable percentage is less than the Face Amount, the Sum
Insured will equal the Face Amount of the Policy.

The applicable percentage becomes lower as the younger Insured's Age increases.
If the younger Insured's Age in the above example were, for example, 70 (rather
than between 0 and 40), the applicable percentage would be 230%. The Sum
Insured would not exceed the $300,000 Face Amount unless the Policy Value
exceeded $130,436 (rather than $100,000), and each dollar then added to or taken
from Policy Value would change the Sum Insured by $2.30.

ILLUSTRATION OF OPTION 2 - For purposes of this illustration, assume that the
younger Insured is under the Age of 40 and that there is no outstanding Debt.

Under Option 2, a Policy with a Face Amount of $300,000 will generally produce a
Sum Insured of $300,000 plus Policy Value. For example, a Policy with Policy
Value of $50,000 will produce a Sum Insured of $350,000 ($300,000 + $50,000);
Policy Value of $80,000 will produce a Sum Insured of $380,000 ($300,000 +
$80,000); Policy Value of $100,000 will produce a Sum Insured of $400,000
($300,000 + $100,000). However, the Sum Insured must be at least 300% of the
Policy Value. Therefore, if the Policy Value is greater than $150,000, 300% of
that amount will be the Sum Insured, which will be greater than the Face Amount
plus Policy Value. In this example, each additional dollar of Policy Value
above $150,000 will increase the Sum Insured by $3.00. For example, if the
Policy Value is $200,000, the Guideline Minimum Sum Insured will be $600,000
($200,000 x 3.00); Policy Value of $250,000 will produce a Guideline Minimum Sum
Insured of $750,000 ($250,000 x 3.00); and Policy Value of $300,000 will produce
a Guideline Minimum Sum Insured of $900,000 ($300,000 x 3.00).

Similarly, if Policy Value exceeds $150,000, each dollar taken out of Policy
Value will reduce the Sum Insured by $3.00. If, for example, the Policy Value
is reduced from $200,000 to $150,000 because of partial withdrawals, charges or
negative investment performance, the Sum Insured will be reduced from $600,000
to $450,000. If at any time, however, Policy Value multiplied by the applicable
percentage is less than the Face Amount plus Policy Value, then the Sum Insured
will be the current Face Amount plus Policy Value.

The applicable percentage becomes lower as the younger Insured's Age increases.
If the Insured's Age in the above example were 70, the applicable percentage
would be 230%, so that the Sum Insured must be at least 2.30 times the Policy
Value. The amount of the Sum Insured would be the sum of the Policy Value plus
$300,000 unless the Policy Value exceeded $230,769 (rather than $150,000). Each
dollar added to or subtracted from the Policy would change the Sum Insured by
$2.30.

The Sum Insured under Option 2 will always be the greater of the Face Amount
plus Policy Value or the Policy Value multiplied by the applicable percentage.

CHANGE IN SUM INSURED OPTION - Generally, the Sum Insured Option in effect may
be changed once each Policy year by sending a written request for change to the
Principal Office. Changing Sum Insured Options will not require Evidence of
Insurability. The effective date of any such change will be the Monthly Payment
Date on or following the date of receipt of the request. No charges will be
imposed on changes in Sum Insured Options.

If the Sum Insured Option is changed from Option 2 to Option 1, the Face Amount
will be increased to equal the Sum Insured which would have been payable under
Option 2 on the effective date of the change (i.e. the Face Amount immediately
prior to the change plus the Policy Value on the date of the change). The
amount of the Sum Insured will not be altered at the time of the change.
However, the change in option will affect the determination of the Sum Insured
from that point on, since the Policy Value will no longer be added to the Face
Amount in determining the Sum Insured; the Sum Insured will equal the new Face
Amount (or, if higher, the Guideline Minimum Sum Insured). The cost of
insurance may be higher or lower than it otherwise would have been since any
increases or decreases in Policy Value will, respectively, reduce or increase
the Insurance Amount at Risk under Option 1. Assuming a positive net investment
return with respect to any amounts in the Inheiritage Account, changing the Sum
Insured Option from Option 2 to Option 1 will reduce the Insurance Amount at
Risk and therefore the cost of insurance charge for all subsequent Monthly
Deductions, compared to what such charge would have been if no such change were
made.

If the Sum Insured Option is changed from Option 1 to Option 2, the Face Amount
will be decreased to equal the Sum Insured less the Policy Value on the
effective date of the change. This change may not be made if it would result in
a Face Amount less than $100,000. A change from Option 1 to Option 2 will not
alter the amount of the Sum Insured at the time of the change, but will affect
the determination of the Sum Insured from that point on. Because the Policy
Value will be added to the new specified Face Amount, the Sum Insured will vary
with the Policy Value. Thus, under Option 2, the Insurance Amount at Risk will
always equal the Face Amount unless the Guideline Minimum Sum Insured is in
effect. The cost of insurance may also be higher or lower than it otherwise
would have been without the change in Sum Insured Option. See "CHARGES AND
DEDUCTIONS - Monthly Deduction From Policy Value."

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A change in Sum Insured Option may result in total premiums paid exceeding the
then current maximum premium limitation determined by Internal Revenue Service
Rules. In such event, the Company will pay the excess to the Policy owner. See
"THE POLICY - Premium Payments."

CHANGE IN FACE AMOUNT - Subject to certain limitations, the Policy owner may
increase or decrease the specified Face Amount of a Policy at any time by
submitting a written request to the Company. Any increase or decrease in the
specified Face Amount requested by the Policy owner will become effective on the
Monthly Payment Date on or next following the date of receipt of the request at
the Principal Office, or, if Evidence of Insurability is required, the date of
approval of the request.

INCREASES - Along with the written request for an increase, the Policy owner
must submit satisfactory Evidence of Insurability. The consent of the Insureds
is also required whenever the Face Amount is increased. A request for an
increase in Face Amount may not be less than $100,000. The Policy owner may not
increase the Face Amount after the younger Insured reaches Age 80 or the older
Insured reaches Age 85. An increase must be accompanied by an additional
premium if the Surrender Value is less than $50 plus an amount equal to the sum
of two Minimum Monthly Factors. On the effective date of each increase in Face
Amount, a transaction charge of $50 will be deducted from Policy Value for
administrative costs. The effective date of the increase will be the first
Monthly Payment Date on or following the date all of the conditions for the
increase are met.

An increase in the Face Amount will generally affect the Insurance Amount at
Risk and may affect the portion of the Insurance Amount at Risk included in
various Premium Classes (if more than one Premium Class applies), both of which
may affect the monthly cost of insurance charges. A surrender charge will also
be calculated for the increase. See "CHARGES AND DEDUCTIONS - Monthly Deduction
From Policy Value, - Surrender Charge."

After increasing the Face Amount, the Policy owner will have the right (1)
during a Free Look Period, to have the increase cancelled and the charges which
would not have been deducted but for the increase will be credited to the Policy
and (2) during the first 24 months following the increase, to transfer any or
all Policy Value to the General Account free of charge. See "THE POLICY - Free
Look Period - Conversion Privileges." A refund of charges which would not have
been deducted but for the increase will be made at the Policy owner's request.

DECREASES - The minimum amount for a decrease in Face Amount is $100,000. The
Face Amount in force after any decrease may not be less than $100,000. If,
following a decrease in Face Amount, the Policy would not comply with the
maximum premium limitation applicable under the Internal Revenue Service Rules,
the decrease may be limited or Policy Value may be returned to the Policy owner
(at the Policy owner's election) to the extent necessary to meet the
requirements. A return of Policy Value may result in tax liability to the
Policy owner.

A decrease in the Face Amount will affect the total Insurance Amount at Risk and
the portion of the Insurance Amount at Risk covered by various Premium Classes,
both of which may affect a Policy owner's monthly cost of insurance charges.
See "CHARGES AND DEDUCTIONS - Monthly Deduction From Policy Value." For
purposes of determining the cost of insurance charge, any decrease in the Face
Amount will reduce the Face Amount in the following order: (1) the Face Amount
provided by the most recent increase; (2) the next most recent increases
successively, and (3) the initial Face Amount. This order will also be used to
determine whether a surrender charge will be deducted and in what amount. If
the Policy owner requests a decrease in the Face Amount, the amount of any
surrender charge deducted will reduce the current Policy Value. The Policy
owner may specify one Sub-Account from which the surrender charge will be
deducted. If no specification is provided, the Company will make a Pro Rata
Allocation. The current surrender charge will be reduced by the amount
deducted. See "CHARGES AND DEDUCTIONS - Surrender Charge."

POLICY VALUE AND SURRENDER VALUE - The Policy Value is the total amount
available for investment and is equal to the sum of the accumulation in the
General Account and the value of the Accumulation Units in the Sub-Accounts.
The Policy Value is used in determining the Surrender Value (the Policy Value
less any Debt and applicable surrender charges). See "THE POLICY -
Surrender." There is no guaranteed minimum Policy Value. Because Policy Value
on any date depends upon a number of variables, it cannot be predetermined.

Policy Value and Surrender Value will reflect frequency and amount of Net
Premiums paid, interest credited to accumulations in the General Account, the
investment performance of the chosen Sub-Accounts, any partial withdrawals, any
loans, any loan repayments, any loan interest paid or credited, and any charges
assessed in connection with the Policy.

CALCULATION OF POLICY VALUE - The Policy Value is determined first on the Date
of Issue and thereafter on each Valuation Date. On the Date of Issue, the
Policy Value will be the Net Premiums received, plus any interest earned during
the period when premiums are held in the General Account (before being
transferred to the Inheiritage Account; see THE POLICY - Application For A
Policy") less any Monthly Deductions due. On each Valuation Date after the Date
of Issue the Policy Value will be:

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<PAGE>

(a) the aggregate of the values in each of the Sub-Accounts on the
Valuation Date, determined for each Sub-Account by multiplying the
value of an Accumulation Unit in that Sub-Account on that date by
the number of such Accumulations Units allocated to the Policy; plus

(b) the value in the General Account (including any amounts transferred
to the General Account with respect to a loan).

Thus, the Policy Value is determined by multiplying the number of Accumulation
Units in each Sub-Account by the value of the applicable Accumulation Units on
the particular Valuation Date, adding the products, and adding the amount of the
accumulations in the General Account, if any.

THE ACCUMULATION UNIT - Each Net Premium is allocated to the Sub-Account(s)
selected by the Policy owner. Allocations to the Sub-Accounts are credited to
the Policy in the form of Accumulation Units. Accumulation Units are credited
separately for each Sub-Account.

The number of Accumulation Units of each Sub-Account credited to the Policy is
equal to the portion of the Net Premium allocated to the Sub-Account, divided by
the dollar value of the applicable Accumulation Unit as of the Valuation Date
the payment is received at the Company's Principal Office. The number of
Accumulation Units will remain fixed unless changed by a subsequent split of
Accumulation Unit value, transfer, partial withdrawal or surrender. In
addition, if the Company is deducting the Monthly Deduction or other charges
from a Sub-Account, each such deduction will result in cancellation of a number
of Accumulation Units equal in value to the amount deducted.

The dollar value of an Accumulation Unit of each Sub-Account varies from
Valuation Date to Valuation Date based on the investment experience of that
Sub-Account. That experience, in turn, will reflect the investment performance,
expenses and charges of the respective Underlying Fund. The value of an
Accumulation Unit was set at $1.00 on the first Valuation Date for each
Sub-Account. The dollar value of an Accumulation Unit on a given Valuation Date
is determined by multiplying the dollar value of the corresponding Accumulation
Unit as of the immediately preceding Valuation Date by the appropriate net
investment factor.

NET INVESTMENT FACTOR - The net investment factor measures the investment
performance of a Sub-Account of the Inheiritage Account during the Valuation
Period just ended. The net investment factor for each Sub-Account is equal to
1.0000 plus the number arrived at by dividing (a) by (b) and subtracting (c) and
(d) from the result, where:

(a) is the investment income of that Sub-Account for the Valuation Period,
plus capital gains, realized or unrealized, credited during the
Valuation Period; minus capital losses, realized or unrealized,
charged during the Valuation Period; adjusted for provisions made
for taxes, if any;

(b) is the value of that Sub-Account's assets at the beginning of the
Valuation Period;

(c) is a charge for each day in the Valuation Period equal on an annual
basis to .90% of the daily net asset value of that Sub-Account for
mortality and expense risks. This charge may be increased or
decreased by the Company, but may not exceed 1.275%; and

(d) is the Inheiritage Account administrative charge for each day in the
Valuation Period equal on an annual basis to 0.25% of the daily net
asset value of that Sub-Account. This charge is applicable only
during the first fifteen Policy years.

The net investment factor may be greater or less than one. Therefore, the value
of an Accumulation Unit may increase or decrease. The Policy owner bears the
investment risk.

Allocations to the General Account are not converted into Accumulation Units,
but are credited interest at a rate periodically set by the Company. See "MORE
INFORMATION ABOUT THE GENERAL ACCOUNT."

PAYMENT OPTIONS - During the Insureds' lifetime, the Policy owner may arrange
for the Death Proceeds to be paid in a single sum or under one or more of the
available payment options. The payment options currently available are
described in Appendix B, "PAYMENT OPTIONS." These choices are also available at
the Final Premium Payment Date and if the Policy is surrendered. The Company
may make more payment options available in the future. If no election is made,
the Company will pay the Death Proceeds in a single sum. When the Death
Proceeds are payable in a single sum, the Beneficiary may, within one year of
the death of the last surviving Insured, select one or more of the payment
options, if no payments have yet been made.

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<PAGE>

optional insurance benefits will be deducted as part of the Monthly
Deduction. See "CHARGES AND DEDUCTIONS - Monthly Deduction From Policy
Value."

SURRENDER - The Policy owner may at any time surrender the Policy and receive
its Surrender Value. The Surrender Value is the Policy Value less any Debt and
applicable surrender charges. The Surrender Value will be calculated as of the
Valuation Date on which a written request for surrender and the Policy are
received at the Principal Office. A surrender charge will be deducted when a
Policy is surrendered if less than 15 full Policy years have elapsed from the
Date of Issue of the Policy or from the effective date of any increase in Face
Amount. See "CHARGES AND DEDUCTIONS - Surrender Charge."

The proceeds on surrender may be paid in a single lump sum or under one of the
payment options described in "APPENDIX B - PAYMENT OPTIONS." The Company will
normally pay the Surrender Value within seven days following the Company's
receipt of the surrender request, but the Company may delay payment under the
circumstances described in "OTHER POLICY PROVISIONS - Postponement Of Payments."

For important tax consequences which may result from surrender see "FEDERAL TAX
CONSIDERATIONS."

PARTIAL WITHDRAWAL - Any time after the first Policy year, the Policy owner may
withdraw a portion of the Surrender Value of the Policy, subject to the limits
stated below, upon written request filed at the Principal Office. The written
request must indicate the dollar amount the Policy owner wishes to receive and
the Accounts from which such amount is to be withdrawn. The Policy owner may
allocate the amount withdrawn among the Sub-Accounts and the General Account.
If the Policy owner does not provide allocation instructions the Company will
make a Pro Rata Allocation. Each partial withdrawal must be in a minimum amount
of $500. Under Option 1, the Face Amount is reduced by the amount of the
partial withdrawal, and a partial withdrawal will not be allowed if it would
reduce the Face Amount below $100,000.

A partial withdrawal from a Sub-Account will result in the cancellation of the
number of Accumulation Units equivalent in value to the amount withdrawn. The
amount withdrawn equals the amount requested by the Policy owner plus the
transaction charge and any applicable partial withdrawal charge as described
under "CHARGES AND DEDUCTIONS - Charges On Partial Withdrawal." The Company
will normally pay the amount of the partial withdrawal within seven days
following the Company's receipt of the partial withdrawal request, but the
Company may delay payment under certain circumstances described in "OTHER POLICY
PROVISIONS - Postponement Of Payments."

For important tax consequences which may result from partial withdrawals, see
"FEDERAL TAX CONSIDERATIONS."

PAID-UP INSURANCE OPTION - Upon written request, the Policy owner may elect to
have, without further premiums due, joint survivorship insurance coverage for
the lifetime of the Insureds, with the Death Proceeds payable on the death of
the last surviving Insured. The amount of Paid-Up Insurance will be the amount
which the Surrender Value can purchase for a net single premium at the Insureds'
ages and classes of risk on the date this option is elected. If the Surrender
Value exceeds the net single premium, the excess will be paid to the Policy
owner. The net single premium is based on the Commissioner's 1980 Standard
Ordinary Mortality Table D, Smoker or Non-Smoker (or appropriate increases in
such tables for non-standard risks). Interest will not be less than 4.5%.

IF THE PAID-UP INSURANCE OPTION IS ELECTED, THE FOLLOWING POLICY OWNER RIGHTS
WILL BE AFFECTED: The Policy owner who has elected the Paid-Up Insurance option
may not pay additional premiums, select Sum Insured Option 2, increase or
decrease the Face Amount or make partial withdrawals. Riders will continue only
with the consent of the Company. The Policy owner may, after electing Paid-Up
Insurance, surrender the Policy for its net cash value. Guaranteed cash value
equals the net single premium for the Paid-Up Insurance at the Insureds'
attained ages, or the survivor's attained age if one Insured has died. The net
cash value is the cash value less any debt. Policy Value in the Inheiritage
Account will be transferred to the General Account on the date the Company
receives written request to exercise the option. Transfers of Policy Value from
the General Account back to the Inheiritage Account will not be permitted. See
also "MORE INFORMATION ABOUT THE GENERAL ACCOUNT," which discusses the
ramifications of the Policy Value being allocated to the General Account,
including limitations respecting securities regulation.

In most instances, the result of electing the Paid-Up Insurance option will be
to cause the Policy to be treated as a modified endowment contract. If the
Policy becomes a modified endowment contract, Policy loans, partial withdrawals
or surrender will be subject to unfavorable federal tax treatment. See "FEDERAL
TAX CONSIDERATIONS - Modified Endowment Contracts."

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<PAGE>

CHARGES AND DEDUCTIONS

Charges will be deducted in connection with the Policy to compensate the Company
for providing the insurance benefits set forth in the Policy and any additional
benefits added by rider, administering the Policy, incurring distribution
expenses, and assuming certain risks in connection with the Policies. Each of
the charges identified as an administrative charge is intended to reimburse the
Company for actual administrative costs incurred, and is not intended to result
in a profit to the Company.

TAX EXPENSE CHARGE - A charge will be deducted from each premium payment for
state and local premium taxes paid by the Company for the Policy and to
compensate the Company for federal taxes imposed for deferred acquisition costs
("DAC taxes"). The total charge is the actual state and local premium taxes
paid by the Company, varying according to jurisdiction, and a DAC tax deduction
of 1% of premiums. The premium tax deduction will change when either the
applicable jurisdiction changes or the tax rate changes in the applicable
jurisdiction. The Company should be notified of any change in address as soon
as possible. The 1% rate attributable to premiums for DAC taxes approximates
the Company's expenses in paying federal taxes for deferred acquisition costs
associated with the Policies. The Company reserves the right to increase or
decrease the 1% DAC tax deduction to reflect changes in the Company's expenses
for DAC taxes. The DAC tax deduction is a factor the Company must use when
calculating the maximum sales load it can charge under SEC rules.

PREMIUM EXPENSE CHARGE - A charge of 1% of premiums will be deducted from each
premium payment to partially compensate the Company for the cost of selling the
Policies. The premium expense charge is a factor the Company must use when
calculating the maximum sales load it can charge under SEC rules during the
first two Policy years.

MONTHLY DEDUCTION FROM POLICY VALUE - Prior to the Final Premium Payment Date, a
Monthly Deduction from Policy Value will be made to cover a charge for the cost
of insurance, a charge for any optional insurance benefits added by rider and a
monthly administrative charge. The cost of insurance charge and the monthly
administrative charges are discussed below. The Monthly Deduction on or
following the effective date of a requested increase in the Face Amount will
also include a $50 administrative charge for the increase. See "THE POLICY -
Change In Face Amount."

Prior to the Final Premium Payment Date, the Monthly Deduction will be deducted
as of each Monthly Payment Date commencing with the Date of Issue of the Policy.
It will be allocated to one Sub-Account according to the Policy owner's
instructions, or, if no allocation is specified, the Company will make a Pro
Rata Allocation. If the Sub-Account the Policy owner specifies does not have
sufficient funds to cover the Monthly Deduction, the Company will deduct the
charge for that month as if no specification were made. However, if on
subsequent Monthly Payment Dates there is sufficient Policy Value in the
Sub-Account the Policy owner specified, the Monthly Deduction will be deducted
from that Sub-Account. No Monthly Deductions will be made on or after the Final
Premium Payment Date.

COST OF INSURANCE - This charge is designed to compensate the Company for the
anticipated cost of providing Death Proceeds to Beneficiaries of those last
surviving Insureds who die prior to the Final Premium Payment Date. The cost of
insurance is determined on a monthly basis, and is determined separately for the
initial Face Amount and for each subsequent increase in Face Amount. Because
the cost of insurance depends upon a number of variables, it can vary from month
to month.

CALCULATION OF THE CHARGE - If the Policy owner selects Sum Insured Option 2,
the monthly cost of insurance charge for the initial Face Amount will equal the
applicable cost of insurance rate multiplied by the initial Face Amount. If the
Policy owner selects Sum Insured Option 1, however, the applicable cost of
insurance rate will be multiplied by the initial Face Amount less the Policy
Value (minus charges for rider benefits) at the beginning of the policy month.
Thus, the cost of insurance charge may be greater for owners who have selected
Sum Insured Option 2 than for those who have selected Sum Insured Option 1,
assuming the same Face Amount in each case and assuming that the Guideline
Minimum Sum Insured is not in effect. In other words, since the Sum Insured
under Option 1 remains constant while the Sum Insured under Option 2 varies with
the Policy Value, any Policy Value increases will reduce the insurance charge
under Option 1 but not under Option 2.

