PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT, N-4, 2000-01-03

PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
N-4, 2000-01-03

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 3, 2000
FILE NO. 333-
FILE NO. 811-8108
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. / /
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 17 /X/

PROTECTIVE VARIABLE ANNUITY
SEPARATE ACCOUNT
(EXACT NAME OF REGISTRANT)

PROTECTIVE LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)

2801 HIGHWAY 280 SOUTH
BIRMINGHAM, ALABAMA 35223
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)

(205) 879-9230
(DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

STEVE M. CALLAWAY, ESQUIRE
PROTECTIVE LIFE INSURANCE COMPANY
2801 HIGHWAY 280 SOUTH
BIRMINGHAM, ALABAMA, 35223
(NAME AND ADDRESS OF AGENT FOR SERVICES)

COPY TO:
STEPHEN E. ROTH, ESQUIRE
SUTHERLAND, ASBILL & BRENNAN LLP
1275 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004
(202) 383-0158

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

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of the registration statement.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), SHALL
DETERMINE.

TITLE OF SECURITIES BEING REGISTERED: INTERESTS IN A SEPARATE
ACCOUNT ISSUED THROUGH VARIABLE ANNUITY CONTRACTS.

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<PAGE>
PART A
INFORMATION REQUIRED TO BE IN THE PROSPECTUS
<PAGE>
THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL, AND IT IS NOT SOLICITING
OFFERS TO BUY, THE SECURITIES DESCRIBED HEREIN. A REGISTRATION STATEMENT
RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THE INFORMATION IN THIS PRELIMINARY PROSPECTUS WILL BE
AMENDED OR COMPLETED BEFORE THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
<PAGE>
PRELIMINARY PROSPECTUS DATED JANUARY 3, 2000

<TABLE>
<S> <C>
[LOGO TO COME] PROTECTIVE LIFE INSURANCE COMPANY
PROTECTIVE VARIABLE ANNUITY
SEPARATE ACCOUNT
P.O. BOX 10648
BIRMINGHAM, ALABAMA 35202-0648
TELEPHONE: 1-800-456-6330
</TABLE>

This Prospectus describes the NAME-SM- Contract, a group and individual
flexible premium deferred variable and fixed annuity contract offered by
Protective Life Insurance Company. The Contract is designed for investors who
desire to accumulate capital on a tax deferred basis for retirement or other
long term investment purpose. It may be purchased on a non-qualified basis or
for use with certain qualified retirement plans.

You may allocate your Purchase Payments to one or more of the Sub-Accounts
of the Protective Variable Annuity Separate Account, the Guaranteed Account, or
both. The assets of each Sub-Account will be invested solely in a corresponding
Fund of Protective Investment Company, Van Kampen Life Investment Trust,
MFS-Registered Trademark- Variable Insurance Trust-SM-, Oppenheimer Variable
Account Funds, Calvert Variable Series, Inc., and Van Eck Worldwide Insurance
Trust. The Funds are:

<TABLE>
<S> <C> <C> <C>
PROTECTIVE INVESTMENT MFS-REGISTERED TRADEMARK- OPPENHEIMER VARIABLE ACCOUNT CALVERT VARIABLE SERIES,
COMPANY VARIABLE INSURANCE TRUST FUNDS INC.
INTERNATIONAL EQUITY FUND NEW DISCOVERY SERIES AGGRESSIVE GROWTH FUND/VA SOCIAL SMALL CAP GROWTH
SMALL CAP VALUE FUND EMERGING GROWTH SERIES GLOBAL SECURITIES FUND/ VA PORTFOLIO
CAPITAL GROWTH FUND RESEARCH SERIES CAPITAL APPRECIATION FUND/VA SOCIAL BALANCED PORTFOLIO
CORE(SM) U.S. EQUITY FUND GROWTH SERIES MAIN STREET GROWTH &
GROWTH AND INCOME FUND GROWTH WITH INCOME SERIES INCOME FUND/VA VAN ECK WORLDWIDE INSURANCE
GLOBAL INCOME FUND UTILITIES SERIES HIGH INCOME FUND/VA TRUST
TOTAL RETURN SERIES MONEY FUND/VA WORLDWIDE HARD ASSETS FUND
VAN KAMPEN LIFE INVESTMENT STRATEGIC BOND FUND/VA WORLDWIDE REAL ESTATE FUND
TRUST
EMERGING GROWTH PORTFOLIO
ENTERPRISE PORTFOLIO
COMSTOCK PORTFOLIO
GROWTH AND INCOME PORTFOLIO
STRATEGIC STOCK PORTFOLIO
ASSET ALLOCATION PORTFOLIO
</TABLE>

The value of your Contract, except amounts you allocate to the Guaranteed
Account, will vary according to the investment performance of the Funds in which
the selected Sub-Accounts are invested. You bear the investment risk on amounts
you allocate to the Sub-Accounts.

This Prospectus sets forth basic information about the Contract and the
Variable Account that a prospective investor should know before investing. The
Statement of Additional Information which has been filed with the Securities and
Exchange Commission, contains additional information about the Contract and the
Variable Account. The Statement of Additional Information is dated the same date
as this Prospectus and is incorporated herein by reference. The Table of
Contents for the Statement of Additional Information is on the last page of this
Prospectus. You may obtain a copy of the Statement of Additional Information
free of charge by writing or calling Protective Life at the address or telephone
number shown above. You may also obtain an electronic copy of the Statement of
Additional Information, as well as other material that we file electronically
and certain material incorporated by reference, at the SEC web site
(http://www.sec.gov).

PLEASE READ THIS PROSPECTUS CAREFULLY. INVESTORS SHOULD KEEP A COPY FOR
FUTURE REFERENCE. THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS
FOR EACH OF THE FUNDS.

THE NAME-SM- CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED BY,
ANY BANK OR FINANCIAL INSTITUTION. IT IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY, AND IT IS SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS............................... 3
EXPENSES.................................. 4
Examples................................ 7
SUMMARY................................... 10
The Contract............................ 10
Federal Tax Status...................... 12
CONDENSED FINANCIAL INFORMATION........... 13
THE COMPANY, VARIABLE ACCOUNT AND FUNDS... 16
Protective Life Insurance Company....... 16
Protective Variable Annuity Separate
Account............................... 16
Administration.......................... 16
The Funds............................... 16
Protective Investment Company (PIC)..... 17
Van Kampen Life Investment Trust........ 18
MFS-Registered Trademark- Variable
Insurance Trust-SM-................... 18
Oppenheimer Variable Account Funds...... 19
Calvert Variable Series, Inc............ 19
Van Eck Worldwide Insurance Trust....... 20
Other Information about the Funds....... 20
Other Investors in the Funds............ 21
Addition, Deletion or Substitution of
Investments........................... 21
DESCRIPTION OF THE CONTRACT............... 22
The Contract............................ 22
Parties to the Contract................. 22
Issuance of a Contract.................. 23
Purchase Payments....................... 24
Right to Cancel......................... 24
Allocation of Purchase Payments......... 24
Variable Account Value.................. 25
Transfers............................... 26
Surrenders and Partial Surrenders....... 28
THE GUARANTEED ACCOUNT.................... 30
DEATH BENEFIT............................. 31
Standard Death Benefit.................. 32
Optional Benefit Packages............... 32
SUSPENSION OR DELAY IN PAYMENTS........... 33
CHARGES AND DEDUCTIONS.................... 34
Surrender Charge........................ 34
Mortality and Expense Risk Charge....... 36
Administration Charges.................. 36
Transfer Fee............................ 36
Contract Maintenance Fee................ 36
Fund Expenses........................... 37
Premium Taxes........................... 37
Other Taxes............................. 37
ANNUITIZATION............................. 37
Annuity Commencement Date............... 37
Fixed Income Payments................... 37
Variable Income Payments................ 37
Annuity Options......................... 38
Minimum Amounts......................... 39
Death of Annuitant or Owner After
Annuity Commencement Date............. 39
</TABLE>

<TABLE>

<CAPTION>
PAGE
----
<S> <C>
YIELDS AND TOTAL RETURNS.................. 39
Yields.................................. 39
Total Returns........................... 40
Standardized Average Annual Total
Returns............................... 40
Non-Standard Average Annual Total
Returns............................... 40
Performance Comparisons................. 41
Other Matters........................... 41
FEDERAL TAX MATTERS....................... 42
Introduction............................ 42
The Company's Tax Status................ 42
TAXATION OF ANNUITIES IN GENERAL.......... 42
Tax Deferral During Accumulation
Period................................ 42
Taxation of Partial and Full
Surrenders............................ 44
Taxation of Annuity Payments............ 44
Taxation of Death Benefit Proceeds...... 45
Assignments, Pledges, and Gratuitous
Transfers............................. 45
Penalty Tax on Premature
Distributions......................... 45
Aggregation of Contracts................ 46
Loss of Interest Deduction Where
Contract Is Held By or For the Benefit
of Certain Nonnatural Persons......... 46
QUALIFIED RETIREMENT PLANS................ 47
In General.............................. 47
Direct Rollovers........................ 50
FEDERAL INCOME TAX WITHHOLDING............ 50
GENERAL MATTERS........................... 50
The Contract............................ 50
Error in Age or Gender.................. 50
Incontestability........................ 51
Non-Participation....................... 51
Assignment.............................. 51
Notice.................................. 51
Modification............................ 51
Reports................................. 51
Settlement.............................. 51
Receipt of Payment...................... 51
Protection of Proceeds.................. 51
Minimum Values.......................... 52
Application of Law...................... 52
No Default.............................. 52
DISTRIBUTION OF THE CONTRACTS............. 52
Inquiries............................... 52
IMSA...................................... 52
LEGAL PROCEEDINGS......................... 52
VOTING RIGHTS............................. 52
FINANCIAL STATEMENTS...................... 53
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
APPENDIX A: Death Benefit calculation
examples................................ A-1
APPENDIX B: Surrender Charge calculation
examples................................ B-1
APPENDIX C: Variable Annuitization
calculation............................. C-1
</TABLE>

2
<PAGE>
DEFINITIONS

"We", "us", "our", "Protective Life", and "Company" refer to Protective Life
Insurance Company. "You" and "your" refer to the person(s) who has been issued a
Contract.

ACCUMULATION UNIT: A unit of measure used to calculate the value of a
Sub-Account prior to the Annuity Commencement Date.

ALLOCATION OPTION: Any account to which you may allocate Purchase Payments
or transfer Contract Value under this Contract.

ANNUITY COMMENCEMENT DATE: The date as of which the Contract Value, less
applicable premium tax, is applied to an Annuity Option.

ANNUITY OPTION: The payout option under which the Company makes annuity
income payments.

ANNUITY UNIT: A unit of measure used to calculate the amount of the variable
income payments.

ASSUMED INVESTMENT RETURN: The assumed annual rate of return used to
calculate the amount of the variable income payments.

CONTRACT: The NAME-SM- flexible premium deferred variable and fixed annuity
Contract.

CONTRACT ANNIVERSARY: The same month and day as the Effective Date in each
subsequent year of the Contract.

CONTRACT VALUE: Prior to the Annuity Commencement Date, the sum of the
Variable Account value and the Guaranteed Account value.

CONTRACT YEAR: Any period of 12 months commencing with the Effective Date or
any Contract Anniversary.

DCA: Dollar cost averaging.

DCA FIXED ACCOUNTS: The DCA Fixed Accounts are part of the Company's general
account and are not part of or dependent upon the investment performance of the
Variable Account. These accounts are available for dollar cost averaging only
and may not be available in all states.

EFFECTIVE DATE: The date as of which we credit the initial Purchase Payment
to the Contract and the date the Contract takes effect.

FIXED ACCOUNT: The Fixed Account is part of the Company's general account
and is not part of or dependent upon the investment performance of the Variable
Account. This account may not be available in all states.

FUND: Any investment portfolio in which a corresponding Sub-Account invests.

GUARANTEED ACCOUNT: The Fixed Account, DCA Fixed Accounts, and any other
Allocation Option we may offer with interest rate guarantees.

PURCHASE PAYMENT: The amount(s) paid by the Owner and accepted by the
Company as consideration for this Contract.

QUALIFIED CONTRACTS: Contracts issued in connection with retirement plans
that receive favorable tax treatment under Sections 401, 403, 408, 408A or 457
of the Internal Revenue Code.

QUALIFIED PLANS: Retirement plans that receive favorable tax treatment under
Sections 401, 403, 408, 408A or 457 of the Internal Revenue Code.

SUB-ACCOUNT: A separate division of the Variable Account.

VALUATION DAY: Each day on which the New York Stock Exchange is open for
business.

VALUATION PERIOD: The period which begins at the close of regular trading on
the New York Stock Exchange on any Valuation Day and ends at the close of
regular trading on the next Valuation Day.

VARIABLE ACCOUNT: The Protective Variable Annuity Separate Account, a
separate investment account of Protective Life.

WRITTEN NOTICE: A notice or request submitted in writing in a form
satisfactory to the Company that we receive at the administrative office.

3
<PAGE>
EXPENSES

The following expense information assumes that the entire Contract Value is
Variable Account Value.

<TABLE>
<S> <C>
OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchase Payments................. None
Maximum Surrender Charge Imposed on Amount Surrendered
(contingent deferred sales charge as a % of amount
surrendered)............................................ 7.0%
Transfer Processing Fee................................... None*

ANNUAL CONTRACT MAINTENANCE FEE............................. $30**
</TABLE>

<TABLE>
<CAPTION>
WITH STANDARD WITH OPTIONAL
BENEFITS BENEFITS
------------- -------------
<S> <C> <C>
ANNUAL VARIABLE ACCOUNT EXPENSES
(as a percentage of average Variable Account value)
Mortality and Expense Risk Charge......................... 1.10% 1.25%
Administration Charge..................................... 0.15% 0.15%
Total Annual Variable Account Expenses.................... 1.25% 1.40%
</TABLE>

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<TABLE>
<C> <S>
* Protective Life reserves the right to charge a Transfer Fee
in the future. (See "Charges and Deductions".)

** The contract maintenance fee may not apply. (See "Charges
and Deductions".)
</TABLE>

4
<PAGE>
ANNUAL FUND EXPENSES
(AFTER REIMBURSEMENT AND AS PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
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MANAGEMENT OTHER TOTAL ANNUAL
(ADVISORY) EXPENSES AFTER FUND EXPENSES
FEES REIMBURSEMENT (AFTER REIMBURSEMENTS)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PROTECTIVE INVESTMENT COMPANY (PIC) (1)
International Equity Fund........................ 1.10% 0.00% 1.10%
Small Cap Value Fund............................. 0.80% 0.00% 0.80%
Capital Growth Fund.............................. 0.80% 0.00% 0.80%
CORE-SM- U.S. Equity Fund........................ 0.80% 0.00% 0.80%
Growth and Income Fund........................... 0.80% 0.00% 0.80%
Global Income Fund............................... 1.10% 0.00% 1.10%
VAN KAMPEN LIFE INVESTMENT TRUST
Emerging Growth Portfolio........................
Enterprise Portfolio.............................
Comstock Portfolio...............................
Growth and Income Portfolio......................
Strategic Stock Portfolio........................
Asset Allocation Portfolio.......................
MFS-REGISTERED TRADEMARK- VARIABLE INSURANCE
TRUST-SM- (2, 3)
New Discovery Series............................. 0.90% 0.27% 1.17%
Emerging Growth Series........................... 0.75% 0.10% 0.85%
Research Series.................................. 0.75% 0.11% 0.86%
Growth Series....................................
Growth With Income Series........................ 0.75% 0.13% 0.88%
Utilities Series................................. 0.75% 0.26% 1.01%
Total Return Series.............................. 0.75% 0.16% 0.91%
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Aggressive Growth Fund/VA........................ 0.69% 0.02% 0.71%
Global Securities Fund/VA........................ 0.68% 0.06% 0.74%
Capital Appreciation Fund/VA..................... 0.72% 0.03% 0.75%
Main Street Growth & Income Fund/VA.............. 0.74% 0.05% 0.79%
High Income Fund/VA.............................. 0.74% 0.04% 0.78%
Strategic Bond Fund/VA........................... 0.74% 0.06% 0.80%
Money Fund/VA.................................... 0.45% 0.05% 0.50%
CALVERT VARIABLE SERIES, INC.(4)
Social Small Cap Growth Portfolio................ 1.00% 0.33% 1.33%
Social Balanced Portfolio........................ 0.70% 0.18% 0.88%
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund....................... 1.00% 0.16% 1.16%
Worldwide Real Estate Fund(5).................... 0.00% 0.89% 0.89%
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</TABLE>

<TABLE>
<C> <S>
(1) The annual expenses listed for all of the PIC funds are net
of certain reimbursements by PIC's investment manager. (See
"The Funds".) Absent the reimbursements, total expenses for
the period ended December 31, 1998 were: CORE-SM- U.S.
Equity Fund 0.85%, Small Cap Value Fund 0.89%, International
Equity Fund 1.39%, Growth and Income Fund 0.85%, Capital
Growth Fund 0.86%, and Global Income Fund 1.28%. PIC's
investment manager has voluntarily agreed to reimburse
certain of each Fund's expenses in excess of its management
fees. Although this reimbursement may be ended on 120 days'
notice to PIC, the investment manager has no present
intention of doing so.
</TABLE>

5
<PAGE>
<TABLE>
<C> <S>
(2) MFS has agreed to bear expenses for these series, subject to
reimbursement by these series, such that each series' "Other
Expenses" shall not exceed 0.25% of the average daily net
assets of these series during the current fiscal year. This
waiver and reimbursement was in effect for the period ending
December 31, 1998. The payments made by MFS on behalf of
each series under this arrangement are subject to
reimbursement by the series to MFS, which will be
accomplished by the payment of an expense reimbursement fee
by the series to MFS computed and paid monthly at a
percentage of the series' average daily net assets for its
then current fiscal year, with a limitation that immediately
after such payment the series' "Other Expenses" will not
exceed the percentage set forth above for that series. The
obligation of MFS to bear a series' "Other Expenses"
pursuant to this arrangement, and the series' obligation to
pay the reimbursement fee to MFS, terminates on the earlier
of the date on which payments made by the series equal the
prior payment of such reimbursable expenses by MFS, or
December 31, 2004 (May 1, 2001 in the case of the New
Discovery Series). MFS may, in its discretion, terminate
this arrangement at an earlier date, provided that the
arrangement will continue for each series until at least
May 1, 2000, unless terminated with the consent of the board
of trustees which oversees the series. Absent the
reimbursements, total expenses for the New Discovery Series
for the period ended December 31, 1998 were 5.22% reflecting
"Other Expenses" of 4.47%.

(3) Each Series has an expense offset arrangement which reduces
the Series' custodian based fee based on the amount of cash
maintained by the Series with its custodian and dividend
disbursing agent. Each Series may enter into other such
arrangements and directed brokerage arrangements, which
would also have the effect of reducing the Series' expenses.
Expenses do not take into account these expense reductions
and are therefore higher than the actual expenses of the
Series. Had this offset been incorporated into the reported
expenses, "Other Expenses" for the New Discovery Series
would appear on the Expense Table as 0.25% and in footnote
(2) as 4.45%, and the "Other Expenses" for the Utility
Series would appear on the Expense Table as 0.23%.

(4) The figures have been restated to reflect an increase in
transfer agency expenses (the addition of 0.01%) for the
Calvert Social Balanced Portfolio expected to be incurred in
1999. "Other Expenses" reflect an indirect fee. Net fund
operating expenses after reductions for fees paid indirectly
(again, restated for the Calvert Social Balanced Portfolio)
would be 0.86% for Calvert Social Balanced, and 1.12% for
Calvert Social Small Cap Growth.

(5) Van Eck Associates Corporation (the "Adviser") earned fees
for investment management and advisory services. The fee is
based on an annual rate of 1% of the average daily net
assets. The Adviser agreed to waive its management fees and
assume all expenses of the fund except interest, taxes,
brokerage commissions and extraordinary expenses for the
period January 1, 1998 to February 28, 1998. The Adviser
also agreed to assume expenses exceeding 1% of average daily
net assets except interest, taxes, brokerage commissions and
extraordinary expenses for the period March 1, 1998 to
December 31, 1998. For the year ended December 31, 1998, the
Adviser assumed expenses in the amount of $49,729 (3.43%).
Absent this reimbursement, total expenses for the Van Eck
Worldwide Real Estate Fund would have been 5.32% reflecting
"Management Fees" of 1.00% and "Other Expenses" of 4.32%.
Certain of the officers and trustees of the Trust are
officers, directors or stockholders of the Adviser and Van
Eck Securities Corporation. As of December 31, 1998, the
Adviser owned 39% of the outstanding shares of beneficial
interest of the Fund.
</TABLE>

6
<PAGE>
EXAMPLES

STANDARD DEATH BENEFIT

At the end of the applicable time period, you would have paid the following
expenses on a $1,000 investment, assuming selection of the standard death
benefit and a 5% annual return on assets.

1. If the Contract is surrendered at the end of the applicable time period:

<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
PIC International Equity.................................... $ $ $ $
PIC Small Cap Value.........................................
PIC Capital Growth..........................................
PIC CORE-SM- U. S. Equity...................................
PIC Growth and Income.......................................
PIC Global Income...........................................
Van Kampen Emerging Growth..................................
Van Kampen Enterprise.......................................
Van Kampen Comstock.........................................
Van Kampen Growth and Income................................
Van Kampen Strategic Stock..................................
Van Kampen Asset Allocation.................................
MFS New Discovery...........................................
MFS Emerging Growth.........................................
MFS Research................................................
MFS Growth..................................................
MFS Growth With Income......................................
MFS Utilities...............................................
MFS Total Return............................................
Oppenheimer Aggressive Growth...............................
Oppenheimer Global Securities...............................
Oppenheimer Capital Appreciation............................
Oppenheimer Main Street Growth & Income.....................
Oppenheimer High Income.....................................
Oppenheimer Strategic Bond..................................
Oppenheimer Money Fund......................................
Calvert Social Small Cap Growth.............................
Calvert Social Balanced.....................................
Van Eck Worldwide Hard Assets...............................
Van Eck Worldwide Real Estate...............................
</TABLE>

2. If the Contract is not surrendered at the end of the applicable time
period:

7
<PAGE>
<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
MFS New Discovery...........................................
MFS Emerging Growth.........................................
MFS Research................................................
MFS Growth..................................................
MFS Growth With Income......................................
MFS Utilities...............................................
MFS Total Return............................................
Oppenheimer Aggressive Growth...............................
Oppenheimer Global Securities...............................
Oppenheimer Capital Appreciation............................
Oppenheimer Main Street Growth & Income.....................
Oppenheimer High Income.....................................
Oppenheimer Strategic Bond..................................
Oppenheimer Money Fund......................................
Calvert Social Small Cap Growth.............................
Calvert Social Balanced.....................................
Van Eck Worldwide Hard Assets...............................
Van Eck Worldwide Real Estate...............................
</TABLE>

OPTIONAL BENEFIT PACKAGES

At the end of the applicable time period, you would have paid the following
expenses on a $1,000 investment, assuming selection of an optional benefit
package and a 5% annual return on assets.

3. If the Contract is surrendered at the end of the applicable time period:

<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
PIC International Equity.................................... $ $ $ $
PIC Small Cap Value.........................................
PIC Capital Growth..........................................
PIC CORE-SM- U. S. Equity...................................
PIC Growth and Income.......................................
PIC Global Income...........................................
Van Kampen Emerging Growth..................................
Van Kampen Enterprise.......................................
Van Kampen Comstock.........................................
Van Kampen Growth and Income................................
Van Kampen Strategic Stock..................................
Van Kampen Asset Allocation.................................
MFS New Discovery...........................................
MFS Emerging Growth.........................................
MFS Growth..................................................
MFS Research................................................
MFS Growth With Income......................................
MFS Utilities...............................................
MFS Total Return............................................
Oppenheimer Aggressive Growth...............................
Oppenheimer Global Securities...............................
Oppenheimer Capital Appreciation............................
Oppenheimer Main Street Growth & Income.....................
Oppenheimer High Income.....................................
Oppenheimer Strategic Bond..................................
Oppenheimer Money Fund......................................
</TABLE>

8
<PAGE>
<TABLE>
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Calvert Social Small Cap Growth.............................
Calvert Social Balanced.....................................
Van Eck Worldwide Hard Assets...............................
Van Eck Worldwide Real Estate...............................
</TABLE>

4. If the Contract is not surrendered at the end of the applicable time
period:

The preceding Expenses and Examples are intended to assist the owner in
understanding the costs and expenses that he or she will bear directly or
indirectly. They reflect the expenses for the Variable Account and each Fund for
the period January 1, 1998 to December 31, 1998. For a more complete description
of the various costs and expenses see "Charges and Deductions" in this
prospectus, and the prospectuses for each of the Funds, which accompany this
prospectus. In addition to the expenses listed above, premium taxes currently
varying from 0 to 3.5% may be applicable in certain states.

The Examples assume that no transfer fee or premium taxes have been assessed
and that the contract maintenance fee is $30. At the anticipated average
Contract value of $ , the contract maintenance fee is equivalent to %.

THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE ASSUMED
5% ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.

9
<PAGE>
SUMMARY

THE CONTRACT

<TABLE>
<S> <C>
WHAT IS THE NAME-SM- CONTRACT? The NAME-SM- Contract is a flexible premium deferred
variable and fixed annuity contract issued by
Protective Life. (See "The Contract.") In certain
states the Contract is offered as a group contract to
eligible persons.

HOW IS A CONTRACT ISSUED? Protective Life will issue the Contract when it
receives and accepts your complete application
information and an initial Purchase Payment. (See
"Issuance of a Contract.")

WHAT ARE THE PURCHASE PAYMENTS? The minimum amount which Protective Life will accept
as an initial Purchase Payment is $2,000. Subsequent
Purchase Payments may be made at any time prior to the
earlier of: (1) the oldest Owner's 85th birthday; or
(2) the Annuitant's 85th birthday. No Purchase Payment
will be accepted within 7 years of the Annuity
Commencement Date then in effect. The minimum
subsequent Purchase Payment we will accept is $100.
The maximum aggregate Purchase Payment(s) we will
accept without prior administrative office approval is
$1,000,000. We reserve the right not to accept any
Purchase Payment. (See "Purchase Payments.")

CAN I CANCEL THE CONTRACT? You have the right to return the Contract within a
certain number of days (which varies by state and is
never less than ten) after you receive it. The
returned Contract will be treated as if it were never
issued. Protective Life will refund the Contract Value
in states where permitted. This amount may be more or
less than the Purchase Payments. Where required, we
will refund Purchase Payments. (See "Right to
Cancel.")

CAN I TRANSFER AMOUNTS IN THE CONTRACT? Prior to the Annuity Commencement Date, you may
request transfers from one Allocation Option to
another. No transfers may be made into a DCA Fixed
Account. At least $100 must be transferred. Protective
Life reserves the right to limit the maximum amount
that may be transferred from the Fixed Account to the
greater of (a) $2,500; or (b) 25% of the value of the
Fixed Account per Contract Year. The Company reserves
the right to charge a transfer fee of $25 for each
transfer after the 12th transfer during such Contract
Year. (See "Transfers.")

CAN I SURRENDER THE CONTRACT? Upon Written Notice before the Annuity Commencement
Date, you may surrender the Contract and receive its
surrender value. (See "Surrenders and Partial
Surrenders.") Surrenders may have federal (and state)
income tax consequences. In addition, surrenders from
Contracts issued pursuant to Section 403(b) of the
Internal Revenue Code may not be allowed in certain
circumstances. (See "Federal Tax Matters.")
</TABLE>

10
<PAGE>
<TABLE>
<S> <C>
IS THERE A DEATH BENEFIT? If any Owner dies prior to the Annuity Commencement
Date and while this Contract is in force, a death
benefit, less any applicable premium tax, will be
payable to the Beneficiary. The death benefit is
determined as of the end of the Valuation Period
during which we receive due proof of the Owner's
death. The standard death benefit will equal the
greater of: (1) the Contract Value; or (2) aggregate
Purchase Payments less aggregate amounts surrendered,
including surrender charges. Only one death benefit is
payable under this Contract, even though the Contract
may, in some circumstances, continue beyond the time
of an Owner's death. (See "Death Benefit.")

At the time of application the Owner may purchase an
optional benefit package that may provide a death
benefit which is greater than the standard death
benefit provided under the contract. (See "Optional
Benefit Packages.")

ARE THERE CHARGES AND DEDUCTIONS FROM MY The following charges and deductions are made in
CONTRACT? connection with the Contract:

SURRENDER CHARGES. Full or partial surrenders are subject to a surrender
charge. The surrender charge is equal to a specified
percentage (maximum 7.0%) of the amount you surrender.
The cumulative surrender charges assessed will never
exceed 7.0% of the total Purchase Payments we accept
under this Contract. (See "Surrender Charges.")

MORTALITY AND EXPENSE RISK CHARGE. We will deduct a mortality and expense risk charge to
compensate us for assuming certain mortality and
expense risks. For Contracts issued with the standard
death benefit, the charge equals, on an annual basis,
1.10% of the average daily net assets of the Variable
Account value attributable to the Contracts. For
Contracts issued with an optional benefit package, the
charge equals 1.25% of such assets prior to the
Annuity Commencement Date. (See "Optional Benefit
Packages.") On and after the Annuity Commencement
Date, the charge equals 1.10% of such assets. (See
"Mortality and Expense Risk Charge.")

ADMINISTRATION CHARGE. We will deduct an administration charge equal, on an
annual basis, to 0.15% of the average daily net assets
of the Variable Account value supporting the
Contracts. (See "Administration Charge.")

CONTRACT MAINTENANCE FEE. Prior to the Annuity Commencement Date a contract
maintenance fee of $30 is deducted from the Contract
Value on each Contract Anniversary, and on any day
that the Contract is surrendered, if the surrender
occurs on any day other than the Contract Anniversary.
Under certain circumstances, we may waive this fee.
(See "Contract Maintenance Fee.")
</TABLE>

11
<PAGE>
<TABLE>
<S> <C>
TAXES. Some states impose premium taxes at rates currently
ranging up to 3.5%. If premium taxes apply to your
Contract, we will deduct them from the Purchase
Payment(s) when accepted or from the Contract Value
upon a full or partial surrender, death or
annuitization. The Company reserves the right to
impose a charge for other taxes attributable to the
Variable Account. (See "Charges and Deductions.")

INVESTMENT MANAGEMENT FEES AND OTHER The net assets of each Sub-Account of the Variable
EXPENSES OF THE FUNDS. Account will reflect the investment management fee the
corresponding Fund incurs as well as the other
operating expenses of that Fund. For each Fund, the
investment manager receives a daily fee for its
investment management services. The management fees
are based on the average daily net assets of the Fund.
(See "Fund Expenses" and the Funds' prospectuses.)

WHAT ANNUITY OPTIONS ARE AVAILABLE? Currently, we apply the Contract Value, less any
applicable premium tax, to an Annuity Option on the
Annuity Commencement Date, unless you choose to
receive the surrender value in a lump sum. Annuity
Options include: payments for a certain period, and
life income with or without payments for a certain
period. Some Annuity Options are available on either a
fixed or variable payment basis. (See "Annuitiza-
tion".)

IS THE CONTRACT AVAILABLE FOR QUALIFIED We may issue the Contract for use with retirement
RETIREMENT PLANS? plans that receive special federal income tax
treatment under the Internal Revenue Code such as
pension and profit sharing plans (including H.R. 10
plans), tax sheltered annuities individual retirement
accounts, and individual retirement annuities.
Contracts issued for these qualified retirement plans
are referred to as Qualified Contracts, and these
types of plans are referred to as Qualified Plans.
(See "Federal Tax Matters".)

OTHER CONTRACTS We offer other types of annuity contracts and
insurance policies which also invest in the same Funds
in which your Contract invests. These other types of
contracts and policies may have different charges that
could affect the value of Sub-Accounts and may offer
different benefits than your Contract. To obtain more
information about these contracts and policies, you
may contact our administrative office in writing or by
telephone.
</TABLE>

FEDERAL TAX STATUS

Generally, a distribution from the Contract, which includes a full or
partial surrender or payment of a death benefit, will result in taxable income
if there has been an increase in the Contract Value. In certain circumstances, a
10% penalty tax may also apply. (See "Federal Tax Matters").

12
<PAGE>
CONDENSED FINANCIAL INFORMATION

The date of inception of each of the sub-accounts is as follows:

<TABLE>
<S> <C>
March 14, 1994 -- PIC International Equity
PIC Small Cap Value
PIC CORE-SM- U.S. Equity
PIC Growth and Income
PIC Global Income
Oppenheimer Money Fund (formerly PIC Money
Market)

June 13, 1995 -- PIC Capital Growth

July 1, 1997 -- MFS Emerging Growth
MFS Research
MFS Growth with Income
MFS Total Return
Oppenheimer Aggressive Growth
Oppenheimer Capital Appreciation
(formerly Oppenheimer Growth)
Oppenheimer Main Street Growth &
Income (formerly Oppenheimer
Growth & Income)
Oppenheimer Strategic Bond
Calvert Social Small Cap Growth
Calvert Social Balanced

November 5, 1998 -- MFS New Discovery
MFS Utilities
Oppenheimer Global Securities
Oppenheimer High Income
Van Eck Worldwide Hard Assets
Van Eck Worldwide Real Estate

May 1, 2000 -- MFS Growth Series
Van Kampen Emerging Growth
Van Kampen Enterprise
Van Kampen Comstock
Van Kampen Growth and Income
Van Kampen Strategic Stock
Van Kampen Asset Allocation
</TABLE>

13
<PAGE>
ACCUMULATION UNIT VALUES

At December 31, of each year listed below, net assets of the Variable
Account were represented by the following Accumulation Unit values and
Accumulation Units outstanding. The Accumulation Unit values shown below are for
a Contract issued with the standard death benefit, which has a total mortality
and expense risk charge and administration charge of 1.25%. For Contracts issued
with an optional benefit package, the total mortality and expense risk charge
and administration charge is 1.40%, and the Accumulation Unit values would be
lower than those for Contracts with the standard death benefit. No Accumulation
Units were associated with Contracts with an optional benefit package on or
before December 31, 1998. You should read this information in conjunction with
the Variable Account's financial statements and related notes in the Statement
of Additional Information.

<TABLE>
<CAPTION>
(STANDARD (OPTIONAL
BENEFITS) BENEFITS)
SUB-ACCOUNT 1994 1995 1996 1997 1998 1999 1999
----------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
PIC
International Equity....... 9.48 11.18 13.12 13.51 16.07
Small Cap Value............ 8.91 9.35 11.09 14.46 12.07
Capital Growth............. -- 10.36 12.48 16.56 22.00
CORE-SM- U. S. Equity...... 9.94 13.40 16.12 20.81 25.10
Growth and Income.......... 9.71 12.66 15.83 20.27 19.40
Global Income.............. 9.82 11.32 12.22 13.25 14.42
VAN KAMPEN
Emerging Growth............ -- -- -- -- -- -- --
Enterprise................. -- -- -- -- -- -- --
Comstock................... -- -- -- -- -- -- --
Growth and Income.......... -- -- -- -- -- -- --
Strategic Stock............ -- -- -- -- -- -- --
Asset Allocation........... -- -- -- -- -- -- --
MFS
New Discovery.............. -- -- -- -- 11.97
Emerging Growth............ -- -- -- 11.36 15.02
Research................... -- -- -- 10.89 13.24
Growth..................... -- -- -- -- -- -- --
Growth With Income......... -- -- -- 11.40 13.75
Utilities.................. -- -- -- -- 10.65
Total Return............... -- -- -- 11.10 12.29
OPPENHEIMER
Aggressive Growth.......... -- -- -- 10.97 12.16
Global Securities.......... -- -- -- -- 11.26
Capital Appreciation....... -- -- -- 11.22 13.72
Main Street Growth &
Income................... -- -- -- 11.83 12.21
High Income................ -- -- -- -- 10.51
Money Fund................. 1.02 1.05 1.09 1.13 1.17
Strategic Bond............. -- -- -- 10.33 10.47
CALVERT
Social Small Cap Growth.... -- -- -- 11.04 10.22
Social Balanced............ -- -- -- 11.14 12.77
VAN ECK
Worldwide Hard Assets...... -- -- -- -- 9.50
Worldwide Real Estate...... -- -- -- -- 10.39
</TABLE>

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

<TABLE>
<C> <S>
* Accumulation Unit values are rounded to the nearest whole
cent.
</TABLE>

14
<PAGE>
ACCUMULATION UNITS OUTSTANDING

No Accumulation Units were associated with Contracts with an optional
benefit package on or before December 31, 1998.

<TABLE>
<CAPTION>
(STANDARD (OPTIONAL
BENEFITS) BENEFITS)
SUB-ACCOUNT 1994 1995 1996 1997 1998 1999 1999
----------- --------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
PIC
International Equity.... 2,588,605 4,954,564 7,363,767 9,722,696 10,798,391
Small Cap Value......... 2,347,968 4,579,808 5,797,119 7,429,530 8,201,197
Capital Growth.......... -- 930,249 2,419,601 4,493,710 6,926,984
CORE-SM- U. S. Equity... 1,682,927 4,128,798 6,300,382 8,495,067 10,415,387
Growth and Income....... 4,260,743 10,012,351 13,291,398 17,539,696 19,909,590
Global Income........... 1,457,712 2,438,238 3,081,317 3,677,919 4,330,727
VAN KAMPEN
Emerging Growth......... -- -- -- -- -- -- --
Enterprise.............. -- -- -- -- -- -- --
Comstock................ -- -- -- -- -- -- --
Growth and Income....... -- -- -- -- -- -- --
Strategic Stock......... -- -- -- -- -- -- --
Asset Allocation........ -- -- -- -- -- -- --
MFS
New Discovery........... -- -- -- -- --
Emerging Growth......... -- -- -- 292,318 1,102,153
Research................ -- -- -- 577,212 1,987,679
Growth.................. -- -- -- -- -- -- --
Growth With Income...... -- -- -- 234,240 1,409,735
Utilities............... -- -- -- -- --
Total Return............ -- -- -- 157,430 1,060,293
OPPENHEIMER
Aggressive Growth....... -- -- -- 238,172 931,993
Global Securities....... -- -- -- -- --
Capital Appreciation.... -- -- -- 321,669 1,167,782
Main Street Growth &
Income................ -- -- -- 247,774 1,644,982
High Income............. -- -- -- -- --
Money Fund.............. 3,034,056 4,273,270 5,577,080 3,151,349 4,526,291
Strategic Bond.......... -- -- -- 284,169 1,524,677
CALVERT
Social Small Cap
Growth................ -- -- -- 12,376 53,800
Social Balanced......... -- -- -- 94,365 481,687
VAN ECK
Worldwide Hard Assets... -- -- -- -- --
Worldwide Real Estate... -- -- -- -- --
</TABLE>

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

<TABLE>
<C> <S>
** Accumulation Units are rounded to the nearest unit.
</TABLE>

15
<PAGE>
THE COMPANY, VARIABLE ACCOUNT AND FUNDS

PROTECTIVE LIFE INSURANCE COMPANY

The Contracts are issued by Protective Life. A Tennessee corporation founded
in 1907, Protective Life provides individual life insurance, annuities, group
dental insurance, and guaranteed investment contracts. Protective Life is
currently licensed to transact life insurance business in 49 states and the
District of Columbia. As of September 30, 1999, Protective Life had total assets
of approximately $12.1 billion. Protective Life is the principal operating
subsidiary of Protective Life Corporation ("PLC"), an insurance holding company
whose stock is traded on the New York Stock Exchange. PLC, a Delaware
corporation, had total assets of approximately $12.5 billion at September 30,
1999.

PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT

The Protective Variable Annuity Separate Account is a separate investment
account of Protective Life. The Variable Account was established under Tennessee
law by the Board of Directors of Protective Life on October 11, 1993. The
Variable Account is registered with the Securities and Exchange Commission (the
"SEC") as a unit investment trust under the Investment Company Act of 1940 (the
"1940 Act") and meets the definition of a separate account under federal
securities laws. This registration does not involve supervision by the SEC of
the management or investment policies or practices of the Variable Account.

Protective Life owns the assets of the Variable Account. These assets are
held separate from other assets and are not part of Protective Life's general
account. The portion of the assets of the Variable Account equal to the reserves
or other contract liabilities of the Variable Account will not be charged with
liabilities that arise from any other business Protective Life conducts.
Protective Life may transfer to its general account any assets which exceed the
reserves and other contract liabilities of the Variable Account. Protective Life
may accumulate in the Variable Account the charge for mortality and expense
risks and investment results applicable to those assets that are in excess of
the net assets supporting the contracts. The income, gains and losses, both
realized and unrealized, from the assets of the Variable Account are credited to
or charged against the Variable Account without regard to any other income,
gains or losses of Protective Life. The obligations under the Contracts are
obligations of Protective Life.

Currently, thirty Sub-Accounts of the Variable Account are available under
this Contract: PIC International Equity; PIC Small Cap Value; PIC Capital
Growth; PIC CORE-SM- U.S. Equity; PIC Growth and Income; PIC Global Income; Van
Kampen Emerging Growth; Van Kampen Enterprise; Van Kampen Comstock; Van Kampen
Growth and Income; Van Kampen Strategic Stock; Van Kampen Asset Allocation; MFS
New Discovery; MFS Emerging Growth; MFS Growth; MFS Research; MFS Growth With
Income; MFS Utilities; MFS Total Return; Oppenheimer Aggressive Growth;
Oppenheimer Global Securities; Oppenheimer Capital Appreciation; Oppenheimer
Main Street Growth & Income; Oppenheimer High Income; Oppenheimer Strategic
Bond; Oppenheimer Money Fund; Calvert Social Small Cap Growth; Calvert Social
Balanced; Van Eck Worldwide Hard Assets; and Van Eck Worldwide Real Estate. Each
Sub-Account invests in shares of a corresponding Fund. Therefore, the investment
experience of your Contract depends on the experience of the Sub-Accounts that
you select. Other contracts Protective Life issues may offer some or all of the
Sub-Accounts of the Variable Account.

ADMINISTRATION

Protective Life Insurance Company performs the Contract administration at
its administrative office at 2801 Highway 280 South, Birmingham, Alabama 35223.
Contract administration includes processing applications for the Contracts and
subsequent Owner requests; processing Purchase Payments, transfers, surrenders
and death benefit claims as well as performing record maintenance and disbursing
annuity income payments.

THE FUNDS

Each Sub-Account invests in a corresponding Fund. Each Fund is an investment
portfolio of one of the following investment companies: Protective Investment
Company ("PIC Funds") managed by Protective

16
<PAGE>
Investment Advisors, Inc. (formerly Investment Distributors Advisory Services,
Inc.), and subadvised by Goldman Sachs Asset Management or Goldman Sachs Asset
Management International; Van Kampen Life Investment Trust managed by Van Kampen
Asset Management, Inc.; Oppenheimer Variable Account Funds managed by
OppenheimerFunds, Inc.; MFS-Registered Trademark- Variable Insurance Trust-SM-
managed by MFS Investment Management; Calvert Variable Series, Inc. managed by
Calvert Asset Management Company, Inc.; or Van Eck Worldwide Insurance Trust
managed by Van Eck Associates Corporation. Shares of these Funds are offered
only to:

(1) the Variable Account,

(2) other separate accounts of Protective Life and its affiliates
supporting variable annuity contracts or variable life insurance
policies,

(3) separate accounts of other life insurance companies supporting
variable annuity contracts or variable life insurance policies, and

(4) certain qualified retirement plans.

Such shares are not offered directly to investors but are available only
through the purchase of such contracts or policies or through such plans. See
the prospectus for each Fund for details about that Fund.

There is no guarantee that any Fund will meet its investment objectives.
Please refer to the prospectus for each of the Funds you are considering for
more information.

PROTECTIVE INVESTMENT COMPANY (PIC)

INTERNATIONAL EQUITY FUND.

This Fund seeks to provide long-term capital appreciation. This Fund will
pursue its objectives by investing substantially all, and at least 65%, of total
assets in equity and equity-related securities of companies that are organized
outside the United States or whose securities are primarily traded outside the
United States.

SMALL CAP VALUE FUND.

This Fund seeks long-term capital growth. This Fund will pursue its
objectives by investing, under normal circumstances, at least 65% of its total
assets in equity securities of companies with public stock market
capitalizations of $1 billion or less at the time of investment.

CAPITAL GROWTH FUND

This Fund seeks long-term capital growth. The Fund will pursue its objective
by investing, under normal circumstances, at least 90% of its total assets in a
diversified portfolio of equity securities having long-term capital appreciation
potential.

CORE-SM- U.S. EQUITY FUND.

This Fund seeks a total return consisting of capital appreciation plus
dividend income. This Fund will pursue its objectives by investing, under normal
circumstances, at least 90% of its total assets in equity securities selected
using both fundamental research and a variety of quantitative techniques in
seeking to maximize the Fund's expected return, while maintaining risk, style,
capitalization and industry characteristics similar to the S&P 500 Index.

GROWTH AND INCOME FUND.

This Fund seeks long-term growth of capital and growth of income. This Fund
will pursue its objectives by investing, under normal circumstances, at least
65% of its total assets in equity securities that have favorable prospects of
capital appreciation and/or dividend paying ability.

17
<PAGE>
GLOBAL INCOME FUND.

This Fund seeks high total return, emphasizing current income and, to a
lesser extent, providing opportunities for capital appreciation. This Fund will
pursue its objectives by investing primarily in high quality fixed-income
securities of U.S. and foreign issuers and through foreign currency
transactions.

VAN KAMPEN LIFE INVESTMENT TRUST

EMERGING GROWTH PORTFOLIO.

This Fund seeks capital appreciation by investing in a portfolio of
securities consisting principally of common stocks of small and medium sized
companies considered by the Fund's investment adviser to be emerging growth
companies. Any ordinary income received from portfolio securities is entirely
incidental.

ENTERPRISE PORTFOLIO.

This Fund seeks capital appreciation through investment in securities
believed by the Fund's investment adviser to have above average potential for
capital appreciation.

COMSTOCK PORTFOLIO.

This Fund seeks capital growth and income through investments in equity
securities, including common stocks, preferred stocks and securities convertible
into common and preferred stocks.

GROWTH AND INCOME.

This Fund seeks income and long-term growth of capital through investments
in income-producing equity securities including common stocks and convertible
securities.

STRATEGIC STOCK PORTFOLIO.

This Fund seeks above average total return through a combination of
potential capital appreciation and dividend income consistent with the
preservation of invested capital.

ASSET ALLOCATION PORTFOLIO.

This Fund seeks high total investment return consistent with prudent
investment risk through a fully managed investment policy utilizing equity
securities as well as investment grade intermediate and long-term debt
securities and money market securities. Total investment return consists of
current income (including dividends, interest and discount accruals) and capital
appreciation or depreciation.

MFS-REGISTERED TRADEMARK- VARIABLE INSURANCE TRUST-SM-

NEW DISCOVERY SERIES.

This Fund seeks to provide capital appreciation.

EMERGING GROWTH SERIES.

This Fund seeks to provide long-term growth of capital.

RESEARCH SERIES.

This Fund seeks to provide long-term growth of capital and future income.

GROWTH SERIES.

This Fund seeks long-term growth of capital and future income rather than
current income by investing primarily in common stocks and related securities,
such as preferred stocks, convertible securities and depositary receipts for
those securities of companies that the Fund's investment adviser believes offer
better than average prospects for long-term growth.

18
<PAGE>
GROWTH WITH INCOME SERIES.

This Fund seeks reasonable current income and long-term growth of capital
and income.

UTILITIES SERIES.

This Fund seeks to provide capital growth and current income above that
available from a portfolio invested entirely in equity securities.

TOTAL RETURN SERIES.

This Fund seeks primarily to provide above-average income (compared to a
portfolio invested entirely in equity securities) consistent with the prudent
employment of capital and secondarily to provide a reasonable opportunity for
growth of capital and income.

OPPENHEIMER VARIABLE ACCOUNT FUNDS

AGGRESSIVE GROWTH FUND/VA.

This Fund seeks to achieve long-term capital appreciation by investing in
"growth-type" companies.

GLOBAL SECURITIES FUND/VA.

This Fund seeks long-term capital appreciation by investing in securities of
foreign issuers, "growth-type" companies and cyclical industries.

