<PAGE>
PROSPECTUS SUPPLEMENT
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
INHEIRITAGE ACCOUNT
(Supplement to Prospectus Dated April 30, 1996)
* * *
PREFERRED LOAN OPTION
The following is inserted under the Section "LOAN PRIVILEGE" in the
SUMMARY and as the last section under POLICY LOANS:
PREFERRED LOAN OPTION - A preferred loan option is available under the
Policies. The preferred loan option will be available upon written
request. It may be revoked by you at any time. If this option has been
selected, after the tenth policy anniversary Policy Value in the General
Account equal to the loan amount will be credited with interest at an
effective annual yield of at least 7.5%. Our current practice is to
credit a rate of interest equal to the rate being charged for the preferred
loan.
There is some uncertainty as to the tax treatment of preferred loans.
Consult a qualified tax adviser (and see "FEDERAL TAX CONSIDERATIONS").
THE PREFERRED LOAN OPTION IS NOT AVAILABLE IN ALL STATES.
The following replaces the third paragraph under "FEDERAL TAX CONSIDERATIONS -
TAXATION OF THE POLICIES":
The Company believes that non-preferred loans received under a Policy will
be treated as indebtedness of the policy owner for federal income tax
purposes. Under current law, these loans will not constitute income for
the Policyowner while the Policy is in force (but see "MODIFIED ENDOWMENT
POLICIES"). However, there is a risk that a preferred loan may be
characterized by the IRS as a withdrawal and taxed accordingly. At the
present time, the IRS has not issued any guidance on whether loans with the
attributes of a preferred loan should be treated differently than a
non-preferred loan. This lack of specific guidance makes the tax treatment
of preferred loans uncertain. In the event IRS guidelines are issued in
the future, you may revoke your request for a preferred loan.
Section 264 of the Internal Revenue Code restricts the deduction of
interest on Policy loans. Consumer interest paid on Policy loans under an
individually owned Policy is not tax deductible. No tax deduction for
interest is allowed on Policy loans exceeding $50,000 in aggregate, if the
Insured is an officer or employee of, or is financially interested in, any
business carried on by the taxpayer.
* * *
TWELVE TRANSFERS WITHOUT CHARGE
The sections "SUMMARY - Transfer Charge," "THE POLICY - Transfer
Privilege," "CHARGES AND DEDUCTIONS - Transfer Charges," and "MORE INFORMATION
ABOUT THE GENERAL ACCOUNT -- Transfers, Surrenders, Partial Withdrawals and
Policy Loans," are amended to indicate that the first twelve transfers of
Policy Value in a Policy year, rather than the first six transfers, will be
free of charge.
* * *
Inheiritage, Select Inheiritage
<PAGE>
CHANGES IN DIRECTORS AND
OFFICERS
John P. Kavanaugh, Edward J. Parry III and J. Barry May have been elected as
Directors of the Company. Mr. Kavanaugh has been a Vice-President of the
Company since 1992, and previously served as Second Vice-President of the
Company. Mr. Kavanaugh is also a Director and Vice President of First
Allmerica Financial Life Insurance Company, and is a Director and President
of Allmerica Asset Management, Inc. Mr. Parry has been Vice President and
Treasurer of the Company since 1993; Assistant Vice President from 1992 to
1993; and was previously a Manager, Price Waterhouse, from 1987 to 1992. He
is also a Director and Officer of First Allmerica. Mr. May has been President
of the Hanover Insurance Company since September, 1996. He previously served
as Eastern Regional Vice-President and Regional Vice President of the New
England Region of the Hanover Insurance Company. Mr. May is also a Director
of First Allmerica.
Kruno Huitzingh, Theodore J. Rupley, and Diane E. Wood have resigned as
Directors and officers of the Company. Mark C. Colborn has resigned as
Controller, but continues as Vice-President.
* * *
Prospectus Supplement dated November 25, 1996.