If the Policy owner selects Sum Insured Option 2, the monthly insurance charge
for each increase in Face Amount (other than an increase caused by a change in
Sum Insured Option) will be equal to the cost of insurance rate applicable to
that increase multiplied by the increase in Face Amount. If the Policy owner
selects Sum Insured Option 1, the applicable cost of insurance rate will be
multiplied by the increase in the Face Amount reduced by any Policy Value (minus
rider charges) in excess of the initial Face Amount at the beginning of the
policy month.

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<PAGE>

Sum Insured (Policy Value times the applicable percentage) less the greater
of the Face Amount or the Policy Value if the Policy owner selected Sum
Insured Option 1, or less the Face Amount plus the Policy Value if the Policy
owner selected Sum Insured Option 2. When the Guideline Minimum Sum Insured
is in effect, the cost of insurance charge for the initial Face Amount and
for any increases will be calculated as set forth in the preceding two
paragraphs.

The monthly cost of insurance charge will also be adjusted for any decreases in
Face Amount. See "THE POLICY - Change In Face Amount: Decreases."

COST OF INSURANCE RATES - Cost of insurance rates are based on a blended unisex
rate table, Age and Premium Class of the Insureds at the Date of Issue, the
effective date of an increase or date of rider, as applicable, the amount of
premiums paid less debt, any partial withdrawals and withdrawal charges, and
risk classification. Sex-distinct rates do not apply, except in those states
that do not permit unisex rates. The cost of insurance rates are determined at
the beginning of each Policy year for the initial Face Amount. The cost of
insurance rates for an increase in Face Amount or rider are determined annually
on the anniversary of the effective date of each increase or rider. The cost of
insurance rates generally increase as the Insureds' Ages increase. The actual
monthly cost of insurance rates will be based on the Company's expectations as
to future mortality experience. They will not, however, be greater than the
guaranteed cost of insurance rates set forth in the Policy. These guaranteed
rates are based on the 1980 Commissioners Standard Ordinary Mortality Tables
(Mortality Table D, Smoker or Non-Smoker, for unisex Policies) and the Insureds'
Ages. The Tables used for this purpose set forth different mortality estimates
for smokers and non-smokers. Any change in the cost of insurance rates will
apply to all persons of the same insuring Age and Premium Class whose Policies
have been in force for the same length of time.

The premium class of an Insured will affect the cost of insurance rates. The
Company currently places Insureds into standard premium classes and substandard
premium classes. In an otherwise identical Contract, an Insured in the standard
premium class will have a lower cost of insurance than an Insured in a
substandard premium class with a higher mortality risk. The premium classes are
also divided into two categories: smokers and nonsmokers. Nonsmoking Insureds
will incur lower cost of insurance rates than Insureds who are classified as
smokers but who are otherwise in the same premium class. Any Insured with an
Age at issuance under 18 will be classified initially as regular or substandard.
The Insured then will be classified as a smoker at Age 18 unless the Insured
provides satisfactory evidence that the Insured is a nonsmoker. The Company
will provide notice to the Policy owner of the opportunity for an Insured to be
classified as a nonsmoker when the Insured reaches Age 18.

The cost of insurance rate is determined separately for the initial Face Amount
and for the amount of any increase in Face Amount. For each increase in Face
Amount the Policy owner requests, at a time when an Insured is in a less
favorable Premium Class than previously, a correspondingly higher cost of
insurance rate will apply only to that portion of the Insurance Amount at Risk
for the increase. For the initial Face Amount and any prior increases, the
Company will use the Premium Class previously applicable. On the other hand, if
an Insured's Premium Class improves on an increase, the lower cost of insurance
rate generally will apply to the entire Insurance Amount at Risk.

MONTHLY ADMINISTRATIVE CHARGES - Prior to the Final Premium Payment Date, a
monthly administrative charge of $6 per month will be deducted from Policy
Value. This charge will be used to compensate the Company for expenses incurred
in the administration of the Policy and will compensate the Company for first
year underwriting and other start-up expenses incurred in connection with the
Policy. These expenses include the cost of processing applications, conducting
medical examinations, determining insurability and the Insureds' Premium Class,
and establishing Policy records. The Company does not expect to derive a profit
from these charges.

CHARGES AGAINST ASSETS OF THE INHEIRITAGE ACCOUNT - The Company assesses each
Sub-Account with a charge for mortality and expense risks assumed by the Company
and a charge for administrative expenses of the Inheiritage Account.

MORTALITY AND EXPENSE RISK CHARGE - The Company currently makes a charge on an
annual basis of 0.90% of the daily net asset value in each Sub-Account. This
charge is for the mortality risk and expense risk which the Company assumes in
relation to the variable portion of the Policies. The total charges may be
increased or decreased by the Board of Directors of the Company once each year,
subject to compliance with applicable state and federal requirements, but it may
not exceed 1.275% on an annual basis.

Any mortality and expense risk charge above 0.90% is currently considered above
the range of industry practice. To increase the charge above the range of
industry practice, the Company must file a request with the Securities and
Exchange Commission ("SEC") for an exemption from certain SEC rules, in which it
would be necessary to demonstrate that the proposed charge is reasonable in
relation to the risks assumed under the Policy. Even with such a demonstration,
there is no assurance that the SEC would issue an exemption order.

<PAGE>

The mortality risk assumed by the Company is that Insureds may live for a
shorter time than anticipated, and that the Company will therefore pay an
aggregate amount of Death Proceeds greater than anticipated. The expense risk
assumed is that the expenses incurred in issuing and administering the Policies
will exceed the amounts realized from the administrative charges provided in the
Policies. If the charge for mortality and expense risks is not sufficient to
cover actual mortality experience and expenses, the Company will absorb the
losses. If costs are less than the amounts provided, the difference will be a
profit to the Company. To the extent this charge results in a current profit to
the Company, such profit will be available for use by the Company for, among
other things, the payment of distribution, sales and other expenses. Since
mortality and expense risks involve future contingencies which are not subject
to precise determination in advance, it is not feasible to identify specifically
the portion of the charge which is applicable to each.

INHEIRITAGE ACCOUNT ADMINISTRATIVE CHARGE - During the first fifteen Policy
years, the Company assesses a charge on an annual basis of 0.25% of the daily
net asset value in each Sub-Account. The charge is assessed to help defray
administrative expenses actually incurred in the administration of the
Inheiritage Account and the Sub-Accounts and is not expected to be a source of
profit. The administrative functions and expenses assumed by the Company in
connection with the Inheiritage Account and the Sub-Accounts include, but are
not limited to, clerical, accounting, actuarial and legal services, rent,
postage, telephone, office equipment and supplies, expenses of preparing and
printing registration statements, expenses of preparing and typesetting
prospectuses and the cost of printing prospectuses not allocable to sales
expense, filing and other fees. No Inheiritage Account administrative charge is
imposed after the fifteenth Policy year.

OTHER CHARGES AGAINST THE ASSETS OF THE INHEIRITAGE ACCOUNT - Because the
Sub-Accounts purchase shares of the Underlying Investment Companies, the value
of the Accumulation Units of the Sub-Accounts will reflect the investment
advisory fee and other expenses incurred by the Underlying Investment Companies.
The prospectuses and statements of additional information of the Trust, VIP, VIP
II, T. Rowe Price and DGPF contain additional information concerning such fees
and expenses.

No charges are currently made against the Sub-Accounts for federal or state
income taxes. Should the Company determine that taxes will be imposed, the
Company may make deductions from the Sub-Account to pay such taxes. See
"FEDERAL TAX CONSIDERATIONS." The imposition of such taxes would result in a
reduction of the Policy Value in the Sub-Accounts.

SURRENDER CHARGE - The Policy provides for a contingent surrender charge. A
separate surrender charge, described in more detail below, is calculated upon
the issuance of the Policy and for each increase in the Face Amount. The
surrender charge is comprised of a contingent deferred administrative charge and
a contingent deferred sales charge. The contingent deferred administrative
charge compensates the Company for expenses incurred in administering the
Policy. The contingent deferred sales charge compensates the Company for
expenses relating to the distribution of the Policy, including Agent's
commissions, advertising and the printing of the prospectus and sales
literature.

A surrender charge may be deducted if the Policy owner requests a full surrender
of the Policy or a decrease in Face Amount. The duration of the surrender
charge is 15 years from Date of Issue or from the effective date of any increase
in the Face Amount. The maximum surrender charge calculated upon issuance of
the Policy is equal to the sum of (a) plus (b) where (a) is a deferred
administrative charge equal to $8.50 per thousand dollars of the initial Face
Amount and (b) is a deferred sales charge of 48% of premiums received up to a
maximum number of Guideline Annual Premiums subject to the deferred sales charge
that varies by average issue Age from 1.95 (for average issue Ages 5 through 75)
to 1.31 (for average issue Age 82). In accordance with limitations under state
insurance regulations, the amount of the maximum surrender charge will not
exceed a specified amount per $1,000 initial face Amount, as indicated in
"APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES." The maximum surrender
charge continues in a level amount for 40 Policy months and reduces by 0.5% or
more per month thereafter, as described in "APPENDIX D - CALCULATION OF MAXIMUM
SURRENDER CHARGES." This reduction in the maximum surrender charge will reduce
the deferred sales charge and the deferred administrative charge
proportionately.

If the Policy owner surrenders the Policy during the first two Policy years
following the Date of Issue before making premium payments associated with the
initial Face Amount which are at least equal to one Guideline Annual Premium,
the deferred administrative charge will be $8.50 per thousand dollars of initial
Face Amount, as described above, but the deferred sales charge will not exceed
25% of premiums received. See "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER
CHARGES."

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<PAGE>

charge of 48% of premiums associated with the increase, up to a maximum
number of Guideline Annual Premiums (for the increase) subject to the
deferred sales charge that varies by average Age (at the time of increase)
from 1.95 (for average Ages 5 through 75) to 1.31 (for average Age 82). In
accordance with limitations under state insurance regulations, the amount of
the surrender charge will not exceed a specified amount per $1,000 of
increase, as indicated in "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER
CHARGES." As is true for the initial Face Amount, (a) is a deferred
administrative charge and (b) is a deferred sales charge. The maximum
surrender charge for the increase continues in a level amount for 40 Policy
months and reduces by 0.5% or more per month thereafter, as provided
in"APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES." If the Policy
owner surrenders the Policy during the first two Policy years following an
increase in Face Amount before making premium payments associated with the
increase in Face Amount which are at least equal to one Guideline Annual
Premium, the deferred administrative charge will be $8.50 per thousand
dollars of Face Amount increase, as described above, but the deferred sales
charge will not exceed 25% of premiums associated with the increase. See
"APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES." The premiums
associated with the increase are determined as described below.

Additional premium payments may not be required to fund a requested increase
in Face Amount. Therefore, a special rule, which is based on relative
Guideline Annual Premium payments, applies to allocate a portion of existing
Policy Value to the increase and to allocate subsequent premium payments
between the initial Policy and the increase. For example, suppose the
Guideline Annual Premium is equal to $1,500 before an increase and is equal
to $2,000 as a result of the increase. The Policy Value on the effective
date of the increase would be allocated 75% ($1,500/$2,000) to the initial
Face Amount and 25% to the increase. All future premiums would also be
allocated 75% to the initial Face Amount and 25% to the increase. Thus,
existing Policy Value associated with the increase will equal the portion of
Policy Value allocated to the increase on the effective date of the increase,
before any deductions are made. Premiums associated with the increase will
equal the portion of the premium payments actually made on or after the
effective date of the increase which are allocated to the increase.

See "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES," for examples
illustrating the calculation of the maximum surrender charge for the initial
Face Amount and for any increases, as well as for the surrender charge based
on actual premiums paid or associated with any increases.

A surrender charge may be deducted on a decrease in the Face Amount. In the
event of a decrease, the surrender charge deducted is a fraction of the
charge that would apply to a full surrender of the Policy. The fraction will
be determined by dividing the amount of the decrease by the current Face
Amount and multiplying the result by the surrender charge. If more than one
surrender charge is in effect (i.e., pursuant to one or more increases in the
Face Amount of a Policy), the surrender charge will be applied in the
following order: (1) the most recent increase; (2) the next most recent
increases successively, and (3) the initial Face Amount. Where a decrease
causes a partial reduction in an increase or in the initial Face Amount, a
proportionate share of the surrender charge for that increase or for the
initial Face Amount will be deducted.

CHARGES ON PARTIAL WITHDRAWAL - After the first policy year, partial
withdrawals of Surrender Value may be made. The minimum withdrawal is $500.
Under Option 1, the Face Amount is reduced by the amount of the partial
withdrawal, and a partial withdrawal will not be allowed if it would reduce
the Face Amount below $100,000.

A transaction charge, which is the smaller of 2% of the amount withdrawn or
$25, will be assessed on each partial withdrawal to reimburse the Company for
the cost of processing the withdrawal. The Company does not expect to make a
profit on this charge.

A partial withdrawal charge may also be deducted from Policy Value. For each
partial withdrawal the Policy owner may withdraw an amount equal to 10% of
the Policy Value on the date the written withdrawal request is received by
the Company less the total of any prior withdrawals in that Policy year which
were not subject to the Partial Withdrawal charge, without incurring a
partial withdrawal charge. Any partial withdrawal in excess of this amount
("excess withdrawal") will be subject to the partial withdrawal charge. The
partial withdrawal charge is equal to 5% of the excess withdrawal up to the
amount of the surrender charge(s) on the date of withdrawal.

This right is not cumulative from Policy year to Policy year. For example,
if only 8% of Policy Value were withdrawn in Policy year two, the amount the
Policy owner could withdraw in subsequent Policy years would not be increased
by the amount the Policy owner did not withdraw in the second Policy year.

The Policy's outstanding surrender charge will be reduced by the amount of
the partial withdrawal charge deducted, by proportionately reducing the
deferred sales charge component and the deferred administrative charge
component. The partial withdrawal charge deducted will decrease existing
surrender charges in the following order: (1) the most recent increase in
Face Amount; (2) the next most recent increases successively, and (3) the
initial Face Amount.

TRANSFER CHARGES - The first six transfers in a Policy year will be free of
charge. Thereafter, a transfer charge

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<PAGE>

of $10 will be imposed for each transfer request to reimburse the Company for
the administrative costs incurred in processing the transfer request. The
Company reserves the right to increase the charge, but it will never exceed
$25. The Company also reserves the right to change the number of free
transfers allowed in a Policy Year. See "THE POLICY - Transfer Privilege."

The Policy owner may have automatic transfers of at least $100 a month made
on a periodic basis (a) from Sub-Account 3 or Sub-Account 5 (which invest in
the Money Market Fund and Government Bond Fund of the Trust, respectively) to
one or more of the other Sub-Accounts or (b) to reallocate Policy Value among
the Sub-Accounts. The first automatic transfer counts as one transfer towards
the six free transfers allowed in each policy year. Each subsequent automatic
transfer is without charge and does not reduce the remaining number of
transfers which may be made without charge.

If the Policy owner utilizes the Conversion Privilege, Loan Privilege or
reallocates Policy Value within 20 days of the Date of Issue of the Policy,
any resulting transfer of Policy Value from the Sub-Accounts to the General
Account will be free of charge, and in addition to the six free transfers in
a Policy year. See "THE POLICY - Conversion Privileges" and "POLICY LOANS."

CHARGE FOR INCREASE IN FACE AMOUNT - For each increase in Face Amount the Policy
owner requests, a transaction charge of $50 will be deducted from Policy Value
to reimburse the Company for administrative costs associated with the increase.
This charge is guaranteed not to increase and the Company does not expect to
make a profit on this charge.

OTHER ADMINISTRATIVE CHARGES - The Company reserves the right to impose a charge
for the administrative costs incurred for changing the Net Premium allocation
instructions, for changing the allocation of any Monthly Deductions among the
various Sub-Accounts, or for a projection of values. No such charges are
currently imposed and any such charge is guaranteed not to exceed $25.

POLICY LOANS

Loans may be obtained by request to the Company on the sole security of this
Policy. The total amount which may be borrowed is the Loan Value. In the first
Policy year, the Loan Value is 75% of Policy Value reduced by applicable
surrender charges as well as Monthly Deductions and interest on Debt to the end
of the Policy year. The Loan Value in the second Policy year and thereafter is
90% of an amount equal to Policy Value reduced by applicable surrender charges.
There is no minimum limit on the amount of the loan. The loan amount will
normally be paid within seven days after the Company receives the loan request
at its Principal Office, but the Company may delay payments under certain
circumstances. See "OTHER POLICY PROVISIONS - Postponement Of Payments."

A Policy loan may be allocated among the General Account and one or more
Sub-Accounts. If the Policy owner does not make an allocation, the Company
will make a Pro Rata Allocation based on the amounts in the Accounts on the
date the Company receives the loan request. Policy Value in each Sub-Account
equal to the Policy loan allocated to such Sub-Account will be transferred to
the General Account, and the number of Accumulation Units equal to the Policy
Value so transferred will be cancelled. This will reduce the Policy Value in
these Sub-Accounts. These transactions are not treated as transfers for
purposes of the transfer charge.

As long as the Policy is in force, Policy Value in the General Account equal to
the loan amount will be credited with interest at an effective annual yield of
at least 6% per year. NO ADDITIONAL INTEREST WILL BE CREDITED TO SUCH POLICY
VALUE.

LOAN INTEREST CHARGED - Interest accrues daily and is payable in arrears at the
annual rate of 8%. Interest is due and payable at the end of each Policy year
or on a pro rata basis for such shorter period as the loan may exist. Interest
not paid when due will be added to the loan amount and bear interest at the same
rate. After the due and unpaid interest is added to loan amount, if the new
loan amount exceeds the Policy Value in the General Account, the Company will
transfer Policy Value equal to that excess loan amount from the Policy Value in
each Sub-Account to the General Account as security for the excess loan amount.
The Company will allocate the amount transferred among the Sub-Accounts in the
same proportion that the Policy Value in each Sub-Account bears to the total
Policy Value in all Sub-Accounts.

REPAYMENT OF DEBT - Loans may be repaid at any time prior to the lapse of the
Policy. Upon repayment of Debt, the portion of the Policy Value that is in the
General Account securing the Debt repaid will be allocated to the various
Accounts and increase the Policy Value in such accounts in accordance with the
Policy owner's instructions. If the Policy owner does not make a repayment
allocation, the Company will allocate Policy Value in accordance with the Policy
owner's most recent premium allocation instructions; provided, however, that
loan repayments allocated to the Inheiritage Account cannot exceed Policy Value
previously transferred from the Inheiritage Account to secure the Debt.

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<PAGE>

If Debt exceeds the Policy Value less the surrender charge, the Policy will
terminate. A notice of such pending termination will be mailed to the last
known address of the Policy owner and any assignee. If the Policy owner does
not make sufficient payment within 62 days after this notice is mailed, the
Policy will terminate with no value. See "POLICY TERMINATION AND
REINSTATEMENT."

EFFECT OF POLICY LOANS - Although Policy loans may be repaid at any time prior
to the lapse of the Policy, Policy loans will permanently affect the Policy
Value and Surrender Value, and may permanently affect the Death Proceeds. The
effect could be favorable or unfavorable, depending upon whether the investment
performance of the Sub-Account(s) is less than or greater than the interest
credited to the Policy Value in the General Account attributable to the loan.

Moreover, outstanding Policy loans and the accrued interest will be deducted
from the proceeds payable upon the death of the last surviving Insured or
upon surrender.

POLICY TERMINATION AND REINSTATEMENT

TERMINATION - The failure to make premium payments will not cause the Policy to
lapse unless: (a) the Surrender Value is insufficient to cover the next Monthly
Deduction plus loan interest accrued; or (b) Debt exceeds the Policy Value less
surrender charges. If one of these situations occurs, the Policy will be in
default. The Policy owner will then have a grace period of 62 days, measured
from the date of default, to make sufficient payments to prevent termination. On
the date of default, the Company will send a notice to the Policy owner and to
any assignee of record. The notice will state the amount of premium due and the
date on which it is due.

Failure to make a sufficient payment within the grace period will result in
termination of the Policy. If the last surviving Insured dies during the grace
period, the Death Proceeds will still be payable, but any Monthly Deductions due
and unpaid through the policy month in which the last surviving Insured dies and
any other overdue charge will be deducted from the Death Proceeds.

Except for the situation described in (b) above, if, during the first 48 months
after the Date of Issue or the effective date of an increase in Face Amount, the
Policy owner makes premium payments, less Debt, partial withdrawals and partial
withdrawal charges, at least equal to the sum of the Minimum Monthly Factors for
the number of months the Policy, increase, or Policy Change which causes a
change in the Minimum Monthly Factor has been in force, the Policy is guaranteed
not to lapse during that period. A Policy Change which causes a change in the
Minimum Monthly Factor is a change in the Face Amount or the addition or
deletion of a rider. Except for the first 48 months after the Date of Issue or
the effective date of an increase, payments equal to the Minimum Monthly Factor
do not guarantee that the Policy will remain in force.

REINSTATEMENT - If the Policy has not been surrendered and the Insureds are
alive, the terminated Policy may be reinstated anytime within 3 years after the
date of default and before the Final Premium Payment Date. The reinstatement
will be effective on the Monthly Payment Date following the date the Policy
owner submits the following to the Company: (1) a written application for
reinstatement; (2) Evidence of Insurability showing that the Insureds are
insurable according to the Company's underwriting rules; and (3) a premium that,
after the deduction of the tax expense charge and premium expense charge, is
large enough to cover the minimum amount payable, as described below.

MINIMUM AMOUNT PAYABLE - If reinstatement is requested when less than 48 Monthly
Deductions have been made since the Date of Issue or the effective date of an
increase in the Face Amount, the Policy owner must pay the lesser of the amount
shown in A or B:

Under A, the minimum amount payable is the Minimum Monthly Factor for the
three-month period beginning on the date of reinstatement.

Under B, the minimum amount payable is the sum of

- the amount by which the surrender charge as of the date of
reinstatement exceeds the Policy Value on the date of default; plus

- Monthly Deductions for the three-month period beginning on the
date of reinstatement.

If reinstatement is requested after 48 Monthly Deductions have been made since
the Date of Issue of the policy or any increase in the Face Amount, the Policy
owner must pay the amount shown in B above. The Company reserves the right to
increase the Minimum Monthly Factor upon reinstatement.