CAPITAL APPRECIATION FUND/VA.

This Fund seeks to achieve long-term capital appreciation by investing in
securities of well-known established companies.

MAIN STREET GROWTH & INCOME FUND/VA.

This Fund seeks a high total return (which includes growth in the value of
its shares as well as current income) from equity and debt securities. From time
to time this Fund may focus on small to medium capitalization common stocks,
bonds and convertible securities.

HIGH INCOME FUND/VA.

This Fund seeks a high level of current income from investment in high yield
fixed-income securities.

STRATEGIC BOND FUND/VA.

This Fund seeks a high level of current income principally derived from
interest on debt securities and seeks to enhance such income by writing covered
call options on debt securities.

MONEY FUND/VA.

This Fund seeks maximum current income from investments in "money market"
securities consistent with low capital risk and the maintenance of liquidity. AN
INVESTMENT IN THE MONEY FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO
PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE
MONEY BY INVESTING IN THE FUND.

CALVERT VARIABLE SERIES, INC.

SOCIAL SMALL CAP GROWTH PORTFOLIO.

This Fund seeks to provide long-term capital appreciation by investing in
equity securities of companies that have small market capitalizations.

19
<PAGE>
SOCIAL BALANCED PORTFOLIO.

This Fund seeks to achieve a total return above the rate of inflation
through an actively managed, non-diversified portfolio of common and preferred
stocks, bonds, and money market instruments that offer income and capital growth
opportunity and that satisfy the social criteria established for the Fund.

VAN ECK WORLDWIDE INSURANCE TRUST

WORLDWIDE HARD ASSETS FUND.

This Fund seeks long-term capital appreciation by investing primarily in
"Hard Asset Securities". Hard Asset Securities are the stocks, bonds and other
securities of companies that derive at least 50% of gross revenue or profit from
the exploration, development, production or distribution of (together "Hard
Assets"):

(i) precious metals;

(ii) natural resources;

(iii) real estate; and

(iv) commodities.

WORLDWIDE REAL ESTATE FUND.

This Fund seeks a high total return by investing in equity securities of
companies that own significant real estate or that principally do business in
real estate.

THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF ANY OF THE
FUNDS WILL BE ACHIEVED. More detailed information concerning the investment
objectives, policies and restrictions of the Funds, the expenses of the Funds,
the risks attendant to investing in the Funds and other aspects of their
operations can be found in the current prospectuses for the Funds, which
accompany this prospectus, and the current Statement of Additional Information
for each of the Funds. The Funds' prospectuses should be read carefully before
any decision is made concerning the allocation of Purchase Payments or transfers
among the Sub-Accounts.

Certain Funds may have investment objectives and policies similar to other
mutual funds (sometimes having similar names) that are managed by the same
investment adviser or manager. The investment results of the Funds, however, may
be more or less favorable than the results of such other mutual funds.
Protective Life does not guarantee or make any representation that the
investment results of any Fund is, or will be, comparable to any other mutual
fund, even one with the same investment adviser or manager.

OTHER INFORMATION ABOUT THE FUNDS

Each Fund sells its shares to the Variable Account in accordance with the
terms of a participation agreement between the appropriate investment company
and Protective Life. The termination provisions of these agreements vary. Should
a participation agreement relating to a Fund terminate, the Variable Account may
not be able to purchase additional shares of that Fund. In that event, Owners
may no longer be able to allocate Variable Account value or Purchase Payments to
Sub-Accounts investing in that Fund. In certain circumstances, it is also
possible that a Fund may refuse to sell its shares to the Variable Account
despite the fact that the participation agreement relating to that Fund has not
been terminated. Should a Fund decide to discontinue selling its shares to the
Variable Account, Protective Life would not be able to honor requests from
Owners to allocate Purchase Payments or transfer Account Value to the
Sub-Account investing in shares of that Fund.

We may receive compensation from one or more of the Funds (or their
affiliates) based upon an annual percentage of the average net assets we held in
the Fund. These amounts are intended to compensate us for administrative and
other services we provide to the Funds. Managers or advisers paying fees under
these agreements do not increase the fees or expenses the Funds or their
shareholders pay.

20
<PAGE>
OTHER INVESTORS IN THE FUNDS

PIC currently sells shares of its Funds only to Protective Life as the
underlying investment for the Variable Account as well as for variable life
insurance contracts issued through Protective Life, and to Protective Life
Annuity and Insurance Company (formerly American Foundation Life Insurance
Company) a Protective Life affiliate, as the underlying investment for variable
annuity contracts issued by Protective Life and Annuity Insurance Company. PIC
may in the future sell shares of its Funds to other separate accounts of
Protective Life or its life insurance company affiliates supporting other
variable annuity contracts or variable life insurance policies. In addition,
upon obtaining regulatory approval, PIC may sell shares to certain retirement
plans qualifying under Section 401 of the Internal Revenue Code of 1986.
Protective Life currently does not foresee any disadvantages to Owners that
would arise from the possible sale of shares to support its variable annuity and
variable life insurance policies or those of its affiliates or from the possible
sale of shares to such retirement plans. However, the board of directors of PIC
will monitor events in order to identify any material irreconcilable conflicts
that might possibly arise if such shares were also offered to support variable
annuity policies other than the Contracts or variable life insurance policies or
to retirement plans. In event of such a conflict, the board of directors would
determine what action, if any, should be taken in response to the conflict. In
addition, if Protective Life believes that PIC's response to any such conflicts
insufficiently protects Owners, it will take appropriate action on its own,
including withdrawing the Account's investment in the Fund. (See the PIC
Prospectus for more detail.)

Shares of the Van Kampen Life Investment Trust, the MFS-Registered
Trademark- Variable Insurance Trust-SM-, Oppenheimer Variable Account Funds,
Calvert Variable Series, Inc. and Van Eck Worldwide Insurance Trust are sold to
separate accounts of insurance companies, which may or may not be affiliated
with Protective Life or each other, a practice known as "shared funding." They
may also be sold to separate accounts to serve as the underlying investment for
both variable annuity contracts and variable life insurance policies, a practice
known as "mixed funding." As a result, there is a possibility that a material
conflict may arise between the interests of Owners of Protective Life's
Contracts, whose Contract Values are allocated to the Variable Account, and of
owners of other contracts whose contract values are allocated to one or more
other separate accounts investing in any one of the Funds. Shares of some of
these Funds may also be sold to certain qualified pension and retirement plans.
As a result, there is a possibility that a material conflict may arise between
the interests of Contract Owners generally or certain classes of Contract
Owners, and such retirement plans or participants in such retirement plans. In
the event of any such material conflicts, Protective Life will consider what
action may be appropriate, including removing the Fund from the Variable Account
or replacing the Fund with another fund. As is the case with PIC, the boards of
directors (or trustees) of the Van Kampen Life Investment Trust, the
MFS-Registered Trademark- Variable Insurance Trust-SM-, Oppenheimer Variable
Account Funds, Calvert Variable Series, Inc. and Van Eck Worldwide Insurance
Trust monitor events related to their Funds to identify possible material
irreconcilable conflicts among and between the interests of the Fund's various
investors. There are certain risks associated with mixed and shared funding and
with the sale of shares to qualified pension and retirement plans, as disclosed
in each Fund's prospectus.

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS

Protective Life reserves the right, subject to applicable law, to make
additions to, deletions from, or substitutions for the shares that are held in
the Variable Account or that the Variable Account may purchase. If the shares of
a Fund are no longer available for investment or if in Protective Life's
judgment further investment in any Fund should become inappropriate in view of
the purposes of the Variable Account, Protective Life may redeem the shares, if
any, of that Fund and substitute shares of another registered open-end
management company or unit investment trust. Protective Life will not substitute
any shares attributable to a Contract's interest in the Variable Account without
notice and any necessary approval of the Securities and Exchange Commission and
state insurance authorities.

Protective Life also reserves the right to establish additional Sub-Accounts
of the Variable Account, each of which would invest in shares corresponding to a
new Fund. Subject to applicable law and any required SEC approval, Protective
Life may, in its sole discretion, establish new Sub-Accounts or eliminate one or
more Sub-Accounts if marketing needs, tax considerations or investment
conditions warrant. We may make any new Sub-Accounts available to existing
Owner(s) on a basis we determine.

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If we make any of these substitutions or changes, Protective Life may by
appropriate endorsement change the Contract to reflect the substitution or other
change. If Protective Life deems it to be in the best interest of Owners and
Annuitants, and subject to any approvals that applicable law may require, we may
operate the Variable Account as a management company under the 1940 Act, we may
de-register it under that Act if registration is no longer required, or we may
combine it with other Protective Life separate accounts. Protective Life
reserves the right to make any changes to the Variable Account that the 1940 Act
or other applicable law or regulation requires.

DESCRIPTION OF THE CONTRACT

The following sections describe the Contracts currently being offered.

THE CONTRACT

The NAME-SM- Contract is a flexible premium deferred variable and fixed
annuity contract issue by Protective Life. In certain states we offer the
Contract as a group contract to eligible persons who have established accounts
with certain broker-dealers that have entered into a distribution agreement with
Protective Life to offer the Contract. In those states we may also offer the
Contract to members of other eligible groups. In all other states, we offer the
Contract as an individual contract. If you purchase an interest in a group
contract, you will receive a certificate evidencing your ownership interest in
the group contract. Otherwise, you will receive an individual Contract.

You may purchase the Contract on a non-qualified basis. You may also
purchase it for use with certain qualified retirement plans that receive special
federal income tax treatment under the Internal Revenue Code, such as pension
and profit sharing plans (including H.R. 10 Plans), tax sheltered annuity plans,
individual retirement accounts, and individual retirement annuities.

You may wish to consult a qualified tax and/or financial adviser regarding
the use of the Contract within a qualfiied plan or in connection with other
employee benefit plans or arrangements that receive favorable tax treatment,
since many such plans or arrangements provide the same type of tax deferral as
provided by the Contract. The Contract provides a number of extra benefits and
features not provided by employee benefit plans or arrangements alone, although
there are costs and expenses under the Contract related to these benefits and
features. You should carefully consider these benefits and features in relation
to their costs as they apply to your particular situation.

PARTIES TO THE CONTRACT

OWNER.

The Owner is the person or persons who own the Contract and are entitled to
exercise all rights and privileges provided in the Contract. In those states
where the Contract is issued as a group contract, the term "Owner" refers to the
holder of the certificate evidencing an interest in the group contract. Two
persons may own the Contract together; they are designated as the Owner and the
Joint Owner. In the case of Joint Owners, provisions relating to action by the
Owner means both Joint Owners acting together. Individuals as well as nonnatural
persons, such as corporations or trusts, may be Owners. Protective Life will
only issue a Contract prior to each Owner's 85th birthday.

The Owner of this Contract may be changed by Written Notice provided:

(1) each new Owner's 85th birthday is after the Effective Date; and

(2) each new Owner's 90th birthday is on or after the Annuity
Commencement Date.

For a period of 1 year after any change of ownership involving a natural
person, the death benefit will equal the Contract Value regardless of the death
benefit option selected. Changing the Owner may result in a tax liability. (See
"Taxation of Annuities in General: Assignments, Pledges, and Gratuitous
Transfers.")

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BENEFICIARY.

The Beneficiary is the person or persons who may receive the benefits of
this Contract upon the death of any Owner.

PRIMARY -- The Primary Beneficiary is the surviving Joint Owner, if any.
If there is no surviving Joint Owner, the Primary Beneficiary is the
person or persons designated by the Owner and named in our records.

CONTINGENT -- The Contingent Beneficiary is the person or persons
designated by the Owner and named in our records to be Beneficiary if
the Primary Beneficiary is not living at the
time of the Owner's death.

If no Beneficiary designation is in effect or if no Beneficiary is living at
the time of an Owner's death, the Beneficiary will be the estate of the deceased
Owner. If any Owner dies on or after the Annuity Commencement Date, the
Beneficiary will become the new Owner.

Unless designated irrevocably, the Owner may change the Beneficiary by
Written Notice prior to the death of any Owner. An irrevocable Beneficiary is
one whose written consent is needed before the Owner can change the Beneficiary
designation or exercise certain other rights. In the case of certain Qualified
Contracts, Treasury Department regulations prescribe certain limitations on the
designation of a Beneficiary.

ANNUITANT.

The Annuitant is the person on whose life annuity income payments may be
based. The Owner is the Annuitant unless the Owner designates another person as
the Annuitant. The Contract must be issued prior to the Annuitant's 85th
birthday. If the Annuitant is not an Owner and dies prior to the Annuity
Commencement Date, the Owner will become the new Annuitant unless the Owner
designates otherwise.

The Owner may change the Annuitant by Written Notice prior to the Annuity
Commencement Date. However, if any Owner is not an individual the Annuitant may
not be changed. The new Annuitant's 90th birthday must be on or after the
Annuity Commencement Date in effect when the change of Annuitant is requested.

PAYEE.

The Payee is the person or persons designated by the Owner to receive the
annuity income payments under the Contract. The Annuitant is the Payee unless
the Owner designates another party as the Payee. The Owner may change the Payee
at any time.

ISSUANCE OF A CONTRACT

To purchase a Contract, you must submit certain application information and
an initial Purchase Payment to Protective Life through a licensed representative
of Protective Life, who is also a registered representative of a broker-dealer
having a distribution agreement with Investment Distributors, Inc. The minimum
initial Purchase Payment is $2,000. Protective Life reserves the right to accept
or decline a request to issue a Contract. Contracts may be sold to or in
connection with retirement plans which do not qualify for special tax treatment
as well as retirement plans that qualify for special tax treatment under the
Internal Revenue Code.

If the necessary application information for a Contract accompanies the
initial Purchase Payment, we will allocate the initial Purchase Payment (less
any applicable premium tax) to the Allocation Options as you direct on the
appropriate form within two business days of receiving such Purchase Payment at
the administrative office. If we do not receive the necessary application
information, Protective Life will retain the Purchase Payment for up to five
business days while it attempts to complete the information. If the necessary
application information is not complete after five days, Protective Life will
inform the applicant of the reason for the delay and return the initial Purchase
Payment immediately unless the applicant specifically consents to Protective
Life retaining it until the information is complete. Once the information is
complete, we will allocate the initial Purchase Payment to the appropriate
Allocation Options within two business days.

You may transmit information necessary to complete an application to the
Company by telephone, facsimile, or electronic media.

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PURCHASE PAYMENTS

We will only accept Purchase Payments prior to the earlier of the oldest
Owner's 85th birthday, or the Annuitant's 85th birthday. No Purchase Payment
will be accepted within 7 years of the Annuity Commencement Date then in effect.
The minimum subsequent Purchase Payment we will accept is $100. We reserve the
right not to accept any Purchase Payment.

Purchase Payments are payable at our administrative office. You may make
them by check payable to Protective Life Insurance Company or by any other
method we deem acceptable. Protective Life retains the right to limit the
maximum aggregate Purchase Payment that can be made without prior administrative
office approval. This amount is currently $1,000,000.

Under the current automatic purchase payment plan, you may select a monthly
or quarterly payment schedule pursuant to which Purchase Payments will be
automatically deducted from a bank account. We currently accept automatic
purchase payments on the 1st through the 28th day of each month. Each automatic
purchase payment must be at least $50. You may not allocate payments made
through the automatic purchase payment plan to any DCA Fixed Account. You may
not elect the automatic purchase payment plan and the partial automatic
withdrawal plan simultaneously. (See "Surrenders and Partial Surrenders".) Upon
notification of the death of any Owner the Company will terminate deductions
under the automatic purchase payment plan. (See "Allocation of Purchase
Payments".)

RIGHT TO CANCEL

You have the right to return the Contract within a certain number of days
after you receive it by returning it to our administrative office or the sales
representative who sold it along with a written cancellation request. The number
of days, which is at least ten, is determined by state law in the state where
the Contract is delivered. Return of the Contract by mail is effective on being
post-marked, properly addressed and postage pre-paid. We will treat the returned
Contract as if it had never been issued. Where permitted, Protective Life will
refund the Contract Value plus any fees deducted from either Purchase Payments
or Contract Value. This amount may be more or less than the aggregate amount of
your Purchase Payments up to that time. Where required, we will refund the
Purchase Payment.

ALLOCATION OF PURCHASE PAYMENTS

The allocation of your Purchase Payment among the Allocation Options you
have selected will be at the next price determined after we receive your
Purchase Payment. Owners must indicate in the application how their initial and
subsequent Purchase Payments are to be allocated among the Allocation Options.
The Fixed Account is not available in the states of Oregon, Maryland,
Massachusetts, or South Carolina. In the state of Oregon the DCA Fixed Accounts
are only available for initial Purchase Payments.

If such instructions are indicated by percentages, whole percentages must be
used. Subsequent Purchase Payments made through the automatic purchase payment
plan may not be allocated to any DCA Fixed Account. Subsequent Purchase Payments
will not be allocated to a DCA Fixed Account if, on the day we receive the
Purchase Payment, the value of that DCA Fixed Account is greater than $0.

For Individual Retirement Annuities and Contracts issued in states where,
upon cancellation during the right-to-cancel period, we return at least your
Purchase Payments, we reserve the right to allocate your initial Purchase
Payment (and any subsequent Purchase Payment made during the right-to-cancel
period) to the Oppenheimer Money Fund Sub-Account until the expiration of the
number of days in the free look period starting from the date we mail the
Contract from our administrative office. Thereafter, we will allocate all
Purchase Payments according to your allocation instructions then in effect.

Owners may change allocation instructions by Written Notice at any time.
Owners may also change instructions by telephone, facsimile transmission,
automated telephone system or via the internet at www.ipd1.protective.com. For
non-written instructions regarding allocations, we will require a form of
personal identification prior to acting on instructions and we will record any
telephone voice instructions. If we follow these procedures, we will not be
liable for any losses due to unauthorized or fraudulent instructions. We

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reserve the right to limit or eliminate any of these non-written communication
methods for any Contract or class of Contracts at any time for any reason.

VARIABLE ACCOUNT VALUE

SUB-ACCOUNT VALUE.

A Contract's Variable Account value at any time is the sum of the
Sub-Account values and therefore reflects the investment experience of the
Sub-Accounts to which it is allocated. There is no guaranteed minimum Variable
Account value. The Sub-Account value for any Sub-Account as of the Effective
Date is equal to the amount of the initial Purchase Payment allocated to that
Sub-Account. On subsequent Valuation Days prior to the Annuity Commencement
Date, the Sub-Account value is equal to that part of any Purchase Payment
allocated to the Sub-Account and any Contract Value transferred to the
Sub-Account, adjusted by income, dividends, net capital gains or losses
(realized or unrealized), decreased by partial surrenders (including any
applicable surrender charges and premium tax), Contract Value transferred out of
the Sub-Account and fees deducted from the Sub-Account. The Sub-Account value
for a Contract may be determined on any day by multiplying the number of
Accumulation Units attributable to the Contract in that Sub-Account by the
Accumulation Unit value for that Sub-Account on that day. (See "Determination of
Accumulation Units" and "Determination of Accumulation Unit Value.")

DETERMINATION OF ACCUMULATION UNITS.

Purchase Payments allocated and Contract Value transferred to a Sub-Account
are converted into Accumulation Units. An Accumulation Unit is a unit of measure
used to calculate the value of a Sub-Account prior to the Annuity Commencement
Date. We determine the number of Accumulation Units by dividing the dollar
amount directed to the Sub-Account by the value of the Accumulation Unit for
that Sub-Account for the Valuation Day as of which the allocation or transfer
occurs. Purchase Payments allocated or amounts transferred to a Sub-Account
under a Contract increase the number of Accumulation Units of that Sub-Account
credited to the Contract. The Company executes such allocations and transfers as
of the end of the Valuation Period in which it receives a Purchase Payment or
Written Notice or other instruction requesting a transfer.

Certain events reduce the number of Accumulation Units of a Sub-Account
credited to a Contract. The following events result in the cancellation of the
appropriate number of Accumulation Units of a Sub-Account:

- surrenders and applicable surrender charges;

- partial surrenders and applicable surrender charges;

- partial automatic withdrawals;

- transfer from a Sub-Account and any applicable transfer fee;

- payment of a death benefit claim;

- application of the Contract Value to an Annuity Option; and

- deduction of the annual contract maintenance fee.

Accumulation Units are canceled as of the end of the Valuation Period in which
the Company receives Written Notice of or other instructions regarding the
event.

DETERMINATION OF ACCUMULATION UNIT VALUE.

The Accumulation Unit value for each Sub-Account at the end of every
Valuation Day is the Accumulation Unit value at the end of the previous
Valuation Day times the net investment factor. The Sub-Account value for a
Contract may be determined on any day by multiplying the number of Accumulation
Units attributable to the Contract in that Sub-Account by the Accumulation Unit
value for that Sub-Account on that day.

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NET INVESTMENT FACTOR.

The net investment factor measures the investment performance of a
Sub-Account from one Valuation Period to the next. For each Sub-Account, the net
investment factor reflects the investment performance of the Fund in which the
Sub-Account invests and the charges assessed against that Sub-Account for a
Valuation Period. Each Sub-Account has a net investment factor for each
Valuation Period which may be greater or less than one. Therefore, the value of
an Accumulation Unit may increase or decrease. The net investment factor for any
Sub-Account for any Valuation Period is determined by dividing (1) by (2) and
subtracting (3) from the result, where:

(1) is the result of:

a. the net asset value per share of the Fund held in the
Sub-Account, determined at the end of the current Valuation
Period; plus

b. the per share amount of any dividend or capital gain
distributions the Fund makes to the Sub-Account, if the
"ex-dividend" date occurs during the current Valuation Period;
plus or minus

c. a per share charge or credit for any taxes reserved for, which
the Company determines to have resulted from the investment
operations of the Sub-Account.

(2) is the net asset value per share of the Fund held in the
Sub-Account, determined at the end of the last prior Valuation
Period.

(3) is a factor representing the mortality and expense risk charge and
the administration charge for the number of days in the Valuation
Period.

TRANSFERS

Prior to the Annuity Commencement Date, you may instruct us to transfer
Contract Value between and among the Allocation Options. When we receive your
transfer instructions, we will allocate the Contract Value you transfer at the
next price determined for the Allocation Options you indicate.

You must transfer at least $100, or if less, the entire amount in the
Allocation Option each time you make a transfer. If after the transfer, the
Contract Value remaining in any Allocation Option from which a transfer is made
would be less than $100, then we may transfer the entire Contract Value in that
Allocation Option instead of the requested amount. We reserve the right to limit
the number of transfers to no more than 12 per Contract Year. For each
additional transfer over 12 during each Contract Year, we reserve the right to
charge a Transfer Fee which will not exceed $25. The Transfer Fee, if any, will
be deducted from the amount being transferred. (See "Charges and Deductions --
Transfer Fee".)

Transfers involving a Guaranteed Account are subject to additional
restrictions. The maximum amount that may be transferred from the Fixed Account
during a Contract Year is the greater of:

(1) $2,500; or

(2) 25% of the Contract Value in the Fixed Account value.

Transfers into any DCA Fixed Account are not permitted.

Owners may request transfers by Written Notice at any time. Owners also may
request transfers by telephone, facsimile transmission, automated telephone
system or via the Internet at www.ipd1.protective.com. From time to time and at
our sole discretion, we may introduce additional methods for requesting
transfers or discontinue any method for making non-written requests for such
transfers. We will require a form of personal identification prior to acting on
non-written requests and we will record telephone requests. We will send you a
confirmation of all transfer requests communicated to us. If we follow these
procedures we will not be liable for any losses due to unauthorized or
fraudulent transfer requests.

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After the Annuity Commencement Date, when Variable Income Payments are
selected, transfers are allowed between Sub-Accounts, but are limited to one
transfer per month. Dollar cost averaging and portfolio rebalancing are not
allowed. No transfers are allowed within the Guaranteed Account or between the
Guaranteed Account or any Sub-Account.

RESERVATION OF RIGHTS.

We reserve the right to limit amounts transferred into or out of any account
within the Guaranteed Account. We reserve the right to modify, limit, suspend or
eliminate the transfer privileges (including acceptance of non-written
instructions) without prior notice for any Contract or class of Contracts at any
time for any reason. We also reserve the right to not honor transfers requested
by a third party holding a power of attorney from an Owner where that third
party requests transfers during a single Valuation Period on behalf of the
Owners of two or more Contracts.

DOLLAR COST AVERAGING.

Prior to the Annuity Commencement Date, you may instruct us by Written
Notice to systematically and automatically transfer, on a monthly or quarterly
basis, amounts from a DCA Fixed Account (or any other Allocation Option) to any
Allocation Option, except that no transfers may be made into a DCA Fixed
Account. This is known as the "dollar-cost averaging" method of investment. By
transferring equal amounts of Contract Value on a regularly scheduled basis, as
opposed to allocating a larger amount at one particular time, an Owner may be
less susceptible to the impact of market fluctuations in the value of
Sub-Account Accumulation Units. Protective Life, however, makes no guarantee
that the dollar cost averaging method will result in a profit or protection
against loss.

You may make dollar cost averaging transfers on the 1st through the 28th day
of each month. In states where, upon cancellation during the right-to-cancel
period, we are required to return your Purchase Payment, we reserve the right to
delay commencement of dollar cost averaging transfers until the expiration of
the right-to-cancel period.

The DCA Fixed Accounts are available only for Purchase Payments designated
for dollar cost averaging. In the state of Oregon, the DCA Fixed Accounts are
only available for the initial Purchase Payment. Purchase Payments may not be
allocated into any DCA Fixed Account when that DCA Fixed Account value is
greater than $0, and all funds must be transferred from a DCA Fixed Account
prior to allocating a Purchase Payment to that DCA Fixed Account. Where we
agree, under current administrative procedures, to allocate a Purchase Payment
to any DCA Fixed Account in installments from more than one source, we will
credit each installment with the interest rate applied to the first installment
we receive. Any Purchase Payment allocated to a DCA Fixed Account must include
instructions regarding the number and frequency of the dollar cost averaging
transfers, and the Allocation Option(s) into which the transfers are to be made.

Currently, the maximum period for dollar cost averaging from DCA Fixed
Account 1 is six months and from DCA Fixed Account 2 is twelve months. From time
to time, we may offer different maximum periods for dollar cost averaging
amounts from a DCA Fixed Account.

The periodic amount transferred from a DCA Fixed Account will be equal to
the Purchase Payment allocated to the DCA Fixed Account divided by the number of
dollar cost averaging transfers to be made. Interest credited will be
transferred from the DCA Fixed Account after the last dollar cost averaging
transfer. We will process dollar cost averaging transfers until the earlier of
the following: (1) the DCA Fixed Account Value equals 0, or (2) the Owner
instructs us by Written Notice to cancel the automatic transfers. If you
terminate transfers from a DCA Fixed Account before the amount remaining in that
account is $0, we will immediately transfer any amount remaining in that DCA
Fixed Account according to your instructions. If you do not provide
instructions, we will transfer the remaining amount to the Fixed Account. In
states where the Fixed Account is not available, we will transfer the remaining
amount to the OppenheimerFunds Money Fund Sub-Account. Upon the death of any
Owner, dollar cost averaging transfers will continue until canceled by the
Beneficiary(s).

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There is no charge for dollar cost averaging. Automatic transfers made to
facilitate dollar cost averaging will not count toward the 12 transfers
permitted each Contract Year if Protective Life elects to limit transfers, or
the designated number of free transfers in any Contract Year if the Company
elects to charge for transfers in excess of that number in any Contract Year. We
reserve the right to discontinue dollar cost averaging upon written notice to
the Owner.

PORTFOLIO REBALANCING.

Prior to the Annuity Commencement Date, you may instruct Protective Life by
Written Notice to periodically transfer your Variable Account value among
specified Sub-Accounts to achieve a particular percentage allocation of Variable
Account value among such Sub-Accounts ("portfolio rebalancing"). The portfolio
rebalancing percentages must be in whole numbers and must allocate amounts only
among the Sub-Accounts. You may not transfer any Contract Value to or from the
Guaranteed Account as part of portfolio rebalancing. Unless you instruct
otherwise, portfolio rebalancing is based on your Purchase Payment allocation
instructions in effect with respect to the Sub-Accounts at the time of each
rebalancing transfer. We deem portfolio rebalancing instructions from you that
differ from your current Purchase Payment allocation instructions to be a
request to change your Purchase Payment allocation.

You may elect portfolio rebalancing to occur on the 1st through 28th day of
a month on either a quarterly, semi-annual or annual basis. If you do not select
a day, transfers will occur on the same day of the month as your Contract
Anniversary, or on the 28th day of the month if your Contract Anniversary occurs
on the 29th, 30th or 31st day of the month. You may change or terminate
portfolio rebalancing by Written Notice, or by other non-written communication
methods acceptable for transfer requests. Upon the death of any Owner portfolio
rebalancing will continue until canceled by the Beneficiary(s).

There is no charge for portfolio rebalancing. Automatic transfers made to
facilitate portfolio rebalancing will not count toward the 12 transfers
permitted each Contract Year if Protective Life elects to limit transfers, or
the designated number of free transfers in any Contract Year if the Company
elects to charge for transfers in excess of that number in any Contract Year. We
reserve the right to discontinue portfolio rebalancing upon written notice to
the Owner.

SURRENDERS AND PARTIAL SURRENDERS

SURRENDER.

At any time before the Annuity Commencement Date, you may request a
surrender of your Contract for its surrender value. To surrender your Contract,
you must return the Contract to us and make your surrender request by Written
Notice. We will pay you the surrender value in a lump sum unless you request
payment under another payment option that we are making available at the time.
Partial and full surrenders from Contracts issued as tax sheltered annuities are
prohibited in certain circumstances. (See "Federal Tax Matters.") A surrender
may have federal and state income tax consequences. (See "Taxation of Partial
and Full Surrenders".) A surrender value may be available under certain Annuity
Options. (See "Annuitization".) In accordance with SEC regulations, surrenders
and partial surrenders are generally payable within 7 calendar days of our
receiving Written Notice of your request. (See "Suspension or Delay in
Payments".)

SURRENDER VALUE.

The surrender value of your Contract is equal to the Contract Value minus
any applicable surrender charge, contract maintenance fee and premium tax. We
will determine the surrender value as of the end of the Valuation Period during
which we receive your Written Notice requesting surrender and your Contract at
our administrative office.

PARTIAL SURRENDER.

At any time before the Annuity Commencement Date, you may request a partial
surrender of your Contract Value provided the Contract Value remaining after the
partial surrender is at least $2,000. You must request the partial surrender by
Written Notice. We will withdraw the amount requested from the Contract

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Value as of the end of the Valuation Period during which we receive Written
Notice requesting the partial surrender. The amount we will pay you upon a
partial surrender is equal to the Contract Value surrendered minus any
applicable surrender charge.

You may specify the amount of the partial surrender to be made from any
Allocation Option. If the you do not so specify, or if the amount in the
designated account(s) is inadequate to comply with the request, the partial
surrender will be made from each Allocation Option based on the proportion that
the value of each Allocation Option bears to the total Contract Value.

A partial surrender may have federal and state income tax consequences. (See
"Taxation of Partial and Full Surrenders".)

CANCELLATION OF ACCUMULATION UNITS.

Surrenders and partial surrenders, including any surrender charges, will
result in the cancellation of Accumulation Units from each applicable
Sub-Account(s) and/or in a reduction of the Guaranteed Account value.

SURRENDER AND PARTIAL SURRENDER RESTRICTIONS.

The Owner's right to make surrenders and partial surrenders is subject to
any restrictions imposed by applicable law or employee benefit plan.

RESTRICTIONS ON DISTRIBUTIONS FROM CERTAIN TYPES OF CONTRACTS.

There are certain restrictions on surrenders and partial surrenders of
Contracts used as funding vehicles for Internal Revenue Code Section 403(b)
retirement plans. Section 403(b)(11) of the Code restricts the distribution
under Section 403(b) annuity contracts of:

(i) contributions made pursuant to a salary reduction agreement in
years beginning after December 31, 1988;

(ii) earnings on those contributions; and

(iii) earnings after December 31, 1988 on amounts attributable to
salary reduction contributions held
as of December 31, 1988.

Distributions of those amounts may only occur upon the death of the
employee, attainment of age 59 1/2, separation from service, disability, or
hardship. In addition, income attributable to salary reduction contributions may
not be distributed in the case of hardship.

In the case of certain Qualified Plans, federal tax law imposes restrictions
on the form and manner in which benefits may be paid. For example, spousal
consent may be needed in certain instances before a distribution may be made.

PARTIAL AUTOMATIC WITHDRAWALS.

Currently, the Company offers a partial automatic withdrawal plan. This plan
allows you to pre-authorize periodic partial surrenders prior to the Annuity
Commencement Date. You may elect to participate in this plan at the time of
application or at a later date by properly completing an election form. In order
to participate in the plan you must have:

(1) made an initial Purchase Payment of at least $5,000; or

(2) a Contract Value as of the previous Contract Anniversary equal to
$5,000.

The partial automatic withdrawal plan and the automatic purchase payment
plan may not be elected simultaneously. (See "Purchase Payments".) There may be
federal and state income tax consequences to partial automatic withdrawals from
the Contract and the Owner should, therefore, consult with his or her tax
advisor before participating in any withdrawal program. (See "Taxation of
Partial and Full Surrenders".)

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<PAGE>
When you elect the partial automatic withdrawal plan, you will instruct
Protective Life to withdraw a level dollar amount from the Contract on a monthly
or quarterly basis. Partial automatic withdrawals may be made on the 1st through
the 28th day of each month. The amount requested must be at least $100 per
withdrawal. We will process withdrawals for the designated amount until you
instruct us otherwise. If, during any Contract Year, the amount of the
withdrawals exceeds the "free withdrawal amount" described in the "Surrender
Charge" section of this prospectus, we will deduct a surrender charge where
applicable. (See "Surrender Charge.") Partial automatic withdrawals will be
taken pro-rata from the Allocation Options in proportion to the value each
Allocation Option bears to the total Contract Value and will be made only by an
electronic fund transfer. We will pay you the amount requested each month or
quarter as applicable and cancel the applicable Accumulation Units.

If any partial automatic withdrawal transaction would result in a Contract
Value of less than $5,000 after the withdrawal, the transaction will not be
completed and the partial automatic withdrawal plan will terminate. Once partial
automatic withdrawals have terminated due to insufficient Contract Value, they
will not be automatically reinstated in the event that your Contract Value
should reach $5,000 again. The partial automatic withdrawal plan will also
terminate in the event that a non-automated partial surrender is made from a
Contract participating in the plan, except in the case of a partial surrender
taken as a minimum required distribution from a Qualified Plan. (See "Qualified
Retirement Plans".) Upon notification of the death of any Owner the Company will
terminate the partial automatic withdrawal plan. The partial automatic
withdrawal plan may be discontinued by the Owner at any time by Written Notice.

There is no charge for the partial automatic withdrawal plan. We reserve the
right to discontinue the partial automatic withdrawal plan upon written notice
to you.

THE GUARANTEED ACCOUNT

The Guaranteed Account has not been, and is not required to be, registered
with the SEC under the Securities Act of 1933, and neither these accounts nor
the Company's general account have been registered as an investment company
under the 1940 Act. Therefore, neither the Guaranteed Account, the Company's
general account, nor any interests therein are generally subject to regulation
under the 1933 Act or the 1940 Act. The disclosures relating to the Guaranteed
Account included in this prospectus are for the Owner's information and have not
been reviewed by the SEC. However, such disclosures may be subject to certain
generally applicable provisions of federal securities law relating to the
accuracy and completeness of statements made in prospectuses.

The Guaranteed Account currently includes the Fixed Account and two DCA
Fixed Accounts. The Fixed Account and the DCA Fixed Accounts are part of
Protective Life's general account. The assets of Protective Life's general
account support its insurance and annuity obligations and are subject to
Protective Life's general liabilities from business operations. Since the Fixed
Account and the DCA Fixed Accounts are part of the general account, Protective
Life assumes the risk of investment gain or loss on this amount.

The Fixed Account is not available in the states of Oregon, Maryland,
Massachusetts or South Carolina. In the state of Oregon the DCA Fixed Accounts
are only available for initial Purchase Payments.

In states where the Fixed Account and DCA Fixed Accounts are available, you
may allocate some or all of your Purchase Payments and may transfer some or all
of your Contract Value to an account within the Guaranteed Account, except that
transfers may not be made into any DCA Fixed Account, and Purchase Payments may
not be allocated to any DCA Fixed Account when that DCA Fixed Account value is
greater than $0. All previously allocated funds must be transferred out of a DCA
Fixed Account prior to allocating a subsequent Purchase Payment to that DCA
Fixed Account. Amounts allocated or transferred to an account within the
Guaranteed Account earn interest from the date the funds are credited to the
account.

The interest rate we apply to Purchase Payments and transfers into the Fixed
Account is guaranteed for one year from the date the Purchase Payment or
transfer is credited to the account. When an interest rate guarantee expires, we
will set a new interest rate, which may not be the same as the interest rate
then in effect

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for Purchase Payments or transfers allocated to the Fixed Account. The new
interest rate is also guaranteed for one year.

DCA Fixed Accounts are designed to systematically transfer amounts to other
Allocation Options over a designated period. The interest rate we apply to
Purchase Payments allocated to a DCA Fixed Account is guaranteed for the period
over which transfers are allowed from that DCA Fixed Account.

From time to time and subject to regulatory approval, we may offer Fixed
Accounts or DCA Fixed Accounts with different interest guaranteed periods. We,
in our sole discretion, establish the interest rates for each account in the
Guaranteed Account. We will not declare a rate that is less than an annual
effective interest rate of 3.00%. Because these rates vary from time to time,
allocations made to the same account within the Guaranteed Account at different
times may earn interest at different rates.

GUARANTEED ACCOUNT VALUE.

Any time prior to the Annuity Commencement Date, the Guaranteed Account
value is equal to the sum of:

(1) Purchase Payments allocated to the Guaranteed Account; plus

(2) amounts transferred into the Guaranteed Account; plus

(3) interest credited to the Guaranteed Account; minus

(4) amounts transferred out of the Guaranteed Account including any
applicable transfer fee; minus

(5) the amount of any surrenders removed from the Guaranteed Account,
including any applicable premium tax and surrender charges; minus

(6) Fees deducted from the Guaranteed Account.

For the purposes of interest crediting, amounts deducted, transferred or
withdrawn from accounts within the Guaranteed Account will be separately
accounted for on a "first-in, first-out" (FIFO) basis.

DEATH BENEFIT

If any Owner dies before the Annuity Commencement Date and while this
Contract is in force, the Company will pay a death benefit, less any applicable
premium tax, to the Beneficiary. We will determine the death benefit as of the
end of the Valuation Period during which we receive due proof of death. Only one
death benefit is payable under this Contract, even though the Contract may, in
some circumstances, continue beyond the time of an Owner's death. If any Owner
is not a natural person, the death of the Annuitant is treated as the death of
an Owner. In the case of certain Qualified Contracts, regulations promulgated by
the Treasury Department prescribe certain limitations on the designation of a
Beneficiary.

The death benefit may be taken in one sum immediately, in which event the
Contract will terminate. If the death benefit is not taken in one sum
immediately, the death benefit will become the new Contract Value as of the end
of the Valuation Period during which we receive due proof of death and the
entire interest in the Contract must be distributed under one of the following
options:

(1) the entire interest must be distributed over the life of the
Beneficiary, or over a period not extending beyond the life
expectancy of the Beneficiary, with distribution beginning within
one year of the Owner's death; or,

(2) the entire interest must be distributed within 5 years of the
Owner's death.

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If the Beneficiary is the deceased Owner's spouse, the surviving spouse may
elect, in lieu of receiving a death benefit, to continue the Contract and become
the new Owner, provided the deceased Owner's spouse's 85th birthday is after the
Effective Date and the 90th birthday is after the Annuity Commencement Date then
in effect. The surviving spouse may select a new Beneficiary. Upon this spouse's
death, the death benefit may be taken in one sum immediately and the Contract
will terminate. If the death benefit is not taken in one sum immediately, the
death benefit will become the new Contract Value as of the end of the Valuation
Period during which we receive due proof of death and must be distributed to the
new Beneficiary according to paragraph (1) or (2), above.

If there is more than one Beneficiary, the foregoing provisions apply to
each Beneficiary individually.

For a period of one year after any change of ownership involving a natural
person, the death benefit will equal the Contract Value regardless of whether
the standard or optional death benefit was selected.

The death benefit provisions of this Contract shall be interpreted to comply
with the requirements of Section72(s) of the Internal Revenue Code. We reserve
the right to endorse this Contract, as necessary, to conform with regulatory
requirements. We will send you a copy of any endorsement containing such
Contract modifications.

STANDARD DEATH BENEFIT

The standard death benefit will equal the greater of:

(1) the Contract Value; or

(2) aggregate Purchase Payments less aggregate amounts surrendered,
including associated surrender charges.

OPTIONAL BENEFIT PACKAGES

At the time of application, the Owner may purchase an optional benefit
package that may provide a death benefit which is greater than the standard
death benefit provided under the Contract. A death benefit available under an
optional benefit package must be distributed according to the rules in the
"Death Benefit" section above.

Currently, two optional benefit packages are available. If the Owner
purchases one of these packages, the mortality and expense risk expense charge
will increase by 0.15% to 1.25%, for total mortality and expense risk and
administration charges of 1.40%. (See "Charges and Deductions".) Once you select
an optional benefit package, you may not cancel or change the option. If any
Owner is not a natural person, we will treat references to the Owner's birthday
as references to the Annuitant's birthday.

Refer to Appendix A for an example of the calculation of each death benefit.

ANNUAL RESET DEATH BENEFIT PACKAGE.

We will determine an annual reset anniversary value on each Contract
Anniversary occurring before the earlier of the deceased Owner's 80th birthday
or the deceased Owner's date of death. Each annual reset anniversary value is
equal to the sum of:

- the Contract Value on that Contract Anniversary; plus

- all Purchase Payments since that Contract Anniversary;

- minus all amounts surrendered including associated surrender
charges since that Contract Anniversary.

The death benefit will equal the greatest of:

(1) the Contract Value; or

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(2) aggregate Purchase Payments less aggregate surrenders including
associated surrender charges; or

(3) the greatest annual reset anniversary value attained.

COMPOUND AND 3-YEAR RESET DEATH BENEFIT PACKAGE (NOT AVAILABLE IN THE STATE OF
WASHINGTON).

We will determine a compound anniversary value on the most recent Contract
Anniversary before the earlier of the deceased Owner's 80th birthday or the
deceased Owner's date of death.

The compound anniversary value is equal to the sum of:

(a) the accumulation to the Contract Anniversary of all Purchase
Payments prior to that Contract Anniversary, minus the
accumulation of amounts surrendered including associated
surrender charges prior to that Contract Anniversary; plus,

(b) any Purchase Payments on or since that Contract Anniversary,
minus any amounts surrendered including associated surrender
charges on or since that Contract Anniversary.

If the Effective Date is before the deceased Owner's 71st birthday, the
amounts in (a) will accumulate at an annual effective interest rate of 4.00%. If
the Effective Date is on or after the deceased Owner's 71st birthday, the
amounts in (a) will accumulate at an annual effective interest rate of 3.00%.

We will determine a 3-year reset anniversary value every 3rd Contract
Anniversary occurring before the earlier of the deceased Owner's 80th birthday
or the deceased Owner's date of death. Each 3-year reset anniversary value is
equal the sum of:

- the Contract Value on that Contract Anniversary;

- plus all Purchase Payments since that Contract Anniversary;

- minus all amounts surrendered including associated surrender
charges since that Contract Anniversary.

The death benefit will equal the greatest of:

(1) the Contract Value; or

(2) aggregate Purchase Payments less aggregate surrenders including
associated surrender charges; or

(3) the compound anniversary value; or

(4) the greatest 3-year reset anniversary value attained.

Refer to Appendix A for an example of the calculation of each death benefit.

SUSPENSION OR DELAY IN PAYMENTS

Payments of a partial or full surrender of the Variable Account value or
death benefit are usually made within seven (7) calendar days. However, the
Company may delay such payment of a partial or full surrender of the Variable
Account Value or death benefit for any period in the following circumstances
where permitted by the state of issue:

(1) when the New York Stock Exchange is closed; or

(2) when trading on the New York Stock Exchange is restricted; or

(3) when an emergency exists (as determined by the SEC as a result of
which (a) the disposal of securities in the Variable Account is
not reasonably practical; or (b) it is not

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<PAGE>
reasonably practical to determine fairly the value of the net
assets of the Variable Account); or

(4) when the SEC, by order, so permits for the protection of security
holders.

The Company may delay payment of a partial or full surrender from the
Guaranteed Account for up to six months where permitted.

CHARGES AND DEDUCTIONS

SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE)

GENERAL

We do not deduct any charge for sales expenses from Purchase Payments at the
time you make them. However, within certain time limits described below, we
deduct a surrender charge (contingent deferred sales charge) from the Contract
Value if you make a full or partial surrender before the Annuity Commencement
Date. We do not apply the surrender charge to the payment of a death benefit.

In the event surrender charges are not sufficient to cover sales expenses,
we will bear the loss; conversely, if the amount of such charges provides more
than enough to cover such expenses, we will retain the excess. Protective Life
does not currently believe that the surrender charges imposed will cover the
expected costs of distributing the Contracts. Any shortfall will be made up from
Protective Life's general assets which may include amounts derived from the
mortality and expense risk charge.

FREE WITHDRAWAL AMOUNT

Each Contract Year you may withdraw a specified amount, called the "free
withdrawal amount", from your Contract without incurring a surrender charge.
During the first Contract Year the free withdrawal amount is equal to 15% of
your initial Purchase Payment. In any subsequent Contract Year the free
withdrawal amount is equal to the greatest of: (1) the earnings in your Contract
as of the prior Contract Anniversary; (2) 15% of your cumulative Purchase
Payments as of the prior Contract Anniversary; or (3) 15% of the Contract Value
as of the prior Contract Anniversary. For the purpose of determining the free
withdrawal amount, earnings equal the Contract Value minus the Purchase Payments
not previously assessed with a surrender charge, both measured as of the
Contract Anniversary for which values are being determined. Withdrawals in
excess of the free withdrawal amount in any Contract Year are treated as
surrenders. Withdrawals, including withdrawals of the free withdrawal amount,
may be subject to income taxation and may be subject to a 10% federal penalty
tax if taken before the Owner reaches age 59 1/2. (See "Taxation of Annuities in
General, Taxation of Partial and Full Surrenders.")

DETERMINING THE SURRENDER CHARGE.

Except in the State of Oregon, we calculate the surrender charge by first
allocating surrendered Contract Value in excess of any free withdrawal amount to
Purchase Payments or portions of Purchase Payments not previously assessed with
a surrender charge on a "first-in, first-out" (FIFO) basis. We then allocate any
remaining surrendered Contract Value pro-rata to these Purchase Payments. The
surrender charge is the total of each of the allocated amounts of surrendered
Contract Value multiplied by its applicable surrender charge percentage, as
shown below. If the surrendered Contract Value exceeds any free withdrawal
amount and if no surrendered Contract Value was allocated to Purchase Payments,
we determine the surrender charge on the surrendered Contract Value by applying
the surrender charge percentage associated with the most recent Purchase Payment
we accepted.

In the State of Oregon, we calculate the surrender charge by first
allocating surrendered Contract Value in excess of any free withdrawal amount to
Purchase Payments not previously assessed with a surrender charge using a
"first-in, first-out" (FIFO) basis. We then allocate any remaining surrendered
Contract Value to the

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<PAGE>
initial Purchase Payment. The surrender charge is the total of each of the
allocated amounts of surrendered Contract Value multiplied by its applicable
surrender charge percentage, as shown below.

<TABLE>
<CAPTION>
SURRENDER
CHARGE AS
NUMBER OF FULL YEARS ELAPSED BETWEEN PERCENTAGE
THE DATE PURCHASE PAYMENT WAS ACCEPTED OF AMOUNT
AND THE DATE OF SURRENDER SURRENDERED
- -------------------------------------- -----------
<S> <C>
0........................................................... 7.0%
1........................................................... 6.0%
2........................................................... 6.0%
3........................................................... 5.0%
4........................................................... 4.0%
5........................................................... 3.0%
6........................................................... 2.0%
7+.......................................................... 0%
</TABLE>

The cumulative surrender charges assessed will never exceed 7.0% of the
total Purchase Payments we have accepted under this Contract. Refer to
Appendix B for an example of how the surrender charge is calculated in all
states except Oregon.

REDUCTION OR ELIMINATION OF SURRENDER CHARGE.

We may decrease or waive surrender charges on Contracts issued to a trustee,
employer or similar entity pursuant to a retirement plan or when sales are made
in a similar arrangement where offering the Contracts to a group of individuals
under such a program results in savings of sales expenses. We will determine the
entitlement to such a reduction in surrender charge.

We may also waive surrender charges on partial surrenders taken as a minimum
distribution required under federal or state tax laws on amounts attributable to
Protective Life Annuity Contracts. (See "Qualified Retirement Plans".) During
any Contract Year, the total amount of such partial surrenders will reduce the
free withdrawal amount available on any subsequent partial surrender.

WAIVER OF SURRENDER CHARGES.

If you select an optional benefit package we will waive any applicable
surrender charge if, at any time after the first Contract Year:

(1) you are first diagnosed as having a terminal illness by a physician
that is not related to you or the Annuitant; or,

(2) you enter, for a period of at least ninety (90) days, a facility
which is both

(a) licensed by the state; and

(b) qualified as a skilled nursing home facility under Medicare or
Medicaid.

For Contracts purchased in the State of Texas, we will also waive surrender
charges on these conditions during the first Contract Year.

The term "terminal illness" means that you are diagnosed as having a
non-correctable medical condition that, with a reasonable degree of medical
certainty, will result in your death in less than 12 months. A "physician" is a
medical doctor licensed by a state's Board of Medical Examiners, or similar
authority in the United States, acting within the scope of his or her license.
You must submit written proof of a terminal illness satisfactory to the Company.
The Company reserves the right to require an examination by a physician of its
choice.

Once we have granted the waiver of surrender charges, no surrender charges
will apply to the Contract in the future and we will accept no additional
Purchase Payments.

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If any Owner is not an individual, the Waiver of Surrender Charge provisions
will apply to the Annuitant.

SUSPENSION OF BENEFITS.

For a period of one year after any change of ownership involving a natural
person, we will not waive the surrender charges under the provision above.

MORTALITY AND EXPENSE RISK CHARGE

To compensate Protective Life for assuming mortality and expense risks, we
deduct a daily mortality and expense risk charge. Prior to the Annuity
Commencement Date, for Contracts issued with the standard death benefit the
charge is equal, on an annual basis, to 1.10% of the average daily net assets of
the Variable Account attributable to such Contracts. If you select one of the
optional benefit packages, the mortality and expense risk expense charge will
increase by 0.15% for a total mortality and expense risk charge of 1.25% of the
average annual daily net assets of the Variable Account attributable to your
Contract. (See "Optional Benefit Packages".) On, and after the Annuity
Commencement Date, the mortality and expense risk charge is equal to 1.10% of
the average annual daily net assets of the Variable Account attributable to a
Contract. We deduct the mortality and expense charge only from the Variable
Account.

The mortality risk Protective Life assumes is that Annuitant(s) may live for
a longer period of time than estimated when the guarantees in the Contract were
established. Because of these guarantees, each Payee is assured that longevity
will not have an adverse effect on the annuity payments received. The mortality
risk that Protective Life assumes also includes a guarantee to pay a death
benefit if the Owner dies before the Annuity Commencement Date. The expense risk
that Protective Life assumes is the risk that the administration charge,
contract maintenance fee and transfer fees may be insufficient to cover actual
future expenses. It is possible that the mortality and expense risk charge (or a
portion of it) could be treated as an amount received through a partial
surrender for tax purposes. (See "Federal Tax Matters.") We may make a profit or
incur a loss from this change. Any profit may be used to finance distribution
expenses.

ADMINISTRATION CHARGES

We will deduct an administration charge equal, on an annual basis, to 0.15%
of the daily net asset value of the Variable Account attributable to such
Contracts. We make this deduction to reimburse Protective Life for expenses
incurred in the administration of the Contract and the Variable Account. We
deduct the administration charge only from the Variable Account value.

TRANSFER FEE

Currently, there is no charge for transfers. Protective Life reserves the
right, however, to charge $25 for each transfer after the first 12 transfers in
any Contract Year. For the purpose of assessing the fee, we would consider each
request to be one transfer, regardless of the number of Allocation Options
affected by the transfer in one day. We would deduct the fee from the amount
being transferred.

CONTRACT MAINTENANCE FEE

Prior to the Annuity Commencement Date, we deduct a contract maintenance fee
of $30 from the Contract Value on each Contract Anniversary, and on any day that
you surrender the Contract other than the Contract Anniversary. We will deduct
the contract maintenance fee from the Allocation Options in the same proportion
as their values are to the Contract Value. We will waive the contract
maintenance fee in the event the Contract Value or the aggregate Purchase
Payments reduced by surrenders and associated surrender charges equals or
exceeds $50,000 on the date we are to deduct the contract maintenance fee.

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FUND EXPENSES

The net assets of each Sub-Account of the Variable Account will reflect the
investment management fees and other operating expenses the Funds incur. For
each Fund, an investment manager receives a daily fee for its services. (See the
prospectuses for the Funds, which accompany this Prospectus.)

PREMIUM TAXES

Some states impose premium taxes at rates currently ranging up to 3.5%. If
premium taxes apply to your Contract, we will deduct them from the Purchase
Payment(s) when accepted or from the Contract Value upon a full or partial
surrender, death or annuitization.

OTHER TAXES

Currently, no charge will be made against the Variable Account for federal,
state or local taxes other than premium taxes. We reserve the right, however, to
deduct a charge for taxes attributable to the operation of the Variable Account.

ANNUITIZATION

ANNUITY COMMENCEMENT DATE

On the Effective Date, the Annuity Commencement Date is the earlier of any
Owner's 90th birthday or the Annuitant's 90th birthday. The Owner may change the
Annuity Commencement Date by Written Notice. The proposed Annuity Commencement
Date must be at least 30 days after the date the written request is received by
the Company, and at least 7 years after the most recent Purchase Payment. The
new Annuity Commencement Date may be any date before or on the Owner's or
Annuitant's 90th birthday and may not be later than that date unless approved by
Protective Life. Annuity Commencement Dates that occur or are scheduled to occur
at an advanced age for the Annuitant (E.G., past age 85), may in certain
circumstances have adverse income tax consequences. (See "Federal Income Tax
Matters".) Distributions from Qualified Contracts may be required before the
Annuity Commencement Date.

On the Annuity Commencement Date, we will apply your Contract Value, less
any applicable charges and premium tax, to the Annuity Option you have selected
to determine an annuity income payment. You may elect to receive a fixed income
payment, a variable income payment, or a combination of both using the same
Annuity Option and certain period.

FIXED INCOME PAYMENTS

Fixed income payments are periodic payments from the Company to the
designated Payee, the amount of which is fixed and guaranteed by the Company.
Fixed income payments are not in any way dependent upon the investment
experience of the Variable Account. Once fixed income payments have begun, they
may not be surrendered.

VARIABLE INCOME PAYMENTS

Variable income payments are periodic payments from the Company to the
designated Payee, the amount of which varies from one payment to the next as a
reflection of the net investment experience of the Sub-Account(s) you select to
support the payments.

ANNUITY UNITS.

On the Annuity Commencement Date, we will apply the Contract Value you have
allocated to variable income payments (less applicable charges and premium
taxes) to the variable Annuity Option you have selected. Using an interest
assumption of 5%, we will determine the dollar amount that would equal a
variable income payment if a payment were made on that date. (No payment is
actually made on that date.) We will then allocate that dollar amount among the
Sub-Accounts you selected to support your variable income

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<PAGE>
payments, and we will determine the number of Annuity Units in each of those
Sub-Accounts that is credited to your Contract. We will make this determination
based on the Annuity Unit values established at the close of regular trading on
the New York Stock Exchange on the Annuity Commencement Date. If the Annuity
Commencement Date is a day on which the New York Stock Exchange is closed, we
will determine the number of Annuity Units on the next day the New York Stock
Exchange is open. The number of Annuity Units attributable to each Sub-Account
under a Contract remains constant unless there is an exchange of Annuity Units
between Sub-Accounts.

VARIABLE INCOME PAYMENTS.

We will determine the amount of your variable income payment no earlier than
five Valuation Days before the date on which a payment is due, using values
established at the close of regular trading on the New York Stock Exchange that
day.

We determine the dollar amount of each variable income payment attributable
to each Sub-Account by multiplying the number of Annuity Units of that
Sub-Account credited to your Contract by the Annuity Unit value (described
below) for that Sub-Account on the Valuation Period during which the payment is
determined. The dollar value of each variable income payment is the sum of the
variable income payments attributable to each Sub-Account.

The Annuity Unit value of each Sub-Account for any Valuation Period is equal
to (a) multiplied by (b) divided by (c) where:

(a) is the net investment factor for the Valuation Period for which the
Annuity Unit value is being calculated;

(b) is the Annuity Unit value for the preceding Valuation Period; and

The AIR is equal to 5%.

IF THE NET INVESTMENT RETURN OF THE SUB-ACCOUNT FOR A VARIABLE INCOME
PAYMENT PERIOD IS EQUAL TO THE AIR DURING THAT PERIOD, THE VARIABLE INCOME
PAYMENT ATTRIBUTABLE TO THAT SUB-ACCOUNT FOR THAT PERIOD WILL EQUAL THE PAYMENT
FOR THE PRIOR PERIOD. TO THE EXTENT THAT SUCH NET INVESTMENT RETURN EXCEEDS THE
AIR FOR THAT PERIOD, THE PAYMENT FOR THAT PERIOD WILL BE GREATER THAN THE
PAYMENT FOR THE PRIOR PERIOD; TO THE EXTENT THAT SUCH NET INVESTMENT RETURN
FALLS SHORT OF THE AIR FOR THAT PERIOD, THE PAYMENT FOR THAT PERIOD WILL BE LESS
THAN THE PAYMENT FOR THE PRIOR PERIOD.

Refer to Appendix C for an explanation of the variable annuitization
calculation.

EXCHANGE OF ANNUITY UNITS.

After the Annuity Commencement Date, you may exchange the dollar amount of a
designated number of Annuity Units of a particular Sub-Account for an equivalent
dollar amount of Annuity Units of another Sub-Account. On the date of the
exchange, the dollar amount of a variable income payment generated from the
Annuity Units of either Sub-Account would be the same. We allow only one
exchange between Sub-Accounts in any calendar month, and allow no exchanges
between the Guaranteed Account and the Variable Account.

ANNUITY OPTIONS.

You may select an Annuity Option, or change your selection by Written Notice
the Company receives no later than 30 days before the Annuity Commencement Date.
You may not change your selection of Annuity Option less than 30 days before the
Annuity Commencement Date. If you have not selected an Annuity Option within 30
days of the Annuity Commencement Date, we will apply your Contract Value to
Option B -- Life Income with Payments for a 10 Year Certain Period, with the
Variable Account value used to purchase variable income payments and the
Guaranteed Account value used to purchase fixed income payments.

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You may select from among the following Annuity Options:

OPTION A -- PAYMENTS FOR A CERTAIN PERIOD:

We will make payments for the period you select. No certain period may
be longer than 30 years. Payments under this Annuity Option do not depend
on the life of an Annuitant. The Contract may be surrendered for its
commuted value while variable income payments under Option A are being made
but fixed income payments under this option may not be surrendered.

OPTION B -- LIFE INCOME WITH OR WITHOUT A CERTAIN PERIOD:

Payments are based on the life of an Annuitant. If you elect to include
a certain period, we will make payments for the lifetime of the
Annuitant(s), with payments guaranteed for the certain period you select.
No certain period may be longer than 30 years. Payments stop at the end of
the selected certain period or when the Annuitant(s) dies, whichever is
later. We reserve the right to demand proof that the Annuitant(s) is living
prior to making any payment under Option B. IF NO CERTAIN PERIOD IS
SELECTED, PAYMENTS WILL STOP UPON THE DEATH OF THE ANNUITANT(S), NO MATTER
HOW FEW OR HOW MANY PAYMENTS HAVE BEEN MADE. The Contract may not be
surrendered while variable income payments under Option B are being made
regardless of whether fixed or variable income payments are selected.

ADDITIONAL OPTION:

You may use the Contract Value, less applicable premium tax, to
purchase any annuity contract that we offer on the date you elect this
option.

MINIMUM AMOUNTS

If your Contract Value is less than $5,000 on the Annuity Commencement Date,
we reserve the right to pay the Contract Value in one lump sum. If at any time
your annuity income payments are less than the minimum payment amount according
to the Company's rules then in effect, we reserve the right to change the
frequency to an interval that will result in a payment at least equal to the
minimum.

DEATH OF ANNUITANT OR OWNER AFTER ANNUITY COMMENCEMENT DATE

In the event of the death of any Owner on or after the Annuity Commencement
Date, the Beneficiary will become the new Owner. If any Owner or Annuitant dies
on or after the Annuity Commencement Date and before all benefits under the
Annuity Option you selected, we will pay any remaining portion of such benefits
at least as fast as under the Annuity Option in effect when the Owner or
Annuitant died. After the death of the Annuitant, any remaining payments shall
be payable to the Beneficiary unless you specified otherwise before the
Annuitant's death.

YIELDS AND TOTAL RETURNS

From time to time, Protective Life may advertise or include in sales
literature yields, effective yields, and total returns for the Sub-Accounts.
THESE FIGURES ARE BASED ON HISTORIC RESULTS AND DO NOT INDICATE OR PROJECT
FUTURE PERFORMANCE. More detailed information about the calculation of
performance information appears in the Statement of Additional Information.

Yields, effective yields, and total returns for the Sub-Accounts are based
on the investment performance of the corresponding Funds. The Funds' performance
also reflects the Funds' expenses. Certain of the expenses of each Fund may be
reimbursed by the investment manager. (See the Prospectuses for the Funds.)

YIELDS

The yield of the Oppenheimer Money Fund Sub-Account refers to the annualized
income generated by an investment in the Sub-Account over a specified seven-day
period. The yield is calculated by assuming that

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the income generated for that seven-day period is generated each seven day
period over a 52 week period and is shown as a percentage of the investment. The
effective yield is calculated similarly but when annualized the income earned by
an investment in the Sub-Account is assumed to be reinvested. The effective
yield will be slightly higher than the yield because of the compounding effect
of this assumed reinvestment.

The yield of a Sub-Account (except the Oppenheimer Money Fund Sub-Account)
refers to the annualized income generated by an investment in the Sub-Account
over a specified 30 day or one-month period. The yield is calculated by assuming
that the income generated by the investment during that 30 day or one month
period is generated each period over a 12 month period and is shown as a
percentage of the investment.

TOTAL RETURNS

The total return of a Sub-Account refers to return quotations assuming an
investment under a Contract has been held in the Sub-Account for various periods
of time including a period measured from the date the Sub-Account commenced
operations. Average annual total return refers to total return quotations that
are based on an average return over one, five and ten years since the inception
of the Sub-Account.

Certain Funds have been in existence prior to the investment by the
Sub-Accounts in such Funds. Protective Life may advertise the performance of the
Sub-Accounts that invest in these Funds for these prior periods. The performance
information of any period prior to the investments by the Sub-Accounts is
calculated as if the Sub-Account had invested in those Funds during those
periods, using current charges and expenses associated with the Contract.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS

The average annual total return quotations represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a Contract to the redemption value of that investment as of the last day
of each of the periods for which the quotations are provided. Average annual
total return information shows the average percentage change in the value of an
investment in the Sub-Account from the beginning date of the measuring period to
the end of that period. This standardized version of average annual total return
reflects all historical investment results, less all charges and deductions
applied against the Sub-Account (including any surrender charges that would
apply if you terminated the Contract at the end of each indicated period, but
excluding any deductions for premium taxes).

When a Sub-Account has been in operation prior to the commencement of the
offering of the Contract described in this prospectus. Protective Life may
advertise the performance of the Sub-Accounts for these prior periods. The
Sub-Account performance information of any period prior to the commencement of
the offering of the Contract is calculated as if the Contract had been offered
during those periods, using current charges and expenses.

Until a Sub-Account (other than the Oppenheimer Money Fund Sub-Account) has
been in operation for 10 years, Protective Life will always include quotes of
standard average annual total return for the period measured from the date that
Sub-Account began operations. When a Sub-Account (other than the Oppenheimer
Money Fund Sub-Account) has been in operation for one, five and ten years,
respectively, the standard version average annual total return for these periods
will be provided.

NON-STANDARD AVERAGE ANNUAL TOTAL RETURNS

In addition to the standard version of average annual total return described
above, total return performance information computed on non-standard bases may
be used in advertisements or sales literature. Non-standard average annual total
return information may be presented, computed on the same basis as the standard
version except deductions will not include the surrender charges or the contract
maintenance fee. In addition, Protective Life may from time to time disclose
average annual total return in other non-standard formats and cumulative total
return for Contracts funded by the Sub-Accounts.

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Protective Life may, from time to time, also disclose yield, standard
average annual total returns, and non-standard total returns for the Funds.

Non-standard performance data will only be disclosed if the standard
performance data for the periods described in "Standardized Average Annual Total
Returns," above, is also disclosed. For additional information regarding the
calculation of other performance data, please refer to the Statement of
Additional Information.

PERFORMANCE COMPARISONS

Protective Life may, from time to time, advertise or include in sales
literature Sub-Account performance relative to certain performance rankings and
indices compiled by independent organizations. In advertising and sales
literature, the performance of each Sub-Account may be compared to the
performance of other variable annuity issuers in general or to the performance
of particular types of variable annuities investing in mutual funds, or
investment portfolios of mutual funds with investment objectives similar to each
of the Sub-Accounts. Lipper Analytical Services, Inc. ("Lipper"), the Variable
Annuity Research Data Service ("VARDS"), and Morningstar Inc. ("Morningstar")
are independent services which monitor and rank the performance of variable
annuity issuers in each of the major categories of investment objectives on an
industry-wide basis.

Lipper and Morningstar rankings include variable life insurance issuers as
well as variable annuity issuers. VARDS rankings compare only variable annuity
issuers. The performance analyses prepared by Lipper, Morningstar and VARDS each
rank such issuers on the basis of total return, assuming reinvestment of
distributions, but do not take sales charges, redemption fees, or certain
expense deductions at the separate account level into consideration. In
addition, VARDS prepares risk adjusted rankings, which consider the effects of
market risk on total return performance. This type of ranking provides data as
to which funds provide the highest total return within various categories of
funds defined by the degree of risk inherent in their investment objectives.

Advertising and sales literature may also compare the performance of each
Sub-Account to the Standard & Poor's Index of 500 Common Stocks, a widely used
measure of stock performance. This unmanaged index assumes the reinvestment of
dividends but does not reflect any "deduction" for the expense of operating or
managing an investment portfolio. Other independent ranking services and indices
may also be used as a source of performance comparison.

OTHER MATTERS

Protective Life may also report other information including the effect of
tax-deferred compounding on a Sub-Account's investment returns, or returns in
general, which may be illustrated by tables, graphs, or charts.

All income and capital gains derived from Sub-Account investments are
reinvested and can lead to substantial long-term accumulation of assets,
provided that the underlying Fund's investment experience is positive.

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FEDERAL TAX MATTERS

INTRODUCTION

The following discussion of the federal income tax treatment of the Contract
is not exhaustive, does not purport to cover all situations, and is not intended
as tax advice. The federal income tax treatment of the Contract is unclear in
certain circumstances, and you should always consult a qualified tax adviser
regarding the application of law to individual circumstances. This discussion is
based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations, and interpretations existing on the date of this Prospectus. These
authorities, however, are subject to change by Congress, the Treasury
Department, and judicial decisions.

This discussion does not address state or local tax consequences associated
with the purchase of the Contract. In addition, PROTECTIVE LIFE MAKES NO
GUARANTEE REGARDING ANY TAX TREATMENT -- FEDERAL, STATE OR LOCAL -- OF ANY
CONTRACT OR OF ANY TRANSACTION INVOLVING A CONTRACT.

THE COMPANY'S TAX STATUS

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

TAXATION OF ANNUITIES IN GENERAL

TAX DEFERRAL DURING ACCUMULATION PERIOD

Under existing provisions of the Internal Revenue Code, except as described
below, any increase in an Owner's Contract Value is generally not taxable to the
Owner until received, either in the form of annuity payments as contemplated by
the Contracts, or in some other form of distribution. However, this rule applies
only if:

(1) the investments of the Variable Account are "adequately
diversified" in accordance with Treasury Department regulations;

(2) the Company, rather than the Owner, is considered the owner of
the assets of the Variable Account for federal income tax
purposes; and

(3) the Owner is an individual (or an individual is treated as the
Owner for tax purposes).

DIVERSIFICATION REQUIREMENTS.

The Internal Revenue Code and Treasury Department regulations prescribe the
manner in which the investments of a segregated asset account, such as the
Variable Account, are to be "adequately diversified." If the Variable Account
fails to comply with these diversification standards, the Contract will not be
treated as an annuity contract for federal income tax purposes and the Owner
would generally be taxable currently on the excess of the Contact Value over the
premiums paid for the Contact. Protective Life expects that the Variable
Account, through the Funds, will comply with the diversification requirements
prescribed by the Internal Revenue Code and Treasury Department regulations.

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OWNERSHIP TREATMENT.

In certain circumstances, variable annuity contract owners may be considered
the owners, for federal income tax purposes, of the assets of a segregated asset
account, such as the Variable Account, used to support their contracts. In those
circumstances, income and gains from the segregated asset account would be
includable in the contract owners' gross income. The Internal Revenue Service
(the "IRS") has stated in published rulings that a variable contract owner will
be considered the owner of the assets of a segregated asset account if the owner
possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. In addition, the Treasury
Department announced, in connection with the issuance of regulations concerning
investment diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control of the investments of a
segregated asset account may cause the investor, rather than the insurance
company, to be treated as the owner of the assets in the account." This
announcement also stated that the IRS would issue guidance by way of regulations
or rulings on the "extent to which policyholders may direct their investments to
particular sub-accounts [of a segregated asset account] without being treated as
owners of the underlying assets." As of the date of this Prospectus, the IRS has
not issued any such guidance.

The ownership rights under the Contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of the assets of a segregated
asset account. For example, the Owner of this Contract has the choice of more
investment options to which to allocate purchase payments and Variable Account
values, and may be able to transfer among investment options more frequently
than in such rulings. These differences could result in the Owner being treated
as the owner of the assets of the Variable Account and thus subject to current
taxation on the income and gains from those assets. In addition, the Company
does not know what standards will be set forth in the regulations or rulings
which the Treasury Department has stated it expects to issue. Protective Life
therefore reserves the right to modify the Contract as necessary to attempt to
prevent Contract Owners from being considered the owners of the assets of the
Variable Account. However, there is no assurance such efforts would be
successful.

NONNATURAL OWNER.

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

In addition, exceptions to the general rule for nonnatural Owners will apply
with respect to:

(1) Contracts acquired by an estate of a decedent by reason of the
death of the decedent;

(2) certain Qualified Contracts;

(3) Contracts purchased by employers upon the termination of certain
Qualified Plans;

(4) certain Contracts used in connection with structured settlement
agreements; and

(5) Contracts purchased with a single purchase payment when the
annuity starting date is no later than a year from purchase of
the Contract and substantially equal periodic payments are made,
not less frequently than annually, during the annuity period.

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DELAYED ANNUITY COMMENCEMENT DATES.

If the Contract's Annuity Commencement Date occurs (or is scheduled to
occur) at a time when the Annuitant has reached an advanced age (E.G., past age
85), it is possible that the Contract would not be treated as an annuity for
federal income tax purposes. In that event, the income and gains under the
Contract could be currently includable in the Owner's income.

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

TAXATION OF PARTIAL AND FULL SURRENDERS

In the case of a partial surrender, amounts you receive are generally
includable in income to the extent your Contract Value before the surrender
exceeds your "investment in the contract." Amounts received under a partial
automatic withdrawal plan are treated as partial surrenders. In the case of a
full surrender, amounts received are includable in income to the extent they
exceed the "investment in the contract." For these purposes, the investment in
the contract at any time equals the total of the Purchase Payments made under
the Contract to that time (to the extent such payments were neither deductible
when made nor excludable from income as, for example, in the case of certain
contributions to Qualified Contracts) less any amounts previously received from
the Contract which were not included in income. Partial and full surrenders may
be subject to a 10% penalty tax. (See "Penalty Tax on Premature Distributions.")
Partial and full surrenders may also be subject to federal income tax
withholding requirements. (See "Federal Income Tax Withholding.") In addition,
in the case of partial and full surrenders from certain Qualified Contracts,
mandatory withholding requirements may apply, unless a "direct rollover" of the
amount surrendered is made. (See "Direct Rollovers".)

Under the Waiver of Surrender Charges provision of the Contract, amounts we
distribute may not be subject to Surrender Charges if you have a terminal
illness or enter, for a period of at leaast 90 days, certain nursing home
facilities. However, such distributions will be treated as surrenders for
federal income tax purposes.

The Contract provides a death benefit that in certain circumstances may
exceed the greater of the Purchase Payments or the Contract Value. As described
elsewhere in this Prospectus, the Company imposes certain charges with respect
to the death benefit. It is possible that these charges (or some portion
thereof) could be treated for federal tax purposes as a partial surrender of the
Contract.

TAXATION OF ANNUITY PAYMENTS

Normally, the portion of each annuity income payment taxable as ordinary
income equals the excess of the payment over the exclusion amount. In the case
of variable income payments, the exclusion amount is the "investment in the
Contract" (defined above) you allocate to the variable Annuity Option, adjusted
for any period certain or refund feature, when payments begin divided by the
number of payments expected (as determined by Treasury Department regulations
which take into account the annuitant's life expectancy and the form of annuity
benefit selected). In the case of fixed income payments, the exclusion amount is
determined by multiplying (1) the payment by (2) the ratio of the investment in
the contract you allocate to the fixed Annuity Option, adjusted for any period
certain or refund feature, to the total expected amount of annuity income
payments for the term of the Contract (determined under Treasury Department
regulations).

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

There may be special income tax issues present in situations where the Owner
and the Annuitant are not the same person and are not married to one another.
You should consult a tax advisor in those situations.

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Annuity income payments may be subject to federal income tax withholding
requirements. (See "Federal Income Tax Income Withholding".) In addition, in the
case of annuity income payments from certain Qualified Plans, mandatory
withholding requirements may apply, unless a "direct rollover" of such annuity
payments is made. (See "Direct Rollovers".)

TAXATION OF DEATH BENEFIT PROCEEDS

Prior to the Annuity Commencement Date, we may distribute amounts from a
Contract because of the death of an Owner or, in certain circumstances, the
death of the Annuitant. Such death benefit proceeds are includable in income as
follows:

(1) if distributed in a lump sum, they are taxed in the same manner
as a full surrender, as described above; or

(2) if distributed under an Annuity Option, they are taxed in the
same manner as annuity income payments, as described above.

After the Annuity Commencement Date, where a guaranteed period exists under
an Annuity Option, and the Annuitant dies before the end of that period,
payments we make to the Beneficiary for the remainder of that period are
includable in income as follows:

(1) if received in a lump sum, they are included in income to the
extent that they exceed the unrecovered investment in the
Contract at that time; or

(2) if distributed in accordance with the existing Annuity Option
selected, they are fully excluded from income until the remaining
investment in the Contract is deemed to be recovered, and all
annuity income payments thereafter are fully includable in
income.

Proceeds payable on death may be subject to federal income tax withholding
requirements. (See "Federal Income Tax Withholding".) In addition, in the case
of such proceeds from certain Qualified Contracts, mandatory withholding
requirements may apply, unless a "direct rollover" of such proceeds is made.
(See "Direct Rollovers".)

ASSIGNMENTS, PLEDGES, AND GRATUITOUS TRANSFERS

Other than in the case of Qualified Contracts (which generally cannot be
assigned or pledged), any assignment or pledge of (or agreement to assign or
pledge) any portion of the Contract Value is treated for federal income tax
purposes as a surrender of such amount or portion. The investment in the
contract is increased by the amount includable as income with respect to such
assignment or pledge, though it is not affected by any other aspect of the
assignment or pledge (including its release). If an Owner transfers a Contract
without adequate consideration to a person other than the Owner's spouse (or to
a former spouse incident to divorce), the Owner will be taxed on the difference
between his or her Contract Value and the investment in the Contract at the time
of transfer. In such case, the transferee's investment in the Contract will
increase to reflect the increase in the transferor's income.

PENALTY TAX ON PREMATURE DISTRIBUTIONS

Where we have not issued the Contract in connection with a Qualified Plan,
there generally is a 10% penalty tax on the amount of any payment from the
Contract that is includable in income unless the payment is:

(a) received on or after the Owner reaches age 59 1/2;

(b) attributable to the Owner's becoming disabled (as defined in the
tax law);

(c) made on or after the death of the Owner or, if the Owner is not
an individual, on or after the death of the primary annuitant
(as defined in the tax law);

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(d) made as a series of substantially equal periodic payments (not
less frequently than annually) for the life (or life expectancy)
of the Owner or the joint lives (or joint life expectancies) of
the Owner and a designated Beneficiary (as defined in the tax
law); or

(e) made under a Contract purchased with a single Purchase Payment
when the annuity starting date is no later than a year from
purchase of the Contract and substantially equal periodic
payments are made, not less frequently than annually, during the
annuity period.

(Similar rules, discussed below, apply in the case of certain Qualified
Contracts.)

AGGREGATION OF CONTRACTS

In certain circumstances, the IRS may determine the amount of an annuity
income payment or a surrender from a Contract that is includable in income by
combining some or all of the annuity contracts a person owns that were not
issued in connection with Qualified Plans. For example, if a person purchases a
Contract offered by this Prospectus and also purchases at approximately the same
time an immediate annuity issued by Protective Life, the IRS may treat the two
contracts as one contract. In addition, if a person purchases two or more
deferred annuity contracts from the same insurance company (or its affiliates)
during any calendar year, all such contracts will be treated as one contract for
purposes of determining whether any payment that was not received as an annuity
(including surrenders prior to the Annuity Commencement Date) is includable in
income. The effects of such aggregation are not clear; however, it could affect
the amount of a surrender or an annuity payment that is taxable and the amount
which might be subject to the 10% penalty tax described above.

LOSS OF INTEREST DEDUCTION WHERE CONTRACT IS HELD BY OR FOR THE BENEFIT OF
CERTAIN NONNATURAL PERSONS

In the case of Contracts issued after June 8, 1997 to a nonnatural taxpayer
(such as a corporation or a trust), or held for the benefit of such an entity,
recent changes in the tax law may result in a portion of otherwise deductible
interest no longer being deductible by the entity, regardless of whether the
interest relates to debt used to purchase or carry the Contract. However, this
interest deduction disallowance does not affect Contracts where the income on
such Contracts is treated as ordinary income that the Owner received or accrued
during the taxable year. Entities that are considering purchasing the Contract,
or entities that will be Beneficiaries under a Contract, should consult a tax
adviser.

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QUALIFIED RETIREMENT PLANS

IN GENERAL

The Contracts are also designed for use in connection with certain types of
retirement plans which receive favorable treatment under the Internal Revenue
Code. Numerous special tax rules apply to the participants in Qualified Plans
and to Contracts used in connection with Qualified Plans. Therefore, we make no
attempt in this Prospectus to provide more than general information about use of
the Contract with the various types of Qualified Plans.

The tax rules applicable to Qualified Plans vary according to the type of
plan and the terms and conditions of the plan itself. For example, both the
amount of the contribution that you may make, and the tax deduction or exclusion
that you may claim for such contribution, are limited under Qualified Plans and
vary with the type of plan. Also, for full surrenders, partial automatic
withdrawals, partial surrenders, and annuity income payments under Qualified
Contracts, there may be no "investment in the Contract" and the total amount
received may be taxable. Similarly, loans from Qualified Contracts, where
available, are subject to a variety of limitations, including restrictions as to
the amount that may be borrowed, the duration of the loan, and the manner in
which the loan must be repaid. (Owners should always consult their tax advisors
and retirement plan fiduciaries prior to exercising any loan privileges that are
available.) Both the amount of the contribution that you and/or your employer
may make, and the tax deduction or exclusion that you and/or your employer may
claim for such contribution, are limited under Qualified Plans.

If you use this Contract in connection with a Qualified Plan, the Owner and
Annuitant must be the same individual. Additionally, for Contracts issued in
connection with Qualified Plans subject to the Employee Retirement Income
Security ACT ("ERISA"), the spouse or former spouse of the Owner will have
rights in the Contract. In such a case, the Owner may need the consent of the
spouse or former spouse to change annuity options, to elect a partial automatic
withdrawal option, or to make a partial or full surrender of the Contract. In
addition, special rules apply to the time at which distributions must commence
and the form in which the distributions must be paid. For example, the length of
any guarantee period may be limited in some circumstances to satisfy certain
minimum distribution requirements under the Internal Revenue Code. Furthermore,
failure to comply with minimum distribution requirements applicable to Qualified
Plans will result in the imposition of an excise tax. This excise tax generally
equals 50% of the amount by which a minimum required distribution exceeds the
actual distribution from the Qualified Plan. In the case of Individual
Retirement Accounts or Annuities ("IRAs"), distributions of minimum amounts (as
specified in the tax law) must generally commence by April 1 of the calendar
year following the calendar year in which the Owner attains age 70 1/2. In the
case of certain other Qualified Plans, distributions of such minimum amounts
must generally commence by the later of this date or April 1 of the calendar
year following the calendar year in which the employee retires.

There may be a 10% penalty tax on the taxable amount of payments from
certain Qualified Contracts. There are exceptions to this penalty tax which vary
depending on the type of Qualified Plan. In the case of an IRA, exceptions
provide that the penalty tax does not apply to a payment:

(a) received on or after the Owner reaches age 59 1/2;

(b) received on or after the Owner's death or because of the Owner's
disability (as defined in the tax law); or

(c) made as a series of substantially equal periodic payments (not
less frequently than annually) for the life (or life expectancy)
of the Owner or for the joint lives (or joint life expectancies)
of the Owner and his designated beneficiary (as defined in the
tax law).

These exceptions, as well as certain others not described herein, generally
apply to taxable distributions from other Qualified Plans (although, in the case
of plans qualified under sections 401 and 403, exception "c" above for
substantially equal periodic payments applies only if the Owner has separated
from service). In

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addition, the penalty tax does not apply to certain distributions from IRAs
taken after December 31, 1997 which are used for qualified first time home
purchases or for higher education expenses. You must meet special conditions to
be eligible for these two exceptions to the penalty tax. Those wishing to take a
distribution from an IRA for these purposes should consult their tax advisor.

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

Following are brief descriptions of various types of Qualified Plans in
connection with which the Company may issue a Contract.

INDIVIDUAL RETIREMENT ACCOUNTS AND ANNUITIES.

Section 408 of the Internal Revenue Code permits eligible individuals to
contribute to an individual retirement program known as IRAs. IRAs are subject
to limits on the amounts that may be contributed and deducted, the persons who
may be eligible and on the time when distributions may commence. Also, subject
to the direct rollover and mandatory withholding requirements (discussed below),
you may "roll over" distributions from certain Qualified Plans on a tax-deferred
basis into an IRA.

However, you may not use the Contract in connection with an "Education IRA"
under Section 530 of the Internal Revenue Code, a "Simplified Employee Pension"
under Section 408(k) of the Internal Revenue Code, or a "Simple IRA" under
Section 408(p) of the Internal Revenue Code.

IRAs generally may not invest in life insurance contracts, but an annuity
contract that is purchased by, or used as, an IRA may provide a death benefit
that equals the greater of the premiums paid and the contract's cash value. The
Owners of the Contract may purchase an optional benefit package which provides a
death benefit that in certain circumstances may exceed the greater of the
Purchase Payments and the Contract Value. It is possible that the death benefit
could be viewed as violating the prohibition on investment in life insurance
contracts with the result that the Contract would not be viewed as satisfying
the requirements of an IRA.

ROTH IRAS.

Section 408A of the Internal Revenue Code permits eligible individuals to
contribute to a type of IRA known as a "Roth IRA." Roth IRAs are generally
subject to the same rules as non-Roth IRAs, but differ in several respects.
Among the differences is that, although contributions to a Roth IRA are not
deductible, "qualified distributions" from a Roth IRA will be excludable from
income.

A qualifed distribution is a distribution that satisfies two requirements.
First, the distribution must be made in a taxable year that is at least five
years after the first taxable year for which a contribution to any Roth IRA
established for the Owner was made. Second, the distribution must be either (1)
made after the Owner attains the age of 59 1/2; (2) made after the Owner's
death; (3) attributable to the Owner being disabled; (4) a qualified first-time
homebuyer distribution within the meaning of Section 72(t)(2)(F) of the Internal
Revenue Code. In addition, distributions from Roth IRAs need not commence when
the Owner attains age 70 1/2. A Roth IRA may accept a "qualified rollover
contribution" from a non-Roth IRA, but a Roth IRA may not accept rollover
contributions from other qualified plans. The state tax treatment of a Roth IRA
may differ from federal tax treatment of a Roth IRA.

As described above (see "Individual Retirement Annuities"), there is some
uncertainty regarding the proper characterization of the Contract's optional
death benefit for purposes of the tax rules governing IRAs (which include Roth
IRAs). Persons intending to use the Contract in connection with a Roth IRA
should seek competent advice.

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CORPORATE AND SELF-EMPLOYED ("H.R. 10" AND "KEOGH") PENSION AND PROFIT-SHARING
PLANS.

Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of tax-favored retirement plans for employees. The
Self-Employed Individuals' Tax Retirement Act of 1962, as amended, commonly
referred to as "H.R. 10" or "Keogh," permits self-employed individuals also to
establish such tax-favored retirement plans for themselves and their employees.
Such retirement plans may permit the purchase of the Contract in order to
provide benefits under the plans. If the Owner of the Contract purchases an
optional death benefit package, the death benefit that in certain circumstances
may exceed the greater of the Purchase Payments and the Contract Value. It is
possible the IRS could characterize such a death benefit as an incidental death
benefit. There are limitations on the amount of incidental benefits that may be
provided under pension and profit sharing plans. In addition, the provision of
such benefits may result in currently taxable income to participants.

SECTION 403(b) POLICIES.

Section 403(b) of the Internal Revenue Code permits public school employees
and employees of certain types of charitable, educational and scientific
organizations specified in Section 501(c)(3) of Internal Revenue the Code to
have their employers purchase annuity contracts for them and, subject to certain
limitations, to exclude the amount of purchase payments from gross income for
tax purposes. Purchasers of the Contracts for use as a "Section 403(b) Policy"
should seek competent advice as to eligibility, limitations on permissible
amounts of purchase payments and other tax consequences associated with such
Contracts. In particular, purchasers and their advisers should consider that the
optional benefit packages under the Contract provide a death benefit that in
certain circumstances may exceed the greater of the Purchase Payments and the
Contract Value. It is possible the IRS could characterize the death benefit as
an "incidental death benefit". If the death benefit were so characterized, this
could result in currently taxable income to purchasers. In addition, there are
limitations on the amount of incidental death benefits that may be provided
under a Section 403(b) Policy. Even if the IRS characterized the death benefit
under the Contract as an incidental death benefit, the death benefit is unlikely
to violate those limits unless the purchaser also purchases a life insurance
contract as part of his or her Section 403(b) Policy.

Section 403(b) Policies contain restrictions on withdrawals of:

(i) contributions made pursuant to a salary reduction agreement in
years beginning after December 31, 1988;

(ii) earnings on those contributions; and

(iii) earnings after December 31, 1988 on amounts attributable to
salary reduction contributions held as of December 31, 1988.

These amounts can be paid only if the employee has reached age 59 1/2,
separated from service, died, become disabled, or in the case of hardship.
Amounts permitted to be distributed in the event of hardship are limited to
actual contributions; earnings thereon can not be distributed on account of
hardship. (These limitations on withdrawals do not apply to the extent the
Company is directed to transfer some or all of the Contract Value to the issuer
of another Section 403(b) Policy or into a Section 403(b)(7) custodial account.)

Employers intending to use the Contract in connection with such plans should
seek competent advice.

DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT
ORGANIZATIONS.

Section 457 of the Internal Revenue Code permits employees of state and
local governments and tax-exempt organizations to defer a portion of their
compensation without paying current taxes. The employees must be participants in
an eligible deferred compensation plan. Generally, a Contract purchased by a
state or local government or a tax-exempt organization will not be treated as an
annuity contract for federal income tax purposes. The Contract will be issued in
connection with a Section 457 deferred compensation plan sponsored by a state or
local government only if the plan has established a trust to hold plan assets,
including the Contract. Those who intend to use the Contracts in connection with
such plans should seek competent advice.

49
<PAGE>
DIRECT ROLLOVERS

If your Contract is used in connection with a pension, profit-sharing, or
annuity plan qualified under sections 401(a) or 403(a) of the Code, or is a
Section 403(b) Policy, any "eligible rollover distribution" from the Contract
will be subject to direct rollover and mandatory withholding requirements. An
eligible rollover distribution generally is any taxable distribution from a
qualified pension plan under section 401(a) of the Internal Revenue Code,
qualified annuity plan under section 403(a) of the Code, or section 403(b)
annuity or custodial account, excluding certain amounts (such as minimum
distributions required under section 401(a)(9) of the Internal Revenue Code,
distributions which are part of a "series of substantially equal periodic
payments" made for life or a specified period of 10 years or more, or hardship
distributions as defined in the tax law).

Under these requirements, federal income tax equal to 20% of the eligible
rollover distribution will be withheld from the amount of the distribution.
Unlike withholding on certain other amounts distributed from the Contract,
discussed below, you cannot elect out of withholding with respect to an eligible
rollover distribution. However, this 20% withholding will not apply if, instead
of receiving the eligible rollover distribution, you elect to have it directly
transferred to certain Qualified Plans. Prior to receiving an eligible rollover
distribution, you will receive a notice (from the plan administrator or the
Company) explaining generally the direct rollover and mandatory withholding
requirements and how to avoid the 20% withholding by electing a direct transfer.

FEDERAL INCOME TAX WITHHOLDING

Protective Life will withhold and remit to the federal government a part of
the taxable portion of each distribution made under a Contract unless the
distributee notifies Protective Life at or before the time of the distribution
that he or she elects not to have any amounts withheld. In certain
circumstances, Protective Life may be required to withhold tax. The withholding
rates applicable to the taxable portion of periodic annuity payments (other than
eligible rollover distributions) are the same as the withholding rates generally
applicable to payments of wages. In addition, a 10% withholding rate applies to
the taxable portion of non-periodic payments (including surrenders prior to the
Annuity Commencement Date) and conversions of, or rollovers from, non-Roth IRAs
to Roth IRAs. Regardless of whether you elect not to have federal income tax
withheld, you are still liable for payment of federal income tax on the taxable
portion of the payment. As discussed above, the withholding rate applicable to
eligible rollover distributions is 20%.

GENERAL MATTERS

THE CONTRACT

The Contract and its attachments, including the copy of your application and
any endorsements, riders and amendments, constitute the entire agreement between
you and us. All statements in the application shall be considered
representations and not warranties. The terms and provisions of this Contract
are to be interpreted in accordance with the Internal Revenue Code and
applicable regulations.

ERROR IN AGE OR GENDER

When a benefit of the Contract is contingent upon any person's age or
gender, we may require proof of such. We may suspend payments until we receive
proof. When we receive satisfactory proof, we will make the payments which were
due during the period of suspension. Where the use of unisex mortality rates is
required, we will not determine or adjust benefits based upon gender.

If after we receive proof of age and gender (where applicable), we determine
that the information you furnished was not correct, we will adjust any benefit
under this Contract to that which would be payable based upon the correct
information. If we have underpaid a benefit because of the error, we will make
up the underpayment in a lump sum. If the error resulted in an overpayment, we
will deduct the amount of the overpayment from any current or future payment due
under the Contract. We will deduct up to the full

50
<PAGE>
amount of any current or future payment until the overpayment has been fully
repaid. Underpayments and overpayments will bear interest at an annual effective
interest rate of 3% when permitted by the state of issue.

INCONTESTABILITY

We will not contest the Contract.

NON-PARTICIPATION

The Contract is not eligible for dividends and will not participate in
Protective Life's surplus or profits.

ASSIGNMENT

You have the right to assign the Contract if it is a non-qualified contract.
We do not assume responsibility for the assignment. Any claim made under an
assignment is subject to proof of the nature and extent of the assignee's
interest prior to payment by us. Assignments have federal income tax
consequences. (See "Assignments, Pledges and Gratuitous Transfers" in the
prospectus.)

NOTICE

All instructions and requests to change or assign the Contract must be in
writing in a form acceptable to us, signed by the Owner(s), and received at our
administrative office. The instruction, change or assignment will relate back to
and take effect on the date it was signed, except we will not be responsible for
following any instruction or making any change or assignment before we receive
it.

MODIFICATION

No one is authorized to modify or waive any term or provision of this
Contract unless we agree to the modification or waiver in writing and it is
signed by our President, Vice-President or Secretary. We reserve the right to
change or modify the provisions of this Contract to conform to any applicable
laws, rules or regulations issued by a government agency, or to assure continued
qualification of the Contract as an annuity contract under the Internal Revenue
Code. We will send you a copy of the endorsement that modifies the Contract, and
where required we will obtain all necessary approvals, including that of the
Owner(s).

REPORTS

At least annually prior to the Annuity Commencement Date, we will send to
you at the address contained in our records a report showing the current
Contract Value and any other information required by law.

SETTLEMENT

Benefits due under this Contract are payable from our administrative office.
You may apply the settlement proceeds to any payout option we offer for such
payments at the time you make the election. Unless directed otherwise in
writing, we will make payments according to the Owner's instructions as
contained in our records at the time we make the payment. We shall be discharged
from all liability for payment to the extent of any payments we make.

RECEIPT OF PAYMENT

If any Owner, Annuitant, Beneficiary or Payee is incapable of giving a valid
receipt for any payment, we may make such payment to whomever has legally
assumed his or her care and principal support. Any such payment shall fully
discharge us to the extent of that payment.

PROTECTION OF PROCEEDS

To the extent permitted by law and except as provided by an assignment, no
benefits payable under this Contract will be subject to the claims of creditors.

51
<PAGE>
MINIMUM VALUES

The values available under the Contract are at least equal to the minimum
values required in the state where the Contract is delivered.

APPLICATION OF LAW

The provisions of the Contract are to be interpreted in accordance with the
laws of the state where the Contract is delivered, with the Internal Revenue
Code and with applicable regulations.

NO DEFAULT

The Contract will not be in default if subsequent Purchase Payments are not
made.

DISTRIBUTION OF THE CONTRACTS

We will offer the Contracts on a continuous basis and Protective Life does
not anticipate discontinuing the offering of the Contracts. Nevertheless,
Protective Life reserves the right to discontinue the offering at any time.
Investment Distributors, Inc. serves as principal underwriter (as defined in the
1940 Act) for the Contracts. Investment Distributors, Inc. has agreed to use its
best efforts to sell the Contracts. Investment Distributors, Inc. is a
wholly-owned subsidiary of PLC and has the same address as Protective Life.
Applications for Contracts are solicited by agents who are licensed by
applicable state insurance authorities to sell Protective Life's Contracts and
who are also registered representatives of broker/dealers having a distribution
agreement with Investment Distributors, Inc. or broker/dealers having a
distribution agreement with such broker/dealer. Investment Distributors, Inc. is
an affiliate of Protective Life Insurance Company and is registered with the SEC
under the Securities Exchange Act of 1934 as a broker/dealer. Investment
Distributors, Inc. is a member of the National Association of Securities
Dealers, Inc. The maximum commission Protective Life will pay is 7% of the
Purchase Payments for the sale of a Contract, not including subsequent
asset-based commissions.

INQUIRIES

You may make inquiries regarding a Contract by writing to Protective Life at
its administrative office.

IMSA

Protective Life Insurance Company is a member of the Insurance Marketplace
Standards Association ("IMSA"), and as such may include the IMSA logo and
information about IMSA membership in its advertisements. Companies that belong
to IMSA subscribe to a set of ethical standards covering the various aspects of
sales and service for individually sold life insurance and annuities.