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<PAGE>

will be restored to the Policy to the extent it does not exceed the
surrender charge on the date of reinstatement. Any Policy Value less Debt as
of the date of default which exceeds the surrender charge on the date of
reinstatement will not be restored.

POLICY VALUE ON REINSTATEMENT - The Policy Value on the date of reinstatement
is:

. the Net Premium paid to reinstate the Policy increased by interest
from the date the payment was received at the Company's Principal
Office;
. plus an amount equal to the Policy Value less Debt on the date of
default to the extent it does not exceed the surrender charge on the
date of reinstatement;

. minus the Monthly Deduction due on the date of reinstatement.

The Policy owner may not reinstate any Debt outstanding on the date of default
or foreclosure.

OTHER POLICY PROVISIONS

The following Policy provisions may vary in certain states in order to comply
with requirements of the insurance laws, regulations, and insurance regulatory
agencies in those states.

POLICY OWNER - The Policy owner is named in the application for the Policy. The
Policy owner is generally entitled to exercise all rights under a Policy while
the Insureds are alive, subject to the consent of any irrevocable Beneficiary
(the consent of a revocable Beneficiary is not required). The consent of the
Insureds is required whenever the Face Amount of insurance is increased.

BENEFICIARY -The Beneficiary is the person or persons to whom the insurance
proceeds are payable upon the death of the last surviving Insured. Unless
otherwise stated in the Policy, the Beneficiary has no rights in the Policy
before the death of the last surviving Insured. While the Insureds are alive,
the Policy owner may change any Beneficiary unless the Policy owner has declared
a Beneficiary to be irrevocable. If no Beneficiary is alive when the last
surviving Insured dies, the owner (or the owner's estate) will be the
Beneficiary. If more than one Beneficiary is alive when the last surviving
Insured dies, they will be paid in equal shares, unless the Policy owner has
chosen otherwise. Where there is more than one Beneficiary, the interest of a
Beneficiary who dies before the last surviving Insured dies will pass to
surviving Beneficiaries proportionally.

INCONTESTABILITY - The Company will not contest the validity of a Policy after
it has been in force during the lifetimes of both Insureds for two years from
the Date of Issue. The Company will not contest the validity of any increase in
the Face Amount after such increase or rider has been in force during the
lifetimes of both Insureds for two years from its effective date.

SUICIDE - The Death Proceeds will not be paid if either Insured commits suicide,
while sane or insane, within two years from the Date of Issue. Instead, the
Company will pay the Beneficiary an amount equal to all premiums paid for the
Policy, without interest, less any outstanding Debt and less any partial
withdrawals. If either Insured commits suicide, while sane or insane, generally
within two years from the effective date of any increase in the Sum Insured, the
Company's liability with respect to such increase will be limited to a refund of
the cost thereof. The Beneficiary will receive the administrative charges and
insurance charges paid for such increase.

NOTICE OF FIRST INSURED TO DIE - Within 90 days of the death of the first
Insured to die, or as soon thereafter as is reasonably possible, the Policy
owner must mail to the Principal Office due proof of such death.

AGE - If the Age of either Insured as stated in the application for a Policy is
not correct, benefits under a Policy will be adjusted to reflect the correct
Age, if death of the last surviving Insured occurs prior to the Final Premium
Payment Date. The adjusted benefit will be that which the most recent cost of
insurance charge would have purchased for the correct Age. In no event will the
Sum Insured be reduced to less than the Guideline Minimum Sum Insured.

ASSIGNMENT - The owner may assign a Policy as collateral or make an absolute
assignment of the Policy. All rights under the Policy will be transferred to
the extent of the assignee's interest. The Consent of the assignee may be
required in order to make changes in premium allocations, to make transfers, or
to exercise other rights under the Policy. The Company is not bound by an
assignment or release thereof, unless it is in writing and is recorded at the
Company's Principal Office. When recorded, the assignment will take effect as
of the date the written request was signed. Any rights created by the
assignment will be subject to any payments made or actions taken by the Company
before the assignment is recorded. The Company is not responsible for
determining the validity of any assignment or release.

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<PAGE>

postponed whenever: (a) the New York Stock Exchange is closed other than
customary weekend and holiday closings, or trading on the New York Stock
Exchange is restricted as determined by the SEC or (b) an emergency exists,
as determined by the SEC, as a result of which disposal of securities is not
reasonably practicable or it is not reasonably practicable to determine the
value of the Inheiritage Account's net assets. Payments under the Policy of
any amounts derived from the premiums paid by check may be delayed until such
time as the check has cleared the bank.

The Company also reserves the right to defer payment of any amount due from
the General Account upon surrender, partial withdrawal or death of the last
surviving Insured, as well as payments of policy loans and transfers from the
General Account, for a period not to exceed six months.

DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY

Name and Position Principal Occupation(s) During Past Five
Years
- ----------------------------- -----------------------------------------
Bruce C. Anderson Director of First Allmerica since 1996;
Director and Vice President Vice President, First Allmerica

Abigail M. Armstrong Secretary of First Allmerica since 1996;
Secretary and Counsel Counsel, First Allmerica

Mark R. Colborn Vice President and Controller, First
Vice President and Controller Allmerica

Kruno Huitzingh Director of First Allmerica since 1996;
Director, Vice President and Vice President & Chief Information
Chief Information Officer Officer, First Allmerica since 1993;
Executive Vice President, Chicago Board
Options Exchange, 1985 to 1993

James R. McAuliffe Director of First Allmerica since
Director 1996; President and CEO, Citizens
Insurance Company of America since 1995;
Vice President and Chief Investment
Officer, First Allmerica, 1986 to 1994

John F. Kelly Director of First Allmerica since 1996;
Director Senior Vice President, General Counsel
and Assistant Secretary, First Allmerica

John F. O'Brien Director, Chairman of the Board,
Director and Chairman of the Board President and Chief Executive Officer of
First Allmerica

Edward J. Parry, III Vice President and Treasurer, First
Vice President and Treasurer Allmerica since 1993; Assistant. Vice
President to 1992 to 1993; Manager,
Price Waterhouse, 1987 to 1992

Richard M. Reilly Director of First Allmerica since 1996;
Director and Vice President Vice President, First Allmerica;
Director and President, Allmerica
Investments, Inc.; Director and
President Allmerica Investment
Management Company, Inc .since 1992,
Director and Executive Vice President,
1990 to 1992.

Larry C. Renfro Director of First Allmerica since 1996;
Director Vice President, First Allmerica

Theodore J. Rupley Director of First Allmerica since 1996;
Director President, The Hanover Insurance Company
since 1992; President, Fountain
Powerboats, 1992; President;
Metropolitan Property & Casualty
Company, 1986-1992.

Philip J. Soule Director of First Allmerica since 1996;
Director Vice President, First Allmerica

Eric Simonsen Director of First Allmerica since 1996;
Director, Vice President and Chief Vice President and Chief Financial
Financial Officer Officer, First Allmerica

Diane E. Wood Director of First Allmerica since 1996;
Director and Vice President Vice President, First Allmerica

39
<PAGE>

DISTRIBUTION

Allmerica Investments, Inc. an indirect subsidiary of First Allmerica, acts
as the principal underwriter of the Policies pursuant to a Sales and
Administrative Services Agreement with the Company and the Inheiritage
Account. Allmerica Investments, Inc. is registered with the Securities and
Exchange Commission as a broker-dealer and is a member of the National
Association of Securities Dealers. The Policies are sold by agents of the
Company who are registered representatives of Allmerica Investments, Inc. or
of broker-dealers who have selling agreements with Allmerica Investments, Inc.

The Company pays to registered representatives who sell the Policy commissions
based on a commission schedule. After issue of the Policy or an increase in
Face Amount, commissions generally will equal 50 percent of the first year
premiums up to a basic premium amount established by the Company. Thereafter,
commissions will generally equal 3.5 percent of any additional premiums.
Certain registered representatives, including registered representatives
enrolled in the Company's training program for new agents, may receive
additional first year and renewal commissions and training reimbursements.
General Agents of the Company and certain registered representatives may also be
eligible to receive expense reimbursements based on the amount of earned
commissions. General Agents may also receive overriding commissions, which will
not exceed 10 percent of first year or 14 percent of renewal premiums.

The Company intends to recoup the commission and other sales expense through a
combination of the deferred sales charge component of the anticipated surrender
and partial withdrawal charges, and the investment earnings on amounts allocated
to accumulate on a fixed basis in excess of the interest credited on fixed
accumulations by the Company. There is no additional charge to the Policy Owner
or to the Separate Account. Any surrender charge assessed on a Policy will be
retained by the Company except for amounts it may pay to Allmerica Investments,
Inc. for services it performs and expenses it may incur as principal underwriter
and general distributor.

REPORTS

The Company will maintain the records relating to the Inheiritage Account. The
Policy owner will be promptly sent statements of significant transactions such
as premium payments, changes in specified Face Amount, changes in Sum Insured
Option, transfers among Sub-Accounts and the General Account, partial
withdrawals, increases in loan amount by the Policy owner, loan repayments,
lapse, termination for any reason, and reinstatement. An annual statement will
also be sent to the Policy owner within 30 days after a Policy Anniversary. The
annual statement will summarize all of the above transactions and deductions of
charges during the Policy year. It will also set forth the status of the Death
Proceeds, Policy Value, Surrender Value, amounts in the Sub-Accounts and General
Account, and any Policy loan(s).

In addition, the Policy owner will be sent periodic reports containing financial
statements and other information for the Inheiritage Account and the Underlying
Investment Companies as required by the Investment Company Act of 1940.

LEGAL PROCEEDINGS

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

FURTHER INFORMATION

A Registration Statement under the Securities Act of 1933 relating to this
offering has been filed with the Securities and Exchange Commission. Certain
portions of the Registration Statement and amendments have been omitted from
this prospectus pursuant to the rules and regulations of the Securities and
Exchange Commission. Statements contained in this prospectus concerning the
Policy and other legal documents are summaries. The complete documents and
omitted information may be obtained from the Securities and Exchange
Commission's principal office in Washington, D.C., upon payment of the
Securities and Exchange Commission's prescribed fees.

INDEPENDENT ACCOUNTANTS

The financial statements of the Company as of December 31, 1995 and 1994 and for
each of the three years in the period ended December 31, 1995 and of the
Inheiritage Account of Allmerica Financial Life Insurance and Annuity Company as
of December 31, 1995 and for the periods indicated, included in this Prospectus
constituting part of the Registration Statement, have been so included in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.

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<PAGE>

The financial statements of the Company included herein should be considered
only as bearing on the ability of the Company to meet its obligations under the
Policies.

FEDERAL TAX CONSIDERATIONS

The effect of federal income taxes on the value of a Policy, on loans,
withdrawals, or surrenders, on death benefit payments, and on the economic
benefit to the Policy owner or the Beneficiary depends upon a variety of
factors. The following discussion is based upon the Company's understanding of
the present federal income tax laws as they are currently interpreted. From
time to time legislation is proposed which, if passed, could significantly,
adversely and possibly retroactively affect the taxation of the Policies. No
representation is made regarding the likelihood of continuation of current
federal income tax laws or of current interpretations by the Internal Revenue
Service (IRS). Moreover, no attempt has been made to consider any applicable
state or other tax laws.

It should be recognized that the following summary of federal income tax aspects
of amounts received under the Policies is not exhaustive, does not purport to
cover all situations and is not intended as tax advice. Specifically, the
discussion below does not address certain tax provisions that may be applicable
if the Policy owner is a corporation or the Trustee of an employee benefit plan.
A qualified tax adviser should always be consulted with regard to the
application of law to individual circumstances.

THE COMPANY AND THE INHEIRITAGE ACCOUNT - The Company is taxed as a life
insurance company under Subchapter L of the Internal Revenue Code of 1986 (the
"Code") and files a consolidated tax return with its parent and affiliates. The
Company does not expect to incur any income tax upon the earnings or realized
capital gains attributable to the Inheiritage Account. Based on these
expectations, no charge is made for federal income taxes which may be
attributable to the Inheiritage Account.

The Company will review periodically the question of a charge to the Inheiritage
Account for federal income taxes. Such a charge may be made in future years for
any federal income taxes incurred by the Company. This might become necessary
if the tax treatment of the Company is ultimately determined to be other than
what the Company believes it to be, if there are changes made in the federal
income tax treatment of variable life insurance at the Company level, or if
there is a change in the Company's tax status. Any such charge would be
designed to cover the federal income taxes attributable to the investment
results of the Inheiritage Account.

Under current laws the Company may also incur state and local taxes (in addition
to premium taxes) in several states. At present these taxes are not
significant. If there is a material change in applicable state or local tax
laws, charges may be made for such taxes paid, or reserves for such taxes,
attributable to the Inheiritage Account.

TAXATION OF THE POLICIES - The Company believes that the Policies described in
this prospectus will be considered life insurance contracts under Section 7702
of the Code, which generally provides for the taxation of life insurance
contracts and places limitations on the relationship of the Policy Value to the
Insurance Amount at risk. As a result, the Death Proceeds payable are
excludable from the gross income of the Beneficiary. Moreover, any increase in
the Policy Value of the Policy is not taxable until received by the Policy owner
or the Policy owner's designee. But see "MODIFIED ENDOWMENT CONTRACTS."
Although the Company believes that the Policies are in compliance with Section
7702 of the Code, the manner in which Section 7702 should be applied to certain
features of a joint survivorship life insurance contract is not directly
addressed by Section 7702. In the absence of final regulations or other
guidance issued under Section 7702, there is necessarily some uncertainty
whether a Policy will meet the Section 7702 definition of a life insurance
contract. This is true particularly if the Policy owner pays the full amount of
premiums permitted under the Policy. A Policy owner contemplating the payment
of such premiums should do so only after consulting a tax adviser. If a Policy
were determined not to be a life insurance contract under Section 7702, it would
not have most of the tax advantages normally provided by a life insurance
contract.

The Code requires that the investment of each Sub-Account be adequately
diversified in accordance with Treasury regulations in order to be treated as a
life insurance policy for tax purposes. Although the Company does not have
control over the investments of the Underlying Funds, the Company believes that
the Underlying Funds currently meet the Treasury's diversification requirements,
and the Company will monitor continued compliance with these requirements. In
connection with the issuance of previous regulations relating to diversification
requirements, the Treasury Department announced that such regulations do not
provide guidance concerning the extent to which Policyowners may direct their
investments to particular divisions of a separate account. Regulations in this
regard may be issued in the future. It is possible that if and when regulations
are issued, the Policies may need to be modified to comply with such
regulations. For these reasons, the Policies or the Company's administrative
rules may be modified as necessary to prevent a Policy owner from being
considered the owner of the assets of the Inheiritage Account.

41
<PAGE>

The Company believes that loans received under a Policy will be treated as
indebtedness of the Policy owner for federal tax purposes, and under current
law will not constitute income to the Policy owner so long as the Policy
remains in force. But see "MODIFIED ENDOWMENT CONTRACTS." Deducting
interest on policy loans is, however, subject to the restrictions of Section
264 of the Code. Consumer interest paid on Policy loans under a Policy owned
by an individual is not tax deductible. In addition, no tax deduction is
allowed for any interest on any loan under one or more life insurance
policies (purchased after June 20, 1986) owned by a taxpayer covering the
life of any individual who is an officer or employee of or is financially
interested in, any business carried on by that taxpayer, to the extent the
aggregate amount of such loans exceeds $50,000.

Depending upon the circumstances, a surrender, partial withdrawal, change in
the Sum Insured Option, change in the Face Amount, lapse with policy loan
outstanding, or assignment of the Policy may have tax consequences. In
particular, under specified conditions, a distribution under the Policy
during the first fifteen years from Date of Issue that reduces future
benefits under the Policy will be taxed to the Policy owner as ordinary
income to the extent of any investment earnings in the Policy. Federal,
state and local income, estate, inheritance, and other tax consequences of
ownership or receipt of Policy proceeds depend on the circumstances of each
Insured, Policy owner, or Beneficiary.

The Split Option Rider permits a Policy to be split into two other life
insurance policies, one covering each Insured singly. A Policy split may
have adverse tax consequences. It is not clear whether a Policy split will
be treated as a nontaxable exchange under Section 1035 of the Code. Unless a
Policy split is so treated, it could result in recognition of taxable income
on the gain in the Policy. In addition, it is not clear whether, in all
circumstances, the individual policies that result from a Policy split would
be treated as life insurance policies under Section 7702 of the Code or would
be classified as modified endowment contracts. The Policy owner should
consult a competent tax adviser regarding the possible adverse tax
consequences of a Policy Split.

MODIFIED ENDOWMENT CONTRACTS - The Technical and Miscellaneous Revenue Act of
1988 ("Act") adversely affects the tax treatment of distributions under
so-called "modified endowment contracts." Under the Act, any life insurance
policy, including a Policy offered by this prospectus, that fails to satisfy a
"7-pay" test is considered a modified endowment contract. A Policy fails to
satisfy the 7-pay test if the cumulative premiums paid under the Policy at any
time during the first seven policy years exceeds the sum of the net level
premiums that would have been paid, had the Policy provided for paid-up future
benefits after the payment of seven level premiums.

If a Policy is considered a modified endowment contract, all distributions
under the Policy will be taxed on an "income first" basis. Most
distributions received by a Policy owner directly or indirectly (including
loans, withdrawals, partial surrenders, or the assignment or pledge of any
portion of the value of the Policy) will be includible in gross income to the
extent that the cash Surrender Value of the Policy exceeds the Policy owner's
investment in the contract. Any additional amounts will be treated as a
return of capital to the extent of the Policy owner's basis in the Policy.
In addition, with certain exceptions, an additional 10% tax will be imposed
on the portion of any distribution that is includible in income. All
modified endowment contracts issued by the same insurance company to the same
Policy owner during any 12-month period will be treated as a single modified
endowment contract in determining taxable distributions.

Currently, each Policy is reviewed when premiums are received to determine if it
satisfies the 7-pay test. If the Policy does not satisfy the 7-pay test, the
Company will notify the Policy owner of the option of requesting a refund of the
excess premium. The refund process must be completed within 60 days after the
Policy anniversary, or the Policy will be permanently classified as a modified
endowment contract.

ESTATE AND GENERATION SKIPPING TAXES - When the last surviving Insured dies, the
Death Proceeds will generally be includible in the Policy owner's estate for
purposes of federal estate tax if the last surviving Insured owned the Policy.
If the Policy owner was not the last surviving Insured, the fair market value of
the Policy would be included in the Policy owner's estate upon the Policy
owner's death. Nothing would be includible in the last surviving Insured's
estate if he or she neither retained incidents of ownership at death nor had
given up ownership within three years before death.

Federal estate tax is integrated with federal gift tax under a unified rate
schedule. In general, estates less than $600,000 will not incur a federal
estate tax liability. In addition, an unlimited marital deduction may be
available for federal estate and gift tax purposes. The unlimited marital
deduction permits the deferral of taxes until the death of the surviving spouse,
when the Death Proceeds would be available to pay taxes due and other expenses
incurred.

42
<PAGE>

ownership of the Policy to someone two or more generations younger, the
transfer may be subject to the generation-skipping tax, the taxable amount
being the value of the Policy. (Such a transfer is unlikely but not
impossible.) If the Death Proceeds are not includible in the Insured's
estate (because the Insured retained no incidents of ownership and did not
relinquish ownership within three years before death), the payment of the
Death Proceeds to the beneficiary is not subject to the generation-skipping
tax regardless of the beneficiary's generation. The generation-skipping tax
provisions generally apply to transfers which would be subject to the gift
and estate tax rules. Individuals are generally allowed an aggregate
generation skipping tax exemption of $1 million. Because these rules are
complex, the Policy owner should consult with a tax adviser for specific
information where benefits are passing to younger generations.

MORE INFORMATION ABOUT THE GENERAL ACCOUNT

As discussed earlier, the Policy owner may allocate Net Premiums and transfer
Policy Value to the General Account. Because of exemption and exclusionary
provisions in the securities laws, any amount in the General Account is not
generally subject to regulation under the provisions of the Securities Act of
1933 or the Investment Company Act of 1940. Accordingly, the disclosures in
this Section have not been reviewed by the Securities and Exchange Commission.
Disclosures regarding the fixed portion of the Policy and the General Account
may, however, be subject to certain generally applicable provisions of the
Federal securities laws concerning the accuracy and completeness of statements
made in prospectuses.

GENERAL DESCRIPTION - The General Account of the Company is made up of all of
the general assets of the Company other than those allocated to any separate
account. Allocations to the General Account become part of the assets of the
Company and are used to support insurance and annuity obligations. Subject to
applicable law, the Company has sole discretion over the investment of assets of
the General Account.

A portion or all of Net Premiums may be allocated or transferred to accumulate
at a fixed rate of interest in the General Account. Such net amounts are
guaranteed by the Company as to principal and a minimum rate of interest. The
allocation or transfer of funds to the General Account does not entitle the
Policy owner to share in the investment experience of the General Account.

GENERAL ACCOUNT VALUE - The Company bears the full investment risk for amounts
allocated to the General Account and guarantees that interest credited to each
Policy owner's Policy Value in the General Account will not be less than an
annual rate of 4% ("Guaranteed Minimum Rate").

The Company may, AT ITS SOLE DISCRETION, credit a higher rate of interest
("excess interest"), although it is not obligated to credit interest in excess
of 4% per year, and might not do so. However, the excess interest rate, if any,
in effect on the date a premium is received at the Principal Office is
guaranteed on that premium for one year, unless the Policy Value associated with
the premium becomes security for a Policy loan. AFTER SUCH INITIAL ONE YEAR
GUARANTEE OF INTEREST ON NET PREMIUM, ANY INTEREST CREDITED ON THE POLICY'S
ACCUMULATED VALUE IN THE GENERAL ACCOUNT IN EXCESS OF THE GUARANTEED MINIMUM
RATE PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF THE COMPANY. THE
POLICY OWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE
GUARANTEED MINIMUM RATE.