LEGAL PROCEEDINGS

There are at present no legal proceedings to which the Variable Account is a
party or the assets of the Variable Account are subject. Protective Life is
involved in pending and threatened proceedings in which claims for monetary
damages or penalties may be asserted. Management, after consultation with legal
counsel, does not believe that such proceedings are material, nor does it
anticipate the ultimate liability arising from any such proceeding would be
material, to Protective Life in relation to its total assets. Such proceedings
are not related to the Variable Account.

VOTING RIGHTS

In accordance with its view of applicable law, Protective Life will vote the
Fund shares held in the Variable Account at special shareholder meetings of the
Funds in accordance with instructions received from persons having voting
interests in the corresponding Sub-Accounts. If, however, the 1940 Act or any
regulation

52
<PAGE>
thereunder should be amended, or if the present interpretation thereof should
change, or Protective Life determines that it is allowed to vote such shares in
its own right, it may elect to do so.

The number of votes available to an Owner will be calculated separately for
each Sub-Account of the Variable Account, and may include fractional votes. The
number of votes attributable to a Sub-Account will be determined by applying an
Owner's percentage interest, if any, in a particular Sub-Account to the total
number of votes attributable to that Sub-Account. An Owner holds a voting
interest in each Sub-Account to which that Owner has allocated Accumulation
Units or Annuity Units. Before the Annuity Commencement Date, the Owner's
percentage interest, if any, will be percentage of the dollar value of
Accumulation Units allocated for his or her Contract to the total dollar value
of that Sub-Account. On or after the Annuity Commencement Date, the Owner's
percentage interest, if any, will be percentage of the dollar value of the
liability for future variable income payments to be paid from the Sub-Account to
the total dollar value of that Sub-Account. The liability for future payments is
calculated on the basis of the mortality assumptions, (if any), the Assumed
Investment Return and the Annuity Unit Value of that Sub-Account. Generally, as
variable income payments are made to the payee, the liability for future
payments decreases as does the number of votes.

The number of votes which are available to the Owner will be determined as
of the date coincident with the date established by the Fund for determining
shareholders eligible to vote at the relevant meeting of that Fund. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established by the Fund.

Shares as to which no timely instructions are received and shares held by
Protective Life in a Sub-Account as to which no Owner has a beneficial interest
will be voted in proportion to the voting instructions which are received with
respect to all Contracts participating in that Sub-Account. Voting instructions
to abstain on any item to be voted upon will be applied to reduce the votes
eligible to be cast on that item.

Each person having a voting interest in a Sub-Account will receive proxy
materials, reports, and other material relating to the appropriate Fund.

FINANCIAL STATEMENTS

The audited statement of assets and liabilities of The Protective Variable
Annuity Separate Account as of December 31, 1998 and 1997 and the related
statements of operations and changes in net assets for the years ended
December 31, 1998 and 1997 as well as the Report of Independent Accountants are
contained in the Statement of Additional Information.

The audited consolidated balance sheets for Protective Life as of
December 31, 1998 and 1997 and the related consolidated statements of income,
stockholder's equity, and cash flows for the three years in the period ended
December 31, 1998 and the related financial statement schedules as well as the
Report of Independent Accountants are contained in the Statement of Additional
Information.

53
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CALCULATION OF YIELDS AND TOTAL RETURNS..................... 3
Oppenheimer Money Fund Sub-Account Yield.................. 3
Other Sub-Account Yields.................................. 4
Total Returns............................................. 5
Effect of the Contract Maintenance Fee on Performance
Data.................................................... 6
SAFEKEEPING OF ACCOUNT ASSETS............................... 6
STATE REGULATION............................................ 7
RECORDS AND REPORTS......................................... 7
LEGAL MATTERS............................................... 7
EXPERTS..................................................... 7
OTHER INFORMATION........................................... 7
FINANCIAL STATEMENTS........................................ 7
</TABLE>
<PAGE>
APPENDIX A

EXAMPLE OF DEATH BENEFIT CALCULATIONS

Assume an Owner is 55 on the Effective Date, 1/1/yy. The following
transactions occur prior to the Owner's death on 7/1(yy+5) when the Contract
Value is $185,000. For purposes of this example, also assume that proof of death
was provided immediately, and no premium tax is applicable.

<TABLE>
<CAPTION>
DATE TRANSACTION AMOUNT
- ---- ----------- ------
<S> <C> <C>
1/1/yy Purchase Payment $100,000
Partial
4/1/(yy+2) Surrender $ 25,000
10/1(yy+4) Purchase Payment $ 80,000
</TABLE>

The Contract Values on each Contract Anniversary are shown below. These
Contract Values are hypothetical and are solely for the purpose of illustrating
death benefit calculations. The Contract Values presented are net of all
expenses and charges (except any charge for premium taxes), including Fund
expenses and Variable Account expenses and charges. This illustration does not
reflect historical investment results, nor does it predict or guarantee future
investment results. Actual results may be higher or lower.

<TABLE>
<CAPTION>
ANNIVERSARY DATE CONTRACT VALUE
- ---------------- --------------
<S> <C>
1/1(yy+1) $120,000
1/1(yy+2) $130,000
1/1(yy+3) $105,000
1/1(yy+4) $110,000
1/1(yy+5) $180,000
</TABLE>

STANDARD DEATH BENEFIT

Under the Standard Death Benefit, the death benefit payable is the greater
of:

(1) Contract Value of $185,000 or,

(2) aggregate Purchase Payments less aggregate surrenders, or $180,000
less $25,000 equals $155,000.

The death benefit payable is then $185,000.

ANNUAL RESET DEATH BENEFIT OPTION

The Annual Reset Death Benefit is equal to the greatest annual reset
anniversary value attained, where an annual reset anniversary value equals the
Contract Value on the Contract Anniversary plus all subsequent Purchase Payments
minus all subsequent amounts surrendered, as shown below.

ANNIVERSARY

<TABLE>
<CAPTION>
ANNIVERSARY
DATE ANNIVERSARY VALUE
- ----------- -----------------
<S> <C>
1/1/(yy+1) $120,000 minus $25,000 plus $80,000 equals $175,000
1/1/(yy+2) $130,000 minus $25,000 plus $80,000 equals $185,000
1/1/(yy+3) $105,000 plus $80,000 equals $185,000
1/1/(yy+4) $110,000 plus $80,000 equals $190,000
1/1/(yy+5) $180,000
</TABLE>

The Annual Reset Death Benefit is the greatest annual reset anniversary
value attained, or $190,000.

Under the Annual Reset Death Benefit option, the death benefit payable is
the greater of:

(1) the Standard Death Benefit of $185,000; or

(2) the Annual Reset Death Benefit of $190,000.

A-1
<PAGE>
The death benefit payable is then $190,000.

COMPOUND AND 3-YEAR RESET DEATH BENEFIT OPTION

The Compound Death Benefit is equal to the accumulation to the most recent
Contract Anniversary of all prior Purchase Payments less all prior amounts
surrendered, using an annual effective interest rate of 4%, plus all Purchase
Payments on or since that Contract Anniversary less all amounts surrendered
since that Contract Anniversary.

An accumulation interest rate of 3% would have been applicable if the
Effective Date of the Contract had been on or after the deceased Owner's 71st
birthday.

For ease of understanding, this example assumes an equal number of days in
each quarterly period. In practice, the actual number of days in each period
will be taken into account.

The Compound Death Benefit is:

Purchase Payment of $100,000 times (1.04(5)) equals $121,665.29;
minus
Surrender of $25,000 times (1.04(2.75)) equals $27,847.21; plus
Purchase Payment of $80,000 times (1.04(0.25)) equals $80,788.27;
equals $174,606.35.

The 3-Year Reset Death Benefit is equal to the greatest 3-year reset
anniversary value attained, where a 3-year reset anniversary value equals the
Contract Value on that Contract Anniversary plus all subsequent Purchase
Payments minus all subsequent amounts surrendered, as shown below.

The only 3-year reset anniversary was on 1/1/(yy+3), where the anniversary
value was $105,000 plus $80,000 equals $185,000.

The 3-Year Reset Death Benefit is the greatest 3-year reset anniversary
value attained, or $185,000.

Under the Compound and 3-Year Reset Death Benefit option, the death benefit
payable is the greatest of:

(1) the standard Death Benefit of $185,000; or

(2) the Compound Death Benefit, of $174,606.35; or

(3) the 3-Year Reset Death Benefit, of $185,000.

The death benefit payable is then $185,000.

A-2
<PAGE>
APPENDIX B

EXAMPLE OF SURRENDER CHARGE CALCULATION

Surrender charges are applied to Contract Value surrendered according to the
table below:

<TABLE>
<CAPTION>
NUMBER OF FULL YEARS ELAPSED BETWEEN SURRENDER
THE DATE PURCHASE PAYMENT WAS ACCEPTED CHARGE
AND THE DATE OF SURRENDER PERCENTAGE
- -------------------------------------- ----------
<S> <C>
0........................................................... 7.0%
1........................................................... 6.0%
2........................................................... 6.0%
3........................................................... 5.0%
4........................................................... 4.0%
5........................................................... 3.0%
6........................................................... 2.0%
7+.......................................................... 0.0%
</TABLE>

Assume an initial Purchase Payment of $100,000 is made on the Effective
Date, followed 5 years later by a subsequent Purchase Payment of $50,000. On the
sixth Contract Anniversary, assume the Contract Value is $175,000.

During the seventh Contract Year, when the Contract Value has increased to
$185,000, a partial surrender of $50,000 is requested. On the eighth Contract
Anniversary, when the Contract Value is $200,000, a full surrender is requested.

When the partial surrender is requested, 15% of $175,000 equals $26,250 is
available free of surrender charges. The remaining surrendered amount of $50,000
less $26,250 equals $23,750 is allocated to the initial Purchase Payment of
$100,000. Since 6 full years have elapsed since the initial Purchase Payment, a
2.0% surrender charge percentage will apply and the surrender charge is $23,750
times 2.0% equals $475.

From the $200,000 surrendered, $73,750 represents earnings in the Contract
and is free of surrender charges. The remaining $200,000 less $73,750 equals
$126,250 is prorated to surrendered Purchase Payments as follows:

- $76,250 is allocated to the initial Purchase Payment

- $50,000 is allocated to the surrendered subsequent Purchase Payment

Since 8 full years have elapsed since the initial Purchase Payment, a 0.0%
surrender charge percentage will apply to $76,250.

Since 3 full years have elapsed since the subsequent Purchase Payment, a
5.0% surrender charge percentage will apply to $50,000.

The total surrender charge upon the full surrender is $2,500.

B-1
<PAGE>
APPENDIX C

EXPLANATION OF THE VARIABLE ANNUITIZATION CALCULATION

Assuming a Contract Value (less applicable charges and premium taxes) of
$100,000 on the Annuity Commencement Date and annual variable income payments
selected under Option A with a 5 year certain period, the dollar amount of the
payment determined, but not paid, on the Annuity Commencement Date is calculated
using an interest assumption of 5%, as shown below.

There are 5 annual payments scheduled. Assuming an interest rate of 5%, the
applied Contract Value is then assumed to have a balance of $0 after the last
payment is made at the end of the 5th year. The amount of the payment determined
on the Annuity Commencement Date is the amount necessary to force this balance
to $0.

<TABLE>
<CAPTION>
INTEREST CONTRACT CONTRACT
EARNED VALUE VALUE
DURING YEAR BEFORE PAYMENT AFTER
DATE AT 5% PAYMENT MADE PAYMENT
- ---- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Annuity Commencement Date.... $100,000.00 $ 0.00 $100,000.00
End of 1st year......... $5,000.00 $105,000.00 $23,097.48 $ 81,902.52
End of 2nd year......... $4,095.13 $ 85,997.65 $23,097.48 $ 62,900.17
End of 3rd year......... $3,145.01 $ 66,045.17 $23,097.48 $ 42,947.69
End of 4th year......... $2,147.38 $ 45,095.08 $23,097.48 $ 21,997.60
End of 5th year......... $1,099.88 $ 23,097.48 $23,097.48 $ 0.00
</TABLE>

Assuming an interest rate of 5%, a payment of $23,097.48 is determined, but
not paid, on the Annuity Commencement Date.

The actual variable income payment made at the end of the 1st year will
equal $23,097.48 only if the net investment return during the 1st year equals
5%. If the net investment return exceeds 5%, then the 1st payment will exceed
$23,097.48. If the net investment return is less than 5%, then the 1st payment
will be less than $23,097.48.

Subsequent variable payments will vary based on the net investment return
during the year in which the payment is scheduled to be made. A payment will
equal the payment made at the end of the prior year only if the net investment
return equals 5%. If the net investment return exceeds 5%, then the payment will
exceed the prior payment. If the net investment return is less than 5%, then the
payment will be less than the prior payment.

C-1
<PAGE>
PLEASE TEAR OFF, COMPLETE AND RETURN THIS FORM TO ORDER A FREE STATEMENT OF
ADDITIONAL INFORMATION FOR THE CONTRACTS OFFERED UNDER THE PROSPECTUS. ADDRESS
THE FORM TO PROTECTIVE LIFE'S INVESTMENT PRODUCTS DIVISION, CUSTOMER SERVICE
CENTER AT THE ADDRESS SHOWN ON THE COVER.

PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION FOR
THE NAME-SM- VARIABLE ANNUITY.

- --------------------------------------------------------------------------------
Name Social Security No.

- --------------------------------------------------------------------------------
Address

- --------------------------------------------------------------------------------
City, State, Zip

- --------------------------------------------------------------------------------
Daytime Telephone Number
<PAGE>
PART B

INFORMATION REQUIRED TO BE IN
THE STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY
P.O. Box 10648
Birmingham, Alabama 35202-0648
Telephone: 1-800-456-6330
STATEMENT OF ADDITIONAL INFORMATION
PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
NAME-SM- VARIABLE ANNUITY
A FLEXIBLE PREMIUM
DEFERRED VARIABLE AND FIXED ANNUITY CONTRACT

This Statement of Additional Information contains information in addition to
the information described in the Prospectus for the NAME-SM- Variable Annuity, a
group and individual flexible premium deferred variable and fixed annuity
contract (the "Contract") offered by Protective Life Insurance Company. This
Statement of Additional Information is not a Prospectus. It should be read only
in conjunction with the Prospectuses for the Contract and the Funds. The
Prospectus is dated the same as this Statement of Additional Information. You
may obtain a copy of the Prospectus by writing or calling us at our address or
phone number shown above.

THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS .
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
CALCULATION OF YIELDS AND TOTAL RETURNS.................................................................... 3
Oppenheimer Money Fund Sub-Account Yield................................................................. 3
Other Sub-Account Yields................................................................................. 4
Total Returns............................................................................................ 5
Effect of the Contract Maintenance Fee on Performance Data............................................... 6
SAFEKEEPING OF ACCOUNT ASSETS.............................................................................. 6
STATE REGULATION........................................................................................... 7
RECORDS AND REPORTS........................................................................................ 7
LEGAL MATTERS.............................................................................................. 7
EXPERTS.................................................................................................... 7
OTHER INFORMATION.......................................................................................... 7
FINANCIAL STATEMENTS....................................................................................... 7
</TABLE>

2
<PAGE>
CALCULATION OF YIELDS AND TOTAL RETURNS

From time to time, Protective Life may disclose yields, total returns, and
other performance data pertaining to the Contracts for a Sub-Account. Such
performance data will be computed or accompanied by performance data computed,
in accordance with the standards defined by the Securities and Exchange
Commission ("SEC").

Because of the charges and deductions imposed under a Contract, yields for
the Sub-Accounts will be lower than the yields for their respective Funds. The
calculations of yields, total returns, and other performance data do not reflect
the effect of premium tax that may be applicable to a particular Contract.
Premium taxes currently range from 0% to 3.50% of premium based on the state in
which the Contract is sold.

OPPENHEIMER MONEY FUND SUB-ACCOUNT YIELD

From time to time, advertisements and sales literature may quote the current
annualized yield of the Oppenheimer Money Fund Sub-Account for a seven-day
period in a manner which does not take into consideration any realized or
unrealized gain, or losses on shares of the Oppenheimer Variable Account Funds
Money Fund or on its portfolio securities.

This current annualized yield is computed by determining the net change
(exclusive of realized gains and losses on the sale of securities and unrealized
appreciation and depreciation) at the end of the seven day period in value of a
hypothetical account under a Contract having a balance of 1 Accumulation Unit of
the Oppenheimer Money Fund Sub-Account at the beginning of the period, dividing
such net change in account value by the value of the hypothetical account at the
beginning of the period to determine the base period return, and annualizing
this quotient on a 365-day basis. The net change in account value reflects: 1)
net income from the Oppenheimer Variable Account Funds Money Fund attributable
to the hypothetical account; and 2) charges and deductions imposed under the
Contract attributable to the hypothetical account. The charges and deductions
reflect the per unit charges for the hypothetical account for: 1) the Annual
Contract Maintenance Fee; 2) Administration Charge; and 3) the Mortality and
Expense Risk Charge. For purposes of calculating current yields for a Contract,
an average per unit Contract Maintenance Fee is used based on the $30 Contract
Maintenance Fee deducted at the end of each Contract Year. Current Yield will be
calculated according to the following formula:

Current Yield = ((NCS-ES)/UV) X (365/7)

Where:

<TABLE>
<S> <C>
NCS the net change in the value of the Fund (exclusive of unrealized gains
or losses on the sale of securities and unrealized appreciation and
depreciation) for the seven-day period attributable to a hypothetical
Account having a balance of 1 Sub-Account Accumulation Unit.
ES per accumulation unit expenses attributable to the hypothetical account
for the seven-day period.
UV The Accumulation Unit value as of the end of the last day of the prior
seven-day period.
</TABLE>

The effective yield of the Oppenheimer Variable Account Funds Money Fund
Sub-Account determined on a compounded basis for the same seven-day period may
also be quoted.

3
<PAGE>
The effective yield is calculated by compounding the unannualized base
period return according to the following formula:

Effective Yield = (1+((NCS-ES)/UV))"(365/7)" - 1

Where:

<TABLE>
<S> <C>
NCS the net change in the value of the portfolio (exclusive of realized
gains and losses on the sale of securities and unrealized appreciation
and depreciation) for the seven-day period attributable to a
hypothetical account having a balance of 1 Sub-Account Accumulation
Unit.
ES per Accumulation Unit expenses attributable to the hypothetical account
for the seven-day period.
UV the Accumulation Unit value as of the end of the last day of the prior
seven-day period.
</TABLE>

Because of the charges and deductions imposed under the Contract, the
current and effective yields for the Oppenheimer Money Fund Sub-Account will be
lower than such yields for the Oppenheimer Variable Account Funds Money Fund.

The current and effective yields on amounts held in the Oppenheimer Money
Fund Sub-Account normally will fluctuate on a daily basis. THEREFORE, THE
DISCLOSED YIELD FOR ANY GIVEN PAST PERIOD IS NOT AN INDICATION OR REPRESENTATION
OF FUTURE YIELDS OR RATES OF RETURN. The Oppenheimer Money Fund Sub-Account's
actual yield is affected by changes in interest rates on money market
securities, average portfolio maturity of the Oppenheimer Variable Account Funds
Money Fund, the types of quality of portfolio securities held by the Oppenheimer
Variable Account Funds Money Fund and the Oppenheimer Variable Account Funds
Money Fund's operating expenses. Yields on amounts held in the Oppenheimer Money
Fund Sub-Account may also be presented for periods other than a seven day
period.

OTHER SUB-ACCOUNT YIELDS

From time to time, sales literature or advertisements may quote the current
annualized yield of one or more of the Sub-Accounts (except the Oppenheimer
Money Fund Sub-Account) for a Contract for 30-day or one-month periods. The
annualized yield of a Sub-Account refers to income generated by the Sub-Account
over a specific 30 day or one month period. Because the yield is annualized, the
yield generated by a Sub-Account during a 30-day or one-month period is assumed
to be generated each period over a 12-month period.

The yield is computed by: 1) dividing the net investment income of the Fund
attributable to the Sub-Account Accumulation Units less Sub-Account expenses for
the period; by 2) the maximum offering price per Accumulation Unit on the last
day of the period times the daily average number of units outstanding for the
period; by 3) compounding that yield for a six-month period; and by 4)
multiplying that result by 2. Expenses attributable to the Sub-Account include
the Annual Contract Maintenance Fee, the Administration Charge and the Mortality
and Expense Risk Charge. The yield calculation assumes an Contract Maintenance
Fee of $30 per year per Contract deducted at the end of each Contract Year. For
purposes of calculating the 31-day or one-month yield, an average administration
fee per dollar of Contract value in the Variable Account is used to determine
the amount of the charge

4
<PAGE>
attributable to the Sub-Account for the 30-day or one-month period. The 30 day
or one month yield is calculated according to the following formula:

Yield = 2 X [(((NI-ES)/ (U X UV))+1)(6) - 1]

Where:

<TABLE>
<S> <C>
NI net income of the Fund for the 30 day or one month period attributable
to the Sub-Account Accumulation Units.
ES expenses of the Sub-Account for the 30 day or one month period.
U the average number of Accumulation Units outstanding.
UV the Accumulation Unit value as of the end of the last day in the 30 day
or one month period.
</TABLE>

Because of the charges and deductions imposed under the Contracts, the yield
for the Sub-Account will be lower than the yield for the corresponding Fund.

The yield on the amounts held in the Sub-Accounts normally will fluctuate
over time. Therefore, the disclosed yield for any given past period is not an
indication or representation of future yields or rates of return. The
Sub-Account's actual yield is affected by the types and quality of portfolio
securities held by the corresponding Fund and its operating expenses.

Yield calculations do not take into account the surrender charge under the
Contract equal to 1% to 7% of Purchase Payments during the seven years prior to
the surrender (including the year in which the surrender is made) on amounts
surrendered under the Contract.

TOTAL RETURNS

From time to time, sales literature or advertisements may also quote total
returns for one or more of the Sub-Accounts for various periods of time.

Until a Sub-Account has been in operation for 10 years, Protective Life will
always include quotes of standard average annual total return for the period
measured from the date that Sub-Account began operations. When a Sub-Account has
been in operation for 1, 5, and 10 years, respectively, the standard average
annual total return for these periods will be provided. Average annual total
returns for other periods of time may, from time to time, also be disclosed.

Average annual total returns represent the average annual compounded rates
of return that would equate an initial investment of $1,000 under a Contract to
the redemption value of that investment as of the last day of each of the
periods. The ending date of each period for which total return quotations are
provided will generally be for the most recent month-end practicable considering
the type and media of the communication and will be stated in the communication.

All average annual total returns will be calculated using Sub-Account unit
values computed on each Valuation Day based on the performance of the
Sub-Account's underlying Fund, the deductions for the mortality and expense risk
charge and the administration charge.

The standard average annual total return calculation assumes that the
contract maintenance fee is $30 per year per contract, expressed as a percentage
of the average Contract Value. For any period less than eight years, the
standard average annual total return will also reflect the deduction of a
surrender charge. The standard average annual total return will be calculated
according to the following formula:

TR = (ERV/P)(1/N) - 1

5
<PAGE>
Where:

<TABLE>
<S> <C> <C>
TR = the average annual total return net of Sub-Account recurring
charges.
ERV = the ending redeemable value (net of any applicable charges) of the
hypothetical account at the end of the period.
P = a hypothetical single Purchase Payment of $1,000.
N = the number of years in the period.
</TABLE>

In addition to standard average annual total returns, sales literature or
advertisements may from time to time also quote nonstandard average annual total
returns that do not reflect the contract maintenance fee or the surrender
charge. These nonstandard average annual total returns are calculated in exactly
the same way as standard average annual total returns described above, except
that the ending redeemable value of the hypothetical account for the period is
replaced with an ending value for the period that does not take into account the
contract maintenance fee or the deduction of a surrender charge.

Protective Life may also disclose cumulative total returns in conjunction
with the formats described above. The cumulative total returns will be
calculated using the following formula:

CTR = (EV/P) - 1

Where:

<TABLE>
<S> <C> <C>
CTR = The cumulative total return net of Sub-Account recurring charges for
the period.
EV = The ending value of the hypothetical investment at the end of the
period that does not take into account the contract maintenance fee
or the surrender charge.
P = A hypothetical single Purchase Payment of $1,000.
</TABLE>

EFFECT OF THE CONTRACT MAINTENANCE FEE ON PERFORMANCE DATA

The Contract provides for a $30 annual contract maintenance fee to be
deducted at the end of each Contract Year from the Sub-Accounts based on the
proportion that the value of each such Sub-Account bears to the total Contract
Value. For purposes of reflecting the contract maintenance fee in yield and
total return quotations, the annual charge is converted into a per-dollar
per-day charge based on the average Variable Account Value of all Contracts on
the last day of the period for which quotations are provided. The per-dollar
per-day average charge is then adjusted to reflect the basis upon which the
particular quotation is calculated.

SAFEKEEPING OF ACCOUNT ASSETS

Title to the assets of the Variable Account is held by Protective Life. The
assets are kept physically segregated and held separate and apart from the
Company's General Account assets and from the assets in any other separate
account.

Records are maintained of all purchases and redemptions of Fund shares held
by each of the Sub-Accounts.

The officers and employees of Protective Life are covered by an insurance
company blanket bond issued in the amount of $20 million dollars. The bond
insures against dishonest and fraudulent acts of officers and employees.

6
<PAGE>
STATE REGULATION

Protective Life is subject to regulation and supervision by the Department
of Insurance of the State of Tennessee which periodically examines its affairs.
It is also subject to the insurance laws and regulations of all jurisdictions
where it is authorized to do business. Where required, a copy of the Contract
form has been filed with, and, if applicable, approved by, insurance officials
in each jurisdiction where the Contracts are sold. Protective Life is required
to submit annual statements of its operations, including financial statements,
to the insurance departments of the various jurisdictions in which it does
business for the purposes of determining solvency and compliance with local
insurance laws and regulations.

RECORDS AND REPORTS

Protective Life will maintain all records and accounts relating to the
Variable Account. As presently required by the 1940 Act and regulations
promulgated thereunder, reports containing such information as may be required
under the Act or by any other applicable law or regulation will be sent to
Owner(s) periodically at the last known address.

LEGAL MATTERS

Sutherland, Asbill & Brennan LLP of Washington, D. C. has provided advice on
certain matters relating to the federal securities laws.

EXPERTS

The statement of assets and liabilities of The Protective Variable Annuity
Separate Account as of December 31, 1998 and 1997 and the related statements of
operations and changes in net assets for the years ended December 31, 1998 and
1997 and the consolidated balance sheets of Protective Life as of December 31,
1998 and 1997 and the related consolidated statements of income, stockholder's
equity and cash flows for each of the three years in the period ended December
31, 1998 and the related financial statement schedules included in this
Statement of Additional Information and in the registration statement have been
included herein in reliance on the report of PricewaterhouseCoopers LLP
(formerly Coopers & Lybrand LLP) of Birmingham, AL, independent accountants,
given on the authority of that firm as experts in accounting and auditing.

OTHER INFORMATION

A registration statement has been filed with the SEC under the Securities
Act of 1933 as amended, with respect to the Contracts discussed in this
Statement of Additional Information. Not all the information set forth in the
registration statement, amendments and exhibits thereto has been included in
this Statement of Additional Information. Statements contained in this Statement
of Additional Information concerning the content of the Contracts and other
legal instruments are intended to be summaries. For a complete statement of the
terms of these documents, reference should be made to the instruments filed with
the SEC at 450 Fifth Street, N. W., Washington, D.C. 20549.

FINANCIAL STATEMENTS

The audited statement of assets and liabilities of The Protective Variable
Annuity Separate Account as of December 31, 1998 and 1997 and the related
statements of operations and changes in net assets for the years ended December
31, 1998 and 1997 as well as the Report of Independent Accountants are contained
herein.

The audited consolidated balance sheets for Protective Life as of
December 31, 1998 and 1997 and the related consolidated statements of income,
stockholder's equity, and cash flows for the years ended December 31, 1998, 1997
and 1996 as well as the Report of Independent Accountants are contained herein.

Financial Statements follow this page.

7
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
Report of Independent Accountants.................................................... F-1
Statement of Assets and Liabilities as of December 31, 1998.......................... F-2
Statement of Assets and Liabilities as of December 31, 1997.......................... F-4
Statement of Operations for the year ended December 31, 1998......................... F-6
Statement of Operations for the year ended December 31, 1997......................... F-8
Statement of Changes in Net Assets for the year ended December 31, 1998.............. F-10
Statement of Changes in Net Assets for the period ended December 31, 1997............ F-12
Notes to Financial Statements........................................................ F-14

PROTECTIVE LIFE INSURANCE COMPANY
Report of Independent Accountants.................................................... F-22
Consolidated Statements of Income for the years ended December 31, 1998, 1997 and
1996................................................................................ F-23
Consolidated Balance Sheets as of December 31, 1998 and 1997......................... F-24
Consolidated Statements of Share-Owner's Equity for the years ended December 31,
1998, 1997, and 1996................................................................ F-25
Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and
1996................................................................................ F-26
Notes to Consolidated Financial Statements........................................... F-27
Financial Statement Schedules:
Schedule III -- Supplementary Insurance Information.................................. S-1
Schedule IV -- Reinsurance........................................................... S-2
</TABLE>

All other schedules to the consolidated financial statements required by
Article 7 of Regulation S-X are not required under the related instructions or
are inapplicable and therefore have been omitted.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Contract Owners and Board of Directors
of Protective Life Insurance Company

In our opinion, the accompanying statements of assets and liabilities and
the related statements of operations and changes in assets of the Protective
Variable Annuity Separate Account (the "Separate Account") listed in the
accompanying index of this Form N-4 present fairly, in all material respects,
the financial position of the Separate Account at December 31, 1998 and 1997,
and the results of its operations and its cash flows for each of the two years
in the period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Separate Account's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
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 provide a
reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

March 17, 1999
Birmingham, Alabama

F-1
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PIC PIC PIC PIC PIC PIC
MONEY GROWTH AND INTERNATIONAL GLOBAL SMALL CAP CORE
MARKET INCOME EQUITY INCOME VALUE US EQUITY
---------- ------------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in sub-accounts at
market value...................... $5,304,962 $ 386,296,900 $ 173,532,636 $62,451,103 $99,008,326 $ 261,457,421
Receivable from Protective Life
Insurance Company................. 1 0 0 0 0 0
---------- ------------- ------------- ----------- ----------- -------------
Total Assets................... 5,304,963 386,296,900 173,532,636 62,451,103 99,008,326 261,457,421
---------- ------------- ------------- ----------- ----------- -------------
LIABILITIES
Payable to Protective Life
Insurance Company................. 0 0 0 0 0 0
---------- ------------- ------------- ----------- ----------- -------------
NET ASSETS......................... $5,304,963 $ 386,296,900 $ 173,532,636 $62,451,103 $99,008,326 $ 261,457,421
========== ============= ============= =========== =========== =============

<CAPTION>
CALVERT
SOCIAL
PIC SMALL CALVERT
CAPITAL CAP SOCIAL
GROWTH GROWTH BALANCED
------------- --------- ----------
<S> <C> <C> <C>
ASSETS
Investment in sub-accounts at
market value...................... $ 152,416,381 $ 549,826 $6,149,990
Receivable from Protective Life
Insurance Company................. 0 0 0
------------- --------- ----------
Total Assets................... 152,416,381 549,826 6,149,990
------------- --------- ----------
LIABILITIES
Payable to Protective Life
Insurance Company................. 0 0 0
------------- --------- ----------
NET ASSETS......................... $ 152,416,381 $ 549,826 $6,149,990
============= ========= ==========
</TABLE>

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

F-2
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MFS
MFS GROWTH MFS OPPENHEIMER OPPENHEIMER
EMERGING MFS WITH TOTAL AGGRESSIVE OPPENHEIMER GROWTH AND
GROWTH RESEARCH INCOME RETURN GROWTH GROWTH INCOME
----------- ----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in sub-accounts
at market value............ $16,563,501 $26,334,396 $19,391,258 $13,034,687 $11,330,154 $16,022,393 $20,092,152
Receivable from Protective
Life Insurance Company..... 0 0 0 0 0 0 0
----------- ----------- ----------- ----------- ---------- ---------- ----------
Total Assets............ 16,563,501 26,334,396 19,391,258 13,034,687 11,330,154 16,022,393 20,092,152
----------- ----------- ----------- ----------- ---------- ---------- ----------
LIABILITIES
Payable to Protective Life
Insurance Company.......... 0 0 0 0 0 0 0
----------- ----------- ----------- ----------- ---------- ---------- ----------
NET ASSETS.................. $16,563,501 $26,334,396 $19,391,258 $13,034,687 $11,330,154 $16,022,393 $20,092,152
=========== =========== =========== =========== ========== ========== ==========

OPPENHEIMER
STRATEGIC
BOND TOTAL
------------ --------------
<S> <C> <C>
ASSETS
Investment in sub-accounts
at market value............ $15,978,991 $1,285,915,077
Receivable from Protective
Life Insurance Company..... 0 1
---------- --------------
Total Assets............ 15,978,991 1,285,915,078
---------- --------------
LIABILITIES
Payable to Protective Life
Insurance Company.......... 0 0
---------- --------------
NET ASSETS.................. $15,978,991 $1,285,915,078
========== ==============
</TABLE>

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

F-3
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PIC PIC PIC PIC PIC PIC
MONEY GROWTH AND INTERNATIONAL GLOBAL SMALL CAP CORE
MARKET INCOME EQUITY INCOME VALUE US EQUITY
---------- ------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in sub-accounts at
market value...................... $3,571,053 $ 355,505,039 $ 131,344,810 $48,720,463 $ 107,421,163 $ 176,791,623
Receivable from Protective Life
Insurance Company................. 17,327 49,074 479 0 6,003 0
---------- ------------- ------------- ----------- ------------- -------------
Total Assets................... 3,588,380 355,554,113 131,345,289 48,720,463 107,427,166 176,791,623
---------- ------------- ------------- ----------- ------------- -------------
LIABILITIES
Payable to Protective Life
Insurance Company................. 0 0 0 14 0 2,581
---------- ------------- ------------- ----------- ------------- -------------
NET ASSETS......................... $3,588,380 $ 355,554,113 $ 131,345,289 $48,720,449 $ 107,427,166 $ 176,789,042
========== ============= ============= =========== ============= =============

<CAPTION>
CALVERT
PIC SOCIAL CALVERT
CAPITAL SMALL CAP SOCIAL
GROWTH GROWTH BALANCED
----------- --------- ----------
<S> <C> <C> <C>
ASSETS
Investment in sub-accounts at
market value...................... $74,411,193 $ 136,679 $1,050,736
Receivable from Protective Life
Insurance Company................. 0 0 155
----------- --------- ----------
Total Assets................... 74,411,193 136,679 1,050,891
----------- --------- ----------
LIABILITIES
Payable to Protective Life
Insurance Company................. 12 0 0
----------- --------- ----------
NET ASSETS......................... $74,411,181 $ 136,679 $1,050,891
=========== ========= ==========
</TABLE>

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

F-4
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MFS
MFS GROWTH MFS OPPENHEIMER OPPENHEIMER
EMERGING MFS WITH TOTAL AGGRESSIVE OPPENHEIMER GROWTH AND
GROWTH RESEARCH INCOME RETURN GROWTH GROWTH INCOME
---------- ---------- ---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in sub-accounts at
market value..................... $3,320,856 $6,285,782 $2,671,278 $1,747,276 $2,613,453 $3,609,636 $2,931,384
Receivable from Protective Life
Insurance Company................ 0 0 0 0 0 0 728
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Assets.................. 3,320,856 6,285,782 2,671,278 1,747,276 2,613,453 3,609,636 2,932,112
---------- ---------- ---------- ---------- ---------- ---------- ----------
LIABILITIES
Payable to Protective Life
Insurance Company................ 0 0 1 0 0 1,092 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS........................ $3,320,856 $6,285,782 $2,671,277 $1,747,276 $2,613,453 $3,608,544 $2,932,112
========== ========== ========== ========== ========== ========== ==========

OPPENHEIMER
STRATEGIC
BOND TOTAL
------------ -------------
<S> <C> <C>
ASSETS
Investment in sub-accounts at
market value..................... $2,935,255 $ 925,067,679
Receivable from Protective Life
Insurance Company................ 0 73,766
---------- -------------
Total Assets.................. 2,935,255 925,141,445
---------- -------------
LIABILITIES
Payable to Protective Life
Insurance Company................ 14,633 18,333
---------- -------------
NET ASSETS........................ $2,920,622 $ 925,123,112
========== =============
</TABLE>

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

F-5
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PIC PIC PIC
MONEY PIC PIC GLOBAL PIC CORE US
MARKET GROWTH AND INTERNATIONAL INCOME SMALL CAP EQUITY
SUB- INCOME EQUITY SUB- EQUITY SUB-
ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ACCOUNT SUB-ACCOUNT ACCOUNT
--------- ------------ ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................................. $ 248,570 $ 4,636,458 $ 73,813 $1,425,072 $ 506,364 $ 1,545,019
EXPENSE
Mortality and expense risk and
administrative charges.................. 73,185 5,531,483 2,192,885 781,443 1,543,516 3,060,032
--------- ------------ ---------- ---------- ------------ -----------
Net investment income (loss).............. 175,385 (895,025) (2,119,072) 643,629 (1,037,152) (1,515,013)
--------- ------------ ---------- ---------- ------------ -----------
NET REALIZED AND UNREALIZED GAINS ON
INVESTMENTS
Net realized gain (loss) from redemption of
investment shares.......................... 1 (17,561) (17,289) 4,026 (80,834) (1,687)
Capital gain distribution................... 0 26,646,014 8,165,714 1,574,397 11,785,637 2,694,185
--------- ------------ ---------- ---------- ------------ -----------
Net realized gain on investments............ 1 26,628,453 8,148,425 1,578,423 11,704,803 2,692,498
Net unrealized appreciation (depreciation)
on investments during the period........... 1 (45,438,848) 19,472,762 2,463,139 (30,578,648) 39,309,978
--------- ------------ ---------- ---------- ------------ -----------
Net realized and unrealized gain (loss) on
investments................................ 2 (18,810,395) 27,621,187 4,041,562 (18,873,845) 42,002,476
--------- ------------ ---------- ---------- ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................. $ 175,387 $(19,705,420) $25,502,115 $4,685,191 $(19,910,997) $40,487,463
========= ============ ========== ========== ============ ===========

<CAPTION>
PIC CALVERT
CAPITAL SMALL CAP CALVERT
GROWTH GROWTH BALANCED
SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT
----------- --------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends................................. $ 578,012 $ 487 $ 137,208
EXPENSE
Mortality and expense risk and
administrative charges.................. 1,509,515 4,471 43,385
----------- --------- ---------
Net investment income (loss).............. (931,503) (3,984) 93,823
----------- --------- ---------
NET REALIZED AND UNREALIZED GAINS ON
INVESTMENTS
Net realized gain (loss) from redemption of
investment shares.......................... (15,882) 543 (4,185)
Capital gain distribution................... 2,671,568 6,748 307,711
----------- --------- ---------
Net realized gain on investments............ 2,655,686 7,291 303,526
Net unrealized appreciation (depreciation)
on investments during the period........... 29,948,200 (21,221) 118,408
----------- --------- ---------
Net realized and unrealized gain (loss) on
investments................................ 32,603,886 (13,930) 421,934
----------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................. $31,672,383 $ (17,914) $ 515,757
=========== ========= =========
</TABLE>

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

F-6
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MFS MFS GROWTH OPPENHEIMER OPPENHEIMER
EMERGING MFS WITH MFS TOTAL AGGRESSIVE OPPENHEIMER GROWTH AND
GROWTH RESEARCH INCOME RETURN GROWTH GROWTH INCOME
---------- ---------- ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends............................ $ 0 $ 18,216 $ 0 $ 61,776 $ 10,204 $ 38,507 $ 11,591
EXPENSE
Mortality and expense risk and
administrative charges............. 121,117 208,964 127,398 91,976 90,619 121,481 136,131
---------- ---------- ---------- --------- ---------- ---------- ----------
Net investment income (loss)......... (121,117) (190,748) (127,398) (30,200) (80,415) (82,974) (124,540)
---------- ---------- ---------- --------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAINS ON
INVESTMENTS
Net realized gain (loss) from
redemption of investment shares....... (150) (2,028) 2,288 (149) (8,467) 1,617 430
Capital gain distribution.............. 54,636 238,877 0 72,636 104,789 464,612 255,235
---------- ---------- ---------- --------- ---------- ---------- ----------
Net realized gain on investments....... 54,486 236,849 2,288 72,487 96,322 466,229 255,665
Net unrealized appreciation
(depreciation) on investments during
the period............................ 2,954,000 3,073,695 2,041,489 695,548 898,627 1,756,712 344,809
---------- ---------- ---------- --------- ---------- ---------- ----------
Net realized and unrealized gain (loss)
on investments........................ 3,008,486 3,310,544 2,043,777 768,035 994,949 2,222,941 600,474
---------- ---------- ---------- --------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $2,887,369 $3,119,796 $1,916,379 $ 737,835 $ 914,534 $2,139,967 $ 475,934
========== ========== ========== ========= ========== ========== ==========

<CAPTION>
OPPENHEIMER
STRATEGIC
BOND TOTAL
------------ -----------
<S> <C> <C>
INVESTMENT INCOME
Dividends............................ $ 89,250 $ 9,380,547
EXPENSE
Mortality and expense risk and
administrative charges............. 128,836 15,766,437
---------- -----------
Net investment income (loss)......... (39,586) (6,385,890)
---------- -----------
NET REALIZED AND UNREALIZED GAINS ON
INVESTMENTS
Net realized gain (loss) from
redemption of investment shares....... 1,758 (137,569)
Capital gain distribution.............. 57,517 55,100,276
---------- -----------
Net realized gain on investments....... 59,275 54,962,707
Net unrealized appreciation
(depreciation) on investments during
the period............................ 47,763 27,086,414
---------- -----------
Net realized and unrealized gain (loss)
on investments........................ 107,038 82,049,121
---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 67,452 $75,663,231
========== ===========
</TABLE>

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

F-7
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PIC PIC PIC PIC PIC PIC
MONEY GROWTH AND INTERNATIONAL GLOBAL SMALL CAP CORE US
MARKET INCOME EQUITY INCOME VALUE EQUITY
--------- ----------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................................... $ 216,131 $ 2,530,403 $2,328,793 $3,987,063 $ 311,079 $ 1,442,006
EXPENSE
Mortality and expense risk and
administrative charges.................... 62,875 4,093,470 1,668,076 601,492 1,213,746 1,983,808
--------- ----------- ---------- ---------- ----------- -----------
Net investment income (loss)................ 153,256 (1,563,067) 660,717 3,385,571 (902,667) (541,802)
--------- ----------- ---------- ---------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS ON
INVESTMENTS
Net realized gain (loss) from redemption of
investment shares............................ 0 3,109 5,500 1,401 17,568 553
Capital gain distribution..................... 0 47,260,910 7,212,859 603,653 11,826,478 13,990,186
--------- ----------- ---------- ---------- ----------- -----------
Net realized gain on investments.............. 0 47,264,019 7,218,359 605,054 11,844,046 13,990,739
Net unrealized appreciation (depreciation) on
investments during the period................ 1 19,421,926 (5,637,373) (450,116) 10,752,598 20,604,003
--------- ----------- ---------- ---------- ----------- -----------
Net realized and unrealized gain (loss) on
investments.................................. 1 66,685,945 1,580,986 154,938 22,596,644 34,594,742
--------- ----------- ---------- ---------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................... $ 153,257 $65,122,878 $2,241,703 $3,540,509 $21,693,977 $34,052,940
========= =========== ========== ========== =========== ===========

<CAPTION>
CALVERT
PIC SOCIAL CALVERT
CAPITAL SMALL CAP SOCIAL
GROWTH GROWTH BALANCED
----------- --------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends................................... $ 451,531 $ 0 $ 23,016
EXPENSE
Mortality and expense risk and
administrative charges.................... 711,311 408 2,454
----------- --------- ---------
Net investment income (loss)................ (259,780) (408) 20,562
----------- --------- ---------
NET REALIZED AND UNREALIZED GAINS ON
INVESTMENTS
Net realized gain (loss) from redemption of
investment shares............................ (554) (12) 76
Capital gain distribution..................... 4,665,040 12,282 49,926
----------- --------- ---------
Net realized gain on investments.............. 4,664,486 12,270 50,002
Net unrealized appreciation (depreciation) on
investments during the period................ 8,959,175 (12,845) (53,486)
----------- --------- ---------
Net realized and unrealized gain (loss) on
investments.................................. 13,623,661 (575) (3,484)
----------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................... $13,363,881 $ (983) $ 17,078
=========== ========= =========
</TABLE>

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

F-8
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MFS
MFS GROWTH OPPENHEIMER
EMERGING MFS WITH MFS TOTAL AGGRESSIVE OPPENHEIMER
GROWTH RESEARCH INCOME RETURN GROWTH GROWTH
----------- ----------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends.................................. $ 0 $ 0 $ 10,479 $ 0 $ 0 $ 0
EXPENSE
Mortality and expense risk and
administrative charges................... 11,765 19,515 7,836 4,785 7,974 11,176
--------- --------- --------- --------- --------- ---------
Net investment income (loss)............... (11,765) (19,515) 2,643 (4,785) (7,974) (11,176)
--------- --------- --------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAINS ON
INVESTMENTS
Net realized gain (loss) from redemption of
investment shares........................... 2,267 7 92 202 11 19
Capital gain distribution.................... 0 0 49,017 0 0 0
--------- --------- --------- --------- --------- ---------
Net realized gain on investments............. 2,267 7 49,109 202 11 19
Net unrealized appreciation (depreciation) on
investments during the period............... 2,208 13,033 41,478 48,443 (56,978) (9,267)
--------- --------- --------- --------- --------- ---------
Net realized and unrealized gain (loss) on
investments................................. 4,475 13,040 90,587 48,645 (56,967) (9,248)
--------- --------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................... $ (7,290) $ (6,475) $ 93,230 $ 43,860 $ (64,941) $ (20,424)
========= ========= ========= ========= ========= =========

OPPENHEIMER OPPENHEIMER
GROWTH AND STRATEGIC
INCOME BOND TOTAL
------------ ------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends.................................. $ 8,008 $ 73,276 11,381,785
EXPENSE
Mortality and expense risk and
administrative charges................... 8,503 9,293 10,418,487
---------- --------- -------------
Net investment income (loss)............... (495) 63,983 963,298
---------- --------- -------------
NET REALIZED AND UNREALIZED GAINS ON
INVESTMENTS
Net realized gain (loss) from redemption of
investment shares........................... 118 21 30,378
Capital gain distribution.................... 0 0 85,670,351
---------- --------- -------------
Net realized gain on investments............. 118 21 85,700,729
Net unrealized appreciation (depreciation) on
investments during the period............... 109,900 (22,462) 53,710,238
---------- --------- -------------
Net realized and unrealized gain (loss) on
investments................................. 110,018 (22,441) 139,410,967
---------- --------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................... $ 109,523 $ 41,542 $ 140,374,265
========== ========= =============
</TABLE>

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

F-9
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PIC PIC PIC PIC PIC PIC
MONEY GROWTH & INTERNATIONAL GLOBAL SMALL CAP CORE US
MARKET INCOME EQUITY INCOME EQUITY EQUITY
----------- ------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss)....... $ 175,385 $ (895,025) $ (2,119,072) $ 643,629 $ (1,037,152) $ (1,515,013)
Net realized gain on investments... 1 26,628,453 8,148,425 1,578,423 11,704,803 2,692,498
Net unrealized appreciation
(depreciation) of investments
during the period................. 1 (45,438,848) 19,472,762 2,463,139 (30,578,648) 39,309,978
----------- ------------- ------------- ----------- ------------- -------------
Net increase (decrease) in net
assets resulting from
operations........................ 175,387 (19,705,420) 25,502,115 4,685,191 (19,910,997) 40,487,463
----------- ------------- ------------- ----------- ------------- -------------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contract owners' net payments...... 2,963,346 44,661,113 12,821,323 6,767,675 10,541,589 28,759,864
Contract maintenance fees.......... (2,344) (155,734) (66,464) (17,859) (47,353) (79,195)
Surrenders......................... (3,373,648) (15,673,534) (4,971,778) (2,847,710) (3,549,612) (7,435,839)
Death benefits..................... (36,443) (2,354,085) (1,135,800) (491,719) (712,842) (1,430,656)
Transfer (to) from other
portfolios........................ 1,990,285 23,970,447 10,037,951 5,635,076 5,260,375 24,366,742
----------- ------------- ------------- ----------- ------------- -------------
Net increase in net assets
resulting from variable annuity
contract transactions............. 1,541,196 50,448,207 16,685,232 9,045,463 11,492,157 44,180,916
----------- ------------- ------------- ----------- ------------- -------------
Total increase (decrease) in net
assets............................ 1,716,583 30,742,787 42,187,347 13,730,654 (8,418,840) 84,668,379
NET ASSETS
Beginning of Year.................. 3,588,380 355,554,113 131,345,289 48,720,449 107,427,166 176,789,042
----------- ------------- ------------- ----------- ------------- -------------
End of Year........................ $ 5,304,963 $ 386,296,900 $ 173,532,636 $62,451,103 $ 99,008,326 $ 261,457,421
=========== ============= ============= =========== ============= =============