Even if excess interest is credited to accumulated value in the General Account,
no excess interest will be credited to that portion of the Policy Value which is
equal to Debt. However, such Policy Value will be credited interest at an
effective annual yield of at least 6%.

The Company guarantees that, on each Monthly Payment Date, the Policy Value in
the General Account will be the amount of the Net Premiums allocated or Policy
Value transferred to the General Account, plus interest at an annual rate of 4%
per year, plus any excess interest which the Company credits, less the sum of
all Policy charges allocable to the General Account and any amounts deducted
from the General Account in connection with loans, partial withdrawals,
surrenders or transfers.

THE POLICY - This prospectus describes a flexible premium variable life
insurance policy and is generally intended to serve as a disclosure document
only for the aspects of the Policy relating to the Inheiritage Account. For
complete details regarding the General Account, see the Policy itself.

TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS - If a Policy is
surrendered or if a partial withdrawal is made, a surrender charge or partial
withdrawal charge, as applicable, may be imposed. In the event of a decrease in
Face Amount, the surrender charge deducted is a fraction of the charge that
would apply to a full surrender of the Policy. Partial withdrawals are made on
a last-in/first-out basis from Policy Value allocated to

43
<PAGE>

the General Account.

The first six transfers in a policy year are free of charge. Thereafter, a $10
transfer charge will be deducted for each transfer in that Policy year. The
transfer privilege is subject to the consent of the Company and to the Company's
then current rules.

Policy loans may also be made from the Policy Value in the General Account.

Transfers, surrenders, partial withdrawals, Death Proceeds and Policy loans
payable from the General Account may be delayed up to six months. However, if
payment is delayed for 30 days (10 days in New York) or more, the Company will
pay interest at least equal to an effective annual yield of 3.5% per year for
the period of deferment. Amounts from the General Account used to pay premiums
on policies with the Company will not be delayed.

FINANCIAL STATEMENTS

Financial Statements for the Company and for the Inheiritage Account are
included in this prospectus beginning immediately after this section. The
financial statements of the Company should be considered only as bearing on the
ability of the Company to meet its obligations under the Policy. They should
not be considered as bearing on the investment performance of the assets held in
the Inheiritage Account.

<PAGE>

ALLMERICA FINANCIAL
LIFE INSURANCE AND
ANNUITY COMPANY

(formerly SMA Life Assurance Company)

STATUTORY FINANCIAL STATEMENTS

DECEMBER 31, 1995

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY

December 31, 1995

Statutory Financial Statements
Report of Independent Accountants . . . . . . . . . . . . . . . . . 1
Statement of Assets, Liabilities, Surplus and Other Funds . . . . . 3
Statement of Operations and Changes in Capital and Surplus. . . . . 4
Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Statutory Financial Statements . . . . . . . . . . . . . . 6

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholder of
Allmerica Financial Life Insurance and Annuity Company
(formerly known as SMA Life Assurance Company)

We have audited the accompanying statutory basis statement of assets,
liabilities, surplus and other funds of Allmerica Financial Life Insurance and
Annuity Company as of December 31, 1995 and 1994, and the related statutory
basis statements of operations and changes in capital and surplus, and of cash
flows for each of the three years ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As described more fully in Note 1 to the financial statements, the Company
prepared these financial statements using accounting practices prescribed or
permitted by the Insurance Department of the State of Delaware, which practices
differ from generally accepted accounting principles. The effects on the
financial statements of the variances between the statutory basis of accounting
and generally accepted accounting principles, although not reasonably
determinable, are presumed to be material.

In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Allmerica Financial Life Insurance and Annuity Company as of December 31,
1995 and 1994, or the results of its operations or its cash flows for each of
the three years ended December 31, 1995.

<PAGE>

To the Board of Directors and Stockholder of
Allmerica Financial Life Insurance and Annuity Company
(formerly known as SMA Life Assurance Company)

Page 2

In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets, liabilities, surplus and other funds of
Allmerica Financial Life Insurance and Annuity Company as of December 31, 1995
and 1994, and the results of its operations and its cash flows for each of the
three years ended December 31, 1995, on the basis of accounting described in
Note 1.

As discussed in Note 1 to the financial statements, the Company's parent, State
Mutual Life Assurance Company of America, converted from a Massachusetts mutual
life insurance company to a Massachusetts stock life insurance company on
October 16, 1995. In connection with this transaction, the Company changed its
name to Allmerica Financial Life Insurance and Annuity Company and its parent
became a wholly-owned subsidiary of Allmerica Financial Corporation.

/s/Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Boston, MA

February 5, 1996

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

STATEMENT OF ASSETS, LIABILITIES, SURPLUS AND
OTHER FUNDS
as of December 31,
(In thousands)

ASSETS 1995 1994
---- ----
<S> <C> <C>
Cash $ 7,791 $ 7,248
Investments:
Bonds 1,659,575 1,595,275
Stocks 18,132 12,283
Mortgage loans 239,522 295,532
Policy loans 122,696 116,600
Real estate 40,967 51,288
Short term investments 3,500 45,239
Other invested assets 40,196 27,443
----------- -----------

Total cash and investments 2,132,379 2,150,908

Premiums deferred and uncollected (1,231) 5,452
Investment income due and accrued 38,413 39,442
Other assets 6,060 10,569
Assets held in separate accounts 2,978,409 1,869,695
----------- -----------

$ 5,154,030 $ 4,076,066
----------- -----------
----------- -----------

LIABILITIES, SURPLUS AND OTHER FUNDS

Liabilities:

Policy liabilities:
Life reserves $ 856,239 $ 890,880
Annuity and other fund reserves 865,216 928,325
Accident and health reserves 167,246 121,580
Claims payable 11,047 11,720
----------- -----------

Total policy liabilities 1,899,748 1,952,505

Expenses and taxes payable 20,824 17,484
Other liabilities 27,499 36,466
Asset valuation reserve 31,556 20,786
Obligations related to separate account business 2,967,547 1,859,502
----------- -----------

Total liabilities 4,947,174 3,886,743
----------- -----------

Surplus and Other Funds:
Common stock, $1,000 par value
Authorized - 10,000 shares
Issued and outstanding - 2,517 shares 2,517 2,517
Paid-in surplus 199,307 199,307
Unassigned surplus (deficit) 4,282 (13,621)
Special contingency reserves 750 1,120
----------- -----------
Total surplus and other funds 206,856 189,323
----------- -----------

$ 5,154,030 $ 4,076,066
----------- -----------
----------- -----------

</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

STATEMENT OF OPERATIONS AND
CHANGES IN CAPITAL AND SURPLUS
for the year ended December 31,
(In thousands)

<TABLE>
<CAPTION>
REVENUE 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>

Premiums and other considerations:
Life $ 156,864 $ 195,633 $ 189,285
Annuities 729,222 707,172 660,143
Accident and health 31,790 31,927 35,718
Reinsurance commissions and reserve adjustments 20,198 4,195 2,309
---------- ---------- ----------

Total premiums and other considerations 938,074 938,927 887,455

Net investment income 167,470 170,430 177,612
Realized capital losses, net of tax (2,295) (17,172) (7,225)
Other revenue 37,466 26,065 19,055
---------- ---------- ----------

Total revenue 1,140,715 1,118,250 1,076,897
---------- ---------- ----------

POLICY BENEFITS AND OPERATING EXPENSES
Policy benefits:
Claims, surrenders and other benefits 391,254 331,418 275,290
Increase (decrease) in policy reserves (22,669) 40,113 15,292
---------- ---------- ----------
Total policy benefits 368,585 371,531 290,582

Operating and selling expenses 150,215 164,175 160,928
Taxes, except capital gains tax 26,536 22,846 19,066
Net transfers to separate accounts 556,856 553,295 586,539
---------- ---------- ----------

Total policy benefits and operating expenses 1,102,192 1,111,847 1,057,115
---------- ---------- ----------

NET INCOME 38,523 6,403 19,782

CAPITAL AND SURPLUS, BEGINNING OF YEAR 189,323 182,216 171,941
Unrealized capital gains (losses) on investments 8,279 12,170 (9,052)
Transfer from (to) asset valuation reserve (10,770) (9,822) 1,974
Other adjustments (18,499) (1,644) (2,429)
---------- ---------- ----------

CAPITAL AND SURPLUS, END OF YEAR $ 206,856 $ 189,323 $ 182,216
---------- ---------- ----------
---------- ---------- ----------

</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

STATEMENT OF CASH FLOWS
for the year ended December 31,
(In thousands)

<TABLE>
<CAPTION>
CASH FLOW FROM OPERATING ACTIVITIES 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Premiums, deposits and other income $ 964,129 $ 962,147 $ 902,725
Allowances and reserve adjustments on
reinsurance ceded 20,693 3,279 22,185
Net investment income 170,949 173,294 182,843
Net increase in policy loans (6,096) (7,585) (7,812)
Benefits to policyholders and beneficiaries (393,472) (330,900) (298,612)
Operating and selling expenses and taxes (153,504) (193,796) (171,533)
Net transfers to separate accounts (608,480) (600,760) (634,021)
Federal income tax (excluding tax on capital gains) (6,771) (19,603) (4828)
Other sources (applications) (13,642) 19,868 7,757
---------- ---------- ----------

NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (26,194) 5,944 (1,296)
---------- ---------- ----------

CASH FLOW FROM INVESTING ACTIVITIES
Sales and maturities of long term investments:
Bonds 572,640 478,512 386,414
Stocks 481 63 64
Real estate and other invested assets 13,008 3,008 11,094
Repayment of mortgage principal 55,202 65,334 79,844
Capital gains tax (400) (968) (3,296)
Acquisition of long term investments:
Bonds (640,339) (508,603) (466,086)
Stocks (44) - -
Real estate and other invested assets (11,929) (24,544) (2,392)
Mortgage loans (415) (364) (2,266)
Other investing activities (3,206) 18,934 (27,254)
---------- ---------- ----------

NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (15,002) 31,372 (23,878)
---------- ---------- ----------

Net change in cash and short term investments (41,196) 37,316 (25,174)

CASH AND SHORT TERM INVESTMENTS
Beginning of the year 52,487 15,171 40,345
---------- ---------- ----------

End of the year $ 11,291 $ 52,487 $ 15,171
---------- ---------- ----------
---------- ---------- ----------

</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

NOTES TO STATUTORY FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION - Allmerica Financial Life Insurance and
Annuity Company ("Allmerica Financial" or the "Company", formerly SMA Life
Assurance Company) is a wholly owned subsidiary of SMA Financial Corp., which is
wholly owned by First Allmerica Financial Life Insurance Company ("First
Allmerica", formerly, State Mutual Life Assurance Company of America), a stock
life insurance company. On October 16, 1995, First Allmerica converted from a
mutual life insurance company to a stock life insurance company. Concurrent
with this transaction, First Allmerica became a wholly owned subsidiary of
Allmerica Financial Corporation ("AFC").

The stockholder's equity of the Company is being maintained at a minimum level
of 5% of general account assets by First Allmerica in accordance with a policy
established by vote of First Allmerica's Board of Directors.

The Company's financial statements have been prepared on the basis of accounting
practices prescribed or permitted by the Insurance Department of the State of
Delaware and in conformity with practices prescribed by the National Association
of Insurance Commissioners (NAIC), which while common in the industry, vary in
some respects from generally accepted accounting principles. Significant
differences include:

- Bonds considered to be "available-for-sale" or "trading" are not
carried at fair value and changes in fair value are not recognized
through surplus or the statement of operations, respectively;

- The Asset Valuation Reserve, represents a reserve against possible
losses on investments and is recorded as a liability through a charge
to surplus. The Interest Maintenance Reserve is designed to include
deferred realized gains and losses (net of applicable federal income
taxes) due to interest rate changes and is also recorded as a
liability, however, the deferred net realized investment gains and
losses are amortized into future income generally over the original
period to maturity of the assets sold. These liabilities are not
required under generally accepted accounting principles;

- Total premiums, deposits and benefits on certain investment-type
contracts are reflected in the statement of operations, instead of
using the deposit method of accounting;

- Policy acquisition costs, such as commissions, premium taxes and other
items, are not deferred and amortized in relation to the revenue/gross
profit streams from the related contracts;

- Benefit reserves are determined using statutorily prescribed interest,
morbidity and mortality assumptions instead of using more realistic
expense, interest, morbidity, mortality and voluntary withdrawal
assumptions with provision made for adverse deviation;

- Amounts recoverable from reinsurers for unpaid losses are not recorded
as assets, but as offsets against the respective liabilities;

- Deferred federal income taxes are not provided for temporary
differences between amounts reported in the financial statements and
those included in the tax returns;

- Certain adjustments related to prior years are recorded as direct
charges or credits to surplus;

- Certain assets, designated as "non-admitted" assets (principally
agents' balances), are not recorded as assets, but are charged to
surplus; and,

- Costs related to other postretirement benefits are recognized only for
employees that are fully vested.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

The preparation of financial statements in accordance with practices prescribed
or permitted by the Insurance Department of the State of Delaware and in
conformity with practices prescribed by the NAIC requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

Certain reclassifications have been made to prior year amounts to conform with
the current year presentation.

VALUATION OF INVESTMENTS - Investments in bonds are carried principally at
amortized cost, in accordance with NAIC guidelines. Preferred stocks are
carried generally at cost and common stocks are carried at market value. Policy
loans are carried principally at unpaid principal balances.

Mortgage loans on real estate are stated at unpaid principal balances, net of
unamortized discounts. Mortgage loans are reduced for losses expected by
management to be realized on transfers of mortgage loans to real estate (upon
foreclosure), on the disposition or settlement of mortgage loans and on mortgage
loans which management believes may not be collectible in full. In determining
the amount of the loss, management considers, among other things, the estimated
fair value of the underlying collateral. Investment real estate and real estate
acquired through foreclosure are carried at the lower of depreciated cost or
market value. Depreciation is generally calculated using the straight-line
method.

An asset valuation reserve (AVR) for bonds, mortgage loans, stocks, real estate,
and other invested assets is maintained by appropriations from surplus in
accordance with a formula specified by the NAIC and is classified as a
liability.

FINANCIAL INSTRUMENTS - In the normal course of business, the Company enters
into transactions involving various types of financial instruments including
investments such as bonds, stocks and mortgage loans and investment and loan
commitments. These instruments involve credit risk and also may be subject to
risk of loss due to interest rate fluctuations. The Company evaluates and
monitors each financial instrument individually and, when appropriate, obtains
collateral or other security to minimize losses.

RECOGNITION OF PREMIUM INCOME AND ACQUISITION COSTS - In general, premiums are
recognized as revenue over the premium paying period of the policies;
commissions and other costs of acquiring the policies are charged to operations
when incurred.

SEPARATE ACCOUNTS - Separate account assets and liabilities represent segregated
funds administered and invested by the Company for the benefit of certain
variable annuity and variable life contract holders. Assets consist principally
of bonds, common stocks, mutual funds, and short term obligations at market
value. The investment income, gains, and losses of these accounts generally
accrue to the contract holders and therefore, are not included in the Company's
net income. Appreciation and depreciation of the Company's interest in the
separate accounts, including undistributed net investment income, is reflected
in capital and surplus.

INSURANCE RESERVES AND ANNUITY AND OTHER FUND RESERVES - Reserves for life
insurance, annuities, and accident and health insurance are established in
amounts adequate to meet the estimated future obligations of policies in
force. These liabilities are computed based upon mortality, morbidity and
interest rate assumptions applicable to these coverages, including provision
for adverse deviation. Reserves are computed using interest rates ranging
from 3% to 6% for individual life insurance policies, 3% to 5 1/2% for
accident and health policies and 3 1/2% to 9 1/2% for annuity contracts.
Mortality, morbidity and withdrawal assumptions for all policies are based on
the Company's own experience and industry standards. The assumptions vary by
plan, age at issue, year of issue and duration. Claims reserves are computed
based on historical experience modified for expected trends in frequency and
severity. Withdrawal characteristics of annuity and other fund reserves vary
by contract. At December 31, 1995 and 1994, approximately 84% and 77%,
respectively, of the contracts (included in both the general account and
separate accounts of the Company) were not subject to discretionary
withdrawal or were subject to withdrawal at book value less surrender charge.

All policy liabilities and accruals are based on the various estimates discussed
above. Although the adequacy of these amounts cannot be assured, management
believes that it is more likely than not that policy liabilities and accruals
will be sufficient to meet future obligations of policies in force. The amount
of liabilities and accruals, however, could be revised in the near term if the
estimates discussed above are revised.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

FEDERAL INCOME TAXES - AFC, its life insurance subsidiaries, First Allmerica and
Allmerica Financial and its non-insurance domestic subsidiaries file a
life-nonlife consolidated United States federal income tax return. Entities
included within the consolidated group are segregated into either a life
insurance or non-life insurance company subgroup. The consolidation of these
subgroups is subject to certain statutory restrictions on the percentage of
eligible non-life taxable operating losses that can be applied to offset life
company taxable income. Allmerica P&C and its subsidiaries file a separate
United States Federal income tax return.

The federal income tax allocation policies and procedures are subject to written
agreement between the companies. The federal income tax for all subsidiaries in
the consolidated return of AFC is calculated on a separate return basis. Any
current tax liability is paid to AFC. Tax benefits resulting from taxable
operating losses or credits of AFC's subsidiaries are not reimbursed to the
subsidiary until such losses or credits can be utilized by the subsidiary on a
separate return basis.

CAPITAL GAINS AND LOSSES - Realized capital gains and losses, net of applicable
capital gains tax or benefit, exclusive of those transferred to the interest
maintenance reserve ("IMR"), are included in the statement of operations.
Unrealized capital gains and losses are reflected as direct credits or charges
to capital and surplus. The IMR, which is included in other liabilities,
establishes a reserve for realized gains and losses, net of tax, resulting from
changes in interest rates on short and long term fixed income investments. Net
realized gains and losses charged to the IMR are amortized into net investment
income over the remaining life of the investment sold. The Company uses the
seriatim method of amortization for interest related gains and losses arising
from the sale of mortgages, and uses the group method to amortize interest
related gains and losses arising from all other fixed income investments.

NOTE 2 - INVESTMENTS

BONDS - The carrying value and fair value of investments in bonds are as
follows:

<TABLE>
<CAPTION>
December 31, 1995
Gross Gross
Carrying Unrealized Unrealized Fair
(In thousands) Value Appreciation Depreciation Value
----- ------------ ------------ -----
<S> <C> <C> <C> <C>
Federal government bonds $ 67,039 $ 3,063 $ - $ 70,102
State, local and government agency bonds 13,607 2,290 23 15,874
Foreign government bonds 12,121 772 249 12,644
Corporate securities 1,471,422 55,836 6,275 1,520,983
Mortgage-backed securities 95,385 951 - 96,336
---------- ---------- ---------- ----------

Total $1,659,574 $ 62,912 $ 6,457 $1,715,939
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

December 31, 1995
Gross Gross
Carrying Unrealized Unrealized Fair
(In thousands) Value Appreciation Depreciation Value
----- ------------ ------------ -----
Federal government bonds $ 17,651 $ 8 $ 762 $ 16,897
State, local and government agency bonds 1,110 54 - 1,164
Foreign government bonds 31,863 83 3,735 28,211
Corporate securities 1,462,871 8,145 56,011 1,415,005
Mortgage-backed securities 81,780 268 1,737 80,311
---------- ---------- ---------- ----------

Total $1,595,275 $ 8,558 $ 62,245 $1,541,588
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

</TABLE>
8

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

The carrying value and fair value by contractual maturity at December 31, 1995,
are shown below. Actual maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties or the Company may have the right to put or
sell the obligation back to the issuer. Mortgage-backed securities are
classified based on expected maturities.

<TABLE>
<CAPTION>
Carrying Fair
(In thousands) Value Value
----- -----
<S> <C> <C>
Due in one year or less $ 250,578 $ 258,436
Due after one year through five years 736,003 763,179
Due after five years through ten years 538,897 558,445
Due after ten years 134,097 135,880
---------- ----------

Total $1,659,575 $1,715,940
---------- ----------
---------- ----------

</TABLE>

MORTGAGE LOANS AND REAL ESTATE - Mortgage loans and real estate investments, are
diversified by property type and location. Real estate investments have been
obtained primarily through foreclosure. Mortgage loans are collateralized by
the related properties and are generally no more than 75% of the property value
at the time the original loan is made. At December 31, 1995 and 1994, mortgage
loan and real estate investments were distributed by the following types and
geographic regions:

<TABLE>
<CAPTION>
(In thousands)
Property Type 1995 1994
- ------------- ---- ----
<S> <C> <C>
Office buildings $ 127,149 $ 140,292
Residential 59,934 57,061
Retail 29,578 72,787
Industrial/Warehouse 38,192 39,424
Other 25,636 37,256
----------- -----------
Total $ 280,489 $ 346,820
----------- -----------
----------- -----------

Geographic Region 1995 1994
- ----------------- ---- ----
South Atlantic $ 86,410 $ 92,934
East North Central 55,991 72,704
Middle Atlantic 38,666 48,688
Pacific 32,803 39,892
West North Central 21,486 27,377
Mountain 9,939 12,211
New England 24,886 26,613
East South Central 5,487 6,224
West South Central 4,821 20,177
---------- ----------

Total $ 280,489 $ 346,820
---------- ----------
---------- ----------

</TABLE>

Reserves for mortgage loans and real estate reflected in the above amounts were
$18.9 million and $21.0 million at December 31, 1995 and 1994, respectively.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

NET INVESTMENT INCOME - The components of net investment income for the year
ended December 31 were as follows:

<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Bonds $ 122,318 $ 123,495 $ 126,729
Stocks 1,653 1,799 953
Mortgage loans 26,356 31,945 40,823
Real estate 9,139 8,425 9,493
Policy loans 9,486 8,797 8,215
Other investments 3,951 1,651 674
Short term investments 2,252 1,378 840
---------- ---------- ----------
175,155 177,490 187,727
Less investment expenses 9,703 9,138 11,026
---------- ---------- ----------
Net investment income, before IMR amortization 165,452 168,352 176,701
IMR amortization 2,018 2,078 911
---------- ---------- ----------
Net investment income $ 167,470 $ 170,430 $ 177,612
---------- ---------- ----------
---------- ---------- ----------

</TABLE>

REALIZED CAPITAL GAINS AND LOSSES - Realized capital gains (losses) on
investments for the years ended December 31 were as follows:

<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Bonds $ 727 $ 645 $ 10,133
Stocks (263) (62) 16
Mortgage loans (1,083) (17,142) (83)
Real estate (1,892) 605 (2,044)
--------- --------- ---------
(2,511) (15,954) 8,022
Less income tax 400 968 3,296
--------- --------- ---------

Net realized capital gains (losses) before transfer to IMR (2,911) (16,922) 4,726
Net realized capital gains transferred to IMR 616 (250) (11,951)
--------- --------- ---------

Net realized capital gains (losses) $ (2,295) $(17,172) $ (7,225)
--------- --------- ---------
--------- --------- ---------
</TABLE>

Proceeds from voluntary sales of investments in bonds during 1995, 1994 and 1993
were $22.4 million, $17.9 million, and $13.2 million, respectively. Gross gains
of $4.3 million, $3.0 million, and $4.5 million and gross losses of $5.2
million, $4.6 million, and $ .5 million, respectively, were realized on those
sales.