<CAPTION>
PIC CALVERT
CAPITAL SMALL CAP CALVERT
GROWTH GROWTH BALANCED
------------- --------- ----------
<S> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss)....... $ (931,503) $ (3,984) $ 93,823
Net realized gain on investments... 2,655,686 7,291 303,526
Net unrealized appreciation
(depreciation) of investments
during the period................. 29,948,200 (21,221) 118,408
------------- --------- ----------
Net increase (decrease) in net
assets resulting from
operations........................ 31,672,383 (17,914) 515,757
------------- --------- ----------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contract owners' net payments...... 23,614,776 231,937 2,395,475
Contract maintenance fees.......... (40,182) (260) (692)
Surrenders......................... (2,924,880) (824) (95,901)
Death benefits..................... (710,672) 0 (30,452)
Transfer (to) from other
portfolios........................ 26,393,775 200,208 2,314,912
------------- --------- ----------
Net increase in net assets
resulting from variable annuity
contract transactions............. 46,332,817 431,061 4,583,342
------------- --------- ----------
Total increase (decrease) in net
assets............................ 78,005,200 413,147 5,099,099
NET ASSETS
Beginning of Year.................. 74,411,181 136,679 1,050,891
------------- --------- ----------
End of Year........................ $ 152,416,381 $ 549,826 $6,149,990
============= ========= ==========
</TABLE>

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

F-10
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MFS
MFS GROWTH MFS OPPENHEIMER OPPENHEIMER
EMERGING MFS WITH TOTAL AGGRESSIVE OPPENHEIMER GROWTH AND
GROWTH RESEARCH INCOME RETURN GROWTH GROWTH INCOME
----------- ----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income
(loss)....................... $ (121,117) $ (190,748) $ (127,398) $ (30,200) $ (80,415) $ (82,974) $ (124,540)
Net realized gain on
investments.................. 54,486 236,849 2,288 72,487 96,322 466,229 255,665
Net unrealized appreciation
(depreciation) of investments
during the period............ 2,954,000 3,073,695 2,041,489 695,548 898,627 1,756,712 344,809
----------- ----------- ----------- ----------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from
operations................... 2,887,369 3,119,796 1,916,379 737,835 914,534 2,139,967 475,934
----------- ----------- ----------- ----------- ---------- ---------- ----------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contract owners' net
payments..................... 5,571,115 9,051,964 7,664,341 3,749,787 4,311,786 5,905,789 8,994,192
Contract maintenance fees..... (2,956) (3,930) (1,930) (1,409) (2,142) (2,350) (2,233)
Surrenders.................... (177,307) (303,372) (326,160) (135,376) (89,091) (123,371) (246,266)
Death benefits................ (102,914) (122,413) (56,738) (44,941) (50,848) (52,012) (164,009)
Transfer (to) from other
portfolios................... 5,067,338 8,306,569 7,524,089 6,981,515 3,632,462 4,545,826 8,102,422
----------- ----------- ----------- ----------- ---------- ---------- ----------
Net increase in net assets
resulting from variable
annuity contract
transactions................. 10,355,276 16,928,818 14,803,602 10,549,576 7,802,167 10,273,882 16,684,106
----------- ----------- ----------- ----------- ---------- ---------- ----------
Total increase (decrease) in
net assets................... 13,242,645 20,048,614 16,719,981 11,287,411 8,716,701 12,413,849 17,160,040
NET ASSETS
Beginning of Year............. 3,320,856 6,285,782 2,671,277 1,747,276 2,613,453 3,608,544 2,932,112
----------- ----------- ----------- ----------- ---------- ---------- ----------
End of Year................... $16,563,501 $26,334,396 $19,391,258 $13,034,687 $11,330,154 $16,022,393 $20,092,152
=========== =========== =========== =========== ========== ========== ==========

OPPENHEIMER
STRATEGIC
BOND TOTAL
------------ --------------
<S> <C> <C>
FROM OPERATIONS
Net investment income
(loss)....................... $ (39,586) $ (6,385,890)
Net realized gain on
investments.................. 59,275 54,962,707
Net unrealized appreciation
(depreciation) of investments
during the period............ 47,763 27,086,414
---------- --------------
Net increase (decrease) in net
assets resulting from
operations................... 67,452 75,663,231
---------- --------------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contract owners' net
payments..................... 5,763,714 183,769,786
Contract maintenance fees..... (2,055) (429,088)
Surrenders.................... (340,560) (42,615,229)
Death benefits................ (49,270) (7,545,814)
Transfer (to) from other
portfolios................... 7,619,088 151,949,080
---------- --------------
Net increase in net assets
resulting from variable
annuity contract
transactions................. 12,990,917 285,128,735
---------- --------------
Total increase (decrease) in
net assets................... 13,058,369 360,791,966
NET ASSETS
Beginning of Year............. 2,920,622 925,123,112
---------- --------------
End of Year................... $15,978,991 $1,285,915,078
========== ==============
</TABLE>

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

F-11
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PIC PIC PIC PIC PIC PIC
MONEY GROWTH AND INTERNATIONAL GLOBAL SMALL CAP CORE US
MARKET INCOME EQUITY INCOME VALUE EQUITY
----------- ------------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss)......... $ 153,256 $ (1,563,067) $ 660,717 $ 3,385,571 $ (902,667) $ (541,802)
Net realized gain on investments..... 0 47,264,019 7,218,359 605,054 11,844,046 13,990,739
Net unrealized appreciation
(depreciation) of investments during
the period.......................... 1 19,421,926 (5,637,373) (450,116) 10,752,598 20,604,003
----------- ------------- ------------- ----------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations........... 153,257 65,122,878 2,241,703 3,540,509 21,693,977 34,052,940
----------- ------------- ------------- ----------- ------------- -------------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contract owners' net payments........ 4,550,506 70,285,404 27,497,729 8,832,118 17,115,594 33,348,489
Contract maintenance fees............ (1,861) (119,996) (53,643) (15,577) (40,747) (57,679)
Surrenders........................... (2,124,233) (10,448,724) (4,248,152) (1,859,370) (3,563,235) (5,804,052)
Death benefits....................... (90,244) (2,020,758) (806,371) (432,617) (383,402) (952,669)
Transfer (to) from other
portfolios.......................... (5,005,559) 22,297,846 10,100,492 1,001,821 8,302,698 14,654,534
----------- ------------- ------------- ----------- ------------- -------------
Net increase in net assets resulting
from variable annuity contract
transactions........................ (2,671,391) 79,993,772 32,490,055 7,526,375 21,430,908 41,188,623
----------- ------------- ------------- ----------- ------------- -------------
Total increase (decrease) in net
assets.............................. (2,518,134) 145,116,650 34,731,758 11,066,884 43,124,885 75,241,563
NET ASSETS
Beginning of Year.................... 6,106,514 210,437,463 96,613,531 37,653,565 64,302,281 101,547,479
----------- ------------- ------------- ----------- ------------- -------------
End of Year.......................... $ 3,588,380 $ 355,554,113 $ 131,345,289 $48,720,449 $ 107,427,166 $ 176,789,042
=========== ============= ============= =========== ============= =============

<CAPTION>
CALVERT
SOCIAL
PIC SMALL CALVERT
CAPITAL CAP SOCIAL
GROWTH GROWTH BALANCED
----------- --------- ----------
<S> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss)......... $ (259,780) $ (408) $ 20,562
Net realized gain on investments..... 4,664,486 12,270 50,002
Net unrealized appreciation
(depreciation) of investments during
the period.......................... 8,959,175 (12,845) (53,486)
----------- --------- ----------
Net increase (decrease) in net assets
resulting from operations........... 13,363,881 (983) 17,078
----------- --------- ----------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contract owners' net payments........ 23,501,411 107,775 954,698
Contract maintenance fees............ (19,980) 7 (21)
Surrenders........................... (1,542,873) (544) (9,883)
Death benefits....................... (290,376) 0 0
Transfer (to) from other
portfolios.......................... 9,204,993 30,424 89,019
----------- --------- ----------
Net increase in net assets resulting
from variable annuity contract
transactions........................ 30,853,175 137,662 1,033,813
----------- --------- ----------
Total increase (decrease) in net
assets.............................. 44,217,056 136,679 1,050,891
NET ASSETS
Beginning of Year.................... 30,194,125 0 0
----------- --------- ----------
End of Year.......................... $74,411,181 $ 136,679 $1,050,891
=========== ========= ==========
</TABLE>

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

F-12
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MFS
MFS GROWTH MFS OPPENHEIMER OPPENHEIMER
EMERGING MFS WITH TOTAL AGGRESSIVE OPPENHEIMER GROWTH AND
GROWTH RESEARCH INCOME RETURN GROWTH GROWTH INCOME
---------- ---------- ---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss)........ $ (11,765) $ (19,515) $ 2,643 $ (4,785) $ (7,974) $ (11,176) $ (495)
Net realized gain on investments.... 2,267 7 49,109 202 11 19 118
Net unrealized appreciation
(depreciation) of investments
during the period.................. 2,208 13,033 41,478 48,443 (56,978) (9,267) 109,900
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from operations... (7,290) (6,475) 93,230 43,860 (64,941) (20,424) 109,523
---------- ---------- ---------- ---------- ---------- ---------- ----------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contract owners' net payments....... 2,503,454 4,920,127 2,051,786 1,145,999 2,107,943 2,994,586 2,158,105
Contract maintenance fees........... 307 (56) 40 (55) (370) (22) (21)
Surrenders.......................... (8,914) (32,833) (7,709) (3,032) (19,335) (7,756) (13,263)
Death benefits...................... 0 0 (4,375) 0 0 (4,472) 0
Transfer (to) from other
portfolios......................... 833,299 1,405,019 538,305 560,504 590,156 646,632 677,768
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets resulting
from variable annuity contract
transactions....................... 3,328,146 6,292,257 2,578,047 1,703,416 2,678,394 3,628,968 2,822,589
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total increase (decrease) in net
assets............................. 3,320,856 6,285,782 2,671,277 1,747,276 2,613,453 3,608,544 2,932,112
NET ASSETS
Beginning of year................... 0 0 0 0 0 0 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
End of year......................... $3,320,856 $6,285,782 $2,671,277 $1,747,276 $2,613,453 $3,608,544 $2,932,112
========== ========== ========== ========== ========== ========== ==========

OPPENHEIMER
STRATEGIC
BOND TOTAL
------------ -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss)........ $ 63,983 $ 963,298
Net realized gain on investments.... 21 85,700,729
Net unrealized appreciation
(depreciation) of investments
during the period.................. (22,462) 53,710,238
---------- -------------
Net increase (decrease) in net
assets resulting from operations... 41,542 140,374,265
---------- -------------
FROM VARIABLE ANNUITY CONTRACT
TRANSACTIONS
Contract owners' net payments....... 1,948,790 206,024,514
Contract maintenance fees........... 429 (309,245)
Surrenders.......................... (13,822) (29,707,730)
Death benefits...................... 0 (4,985,284)
Transfer (to) from other
portfolios......................... 943,683 66,871,634
---------- -------------
Net increase in net assets resulting
from variable annuity contract
transactions....................... 2,879,080 237,893,889
---------- -------------
Total increase (decrease) in net
assets............................. 2,920,622 378,268,154
NET ASSETS
Beginning of year................... 0 546,854,958
---------- -------------
End of year......................... $2,920,622 $ 925,123,112
========== =============
</TABLE>

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

F-13
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

The Protective Variable Annuity Separate Account (Separate Account) was
established by Protective Life Insurance Company (Protective Life) under the
provisions of Tennessee law and commenced operations on March 14, 1994. The
Separate Account is an investment account to which net proceeds from individual
flexible premium deferred variable annuity contracts (the Contracts) are
allocated until maturity or termination of the Contracts.

Protective Life has structured the Separate Account into a unit investment
trust form registered with the U.S. Securities and Exchange Commission under the
Investment Company Act of 1940, as amended. The Separate Account is comprised of
seven proprietary sub-accounts and ten independent sub-accounts. The seven
proprietary sub-accounts are the Money Market, Growth and Income, International
Equity, Global Income, Small Cap Value, Core U.S. Equity, and Capital Growth
sub-accounts. Funds are transferred to Protective Investment Company (the Fund)
in exchange for shares of the corresponding portfolio of the Fund.

The ten independent sub-accounts are the Calvert Social Small Cap Growth,
Calvert Social Balanced, MFS Emerging Growth, MFS Research, MFS Growth with
Income, MFS Total Return, Oppenheimer Aggressive Growth, Oppenheimer Growth,
Oppenheimer Growth & Income, and Oppenheimer Strategic Bond sub-accounts. The
ten independent sub-accounts were added July 1, 1997, with sales beginning July
1, 1997. The Fund invests contract holder's funds in exchange for shares in the
independent funds. The Fund then holds the shares for the contract owners.

Gross premiums from the Contracts are allocated to the sub-accounts in
accordance with contract owner instructions and are recorded as variable annuity
contract transactions in the statement of changes in net assets. Such amounts
are used to provide money to pay contract values under the Contracts (Note 4).
The Separate Account's assets are the property of Protective Life.

Contract owners may allocate some or all of gross premiums or transfer some
or all of the contract value to the Guaranteed Account, which is part of
Protective Life's General Account. The assets of Protective Life's General
Account support its insurance and annuity obligations and are subject to
Protective Life's general liabilities from business operations. The Guaranteed
Account balance for the years ended December 31, 1998 and 1997 was $268,282,860
and $227,706,042, respectively.

Transfers to/from other portfolios, included in the statement of changes in
net assets, are transfers between the individual sub-accounts and the
sub-accounts and the Guaranteed Account.

2. SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATION: Investments are made in shares and are valued at the
net asset values of the respective portfolios. Transactions with the Funds are
recorded on the trade date. Dividend income is recorded on the ex-dividend date.

REALIZED GAINS AND LOSSES: Realized gains and losses on investments include
gains and losses on redemptions of the Fund's shares (determined on the
last-in-first-out (LIFO) basis) and capital gain distributions from the Fund.

DIVIDEND INCOME AND CAPITAL GAIN DISTRIBUTIONS: Dividend income and capital
gain distributions are recorded on the ex-dividend date. Distributions are from
net investment income and net realized gains recorded in the Investment Company
financials.

F-14
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make various
estimates that affect the reported amounts of assets and liabilities, at the
date of the financial statements, as well as the reported amounts of income and
expenses, during the reporting period. Actual results could differ from those
estimates.

FEDERAL INCOME TAXES: The operation of the Separate Account is included in
the federal income tax return of Protective Life. Under the provisions of the
Contracts, Protective Life has the right to charge the Separate Account for
federal income tax attributable to the Separate Account. No charge is currently
being made against the Separate Account for such tax.

RECLASSIFICATIONS: Certain reclassifications have been made in previously
reported financial statements and accompanying notes to make the prior year
amounts comparable to those of the current year. Such reclassifications had no
effect on previously reported net assets.

3. INVESTMENTS

At December 31, 1998, the investments by the respective sub-accounts were as
follows:

<TABLE>
<CAPTION>
SHARES COST MARKET VALUE
------------ ---------------- ----------------
<S> <C> <C> <C>
PIC Money Market............................................... 5,304,961 $ 5,304,961 $ 5,304,961
PIC Growth and Income.......................................... 27,458,284 373,386,033 386,296,900
PIC International Equity....................................... 12,131,396 143,492,563 173,532,636
PIC Global Income.............................................. 5,864,080 59,677,628 62,451,103
PIC Small Cap Value............................................ 11,436,929 117,079,682 99,008,326
PIC CORE US Equity............................................. 11,800,174 181,268,517 261,457,421
PIC Capital Growth............................................. 7,305,467 109,839,206 152,416,381
Calvert Social Small Cap Growth................................ 49,445 583,893 549,826
Calvert Social Balanced........................................ 2,877,861 6,085,066 6,149,990
MFS Emerging Growth............................................ 771,472 13,607,295 16,563,501
MFS Research................................................... 1,382,383 23,247,669 26,334,396
MFS Growth With Income......................................... 964,237 17,307,844 19,391,258
MFS Total Return............................................... 719,354 12,290,697 13,034,687
Oppenheimer Aggressive Growth.................................. 252,736 10,488,505 11,330,154
Oppenheimer Growth............................................. 436,935 14,274,948 16,022,393
Oppenheimer Growth and Income.................................. 981,040 19,636,990 20,092,152
Oppenheimer Strategic Bond..................................... 3,120,780 15,953,092 15,978,992
---------------- ----------------
$ 1,123,524,589 $ 1,285,915,077
================ ================
</TABLE>

F-15
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS (CONTINUED)
At December 31, 1997, the investments by the respective sub-accounts were as
follows:

<TABLE>
<CAPTION>
SHARES COST MARKET VALUE
------------ -------------- --------------
<S> <C> <C> <C>
PIC Money Market................................................... 3,571,053 $ 3,571,053 $ 3,571,053
PIC Growth and Income.............................................. 22,555,045 297,181,881 355,505,039
PIC International Equity........................................... 10,548,201 120,773,576 131,344,810
PIC Global Income.................................................. 4,807,861 48,410,709 48,720,463
PIC Small Cap Value................................................ 9,161,219 94,914,942 107,421,163
PIC CORE US Equity................................................. 9,603,792 135,912,917 176,791,623
PIC Capital Growth................................................. 4,703,701 61,781,865 74,411,193
Calvert Social Small Cap Growth.................................... 11,380 149,524 136,679
Calvert Social Balanced............................................ 530,139 1,104,222 1,050,736
MFS Emerging Growth................................................ 205,753 3,318,647 3,320,856
MFS Research....................................................... 398,086 6,272,749 6,285,782
MFS Growth With Income............................................. 162,486 2,629,799 2,671,278
MFS Total Return................................................... 105,068 1,698,832 1,747,276
Oppenheimer Aggressive Growth...................................... 63,805 2,670,431 2,613,453
Oppenheimer Growth................................................. 111,271 3,618,902 3,609,636
Oppenheimer Growth and Income...................................... 142,438 2,821,485 2,931,384
Oppenheimer Strategic Bond......................................... 573,292 2,957,717 2,935,255
-------------- --------------
$ 789,789,251 $ 925,067,679
============== ==============
</TABLE>

F-16
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS (CONTINUED)

During the year ended December 31, 1998, transactions in shares were as
follows:

<TABLE>
<CAPTION>
PIC
PIC GROWTH PIC PIC
MONEY AND INTERNATIONAL GLOBAL
MARKET INCOME EQUITY INCOME
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares purchased...................................... 11,715,106 3,331,957 1,290,753 971,363
Shares received from reinvestment of dividends........ 248,570 2,218,535 579,579 281,841
-------------- ------------- ------------- -------------
Total shares acquired................................. 11,963,676 5,550,492 1,870,332 1,253,204
Shares redeemed....................................... (10,229,768) (647,253) (287,137) (196,985)
-------------- ------------- ------------- -------------
Net increase in shares owned.......................... 1,733,908 4,903,239 1,583,195 1,056,219
Shares owned, beginning of the period................. 3,571,053 22,555,045 10,548,201 4,807,861
-------------- ------------- ------------- -------------
Shares owned, end of the period....................... 5,304,961 27,458,284 12,131,396 5,864,080
============== ============= ============= =============
Cost of shares acquired............................... $ 11,963,675 $ 86,017,562 $ 26,560,785 $ 13,373,841
============== ============= ============= =============
Cost of shares redeemed............................... $ (10,229,767) $ (9,813,410) $ (3,841,798) $ (2,106,922)
============== ============= ============= =============
</TABLE>

<TABLE>
<CAPTION>
CALVERT
PIC SOCIAL
SMALL PIC PIC SMALL CALVERT
CAP CORE US CAPITAL CAP SOCIAL
VALUE EQUITY GROWTH GROWTH BALANCED
------------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Shares Purchased......................... 1,225,909 2,111,671 2,491,965 39,534 2,236,805
Shares received from reinvestment of
dividends.............................. 1,466,219 189,588 155,774 665 209,275
------------- ------------- ------------- ---------- ------------
Total shares acquired.................... 2,692,128 2,301,259 2,647,739 40,199 2,446,080
Shares redeemed.......................... (416,418) (104,877) (45,973) (2,134) (98,358)
------------- ------------- ------------- ---------- ------------
Net increase in shares owned............. 2,275,710 2,196,382 2,601,766 38,065 2,347,722
Shares owned, beginning of the period.... 9,161,219 9,603,792 4,703,701 11,380 530,139
------------- ------------- ------------- ---------- ------------
Shares owned, end of the period.......... 11,436,929 11,800,174 7,305,467 49,445 2,877,861
============= ============= ============= ========== ============
Cost of shares acquired.................. $ 26,470,659 $ 47,416,639 $ 48,833,246 $ 458,138 $ 5,183,395
============= ============= ============= ========== ============
Cost of shares redeemed.................. $ (4,305,919) $ (2,061,039) $ (775,905) $ (23,769) $ (202,551)
============= ============= ============= ========== ============
</TABLE>

F-17
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS (CONTINUED)
During the year ended December 31, 1998, transactions in shares were as
follows (continued):

<TABLE>
<CAPTION>
MFS
MFS GROWTH MFS
EMERGING MFS WITH TOTAL
GROWTH RESEARCH INCOME RETURN
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares purchased.................................... 568,571 981,678 807,870 610,804
Shares received from reinvestment of dividends...... 2,945 14,624 0 7,874
------------- ------------- ------------- -------------
Total shares acquired............................... 571,516 996,302 807,870 618,678
Shares redeemed..................................... (5,797) (12,005) (6,119) (4,392)
------------- ------------- ------------- -------------
Net increase in shares owned........................ 565,719 984,297 801,751 614,286
Shares owned, beginning of the period............... 205,753 398,086 162,486 105,068
------------- ------------- ------------- -------------
Shares owned, end of the period..................... 771,472 1,382,383 964,237 719,354
============= ============= ============= =============
Cost of shares acquired............................. $ 10,389,644 $ 17,169,721 $ 14,790,927 $ 10,667,082
============= ============= ============= =============
Cost of shares redeemed............................. $ (100,996) $ (194,801) $ (112,882) $ (75,217)
============= ============= ============= =============
</TABLE>

<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER GROWTH OPPENHEIMER
AGGRESSIVE OPPENHEIMER AND STRATEGIC
GROWTH GROWTH INCOME BOND
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares purchased..................................... 191,902 319,277 835,284 2,654,705
Shares received from reinvestment of dividends....... 2,611 15,302 12,085 28,721
---------- ------------- ------------- -------------
Total shares acquired................................ 194,513 334,579 847,369 2,683,426
Shares redeemed...................................... (5,582) (8,915) (8,767) (135,938)
Net increase in shares owned......................... 188,931 325,664 838,602 2,547,488
---------- ------------- ------------- -------------
Shares owned, beginning of the period................ 63,805 111,271 142,438 573,292
Shares owned, end of the period...................... 252,736 436,935 981,040 3,120,780
========== ============= ============= =============
Cost of shares acquired.............................. $8,020,170 $ 10,947,912 $ 16,995,327 $ 13,679,843
========== ============= ============= =============
Cost of shares redeemed.............................. $ (202,096) $ (291,866) $ (179,822) $ (684,468)
========== ============= ============= =============
</TABLE>

F-18
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS (CONTINUED)
During the year ended December 31, 1997, transactions in shares were as
follows:

<TABLE>
<CAPTION>
PIC
PIC GROWTH PIC PIC
MONEY AND INTERNATIONAL GLOBAL
MARKET INCOME EQUITY INCOME
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares purchased......................................... 7,384,222 4,568,466 2,382,529 880,418
Shares received from reinvestment of dividends........... 216,131 3,243,711 771,149 452,653
-------------- -------------- ------------- -------------
Total shares acquired.................................... 7,600,353 7,812,177 3,153,678 1,333,071
Shares redeemed.......................................... (10,135,816) (94,476) (115,268) (225,101)
-------------- -------------- ------------- -------------
Net increase in shares owned............................. (2,535,463) 7,717,701 3,038,410 1,107,970
Shares owned, beginning of the period.................... 6,106,516 14,837,344 7,509,791 3,699,891
-------------- -------------- ------------- -------------
Shares owned, end of the period.......................... 3,571,053 22,555,045 10,548,201 4,807,861
============== ============== ============= =============
Cost of shares acquired.................................. $ 7,600,353 $ 127,303,311 $ 41,961,893 $ 13,885,758
============== ============== ============= =============
Cost of shares redeemed $ (10,135,816) $ (1,631,128) $ (1,593,224) $ (2,368,748)
============== ============== ============= =============
</TABLE>

<TABLE>
<CAPTION>
CALVERT
PIC SOCIAL
SMALL PIC PIC SMALL CALVERT
CAP CORE US CAPITAL CAP SOCIAL
VALUE EQUITY GROWTH GROWTH BALANCED
------------- ------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Shares purchased.................................. 1,889,641 2,256,497 1,994,733 10,417 496,705
Shares received from reinvestment of dividends.... 1,052,027 856,997 330,376 1,023 36,802
------------- ------------- ------------- ---------- ------------
Total shares acquired............................. 2,941,668 3,113,494 2,325,109 11,440 533,507
Shares redeemed................................... (196,875) (87,885) (8,939) (60) (3,368)
------------- ------------- ------------- ---------- ------------
Net increase in shares owned...................... 2,744,793 3,025,609 2,316,170 11,380 530,139
Shares owned, beginning of the period............. 6,416,426 6,578,183 2,387,531 0 0
------------- ------------- ------------- ---------- ------------
Shares owned, end of the period................... 9,161,219 9,603,792 4,703,701 11,380 530,139
============= ============= ============= ========== ============
Cost of shares acquired........................... $ 34,688,924 $ 56,301,000 $ 35,386,576 $ 150,314 $ 1,111,207
============= ============= ============= ========== ============
Cost of shares redeemed........................... $ (2,321,547) $ (1,660,892) $ (128,687) $ (790) $ (6,985)
============= ============= ============= ========== ============
</TABLE>

F-19
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. INVESTMENTS (CONTINUED)
During the year ended December 31, 1997, transactions in shares were as
follows (continued):

<TABLE>
<CAPTION>
MFS
MFS GROWTH MFS
EMERGING MFS WITH TOTAL
GROWTH RESEARCH INCOME RETURN
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares Purchased................................................ 212,328 398,087 160,174 107,942
Shares received from reinvestment of dividends.................. 0 0 3,695 0
------------ ------------ ------------ ------------
Total shares acquired........................................... 212,328 398,087 163,869 107,942
Shares redeemed................................................. (6,575) (1) (1,383) (2,874)
------------ ------------ ------------ ------------
Net increase in shares owned.................................... 205,753 398,086 162,486 105,068
Shares owned, beginning of the period........................... 0 0 0 0
------------ ------------ ------------ ------------
Shares owned, end of the period................................. 205,753 398,086 162,486 105,068
============ ============ ============ ============
Cost of shares acquired......................................... $ 3,422,009 $ 6,272,771 $ 2,652,475 $ 1,745,363
============ ============ ============ ============
Cost of shares redeemed......................................... $ (103,362) $ (22) $ (22,676) $ (46,531)
============ ============ ============ ============
</TABLE>

<TABLE>
<CAPTION>
OPPENHEIMER
OPPENHEIMER GROWTH OPPENHEIMER
AGGRESSIVE OPPENHEIMER AND STRATEGIC
GROWTH GROWTH INCOME BOND
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Shares purchased.............................................. 63,852 111,304 142,996 599,683
Shares received from reinvestment of dividends................ 0 0 405 14,325
---------- ---------- ---------- ----------
Total shares acquired......................................... 63,852 111,304 143,401 614,008
Shares redeemed............................................... (47) (33) (963) (40,716)
---------- ---------- ---------- ----------
Net increase in shares owned.................................. 63,805 111,271 142,438 573,292
Shares owned, beginning of the period......................... 0 0 0 0
---------- ---------- ---------- ----------
Shares owned, end of the period............................... 63,805 111,271 142,438 573,292
========== ========== ========== ==========
Cost of shares acquired....................................... $2,672,447 $3,619,878 $2,840,522 $3,167,524
========== ========== ========== ==========
Cost of shares redeemed....................................... $ (2,016) $ (976) $ (19,037) $ (209,807)
========== ========== ========== ==========
</TABLE>

4. RELATED PARTY TRANSACTIONS

Contract owners' net payments represent premiums received from policyholders
less certain deductions made by Protective Life in accordance with the contract
terms. These deductions include, where appropriate, tax, surrender, mortality
risk and expense and administrative charges. These deductions are made to the
individual contracts in accordance with the terms governing each contract as set
forth in the contract.

The net assets of each sub-account of the Separate Account reflect the
investment management fees and other operating expenses incurred by the Funds.

Protective Life offers a loan privilege to contract owners. Contract owners
may obtain loans using the Contract as the only security for the loan. Loans are
subject to provisions of The Internal Revenue

F-20
<PAGE>
THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. RELATED PARTY TRANSACTIONS (CONTINUED)
Code of 1986, as amended, and to applicable retirement program rules. Loans
outstanding approximated $423,000 and $395,000 at December 31, 1998 and 1997,
respectively.

5. SUBSEQUENT EVENTS

In November 1998, six additional sub-accounts were added to the Separate
Account. These sub-accounts are MFS New Discovery, MFS Utilities, Oppenheimer
Global Securities, Oppenheimer High Income, Van Eck Worldwide Hard Assets, and
Van Eck Worldwide Real Estate. Sales will begin in the sub-accounts in 1999.

Protective Life has also announced plans to liquidate the PIC Money Market
account and replace it with the Oppenheimer Money Fund in 1999.

In 1999, the Oppenheimer Growth Fund and the Oppenheimer Growth and Income
Fund names will be changed to Oppenheimer Capital Appreciation and Oppenheimer
Main Street Growth and Income, respectively.

F-21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Directors and Share Owner
Protective Life Insurance Company
Birmingham, Alabama

In our opinion, the consolidated financial statements of Protective Life
Insurance Company and Subsidiaries (the "Company") listed in the accompanying
index of this Form N-4 present fairly, in all material respects, the
consolidated financial position of the Company at December 31, 1998 and 1997,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedules listed in the index on page F-1 of this Form N-4
present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements. These
financial statements and financial statement schedules are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits. We
conducted our audits of these 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 provide a reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP

February 11, 1999
Birmingham, Alabama

F-22
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------
<S> <C> <C> <C>
1998 1997 1996
------------ ------------ ----------
REVENUES
Premiums and policy fees................................................ $ 1,027,340 $ 814,420 $ 770,224
Reinsurance ceded....................................................... (459,215) (334,214) (308,174)
------------ ------------ ----------
Net of reinsurance ceded.............................................. 568,125 480,206 462,050
Net investment income................................................... 603,795 557,488 498,781
Realized investment gains............................................... 2,136 1,824 5,510
Other income............................................................ 20,201 6,149 5,010
------------ ------------ ----------
1,194,257 1,045,667 971,351
------------ ------------ ----------
BENEFITS AND EXPENSES
Benefits and settlement expenses (net of reinsurance ceded:
1998-$330,494; 1997-$180,605; 1996-$215,424).......................... 730,496 658,872 626,893
Amortization of deferred policy acquisition costs....................... 111,188 107,175 91,001
Other operating expenses (net of reinsurance ceded: 1998-$166,375;
1997-$90,045; 1996-$81,839)........................................... 172,228 129,870 128,148
------------ ------------ ----------
1,013,912 895,917 846,042
------------ ------------ ----------
INCOME BEFORE INCOME TAX.................................................. 180,345 149,750 125,309
INCOME TAX EXPENSE (BENEFIT)
Current................................................................. 48,237 66,283 44,908
Deferred................................................................ 14,925 (13,981) (2,142)
------------ ------------ ----------
63,162 52,302 42,766
------------ ------------ ----------
NET INCOME................................................................ $ 117,183 $ 97,448 $ 82,543
============ ============ ==========
</TABLE>

See notes to consolidated financial statements.

F-23
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31
----------------------
<S> <C> <C>
1998 1997
---------- ----------
ASSETS
Investments:
Fixed maturities, at market (amortized cost: 1998-$6,307,274; 1997-$6,221,871)........ $6,400,262 $6,348,252
Equity securities, at market (cost: 1998-$15,151; 1997-$24,983)....................... 12,258 15,006
Mortgage loans on real estate......................................................... 1,623,603 1,313,478
Investment real estate, net of accumulated depreciation (1998-$782; 1997-$671)........ 14,868 13,469
Policy loans.......................................................................... 232,670 194,109
Other long-term investments........................................................... 70,078 54,704
Short-term investments................................................................ 159,655 54,337
---------- ----------
Total investments................................................................... 8,513,394 7,993,355
Cash.................................................................................... 39,197
Accrued investment income............................................................... 100,395 94,095
Accounts and premiums receivable, net of allowance for uncollectible amounts
(1998-$4,304; 1997-$5,292)............................................................ 31,265 42,255
Reinsurance receivables................................................................. 756,370 591,457
Deferred policy acquisition costs....................................................... 841,425 632,605
Property and equipment, net............................................................. 42,374 36,407
Other assets............................................................................ 34,632 14,445
Assets related to separate accounts
Variable Annuity...................................................................... 1,285,952 924,406
Variable Universal Life............................................................... 13,606 3,634
Other................................................................................. 3,482 3,425
---------- ----------
$11,622,895 $10,375,281
========== ==========
LIABILITIES
Policy liabilities and accruals:
Future policy benefits and claims..................................................... $4,140,003 $3,324,294
Unearned premiums..................................................................... 389,294 396,696
---------- ----------
4,529,297 3,720,990
Guaranteed investment contract deposits................................................. 2,691,697 2,684,676
Annuity deposits........................................................................ 1,519,820 1,511,553
Other policyholders' funds.............................................................. 219,356 183,324
Other liabilities....................................................................... 226,310 246,081
Accrued income taxes.................................................................... (10,992) 941
Deferred income taxes................................................................... 51,735 49,417
Note payable............................................................................ 2,363
Indebtedness to related parties......................................................... 20,898 28,055
Liabilities related to separate accounts
Variable Annuity...................................................................... 1,285,952 924,406
Variable Universal Life............................................................... 13,606 3,634
Other................................................................................. 3,482 3,425
---------- ----------
Total liabilities................................................................... 10,553,524 9,356,502
---------- ----------
COMMITMENTS AND CONTINGENT LIABILITIES -- NOTE G
SHARE-OWNER'S EQUITY
Preferred Stock, $1.00 par value, shares authorized and issued: 2,000, liquidation
preference $2,000..................................................................... 2 2
Common Stock, $1.00 par value........................................................... 5,000 5,000
Shares authorized and issued: 5,000,000
Additional paid-in capital.............................................................. 327,992 327,992
Note receivable from PLC Employee Stock Ownership Plan.................................. (5,199) (5,378)
Retained earnings....................................................................... 686,519 629,436
Accumulated other comprehensive income
Net unrealized gains on investments (net of income tax: 1998-$29,646; 1997-$33,238)... 55,057 61,727
---------- ----------
Total share-owner's equity.......................................................... 1,069,371 1,018,779
---------- ----------
$11,622,895 $10,375,281
========== ==========
</TABLE>

See notes to consolidated financial statements.

F-24
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF SHARE-OWNER'S EQUITY

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
NOTE
ADDITIONAL RECEIVABLE NET UNREALIZED TOTAL SHARE-
PREFERRED COMMON PAID-IN FROM PLC RETAINED GAINS (LOSSES) OWNER'S
STOCK STOCK CAPITAL ESOP EARNINGS ON INVESTMENTS EQUITY
------------ ------- ---------- ---------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995.............. $5,000 $144,494 $(5,765) $449,645 $ 57,863 $ 651,237
----------
Net income for 1996................... 82,543 82,543
Decrease in net unrealized gains on
investments (net of income tax:
$(25,627)).......................... (47,593) (47,593)
Reclassification adjustment for
amounts included in net income (net
of income tax: $(1,928))............ (3,582) (3,582)
----------
Comprehensive income for 1996......... 31,368
----------
Redemption feature of preferred stock
removed-Note I...................... $ 2 1,998 2,000
Preferred dividends ($50 per share)... (100) (100)
Capital contribution from PLC......... 91,500 91,500
Decrease in note receivable from PLC
ESOP................................ 186 186
---- ------- -------- ------- -------- --------- ----------
Balance, December 31, 1996.............. 2 5,000 237,992 (5,579) 532,088 6,688 776,191
----------
Net income for 1997................... 97,448 97,448
Increase in net unrealized gains on
investments (net of income tax-
$30,275)............................ 56,225 56,225
Reclassification adjustment for
amounts included in net income (net
of income tax: $(638)).............. (1,186) (1,186)
----------
Comprehensive income for 1997......... 152,487
----------
Preferred dividends ($50 per share)... (100) (100)
Capital contribution from PLC......... 90,000 90,000
Decrease in note receivable from PLC
ESOP................................ 201 201
---- ------- -------- ------- -------- --------- ----------
Balance, December 31, 1997.............. 2 5,000 327,992 (5,378) 629,436 61,727 1,018,779
----------
Net income for 1998................... 117,183 117,183
Decrease in net unrealized gains on
investments (net of income tax-
($2,844))........................... (5,281) (5,281)
Reclassification adjustment for
amounts included in net income (net
of income tax: $(747)).............. (1,389) (1,389)
----------
Comprehensive income for 1998......... 110,513
----------
Common dividends ($12 per share)...... (60,000) (60,000)
Preferred dividends ($50 per share)... (100) (100)
Decrease in note receivable from PLC
ESOP................................ 179 179
---- ------- -------- ------- -------- --------- ----------
Balance, December 31, 1998.............. $ 2 $5,000 $327,992 $(5,199) $686,519 $ 55,057 $1,069,371
==== ======= ======== ======= ======== ========= ==========
</TABLE>

See notes to consolidated financial statements.

F-25
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------
<S> <C> <C> <C>
1998 1997 1996
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................................. $ 117,183 $ 97,448 $ 82,543
Adjustments to reconcile net income to net cash provided by operating
activities:
Amortization of deferred policy acquisition costs........................ 111,188 107,175 91,001
Capitalization of deferred policy acquisition costs...................... (192,838) (135,211) (77,078)
Depreciation expense..................................................... 7,110 5,124 5,333
Deferred income taxes.................................................... 14,925 (17,918) (2,442)
Accrued income taxes..................................................... (11,933) (5,558) 893
Interest credited to universal life and investment products.............. 352,721 299,004 280,377
Policy fees assessed on universal life and investment products........... (139,689) (131,582) (116,401)
Change in accrued investment income and other receivables................ (159,362) (158,798) (70,987)
Change in policy liabilities and other policyholder funds of traditional
life and health products............................................... 322,464 279,522 133,621
Change in other liabilities.............................................. (19,771) 65,393 7,209
Other (net).............................................................. (22,634) (1,133) (4,281)
----------- ----------- -----------
Net cash provided by operating activities.................................... 379,364 403,466 329,788
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities and principal reduction of investments:
Investments available for sale........................................... 10,445,407 6,462,663 1,327,323
Other.................................................................... 198,559 324,242 168,898
Sale of investments:
Investment available for sale............................................ 1,080,265 1,108,058 1,569,119
Other.................................................................... 155,906 695,270 568,218
Cost of investments acquired:
Investments available for sale........................................... (11,507,234) (8,428,804) (3,798,631)
Other.................................................................... (662,350) (718,335) (400,322)
Acquisitions and bulk reinsurance assumptions.............................. (169,124) 264,126
Purchase of property and equipment......................................... (13,077) (6,087) (6,899)
Sale of property and equipment............................................. 2,681 288
----------- ----------- -----------
Net cash used in investing activities........................................ (302,524) (729,436) (307,880)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under line of credit arrangements and long-term
debt..................................................................... 1,975,800 1,159,538 941,438
Capital contribution from PLC.............................................. 90,000 91,500
Principal payments on line of credit arrangements and long-term debt....... (1,973,437) (1,159,538) (941,438)
Principal payment on surplus note to PLC................................... (2,000) (4,693) (10,000)
Dividends to share-owner................................................... (60,100) (100) (100)
Investment product deposits and change in universal life deposits.......... 981,124 910,659 949,122
Investment product withdrawals............................................. (1,037,424) (745,083) (944,244)
----------- ----------- -----------
Net cash provided by (used in) financing activities.......................... (116,037) 250,783 86,278
----------- ----------- -----------
INCREASE (DECREASE) IN CASH.................................................. (39,197) (75,187) 108,186
CASH AT BEGINNING OF YEAR.................................................... 39,197 114,384 6,198
----------- ----------- -----------
CASH AT END OF YEAR.......................................................... $ 0 $ 39,197 $ 114,384
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year:
Interest on debt......................................................... $ 8,338 $ 4,343 $ 4,633
Income taxes............................................................. $ 57,429 $ 70,133 $ 43,478
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Reduction of principal on note from ESOP................................... $ 179 $ 201 $ 186
Acquisitions and bulk reinsurance assumptions
Assets acquired.......................................................... $ 247,894 $ 1,114,832 $ 296,935
Liabilities assumed...................................................... (380,405) (902,267) (364,862)
----------- ----------- -----------
Net...................................................................... $ (132,511) $ 212,565 $ (67,927)
=========== =========== ===========
</TABLE>

See notes to consolidated financial statements.

F-26
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements of Protective Life
Insurance Company and subsidiaries ("Protective") are prepared on the basis of
generally accepted accounting principles. Such accounting principles differ from
statutory reporting practices used by insurance companies in reporting to state
regulatory authorities. (See also Note B.)

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make various estimates
that affect the reported amounts of assets and liabilities, disclosures of
contingent assets and liabilities, as well as the reported amounts of revenues
and expenses.

ENTITIES INCLUDED

The consolidated financial statements include the accounts, after
intercompany eliminations, of Protective Life Insurance Company and its
wholly-owned subsidiaries. Protective is a wholly-owned subsidiary of Protective
Life Corporation ("PLC"), an insurance holding company.

NATURE OF OPERATIONS

Protective provides financial services through the production, distribution,
and administration of insurance and investment products. Protective markets
individual life insurance, dental insurance and managed care services, credit
life and disability insurance, guaranteed investment contracts, guaranteed
funding agreements, and fixed and variable annuities throughout the United
States. Protective also maintains a separate division devoted exclusively to the
acquisition of insurance policies from other companies.

The operating results of companies in the insurance industry have
historically been subject to significant fluctuations due to competition,
economic conditions, interest rates, investment performance, maintenance of
insurance ratings, and other factors.

RECENTLY ISSUED ACCOUNTING STANDARDS

In 1997 Protective adopted Statement of Financial Accounting Standards
("SFAS") No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities;" SFAS No. 130, "Reporting Comprehensive
Income;" and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information."

In 1998 PLC adopted SFAS No. 132, "Employers' Disclosures About Pensions and
Other Postretirement Benefits."

The adoption of these accounting standards did not have a material effect on
PLC's or Protective's financial statements.

INVESTMENTS

Protective has classified all of its investments in fixed maturities, equity
securities, and short-term investments as "available for sale."

F-27
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investments are reported on the following bases less allowances for
uncollectible amounts on investments, if applicable:

- Fixed maturities (bonds, bank loan participations, and redeemable
preferred stocks) -- at current market value.

- Equity securities (common and nonredeemable preferred stocks) -- at
current market value.

- Mortgage loans on real estate -- at unpaid balances, adjusted for loan
origination costs, net of fees, and amortization of premium or discount.

- Investment real estate -- at cost, less allowances for depreciation
computed on the straight-line method. With respect to real estate acquired
through foreclosure, cost is the lesser of the loan balance plus
foreclosure costs or appraised value.

- Policy loans -- at unpaid balances.

- Other long-term investments -- at a variety of methods similar to those
listed above, as deemed appropriate for the specific investment.

- Short-term investments -- at cost, which approximates current market
value.

Substantially all short-term investments have maturities of three months or
less at the time of acquisition and include approximately $0.9 million in bank
deposits voluntarily restricted as to withdrawal.

As prescribed by SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," certain investments are recorded at their market values
with the resulting unrealized gains and losses reduced by a related adjustment
to deferred policy acquisition costs, net of income tax reported as a component
of share-owner's equity. The market values of fixed maturities increase or
decrease as interest rates fall or rise. Therefore, although the adoption of
SFAS No. 115 does not affect Protective's operations, its reported share-owner's
equity will fluctuate significantly as interest rates change.

Protective's balance sheets at December 31, prepared on the basis of
reporting investments at amortized cost rather than at market values, are as
follows:

<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Total investments.............................................. $ 8,412,167 $ 7,876,952
Deferred policy acquisition costs ............................. 857,949 654,043
All other assets............................................... 2,268,076 1,749,321
------------- -------------
$ 11,538,192 $ 10,280,316
============= =============
Deferred income taxes.......................................... $ 22,089 $ 16,179
All other liabilities.......................................... 10,501,789 9,307,085
------------- -------------
10,523,878 9,323,264
Share-owner's equity........................................... 1,014,314 957,052
------------- -------------
$ 11,538,192 $ 10,280,316
============= =============
</TABLE>

Realized gains and losses on sales of investments are recognized in net
income using the specific identification basis.

F-28
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DERIVATIVE FINANCIAL INSTRUMENTS

Protective does not use derivative financial instruments for trading
purposes. Combinations of swaps, futures contracts and options on treasury notes
are currently being used as hedges for asset/liability management of certain
investments, primarily mortgage loans on real estate, mortgage-backed
securities, and liabilities arising from interest-sensitive products such as
guaranteed investment contracts and individual annuities. Realized investment
gains and losses on such contracts are deferred and amortized over the life of
the hedged asset. No realized investment gains or losses were deferred in 1998.
Net realized gains of $1.5 million were deferred in 1997. At December 31, 1998
and 1997, options and open futures contracts with notional amounts of $975.0
million and $925.0 million, respectively, had net unrealized losses of $0.5
million and $0.4 million respectively.

Protective uses interest rate swap contracts to convert certain investments
and liabilities from a variable to a fixed rate of interest and from a fixed
rate to variable rate of interest. At December 31, 1998, related open interest
rate swap contracts with a notional amount of $55.3 million were in a
$0.2 million net unrealized loss position. At December 31, 1997, related open
interest rate swap contracts with a notional amount of $95.3 million were in a
$0.1 million net unrealized loss position.

CASH

Cash includes all demand deposits reduced by the amount of outstanding
checks and drafts.

PROPERTY AND EQUIPMENT

Property and equipment are reported at cost. Protective primarily uses the
straight-line method of depreciation based upon the estimated useful lives of
the assets. Major repairs or improvements are capitalized and depreciated over
the estimated useful lives of the assets. Other repairs are expensed as
incurred. The cost and related accumulated depreciation of property and
equipment sold or retired are removed from the accounts, and resulting gains or
losses are included in income.

Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Home office building.................................................... $ 37,959 $ 37,459
Other, principally furniture and equipment.............................. 58,958 46,937
--------- ---------
96,917 84,396
Accumulated depreciation................................................ 54,543 47,989
--------- ---------
$ 42,374 $ 36,407
========= =========
</TABLE>

SEPARATE ACCOUNTS

Protective operates separate accounts, some in which Protective bears the
investment risk and others in which the investments risk rests with the contract
holder. The assets and liabilities related to separate accounts in which
Protective does not bear the investment risk are valued at market and reported
separately as assets and liabilities related to separate accounts in the
accompanying consolidated financial statements.

F-29
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUES AND BENEFITS EXPENSE

- Traditional Life and Health Insurance Products -- Traditional life
insurance products consist principally of those products with fixed and
guaranteed premiums and benefits and include whole life insurance
policies, term and term-like life insurance policies, limited-payment life
insurance policies, and certain annuities with life contingencies. Life
insurance and immediate annuity premiums are recognized as revenue when
due. Health insurance premiums are recognized as revenue over the terms of
the policies. Benefits and expenses are associated with earned premiums so
that profits are recognized over the life of the contracts. This is
accomplished by means of the provision for liabilities for future policy
benefits and the amortization of deferred policy acquisition costs.

Liabilities for future policy benefits on traditional life insurance
products have been computed using a net level method including assumptions
as to investment yields, mortality, persistency, and other assumptions
based on Protective's experience modified as necessary to reflect
anticipated trends and to include provisions for possible adverse
deviation. Reserve investment yield assumptions are graded and range from
2.5% to 7.0%. The liability for future policy benefits and claims on
traditional life and health insurance products includes estimated unpaid
claims that have been reported to Protective and claims incurred but not
yet reported. Policy claims are charged to expense in the period that the
claims are incurred.

Activity in the liability for unpaid claims is summarized as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Balance beginning of year................................ $ 106,121 $ 108,159 $ 73,642
Less reinsurance....................................... 18,673 6,423 3,330
---------- ---------- ----------
Net balance beginning of year............................ 87,448 101,736 70,312
---------- ---------- ----------
Incurred related to:
Current year............................................. 288,015 258,322 275,524
Prior year............................................... (10,198) (14,540) (2,417)
---------- ---------- ----------
Total incurred......................................... 277,817 243,782 273,107
---------- ---------- ----------
Paid related to:
Current year............................................. 236,001 203,381 197,163
Prior year............................................... 58,951 58,104 57,812
---------- ---------- ----------
Total paid............................................. 294,952 261,485 254,975
---------- ---------- ----------
Other changes:
Acquisitions and reserve transfers..................... 0 3,415 13,292
---------- ---------- ----------
Net balance end of year.................................. 70,313 87,448 101,736
Plus reinsurance....................................... 20,019 18,673 6,423
---------- ---------- ----------
Balance end of year...................................... $ 90,332 $ 106,121 $ 108,159
========== ========== ==========
</TABLE>

- Universal Life and Investment Products -- Universal life and investment
products include universal life insurance, guaranteed investment
contracts, deferred annuities, and annuities without life contingencies.
Revenues for universal life and investment products consist of policy fees
that have

F-30
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
been assessed against policy account balances for the costs of insurance,
policy administration, and surrenders. That is, universal life and
investment product deposits are not considered revenues in accordance with
generally accepted accounting principles. Benefit reserves for universal
life and investment products represent policy account balances before
applicable surrender charges plus certain deferred policy initiation fees
that are recognized in income over the term of the policies. Policy
benefits and claims that are charged to expense include benefit claims
incurred in the period in excess of related policy account balances and
interest credited to policy account balances. Interest credit rates for
universal life and investment products ranged from 3.4% to 9.4% in 1998.

Protective's accounting policies with respect to variable universal life
and variable annuities are identical except that policy account balances
(excluding account balances that earn a fixed rate) are valued at market
and reported as components of assets and liabilities related to separate
accounts.

DEFERRED POLICY ACQUISITION COSTS

Commissions and other costs of acquiring traditional life and health
insurance, universal life insurance, and investment products that vary with and
are primarily related to the production of new business have been deferred.
Traditional life and health insurance acquisition costs are amortized over the
premium-payment period of the related policies in proportion to the ratio of
annual premium income to total anticipated premium income. Acquisition costs for
universal life and investment products are being amortized over the lives of the
policies in relation to the present value of estimated gross profits before
amortization. Under SFAS No. 97, "Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized Gains and
Losses from the Sale of Investments," Protective makes certain assumptions
regarding the mortality, persistency, expenses, and interest rates it expects to
experience in future periods. These assumptions are to be best estimates and are
to be periodically updated whenever actual experience and/or expectations for
the future change from that assumed. Additionally, relating to SFAS No. 115,
these costs have been adjusted by an amount equal to the amortization that would
have been recorded if unrealized gains or losses on investments associated with
Protective's universal life and investment products had been realized.

The cost to acquire blocks of insurance representing the present value of
future profits from such blocks of insurance is also included in deferred policy
acquisition costs. Protective amortizes the present value of future profits over
the premium payment period including accrued interest of up to approximately 8%.
The unamortized present value of future profits for all acquisitions was
approximately $370.3 million and $274.9 million at December 31, 1998 and 1997,
respectively. During 1998 $132.5 million of present value of future profits on
acquisitions made during the year was capitalized and $37.1 million was
amortized. During 1997 $136.2 million of present value of future profits on
acquisitions made during the year was capitalized, and $28.9 million was
amortized.

INCOME TAXES

Protective uses the asset and liability method of accounting for income
taxes. Income tax provisions are generally based on income reported for
financial statement purposes. Deferred federal income taxes arise from the
recognition of temporary differences between the bases of assets and liabilities
determined for financial reporting purposes and the bases determined for income
tax purposes. Such temporary differences are principally related to the deferral
of policy acquisition costs and the provision for future policy benefits and
expenses.

F-31
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS

Certain reclassifications have been made in the previously reported
financial statements and accompanying notes to make the prior year amounts
comparable to those of the current year. Such reclassifications had no effect on
net income, total assets, or share-owner's equity.

NOTE B -- RECONCILIATION WITH STATUTORY REPORTING PRACTICES

Financial statements prepared in conformity with generally accepted
accounting principals ("GAAP") differ in some respects from the statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. The most significant differences are: (a) acquisition costs of
obtaining new business are deferred and amortized over the approximate life of
the policies rather than charged to operations as incurred, (b) benefit
liabilities are computed using a net level method and are based on realistic
estimates of expected mortality, interest, and withdrawals as adjusted to
provide for possible unfavorable deviation from such assumptions, (c) deferred
income taxes are provided for temporary differences between financial and
taxable earnings, (d) the Asset Valuation Reserve and Interest Maintenance
Reserve are restored to stock-owner's equity, (e) furniture and equipment,
agents' debit balances, and prepaid expenses are reported as assets rather than
being charged directly to surplus (referred to as nonadmitted items),
(f) certain items of interest income, principally accrual of mortgage and bond
discounts are amortized differently, and (g) bonds are stated at market instead
of amortized cost.

The reconciliations of net income and share-owner's equity prepared in
conformity with statutory reporting practices to that reported in the
accompanying consolidated financial statements are as follows:

<TABLE>
<CAPTION>
NET INCOME SHARE-OWNER'S EQUITY
---------------------------------- ---------------------------------------
1998 1997 1996 1998 1997 1996
---------- ---------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
In conformity with statutory
reporting practices: (1)................... $ 147,077 $ 134,417 $ 102,337 $ 531,956 $ 579,111 $ 456,320
Additions (deductions) by
adjustment:
Deferred policy acquisition
costs, net of amortization............... 68,155 10,310 (2,830) 841,425 632,605 488,201
Deferred income tax........................ (14,925) 13,981 2,142 (51,735) (49,417) (37,722)
Asset Valuation Reserve.................... 66,922 67,369 64,233
Interest Maintenance Reserve............... (1,355) (1,434) (2,142) 15,507 9,809 17,682
Nonadmitted items.......................... 42,835 30,500 21,610
Other timing and valuation adjustments..... (76,214) (54,494) (11,210) (282,480) (215,448) (197,227)
Noninsurance affiliates.................... 18,171 17,530 11,104 (4) 4
Consolidation elimination.................. (23,726) (22,862) (16,858) (95,059) (35,746) (36,910)
---------- ---------- ---------- ------------ ------------ -----------
In conformity with generally
accepted accounting principles............. $ 117,183 $ 97,448 $ 82,543 $ 1,069,371 $ 1,018,779 $ 776,191
========== ========== ========== ============ ============ ===========
</TABLE>

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

(1) Consolidated

F-32
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE C -- INVESTMENT OPERATIONS

Major categories of net investment income for the years ended December 31
are summarized as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Fixed maturities......................................... $ 463,416 $ 396,255 $ 310,353
Equity securities........................................ 905 1,186 2,124
Mortgage loans on real estate............................ 158,461 161,604 153,463
Investment real estate................................... 1,224 2,004 1,875
Policy loans............................................. 12,346 11,370 10,378
Other, principally short-term investments................ 16,536 21,876 51,637
---------- ---------- ----------
652,888 594,295 529,830
Investment expenses...................................... 49,093 36,807 31,049
---------- ---------- ----------
$ 603,795 $ 557,488 $ 498,781
========== ========== ==========
</TABLE>

Realized investment gains (losses) for the years ended December 31 are
summarized as follows:

<TABLE>
<S> <C> <C> <C>
Fixed maturities................................. $ 4,374 $ (8,355) $ (7,101)
Equity securities................................ (4,465) 5,975 1,733
Mortgage loans and other investments............. 2,227 4,204 10,878
--------- --------- ---------
$ 2,136 $ 1,824 $ 5,510
========= ========= =========
</TABLE>

Protective recognizes permanent impairments through changes to an allowance
for uncollectible amounts on investments. The allowance totaled $24.1 million at
December 31, 1998 and $23.0 million at December 31, 1997. Additions and
reductions to the allowance are included in realized investment gains (losses).
Without such additions/reductions, Protective had net realized investment gains
of $3.2 million in 1998, net realized investment losses of $6.1 million in 1997,
and net realized investment gains of $3.7 million in 1996.

In 1998, gross gains on the sale of investments available for sale (fixed
maturities, equity securities and short-term investments) were $32.3 million and
gross losses were $32.5 million. In 1997, gross gains were $21.3 million and
gross losses were $23.5 million. In 1996, gross gains were $6.9 million and
gross losses were $11.8 million.

F-33
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE C -- INVESTMENT OPERATIONS (CONTINUED)
The amortized cost and estimated market values of Protective's investments
classified as available for sale at December 31 are as follows:

<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
1998 COST GAINS LOSSES VALUES
- ------------------------------------------------------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Fixed maturities:
Bonds:
Mortgage-backed.......................................... $ 2,581,561 $ 41,626 $ 33,939 $ 2,589,248
United States Government and authorities................. 72,697 2,812 75,509
States, municipalities, and political subdivisions....... 29,521 1,131 30,652
Public utilities......................................... 533,082 15,066 548,148
Convertibles and bonds with warrants..................... 694 179 515
All other corporate bonds................................ 3,083,782 98,992 32,629 3,150,145
Redeemable preferred stocks................................ 5,937 108 6,045
------------ --------- --------- ------------
6,307,274 159,735 66,747 6,400,262
Equity securities............................................ 15,151 456 3,349 12,258
Short-term investments....................................... 159,655 159,655
------------ --------- --------- ------------
$ 6,482,080 $ 160,191 $ 70,096 $ 6,572,175
============ ========= ========= ============
</TABLE>

<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
1997 COST GAINS LOSSES VALUES
- ------------------------------------------------------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Fixed maturities:
Bonds:
Mortgage-backed.......................................... $ 2,982,266 $ 54,103 $ 16,577 $ 3,019,792
United States Government and authorities................. 160,484 1,366 0 161,850
States, municipalities, and political subdivisions....... 31,621 532 0 32,153
Public utilities......................................... 481,679 7,241 0 488,920
Convertibles and bonds with warrants..................... 694 0 168 526
All other corporate bonds................................ 2,559,186 80,903 1,019 2,639,070
Redeemable preferred stocks................................ 5,941 0 0 5,941
------------ --------- --------- ------------
6,221,871 144,145 17,764 6,348,252
Equity securities............................................ 24,983 300 10,277 15,006
Short-term investments....................................... 54,337 0 0 54,337
------------ --------- --------- ------------
$ 6,301,190 $ 144,445 $ 28,041 $ 6,417,595
============ ========= ========= ============
</TABLE>

F-34
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE C -- INVESTMENT OPERATIONS (CONTINUED)

The amortized cost and estimated market values of fixed maturities at
December 31, by expected maturity, are shown below. Expected maturities are
derived from rates of prepayment that may differ from actual rates of
prepayment.

<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED MARKET
1998 COST VALUES
- ------------------------------------------------------------------ ------------ ------------
<S> <C> <C>
Due in one year or less........................................... $ 705,859 $ 709,686
Due after one year through five years............................. 3,255,973 3,325,078
Due after five years through ten years............................ 1,655,055 1,690,581
Due after ten years............................................... 690,387 674,917
------------ ------------
$ 6,307,274 $ 6,400,262
============ ============
</TABLE>

<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED MARKET
1997 COST VALUES
- ------------------------------------------------------------------ ------------ ------------
<S> <C> <C>
Due in one year or less........................................... $ 456,248 $ 460,994
Due after one year through five years............................. 2,774,769 2,815,553
Due after five years through ten years............................ 2,377,989 2,440,193
Due after ten years............................................... 612,865 631,512
------------ ------------
$ 6,221,871 $ 6,348,252
============ ============
</TABLE>

The approximate percentage distribution of Protective's fixed maturity
investments by quality rating at December 31 is as follows:

<TABLE>
<CAPTION>
RATING 1998 1997
- --------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
AAA........................................................................ 34.3% 41.1%
AA......................................................................... 6.2 4.8
A.......................................................................... 29.4 29.1
BBB........................................................................ 26.5 21.9
BB or less................................................................. 3.5 3.0
Redeemable preferred stocks................................................ 0.1 0.1
--------- ---------
100.0% 100.0%
========= =========
</TABLE>

At December 31, 1998 and 1997, Protective had bonds which were rated less than
investment grade of $222.9 million and $195.2 million, respectively, having an
amortized cost of $252.0 million and $193.6 million, respectively. At December
31, 1998, approximately $83.5 million of the bonds rates less than investment
grade were securities issued in company-sponsored commercial mortgage loan
securitizations. Approximately $817.9 million of bonds are not publicly traded.

F-35
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE C -- INVESTMENT OPERATIONS (CONTINUED)
The change in unrealized gains (losses), net of income tax on fixed maturity
and equity securities for the years ended December 31 is summarized as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- --------- ----------
<S> <C> <C> <C>
Fixed maturities........................................... $ (21,705) $ 72,741 $ (56,898)
Equity securities.......................................... $ 4,605 $ (8,813) $ 207
</TABLE>

At December 31, 1998, all of Protective's mortgage loans were commercial
loans of which 75% were retail, 10% were apartments, 8% were warehouses, and 6%
were office buildings. Protective specializes in making mortgage loans on either
credit-oriented or credit-anchored commercial properties, most of which are
strip shopping centers in smaller towns and cities. No single tenant's leased
space represents more than 5% of mortgage loans. Approximately 82% of the
mortgage loans are on properties located in the following states listed in
decreasing order of significance: Georgia, Florida, Texas, North Carolina,
Tennessee, Virginia, Alabama, South Carolina, Kentucky, Ohio, Maryland,
California, Mississippi, and Washington.

Many of the mortgage loans have call provisions after three to ten years.
Assuming the loans are called at their next call dates, approximately $48.1
million would become due in 1999, $348.9 million in 2000 to 2003, and $209.1
million in 2004 to 2008.

At December 31, 1998, the average mortgage loan was approximately
$2.0 million, and the weighted average interest rate was 8.3%. The largest
single mortgage loan was $12.8 million.

At December 31, 1998 and 1997, Protective's problem mortgage loans and
foreclosed properties totaled $11.7 million and $17.7 million, respectively.
Since Protective's mortgage loans are collateralized by real estate, any
assessment of impairment is based upon the estimated fair value of the real
estate. Based on Protective's evaluation of its mortgage loan portfolio,
Protective does not expect any material losses on its mortgage loans.

Certain investments, principally real estate, with a carrying value of $10.6
million were nonincome producing for the twelve months ended December 31, 1998.

Policy loan interest rates generally range from 4.5% to 8.0%.

NOTE D -- FEDERAL INCOME TAXES

Protective's effective income tax rate varied from the maximum federal
income tax rate as follows:

<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Statutory federal income tax rate applied to pretax
income.................................................... 35.0% 35.0% 35.0%
Dividends received deduction and tax-exempt interest........ (0.1) (0.2) (0.4)
Low-income housing credit................................... (0.5) (0.6) (0.6)
Tax benefits arising from prior acquisitions and other
adjustments............................................... 0.1 0.7 0.1
State income taxes.......................................... 0.5
----- ----- -----
Effective income tax rate................................... 35.0% 34.9% 34.1%
===== ===== =====
</TABLE>

F-36
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE D -- FEDERAL INCOME TAXES (CONTINUED)
The provision for federal income tax differs from amounts currently payable
due to certain items reported for financial statement purposes in periods which
differ from those in which they are reported for income tax purposes.

Details of the deferred income tax provision for the years ended
December 31 are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Deferred policy acquisition costs................................... $ 60,746 $ 7,054 $ 15,542
Benefit and other policy liability changes.......................... (41,268) (23,564) (16,321)
Temporary differences of investment income.......................... (3,491) 2,516 (1,163)
Other items......................................................... (1,062) 13 (200)
---------- ---------- ----------
$ 14,925 $ (13,981) $ (2,142)
========== ========== ==========
</TABLE>

The components of Protective's net deferred income tax liability as of
December 31 were as follows:

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Deferred income tax assets:
Policy and policyholder liability reserves.................................... $ 190,328 $ 138,701
Other......................................................................... 2,091 1,029
---------- ----------
192,419 139,730
---------- ----------
Deferred income tax liabilities:
Deferred policy acquisition costs............................................. 211,641 150,895
Unrealized gain on investments................................................ 32,513 38,252
---------- ----------
244,154 189,147
---------- ----------
Net deferred income tax liability............................................. $ 51,735 $ 49,417
========== ==========
</TABLE>

Under pre-1984 life insurance company income tax laws, a portion of
Protective's gain from operations which was not subject to current income
taxation was accumulated for income tax purposes in a memorandum account
designated as Policyholders' Surplus. The aggregate accumulation in this account
at December 31, 1998 was approximately $70.5 million. Should the accumulation in
the Policyholders' Surplus account exceed certain stated maximums, or should
distributions including cash dividends be made to PLC in excess of approximately
$769 million, such excess would be subject to federal income taxes at rates then
effective. Deferred income taxes have not been provided on amounts designated as
Policyholders' Surplus. Under current income tax laws, Protective does not
anticipate involuntarily paying income tax on amounts in the Policyholders'
Surplus accounts.

Protective's income tax returns are included in the consolidated income tax
returns of PLC. The allocation of income tax liabilities among affiliates is
based upon separate income tax return calculations.

NOTE E -- DEBT

At December 31, 1998, PLC had borrowed $18.5 million at a rate of 5.8%. PLC
had also borrowed $30.0 million at a rate of 5.4% under a term note that
contains, among other provisions, requirements for

F-37
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE E -- DEBT (CONTINUED)
maintaining certain financial ratios, and restrictions on indebtedness incurred
by PLC's subsidiaries including Protective. Additionally, PLC, on a consolidated
basis, cannot incur debt in excess of 50% of its total capital.

Protective has arranged sources of credit to temporarily fund scheduled
investment commitments. Protective expects that the rate received on its
investments will equal or exceed its borrowing rate. Protective had no such
temporary borrowings outstanding at December 31, 1998 and 1997. Also, Protective
has a mortgage note on investment real estate amounting to approximately $2.4
million that matures in 2003.

Included in indebtedness to related parties is a surplus debenture issued by
Protective to PLC. At December 31, 1998, the balance of the surplus debenture
was $18.0 million. The debenture matures in 2003.

Indebtedness to related parties also consists of payables to affiliates
under control of PLC in the amount of $2.9 million at December 31, 1998.
Protective routinely receives from or pays to affiliates under the control of
PLC reimbursements for expenses incurred on one another's behalf. Receivables
and payables among affiliates are generally settled monthly.

Interest expense on borrowed money totaled $8.3 million, $4.3 million, and
$4.6 million, in 1998, 1997, and 1996, respectively.

NOTE F -- RECENT ACQUISITIONS

In June 1997, Protective acquired West Coast Life Insurance Company ("West
Coast"). In September 1997, Protective acquired the Western Diversified Group.
In October 1997, Protective coinsured a block of credit policies.

In October 1998 Protective coinsured a block of life insurance policies from
Lincoln National Corporation. The policies represent the payroll deduction
business originally marketed and underwritten by Aetna.

These transactions have been accounted for as purchases, and the results of
the transactions have been included in the accompanying financial statements
since the effective dates of the agreements.

NOTE G -- COMMITMENTS AND CONTINGENT LIABILITIES

Under insurance guaranty fund laws, in most states, insurance companies
doing business therein can be assessed up to prescribed limits for policyholder
losses incurred by insolvent companies. Protective does not believe such
assessments will be materially different from amounts already provided for in
the financial statements. Most of these laws do provide, however, that an
assessment may be excused or deferred if it would threaten an insurer's own
financial strength.

A number of civil jury verdicts have been returned against insurers in the
jurisdictions in which Protective does business involving the insurers' sales
practices, alleged agent misconduct, failure to properly supervise agents, and
other matters. Increasingly these lawsuits have resulted in the award of
substantial judgments against the insurer that are disproportionate to the
actual damages, including material amounts of punitive damages. In addition, in
some class action and other lawsuits involving

F-38
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE G -- COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
insurers' sales practices, insurers have made material settlement payments. In
some states (including Alabama), juries have substantial discretion in awarding
punitive damages which creates the potential for unpredictable material adverse
judgments in any given punitive damage suit. Protective and its subsidiaries,
like other insurers, in the ordinary course of business, are involved in such
litigation or alternatively in arbitration. Although the outcome of any
litigation or arbitration cannot be predicted with certainty, Protective
believes that at the present time there are no pending or threatened lawsuits
that are reasonably likely to have a material adverse effect on the financial
position, results of operations, or liquidity of Protective.

NOTE H -- SHARE-OWNER'S EQUITY AND RESTRICTIONS

At December 31, 1998, approximately $608.6 million of consolidated
share-owner's equity excluding net unrealized gains and losses represented net
assets of Protective that cannot be transferred in the form of dividends, loans,
or advances to PLC. In general, dividends up to specified levels are considered
ordinary and may be paid thirty days after written notice to the insurance
commissioner of the state of domicile unless such commissioner objects to the
dividend prior to the expiration of such period. Dividends in larger amounts are
considered extraordinary and are subject to affirmative prior approval by such
commissioner. The maximum amount that would qualify as ordinary dividends to PLC
by Protective in 1999 is estimated to be $138.9 million. Dividends of $60.0
million were paid to PLC in 1998.

NOTE I -- PREFERRED STOCK

PLC owns all of the 2,000 shares of preferred stock issued by Protective's
subsidiary, Protective Life and Annuity Insurance Company ("PL&A"). During 1996,
PL&A's articles of incorporation were amended such that the preferred stock is
redeemable solely at the discretion of PL&A. Prior to November 1998, the stock
paid, when and if declared, annual minimum cumulative dividends of $50 per
share, and noncumulative participating dividends to the extent PL&A's statutory
earnings for the immediately preceding fiscal year exceeded $1 million.
Dividends of $0.1 million were paid to PLC in 1998, 1997, and 1996. Effective
November 3, 1998, PL&A's articles of incorporation were amended such that the
provision for an annual minimum cumulative dividend was removed.

NOTE J -- RELATED PARTY MATTERS

On August 6, 1990, PLC announced that its Board of Directors approved the
formation of an Employee Stock Ownership Plan ("ESOP"). On December 1, 1990,
Protective transferred to the ESOP 520,000 shares of PLC's common stock held by
it in exchange for a note. The outstanding balance of the note, $5.2 million at
December 31, 1998, is accounted for as a reduction to share-owner's equity. The
stock will be used to match employee contributions to PLC's existing 401(k)
Plan. The ESOP shares are dividend paying. Dividends on the shares are used to
pay the ESOP's note to Protective.

Protective leases furnished office space and computers to affiliates. Lease
revenues were $3.0 million in 1998, $3.1 million in 1997, and $3.7 million in
1996. Protective purchases data processing, legal, investment and management
services from affiliates. The costs of such services were $56.2 million, $51.6
million, and $50.4 million in 1998, 1997, and 1996, respectively. Commissions
paid to affiliated marketing organizations of $8.4 million, $5.2 million, and
$7.4 million in 1998, 1997, and 1996, respectively, were included in deferred
policy acquisition costs.

F-39
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE J -- RELATED PARTY MATTERS (CONTINUED)
Certain corporations with which PLC's directors were affiliated paid
Protective premiums, policy fees, or deposits for various types of insurance and
investment products. Such premiums, policy fees, and deposits amounted to
$28.6 million, $21.4 million and $31.2 million in 1998, 1997, and 1996,
respectively. Protective and/or PLC paid commissions, interest on debt and
investment products, and fees to these same corporations totaling $7.3 million,
$5.4 million and $5.0 million in 1998, 1997, and 1996, respectively.

For a discussion of indebtedness to related parties, see Note E.

NOTE K -- OPERATING SEGMENTS

Protective operates seven divisions whose principal strategic focuses can be
grouped into three general categories: Life Insurance, Specialty Insurance
Products, and Retirement Savings and Investment Products. Each division has a
senior officer of Protective responsible for its operations. A division is
generally distinguished by products and/or channels of distribution. A brief
description of each division follows.

LIFE INSURANCE

INDIVIDUAL LIFE DIVISION. The Individual Life Division markets universal
life, variable universal life, and level premium term and term-like insurance
products on a national basis through a network of independent insurance agents.

WEST COAST DIVISION. The West Coast Division sells universal life and level
premium term-like insurance products in the life insurance brokerage market and
in the "bank owned life insurance" market.

ACQUISITIONS DIVISION. The Acquisitions Division focuses solely on
acquiring, converting, and servicing policies acquired from other companies.
These acquisitions may be accomplished through acquisitions of companies or
through the assumption or reinsurance of life insurance and related policies.

SPECIALTY INSURANCE PRODUCTS

DENTAL AND CONSUMER BENEFITS DIVISION. The Division's primary focus is on
indemnity and prepaid dental products. In 1997, the Division exited from the
traditional group major medical business, fulfilling the Division's strategy to
focus primarily on dental and related products.

FINANCIAL INSTITUTIONS DIVISION. The Financial Institutions Division
specializes in marketing credit life and disability insurance products through
banks, consumer finance companies and automobile dealers. The Division also
includes a small property casualty insurer that sells automobile service
contracts.

GUARANTEED INVESTMENT CONTRACTS DIVISION. The Guaranteed Investment
Contracts ("GIC") Division markets GICs to 401(k) and other qualified retirement
savings plans. The Division also offers related products, including fixed and
floating rate funding agreements offered to the trustees of municipal bond
proceeds, bank trust departments, and money market funds, and long-term annuity
contracts offered to fund certain state obligations.

INVESTMENT PRODUCTS DIVISION. The Investment Products Division
manufactures, sells, and supports fixed and variable annuity products. These
products are primarily sold through stockbrokers, but are also sold through
financial institutions and the Individual Life Division's sales force.

F-40
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE K -- OPERATING SEGMENTS (CONTINUED)
CORPORATE AND OTHER

Protective has an additional business segment herein referred to as
Corporate and Other. The Corporate and Other segment primarily consists of net
investment income and expenses not attributable to the Divisions above
(including net investment income on capital and interest on substantially all
debt).

Protective uses the same accounting policies and procedures to measure
operating segment income and assets as it uses to measure its consolidated net
income and assets. Operating segment income is generally income before income
tax. Premiums and policy fees, other income, benefits and settlement expenses,
and amortization of deferred policy acquisition costs are attributed directly to
each operating segment. Net investment income is allocated based on directly
related assets required for transacting the business of that segment. Realized
investment gains (losses) and other operating expenses are allocated to the
segments in a manner which most appropriately reflects the operations of that
segment. Unallocated realized investment gains (losses) are deemed not to be
associated with any specific segment.

Assets are allocated based on policy liabilities and deferred policy
acquisition costs directly attributable to each segment.

There are no significant intersegment transactions.

F-41
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE K-- OPERATING SEGMENTS (CONTINUED)

Operating segment income and assets for the years ended December 31 are as
follows:

<TABLE>
<CAPTION>
LIFE INSURANCE
-------------------------------------
INDIVIDUAL
OPERATING SEGMENT INCOME LIFE WEST COAST ACQUISITIONS
- ------------------------- ---------- ---------- -------------
<S> <C> <C> <C>
1998
Premiums and policy
fees................... $ 228,701 $ 75,757 $ 125,329
Reinsurance ceded........ (102,533) (53,377) (28,594)
---------- ---------- ----------
Net of reinsurance
ceded................ 126,168 22,380 96,735
Net investment income.... 55,779 63,492 112,154
Realized investment gains
(losses)...............
Other income............. 70 6 1,713
---------- ---------- ----------
Total revenues....... 182,017 85,878 210,602
---------- ---------- ----------
Benefits and settlement
expenses............... 106,308 54.617 112,051
Amortization of deferred
policy acquisition
costs.................. 30,543 4,924 18,894
Other operating
expenses............... 14,983 5,354 26,717
---------- ---------- ----------
Total benefits and
expenses............ 151,834 64,895 157,662
---------- ---------- ----------
Income before income
tax.................... 30,183 20,983 52,940
Income tax expense.......
---------- ---------- ----------
Net income...............
---------- ---------- ----------
1997
Premiums and policy
fees................... $ 182,746 $ 41,290 $ 120,504
Reinsurance ceded........ (55,266) (27,168) (17,869)
---------- ---------- ----------
Net of reinsurance
ceded................ 127,480 14,122 102,635
Net investment income.... 54,593 30,194 110,155
Realized investment gains
(losses)...............
Other income............. 617 10
---------- ---------- ----------
Total revenues....... 182,690 44,316 212,800
---------- ---------- ----------
Benefits and settlement
expenses............... 114,678 28,304 116,506
Amortization of deferred
policy acquisition
costs.................. 27,354 961 16,606
Other operating
expenses............... 18,178 6,849 23,016
---------- ---------- ----------
Total benefits and
expenses............ 160,210 36,114 156,128
---------- ---------- ----------
Income before income
tax.................... 22,480 8,202 56,672
Income tax expense.......
---------- ---------- ----------
Net income...............
---------- ---------- ----------
1996
Premiums and policy
fees................... $ 154,295 $ 125,798
Reinsurance ceded........ (37,585) (19,255)
---------- ---------- ----------
Net of reinsurance
ceded................ 116,710 106,543
Net investment income.... 48,442 106,015
Realized investment gains
(losses)............... 3,098
Other income............. 1,056 641
---------- ---------- ----------
Total revenues....... 169,306 213,199
---------- ---------- ----------
Benefits and settlement
expenses............... 96,404 118,181
Amortization of deferred
policy acquisition
costs.................. 28,393 17,162
Other operating
expenses............... 28,611 24,292
---------- ---------- ----------
Total benefits and
expenses............ 153,408 159,635
---------- ---------- ----------
Income before income
tax.................... 15,898 53,564
Income tax expense.......
---------- ---------- ----------
Net income...............
---------- ---------- ----------
OPERATING SEGMENT ASSETS
- -------------------------
1998
Investments and other
assets................. $1,076,202 $1,149,642 $1,600,123
Deferred policy
acquisition costs...... 301,941 144,455 255,347
---------- ---------- ----------
Total assets............. $1,378,143 $1,294,097 $1,855,470
---------- ---------- ----------
1997
Investments and other
assets................. $ 960,316 $ 910,030 $1,401,294
Deferred policy
acquisition costs...... 252,321 108,126 138,052
---------- ---------- ----------
Total assets............. $1,212,637 $1,018,156 $1,539,346
---------- ---------- ----------
1996
Investments and other
assets................. $ 814,728 $1,423,081
Deferred policy
acquisition costs...... 220,232 156,172
---------- ---------- ----------
Total assets............. $1,034,960 $1,579,253
---------- ---------- ----------
</TABLE>

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

(1) Adjustments represent the inclusion of unallocated realized investment
gains (losses) and the recognition of income tax expense. There are no
asset adjustments.

F-42
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE K-- OPERATING SEGMENTS (CONTINUED)

<TABLE>
<CAPTION>
SPECIALTY INSURANCE RETIREMENT SAVINGS AND
PRODUCTS INVESTMENT PRODUCTS
--------------------------- ---------------------------
DENTAL AND GUARANTEED CORPORATE
CONSUMER FINANCIAL INVESTMENT INVESTMENT AND TOTAL
BENEFITS INSTITUTIONS CONTRACTS PRODUCTS OTHER ADJUSTMENTS(1) CONSOLIDATED
----------- ------------- ------------ ------------ ---------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998
Premiums and policy
fees................... $ 277,316 $ 301,230 $ 18,809 $ 198 $ 1,027,340
Reinsurance ceded........ (85,753) (188,958) (459,215)
--------- --------- ---------- ---------- -------- ------ -----------
Net of reinsurance
ceded................ 191,563 112,272 18,809 198 568,125
Net investment income.... 15,245 25,068 $ 213,136 105,827 13,094 603,795
Realized investment gains
(losses)............... 1,609 1,318 $ (791) 2,136
Other income............. 4,295 10,302 1,799 2,016 20,201
--------- --------- ---------- ---------- -------- ------ -----------
Total revenues....... 211,103 147,642 214,745 127,753 15,308 1,194,257
--------- --------- ---------- ---------- -------- ------ -----------
Benefits and settlement
expenses............... 140,632 52,629 178,745 85,045 469 730,496
Amortization of deferred
policy acquisition
costs.................. 10,352 28,526 735 17,213 1 111,188
Other operating
expenses............... 49,913 48,837 2,876 14,428 9,120 172,228
--------- --------- ---------- ---------- -------- ------ -----------
Total benefits and
expenses............ 200,897 129,992 182,356 116,686 9,590 1,013,912
--------- --------- ---------- ---------- -------- ------ -----------
Income before income
tax.................... 10,206 17,650 32,389 11,067 5,718 180,345
Income tax expense....... 63,162 63,162
--------- --------- ---------- ---------- -------- ------ -----------
Net income............... $ 117,183
--------- --------- ---------- ---------- -------- ------ -----------
1997
Premiums and policy
fees................... $ 260,590 $ 196,694 $ 12,367 $ 229 $ 814,420
Reinsurance ceded........ (109,480) (124,431) (334,214)
--------- --------- ---------- ---------- -------- ------ -----------
Net of reinsurance
ceded................ 151,110 72,263 12,367 229 480,206
Net investment income.... 23,810 16,341 $ 211,915 105,196 5,284 557,488
Realized investment gains
(losses)............... (3,180) 589 $4,415 1,824
Other income............. 1,278 3,033 (192) 1,403 6,149
--------- --------- ---------- ---------- -------- ------ -----------
Total revenues....... 176,198 91,637 208,735 117,960 6,916 1,045,667
--------- --------- ---------- ---------- -------- ------ -----------
Benefits and settlement
expenses............... 110,148 27,643 179,235 82,019 339 658,872
Amortization of deferred
policy acquisition
costs.................. 15,711 30,812 618 15,110 3 107,175
Other operating
expenses............... 38,572 20,165 3,945 12,312 6,833 129,870
--------- --------- ---------- ---------- -------- ------ -----------
Total benefits and
expenses............ 164,431 78,620 183,798 109,441 7,175 895,917
--------- --------- ---------- ---------- -------- ------ -----------
Income before income
tax.................... 11,767 13,017 24,937 8,519 (259) 149,750
Income tax expense....... 52,302 52,302
--------- --------- ---------- ---------- -------- ------ -----------
Net income............... $ 97,448
--------- --------- ---------- ---------- -------- ------ -----------
1996
Premiums and policy
fees................... $ 288,050 $ 193,236 $ 8,189 $ 656 $ 770,224
Reinsurance ceded........ (131,520) (119,814) (308,174)
--------- --------- ---------- ---------- -------- ------ -----------
Net of reinsurance
ceded................ 156,530 73,422 8,189 656 462,050
Net investment income.... 16,249 13,898 $ 214,369 98,719 1,089 498,781
Realized investment gains
(losses)............... (7,963) 3,858 $6,517 5,510
Other income............. 2,193 56 1,064 5,010
--------- --------- ---------- ---------- -------- ------ -----------
Total revenues....... 174,972 87,320 206,406 110,822 2,809 971,351
--------- --------- ---------- ---------- -------- ------ -----------
Benefits and settlement
expenses............... 125,797 42,781 169,927 73,093 710 626,893
Amortization of deferred
policy acquisition
costs.................. 5,326 24,900 509 14,710 1 91,001
Other operating
expenses............... 43,028 10,673 3,840 13,196 4,508 128,148
--------- --------- ---------- ---------- -------- ------ -----------
Total benefits and
expenses............ 174,151 78,354 174,276 100,999 5,219 846,042
--------- --------- ---------- ---------- -------- ------ -----------
Income before income
tax.................... 821 8,966 32,130 9,823 (2,410) 125,309
Income tax expense....... 42,766 42,766
--------- --------- ---------- ---------- -------- ------ -----------
Net income............... $ 82,543
--------- --------- ---------- ---------- -------- ------ -----------
OPERATING SEGMENT ASSETS
- -------------------------
1998
Investments and other
assets................. $ 197,337 $ 645,909 $2,869,304 $2,542,536 $700,417 $10,781,470
Deferred policy
acquisition costs...... 23,836 39,212 1,448 75,177 9 841,425
--------- --------- ---------- ---------- -------- ------ -----------
Total assets............. $ 221,173 $ 685,121 $2,870,752 $2,617,713 $700,426 $11,622,895
--------- --------- ---------- ---------- -------- ------ -----------
1997
Investments and other
assets................. $ 208,071 $ 536,058 $2,887,732 $2,313,279 $525,896 $ 9,742,676
Deferred policy
acquisition costs...... 22,459 52,836 1,785 56,074 952 632,605
--------- --------- ---------- ---------- -------- ------ -----------
Total assets............. $ 230,530 $ 588,894 $2,889,517 $2,369,353 $526,848 $10,375,281
--------- --------- ---------- ---------- -------- ------ -----------
1996
Investments and other
assets................. $ 205,696 $ 312,826 $2,606,873 $1,821,250 $490,688 $ 7,675,142
Deferred policy
acquisition costs...... 27,944 32,040 1,164 50,637 12 488,201
--------- --------- ---------- ---------- -------- ------ -----------
Total assets............. $ 233,640 $ 344,866 $2,608,037 $1,871,887 $490,700 $ 8,163,343
--------- --------- ---------- ---------- -------- ------ -----------
</TABLE>

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

F-43
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE L -- EMPLOYEE BENEFIT PLANS

PLC has a defined benefit pension plan covering substantially all of its
employees. The plan is not separable by affiliates participating in the plan.
However, approximately 81% of the participants in the plan are employees of
Protective. The benefits are based on years of service and the employee's
highest thirty-six consecutive months of compensation. PLC's funding policy is
to contribute amounts to the plan sufficient to meet the minimum finding
requirements of ERISA plus such additional amounts as PLC may determine to be
appropriate from time to time. Contributions are intended to provide not only
for benefits attributed to service to date but also for those expected to be
earned in the future.

The actuarial present value of benefit obligations and the funded status of
the plan taken as a whole at December 31 are as follows:

<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
Projected benefit obligation, beginning of the year........................................ $ 30,612 $ 25,196
Service cost -- benefits earned during the year............................................ 2,585 2,112
Interest cost -- on projected benefit obligation........................................... 2,203 2,036
Actuarial gain............................................................................. 2,115 3,421
Plan amendment............................................................................. 160
Benefits paid.............................................................................. (1,128) (2,153)
---------- ---------
Projected benefit obligation, end of the year.............................................. 36,547 30,612
---------- ---------
Fair value of plan assets beginning of the year............................................ 21,763 19,779
Actual return on plan assets............................................................... 1,689 1,625
Employer contribution...................................................................... 2,823 2,512
Benefits paid.............................................................................. (1,128) (2,153)
---------- ---------
Fair value of plan assets end of the year.................................................. 25,147 21,763
---------- ---------
Plan assets less than the projected benefit obligation..................................... (11,400) (8,849)
Unrecognized net actuarial loss from past experience different from that assumed........... 9,069 6,997
Unrecognized prior service cost............................................................ 652 605
Unrecognized net transition asset.......................................................... (34) (51)
---------- ---------
Net pension liability recognized in balance sheet.......................................... $ (1,713) $ (1,298)
========== =========
</TABLE>

Net pension cost of the defined benefit pension plan includes the following
components for the years ended December 31:

<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Service cost............................................................ $ 2,585 $ 2,112 $ 1,908
Interest cost........................................................... 2,203 2,036 1,793
Expected return on plan assets.......................................... (1,950) (1,793) (1,593)
Amortization of prior service cost...................................... 112 100 100
Amortization of transition asset........................................ (17) (17) (17)
Recognized net actuarial loss........................................... 305 152 210
--------- --------- ---------
Net pension cost........................................................ $ 3,238 $ 2,590 $ 2,401
========= ========= =========
</TABLE>

F-44
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE L -- EMPLOYEE BENEFIT PLANS (CONTINUED)
Protective's share of the net pension cost was $2.6 million, $1.8 million,
and $1.5 million, in 1998, 1997, and 1996, respectively.

Assumptions used to determine the benefit obligations as of December 31 were
as follows:

<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Weighted average discount rate.............................................. 6.75% 7.25% 7.75%
Rates of increase in compensation level..................................... 4.75% 5.25% 5.75%
Expected long-term rate of return on assets................................. 8.50% 8.50% 8.50%
</TABLE>

Assets of the pension plan are included in the general assets of Protective.
Upon retirement, the amount of pension plan assets vested in the retiree is used
to purchase a single premium annuity from Protective in the retiree's name.
Therefore, amounts presented above as plan assets exclude assets relating to
retirees.

PLC also sponsors an unfunded excess benefits plan, which is a nonqualified
plan that provides defined pension benefits in excess of limits imposed by
federal income tax law. At December 31, 1998 and 1997, the projected benefit
obligation of this plan totaled $11.7 million and $10.0 million, respectively,
of which $7.8 million and $6.6 million, respectively, have been recognized in
PLC's financial statements.

Net pension cost of the excess benefits plan includes the following
components for the years ended December 31:

<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Service cost............................................................... $ 611 $ 544 $ 424
Interest cost.............................................................. 722 651 505
Plan amendment............................................................. 351
Amortization of prior service cost......................................... 112 112 112
Amortization of transition asset........................................... 37 37 37
Recognized net actuarial loss.............................................. 173 180 155
--------- --------- ---------
Net pension cost........................................................... $ 1,655 $ 1,875 $ 1,233
========= ========= =========
</TABLE>

In addition to pension benefits, PLC provides limited healthcare benefits to
eligible retired employees until age 65. The postretirement benefit is provided
by an unfunded plan. At December 31, 1998 and 1997, the liability for such
benefits totaled $1.2 million and $1.3 million, respectively. The expense
recorded by PLC was $0.1 million in 1998, 1997 and 1996. PLC's obligation is not
materially affected by a 1% change in the healthcare cost trend assumptions used
in the calculation of the obligation.

Life insurance benefits for retirees are provided through the purchase of
life insurance policies upon retirement equal to the employees' annual
compensation up to a maximum of $75,000. This plan is partially funded at a
maximum of $50,000 face amount of insurance.

PLC sponsors a defined contribution plan which covers substantially all
employees. Employee contributions are made on a before-tax basis as provided by
Section 401(k) of the Internal Revenue Code. In 1990, PLC established an
Employee Stock Ownership Plan ("ESOP") to match voluntary employee contributions
to PLC's 401(k) Plan. In 1994, a stock bonus was added to the 401(k) Plan for
employees who are not otherwise under a bonus plan. Expense related to the ESOP
consists of the cost of the shares

F-45
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE L -- EMPLOYEE BENEFIT PLANS (CONTINUED)
allocated to participating employees plus the interest expense on the ESOP's
note payable to Protective less dividends on shares held by the ESOP. At
December 31, 1998, PLC had committed up to 101,124 shares to be released to fund
employee benefits. The expense recorded by PLC for these employee benefits was
less than $0.1 million in 1998 and 1997, and $1.0 million in 1996.

NOTE M -- STOCK BASED COMPENSATION

Certain Protective employees participate in PLC's Long-Term Incentive Plan
(previously known as the Performance Share Plan) and receive stock appreciation
rights (SARs) from PLC.

Since 1973 PLC has had a Performance Share Plan to motivate senior
management to focus on PLC's long-range earnings performance. The criterion for
payment of performance share awards is based upon a comparison of PLC's average
return on average equity or total return over a four year award period (earlier
upon the death, disability or retirement of the executive, or in certain
circumstances, of a change in control of PLC) to that of a comparison group of
publicly held life insurance companies, multiline insurers, and insurance
holding companies. If PLC's results are below the median of the comparison
group, no portion of the award is earned. If PLC's results are at or above the
90th percentile, the award maximum is earned. Under the plan approved by
share-owners in 1992 and 1997, up to 6,400,000 shares may be issued in payment
of awards. The number of shares granted in 1998, 1997, and 1996 were 71,340,
98,780 and 104,580 shares, respectively, having an approximate market value on
the grant date of $2.3 million, $2.0 million, and $1.8 million, respectively. At
December 31, 1998, outstanding awards measured at target and maximum payouts
were 474,695 and 638,090 shares, respectively. The expense recorded by PLC for
the Performance Share Plan was $2.7 million, $2.7 million, and $3.0 million in
1998, 1997, and 1996, respectively.

During 1996, stock appreciation rights (SARs) were granted to certain
executives of PLC to provide long-term incentive compensation based on the
performance of PLC's Common Stock. Under this arrangement PLC will pay (in
shares of PLC Common Stock) an amount equal to the difference between the
specified base price of PLC's Common Stock and the market value at the exercise
date. The SARs are exercisable after five years (earlier upon the death,
disability or retirement of the executive, or in certain circumstances, of a
change in control of PLC) and expire in 2006 or upon termination of employment.
The number of SARs granted during 1996 and outstanding at December 31, 1998 was
675,000. The SARs have a base price of $17.4375 per share of PLC Common Stock
(the market price on the grant date was $17.50 per share). The estimated fair
value of the SARs on the grant date was $3.0 million. This estimate was derived
using the Roll-Geske variation of the Black-Sholes option pricing model.
Assumptions used in the pricing model are as follows: expected volatility rate
of 15% (approximately equal to that of the S&P Life Insurance Index), a risk
free interest rate of 6.35%, a dividend yield rate of 1.97%, and an expected
exercise date of August 15, 2002. The expense recorded by PLC for the SARs was
$0.6 million in 1998 and 1997.

NOTE N -- REINSURANCE

Protective assumes risks from and reinsures certain parts of its risks with
other insurers under yearly renewable term, coinsurance, and modified
coinsurance agreements. Yearly renewable term and coinsurance agreements are
accounted for by passing a portion of the risk to the reinsurer. Generally, the
reinsurer receives a proportionate part of the premiums less commissions and is
liable for a corresponding part of all benefit payments. Modified coinsurance is
accounted for similarly to coinsurance except that the

F-46
<PAGE>
PROTECTIVE LIFE INSURANCE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(ALL DOLLAR AMOUNTS IN TABLES ARE IN THOUSANDS)

NOTE N -- REINSURANCE (CONTINUED)
liability for future policy benefits is held by the original company, and
settlements are made on a net basis between the companies.

Protective has reinsured approximately $64.8 billion, $34.1 billion, and
$18.8 billion in face amount of life insurance risks with other insurers
representing $294.4 million, $147.2 million, and $113.5 million of premium
income for 1998, 1997, and 1996, respectively. Protective has also reinsured
accident and health risks representing $164.8 million, $187.7 million, and
$194.7 million of premium income for 1998, 1997, and 1996, respectively. In 1998
and 1997, policy and claim reserves relating to insurance ceded of
$658.7 million and $485.8 million respectively are included in reinsurance
receivables. Should any of the reinsurers be unable to meet its obligation at
the time of the claim, obligation to pay such claim would remain with
Protective. At December 31, 1998 and 1997, Protective had paid $22.8 million and
$25.6 million, respectively, of ceded benefits which are recoverable from
reinsurers. In addition, at December 31, 1998, Protective had receivables of
$75.0 million related to insurance assumed.