NOTE 3 - FAIR VALUE DISCLOSURES OF FINANCIAL INFORMATION

Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments" requires disclosure of fair value information
about certain financial instruments (insurance contracts, real estate, goodwill
and taxes are excluded) for which it is practicable to estimate such values,
whether or not these instruments are included in the balance sheet. The fair
values presented for certain financial instruments are estimates which, in many
cases, may differ significantly from the amounts which could be recognized upon
immediate liquidation. In cases where market prices are not available,
estimates of fair value are based on discounted cash flow analyses which utilize
current interest rates for similar financial instruments which have comparable
terms and credit quality.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments:

FINANCIAL ASSETS:

CASH AND SHORT TERM INVESTMENTS - The carrying amounts reported in the statement
of assets, liabilities, surplus and other funds approximate fair value.

BONDS - Fair values are based on quoted market prices, if available. If a
quoted market price is not available, fair values are estimated using
independent pricing sources or internally developed pricing models using
discounted cash flow analyses.

STOCKS - Fair values are based on quoted market prices, if available. If a
quoted market price is not available, fair values are estimated using
independent pricing sources or internally developed pricing models.

MORTGAGE LOANS - Fair values are estimated by discounting the future contractual
cash flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings. The fair value of below investment grade
mortgage loans is limited to the lesser of the present value of the cash flows
or book value.

POLICY LOANS - The carrying amount reported in the statement of assets,
liabilities, surplus and other funds approximates fair value since policy loans
have no defined maturity dates and are inseparable from the insurance contracts.

FINANCIAL LIABILITIES:

ANNUITY AND OTHER FUND RESERVES (WITHOUT MORTALITY/MORBIDITY FEATURES) - Fair
values for the Company's liabilities under individual annuity contracts are
estimated based on current surrender values.

The estimated fair values of the financial instruments as of December 31 were as
follows:

<TABLE>
<CAPTION>
1995 1996
---- ----
Carrying Fair Carrying Fair
(In thousands) Value Value Value Value
----- ----- ----- -----
<S> <C> <C> <C> <C>
Financial Assets:
Cash $ 7,791 $ 7,791 $ 7,248 $ 7,248
Short term investments 3,500 3,500 45,239 45,239
Bonds 1,659,575 1,715,940 1,595,275 1,541,588
Stocks 18,132 18,414 12,283 12,590
Mortgage loans 239,522 250,196 295,532 291,704
Policy loans 122,696 122,696 116,600 116,600

Financial Liabilities:
Individual annuity contracts 803,099 797,024 869,230 862,662
Supplemental contracts without life
contingencies 16,796 16,796 16,673 16,673
Other contract deposit funds 632 632 1,105 1,105
</TABLE>
11

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

NOTE 4 - FEDERAL INCOME TAXES

The federal income tax provisions for 1995, 1994 and 1993 were $17.4 million,
$13.1 million and $8.6 million, respectively, which include taxes applicable to
realized capital gains of $.4 million, $1.0 million and $3.3 million.

The effective federal income tax rates were 27%, 67% and 30% in 1995, 1994 and
1993, respectively. The differences between the federal statutory rate and the
Company's effective tax rates are primarily related to decreases in taxable
income for the write-offs of mortgage loans; and increases in taxable income for
differences in policyholder liabilities for federal income tax purposes and
financial reporting purposes and the deferral of policy acquisition costs for
federal tax purposes.

The consolidated federal income tax returns are routinely audited by the
Internal Revenue Service (IRS) and provisions are routinely made in the
financial statements in anticipation of the results of these audits. The IRS
has completed its examination of all of the consolidated federal income tax
returns through 1988. In management's opinion, adequate tax liabilities have
been established for all years. However, the amount of these liabilities could
be revised in the near term if estimates of the Company's ultimate liability are
revised.

NOTE 5 - REINSURANCE

The Company participates in reinsurance to reduce overall risks, including
exposure to large losses and to permit recovery of a portion of direct losses.
Reinsurance contracts do not relieve the Company from its obligation to its
policyholders. Reinsurance financial data for the years ended December 31, is
as follows:

<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Reinsurance premiums assumed $ 3,442 $ 3,788 $ 4,190
Reinsurance premiums ceded
42,914 17,430 14,798
Deduction from insurance
liability including
reinsurance recoverable on
unpaid claims 82,227 46,734 42,805
</TABLE>

Individual life premiums ceded to First Allmerica aggregated $6.8 million, $7.8
million and $9.0 million in 1995, 1994 and 1993, respectively. The Company has
also entered into various reinsurance agreements with First Allmerica under
which certain insurance risks related to individual accident and health
business, premium income and related expenses are assumed by the Company from
First Allmerica. Premiums assumed pursuant to these agreements aggregated $3.4
million, $3.8 million and $4.2 million in 1995, 1994 and 1993, respectively .

During the year Allmerica Financial entered into a coinsurance agreement to
reinsure substantially all of its yearly renewable term life insurance.
Premiums ceded and reinsurance credits taken under this agreement amounted to
$25.4 million and $20.7 million, respectively. At December 31, 1995, the
deduction from insurance liability, including reinsurance recoverable on unpaid
claims under this agreement was $12.7 million.

NOTE 6 - ACCIDENT AND HEALTH POLICY AND CLAIM LIABILITIES

The Company regularly updates its estimates of policy and claims liabilities as
new information becomes available and further events occur which may impact the
resolution of unsettled claims for its accident and health line of business.
Changes in prior estimates are generally reflected in results of operations in
the year such changes are determined to be needed and recorded.

The policy and claims liabilities related to the Company's accident and health
business were $169.7 million and $123.5 million at December 31, 1995 and 1994,
respectively. Accident and health policy and claims liabilities have been
re-estimated for all prior years and were increased by $42.5 million, $10.9
million and $13.2 million, in 1995, 1994 and 1993, respectively, including $21.9
million and $2.8 million recorded as an adjustment to surplus in 1995 and 1993,
respectively. The unfavorable development is primarily due to reserve
strengthening and adverse experience in the Company's individual accident and
health line of business.

<PAGE>

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(a wholly owned subsidiary of First Allmerica Financial Life Insurance Company)

NOTE 7 - DIVIDEND RESTRICTIONS

Delaware has enacted laws governing the payment of dividends to stockholders by
insurers. These laws affect the dividend paying ability of the Company.
Pursuant to Delaware's statute, the maximum amount of dividends and other
distributions that an insurer may pay in any twelve month period, without the
prior approval of the Delaware Commissioner of Insurance, is limited to the
greater of (i) 10% of its statutory policyholder surplus as of the preceding
December 31 or (ii) the individual company's statutory net gain from operations
for the preceding calendar year (if such insurer is a life company) or its net
income (not including realized capital gains) for the preceding calendar year
(if such insurer is not a life company). Any dividends to be paid by an
insurer, whether or not in excess of the aforementioned threshold, from a source
other than statutory earned surplus would also require the prior approval of the
Delaware Commissioner of Insurance. At January 1, 1996, the Company could pay
dividends of $4.3 million to First Allmerica, without prior approval.

NOTE 8 - OTHER RELATED PARTY TRANSACTIONS

First Allmerica provides management, operating personnel and facilities on a
cost reimbursement basis to the Company. Expenses for services received from
First Allmerica were $ 85.8 million, $102.5 million and $98.9 million in 1995,
1994 and 1993, respectively. The net amounts payable to First Allmerica and
affiliates for accrued expenses and various other liabilities and receivables
were $12.6 million and $8.3 million at December 31, 1995 and 1994, respectively.

NOTE 9 - FUNDS ON DEPOSIT

In March 1994, the Company voluntarily withdrew from being licensed in New York.
In connection with the withdrawal First Allmerica, which is licensed in New
York, became qualified to sell the products previously sold by Allmerica
Financial in New York. The Company agreed with the New York Department of
Insurance to maintain, through a custodial account in New York, a security
deposit, the market value of which will at all times equal 102% of all
outstanding general account liabilities of the Company for New York
policyholders, claimants and creditors. As of December 31, 1995, the carrying
value and fair value of the assets or deposit was $295.0 million and $303.6
million, respectively, which is in excess of the required amount.

Additional securities with a carrying value of $4.2 million and $3.9 million
were on deposit with various other state and governmental authorities as of
December 31, 1995 and 1994, respectively.

NOTE 10 - LITIGATION

The Company has been named a defendant in various legal proceedings arising in
the normal course of business. In the opinion of management, based on the
advice of legal counsel, the ultimate resolution of these proceedings will not
have a material effect on the Company's financial statements.

<PAGE>

INHEIRITAGE ACCOUNT

STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1995

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT
GROWTH GRADE INCOME MONEY MARKET
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
1 2 3
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica Investment Trust . . . . . $ 550,258 $ 330,664 $ 402,756
Receivable from Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . . 3,219 594 5,319
----------- ----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . 553,477 331,258 408,075

LIABILITIES:
Payable to Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . . -- -- --
----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . $ 553,477 $ 331,258 $ 408,075
----------- ----------- -----------
----------- ----------- -----------

Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . . $ 553,447 $ 331,258 $ 408,075
----------- ----------- -----------
----------- ----------- -----------

Units outstanding, December 31, 1995 . . . . . . . . . . . . 406,644 285,367 382,537
Net asset value per unit, December 31, 1995. . . . . . . . . $ 1.361084 $ 1.160814 $ 1.066760

<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SELECT
EQUITY INDEX BOND AGGRESSIVE GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
4 5 6
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica Investment Trust . . . . . $ 204,340 $ 76,188 $ 801,749
Receivable from Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . . -- -- --
----------- ----------- -----------

Total assets . . . . . . . . . . . . . . . . . . . . . . 204,340 76,188 801,749

LIABILITIES:
Payable to Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . . 186 89 784
----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . $ 204,154 $ 76,099 $ 800,965
----------- ----------- -----------
----------- ----------- -----------

Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . . $ 204,154 $ 76,099 $ 800,965
----------- ----------- -----------
----------- ----------- -----------

Units outstanding, December 31, 1995 . . . . . . . . . . . . 154,834 67,964 630,256
Net asset value per unit, December 31, 1995. . . . . . . . . $ 1.318535 $ 1.119618 $ 1.270858

<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SELECT SELECT SMALL
GROWTH GROWTH AND INCOME CAP VALUE
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
7 8 9
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica Investment Trust . . . . . $ 168,252 $ 514,364 $ 483,936
Receivable from Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . . 1,706 -- --
----------- ----------- -----------

Total assets . . . . . . . . . . . . . . . . . . . . . . 169,958 514,364 483,936

LIABILITIES:
Payable to Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . . -- 489 473
----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . $ 169,958 $ 513,875 $ 483,463
----------- ----------- -----------
----------- ----------- -----------

Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . . $ 169,958 $ 513,875 $ 483,463
----------- ----------- -----------
----------- ----------- -----------

Units outstanding, December 31, 1995 . . . . . . . . . . . . 136,361 391,419 426,604
Net asset value per unit, December 31, 1995. . . . . . . . . $ 1.246385 $ 1.312852 $ 1.133283
</TABLE>

80
<PAGE>

INHEIRITAGE ACCOUNT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SELECT SELECT VIPF
INTERNATIONAL EQUITY CAPITAL APPRECIATION HIGH INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
11 12 102
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica Investment Trust . . . . . $ 365,270 $ 151,472 --
Investment in shares of Fidelity Variable Insurance
Products Fund. . . . . . . . . . . . . . . . . . . . . . . -- -- $ 288,220
Investment in shares of T. Rowe Price International
Series, Inc. . . . . . . . . . . . . . . . . . . . . . . . -- -- --
Investment in shares of Delaware Group Premium Fund, Inc.. . -- -- --
Receivable from Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . . -- 762 2,116
----------- ----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . 365,270 152,234 290,336

LIABILITIES:
Payable to Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . . 338 -- --
----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . 364,932 152,234 290,336
----------- ----------- -----------
----------- ----------- -----------

Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . . $ 364,819 $ 151,957 $ 290,336
Value of investment by Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . 113 277 --
----------- ----------- -----------
$ 364,932 $ 152,234 290,336
----------- ----------- -----------
----------- ----------- -----------

Units outstanding, December 31, 1995 . . . . . . . . . . . . 322,101 109,902 245,921
Net asset value per unit, December 31, 1995. . . . . . . . . $ 1.132975 $ 1.385173 $ 1.180605

<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VIPF VIPF VIPF
EQUITY INCOME GROWTH OVERSEAS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
103 104 105
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica Investment Trust . . . . . -- -- --
Investment in shares of Fidelity Variable Insurance
Products Fund. . . . . . . . . . . . . . . . . . . . . . . $ 1,300,498 $ 1,084,433 $ 579,296
Investment in shares of T. Rowe Price International. . . . . -- -- --
Series, Inc. . . . . . . . . . . . . . . . . . . . . . . .
Investment in shares of Delaware Group Premium Fund, Inc.. . -- -- --
Receivable from Allmerica Financial Life Insurance . . . . .
and Annuity Company (Sponsor). . . . . . . . . . . . . . . 4,872 -- --
----------- ----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . 1,305,370 1,084,433 579,296

LIABILITIES:
Payable to Allmerica Financial Life Insurance . . . . . . .
and Annuity Company (Sponsor). . . . . . . . . . . . . . . -- 264 4,172
----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . $ 1,305,370 $ 1,084,169 $ 575,124
----------- ----------- -----------
----------- ----------- -----------

Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . . $ 1,305,370 $ 1,084,169 $ 575,124
Value of investment by Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . -- -- --
----------- ----------- -----------
$ 1,305,370 $ 1,084,169 $ 575,124
----------- ----------- -----------
----------- ----------- -----------

Units outstanding, December 31, 1995 . . . . . . . . . . . . 927,413 763,687 553,578
Net asset value per unit, December 31, 1995. . . . . . . . . $ 1.407540 $ 1.419650 $ 1.038922

<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VIPF II T. ROWE DGPF
ASSET MANAGER INTERNATIONAL STOCK INTERNATIONAL EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
106 150 207
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica Investment Trust . . . . . -- -- --
Investment in shares of Fidelity Variable Insurance
Products Fund. . . . . . . . . . . . . . . . . . . . . . . $ 528,058 -- --
Investment in shares of T. Rowe Price International. . . . . -- $ 52,123 --
Series, Inc. . . . . . . . . . . . . . . . . . . . . . . .
Investment in shares of Delaware Group Premium Fund, Inc.. . -- -- $ 149,852
Receivable from Allmerica Financial Life Insurance . . . . .
and Annuity Company (Sponsor). . . . . . . . . . . . . . . -- 864 3,446
----------- ----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . 528,058 52,987 153,298
----------- ----------- -----------
----------- ----------- -----------

LIABILITIES:
Payable to Allmerica Financial Life Insurance . . . . . . .
and Annuity Company (Sponsor). . . . . . . . . . . . . . . 17 -- --
----------- ----------- -----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . $ 528,041 $ 52,987 $ 153,298
----------- ----------- -----------
----------- ----------- -----------

Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . . $ 527,927 $ 52,987 $ 153,298
Value of investment by Allmerica Financial Life Insurance
and Annuity Company (Sponsor). . . . . . . . . . . . . . 114 -- --
----------- ----------- -----------
$ 528,041 $ 52,987 $ 153,298
----------- ----------- -----------
----------- ----------- -----------

Units outstanding, December 31, 1995 . . . . . . . . . . . . 462,302 49,789 138,773
Net asset value per unit, December 31, 1995. . . . . . . . . $ 1.142200 $ 1.064235 $ 1.104671
</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>

INHEIRITAGE ACCOUNT

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT
GROWTH GRADE INCOME
SUB-ACCOUNT 1 SUB-ACCOUNT 2
FOR THE YEAR ENDED FOR THE PERIOD FOR THE YEAR ENDED FOR THE PERIOD
12/31/95 5/12/94* TO 12/31/94 12/31/95 4/28/94* TO 12/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . $ 48,237 $ 7,437 $ 14,621 $ 1,762

EXPENSES:
Mortality and expense risk fees . . . 2,845 277 1,689 73
Administrative fees . . . . . . . . . 790 77 469 20
-------- -------- -------- --------
Total expenses. . . . . . . . . . . . 3,635 354 2,158 93
-------- -------- -------- --------

Net investment income . . . . . . . . 44,602 7,083 12,463 1,669
-------- -------- -------- --------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . . 871 1 170 (51)
Net unrealized gain (loss). . . . . . 35,675 (7,689) 13,405 (1,514)
-------- -------- -------- --------

Net realized and unrealized gain
(loss) on investments. . . . . . . 36,546 (7,688) 13,575 (1,565)
-------- -------- -------- --------

Net increase (decrease) in net
assets from operations . . . . . . $ 81,148 $ (605) $ 26,038 $ 104
-------- -------- -------- --------
-------- -------- -------- --------

<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET EQUITY INDEX
SUB-ACCOUNT 3 SUB-ACCOUNT 4
FOR THE YEAR ENDED FOR THE PERIOD FOR THE YEAR ENDED FOR THE PERIOD
12/31/95 5/27/94* TO 12/31/94 12/31/95 8/15/94* TO 12/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . $ 32,514 $ 7,247 $ 6,792 $ 541

EXPENSES:
Mortality and expense risk fees . . 5,092 1,400 801 39
Administrative fees . . . . . . . . . 1,415 389 223 11
-------- -------- -------- --------
Total expenses. . . . . . . . . . . 6,507 1,789 1,024 50
-------- -------- -------- --------

Net investment income . . . . . . . 26,007 5,458 5,768 491
-------- -------- -------- --------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . . -- -- 650 (7)
Net unrealized gain (loss). . . . . . -- -- 17,486 (544)
-------- -------- -------- --------

Net realized and unrealized gain
(loss) on investments. . . . . . . -- -- 18,136 (551)
-------- -------- -------- --------

Net increase (decrease) in net
assets from operations . . . . . . $ 26,007 $ 5,458 $ 23,904 $ (60)
-------- -------- -------- --------
-------- -------- -------- --------

<CAPTION>
- ---------------------------------------------------------------------------------
GOVERNMENT BOND
SUB-ACCOUNT 5
FOR THE YEAR ENDED FOR THE PERIOD
12/31/95 7/1/94* TO 12/31/94
- ---------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . $ 4,876 $ 2,198

EXPENSES:
Mortality and expense risk fees . . 779 200
Administrative fees . . . . . . . . . 216 56
-------- --------
Total expenses. . . . . . . . . . . 995 256
-------- --------

Net investment income . . . . . . . 3,881 1,942
-------- --------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . . 2,220 47
Net unrealized gain (loss). . . . . . 3,911 (1,709)
-------- --------

Net realized and unrealized gain
(loss) on investments. . . . . . . 6,131 (1,662)
-------- --------

Net increase (decrease) in net
assets from operations . . . . . . $ 10,012 $ 280
-------- --------
-------- --------
</TABLE>

<PAGE>

INHEIRITAGE ACCOUNT

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SELECT AGGRESSIVE
GROWTH SELECT GROWTH
SUB-ACCOUNT 6 SUB-ACCOUNT 7
FOR THE YEAR ENDED FOR THE PERIOD FOR THE YEAR ENDED FOR THE PERIOD
12/31/95 4/22/94* TO 12/31/94 12/31/95 5/20/94* TO 12/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . -- -- $ 25 $ 119

EXPENSES:
Mortality and expense risk fees. . . . $ 4,636 $ 370 1,047 65
Administrative fees. . . . . . . . . . 1,288 103 291 18
-------- -------- -------- --------
Total expenses. . . . . . . . . . . . 5,924 473 1,338 83
-------- -------- -------- --------

Net investment income (loss) . . . . . (5,924) (473) (1,313) 36
-------- -------- -------- --------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . . 2,278 268 1,936 (31)
Net unrealized gain (loss). . . . . . 135,550 (54) 18,467 (914)
-------- -------- -------- --------

Net realized and unrealized gain
(loss) on investments. . . . . . . 137,828 214 20,403 (945)
-------- -------- -------- --------

Net increase (decrease) in net
assets from operations . . . . . . $ 131,904 $ (259) $ 19,090 $ (909)
-------- -------- -------- --------

<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SELECT GROWTH
AND INCOME SMALL CAP VALUE
SUB-ACCOUNT 8 SUB-ACCOUNT 9
FOR THE YEAR ENDED FOR THE PERIOD FOR THE YEAR ENDED FOR THE PERIOD
12/31/95 4/28/94* TO 12/31/94 12/31/95 6/2/94* TO 12/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . $ 24,678 $ 3,878 $ 16,135 $ 743

EXPENSES:
Mortality and expense risk fees . . 2,675 358 2,801 356
Administrative fees . . . . . . . . . 743 100 778 99
-------- -------- -------- --------
Total expenses. . . . . . . . . . . 3,418 458 3,579 455
-------- -------- -------- --------

Net investment income (loss). . . . 21,260 3,420 12,556 288
-------- -------- -------- --------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . 1,275 290 1,180 78
Net unrealized gain (loss). . . . . 53,136 (5,437) 34,744 (3,761)
-------- -------- -------- --------

Net realized and unrealized gain
(loss) on investments. . . . . . 54,411 (5,147) 35,924 (3,683)
-------- -------- -------- --------

Net increase (decrease) in net
assets from operations . . . . . $ 75,671 $ (1,727) $ 48,480 $ (3,395)
-------- -------- -------- --------
-------- -------- -------- --------

<CAPTION>
- ---------------------------------------------------------------------------------
SELECT INTERNATIONAL
EQUITY
SUB-ACCOUNT 11
FOR THE YEAR ENDED FOR THE PERIOD
12/31/95 5/3/94* TO 12/31/94
- ---------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . $ 4,810 $ 176

EXPENSES:
Mortality and expense risk fees . . 1,757 150
Administrative fees . . . . . . . . . 488 42
-------- --------
Total expenses. . . . . . . . . . . 2,245 192
-------- --------

Net investment income (loss). . . . 2,565 (16)
-------- --------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . 1,625 (39)
Net unrealized gain (loss). . . . . 29,470 (3,111)
-------- --------

Net realized and unrealized gain
(loss) on investments. . . . . . 31,095 (3,150)
-------- --------

Net increase (decrease) in net
assets from operations . . . . . $ 33,660 $ (3,166)
-------- --------
-------- --------
</TABLE>

* Date of initial investment.

The accompanying notes are an integral part of these financial statements.

<PAGE>

INHEIRITAGE ACCOUNT

STATEMENTS OF OPERATIONS, Continued

<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . $ 2,887 $ 4,862 --

EXPENSES:
Mortality and expense risk fees . . . 370 1,284 $ 114
Administrative fees . . . . . . . . . 103 357 32
--------- --------- --------
Total expenses. . . . . . . . . . . 473 1,641 146
--------- --------- --------

Net investment income (loss). . . . . 2,414 3,221 (146)
--------- --------- --------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . . 219 1,048 (6)
Net unrealized gain (loss). . . . . . 12,788 16,928 (155)
--------- --------- --------

Net realized and unrealized gain
(loss) on investments . . . . . . . 13,007 17,976 (161)
--------- --------- --------

Net increase (decrease) in net
assets from operations. . . . . . . $ 15,421 $ 21,197 $ (307)
--------- --------- --------
--------- --------- --------

<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VIPF VIPF
EQUITY INCOME GROWTH
SUB-ACCOUNT 103 SUB-ACCOUNT 104
FOR THE YEAR ENDED FOR THE PERIOD FOR THE YEAR ENDED FOR THE PERIOD
12/31/95 4/28/94* TO 12/31/94 12/31/95 5/12/94* TO 12/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . $ 37,820 $ 2,581 $ 1,827 --
--------- --------- --------- ---------
EXPENSES:
Mortality and expense risk fees . . 6,818 707 6,109 $ 837
Administrative fees . . . . . . . . . 1,894 196 1,697 232
--------- --------- --------- ---------
Total expenses. . . . . . . . . . 8,712 903 7,806 1,069
--------- --------- --------- ---------

Net investment income (loss). . . . 29,108 1,678 (5,979) (1,069)
--------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . 5,061 478 4,162 1,050
Net unrealized gain (loss). . . . . 178,135 (3,903) 157,014 8,355
--------- --------- --------- ---------

Net realized and unrealized gain
(loss) on investments . . . . . . 183,196 (3,425) 161,176 9,405
--------- --------- --------- ---------

Net increase (decrease) in net
assets from operations. . . . . . $ 212,304 $ (1,747) $ 155,197 $ 8,336
--------- --------- --------- ---------

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

<CAPTION>
- ----------------------------------------------------------------------------------
VIPF
OVERSEAS
SUB-ACCOUNT 105
FOR THE YEAR ENDED FOR THE PERIOD
12/31/95 4/21/94* TO 12/31/94
- ----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . $ 2,604 --

EXPENSES:
Mortality and expense risk fees . . 4,128 $ 727
Administrative fees . . . . . . . . . 1,146 202
--------- ---------
Total expenses. . . . . . . . . . 5,274 929
--------- ---------

Net investment income (loss). . . . (2,670) (929)
--------- ---------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . 1,200 (15)
Net unrealized gain (loss). . . . . 43,023 (9,330)
--------- ---------

Net realized and unrealized gain
(loss) on investments . . . . . . 44,223 (9,345)
--------- ---------

Net increase (decrease) in net
assets from operations. . . . . . $ 41,553 $ (10,274)
--------- ---------
--------- ---------
</TABLE>

<PAGE>

INHEIRITAGE ACCOUNT

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VIPF II T. ROWE
ASSET MANAGER INTERNATIONAL STOCK
SUB-ACCOUNT 106 SUB-ACCOUNT 150
FOR THE YEAR ENDED FOR THE PERIOD FOR THE PERIOD
12/31/95 6/14/94* TO 12/31/94 6/30/95* TO 12/31/95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . $ 7,071 $ 22 --

EXPENSES:
Mortality and expense risk fees . . 3,680 569 $ 114
Administrative fees . . . . . . . . . 1,022 158 32
--------- --------- ---------
Total expenses. . . . . . . . . . 4,702 727 146
--------- --------- ---------

Net investment income (loss). . . . 2,369 (705) (146)
--------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . 2,905 (44) 25
Net unrealized gain (loss). . . . . 56,562 (8,236) 1,602
--------- --------- ---------

Net realized and unrealized gain
(loss) on investments . . . . . . 59,467 (8,280) 1,627
--------- --------- ---------

Net increase (decrease) in net
assets from operations. . . . . . $ 61,836 $ (8,985) $ 1,681
--------- --------- ---------
--------- --------- ---------

<CAPTION>
- ----------------------------------------------------------------------------------
DGPF
INTERNATIONAL EQUITY
SUB-ACCOUNT 207
FOR THE YEAR ENDED FOR THE PERIOD
12/31/95 5/12/94* TO 12/31/94
- ----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . $ 1,760 --
--------- ---------

EXPENSES:
Mortality and expense risk fees . . . 904 $ 186
Administrative fees . . . . . . . . . 252 52
--------- ---------
Total expenses. . . . . . . . . . . 1,156 238
--------- ---------

Net investment income (loss). . . . . 604 (238)
--------- ---------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss). . . . . . 414 --
Net unrealized gain (loss). . . . . . 11,496 (1,212)
--------- ---------

Net realized and unrealized gain
(loss) on investments . . . . . . 11,910 (1,212)
--------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . $ 12,514 $ (1,450)
--------- ---------
--------- ---------
</TABLE>

* Date of initial investment.

The accompanying notes are an integral part of these financial statements.

85
<PAGE>

INHEIRITAGE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH INVESTMENT GRADE INCOME
SUB-ACCOUNT 1 SUB-ACCOUNT 2
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
12/31/95 5/12/94* TO 12/31/94 12/31/95 4/28/94* TO 12/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income . . . . . . . . $ 44,602 $ 7,083 $ 12,463 $ 1,669
Net realized gain (loss) from
security transactions . . . . . . . 871 1 170 (51)
Net unrealized gain (loss) on
investments . . . . . . . . . . . . 35,675 (7,689) 13,405 (1,514)
--------- --------- --------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 81,148 (605) 26,038 104
--------- --------- --------- ---------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 133,682 34,411 129,213 19,120
Terminations . . . . . . . . . . . . (725) -- (186) --
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . . 197,720 107,846 101,623 55,346
--------- --------- --------- ---------
Net increase (decrease) in net assets
from capital transactions . . . . . 330,677 142,257 230,650 74,466
--------- --------- --------- ---------
Net increase (decrease) in net
assets . . . . . . . . . . . . . . 411,825 141,652 256,688 74,570

NET ASSETS:
Beginning of period . . . . . . . . . 141,652 -- 74,570 --
--------- --------- --------- ---------
End of period . . . . . . . . . . . . $ 553,477 $ 141,652 $ 331,258 $ 74,570
--------- --------- --------- ---------
--------- --------- --------- ---------

<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET EQUITY INDEX
SUB-ACCOUNT 3 SUB-ACCOUNT 4
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
12/31/95 5/27/94* TO 12/31/94 12/31/95 8/15/94* TO 12/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income . . . . . . . . $ 26,007 $ 5,458 $ 5,768 $ 491
Net realized gain (loss) from
security transactions . . . . . . . -- -- 650 (7)
Net unrealized gain (loss) on
investments . . . . . . . . . . . . -- -- 17,486 (544)
--------- --------- --------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 26,007 5,458 23,904 (60)
--------- --------- --------- ---------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 744,319 311,479 62,224 7,031
Terminations . . . . . . . . . . . . -- -- -- --
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . . (859,523) 180,335 91,621 19,434
--------- --------- --------- ---------
Net increase (decrease) in net assets
from capital transactions . . . . . (115,204) 491,814 153,845 26,465
--------- --------- --------- ---------

Net increase (decrease) in net
assets . . . . . . . . . . . . . . (89,197) 497,272 177,749 26,405

NET ASSETS:
Beginning of period . . . . . . . . . 497,272 -- 26,405 --
--------- --------- --------- ---------
End of period . . . . . . . . . . . . $ 408,075 $ 497,272 $ 204,154 $ 26,405
--------- --------- --------- ---------
--------- --------- --------- ---------

<CAPTION>
- ---------------------------------------------------------------------------------
GOVERNMENT BOND
SUB-ACCOUNT 5
YEAR ENDED PERIOD FROM
12/31/95 7/1/94* TO 12/31/94
- ---------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income . . . . . . . . $ 3,881 $ 1,942
Net realized gain (loss) from
security transactions . . . . . . . 2,220 47
Net unrealized gain (loss) on
investments . . . . . . . . . . . . 3,911 (1,709)
--------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 10,012 280
--------- ---------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 54,632 10,629
Terminations . . . . . . . . . . . . -- --

Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . . (98,107) 98,653
--------- ---------
Net increase (decrease) in net assets
from capital transactions . . . . . (43,475) 109,282
--------- ---------

Net increase (decrease) in net
assets . . . . . . . . . . . . . . (33,463) 109,562

NET ASSETS:
Beginning of period . . . . . . . . . 109,562 --
--------- ---------
End of period . . . . . . . . . . . . $ 76,099 $ 109,562
--------- ---------
--------- ---------
</TABLE>

<PAGE>

INHEIRITAGE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

- ------------------------------------------------------------------------------------------------------------------------------------
SELECT AGGRESSIVE GROWTH SELECT GROWTH
SUB-ACCOUNT 6 SUB-ACCOUNT 7
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
12/31/95 4/22/94* TO 12/31/94 12/31/95 5/20/94* TO12/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . $ (5,924) $ (473) $ (1,313) $ 36
Net realized gain (loss) from
security transactions . . . . . . . 2,278 268 1,936 (31)
Net unrealized gain (loss) on
investments . . . . . . . . . . . . 135,550 (54) 18,467 (914)
--------- --------- --------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 131,904 (259) 19,090 (909)
--------- --------- --------- ---------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 214,367 81,071 56,664 13,108
Terminations . . . . . . . . . . . . (127) -- -- --
Other transfers from the General
Account of Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . 223,558 150,451 54,862 27,143
Net increase in net assets from
investments by Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . -- -- -- --
--------- --------- --------- ---------
Net increase in net assets from
capital transactions. . . . . . . . 437,798 231,522 111,526 40,251
--------- --------- --------- ---------
Net increase in net assets . . . . . 569,702 231,263 130,616 39,342

NET ASSETS:
Beginning of period . . . . . . . . . 231,263 -- 39,342 --
--------- --------- --------- ---------
End of period . . . . . . . . . . . . $ 800,965 $ 231,263 $ 169,958 $ 39,342
--------- --------- --------- ---------
--------- --------- --------- ---------

<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
SELECT GROWTH AND INCOME SMALL CAP VALUE
SUB-ACCOUNT 8 SUB-ACCOUNT 9
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
12/31/95 4/28/94* TO 12/31/94 12/31/95 6/2/94* TO 12/31/94
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . $ 21,260 $ 3,420 $ 12,556 $ 288
Net realized gain (loss) from
security transactions . . . . . . . 1,275 290 1,180 78
Net unrealized gain (loss) on
investments . . . . . . . . . . . . 53,136 (5,437) 34,744 (3,761)
--------- --------- --------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 75,671 (1,727) 48,480 (3,395)
--------- --------- --------- ---------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 106,450 34,562 121,457 64,114
Terminations . . . . . . . . . . . . (539) -- -- --
Other transfers from the General
Account of Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . 202,145 97,313 144,338 108,469
Net increase in net assets from
investments by Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . -- -- -- --
--------- --------- --------- ---------
Net increase in net assets from
capital transactions. . . . . . . . 308,056 131,875 265,795 172,583
--------- --------- --------- ---------
Net increase in net assets . . . . . 383,727 130,148 314,275 169,188
NET ASSETS:
Beginning of period . . . . . . . . . 130,148 -- 169,188 --
--------- --------- --------- ---------
End of period . . . . . . . . . . . . $ 513,875 $ 130,148 $ 483,463 $ 169,188
--------- --------- --------- ---------
--------- --------- --------- ---------

<CAPTION>
- -----------------------------------------------------------------------------------
SELECT INTERNATIONAL EQUITY
SUB-ACCOUNT 11
YEAR ENDED PERIOD FROM
12/31/95 5/3/94* TO 12/31/94
- -----------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . $ 2,565 $ (16)
Net realized gain (loss) from
security transactions . . . . . . . 1,625 (39)
Net unrealized gain (loss) on
investments . . . . . . . . . . . . 29,470 (3,111)
--------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 33,660 (3,166)
--------- ---------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 86,660 30,883
Terminations . . . . . . . . . . . . -- --
Other transfers from the General
Account of Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . 163,641 53,154
Net increase in net assets from
investments by Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . -- 100
--------- ---------
Net increase in net assets from
capital transactions. . . . . . . . 250,301 84,137
--------- ---------
Net increase in net assets . . . . . 283,961 80,971
NET ASSETS:
Beginning of period . . . . . . . . . 80,971 --
--------- ---------
End of period . . . . . . . . . . . . $ 364,932 $ 80,971
--------- ---------
--------- ---------

</TABLE>

* Date of initial investment.

The accompanying notes are an integral part of these financial statements.

87
<PAGE>

INHEIRITAGE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SELECT CAPITAL APPRECIATION VIPF HIGH INCOME
SUB-ACCOUNT 12 SUB-ACCOUNT 102
PERIOD FROM YEAR ENDED PERIOD FROM
4/28/95* TO 12/31/95 12/31/95 5/13/94* TO 12/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . $ 2,414 $ 3,221 $ (146)
Net realized gain (loss) from
security transactions . . . . . . . 219 1,048 (6)
Net unrealized gain (loss)
on investments. . . . . . . . . . . 12,788 16,928 (155)
--------- --------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 15,421 21,197 (307)
--------- --------- ---------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 40,487 111,201 29,339
Terminations. . . . . . . . . . . . . -- (94) --
Other transfers from the General
Account of Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . 96,126 96,059 32,941
Net increase in net assets from
investments by Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . 200 -- --
--------- --------- ---------
Net increase in net assets from
capital transactions. . . . . . . . 136,813 207,166 62,280
--------- --------- ---------
Net increase in net assets. . . . . . 152,234 228,363 61,973

NET ASSETS:
Beginning of period . . . . . . . . . -- 61,973 --
--------- --------- ---------
End of period . . . . . . . . . . . . $ 152,234 $ 290,336 $ 61,973
--------- --------- ---------
--------- --------- ---------

<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
VIPF EQUITY INCOME VIPF GROWTH
SUB-ACCOUNT 103 SUB-ACCOUNT 104
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
12/31/95 4/28/94* TO 12/31/94 12/31/95 5/12/94* TO 12/31/94
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . $ 29,108 $ 1,678 $ (5,979) $ (1,069)
Net realized gain (loss) from
security transactions . . . . . . . 5,061 478 4,162 1,050
Net unrealized gain (loss)
on investments. . . . . . . . . . . 178,135 (3,903) 157,014 8,355
--------- --------- --------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 212,304 (1,747) 155,197 8,336
--------- --------- --------- ---------
FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 382,477 95,195 330,994 79,238
Terminations. . . . . . . . . . . . . (227) -- (711) --
Other transfers from the General
Account of Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . 380,024 237,344 305,484 205,631
Net increase in net assets from
investments by Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . -- -- -- --
--------- --------- --------- ---------
Net increase in net assets from
capital transactions. . . . . . . . 762,274 332,539 635,767 284,869
--------- --------- --------- ---------
Net increase in net assets. . . . . . 974,578 330,792 790,964 293,205

NET ASSETS:
Beginning of period . . . . . . . . . 330,792 -- 293,205 --
---------- --------- --------- ---------
End of period . . . . . . . . . . . . $1,305,370 $ 330,792 $ 1,084,169 $ 293,205
---------- --------- --------- ---------
---------- --------- --------- ---------

- ------------------------------------------------------------------------------------------
VIPF OVERSEAS
SUB-ACCOUNT 105
YEAR ENDED PERIOD FROM
12/31/95 4/21/94* TO 12/31/94
- ------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . $ (2,670) $ (929)
Net realized gain (loss) from
security transactions . . . . . . . 1,200 (15)
Net unrealized gain (loss)
on investments. . . . . . . . . . . 43,023 (9,330)
--------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 41,553 (10,274)
--------- ---------
FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 152,554 92,813
Terminations. . . . . . . . . . . . . (129) --
Other transfers from the General
Account of Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . 72,800 225,807
Net increase in net assets from
investments by Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . -- --
--------- ---------
Net increase in net assets from
capital transactions. . . . . . . . 225,225 318,620
--------- ---------
Net increase in net assets. . . . . . 266,778 308,346

NET ASSETS:
Beginning of period . . . . . . . . . . 308,346 --
--------- ---------
End of period . . . . . . . . . . . . . $ 575,124 $ 308,346
--------- ---------
--------- ---------
</TABLE>

<PAGE>

INHEIRITAGE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VIPF II ASSET MANAGER T. ROWE INTERNATIONAL STOCK
SUB-ACCOUNT 106 SUB-ACCOUNT 150
YEAR ENDED PERIOD FROM PERIOD FROM
12/31/95 6/14/94* TO 12/31/94 6/30/95* TO 12/31/95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . $ 2,369 $ (705) $ (146)
Net realized gain (loss) from
security transactions . . . . . . . 2,905 (44) 25
Net unrealized gain (loss)
on investments. . . . . . . . . . . 56,562 (8,236) 1,602
--------- --------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 61,836 (8,985) 1,481
--------- --------- ---------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 161,011 85,685 13,744
Terminations . . . . . . . . . . . . -- -- --
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . . (13,418) 241,812 37,762
Net increase in net assets from
investments by Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . -- 100 --
--------- --------- ---------

Net increase in net assets from
capital transactions. . . . . . . . 147,593 327,597 51,506
--------- --------- ---------

Net increase in net assets . . . . . 209,429 318,612 52,987

NET ASSETS:
Beginning of period . . . . . . . . . 318,612 -- --
--------- --------- ---------
End of period . . . . . . . . . . . . $ 528,041 $ 318,612 $ 52,987
--------- --------- ---------
--------- --------- ---------

<CAPTION>
- ---------------------------------------------------------------------------------
DGPF INTERNATIONAL EQUITY
SUB-ACCOUNT 207
YEAR ENDED PERIOD FROM
12/31/95 5/12/94* TO 12/31/94
- ---------------------------------------------------------------------------------
<S> <C> <C>

INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . $ 604 $ (238)
Net realized gain (loss) from
security transactions . . . . . . . 414 --
Net unrealized gain (loss)
on investments. . . . . . . . . . . 11,496 (1,212)
--------- ---------

Net increase (decrease) in net
assets from operations. . . . . . . 12,514 (1,450)
--------- ---------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . 40,691 18,949
Terminations . . . . . . . . . . . . (481) --
Other transfers from (to) the
General Account of Allmerica
Financial Life Insurance and
Annuity Company (Sponsor) . . . . . 40,455 42,620
Net increase in net assets from
investments by Allmerica Financial
Life Insurance and Annuity
Company (Sponsor) . . . . . . . . . -- --

Net increase in net assets from --------- ---------
capital transactions. . . . . . . . 80,665 61,569
--------- ---------
Net increase in net assets . . . . . 93,179 60,119

NET ASSETS:
Beginning of period . . . . . . . . . 60,119 --
--------- ---------
End of period . . . . . . . . . . . . $ 153,298 $ 60,119
--------- ---------
--------- ---------

* Date of initial investment.

The accompanying notes are an integral part of these financial statements.
</TABLE>

<PAGE>

INHEIRITAGE ACCOUNT

NOTES TO FINANCIAL STATEMENTS - December 31, 1995

NOTE 1 - ORGANIZATION

The Inheiritage Account (Inheiritage) is a separate investment account of
Allmerica Financial Life Insurance and Annuity Company (formerly named SMA Life
Assurance Company) (the Company), established on April 21, 1994 for the purpose
of separating from the general assets of the Company those assets used to fund
the variable portion of flexible premium variable life policies issued by the
Company. Effective October 16, 1995, concurrent with the demutualization, State
Mutual Life Assurance Company of America changed their name to First Allmerica
Financial Life Insurance Company (First Allmerica). The Company is a wholly-
owned subsidiary of First Allmerica. Under applicable insurance law, the assets
and liabilities of Inheiritage are clearly identified and distinguished from the
other assets and liabilities of the Company. Inheiritage cannot be charged with
liabilities arising out of any other business of the Company.