A substantial portion of Protective's new life insurance and credit
insurance sales are being reinsured.

NOTE O -- ESTIMATED MARKET VALUES OF FINANCIAL INSTRUMENTS

The carrying amount and estimated market values of Protective's financial
instruments at December 31 are as follows:

<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
<S> <C> <C> <C> <C>
ESTIMATED ESTIMATED
CARRYING MARKET CARRYING MARKET
AMOUNT VALUES AMOUNT VALUES
------------ ------------ ------------ ------------
Assets (see Notes A and C):
Investments:
Fixed maturities....................................... $ 6,400,262 $ 6,400,262 $ 6,348,252 $ 6,348,252
Equity securities...................................... 12,258 12,258 15,006 15,006
Mortgage loans on real estate.......................... 1,623,603 1,774,379 1,313,478 1,405,474
Short-term investments................................. 159,655 159,655 54,337 54,337
Cash..................................................... 39,197 39,197
Liabilities (see Notes A and E):
Guaranteed investment contract deposits................ 2,691,697 2,751,007 2,684,676 2,687,331
Annuity deposits....................................... 1,519,820 1,513,148 1,511,553 1,494,600
Notes payable.......................................... 2,363 2,363
Other (see Note A):
Derivative Financial Instruments....................... (734) (545)
</TABLE>

Except as noted below, fair values were estimated using quoted market
prices. Protective estimates the fair value of its mortgage loans using
discounted cash flows from the next call date. Protective believes the fair
value of its short-term investments and notes payable approximate book value due
to either being short-term or having a variable rate of interest. Protective
estimates the fair value of its guaranteed investment contracts and annuities
using discounted cash flows and surrender values, respectively. Protective
believes it is not practicable to determine the fair value of its policy loans
since there is no stated maturity, and policy loans are often repaid by
reductions to policy benefits.

F-47
<PAGE>
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION

PROTECTIVE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COL. A COL. B COL. C COL. D COL. E COL. F COL. G

<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
GIC AND
ANNUITY
DEFERRED FUTURE DEPOSITS AND
POLICY POLICY OTHER PREMIUMS NET
ACQUISITION BENEFITS UNEARNED POLICYHOLDERS' AND POLICY INVESTMENT
SEGMENT COSTS AND COSTS PREMIUMS FUNDS FEES INCOME (1)
- ------------------------------------------- ---------- ---------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1998:
Life Insurance
Individual Life.......................... $ 301,941 $1,054,253 $ 355 $ 10,802 $ 126,168 $ 55,779
West Coast............................... 144,455 1,006,280 0 77,254 22,380 63,492
Acquisitions............................. 255,347 1,383,759 553 233,846 96,735 112,154
Specialty Insurance Products
Dental and Consumer Benefits............. 23,836 111,916 3,341 78,224 191,563 15,245
Financial Institutions................... 39,212 215,451 385,006 105,434 112,272 25,068
Retirement Savings and Investment Products
Guaranteed Investment Contracts.......... 1,448 172,674 0 2,691,697 213,136
Investment Products...................... 75,177 194,726 0 1,233,528 18,809 105,827
Corporate and Other........................ 9 944 39 88 198 13,094
---------- ---------- --------- ------------ --------- ---------
TOTAL.................................. $ 841,425 $4,140,003 $ 389,294 $ 4,430,873 $ 568,125 $ 603,795
========== ========== ========= ============ ========= =========
Year Ended December 31, 1997:
Life Insurance
Individual Life.......................... $ 252,321 $ 920,924 $ 356 $ 16,334 $ 127,480 $ 54,593
West Coast............................... 108,126 739,463 0 95,495 14,122 30,194
Acquisitions............................. 138,052 1,025,340 1,437 311,150 102,635 110,155
Specialty Insurance Products
Dental and Consumer Benefits............. 22,459 120,925 2,536 80,654 151,110 23,810
Financial Institutions................... 52,836 159,422 391,085 6,791 72,263 16,341
Retirement Savings and Investment Products
Guaranteed Investment Contracts.......... 1,785 180,690 0 2,684,676 0 211,915
Investment Products...................... 56,074 177,150 0 1,184,268 12,367 105,196
Corporate and Other........................ 952 380 1,282 185 229 5,284
Unallocated Realized Investment Gains
(Losses)................................. 0 0 0 0 0 0
---------- ---------- --------- ------------ --------- ---------
TOTAL.................................. $ 632,605 $3,324,294 $ 396,696 $ 4,379,553 $ 480,206 $ 557,488
========== ========== ========= ============ ========= =========
Year Ended December 31, 1996:
Life Insurance
Individual Life.......................... $ 220,232 $ 793,370 $ 685 $ 15,577 $ 116,710 $ 48,442
Acquisitions............................. 156,172 1,117,159 1,087 251,450 106,543 106,015
Specialty Insurance Products
Dental and Consumer Benefits............. 27,944 119,010 2,572 83,632 156,530 16,249
Financial Institutions................... 32,040 119,242 253,154 1,880 73,422 13,898
Retirement Savings and Investment Products
Guaranteed Investment Contracts.......... 1,164 149,755 0 2,474,728 0 214,369
Investment Products...................... 50,637 149,743 0 1,120,557 8,189 98,719
Corporate and Other........................ 12 170 55 192 656 1,089
Unallocated Realized Investment Gains
(Losses)................................. 0 0 0 0 0 0
---------- ---------- --------- ------------ --------- ---------
TOTAL.................................. $ 488,201 $2,448,449 $ 257,553 $ 3,948,016 $ 462,050 $ 498,781
========== ========== ========= ============ ========= =========

<CAPTION>
- -------------------------------------------
<S> <C> <C> <C>
COL. A COL. H COL. I COL. J
- -------------------------------------------

AMORTIZATION
BENEFITS OF DEFERRED
AND POLICY OTHER
SETTLEMENT ACQUISITION OPERATING
SEGMENT EXPENSES COSTS EXPENSES (1)
- ------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Year Ended December 31, 1998:
Life Insurance
Individual Life.......................... $ 106,308 $ 30,543 $ 14,983
West Coast............................... 54,617 4,924 5,354
Acquisitions............................. 112,051 18,894 26,717
Specialty Insurance Products
Dental and Consumer Benefits............. 140,632 10,352 49,913
Financial Institutions................... 52,629 28,526 48,837
Retirement Savings and Investment Products
Guaranteed Investment Contracts.......... 178,745 735 2,876
Investment Products...................... 85,045 17,213 14,428
Corporate and Other........................ 469 1 9,120
--------- --------- ---------
TOTAL.................................. $ 730,496 $ 111,188 $ 172,228
========= ========= =========
Year Ended December 31, 1997:
Life Insurance
Individual Life.......................... $ 114,678 $ 27,354 $ 18,178
West Coast............................... 28,304 961 6,849
Acquisitions............................. 116,506 16,606 23,016
Specialty Insurance Products
Dental and Consumer Benefits............. 110,148 15,711 38,572
Financial Institutions................... 27,643 30,812 20,165
Retirement Savings and Investment Products
Guaranteed Investment Contracts.......... 179,235 618 3,945
Investment Products...................... 82,019 15,110 12,312
Corporate and Other........................ 339 3 6,833
Unallocated Realized Investment Gains
(Losses)................................. 0 0 0
--------- --------- ---------
TOTAL.................................. $ 658,872 $ 107,175 $ 129,870
========= ========= =========
Year Ended December 31, 1996:
Life Insurance
Individual Life.......................... $ 96,404 $ 28,393 $ 28,611
Acquisitions............................. 118,181 17,162 24,292
Specialty Insurance Products
Dental and Consumer Benefits............. 125,797 5,326 43,027
Financial Institutions................... 42,781 24,900 10,673
Retirement Savings and Investment Products
Guaranteed Investment Contracts.......... 169,927 509 3,840
Investment Products...................... 73,093 14,710 13,197
Corporate and Other........................ 710 1 4,508
Unallocated Realized Investment Gains
(Losses)................................. 0 0 0
--------- --------- ---------
TOTAL.................................. $ 626,893 $ 91,001 $ 128,148
========= ========= =========
</TABLE>

(1) Allocations of Net Investment Income and Other Operating Expenses are based
on a number of assumptions and estimates and results would change if
different methods were applied.

S-1
<PAGE>
SCHEDULE IV -- REINSURANCE

PROTECTIVE LIFE INSURANCE COMPANY AND SUBSIDIARIES

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- -------------------------------------------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
PERCENTAGE OF
CEDED TO ASSUMED AMOUNT
GROSS OTHER FROM OTHER ASSUMED TO
AMOUNT COMPANIES COMPANIES NET AMOUNT NET
---------- ---------- ---------- ---------- ---------
Year Ended December 31, 1998:
Life insurance in force......................... $91,980,657 $64,846,246 $18,010,434 $45,144,845 39.9%
========== ========== ========== ========== =========
Premiums and policy fees:
Life insurance.................................. $ 537,002 $ 294,363 $ 87,964 $ 330,603 26.6%
Accident and health insurance................... 361,705 164,852 14,279 211,132 6.8%
Property and liability insurance................ 26,389 26,289 0.0%
---------- ---------- ---------- ----------
TOTAL........................................... $ 925,096 $ 459,215 $ 102,243 $ 568,024
========== ========== ========== ==========
Year Ended December 31, 1997:
Life insurance in force......................... $78,240,282 $34,139,554 $11,013,202 $55,113,930 20.0%
========== ========== ========== ========== =========
Premiums and policy fees:
Life insurance.................................. $ 387,108 $ 147,184 $ 74,738 $ 314,662 23.8%
Accident and health insurance................... 336,575 187,539 10,510 159,546 6.6%
Property and liability insurance................ 6,139 176 35 5,998 0.6%
---------- ---------- ---------- ----------
TOTAL........................................... $ 729,822 $ 334,899 $ 85,283 $ 480,206
========== ========== ========== ==========
Year Ended December 31, 1996:
Life Insurance in force......................... $53,052,020 $18,840,221 $16,275,386 $50,487,185 32.2%
========== ========== ========== ========== =========
Premiums and policy fees:
Life insurance.................................. $ 272,331 $ 113,487 $ 129,717 $ 288,561 45.0%
Accident and health insurance................... 338,709 194,687 29,467 173,489 17.0%
---------- ---------- ---------- ----------
TOTAL........................................... $ 611,040 $ 308,174 $ 159,184 $ 462,050
========== ========== ========== ==========
</TABLE>

S-2
<PAGE>
PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements:

All required financial statements are included in Part A and Part B of this
Registration Statement.

(b) Exhibits:

<TABLE>
<S> <C>
1. Resolution of the Board of Directors of Protective Life Insurance Company authorizing
establishment of the Protective Life Variable Annuity Separate Account**

2. Not applicable

3. (a) Form of Underwriting Agreement among Protective Life Insurance Company, Investment
Distributors, Inc. and the Protective Life Variable Annuity Separate Account**

(b) Form of Distribution Agreement between Investment Distributors, Inc. and
broker/dealers**

4. (a) Form of Individual Flexible Premium Deferred Variable and Fixed Annuity Contract

(b) Form of Group Flexible Premium Deferred Variable and Fixed Annuity Contract

(d) Annual Reset Death Benefit Rider

(e) Compound Death Benefit Rider

5. (a) Form of Contract Application for Individual Flexible Premium Deferred Variable and
Fixed Annuity Contract

(b) Form of Contract Application for Group Flexible Premium Deferred Variable and Fixed
Annuity Contract

6. (a) Charter of Protective Life Insurance Company.*

(b) By-Laws of Protective Life Insurance Company.*

7. Not applicable

8. (a) Participation/Distribution Agreement (Protective Investment Company)**

(b) Participation Agreement (Oppenheimer Variable Account Funds)***

(d) ParticipationAgreement (Calvert Group, formerly Acacia Capital Corporation)***

(e) Participation Agreement (Van Eck Worldwide Insurance Trust)+

(f) Participation Agreement (Van Kampen Life Investment Trust)++

9. Opinion and Consent of Steve M. Callaway, Esq.++

10. (a) Consent of Sutherland, Asbill & Brennan, LLP++

(b) Consent of PricewaterhouseCoopers LLP++

11. No financial statements will be omitted from Item 23

12. Not applicable

13. Not applicable

14. Powers of attorney
</TABLE>

C-1
<PAGE>
- ------------

* Incorporated herein by reference to the initial filing of the Form N-4
Registration Statement, (File No. 33-70984) filed with the Commission on
October 28, 1993.

** Incorporated herein by reference to Pre-Effective Amendment No. 1 to the
Form N-4 Registration Statement, (File No. 33-70984) filed with the
Commission on February 23, 1994.

*** Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Form N-4 Registration Statement, (File No. 33-70984) filed with the
Commission on April 30, 1997.

**** Incorporated herein by reference to the initial filing of the Form N-4
Registration Statement (File No. 333-68551) filed with the Commission on
December 8, 1998.

+ Incorporated herein by reference to Pre-Effective Amendment Number 1 to the
Form N-4 Registration Statement, (File No. 333-60149) filed with the
Commission on October 26, 1998.

++ To be filed by amendment.

ITEM 25. DIRECTORS AND OFFICERS OF DEPOSITOR.

<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS ADDRESS POSITION AND OFFICES WITH DEPOSITOR
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Drayton Nabers, Jr. Chairman of the Board
John D. Johns President, and Director
R. Stephen Briggs Executive Vice President, Director
Carolyn King Senior Vice President, Investment Products, and Director
Deborah J. Long Senior Vice President, General Counsel, Secretary, and
Director
Jim E. Massengale Executive Vice President, Acquisitions, and Director
Steven A. Schultz Senior Vice President, Financial Institutions, and
Director
Wayne E. Stuenkel Senior Vice President and Chief Actuary, and Director
A.S. Williams, III Executive Vice President, Investments, Treasurer, and
Director
Judy Wilson Senior Vice President, Guaranteed Investment Contracts
T. Davis Keyes Senior Vice President, Information Services, and
Director
J. Russell Bailey, Jr. Vice President, Dental and Consumer Benefits
Michael B. Ballard Vice President, Individual Life Marketing
Harvey S. Benjamin Vice President, Investment Products Operations
Danny L. Bentley Senior Vice President, Dental and Consumer Benefits, and
Director
Richard J. Bielen Senior Vice President, Investments, and Director
Larry Adams Vice President, PPGA Sales
Linda C. Cleveland Vice President, Acquisition Administration
Chris T. Calos Vice President, Marketing, Dental and Consumer Benefits
Tim W. Carney Vice President, MGMD Dental Sales
Jerry W. DeFoor Vice President and Controller and Chief Accounting
Officer
</TABLE>

C-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL BUSINESS ADDRESS POSITION AND OFFICES WITH DEPOSITOR
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
John B. Deremo Vice President, Individual Life Sales
Brent E. Fritz Vice President, Individual Life Product Development
Kevin B. Borie Vice President and Actuary, Investment Products
Bruce W. Gordon Vice President, Marketing, Individual Life
James T. Helton III Vice President and Actuary, Dental and Consumer Benefits
Charles (T.O.) McDowell Vice President, PPGA Sales
William L. McMullen, Jr. Vice President, Customer Service, Financial Institutions
Lawrence G. Merrill Vice President, Investment Products Marketing
Charles Misasi Vice President, Network Plans
Edmund P. Perry Vice President, Individual Life Sales
Carl E. Price Vice President, Direct Marketing, Dental and Consumer
Benefits
Charles M. Prior Vice President, Investments
T. Michael Presley Vice President and Actuary, Financial Institutions
John Sawyer Vice President, Equity Marketing, Individual Life
David C. Stevens Vice President, Operations, Dental and Consumer Benefits
James M. Styne Vice President, Financial Institutions
Carl S. Thigpen Vice President, Investments and Assistant Secretary
Alan E. Watson Vice President, Individual Life Sales
Thomas W. Willingham Vice President, Individual Life Operations and Assistant
Secretary
Banks M. Wood Vice President, Sales and Marketing, Financial
Institutions
</TABLE>

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

* Unless otherwise indicated, principal business address is 2801 Highway 280
South, Birmingham, Alabama 35223.

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR AND
REGISTRANT.

The registrant is a segregated asset account of the Company and is therefore
owned and controlled by the Company. All of the Company's outstanding voting
common stock is owned by Protective Life Corporation. Protective Life
Corporation is described more fully in the prospectus included in this
registration statement. Various companies and other entities controlled by
Protective Life Corporation may therefore be considered to be under common
control with the registrant or the Company. Such other companies and entities,
together with the identity of their controlling persons (where applicable), are
set forth in Exhibit 21 to Form 10-K of Protective Life Corporation for the
fiscal year ended December 31, 1998 (File No. 1-12332) filed with the Commission
on March 25, 1999.

ITEM 27. NUMBER OF CONTRACTOWNERS.

As of the date of this filing, there were 0 contract owners of NAME-SM-
individual and group flexible premium deferred variable and fixed annuity
contracts offered by Registrant.

C-3
<PAGE>
ITEM 28. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article XI of the By-laws of Protective Life provides, in substance, that
any of Protective Life's directors and officers, who is a party or is threatened
to be made a party to any action, suit or proceeding, other than an action by or
in the right of Protective Life, by reason of the fact that he is or was an
officer or director, shall be indemnified by Protective Life against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such claim,
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of Protective
Life and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. If the claim, action or suit is or
was by or in the right of Protective Life to procure a judgment in its favor,
such person shall be indemnified by Protective Life against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
Protective Life, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to Protective
Life unless and only to the extent that the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which such court shall
deem proper. To the extent that a director or officer has been successful on the
merits or otherwise in defense of any such action, suit or proceeding, or in
defense of any claim, issue or matter therein, he shall be indemnified by
Protective Life against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith, not withstanding that he has
not been successful on any other claim issue or matter in any such action, suit
or proceeding. Unless ordered by a court, indemnification shall be made by
Protective Life only as authorized in the specific case upon a determination
that indemnification of the officer or director is proper in the circumstances
because he has met the applicable standard of conduct Such determination shall
be made (a) by the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to, or who have been successful on the merits
or otherwise with respect to, such claim action, suit or proceeding, or (b) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion or (c) by the shareholders.

In addition, the executive officers and directors are insured by PLC's
Directors' and Officers' Liability Insurance Policy including Company
Reimbursement and are indemnified by a written contract with PLC which
supplements such coverage.

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

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<PAGE>
ITEM 29. PRINCIPAL UNDERWRITER.

(a) Investment Distributors, Inc. ("IDI") is the principal underwriter of
the Contracts as defined in the Investment Company Act of 1940. IDI is
also principal underwriter for the Fund and for the Protective Life
Variable Separate Account.

(b) The following information is furnished with respect to the officers and
directors of Investment Distributors, Inc.

<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS* POSITION AND OFFICES POSITION AND OFFICES WITH REGISTRANT
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
Briggs, Robert Stephen President, Chief Executive Officer Executive Vice President, Director
and Director
A.S. Williams, III Vice President Executive Vice President,
Investments, Treasurer, Director
Ballard, Michael B. Director Vice President, Individual Life
Marketing
Merrill, Lawrence G. Director Vice President, Investment Products
Marketing
King, Carolyn Secretary, Chief Compliance Officer Senior Vice President, Investment
Products
Callaway, Steve M. Director None
Borie, Kevin B. Treasurer and Director Vice President and Actuary,
Investment Products
Janet Summey Assistant Secretary Assistant Vice President, Investment
Products
Bonnie Miller Assistant Secretary Assistant Vice President, Investment
Products
</TABLE>

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

* Unless otherwise indicated, principal business address is 2801 Highway 280
South, Birmingham, Alabama, 35223.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

All accounts and records required to be maintained by Section 31(c) of the
Investment Company Act of 1940 and the rules thereunder are maintained by
Protective Life Insurance Company at 2801 Highway 280 South, Birmingham, Alabama
35223.

ITEM 31. MANAGEMENT SERVICES.

All management contracts are discussed in Part A or Part B.

ITEM 32. UNDERTAKINGS.

(a) Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never
more than sixteen (16) months old for so long as payments under the
variable annuity contracts may be accepted.

(b) Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space
that an applicant can check to request a Statement of Additional
Information, or (2) a postcard or similar written communication affixed
to or

C-5
<PAGE>
included in the Prospectus that the applicant can remove to send for a
Statement of Additional Information; and

(c) Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available
under this Form promptly upon written or oral request.

(d) The Company represents that in connection with its offering of the
Contracts as funding vehicles for retirement plans meeting the
requirements of Section 403(b) of the Internal Revenue Code of 1986, it
is relying on a no-action letter dated November 28, 1988, to the
American Council of Life Insurance (Ref. No. IP-6-88) regarding Sections
22(e), 27(c)(1), and 27(d) of the Investment Company Act of 1940, and
that paragraphs numbered (1) through (4) of that letter will be complied
with.

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

C-6
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
the amendment to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Birmingham, State of
Alabama, on January 3, 2000.

PROTECTIVE VARIABLE ANNUITY
SEPARATE ACCOUNT

By: /s/ JOHN D. JOHNS

-----------------------------------
John D. Johns, PRESIDENT
PROTECTIVE LIFE INSURANCE COMPANY

PROTECTIVE LIFE INSURANCE COMPANY

By: /s/ JOHN D. JOHNS

-----------------------------------
John D. Johns, PRESIDENT
PROTECTIVE LIFE INSURANCE COMPANY

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

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------ -------------------

<C> <S> <C>
/s/ DRAYTON NABERS, JR.
------------------------------------------- Chairman of the Board January 3, 2000
Drayton Nabers, Jr. (Principal Executive Officer)

/s/ JOHN D. JOHNS
------------------------------------------- President January 3, 2000
John D. Johns (Principal Financial Officer)

/s/ JERRY DEFOOR Vice President, Controller, and
------------------------------------------- Chief Accounting Officer January 3, 2000
Jerry DeFoor (Principal Accounting Officer)

/s/ DRAYTON NABERS, JR.
------------------------------------------- Director January 3, 2000
Drayton Nabers, Jr.

/s/ JOHN D. JOHNS
------------------------------------------- Director January 3, 2000
John D. Johns

/s/ R. STEPHEN BRIGGS
------------------------------------------- Director January 3, 2000
R. Stephen Briggs
</TABLE>

C-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------ -------------------

<C> <S> <C>
/s/ JIM E. MASSENGALE
------------------------------------------- Director January 3, 2000
Jim E. Massengale

/s/ WAYNE E. STUENKEL
------------------------------------------- Director January 3, 2000
Wayne E. Stuenkel

/s/ A.S. WILLIAMS III
------------------------------------------- Director January 3, 2000
A.S. Williams III

/s/ STEVEN A. SCHULTZ
------------------------------------------- Director January 3, 2000
Steven A. Schultz

/s/ DEBORAH J. LONG
------------------------------------------- Director January 3, 2000
Deborah J. Long

/s/ CAROLYN KING
------------------------------------------- Director January 3, 2000
Carolyn King

/s/ RICHARD J. BIELEN
------------------------------------------- Director January 3, 2000
Richard J. Bielen

/s/ DANNY L. BENTLEY
------------------------------------------- Director January 3, 2000
Danny L. Bentley

/s/ T. DAVIS KEYES
------------------------------------------- Director January 3, 2000
T. Davis Keyes
</TABLE>

C-8

<PAGE>

[LOGO]
PROTECTIVE LIFE INSURANCE COMPANY
Nashville, Tennessee
(A Stock Insurance Company)

INDIVIDUAL FLEXIBLE PREMIUM DEFERRED FIXED AND VARIABLE ANNUITY CONTRACT
(NON-PARTICIPATING)

Protective Life Insurance Company agrees to provide the benefits described in
this Contract.

THIS IS A VARIABLE ANNUITY CONTRACT

THE VALUE OF THIS CONTRACT AND THE ANNUITY INCOME PAYMENTS, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE PROTECTIVE VARIABLE ANNUITY SEPARATE ACCOUNT, IS
VARIABLE. NO MINIMUM VALUE IS GUARANTEED FOR AMOUNTS ALLOCATED TO THE SEPARATE
ACCOUNT.

RIGHT TO CANCEL

YOU HAVE THE RIGHT TO RETURN THIS CONTRACT. You may cancel this Contract within
ten days after you receive it by returning the Contract to our administrative
office, or to the agent who sold the Contract, with a written request for
cancellation. Return of this Contract by mail is effective on being post-marked,
properly addressed and postage pre-paid. We will promptly return the Contract
Value plus any amount deducted for premium taxes. This amount may be more or
less than the Purchase Payments.

/s/ John D. Johns /s/ Deborah J. Long

John D. Johns Deborah J. Long
President Secretary

THIS IS A LEGAL CONTRACT
READ IT CAREFULLY

ADMINISTRATIVE OFFICE:
PROTECTIVE LIFE INSURANCE COMPANY
2801 Highway 280 South
P. O. Box 10648
Birmingham, Alabama 35202-0648
(800) 456-6330

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<PAGE>

THIS PAGE INTENTIONALLY LEFT BLANK.

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<PAGE>

SCHEDULE

CONTRACT NUMBER EFFECTIVE DATE
{PVA20000001} {October 1, 1999}

OWNER BIRTH DATE OF OWNER
{John J. Doe} {November 5, 1953}

JOINT OWNER BIRTH DATE OF JOINT OWNER
{N/A} {N/A}

ANNUITANT BIRTH DATE OF ANNUITANT
{John J. Doe} {November 5, 1953}

BENEFICIARY ANNUITY COMMENCEMENT DATE
{As contained in our records} {November 5, 2038}

INITIAL PURCHASE PAYMENT: {$100,000.00}
<TABLE>
<S><C>
ANNUAL EFFECTIVE INTEREST RATE FOR THE FIXED ACCOUNT ON THE EFFECTIVE DATE: {4.00%}

ANNUAL EFFECTIVE INTEREST RATE FOR DCA FIXED ACCOUNT 1 ON THE EFFECTIVE DATE: {11.00%}

ANNUAL EFFECTIVE INTEREST RATE FOR DCA FIXED ACCOUNT 2 ON THE EFFECTIVE DATE: {8.00%}
</TABLE>
BENEFIT PACKAGE: {Standard}

CONTRACT MAINTENANCE FEE: {$30}
The contract maintenance fee is deducted prior to the Annuity Commencement Date
on each Contract Anniversary and on any day that the Contract is surrendered
other than the Contract Anniversary. The contract maintenance fee will be
deducted from the Allocation Options in the same proportion as their values are
to the Contract Value. The contract maintenance fee will be waived by the
Company in the event the Contract Value or the aggregate Purchase Payments
reduced by surrenders equals or exceeds $50,000 on the date the contract
maintenance fee is to be deducted.

MORTALITY AND EXPENSE RISK CHARGE: {1.10%} per annum prior to the Annuity
Commencement Date, and {1.10%} per annum on or after the Annuity Commencement
Date.

ADMINISTRATION CHARGE: {0.15%} per annum.

TRANSFER FEE: {$25} per transfer in excess of 12 in any Contract Year.

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<PAGE>

SURRENDER CHARGE

<TABLE>
<CAPTION>
NUMBER OF FULL YEARS ELAPSED BETWEEN SURRENDER CHARGE PERCENTAGE
THE DATE PURCHASE PAYMENT WAS ACCEPTED
AND THE DATE OF SURRENDER
<S> <C>
0 {7%}

1 {6%}

2 {6%}

3 {5%}

4 {4%}

5 {3%}

6 {2%}

7+ {0%}
</TABLE>

ALLOCATION OPTIONS AVAILABLE ON THE EFFECTIVE DATE

{PROTECTIVE LIFE GUARANTEED ACCOUNT} {OPPENHEIMERFUNDS}
{Fixed Account} {Aggressive Growth}
{DCA Fixed Account 1} {Global Securities}
{DCA Fixed Account 2} {Capital Appreciation}
{Main Street Growth & Income}
{GOLDMAN SACHS/PIC} {High Income}
{International Equity} {Strategic Bond}
{Small Cap Value} {Money Fund}
{Capital Growth}
{CORE U.S. Equity} {VAN KAMPEN LIFE INVESTMENT TRUST}
{Growth and Income} {Emerging Growth}
{Global Income} {Enterprise}
{Comstock}
{MASSACHUSETTS FINANCIAL SERVICES (MFS)} {Growth and Income}
{New Discovery} {Strategic Stock}
{Emerging Growth} {Asset Allocation}
{Research}
{Growth With Income} {CALVERT}
{Utilities} {Social Small Cap Growth}
{Total Return} {Social Balanced}
{Growth Series}
{VAN ECK}
{Worldwide Hard Assets}
{Worldwide Real Estate}

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<PAGE>

TABLE OF CONTENTS
<TABLE>
<S> <C>
DEFINITIONS ................................................................ 7

GENERAL PROVISIONS.......................................................... 8
Entire Contract............................................................. 8
Modification of the Contract................................................ 8
Incontestability ........................................................... 8
Assignment.................................................................. 8
Notice...................................................................... 8
Error in Age or Gender...................................................... 9
Settlement.................................................................. 9
Receipt of Payment.......................................................... 9
Protection of Proceeds...................................................... 9
Premium Tax ................................................................ 9
Non-Participating .......................................................... 9
Minimum Values.............................................................. 9
Application of Law.......................................................... 9
Reports...................................................................... 9

PARTIES TO THE CONTRACT..................................................... 10
Company..................................................................... 10
Owner....................................................................... 10
Change of Owner............................................................. 10
Beneficiary................................................................. 10
Change of Beneficiary....................................................... 10
Annuitant................................................................... 10
Change of Annuitant......................................................... 10
Payee....................................................................... 10

PURCHASE PAYMENTS .......................................................... 11
Purchase Payment............................................................ 11
Allocation of Purchase Payments............................................. 11
No Default.................................................................. 11

GUARANTEED ACCOUNT ......................................................... 11
Guaranteed Account Value ................................................... 12

VARIABLE ACCOUNT............................................................ 12
General Description......................................................... 12
Sub-Accounts of the Variable Account........................................ 12
Variable Account Value...................................................... 13
</TABLE>

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<PAGE>

<TABLE>
<S> <C>
Accumulation Unit Values.................................................... 13
TRANSFERS................................................................... 14

SURRENDERS.................................................................. 15
Free Withdrawal Amount...................................................... 15
Determining the Surrender Charge............................................ 15
Suspension or Delay in Payment of Surrender................................. 15

DEATH BENEFIT............................................................... 16
Death of an Owner........................................................... 16
Death of the Annuitant...................................................... 16
Death Benefit............................................................... 16
Suspension of Payment....................................................... 17

ANNUITIZATION............................................................... 17
Annuity Commencement Date................................................... 17
Annuity Income Payments..................................................... 17
Fixed Income Payments....................................................... 17
Variable Income Payments.................................................... 17
Annuity Unit Values......................................................... 17
Selection of Annuity Options................................................ 18
Annuity Options............................................................. 18
Minimum Amounts............................................................. 19
Guaranteed Purchase Rates................................................... 19
Fixed Annuity Tables........................................................ 19
</TABLE>

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<PAGE>

DEFINITIONS

ACCUMULATION UNIT: A unit of measure used to calculate the value of a
Sub-Account prior to the Annuity Commencement Date.

ALLOCATION OPTION: Any account to which Purchase Payments may be allocated or
Contract Value transferred under this Contract.

ANNUITY COMMENCEMENT DATE: The date as of which the Contract Value, less
applicable premium tax, is applied to an Annuity Option.

ANNUITY OPTION: The payout option pursuant to which the Company makes annuity
income payments.

ANNUITY UNIT: A unit of measure used to calculate the amount of the variable
income payments.

ASSUMED INVESTMENT RETURN: The assumed annual rate of return used to calculate
the amount of the variable income payments.

CONTRACT ANNIVERSARY: The same month and day as the Effective Date in each
subsequent year of the Contract.

CONTRACT VALUE: Prior to the Annuity Commencement Date, the sum of the Variable
Account value and the Guaranteed Account value.

CONTRACT YEAR: Any period of 12 months commencing with the Effective Date or any
Contract Anniversary.

EFFECTIVE DATE: The date as of which the initial Purchase Payment is credited to
the Contract and the date the Contract takes effect, as shown on the Schedule.

FUND: Any investment portfolio in which a corresponding Sub-Account invests.

GUARANTEED ACCOUNT: Includes any Allocation Option we may offer with interest
rate guarantees.

PURCHASE PAYMENT: The amount(s) paid by the Owner and accepted by the Company as
consideration for this Contract.

QUALIFIED CONTRACTS: Contracts issued in connection with retirement plans that
receive favorable tax treatment under Sections 401, 403, 408, 408A or 457 of the
Internal Revenue Code.

SUB-ACCOUNT: A separate division of the Variable Account.

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<PAGE>

SURRENDER VALUE: The amount available for a full surrender. It is equal to the
Contract Value minus any applicable surrender charge, contract maintenance fee
and premium tax.

VALUATION DAY: Each day on which the New York Stock Exchange is open for
business.

VALUATION PERIOD: The period which begins at the close of regular trading on the
New York Stock Exchange on any Valuation Day and ends at the close of regular
trading on the next Valuation Day.

VARIABLE ACCOUNT: The Protective Variable Annuity Separate Account, a separate
investment account of Protective Life.

WRITTEN NOTICE: A notice or request submitted in writing in a form satisfactory
to the Company that is received at the administrative office.

GENERAL PROVISIONS

ENTIRE CONTRACT - This Contract and its attachments, including the copy of your
Application and any endorsements and amendments, constitute the entire agreement
between you and us. All statements in the Application shall be considered
representations and not warranties.

MODIFICATION OF THE CONTRACT - No one is authorized to modify or waive any term
or provision of this Contract unless we agree to the modification or waiver in
writing and it is signed by our President, Vice-President or Secretary. We
reserve the right to change or modify the provisions of this Contract to conform
to any applicable laws, rules or regulations issued by a government agency, or
to assure continued qualification of the Contract as an annuity contract under
the Internal Revenue Code. We will send you a copy of the endorsement that
modifies the Contract, and where required we will obtain all necessary
approvals, including that of the Owner(s).

INCONTESTABILITY - We will not contest this Contract after it is issued.

ASSIGNMENT - You have the right to assign this Contract. We do not assume
responsibility for the assignment; any claim made under an assignment is subject
to proof of the nature and extent of the assignee's interest prior to payment by
us.

NOTICE - All instructions under this Contract and requests to change or assign
this Contract must be by Written Notice. The Written Notice is effective as of
the date it was signed, however, the Company is not

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<PAGE>

responsible for following any instruction or making any change or assignment
before our receipt of the Written Notice.

ERROR IN AGE OR GENDER - When a benefit of this Contract is contingent upon any
person's age or gender, we may require proof of such. We may suspend payments
until proof is provided. When we receive satisfactory proof, we will make the
payments that were due during the period of suspension. Where the use of unisex
mortality rates is required, we will not determine or adjust benefits based upon
gender.

If after proof of age and gender (where applicable) is provided, it is
determined that the information you furnished was not correct, we will adjust
any benefit under this Contract to that which would be payable based upon the
correct information. If we have underpaid a benefit because of the error, we
will make up the underpayment in a lump sum. If the error resulted in an
overpayment, we will deduct the amount of the overpayment from any current or
future payment due under the Contract. Underpayments and overpayments will bear
interest at an annual effective interest rate of 3%.

SETTLEMENT - Benefits due under this Contract are payable from our
administrative office. The Owner may apply the settlement proceeds to any payout
option we offer for such payments at the time the election is made. Unless
directed otherwise in writing, we will make payments according to the Owner's
instructions as contained in our records at the time the payment is made. We
shall be discharged from all liability for payment to the extent of any payments
we make.

RECEIPT OF PAYMENT - If any Owner, Annuitant, Beneficiary or Payee is incapable
of giving a valid receipt for any payment, we may make such payment to whomever
has legally assumed his or her care and principal support. Any such payment
shall fully discharge us to the extent of that payment.

PROTECTION OF PROCEEDS - To the extent permitted by law and except as provided
by an assignment, no benefits payable under this Contract will be subject to the
claims of creditors.

PREMIUM TAX - Premium tax will be deducted, if applicable. Premium tax may be
deducted from the Purchase Payment(s) when accepted or from the Contract Value
upon a full or partial surrender, death or annuitization.

NON-PARTICIPATING - This Contract does not share in our surplus or profits, or
pay dividends.

MINIMUM VALUES - The values available under the Contract are at least equal to
the minimum values required in the state where the Contract is delivered.

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<PAGE>

APPLICATION OF LAW - The provisions of the Contract are to be interpreted in
accordance with the laws of the state where the Contract is delivered, with the
Internal Revenue Code and with applicable regulations.

REPORTS - At least annually prior to the Annuity Commencement Date, we will send
to you at the address contained in our records a report showing the current
Contract Value and any other information required by law.

PARTIES TO THE CONTRACT

COMPANY - Protective Life Insurance Company, also referred to as "we", "us" and
"our".

OWNER - The person or persons who own the Contract and are entitled to exercise
all rights and privileges provided in the Contract. Two persons may own the
Contract together; they are designated as the Owner and the Joint Owner.
Individuals as well as non-natural persons, such as corporations or trusts, may
be Owners. The Owner is referred to as "you" and "your".

CHANGE OF OWNER - The Owner of this Contract may be changed by Written Notice
provided (1) any new Owner's 85th birthday is after the Effective Date, and (2)
any new Owner's 90th birthday is on or after the Annuity Commencement Date. For
a period of one year after any change of ownership involving a natural person,
the death benefit will equal the Contract Value.

BENEFICIARY - The person or persons who may receive the benefits of this
Contract upon the death of any Owner.
PRIMARY - The Primary Beneficiary is the surviving Joint Owner, if any. If
there is no surviving Joint Owner, the Primary Beneficiary is the person or
persons designated by the Owner and named in our records.
CONTINGENT - The Contingent Beneficiary is the person or persons designated
by the Owner and named in our records to be Beneficiary if the Primary
Beneficiary is not living.

If no Beneficiary designation is in effect or if no Beneficiary is living at the
time of an Owner's death, the Beneficiary will be the estate of the deceased
Owner. If any Owner dies on or after the Annuity Commencement Date, the
Beneficiary will become the new Owner.

CHANGE OF BENEFICIARY - Unless designated irrevocably, the Owner may change the
Beneficiary by Written Notice prior to the death of any Owner. An irrevocable
Beneficiary is one whose written consent is needed before the Owner can change
the Beneficiary designation or exercise certain other rights.

ANNUITANT - The person or persons on whose life annuity income payments may be
based. The Owner is the Annuitant unless the Owner designates another person as
the Annuitant.

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<PAGE>

CHANGE OF ANNUITANT - The Owner may change the Annuitant by Written Notice prior
to the Annuity Commencement Date. However, if any Owner is not an individual the
Annuitant may not be changed. The new Annuitant's 90th birthday may not be
earlier than the Annuity Commencement Date in effect when the change of
Annuitant is requested.

PAYEE - The person or persons designated by the Owner to receive the annuity
income payments under the Contract. The Annuitant is the Payee unless the Owner
designates another party as the Payee. The Owner may change the Payee at any
time.

PURCHASE PAYMENTS

PURCHASE PAYMENT - Purchase Payments are payable at our administrative office.
They may be made by check payable to Protective Life Insurance Company or by any
other method we deem acceptable. Your initial Purchase Payment is shown on the
Schedule. We reserve the right not to accept any Purchase Payment.

Subsequent Purchase Payments may be accepted by the Company. No Purchase Payment
will be accepted within 7 years of the Annuity Commencement Date then in effect.
The minimum subsequent Purchase Payment we will accept is $100. The maximum
aggregate Purchase Payment(s) we will accept without prior administrative office
approval is $1,000,000.

ALLOCATION OF PURCHASE PAYMENTS - We will allocate your Purchase Payments to the
Allocation Options according to your instructions as contained in our records at
the time the Purchase Payment is accepted at our administrative office. Your
initial allocation instructions are on the Application. You may change your
allocation instructions at any time by Written Notice. Allocations must be made
in whole percentages.

NO DEFAULT - This Contract will not be in default if subsequent Purchase
Payments are not made.

GUARANTEED ACCOUNT

The Guaranteed Account includes the Fixed Account and the DCA Fixed Accounts,
which are each a part of the Company's general account. You may allocate some or
all of your Purchase Payments and may transfer some of your Contract Value to an
account within the Guaranteed Account, except that transfers may not be made
into the DCA Fixed Accounts. Amounts allocated to an account within the
Guaranteed Account earn interest from the date the funds are credited to the
account.

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<PAGE>

effect for Purchase Payments or transfers allocated to the Fixed Account. The
new interest rate is also guaranteed for one year.

We will systematically transfer Purchase Payments allocated to the DCA Fixed
Accounts to other Allocation Options in equal amounts over a designated period.
The interest rate we apply to Purchase Payments allocated to a DCA Fixed Account
is guaranteed for the period over which transfers are allowed from that DCA
Fixed Account.

We, in our sole discretion, establish the interest rates for each account in the
Guaranteed Account. We will not declare a rate that is less than an annual
effective interest rate of 3.00%. Because these rates vary from time to time,
allocations made to the same account within the Guaranteed Account at different
times may earn interest at different rates.

GUARANTEED ACCOUNT VALUE - Any time prior to the Annuity Commencement Date, the
Guaranteed Account value is equal to: (1) Purchase Payments allocated to the
Guaranteed Account; plus (2) amounts transferred into the Guaranteed Account;
plus (3) interest credited to the Guaranteed Account; minus (4) amounts
transferred out of the Guaranteed Account; minus (5) the amount of any
surrenders removed from the Guaranteed Account, including any applicable
surrender charges and premium tax; minus (6) fees deducted from the Guaranteed
Account. For the purposes of interest crediting, amounts deducted, transferred
or withdrawn from accounts within the Guaranteed Account will be separately
accounted for on a "first-in, first-out" (FIFO) basis.

VARIABLE ACCOUNT

GENERAL DESCRIPTION - The variable benefits under the Contract are provided
through the Protective Variable Annuity Separate Account, which is registered
with the Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940. We own the assets in the Variable Account. The
portion of the assets of the Variable Account equal to the reserves and other
contract liabilities with respect to the Variable Account are not chargeable
with the liabilities arising out of any other business we may conduct. The
income, gains and losses, both realized and unrealized, from the assets of the
Variable Account shall be credited to or charged against the Variable Account
without regard to any other income, gains or losses of the Company. We have the
right to transfer to our general account any assets of the Variable Account that
are in excess of such reserves and other liabilities.

SUB-ACCOUNTS OF THE VARIABLE ACCOUNT - The Variable Account is divided into a
series of Sub-Accounts. The Sub-Accounts available on the Effective Date are
listed on the Schedule. Each Sub-Account invests in shares of a corresponding
Fund. The income, dividends, and gains, if any, distributed from the shares of a
Fund will be reinvested by purchasing additional shares of that Fund at its net
asset value.

When permitted by law, we may:

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<PAGE>

(1) create new variable accounts;
(2) combine variable accounts, including the Variable Account;
(3) add new Sub-Accounts to, or remove existing Sub-Accounts from the
Variable Account, or combine Sub-Accounts;
(4) make new Sub-Accounts or other Sub-Accounts available to such classes
of the Contracts as we may determine;
(5) add new Funds, or remove existing Funds;
(6) substitute a different Fund for any existing Fund if shares of a Fund
are no longer available for investment, or if we determine that
investment in a Fund is no longer appropriate in light of the purposes
of the Variable Account;
(7) deregister the Variable Account under the Investment Company Act of
1940 if such registration is no longer required;
(8) operate the Variable Account as a management investment company under
the Investment Company Act of 1940 or as any other form permitted by
law; and
(9) make any changes to the Variable Account or its operations as may be
required by the Investment Company Act of 1940 or other applicable law
or regulations.

The investment policy of the Variable Account will not be changed without
obtaining all necessary regulatory approvals.

The values and benefits of this Contract provided by the Variable Account depend
on the investment performance of the Funds in which the Sub-Accounts invests. We
do not guarantee the investment performance of the Funds. You bear the full
investment risk for amounts allocated or transferred to the Sub-Accounts.

We reserve the right to deduct taxes attributable to the operation of the
Variable Account.

VARIABLE ACCOUNT VALUE - At any time prior to the Annuity Commencement Date, the
Variable Account value is equal to: (1) Purchase Payments allocated to the
Variable Account; plus (2) amounts transferred into the Variable Account; plus
or minus (3) investment performance; minus (4) amounts transferred out of the
Variable Account; minus (5) the amount of any surrenders removed from the
Variable Account including any applicable surrender charges and premium tax;
minus (6) fees deducted from the Variable Account. The Variable Account value
also equals the total of the Sub-Account values.

Amounts allocated to the Variable Account, including, but not limited to
Purchase Payments and transfers, are used to purchase Accumulation Units of one
or more Sub-Accounts as directed by the Owner. To calculate the value of a
Sub-Account, we multiply the number of Accumulation Units attributable to each
Sub-Account by the Accumulation Unit value for that Sub-Account as of the
Valuation Period on which the value is being determined.

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<PAGE>

Events that will result in the cancellation of an appropriate number of
Accumulation Units of a Sub-Account include, but are not limited to: (1)
transfers from a Sub-Account; (2) a full or partial surrender; (3) payment of
the death benefit; (4) annuitization; (5) the deduction of the contract
maintenance fee. Accumulation Units will be canceled as of the end of the
Valuation Period during which the transaction occurs.

ACCUMULATION UNIT VALUES - The Accumulation Unit value for each Sub-Account on
any Valuation Day is determined by multiplying the Accumulation Unit value on
the prior Valuation Day by the net investment factor for the Valuation Period.
The net investment factor is used to measure the investment performance of a
Sub-Account from one Valuation Period to the next. A net investment factor is
determined for each Sub-Account for each Valuation Period. The net investment
factor may be greater or less than one, so the value of an Accumulation Unit can
increase or decrease. The net investment factor for any Sub-Account for any
Valuation Period is determined by dividing (1) by (2) and subtracting (3),
where:

(1) is the result of:

a. the net asset value per share of the Fund held in the Sub-Account,
determined at the end of the current Valuation Period; plus

b. the per share amount of any dividend or capital gain distributions
made by the Funds held in the Sub-Account, if the "ex-dividend" date
occurs during the current Valuation Period.

(2) is the net asset value per share of the Fund held in the Sub-Account,
determined at the end of the most recent prior Valuation Period.

(3) is a factor representing the mortality and expense risk charge and the
administration charge for the number of days in the Valuation Period and a
charge or credit for any taxes attributed to the investment operations of
the Sub-Account, as determined by the Company.

TRANSFERS

Prior to the Annuity Commencement Date, you may instruct us to transfer amounts
among the Allocation Options. You must transfer at least $100 or, if less, the
entire amount in the Allocation Option each time you make a transfer. If after
the transfer the amount remaining in any of the Allocation Options from which
the transfer is made is less than $100, we may transfer the entire amount
instead of the requested amount. We may also limit the number of transfers to no
more than 12 per year. For each additional transfer over 12 during each Contract
Year, we may charge a transfer fee as shown on the Schedule. The transfer fee,
if any, will be deducted from the amount being transferred.

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IPV-2048V 12/99
<PAGE>

The maximum amount that may be transferred from the Fixed Account in any
Contract Year is the greater of (a) $2,500; or (b) 25% of the Contract Value in
the Fixed Account. Transfers into a DCA Fixed Account are not permitted.

The DCA Fixed Accounts are available only for Purchase Payments designated for
dollar cost averaging. Purchase Payments may not be allocated into any DCA Fixed
Account when that DCA Fixed Account value is greater than $0 and all amounts
must be transferred from a DCA Fixed Account prior to allocating a Purchase
Payment to that DCA Fixed Account. Any Purchase Payment allocated to a DCA Fixed
Account must include instructions regarding the number and frequency of the
dollar cost averaging transfers, and the Allocation Option(s) into which the
transfers are to be made. If transfers from a DCA Fixed Account are terminated,
we will transfer any amount remaining in that DCA Fixed Account into the Fixed
Account unless you have otherwise instructed us how to allocate the remaining
amount.

We reserve the right to limit amounts transferred into any account within the
Guaranteed Account.