Inheiritage is registered as a unit investment trust under the Investment
Company Act of 1940, as amended (the 1940 Act). Inheiritage currently offers
eighteen Sub-Accounts. Each Sub-Account invests exclusively in a corresponding
investment portfolio of the Allmerica Investment Trust (the Trust) managed by
Allmerica Investment Management Company, Inc., a wholly-owned subsidiary of
First Allmerica or of the Variable Insurance Products Fund (VIPF), or the
Variable Insurance Products Fund II (VIPF II) managed by Fidelity Management &
Research Company (Fidelity Management), or of T. Rowe International Series, Inc.
(T. Rowe) managed by Price-Fleming or of the Delaware Group Premium Fund, Inc.
(DGPF) managed by Delaware International Advisors, Ltd. The Trust, VIPF, VIPF
II, T. Rowe, and DGPF (the Funds) are open-end, diversified series management
investment companies registered under the 1940 Act.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Investments - Security transactions are recorded on the trade date.
Investments held by the SubAccounts are stated at the net asset value per share
of the respective investment portfolio of the Trust, VIPF, VIPF II, T. Rowe, or
DGPF. Net realized gains and losses on securities sold are determined on the
average cost method. Dividends and capital gain distributions are recorded on
the ex-dividend date and are reinvested in additional shares of the respective
investment portfolio of the Trust, VIPF, VIPF II, T. Rowe, or DGPF at net asset
value.

Federal Income Taxes - The Company is taxed as a "life insurance company"
under Subchapter L of the Internal Revenue Code and files a consolidated federal
income tax return with First Allmerica. The Company anticipates no tax liability
resulting from the operations of Inheiritage. Therefore, no provision for income
taxes has been charged against Inheiritage.

NOTE 3 - INVESTMENTS

The number of shares owned, aggregate cost, and net asset value per share
of each Sub-Account's investment in the Trust, VIPF, VIPF II, T. Rowe, and DGPF
at December 31, 1995 were as follows:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PORTFOLIO INFORMATION
SUB- INVESTMENT NUMBER OF AGGREGATE NET ASSET
ACCOUNT PORTFOLIO SHARES COST VALUE PER SHARE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allmerica Investment Trust:
1 Growth 252,876 $ 522,272 $ 2.176
2 Investment Grade Income 296,029 318,773 1.117
3 Money Market 402,756 402,756 1.000
4 Equity Index 111,844 187,398 1.827
5 Government Bond 71,741 73,987 1.062
6 Select Aggressive Growth 433,847 666,253 1.848
7 Select Growth 122,901 150,699 1.369
8 Select Growth and Income 405,650 466,665 1.268
9 Small Cap Value 390,902 452,953 1.238
11 Select International Equity 321,541 338,911 1.136
12 Select Capital Appreciation 110,644 138,684 1.369
Fidelity Variable Insurance Products Fund:
102 High Income 23,919 271,446 12.050
103 Equity Income 67,488 1,126,265 19.270
104 Growth 37,138 919,065 29.200
105 Overseas 33,976 545,604 17.050
Fidelity Variable Insurance Products Fund II:
106 Asset Manager 33,443 479,731 15.790
T. Rowe Price International Series, Inc.:
150 International Stock 4,629 50,521 11.260
Delaware Group Premium Fund:
207 International Equity 11,430 139,568 13.110
</TABLE>

<PAGE>

INHEIRITAGE ACCOUNT

NOTES TO FINANCIAL STATEMENTS - December 31, 1995, Continued

NOTE 4 - RELATED PARTY TRANSACTIONS

On the date of issue and each monthly payment date thereafter, a monthly
charge is deducted from the policy value to compensate the Company for the
cost of insurance, which varies by policy, the cost of any additional
benefits provided by rider, and a monthly administrative charge of $6. The
policyowner may instruct the Company to deduct this monthly charge from a
specific Sub-Account, but if not so specified, it will be deducted on a
pro-rata basis of allocation which is the same proportion that the policy
value in the General Account of the Company and in each Sub- Account bear to
the total policy value. For the years ended December 31, 1995 and 1994, these
monthly deductions from sub-account policy values amounted to $137,108 and
$26,519, respectively.

The Company makes a charge of .90% per annum based on the average daily net
assets of each Sub-Account at each valuation date for mortality and expense
risks. The mortality and expense risks annual charge may be increased or
decreased by the Board of Directors of the Company once each year, subject to
compliance with applicable state and federal requirements, but the total charge
may not exceed 1.275% per annum. During the first 15 policy years, the Company
also charges each Sub-Account .25% per annum based on the average daily net
assets of each Sub-Account for administrative expenses. These charges are
deducted in the daily computation of unit values but paid to the Company on a
monthly basis.

Allmerica Investments, Inc., (Allmerica Investments), a wholly-owned
subsidiary of First Allmerica, is principal underwriter and general distributor
of Inheiritage, and does not receive any compensation for sales of Inheiritage
policies. Commissions are paid to registered representatives of Allmerica
Investments by the Company. As the current series of policies have a contingent
deferred sales charge, no deduction is made for sales charges at the time of the
sale. For the year ended December 31, 1995, the Company received $1,739 for
contingent deferred sales charges applicable to Inheiritage. There were no
contingent deferred sales charges for the year ended December 31, 1994.

NOTE 5 - DIVERSIFICATION REQUIREMENTS

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

The Internal Revenue Service has issued regulations under Section 817(h) of
the Code. The Company believes that Inheiritage satisfies the current
requirements of the regulations, and it intends that Inheiritage will continue
to meet such requirements.

NOTE 6 - PURCHASES AND SALES OF SECURITIES

Cost of purchases and proceeds from sales of the Trust, VIPF, VIPF II, T.
Rowe, and DGPF shares by Inheiritage during the year ended December 31, 1995
were as follows:

- -------------------------------------------------------------------------------------------------------------------
SUB-
ACCOUNT INVESTMENT PORTFOLIO PURCHASES SALES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Allmerica Investment Trust:

1 Growth . . . . . . . . . . . . . . . . . . . . $ 390,534 $ 18,210
2 Investment Grade Income. . . . . . . . . . . . 249,242 6,741
3 Money Market . . . . . . . . . . . . . . . . . 1,459,199 1,554,174
4 Equity Index . . . . . . . . . . . . . . . . . 172,965 13,190
5 Government Bond. . . . . . . . . . . . . . . . 71,423 111,044
6 Select Aggressive Growth . . . . . . . . . . . 472,009 38,905
7 Select Growth . . . . . . . . . . . . . . . . 125,028 16,440
8 Select Growth and Income . . . . . . . . . . . 352,162 22,473
9 Small Cap Value. . . . . . . . . . . . . . . . 307,396 28,273
11 Select International Equity. . . . . . . . . . 301,961 48,832
12 Select Capital Appreciation. . . . . . . . . . 143,738 5,273
Fidelity Variable Insurance Products Fund:
102 High Income. . . . . . . . . . . . . . . . . . 241,089 32,820
103 Equity Income. . . . . . . . . . . . . . . . . 865,907 79,105
104 Growth . . . . . . . . . . . . . . . . . . . . 655,008 24,687
105 Overseas . . . . . . . . . . . . . . . . . . . 305,274 78,178
Fidelity Variable Insurance Products Fund II:
106 Asset Manager. . . . . . . . . . . . . . . . . 249,029 99,251
T. Rowe Price International Series, Inc.:
150 International Stock. . . . . . . . . . . . . . 53,035 2,541
Delaware Group Premium Fund:
207 International Equity . . . . . . . . . . . . . 92,366 14,597
----------- -----------
Totals . . . . . . . . . . . . . . . . . . . . $ 6,507,365 $ 2,194,734
----------- -----------
----------- -----------
</TABLE>

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of Allmerica Financial
Life Insurance and Annuity Company and Policyowners
of Inheiritage Account of Allmerica Financial
Life Insurance and Annuity Company

In our opinion, the accompanying statements of assets and liabilities and
the related statements of operations and of changes in net assets present
fairly, in all material respects, the financial position of each of the Sub-
Accounts (1, 2, 3, 4, 5, 6, 7, 8, 9, 11, 12, 102, 103, 104, 105, 106, 150, and
207) constituting the Inheiritage Account of Allmerica Financial Life Insurance
and Annuity Company at December 31, 1995, the results of each of their
operations and the changes in each of their net assets for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of Allmerica Financial Life
Insurance and Annuity Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of investments owned at December 31, 1995 by
correspondence with the Funds, provide a reasonable basis for the opinion
expressed above.

PRICE WATERHOUSE LLP
Boston, Massachusetts

February 23, 1996

<PAGE>

APPENDIX A - OPTIONAL BENEFITS

This Appendix is intended to provide only a very brief overview of additional
insurance benefits available by rider. For more information, the Policy owner's
agent should be contacted.

The following supplemental benefits are available for issue under the Policies
for an additional charge.

SPLIT OPTION RIDER

This rider, available only at Date of Issue, permits the Policy owner to split
the Policy into two life insurance policies, one covering each Insured singly,
subject to Company guidelines.

OTHER INSURED RIDER

This rider provides a term insurance benefit for up to five Insureds. At
present this benefit is only available for the spouse and minor children of
either primary Insured. The rider includes a feature that allows the Policy
owner to convert the other-insured coverage to any permanent life insurance
policy acceptable to the Company.

FOUR-YEAR TERM RIDER

This rider provides a term insurance benefit during the first four Policy years,
payable upon the death of the last surviving Insured during the coverage period.

48
<PAGE>

APPENDIX B - PAYMENT OPTIONS

PAYMENT OPTIONS - Upon written request, the Surrender Value or all or part of
the Death Proceeds may be placed under one or more of the payment options below
or any other option offered by the Company. If the Policy owner does not make
an election, the Company will pay the benefits in a single sum. A certificate
will be provided to the payee describing the payment option selected.

If a payment option is selected, the Beneficiary may pay to the Company any
amount that would otherwise be deducted from the Sum Insured.

The amounts payable under a payment option for each $1,000 value applied will be
the greater of:

(a) the rate per $1,000 of value applied based on the Company's
non-guaranteed current payment option rates for the Policies; or
(b) the rate in the Policy for the applicable payment option.

The following payment options are currently available. The amounts payable
under these options are paid from the General Account. None are based on the
investment experience of the Inheiritage Account.

Option A: PAYMENTS FOR A SPECIFIED NUMBER OF YEARS. The Company will make
equal payments for any selected number of years (not greater than
thirty). Payments may be made annually, semi-annually, quarterly or
monthly.

Option B: LIFETIME MONTHLY PAYMENTS. Payments are based on the payee's Age on
the date the first payment will be made. One of three variations may
be chosen. Depending upon this choice, payments will end:

(a) upon the death of the payee, with no further payments due (Life
Annuity);
(b) upon the death of the payee, but not before the sum of the
payments made first equals or exceeds the amount applied under
this option (Life Annuity with Installment Refund); or
(c) upon the death of the payee, but not before a selected period (5,
10 or 20 years) has elapsed (Life Annuity with Period Certain).

Option C: INTEREST PAYMENTS. The Company will pay interest at a rate
determined by the Company each year but which will not be less than
3.5%. Payments may be made annually, semi-annually, quarterly or
monthly. Payments will end when the amount left with the Company has
been withdrawn. However, payments will not continue after the death
of the payee. Any unpaid balance plus accrued interest will be paid
in a lump sum.

Option D: PAYMENTS FOR A SPECIFIED AMOUNT. Payments will be made until the
unpaid balance is exhausted. Interest will be credited to the unpaid
balance. The rate of interest will be determined by the Company each
year but will not be less than 3.5%. Payments may be made annually,
semi-annually, quarterly or monthly. The payment level selected must
provide for the payment each year of at least 8% of the amount
applied.

Option E: LIFETIME MONTHLY PAYMENTS FOR TWO PAYEES. One of three variations
may be chosen. After the death of one payee, payments will continue
to the survivor:

(a) in the same amount as the original amount;
(b) in an amount equal to 2/3 of the original amount; or
(c) in an amount equal to 1/2 of the original amount.

Payments are based on the payees' ages on the date the first payment
is due. Payments will end upon the death of the surviving payee.

SELECTION OF PAYMENT OPTIONS - The amount applied under any one option for any
one payee must

49
<PAGE>

be at least $5,000. The periodic payment for any one payee must be at least
$50.

Subject to the Policy owner's and/or the Beneficiary's provision, any option
selection may be changed before the Death Proceeds become payable. If the
Policy owner makes no selection, the Beneficiary may select an option when the
Death Proceeds become payable.

If the amount of monthly income payments under Option B, choice (c) for the
attained Age of the payee are the same for different periods certain, the
Company will deem an election to have been made for the longest period certain
which could have been elected for such Age and amount.

The Policy owner may give the Beneficiary the right to change from Option C or D
to any other option at any time. If the payee selects Option C or D when this
policy becomes a claim, the right may be reserved to change to any other option.
The payee who elects to change options must be a payee under the option
selected.

ADDITIONAL DEPOSITS - An additional deposit may be made to any proceeds when
they are applied under Option B or E. A charge not to exceed 3% will be made.
The Company may limit the amount of this deposit.

RIGHTS AND LIMITATIONS - A payee does not have the right to assign any amount
payable under any option. A payee does not have the right to commute any amount
payable under Option B or E. A payee will have the right to commute any amount
payable under Option A only if the right is reserved in the written request
selecting the option. If the right to commute is exercised, the commuted values
will be computed at the interest rates used to calculate the benefits. The
amount left under Option C, and any unpaid balance under Option D, may be
withdrawn by the payee only as set forth in the written request selecting the
option.

A corporation or fiduciary payee may select only option A, C or D. Such
selection will be subject to the consent of the Company.

PAYMENT DATES - The first payment under any option, except Option C, will be due
on the date this policy matures by death or otherwise, unless another date is
designated. Payments under Option C begin at the end of the first payment
period.

The last payment under any option will be made as stated in the description of
that option. However, should a payee under Option B or E die prior to the due
date of the second monthly payment, the amount applied less the first monthly
payment will be paid in a lump sum or under any option other than Option E. A
lump sum payment will be made to the surviving payee under Option E or the
succeeding payee under Option B.

50
<PAGE>

APPENDIX C - ILLUSTRATIONS
SUM INSURED, POLICY VALUES AND ACCUMULATED PREMIUMS

The following tables illustrate the way in which a Policy's Sum Insured and
Policy Value could vary over an extended period of time. They assume that all
premiums are allocated to and remain in the Inheiritage Account for the entire
period shown and are based on hypothetical gross investment rates of return for
the Underlying Fund (I.E., investment income and capital gains and losses,
realized or unrealized) equivalent to constant gross (after tax) annual rates of
0%, 6%, and 12%.

The tables illustrate a Policy issued on the lives of both Insureds, each Age
55, under a standard Premium Class and qualifying for the non-smoker
discount. The tables also illustrate the guaranteed cost of insurance rates
and the current cost of insurance rates.

The Policy Values and Death Proceeds would be different from those shown if the
gross annual investment rates of return averaged 0%, 6%, and 12% over a period
of years, but fluctuated above or below such averages for individual policy
years. The values would also be different depending on the allocation of a
Policy's total Policy Value among the Sub-Accounts of the Inheiritage Account,
if the actual rates of return averaged 0%, 6% or 12, but the rates of each
Underlying Fund varied above and below such averages.

The amounts shown for the Death Proceeds and Policy Values take into account the
deduction from premium for the tax expense charge, the Monthly Deduction from
Policy Value, and the daily charge against the Inheiritage Account for mortality
and expense risks and the Inheiritage Account administrative charge for the
first fifteen Policy years, equivalent to an effective annual rate of 1.15% of
the average daily value of the assets in the Inheiritage Account attributable to
the Policies, and 0.90% thereafter. The amounts shown in the tables also take
into account the Underlying Investment Company advisory fees and operating
expenses, which are assumed to be at an annual rate of 0.85% of the average
daily net assets of the Underlying Investment Company. The actual fees and
expenses of each Underlying Investment Company vary, and in 1995 ranged from an
annual rate of 0.36% to an annual rate of 1.35% of average daily net assets.
The fees and expenses associated with your Policy may be more or less than 0.85%
in the aggregate, depending upon how you make allocations of Policy Value among
the Sub-Accounts.

Under its Management Agreement with the Trust, Allmerica Investments has
declared a voluntary expense limitation of 1.50% of average net average assets
for the Select International Equity Fund, 0.60% for the Money Market Fund, 1.35%
for the Select Aggressive Growth Fund and Select Capital Appreciation Fund,
1.20% for the Select Growth Fund, 1.10% for the Select Growth and Income Fund,
and 1.00% for the Select Income Fund. Without the effect of the expense
limitation, in 1995 the total operating expenses of the Select Capital
Appreciation Fund would have been 1.42% of average net assets. Fidelity
Management has voluntarily agreed to temporarily limit the total operating
expenses (excluding interest, taxes, brokerage commissions and extraordinary
expenses) of the Equity-Income, and Growth Portfolios to an annual rate of
1.50%, and of the High Income Portfolio to an annual rate of 1.00% of each
Portfolio's average net assets. Except as noted, in 1995 none of the expenses
of the Underlying Funds exceeded the voluntary expense limitations.

Taking into account the mortality and expense risk charge and the Inheiritage
Account administrative charge and the assumed 0.85% charge for Underlying
Investment Company advisory fees and operating expenses, the gross annual rates
of investment return of 0%, 6% and 12% correspond to net annual rates of -2.00%,
4.00%, 10.00%, respectively, during the first 15 Policy years and -1.75%, 4.25%
and 10.25%, respectively, thereafter.

The hypothetical returns shown in the table do not reflect any charges for
income taxes against the Inheiritage Account since no charges are currently
made. However, if in the future such charges are made, in order to produce
illustrated death benefits and cash values, the gross annual investment rate of
return would have to exceed 0%, 6% or 12% by a sufficient amount to cover the
tax charges.

The second column of the tables show the amount which would accumulate if an
amount equal to the Guideline Annual Premium were invested to earn interest,
(after taxes) at 5% compounded annually.

51
<PAGE>

The tables illustrate the Policy Values that would result based upon the
assumptions that no Policy loans have been made, that the Policy owner has not
requested an increase or decrease in the initial Face Amount, that no partial
withdrawals have been made, and that no transfers above 6 have been made in any
Policy year (so that no transaction or transfer charges have been incurred).

Upon request, the Company will provide a comparable illustration based upon the
proposed Insureds' Ages, and underwriting classification, and the requested Face
Amount, Sum Insured Option, and riders.

TO CHOOSE THE SUB-ACCOUNTS WHICH WILL BEST MEET THE POLICY OWNER'S NEEDS AND
OBJECTIVES, CAREFULLY READ THE PROSPECTUSES OF THE TRUST, VIP, AND T. ROWE PRICE
ALONG WITH THIS PROSPECTUS.

52
<PAGE>

GUARANTEED COST OF INSURANCE CHARGES

Insured 1: Unisex Nonsmoker Issue Age 55
Insured 2: Unisex Nonsmoker Issue Age 55
$1,000,000 Sum Insured Option 1
<TABLE>
<CAPTION>

Hypothetical Gross 0% Hypothetical Gross 6% Hypothetical Gross 12%

Policy Premium Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year + Interest Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

1 10,500 0 9,240 1,000,000 0 9,809 1,000,000 0 10,378 1,000,000
2 21,525 5,470 18,186 1,000,000 7,182 19,898 1,000,000 8,963 21,678 1,000,000
3 33,101 7,819 26,819 1,000,000 11,252 30,252 1,000,000 14,967 33,967 1,000,000
4 45,256 16,879 35,119 1,000,000 22,617 40,857 1,000,000 29,077 47,317 1,000,000
5 58,019 25,962 43,062 1,000,000 34,591 51,691 1,000,000 44,704 61,804 1,000,000
6 71,420 34,656 50,616 1,000,000 46,766 62,726 1,000,000 61,546 77,506 1,000,000
7 85,491 42,919 57,739 1,000,000 59,101 73,921 1,000,000 79,680 94,500 1,000,000
8 100,266 50,697 64,377 1,000,000 71,542 85,222 1,000,000 99,179 112,859 1,000,000
9 115,779 57,914 70,454 1,000,000 84,013 96,553 1,000,000 120,106 132,646 1,000,000
10 132,068 64,479 75,879 1,000,000 96,419 107,819 1,000,000 142,524 153,924 1,000,000
11 149,171 71,437 80,557 1,000,000 109,798 118,918 1,000,000 167,642 176,762 1,000,000
12 167,130 77,535 84,375 1,000,000 122,890 129,730 1,000,000 194,392 201,232 1,000,000
13 185,986 82,661 87,221 1,000,000 135,571 140,131 1,000,000 222,871 227,431 1,000,000
14 205,786 86,690 88,970 1,000,000 147,705 149,985 1,000,000 253,186 255,466 1,000,000
15 226,575 89,469 89,469 1,000,000 159,123 159,123 1,000,000 285,458 285,458 1,000,000
16 248,404 88,738 88,738 1,000,000 167,729 167,729 1,000,000 318,247 318,247 1,000,000
17 271,324 86,156 86,156 1,000,000 175,045 175,045 1,000,000 353,300 353,300 1,000,000
18 295,390 81,519 81,519 1,000,000 180,840 180,840 1,000,000 390,879 390,879 1,000,000
19 320,660 74,232 74,232 1,000,000 184,525 184,525 1,000,000 431,068 431,068 1,000,000
20 347,193 63,695 63,695 1,000,000 185,488 185,488 1,000,000 474,082 474,082 1,000,000
Age 60 58,019 25,962 43,062 1,000,000 34,591 51,691 1,000,000 44,704 61,804 1,000,000
Age 65 132,068 64,479 75,879 1,000,000 96,419 107,819 1,000,000 142,524 153,924 1,000,000
Age 70 226,575 89,469 89,469 1,000,000 159,123 159,123 1,000,000 285,458 285,458 1,000,000
Age 75 347,193 63,695 63,695 1,000,000 185,488 185,488 1,000,000 474,082 474,082 1,000,000
</TABLE>

(1) Assumes a $10,000 premium is paid at the beginning of each Policy Year.
"Premiums + Interest" column assumes premiums paid at 5% per year. Values
will be different if premiums are paid with a different frequency or in
different amounts.

(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause this Policy to lapse because of insufficient Policy Value.

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICY OWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE UNDERLYING FUNDS. THE
VALUE OF UNITS, CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGES 0%, 6%, AND
12% OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS, OR IF ANY PREMIUMS WERE ALLOCATED OR CASH VALUE
TRANSFERRED TO THE FIXED ACCOUNT, NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.

53
<PAGE>

CURRENT COST OF INSURANCE CHARGES

Insured 1: Unisex Nonsmoker Issue Age 55
Insured 2: Unisex Nonsmoker Issue Age 55
$1,000,000 Sum Insured Option 1
<TABLE>
<CAPTION>
Hypothetical Gross 0% Hypothetical Gross 6% Hypothetical Gross 12%

1 10,500 0 9,244 1,000,000 0 9,813 1,000,000 0 10,383 1,000,000
2 21,525 5,494 18,210 1,000,000 7,207 19,923 1,000,000 8,989 21,704 1,000,000
3 33,101 7,891 26,891 1,000,000 11,328 30,328 1,000,000 15,047 34,047 1,000,000
4 45,256 17,043 35,283 1,000,000 22,792 41,032 1,000,000 29,264 47,504 1,000,000
5 58,019 26,283 43,383 1,000,000 34,938 52,038 1,000,000 45,078 62,178 1,000,000
6 71,420 35,229 51,189 1,000,000 47,390 63,350 1,000,000 62,226 78,186 1,000,000
7 85,491 43,875 58,695 1,000,000 60,151 74,971 1,000,000 80,834 95,654 1,000,000
8 100,266 52,213 65,893 1,000,000 73,222 86,902 1,000,000 101,037 114,717 1,000,000
9 115,779 60,231 72,771 1,000,000 86,597 99,137 1,000,000 122,985 135,525 1,000,000
10 132,068 67,919 79,319 1,000,000 100,277 111,677 1,000,000 146,843 158,243 1,000,000
11 149,171 76,297 85,417 1,000,000 115,291 124,411 1,000,000 173,832 182,952 1,000,000
12 167,130 84,176 91,016 1,000,000 130,455 137,295 1,000,000 202,976 209,816 1,000,000
13 185,986 91,508 96,068 1,000,000 145,729 150,289 1,000,000 234,464 239,024 1,000,000
14 205,786 98,242 100,522 1,000,000 161,067 163,347 1,000,000 268,511 270,791 1,000,000
15 226,575 104,318 104,318 1,000,000 176,413 176,413 1,000,000 305,355 305,355 1,000,000
16 248,404 107,680 107,680 1,000,000 189,902 189,902 1,000,000 343,787 343,787 1,000,000
17 271,324 110,188 110,188 1,000,000 203,275 203,275 1,000,000 385,739 385,739 1,000,000
18 295,390 111,790 111,790 1,000,000 216,491 216,491 1,000,000 431,631 431,631 1,000,000
19 320,660 112,272 112,272 1,000,000 229,363 229,363 1,000,000 481,843 481,843 1,000,000
20 347,193 111,443 111,443 1,000,000 241,727 241,727 1,000,000 536,868 536,868 1,000,000
Age 60 58,019 26,283 43,383 1,000,000 34,938 52,038 1,000,000 45,078 62,178 1,000,000
Age 65 132,068 67,919 79,319 1,000,000 100,277 111,677 1,000,000 146,843 158,243 1,000,000
Age 70 226,575 104,318 104,318 1,000,000 176,413 176,413 1,000,000 305,355 305,355 1,000,000
Age 75 347,193 111,443 111,443 1,000,000 241,727 241,727 1,000,000 536,868 536,868 1,000,000
</TABLE>

(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause this Policy to lapse because of insufficient Policy Value.

54
<PAGE>

GUARANTEED COST OF INSURANCE CHARGES

Insured 1: Unisex Nonsmoker Issue Age 55
Insured 2: Unisex Nonsmoker Issue Age 55
$1,000,000 Sum Insured Option 2
<TABLE>
<CAPTION>
Hypothetical Gross 0% Hypothetical Gross 6% Hypothetical Gross 12%

1 10,500 0 9,240 1,009,240 0 9,809 1,009,809 0 10,378 1,010,378
2 21,525 5,467 18,182 1,018,182 7,179 19,894 1,019,894 8,959 21,674 1,021,674
3 33,101 7,807 26,807 1,026,807 11,239 30,239 1,030,239 14,952 33,952 1,033,952
4 45,256 16,850 35,090 1,035,090 22,583 40,823 1,040,823 29,037 47,277 1,047,278
5 58,019 25,904 43,004 1,043,004 34,521 51,621 1,051,621 44,619 61,719 1,061,719
6 71,420 34,552 50,512 1,050,512 46,634 62,594 1,062,594 61,380 77,340 1,077,340
7 85,491 42,745 57,565 1,057,565 58,871 73,691 1,073,691 79,379 94,199 1,094,199
8 100,266 50,421 64,101 1,064,101 71,164 84,844 1,084,844 98,664 112,344 1,112,344
9 115,779 57,493 70,033 1,070,033 83,416 95,956 1,095,956 119,259 131,799 1,131,800
10 132,068 63,859 75,259 1,075,259 95,504 106,904 1,106,904 141,175 152,575 1,152,575
11 149,171 70,549 79,669 1,079,669 108,435 117,555 1,117,555 165,549 174,669 1,174,669
12 167,130 76,295 83,135 1,083,135 120,909 127,749 1,127,749 191,222 198,062 1,198,062
13 185,986 80,971 85,531 1,085,531 132,757 137,317 1,137,317 218,169 222,729 1,222,729
14 205,786 84,438 86,718 1,086,718 143,789 146,069 1,146,069 246,346 248,626 1,248,626
15 226,575 86,532 86,532 1,086,532 153,777 153,777 1,153,777 275,675 275,675 1,275,675
16 248,404 84,970 84,970 1,084,970 160,530 160,530 1,160,530 304,419 304,419 1,304,419
17 271,324 81,398 81,398 1,081,398 165,465 165,465 1,165,465 333,940 333,940 1,333,940
18 295,390 75,626 75,626 1,075,626 168,274 168,274 1,168,274 364,077 364,077 1,364,077
19 320,660 67,063 67,063 1,067,063 168,215 168,215 1,168,215 394,224 394,224 1,394,224
20 347,193 55,158 55,158 1,055,158 164,548 164,548 1,164,549 423,743 423,743 1,423,743
Age 60 58,019 25,904 43,004 1,043,004 34,521 51,621 1,051,621 44,619 61,719 1,061,719
Age 65 132,068 63,859 75,259 1,075,259 95,504 106,904 1,106,904 141,175 152,575 1,152,575
Age 70 226,575 86,532 86,532 1,086,532 153,777 153,777 1,153,777 275,675 275,675 1,275,675
Age 75 347,193 55,158 55,158 1,055,158 164,548 164,548 1,164,549 423,743 423,743 1,423,743
</TABLE>

(1) Assumes a $10,000 premium is paid at the beginning of each Policy
Year. "Premiums + Interest" column assumes premiums paid at 5% per
year. Values will be different if premiums are paid with a different
frequency or in different amounts.

(2) Assumes that no policy loan has been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
Policy Value.

55
<PAGE>

CURRENT COST OF INSURANCE CHARGES

Insured 1: Unisex Nonsmoker Issue Age 55
Insured 2: Unisex Nonsmoker Issue Age 55
$1,000,000 Sum Insured Option 2
<TABLE>
<CAPTION>
Hypothetical Gross 0% Hypothetical Gross 6% Hypothetical Gross 12%

1 10,500 0 9,244 1,009,244 0 9,813 1,009,813 0 10,382 1,010,382
2 21,525 5,491 18,207 1,018,207 7,204 19,919 1,019,919 8,985 21,701 1,021,701
3 33,101 7,881 26,881 1,026,881 11,317 30,317 1,030,317 15,034 34,034 1,034,034
4 45,256 17,021 35,261 1,035,261 22,765 41,005 1,041,005 29,232 47,472 1,047,472
5 58,019 26,239 43,339 1,043,339 34,883 51,983 1,051,983 45,011 62,111 1,062,111
6 71,420 35,152 51,112 1,051,112 47,292 63,252 1,063,252 62,102 78,062 1,078,062
7 85,491 43,751 58,571 1,058,571 59,987 74,807 1,074,807 80,618 95,438 1,095,438
8 100,266 52,025 65,705 1,065,705 72,964 86,644 1,086,644 100,686 114,366 1,114,366
9 115,779 59,959 72,499 1,072,500 86,210 98,750 1,098,750 122,435 134,975 1,134,975
10 132,068 67,540 78,940 1,078,940 99,716 111,116 1,111,116 146,014 157,414 1,157,414
11 149,171 75,772 84,892 1,084,893 114,485 123,605 1,123,605 172,594 181,714 1,181,714
12 167,130 83,458 90,298 1,090,298 129,312 136,152 1,136,152 201,148 207,988 1,207,988
13 185,986 90,541 95,101 1,095,101 144,129 148,689 1,148,689 231,803 236,363 1,236,363
14 205,786 96,959 99,239 1,099,239 158,861 161,141 1,161,141 264,690 266,970 1,266,970
15 226,575 102,641 102,641 1,102,641 173,416 173,416 1,173,417 299,942 299,942 1,299,942
16 248,404 105,518 105,518 1,105,518 185,879 185,879 1,185,879 336,199 336,199 1,336,200
17 271,324 107,431 107,431 1,107,431 197,927 197,927 1,197,927 375,200 375,200 1,375,201
18 295,390 108,322 108,322 1,108,322 209,467 209,467 1,209,467 417,148 417,148 1,417,148
19 320,660 107,952 107,952 1,107,953 220,211 220,211 1,220,211 462,068 462,068 1,462,068
20 347,193 106,115 106,115 1,106,115 229,890 229,890 1,229,890 510,023 510,023 1,510,023
Age 60 58,019 26,239 43,339 1,043,339 34,883 51,983 1,051,983 45,011 62,111 1,062,111
Age 65 132,068 67,540 78,940 1,078,940 99,716 111,116 1,111,116 146,014 157,414 1,157,414
Age 70 226,575 102,641 102,641 1,102,641 173,416 173,416 1,173,417 299,942 299,942 1,299,942
Age 75 347,193 106,115 106,115 1,106,115 229,890 229,890 1,229,890 510,023 510,023 1,510,023
</TABLE>

(1) Assumes a $10,000 premium is paid at the beginning of each Policy
Year. "Premiums + Interest" column assumes premiums paid at 5% per
year. Values will be different if premiums are paid with a different
frequency or in different amounts.

(2) Assumes that no policy loan has been made. Excessive loans or
withdrawals may cause this Policy to lapse because of insufficient
Policy Value.

56
<PAGE>

APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES

A separate surrender charge is calculated upon issuance of the Policy and upon
each increase in Face Amount. The maximum surrender charge is equal to the sum
of (a) plus (b), where (a) is a deferred administrative charge equal to $8.50
per $1,000 of initial Face Amount (or Face Amount increase) and (b) is a
deferred sales charge of 48% of premiums received up to a maximum number of
Guideline Annual Premiums (GAPs), based on the joint life expectancy of both
Insureds, subject to the deferred sales charge that varies as shown below by
average issue Age or average Age at time of increase, as applicable:

Applicable Age Maximum GAPs
-------------- ------------

5-75 1.95
76 1.92
77 1.81
78 1.69
79 1.60
80 1.50
81 1.40
82 1.31

A further limitation is imposed based on the Standard Non-Forfeiture Law of each
state. The maximum surrender charges upon issuance of the Policy and upon each
increase in Face Amount are shown in the table below. During the first two
Policy years following issue or an increase in Face Amount, the actual surrender
charge may be less than the maximum. See "CHARGES AND DEDUCTIONS - Surrender
Charge."

The maximum surrender charge initially remains level for 40 months, declines by
one-half of one percent of the initial amount for 80 months, and then declines
by one percent each month thereafter, reaching zero at the end of 180 Policy
months (15 Policy years).

The Factors used in calculating the maximum surrender charges vary with the
issue Age of the younger Insured as indicated in the table that follows.

57
<PAGE>

INITIAL MAXIMUM SURRENDER CHARGE PER $1,000 FACE AMOUNT

Initial Initial Initial
Younger Surrender Younger Surrender Younger Surrender
Issue Age Charge Issue Age Charge Issue Age Charge

--------- ------ --------- ------- --------- ------
5 5.00 31 9.40 57 21.00
6 5.00 32 9.80 58 22.00
7 5.00 33 10.20 59 23.00
8 5.00 34 10.60 60 24.00
9 5.00 35 11.00 61 25.00
10 5.00 36 11.40 62 26.00
11 5.00 37 11.80 63 27.00
12 5.00 38 12.20 64 28.00
13 5.00 39 12.60 65 29.00
14 5.00 40 13.00 66 30.00
15 5.00 41 13.40 67 31.00
16 5.00 42 13.80 68 32.00
17 5.00 43 14.20 69 33.00
18 5.00 44 14.60 70 34.00
19 5.00 45 15.00 71 35.00
20 5.00 46 15.40 72 35.00
21 5.40 47 15.80 73 35.00
22 5.80 48 16.20 74 35.00
23 6.20 49 16.60 75 35.00
24 6.60 50 17.00 76 35.00
25 7.00 51 17.40 77 35.00
26 7.40 52 17.80 78 35.00
27 7.80 53 18.20 79 35.00
28 8.20 54 18.60 80 35.00
29 8.60 55 19.00
30 9.00 56 20.00

58
<PAGE>

EXAMPLES

For the purposes of these examples, assume that two nonsmokers, each Age 55, are
covered as the Insureds under a $1,000,000 Policy. In this example the
Guideline Annual Premium ("GAP") equals $16,861.10. The maximum surrender
charge for the Policy is calculated as follows:

<TABLE>
<CAPTION>
<S> <C>
(a) Deferred Administrative Charge $8,500.00
($8.50/$1,000 of Face Amount)

(b) Deferred Sales Charge $15,781.99
(48% x 1.95 GAPs)
--------------

TOTAL $24,281.99
</TABLE>

Maximum Surrender Charge per Table on page 68 (19.00 x 1,000) $19,000.00

During the first two Policy years after the Date of Issue, the actual surrender
charge is the smaller of the maximum surrender charge and the following sum:

<TABLE>
<CAPTION>
<S> <C>
(a) Deferred Administrative Charge $8,500.00
($8.50/$1,000 of Face Amount)

(b) Deferred Sales Charge Varies
(not to exceed 25% of Premiums
received, up to one GAP, but
less than the maximum number
of GAPs subject to the deferred
sales charge)
---------------

Sum of (a) and (b)
</TABLE>
The maximum surrender charge is $19,000. All premiums are associated with the
initial face amount unless the face amount is increased.

Example 1:
- ----------

Assume the Policy owner surrenders the Policy in the 10th policy month, having
paid total premiums of $7,500. The actual surrender charge would be $10,375.

Example 2:
- ----------

Assume the Policy owner surrenders the Policy in the 120th month. After the
40th policy month, the maximum surrender charge decreases by 0.5% per month
during this period ($95 per month in this example). In this example, the
maximum surrender charge would be $11,400.

<PAGE>

AFLIAC Inheiritage Prospectus B
(Select Inheiritage)

This prospectus describes individual joint survivorship flexible premium
variable life insurance policies ("Policies") offered by Allmerica Financial
Life Insurance and Annuity Company (formerly SMA Life Assurance Company
("Company") to applicants Age 80 or under with respect to the younger Insured
and Age 85 or under with respect to the older Insured. Life insurance coverage
is provided for two Insureds, with death proceeds payable at death of the last
surviving Insured. Within limits, the Policy owner may choose the amount of
initial premium desired and the initial Sum Insured. The Policy owner has the
flexibility to vary the frequency and amount of premium payments, subject to
certain restrictions and conditions. The Policy owner may withdraw a portion of
the Policy's surrender value, or the Policy may be fully surrendered at any
time, subject to certain limitations. Because of the substantial nature of the
surrender charge, the Policy is not suitable for short-term investment purposes.
A Policy owner contemplating surrender of a Policy should pay special attention
to the limitation of deferred sales charges on surrenders in the first two years
following issuance or Face Amount increase.

The Policies permit the Policy owner to allocate net premiums among up to seven
of eleven sub-accounts ("Sub-Accounts") of the Inheiritage Account, a separate
account of the Company, and a fixed interest account ("General Account") of the
Company (together "Accounts"). Each Sub-Account invests its assets in a
corresponding investment portfolio of Allmerica Investment Trust ("Trust"),
Variable Insurance Products Fund ("VIP"), and T. Rowe Price International
Series, Inc. ("T. Rowe Price"). The Trust is managed by Allmerica Investment
Management Company, Inc. ("Allmerica Investment"). VIP is managed by Fidelity
Management & Research Company ("Fidelity Management"). T. Rowe Price is managed
by Rowe Price-Fleming International, Inc. ("Price-Fleming").

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

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES OF THE
ALLMERICA INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS FUND, AND T. ROWE PRICE
INTERNATIONAL SERIES, INC. THE HIGH INCOME PORTFOLIO OF VIP INVESTS IN HIGHER
YIELDING, HIGHER RISK, LOWER RATED DEBT SECURITIES (SEE "INVESTMENT OBJECTIVES
AND POLICIES" IN THIS PROSPECTUS). INVESTORS SHOULD RETAIN A COPY OF THIS
PROSPECTUS FOR FUTURE REFERENCE.

THE POLICIES ARE OBLIGATIONS OF ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY
COMPANY AND ARE DISTRIBUTED BY ALLMERICA INVESTMENTS, INC. THE POLICIES ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR CREDIT
UNION. THE POLICIES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), OR ANY OTHER FEDERAL AGENCY. INVESTMENTS IN THE
CONTRACTS ARE SUBJECT TO VARIOUS RISKS, INCLUDING THE FLUCTUATION OF VALUE AND
POSSIBLE LOSS OF PRINCIPAL.

Dated April 30, 1996
440 Lincoln Street
Worcester, Massachusetts 01653
(508) 855-1000

<PAGE>

(Continued from cover page)

The Trust, VIP, and T. Rowe Price are open-end, diversified series investment
companies. Seven different investment portfolios of the Trust are available
under the Policies: the Money Market Fund, Select International Equity Fund,
Select Aggressive Growth Fund, Select Capital Appreciation Fund, Select Growth
Fund, Select Growth and Income Fund, and Select Income Fund (the "Funds").
Three different investment portfolios of VIP are available under the Policies:
High Income Portfolio, Equity-Income Portfolio, and Growth Portfolio
("Portfolios"). One investment portfolio of T. Rowe Price ("Portfolio") is
available under the Policies: the International Stock Portfolio. Each Fund and
Portfolio has its own investment objectives. The accompanying prospectuses of
the Trust, VIP, and T. Rowe Price describe the investment objectives and certain
attendant risks of each Underlying Fund. The International Stock Portfolio of
T. Rowe Price is not available in all states.

______________

2
<PAGE>

TABLE OF CONTENTS

SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . 15
DESCRIPTION OF THE COMPANY, THE INHEIRITAGE ACCOUNT, ALLMERICA
INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS FUND, AND T. ROWE
PRICE INTERNATIONAL SERIES, INC. . . . . . . . . . . . . . . . . . 18
Investment Objectives and Policies . . . . . . . . . . . . . . . 19
Investment Advisory Services.. . . . . . . . . . . . . . . . . . 24
Addition, Deletion or Substitution of Investments. . . . . . . . 24
Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 25
THE POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Application for a Policy . . . . . . . . . . . . . . . . . . . . 23
Free Look Period . . . . . . . . . . . . . . . . . . . . . . . . 23
Conversion Privileges. . . . . . . . . . . . . . . . . . . . . . 24
Premium Payments . . . . . . . . . . . . . . . . . . . . . . . . 24
Incentive Funding Discount . . . . . . . . . . . . . . . . . . . 24
Allocation of Net Premiums . . . . . . . . . . . . . . . . . . . 25
Transfer Privilege . . . . . . . . . . . . . . . . . . . . . . . 25
Death Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 26
Sum Insured Options. . . . . . . . . . . . . . . . . . . . . . . 26
Change in Face Amount. . . . . . . . . . . . . . . . . . . . . . 30
Policy Value and Surrender Value . . . . . . . . . . . . . . . . 31
Payment Options. . . . . . . . . . . . . . . . . . . . . . . . . 32
Optional Insurance Benefits. . . . . . . . . . . . . . . . . . . 32
Surrender. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Partial Withdrawal . . . . . . . . . . . . . . . . . . . . . . . 32
Paid-up Insurance Option . . . . . . . . . . . . . . . . . . . . 33
CHARGES AND DEDUCTIONS . . . . . . . . . . . . . . . . . . . . . . 33
Tax Expense Charge . . . . . . . . . . . . . . . . . . . . . . . 33
Premium Expense Charge . . . . . . . . . . . . . . . . . . . . . 33
Monthly Deduction from Policy Value. . . . . . . . . . . . . . . 33
Charges Against Assets of the Inheiritage Account. . . . . . . . 35
Surrender Charge . . . . . . . . . . . . . . . . . . . . . . . . 36
Charges on Partial Withdrawal. . . . . . . . . . . . . . . . . . 37
Transfer Charges . . . . . . . . . . . . . . . . . . . . . . . . 38
Charge for Increase in Face Amount . . . . . . . . . . . . . . . 38
Other Administrative Charges . . . . . . . . . . . . . . . . . . 38
POLICY LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
POLICY TERMINATION AND REINSTATEMENT . . . . . . . . . . . . . . . 39
OTHER POLICY PROVISIONS. . . . . . . . . . . . . . . . . . . . . . 40
DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY. . . . . . . . . . 42
DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . 45
FURTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 45
INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . 45
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . 46
Taxation of the Policies . . . . . . . . . . . . . . . . . . . . 46
Modified Endowment Contracts . . . . . . . . . . . . . . . . . . 47
Estate and Generation Skipping Taxes . . . . . . . . . . . . . . 47
MORE INFORMATION ABOUT THE GENERAL ACCOUNT . . . . . . . . . . . . 48
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 49
APPENDIX A - OPTIONAL BENEFITS . . . . . . . . . . . . . . . . . . 81
APPENDIX B - PAYMENT OPTIONS . . . . . . . . . . . . . . . . . . . 82
APPENDIX C - ILLUSTRATIONS . . . . . . . . . . . . . . . . . . . . 84
APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES. . . . . . . 90

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