SURRENDERS

A full surrender of the Contract may be made any time prior to the Annuity
Commencement Date. Partial surrenders may be made prior to the Annuity
Commencement Date provided the Contract Value remaining after the surrender is
at least $2,000. The amount we pay upon a full or partial surrender is equal to
the Contract Value surrendered minus any applicable surrender charge, premium
tax and contract maintenance fee. We will withdraw amounts pro-rata from the
Allocation Options.

FREE WITHDRAWAL AMOUNT - During the first Contract Year you may withdraw an
amount equal to 15% of your initial Purchase Payments without incurring a
surrender charge. In any subsequent Contract Year you may withdraw, without
incurring a surrender charge, an amount equal to the greatest of: (1) the
earnings in your Contract as of the prior Contract Anniversary, if any; or, (2)
15% of your cumulative Purchase Payments as of the prior Contract Anniversary;
or, (3) 15% of the Contract Value as of the prior Contract Anniversary. This is
called the 'free withdrawal amount'. For the purpose of determining the free
withdrawal amount, earnings equal the Contract Value on the prior Contract
Anniversary minus Purchase Payments not previously assessed with a surrender
charge. Withdrawals in excess of the free withdrawal amount in any Contract Year
are subject to the surrender charge.

DETERMINING THE SURRENDER CHARGE - We calculate the surrender charge by first
allocating surrendered Contract Value in excess of any free withdrawal amount to
Purchase Payments not previously assessed with a surrender charge using a
"first-in, first-out" (FIFO) basis. We then allocate any remaining surrendered
Contract Value pro-rata to these Purchase Payments. The surrender charge is the
total of each of the allocated amounts of surrendered Contract Value multiplied
by its applicable surrender charge percentage, as shown on the Schedule. If the
surrendered Contract Value exceeds any free withdrawal amount and if no
surrendered Contract Value was allocated to Purchase Payments, the surrender
charge on the surrendered Contract Value is determined by applying the surrender
charge percentage associated with the most recent Purchase Payment we accepted.
The cumulative surrender

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<PAGE>

charges assessed will never exceed 8.5% of the total Purchase Payments accepted
by us under this Contract.

SUSPENSION OR DELAY IN PAYMENT OF SURRENDER - The Company may suspend or delay
the date of payment of a partial or full surrender from the Variable Account
value for any period:

1) when the New York Stock Exchange is closed; or
2) when trading on the New York Stock Exchange is restricted; or
3) when an emergency exists (as determined by the Securities and Exchange
Commission) as a result of which: (a) the disposal of securities in
the Variable Account is not reasonably practical; or (b) it is not
reasonably practical to determine fairly the value of the net assets
of the Variable Account; or
4) when the Securities and Exchange Commission, by order, so permits for
the protection of security holders.

The Company may delay payment of a partial or full surrender from the Guaranteed
Account for up to six months where permitted.

DEATH BENEFIT

DEATH OF AN OWNER - If any Owner dies before the Annuity Commencement Date and
while this Contract is in force, we will pay the death benefit, less any
applicable premium tax, to the Beneficiary. If any Owner dies on or after the
Annuity Commencement Date, the Beneficiary will become the new Owner and
remaining payments must be distributed at least as rapidly as under the Annuity
Option in effect at the time of the Owner's death.

DEATH OF THE ANNUITANT - If the Annuitant is not an Owner and dies prior to the
Annuity Commencement Date, the Owner will become the new Annuitant unless the
Owner designates otherwise. If any Owner is not an individual, the death of the
Annuitant will be treated as the death of an Owner.

DEATH BENEFIT - The death benefit will be determined as of the end of the
Valuation Period during which we receive due proof of death. The death benefit
will equal the greater of: (1) the Contract Value; or (2) aggregate Purchase
Payments less aggregate amounts surrendered. Only one death benefit is payable
under this Contract, even though the Contract may, in some circumstances,
continue beyond the time of an Owner's death.

The death benefit may be taken in one sum immediately and the Contract will
terminate. If the death benefit is not taken in one sum immediately, the death
benefit will become the new Contract Value as of the end of the Valuation Period
during which we receive due proof of death and the entire interest in the
Contract must be distributed under one of the following options:

(1) the entire interest must be distributed over the life of the
Beneficiary, or over a period not extending beyond the life expectancy
of the Beneficiary, with distribution beginning within one year of the
Owner's death; or,

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<PAGE>

(2) the entire interest must be distributed within 5 years of the Owner's
death.

If the Beneficiary is the deceased Owner's spouse, the surviving spouse may
elect, in lieu of receiving a death benefit, to continue the Contract and become
the new Owner, provided the deceased Owner's spouse's 85th birthday is after the
Effective Date and 90th birthday is after the Annuity Commencement Date then in
effect. The surviving spouse may select a new Beneficiary. Upon this spouse's
death, the Beneficiary may take the death benefit in one sum immediately and the
Contract will terminate. If the death benefit is not taken in one sum
immediately, the death benefit will become the new Contract Value as of the end
of the Valuation Period during which we receive due proof of death and must be
distributed to the new Beneficiary according to either paragraph (1) or (2),
above.

If there is more than one Beneficiary, the foregoing provisions apply to each
Beneficiary individually.

SUSPENSION OF PAYMENT - Payment of the death benefit may be suspended or delayed
under the circumstances described in the provision "Suspension or Delay in
Payment of Surrender".

ANNUITIZATION

ANNUITY COMMENCEMENT DATE - On the Effective Date, the Annuity Commencement Date
is the later of: (1) the oldest Owner's or Annuitant's 90th birthday, or (2) the
10th Contract Anniversary. It is shown on the Schedule. The Owner may change the
Annuity Commencement Date by Written Notice. The proposed Annuity Commencement
Date must be at least 30 days beyond the date the written request is received by
the Company, and at least 7 years after the most recent Purchase Payment. The
new Annuity Commencement Date may not be later than: (1) the oldest Owner's or
Annuitant's 90th birthday, or (2) the 10th Contract Anniversary.

On the Annuity Commencement Date, we will apply your Contract Value, less any
applicable premium tax, to the Annuity Option you have selected to determine an
annuity income payment.

ANNUITY INCOME PAYMENTS - You may elect to receive a fixed income payment, a
variable income payment, or a combination of both using the same Annuity Option
and certain period.

FIXED INCOME PAYMENTS - Fixed income payments are periodic payments from the
Company to the designated Payee, the amount of which is fixed and guaranteed by
the Company. It is not in any way dependent upon the investment experience of
the Variable Account.

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<PAGE>

VARIABLE INCOME PAYMENTS - Variable income payments are periodic payments from
the Company to the designated Payee, the amount of which varies from one payment
to the next as a reflection of the net investment experience of the
Sub-Account(s) you select to support the payments.

Using an Assumed Investment Return of 5%, we determine the dollar amount of the
variable income payment as if a payment were to be made on the Annuity
Commencement Date. However, no payment is actually made on that date. We then
allocate that dollar amount among the Sub-Accounts you selected to support your
variable income payments. Based on the Annuity Unit values of the selected
Sub-Accounts on that date, we determine the number of Annuity Units attributable
to each Sub-Account. The number of Annuity Units attributable to each
Sub-Account remains constant unless there is a transfer of Annuity Units between
Sub-Accounts.

To calculate the amount of each variable income payment, we multiply the number
of Annuity Units attributable to each Sub-Account by the Annuity Unit value for
that Sub-Account as of the Valuation Period on which the payment is being
determined. We then total results of these calculations for each Sub-Account.

ANNUITY UNIT VALUES - The Annuity Unit value of each Sub-Account for any
Valuation Period is equal to (1) multiplied by (2) divided by (3) where:

(1) is the net investment factor for the Valuation Period for which the
Annuity Unit value is being calculated using the mortality and expense
risk charge and the administration charge shown on the Schedule.

(2) is the Annuity Unit value for the preceding Valuation Period: and

(3) is a daily Assumed Investment Return factor adjusted for the number of
days in the Valuation Period.

You may transfer Annuity Units between Sub-Accounts. This is done by converting
Annuity Units of a Sub-Account into a dollar amount using the Annuity Unit value
for that Sub-Account on the Valuation Period during which the transfer occurs
and reconverting that dollar amount into the appropriate number of Annuity Units
of another Sub-Account using its Annuity Unit value for the same Valuation
Period. Thus, on the date of the transfer, the dollar amount of the portion of a
variable income payment generated from the Annuity Units of either Sub-Account
would be the same. Only one transfer between Sub-Accounts is allowed in any
calendar month, and no transfers are allowed involving the Guaranteed Account.

SELECTION OF ANNUITY OPTIONS - You may select an Annuity Option, or change your
selection by Written Notice received by the Company not later than 30 days
before the Annuity Commencement Date. If you have not selected an Annuity Option
within 30 days of the Annuity Commencement Date, we will apply your Contract
Value to Option B - Life Income with Payments for a 10 Year Certain Period, with
the

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IPV-2048V 12/99
<PAGE>

Variable Account value used to purchase variable income payments and the
Guaranteed Account value used to purchase fixed income payments.

ANNUITY OPTIONS - You may select from among the following Annuity Options:

OPTION A - PAYMENTS FOR A CERTAIN PERIOD: Payments will be made for the period
you select. No certain period may be longer than 30 years. Payments under this
Annuity Option do not depend on the life of an Annuitant. Fixed income payments
under Option A may not be surrendered, but you may fully surrender variable
income payments under Option A.

OPTION B - LIFE INCOME WITH OR WITHOUT A CERTAIN PERIOD: Payments are based on
the life of an Annuitant. We reserve the right to demand proof that the
Annuitant(s) is living prior to making any income payment. If you elect to
include a certain period, payments will be made for the lifetime of the
Annuitant, with payments guaranteed for the certain period you select. No
certain period may be longer than 30 years. Payments stop at the end of the
selected certain period or when the Annuitant(s) dies, whichever is later. If no
certain period is selected, payments will stop upon the death of the
Annuitant(s). Neither fixed nor variable income payments under Option B may be
surrendered.

ADDITIONAL OPTION: The Contract Value, less applicable premium tax, may be used
to purchase any annuity contract that we offer on the date this option is
elected.

MINIMUM AMOUNTS - If your Contract Value is less than $5,000 on the Annuity
Commencement Date, we reserve the right to pay the Contract Value in one lump
sum. If at any time your annuity income payments are less than the minimum
payment amount according to the Company's rules then in effect, we reserve the
right to change the frequency of your income payments to an interval that will
result in a payment amount at least equal to the minimum.

GUARANTEED PURCHASE RATES - The guaranteed interest basis, which is not
applicable to variable income payments, is 3%. The mortality basis is the 1983
Individual Annuitant Mortality Table A projected 14 years. One year will be
deducted from the attained age of the Annuitant for every 3 completed years
beyond the year 1997. Upon request, we will furnish you the guaranteed purchase
rates for ages and periods not shown below. Annuity benefits available on the
Annuity Commencement Date will not be less than those provided by the
application of an equivalent amount to the purchase of a single premium
immediate annuity contract offered by us on the Annuity Commencement Date to the
same class of Annuitants for the same Annuity Option.

FIXED ANNUITY TABLES

OPTION A TABLE OPTION B TABLE
-------------- --------------

Payments for a Life Income

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IPV-2048V 12/99
<PAGE>

Certain Period with or without a
Certain Period
<TABLE>
<CAPTION>
LIFE WITH 10 YEAR
LIFE ONLY CERTAIN PERIOD
------------------ -----------------
MONTHLY AGE OF
YEARS PAYMENT ANNUITANT MALE FEMALE MALE FEMALE
- ----- ------- --------- ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
5 17.91 60 4.77 4.25 4.68 4.21
10 9.61 65 5.46 4.78 5.28 4.70
15 6.87 70 6.44 5.53 6.03 5.36
20 5.51 75 7.79 6.63 6.90 6.21
25 4.71 80 9.70 8.26 7.81 7.22
30 4.18 85 & 12.38 10.70 8.60 8.20
over
</TABLE>

These tables illustrate the minimum fixed monthly annuity payments rates for
each $1,000 applied.

INDIVIDUAL FLEXIBLE PREMIUM DEFERRED FIXED AND VARIABLE ANNUITY CONTRACT
NON-PARTICIPATING

20
IPV-2048V 12/99

<PAGE>
Exhibit 4(b)

[PROTECTIVE LOGO]-Registered Trademark-
PROTECTIVE LIFE INSURANCE COMPANY
Nashville, Tennessee
(A Stock Insurance Company)

GROUP FLEXIBLE PREMIUM DEFERRED FIXED AND VARIABLE ANNUITY CONTRACT
(NON-PARTICIPATING)

Protective Life Insurance Company agrees to provide the benefits described in
this Contract. The Contract alone governs the rights of the parties. A
Contract will be furnished with each Certificate issued.

THIS IS A VARIABLE ANNUITY CONTRACT

AMOUNTS AVAILABLE UNDER THIS CONTRACT AND THE ANNUITY INCOME PAYMENTS, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF THE PROTECTIVE VARIABLE ANNUITY
SEPARATE ACCOUNT, ARE VARIABLE. NO MINIMUM VALUE IS GUARANTEED FOR AMOUNTS
ALLOCATED TO THE SEPARATE ACCOUNT.

RIGHT TO CANCEL

YOU HAVE THE RIGHT TO RETURN THIS CONTRACT. You may end your participation
in the Contract within ten days after you receive it by returning the
Contract and Certificate to our administrative office, or to the agent who
sold it to you, with a written request for cancellation. Return by mail is
effective on being post-marked, properly addressed and postage pre-paid. We
will promptly return the Contract Value plus any amount deducted for premium
taxes. This amount may be more or less than the Purchase Payments.

/s/ John D. Johns /s/ Deborah J. Long

John D. Johns Deborah J. Long
President Secretary

THIS IS A LEGALLY BINDING CONTRACT
READ IT CAREFULLY

ADMINISTRATIVE OFFICE:
PROTECTIVE LIFE INSURANCE COMPANY
2801 Highway 280 South
P. O. Box 10648
Birmingham, Alabama 35202-0648
(800) 456-6330

IPV-2050 1 12/99

<PAGE>

This Page Intentionally left blank.

IPV-2050 2 12/99

<PAGE>

SCHEDULE

CONTRACT HOLDER: {AmSouth Bank, N.A., as Trustee.}

CLASS OF ELIGIBLE OWNERS: {Account holders of Broker/Dealers with selling
agreements with Protective Life Insurance Company, its subsidiaries or its
affiliates.}

JURISDICTION: {This Contract is governed by the laws of the State of Alabama.}

CONTRACT MAINTENANCE FEE: {$30} The contract maintenance fee is deducted
prior to the Annuity Commencement Date on each Contract Anniversary, and on
any day that the Contract is surrendered other than the Contract Anniversary.
The contract maintenance fee will be deducted from the Allocation Options in
the same proportion as their values are to the Contract Value. The contract
maintenance fee will be waived by the Company in the event the Contract Value
or the aggregate Purchase Payments reduced by surrenders equals or exceeds
$50,000 on the date the contract maintenance fee is to be deducted.

MORTALITY AND EXPENSE RISK CHARGE: {1.10%} per annum prior to the Annuity
Commencement Date, and {1.10%} per annum on or after the Annuity Commencement
Date.

ADMINISTRATION CHARGE: {0.15%} per annum.

TRANSFER FEE: {$25} per transfer in excess of 12 transfers per Certificate in
any Contract Year.

SURRENDER CHARGE

<TABLE>
<CAPTION>
NUMBER OF FULL YEARS ELAPSED BETWEEN SURRENDER CHARGE PERCENTAGE
THE DATE PURCHASE PAYMENT WAS ACCEPTED
AND THE DATE OF SURRENDER
<S> <C>
0 {7%}
1 {6%}
2 {6%}
3 {5%}
4 {4%}
5 {3%}
6 {2%}
7+ {0%}
</TABLE>

IPV-2050 3 12/99

<PAGE>

ALLOCATION OPTIONS AVAILABLE ON THE EFFECTIVE DATE

<TABLE>
<S> <C>
{PROTECTIVE LIFE GUARANTEED ACCOUNT}
{Fixed Account}
{DCA Fixed Account 1}
{DCA Fixed Account 2} {CALVERT}
{Social Small Cap Growth}
{Social Balanced}

{GOLDMAN SACHS/PIC}
{International Equity}
{Small Cap Value} {VAN ECK}
{Capital Growth} {Worldwide Hard Assets}
{CORE U.S. Equity} {Worldwide Real Estate}
{Growth and Income}
{Global Income}

{MASSACHUSETTS FINANCIAL SERVICES (MFS)}
{New Discovery}
{Emerging Growth}
{Research}
{Growth With Income}
{Utilities}
{Total Return}
{Growth Series}

{OPPENHEIMERFUNDS}
{Aggressive Growth}
{Global Securities}
{Capital Appreciation}
{Main Street Growth & Income}
{High Income}
{Strategic Bond}
{Money Fund}

{VAN KAMPEN LIFE INVESTMENT TRUST}
{Emerging Growth}
{Enterprise}
{Comstock}
{Growth and Income}
{Strategic Stock}
{Asset Allocation}
</TABLE>

IPV-2050 4 12/99

<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
DEFINITIONS ............................................................... 7

GENERAL PROVISIONS......................................................... 8
Entire Contract............................................................ 8
Modification of the Contract............................................... 8
Incontestability .......................................................... 8
Assignment................................................................. 8
Notice..................................................................... 8
Error in Age or Gender..................................................... 9
Settlement................................................................. 9
Receipt of Payment......................................................... 9
Protection of Proceeds..................................................... 9
Premium Tax ............................................................... 9
Non-Participating ......................................................... 9
Minimum Values............................................................. 9
Application of Law......................................................... 9
Reports.................................................................... 9

PARTIES TO THE CONTRACT.................................................... 10
Company.................................................................... 10
Owner...................................................................... 10
Change of Owner............................................................ 10
Beneficiary................................................................ 10
Change of Beneficiary...................................................... 10
Annuitant.................................................................. 10
Change of Annuitant........................................................ 10
Payee...................................................................... 10

PURCHASE PAYMENTS ......................................................... 11
Purchase Payment........................................................... 11
Allocation of Purchase Payments............................................ 11
No Default................................................................. 11

GUARANTEED ACCOUNT ........................................................ 11
Guaranteed Account Value .................................................. 12

VARIABLE ACCOUNT........................................................... 12
General Description........................................................ 12
Sub-Accounts of the Variable Account....................................... 12
</TABLE>

IPV-2050 5 12/99

<PAGE>

<TABLE>
<S> <C>
Variable Account Value..................................................... 13
Accumulation Unit Values................................................... 13

TRANSFERS.................................................................. 14

SURRENDERS................................................................. 15
Free Withdrawal Amount..................................................... 15
Determining the Surrender Charge........................................... 15
Suspension or Delay in Payment of Surrender................................ 15

DEATH BENEFIT.............................................................. 16
Death of an Owner.......................................................... 16
Death of the Annuitant..................................................... 16
Death Benefit.............................................................. 16
Suspension of Payment...................................................... 17

ANNUITIZATION.............................................................. 17
Annuity Commencement Date.................................................. 17
Annuity Income Payments.................................................... 17
Fixed Income Payments...................................................... 17
Variable Income Payments................................................... 17
Annuity Unit Values........................................................ 17
Selection of Annuity Options............................................... 18
Annuity Options............................................................ 18
Minimum Amounts............................................................ 19
Guaranteed Purchase Rates.................................................. 19
Fixed Annuity Tables....................................................... 19
</TABLE>

IPV-2050 6 12/99

<PAGE>

DEFINITIONS

ACCUMULATION UNIT: A unit of measure used to calculate the value of a
Sub-Account prior to the Annuity Commencement Date.

ALLOCATION OPTION: Any account to which Purchase Payments may be allocated or
Contract Value transferred under this Contract.

ANNUITY COMMENCEMENT DATE: The date as of which the Contract Value, less
applicable premium tax, is applied to an Annuity Option.

ANNUITY OPTION: The payout option pursuant to which the Company makes annuity
income payments.

ANNUITY UNIT: A unit of measure used to calculate the amount of the variable
income payments.

ASSUMED INVESTMENT RETURN: The assumed annual rate of return used to
calculate the amount of the variable income payments.

CERTIFICATE: The document the Company issues to evidence the Owner's
participation in the Contract.

CONTRACT ANNIVERSARY: The same month and day as the Effective Date in each
subsequent year of the Contract.

CONTRACT HOLDER: The entity that holds a Contract under which Certificates
may be issued.

CONTRACT VALUE: Prior to the Annuity Commencement Date, the sum of the
Variable Account value and the Guaranteed Account value attributable of a
Certificate issued under this Contract.

CONTRACT YEAR: Any period of 12 months commencing with the Effective Date or
any Contract Anniversary.

EFFECTIVE DATE: The date as of which the initial Purchase Payment is credited
to the Contract and the date the Contract takes effect with respect to an
Owner.

FUND: Any investment portfolio in which a corresponding Sub-Account invests.

GUARANTEED ACCOUNT: Includes any Allocation Option we may offer with
interest rate guarantees.

PURCHASE PAYMENT: The amount(s) paid by the Owner and accepted by the Company
as consideration for the Owner's participation this Contract.

IPV-2050 7 12/99

<PAGE>

QUALIFIED CONTRACTS: Contracts issued in connection with retirement plans
that receive favorable tax treatment under Sections 401, 403, 408, 408A or
457 of the Internal Revenue Code.

SUB-ACCOUNT: A separate division of the Variable Account.

SURRENDER VALUE: The amount available for a full surrender. It is equal to
the Contract Value minus any applicable surrender charge, contract
maintenance fee and premium tax.

VALUATION DAY: Each day on which the New York Stock Exchange is open for
business.

VALUATION PERIOD: The period which begins at the close of regular trading on
the New York Stock Exchange on any Valuation Day and ends at the close of
regular trading on the next Valuation Day.

VARIABLE ACCOUNT: The Protective Variable Annuity Separate Account, a
separate investment account of Protective Life.

WRITTEN NOTICE: A notice or request submitted in writing in a form
satisfactory to the Company that is received at the administrative office.

GENERAL PROVISIONS

ENTIRE CONTRACT - This Contract and its attachments including the
Certificate, the copy of your Application and any endorsements and
amendments, constitute the entire agreement between you and us. All
statements in the Application shall be considered representations and not
warranties.

MODIFICATION OF THE CONTRACT - No one is authorized to modify or waive any
term or provision of this Contract unless we agree to the modification or
waiver in writing and it is signed by our President, Vice-President or
Secretary. We reserve the right to change or modify the provisions of this
Contract to conform to any applicable laws, rules or regulations issued by a
government agency, or to assure continued qualification of the Contract as
an annuity contract under the Internal Revenue Code. We will send you a copy
of the endorsement that modifies the Contract, and where required we will
obtain all necessary approvals, including that of the Owner(s).

INCONTESTABILITY - We will not contest this Contract after it is issued.

ASSIGNMENT - You have the right to assign your interest in this Contract. We
do not assume responsibility for the assignment; any claim made under an
assignment is subject to proof of the nature and extent of the assignee's
interest prior to payment by us.

NOTICE - All instructions under this Contract and requests to change or
assign this Contract must be by Written Notice. The Written Notice is
effective as of the date it was signed, however, the Company is not

IPV-2050 8 12/99

<PAGE>

responsible for following any instruction or making any change or
assignment before our receipt of the Written Notice.

ERROR IN AGE OR GENDER - When a benefit of this Contract is contingent upon
any person's age or gender, we may require proof of such. We may suspend
payments until proof is provided. When we receive satisfactory proof, we
will make the payments that were due during the period of suspension. Where
the use of unisex mortality rates is required, we will not determine or
adjust benefits based upon gender.

If after proof of age and gender (where applicable) is provided, it is
determined that the information you furnished was not correct, we will adjust
any benefit under this Contract to that which would be payable based upon the
correct information. If we have underpaid a benefit because of the error, we
will make up the underpayment in a lump sum. If the error resulted in an
overpayment, we will deduct the amount of the overpayment from any current or
future payment due under the Contract. Underpayments and overpayments will
bear interest at an annual effective interest rate of 3%.

SETTLEMENT - Benefits due under this Contract are payable from our
administrative office. The Owner may apply the settlement proceeds to any
payout option we offer for such payments at the time the election is made.
Unless directed otherwise in writing, we will make payments according to the
Owner's instructions as contained in our records at the time the payment is
made. We shall be discharged from all liability for payment to the extent of
any payments we make.

RECEIPT OF PAYMENT - If any Owner, Annuitant, Beneficiary or Payee is
incapable of giving a valid receipt for any payment, we may make such payment
to whomever has legally assumed his or her care and principal support. Any
such payment shall fully discharge us to the extent of that payment.

PROTECTION OF PROCEEDS - To the extent permitted by law and except as
provided by an assignment, no benefits payable under this Contract will be
subject to the claims of creditors.

PREMIUM TAX - Premium tax will be deducted, if applicable. Premium tax may be
deducted from the Purchase Payment(s) when accepted or from the Contract
Value upon a full or partial surrender, death or annuitization.

NON-PARTICIPATING - This Contract does not share in our surplus or profits,
or pay dividends.

MINIMUM VALUES - The values available under the Contract are at least equal
to the minimum values required in the state where the Contract and
Certificate are delivered.

APPLICATION OF LAW - The provisions of the Contract are to be interpreted in
accordance with the laws of the state of Alabama, with the Internal Revenue Code
and with applicable regulations.

IPV-2050 9 12/99

<PAGE>

REPORTS - At least annually prior to the Annuity Commencement Date, we will
send to you at the address contained in our records a report showing your
current Contract Value and any other information required by law.

PARTIES TO THE CONTRACT

COMPANY - Protective Life Insurance Company, also referred to as "we", "us" and
"our".

OWNER - The person or persons who have been issued a Certificate and are
entitled to exercise all rights and privileges provided in the Contract. Owners
may exercise these rights and privileges without the consent of the Contract
Holder. Two persons may own the Contract together; they are designated as the
Owner and the Joint Owner. Individuals as well as non-natural persons, such as
corporations or trusts, may be Owners. The Owner is referred to as "you" and
"your".

CHANGE OF OWNER - The Owner may be changed by Written Notice provided (1) any
new Owner's 85th birthday is after the Effective Date, and (2) any new Owner's
90th birthday is on or after the Annuity Commencement Date. For a period of one
year after any change of ownership involving a natural person, the death benefit
will equal the Contract Value.

BENEFICIARY - The person or persons who may receive the benefits of this
Contract upon the death of any Owner.
PRIMARY - The Primary Beneficiary is the surviving Joint Owner, if any.
If there is no surviving Joint Owner, the Primary Beneficiary is the
person or persons designated by the Owner and named in our records.
CONTINGENT - The Contingent Beneficiary is the person or persons
designated by the Owner and named in our records to be Beneficiary if
the Primary Beneficiary is not living.

If no Beneficiary designation is in effect or if no Beneficiary is living at the
time of an Owner's death, the Beneficiary will be the estate of the deceased
Owner. If any Owner dies on or after the Annuity Commencement Date, the
Beneficiary will become the new Owner.

ANNUITANT - The person or persons on whose life annuity income payments may be
based. The Owner is the Annuitant unless the Owner designates another person as
the Annuitant.

CHANGE OF ANNUITANT - The Owner may change the Annuitant by Written Notice prior
to the Annuity Commencement Date. However, if any Owner is not an individual the
Annuitant may not be changed. The

IPV-2050 10 12/99

<PAGE>

new Annuitant's 90th birthday may not be earlier than the Annuity
Commencement Date in effect when the change of Annuitant is requested.

PURCHASE PAYMENTS

PURCHASE PAYMENT - Purchase Payments are payable at our administrative office.
They may be made by check payable to Protective Life Insurance Company or by any
other method we deem acceptable. Your initial Purchase Payment is shown on the
Certificate. We reserve the right not to accept any Purchase Payment.

Subsequent Purchase Payments may be accepted by the Company. No Purchase
Payment will be accepted within 7 years of the Annuity Commencement Date then
in effect. The minimum subsequent Purchase Payment we will accept is
$100. The maximum aggregate Purchase Payment(s) we will accept without prior
administrative office approval is $1,000,000.

NO DEFAULT - This Contract will not be in default if subsequent Purchase
Payments are not made.

GUARANTEED ACCOUNT

The Guaranteed Account includes the Fixed Account and the DCA Fixed
Accounts, which are each a part of the Company's general account. You may
allocate some or all of your Purchase Payments and may transfer some of your
Contract Value to an account within the Guaranteed Account, except that
transfers may not be made into the DCA Fixed Accounts. Amounts allocated
to an account within the Guaranteed Account earn interest from the
date the funds are credited to the account.

The interest rate we apply to Purchase Payments and transfers into the
Fixed Account is guaranteed for one year from the date the Purchase
Payment or transfer is credited to the account. When an interest rate
guarantee expires, we will set a new interest rate, which may not be the
same as the interest rate then in effect for Purchase Payments or
transfers allocated to the Fixed Account. The new interest rate is also
guaranteed for one year.

IPV-2050 11 12/99

<PAGE>

We will systematically transfer Purchase Payments allocated to the DCA
Fixed Accounts to other Allocation Options in equal amounts over a
designated period. The interest rate we apply to Purchase Payments allocated
to a DCA Fixed Account is guaranteed for the period over which transfers
are allowed from that DCA Fixed Account.

We, in our sole discretion, establish the interest rates for each account in
the Guaranteed Account. We will not declare a rate that is less than an
annual effective interest rate of 3.00%. Because these rates vary from
time to time, allocations made to the same account within the Guaranteed
Account at different times may earn interest at different rates.

GUARANTEED ACCOUNT VALUE - Any time prior to the Annuity Commencement Date,
the Guaranteed Account value is equal to: (1) Purchase Payments allocated
to the Guaranteed Account; plus (2) amounts transferred into the
Guaranteed Account; plus (3) interest credited to the Guaranteed
Account; minus (4) amounts transferred out of the Guaranteed Account;
minus (5) the amount of any surrenders removed from the Guaranteed
Account, including any applicable surrender charges and premium tax;
minus (6) fees deducted from the Guaranteed Account. For the purposes of
interest crediting, amounts deducted, transferred or withdrawn from
accounts within the Guaranteed Account will be separately accounted for on
a "first-in, first-out" (FIFO) basis.

VARIABLE ACCOUNT

GENERAL DESCRIPTION - The variable benefits under the Contract are provided
through the Protective Variable Annuity Separate Account, which is registered
with the Securities and Exchange Commission as a unit investment trust under
the Investment Company Act of 1940. We own the assets in the Variable
Account. The portion of the assets of the Variable Account equal to the
reserves and other contract liabilities with respect to the Variable Account
are not chargeable with the liabilities arising out of any other business we
may conduct. The income, gains and losses, both realized and unrealized, from
the assets of the Variable Account shall be credited to or charged against
the Variable Account without regard to any other income, gains or losses of
the Company. We have the right to transfer to our general account any assets
of the Variable Account that are in excess of such reserves and other
liabilities.

SUB-ACCOUNTS OF THE VARIABLE ACCOUNT - The Variable Account is divided into a
series of Sub-Accounts. The Sub-Accounts available on the Effective Date are
listed on the Certificate. Each Sub-Account invests in shares of a
corresponding Fund. The income, dividends, and gains, if any, distributed
from the shares of a Fund will be reinvested by purchasing additional shares
of that Fund at its net asset value.

When permitted by law, we may:

(1) create new variable accounts;
(2) combine variable accounts, including the Variable Account;

IPV-2050 12 12/99

<PAGE>

(3) add new Sub-Accounts to, or remove existing Sub-Accounts from
the Variable Account, or combine Sub-Accounts;
(4) make new Sub-Accounts or other Sub-Accounts available to such
classes of the Contracts as we may determine;
(5) add new Funds, or remove existing Funds;
(6) substitute a different Fund for any existing Fund if shares of
a Fund are no longer available for investment, or if we
determine that investment in a Fund is no longer appropriate
in light of the purposes of the Variable Account;
(7) deregister the Variable Account under the Investment Company
Act of 1940 if such registration is no longer required;
(8) operate the Variable Account as a management investment
company under the Investment Company Act of 1940 or as any
other form permitted by law; and
(9) make any changes to the Variable Account or its operations as
may be required by the Investment Company Act of 1940 or other
applicable law or regulations.

The investment policy of the Variable Account will not be changed without
obtaining all necessary regulatory approvals.

The values and benefits of this Contract provided by the Variable Account
depend on the investment performance of the Funds in which the Sub-Accounts
invests. We do not guarantee the investment performance of the Funds. You
bear the full investment risk for amounts allocated or transferred to the
Sub-Accounts.

We reserve the right to deduct taxes attributable to the operation of the
Variable Account.

VARIABLE ACCOUNT VALUE - At any time prior to the Annuity Commencement Date,
the Variable Account value is equal to: (1) Purchase Payments allocated to
the Variable Account; plus (2) amounts transferred into the Variable Account;
plus or minus (3) investment performance; minus (4) amounts transferred out
of the Variable Account; minus (5) the amount of any surrenders removed from
the Variable Account including any applicable surrender charges and premium
tax; minus (6) fees deducted from the Variable Account. The Variable Account
value also equals the total of the Sub-Account values.

Amounts allocated to the Variable Account, including, but not limited to
Purchase Payments and transfers, are used to purchase Accumulation Units of
one or more Sub-Accounts as directed by the Owner. To calculate the value of
a Sub-Account, we multiply the number of Accumulation Units attributable to
each Sub-Account by the Accumulation Unit value for that Sub-Account as of
the Valuation Period on which the value is being determined.

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<PAGE>

ACCUMULATION UNIT VALUES - The Accumulation Unit value for each Sub-Account
on any Valuation Day is determined by multiplying the Accumulation Unit value
on the prior Valuation Day by the net investment factor for the Valuation
Period. The net investment factor is used to measure the investment
performance of a Sub-Account from one Valuation Period to the next. A net
investment factor is determined for each Sub-Account for each Valuation
Period. The net investment factor may be greater or less than one, so the
value of an Accumulation Unit can increase or decrease. The net investment
factor for any Sub-Account for any Valuation Period is determined by dividing
(1) by (2) and subtracting (3), where:

(1) is the result of:

a. the net asset value per share of the Fund held in the Sub-
Account, determined at the end of the current Valuation
Period; plus

b. the per share amount of any dividend or capital gain
distributions made by the Funds held in the Sub-Account, if
the "ex-dividend" date occurs during the current Valuation
Period.

(2) is the net asset value per share of the Fund held in the Sub-Account,
determined at the end of the most recent prior Valuation Period.

(3) is a factor representing the mortality and expense risk charge and the
administration charge for the number of days in the Valuation Period
and a charge or credit for any taxes attributed to the investment
operations of the Sub-Account, as determined by the Company.

TRANSFERS

Prior to the Annuity Commencement Date, you may instruct us to transfer
amounts among the Allocation Options. You must transfer at least $100 or,
if less, the entire amount in the Allocation Option each time you make a
transfer. If after the transfer the amount remaining in any of the
Allocation Options from which the transfer is made is less than $100, we
may transfer the entire amount instead of the requested amount. We may
also limit the number of transfers to no more than 12 per year. For each
additional transfer over 12 during each Contract Year, we may charge a
transfer fee as shown on the Certificate. The transfer fee, if any, will
be deducted from the amount being transferred.

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<PAGE>

The maximum amount that may be transferred from the Fixed Account in
any Contract Year is the greater of (a) $2,500; or (b) 25% of the Contract
Value in the Fixed Account. Transfers into a DCA Fixed Account are not
permitted.

The DCA Fixed Accounts are available only for Purchase Payments designated
for dollar cost averaging. Purchase Payments may not be allocated into any
DCA Fixed Account when that DCA Fixed Account value is greater than $0 and
all amounts must be transferred from a DCA Fixed Account prior to allocating
a Purchase Payment to that DCA Fixed Account. Any Purchase Payment allocated
to a DCA Fixed Account must include instructions regarding the number and
frequency of the dollar cost averaging transfers, and the Allocation
Option(s) into which the transfers are to be made. If transfers from a DCA
Fixed Account are terminated, we will transfer any amount remaining in that
DCA Fixed Account into the Fixed Account unless you have otherwise instructed
us how to allocate the remaining amount.

We reserve the right to limit amounts transferred into any account within the
Guaranteed Account.

SURRENDERS

A full surrender of the Contract may be made any time prior to the
Annuity Commencement Date. Partial surrenders may be made prior to
the Annuity Commencement Date provided the Contract Value remaining after
the surrender is at least $2,000. The amount we pay upon a full or partial
surrender is equal to the Contract Value surrendered minus any applicable
surrender charge, premium tax and contract maintenance fee. We will
withdraw amounts pro-rata from the Allocation Options.

FREE WITHDRAWAL AMOUNT - During the first Contract Year you may withdraw an
amount equal to 15% of your initial Purchase Payments without incurring a
surrender charge. In any subsequent Contract Year you may withdraw, without
incurring a surrender charge, an amount equal to the greatest of: (1) the
earnings in your Contract as of the prior Contract Anniversary, if any; or,
(2) 15% of your cumulative Purchase Payments as of the prior Contract
Anniversary; or, (3) 15% of the Contract Value as of the prior Contract
Anniversary. This is called the 'free withdrawal amount'. For the purpose of
determining the free withdrawal amount, earnings equal the Contract Value on
the prior Contract Anniversary minus Purchase Payments not previously
assessed with a surrender charge. Withdrawals in excess of the free
withdrawal amount in any Contract Year are subject to the surrender charge.

DETERMINING THE SURRENDER CHARGE - We calculate the surrender charge by first
allocating surrendered Contract Value in excess of any free withdrawal amount
to Purchase Payments not previously assessed with a surrender charge using a
"first-in, first-out" (FIFO) basis. We then allocate any remaining
surrendered Contract Value pro-rata to these Purchase Payments. The surrender
charge is the total of each of the allocated amounts of surrendered Contract
Value multiplied by its applicable surrender charge percentage, as shown on
the Certificate. If the surrendered Contract Value exceeds any free
withdrawal amount and if

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<PAGE>

no surrendered Contract Value was allocated to Purchase Payments, the
surrender charge on the surrendered Contract Value is determined by applying
the surrender charge percentage associated with the most recent Purchase
Payment we accepted. The cumulative surrender charges assessed will never
exceed 8.5% of the total Purchase Payments accepted by us under this Contract.

SUSPENSION OR DELAY IN PAYMENT OF SURRENDER - The Company may suspend or
delay the date of payment of a partial or full surrender from the Variable
Account value for any period:

1) when the New York Stock Exchange is closed; or
2) when trading on the New York Stock Exchange is restricted; or
3) when an emergency exists (as determined by the Securities and
Exchange Commission) as a result of which: (a) the disposal
of securities in the Variable Account is not reasonably
practical; or (b) it is not reasonably practical to determine
fairly the value of the net assets of the Variable Account; or
4) when the Securities and Exchange Commission, by order, so
permits for the protection of security holders.

The Company may delay payment of a partial or full surrender from the
Guaranteed Account for up to six months where permitted.

DEATH BENEFIT

DEATH OF AN OWNER - If any Owner dies before the Annuity Commencement Date
and while this Contract is in force, we will pay the death benefit, less any
applicable premium tax, to the Beneficiary. If any Owner dies on or after the
Annuity Commencement Date, the Beneficiary will become the new Owner and
remaining payments must be distributed at least as rapidly as under the
Annuity Option in effect at the time of the Owner's death.

DEATH OF THE ANNUITANT - If the Annuitant is not an Owner and dies prior to
the Annuity Commencement Date, the Owner will become the new Annuitant unless
the Owner designates otherwise. If any Owner is not an individual, the death
of the Annuitant will be treated as the death of an Owner.

DEATH BENEFIT - The death benefit will be determined as of the end of the
Valuation Period during which we receive due proof of death. The death
benefit will equal the greater of: (1) the Contract Value; or (2) aggregate
Purchase Payments less aggregate amounts surrendered. Only one death benefit
is payable under this Contract, even though the Contract may, in some
circumstances, continue beyond the time of an Owner's death.

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<PAGE>

(2) the entire interest must be distributed within 5 years of
the Owner's death.

If the Beneficiary is the deceased Owner's spouse, the surviving spouse may
elect, in lieu of receiving a death benefit, to continue the Contract and
become the new Owner, provided the deceased Owner's spouse's 85th birthday is
after the Effective Date and 90th birthday is after the Annuity Commencement
Date then in effect. The surviving spouse may select a new Beneficiary. Upon
this spouse's death, the Beneficiary may take the death benefit in one sum
immediately and the Contract will terminate. If the death benefit is not
taken in one sum immediately, the death benefit will become the new Contract
Value as of the end of the Valuation Period during which we receive due proof
of death and must be distributed to the new Beneficiary according to either
paragraph (1) or (2), above.

If there is more than one Beneficiary, the foregoing provisions apply to each
Beneficiary individually.

The death benefit provisions of this Contract shall be interpreted to comply
with the requirements of ss.72(s) of the Internal Revenue Code. We reserve
the right to endorse this Contract, as necessary, to conform with regulatory
requirements. We will send you a copy of any endorsement containing such
Contract modifications.

SUSPENSION OF PAYMENT - Payment of the death benefit may be suspended or
delayed under the circumstances described in the provision "Suspension or
Delay in Payment of Surrender".

ANNUITIZATION

ANNUITY COMMENCEMENT DATE - On the Effective Date, the Annuity Commencement
Date is the later of: (1) the oldest Owner's or Annuitant's 90th birthday, or
(2) the 10th Contract Anniversary. It is shown on the Certificate. The Owner
may change the Annuity Commencement Date by Written Notice. The proposed
Annuity Commencement Date must be at least 30 days beyond the date the
written request is received by the Company, and at least 7 years after the
most recent Purchase Payment. The new Annuity Commencement Date may not be
later than: (1) the oldest Owner's or Annuitant's 90th birthday, or (2) the
10th Contract Anniversary.

On the Annuity Commencement Date, we will apply your Contract Value, less any
applicable premium tax, to the Annuity Option you have selected to determine
an annuity income payment.

ANNUITY INCOME PAYMENTS - You may elect to receive a fixed income payment, a
variable income payment, or a combination of both using the same Annuity
Option and certain period.

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<PAGE>

FIXED INCOME PAYMENTS - Fixed income payments are periodic payments from the
Company to the designated Payee, the amount of which is fixed and guaranteed
by the Company. It is not in any way dependent upon the investment experience
of the Variable Account.

VARIABLE INCOME PAYMENTS - Variable income payments are periodic payments
from the Company to the designated Payee, the amount of which varies from one
payment to the next as a reflection of the net investment experience of the
Sub-Account(s) you select to support the payments.

Using an Assumed Investment Return of 5%, we determine the dollar amount of
the variable income payment as if a payment were to be made on the Annuity
Commencement Date. However, no payment is actually made on that date. We then
allocate that dollar amount among the Sub-Accounts you selected to support
your variable income payments. Based on the Annuity Unit values of the
selected Sub-Accounts on that date, we determine the number of Annuity Units
attributable to each Sub-Account. The number of Annuity Units attributable
to each Sub-Account remains constant unless there is a transfer of Annuity
Units between Sub-Accounts.

To calculate the amount of each variable income payment, we multiply the
number of Annuity Units attributable to each Sub-Account by the Annuity Unit
value for that Sub-Account as of the Valuation Period on which the payment is
being determined. We then total results of these calculations for each
Sub-Account.

ANNUITY UNIT VALUES - The Annuity Unit value of each Sub-Account for any
Valuation Period is equal to (1) multiplied by (2) divided by (3) where:

(1) is the net investment factor for the Valuation Period for
which the Annuity Unit value is being calculated using the
mortality and expense risk charge and the administration
charge shown on the Certificate.

(2) is the Annuity Unit value for the preceding Valuation
Period: and

(3) is a daily Assumed Investment Return factor adjusted for the
number of days in the Valuation Period.

You may transfer Annuity Units between Sub-Accounts. This is done by
converting Annuity Units of a Sub-Account into a dollar amount using the
Annuity Unit value for that Sub-Account on the Valuation Period during which
the transfer occurs and reconverting that dollar amount into the appropriate
number of Annuity Units of another Sub-Account using its Annuity Unit value
for the same Valuation Period. Thus, on the date of the transfer, the dollar
amount of the portion of a variable income payment generated from the Annuity
Units of either Sub-Account would be the same. Only one transfer between
Sub-Accounts is allowed in any calendar month, and no transfers are allowed
involving the Guaranteed Account.

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<PAGE>

SELECTION OF ANNUITY OPTIONS - You may select an Annuity Option, or change
your selection by Written Notice received by the Company not later than 30
days before the Annuity Commencement Date. If you have not selected an
Annuity Option within 30 days of the Annuity Commencement Date, we will apply
your Contract Value to Option B - Life Income with Payments for a 10 Year
Certain Period, with the Variable Account value used to purchase variable
income payments and the Guaranteed Account value used to purchase fixed
income payments.

ANNUITY OPTIONS - You may select from among the following Annuity Options:

OPTION A - PAYMENTS FOR A CERTAIN PERIOD: Payments will be made for the
period you select. No certain period may be longer than 30 years. Payments
under this Annuity Option do not depend on the life of an Annuitant. Fixed
income payments under Option A may not be surrendered, but you may fully
surrender variable income payments under Option A.

OPTION B - LIFE INCOME WITH OR WITHOUT A CERTAIN PERIOD: Payments are based
on the life of an Annuitant. We reserve the right to demand proof that the
Annuitant(s) is living prior to making any income payment. If you elect to
include a certain period, payments will be made for the lifetime of the
Annuitant, with payments guaranteed for the certain period you select. No
certain period may be longer than 30 years. Payments stop at the end of the
selected certain period or when the Annuitant(s) dies, whichever is later. If
no certain period is selected, payments will stop upon the death of the
Annuitant(s). Neither fixed nor variable income payments under Option B may
be surrendered.

ADDITIONAL OPTION: The Contract Value, less applicable premium tax, may be
used to purchase any annuity contract that we offer on the date this option
is elected.

MINIMUM AMOUNTS - If your Contract Value is less than $5,000 on the
Annuity Commencement Date, we reserve the right to pay the Contract Value
in one lump sum. If at any time your annuity income payments are less
than the minimum payment amount according to the Company's rules then in
effect, we reserve the right to change the frequency of your income
payments to an interval that will result in a payment amount at least equal
to the minimum.

GUARANTEED PURCHASE RATES - The guaranteed interest basis, which is not
applicable to variable income payments, is 3%. The mortality basis is the
1983 Individual Annuitant Mortality Table A projected 14 years. One year will
be deducted from the attained age of the Annuitant for every 3 completed
years beyond the year 1997. Upon request, we will furnish you the guaranteed
purchase rates for ages and periods not shown below. Annuity benefits
available on the Annuity Commencement Date will not be less than those
provided by the application of an equivalent amount to the purchase of a
single premium immediate annuity contract offered by us on the Annuity
Commencement Date to the same class of Annuitants for the same Annuity Option.

FIXED ANNUITY TABLES

IPV-2050 19 12/99

<PAGE>

<TABLE>
<CAPTION>
OPTION A TABLE OPTION B TABLE
-------------- --------------

PAYMENTS FOR A LIFE INCOME
CERTAIN PERIOD WITH OR WITHOUT A
CERTAIN PERIOD

LIFE WITH 10 YEAR
LIFE ONLY CERTAIN PERIOD
--------- -----------------
MONTHLY AGE OF
YEARS PAYMENT ANNUITANT MALE FEMALE MALE FEMALE
- ----- ------- --------- ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
5 17.91 60 4.77 4.25 4.68 4.21
10 9.61 65 5.46 4.78 5.28 4.70
15 6.87 70 6.44 5.53 6.03 5.36
20 5.51 75 7.79 6.63 6.90 6.21
25 4.71 80 9.70 8.26 7.81 7.22
30 4.18 85 & 12.38 10.70 8.60 8.20
over
</TABLE>

These tables illustrate the minimum fixed monthly annuity payments rates
for each $1,000 applied.

GROUP FLEXIBLE PREMIUM DEFERRED FIXED AND VARIABLE ANNUITY CONTRACT
NON-PARTICIPATING

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<PAGE>

Exhibit 4(c)

CERTIFICATE

<TABLE>
<S> <C>
CERTIFICATE NUMBER EFFECTIVE DATE
{PVA20000001} {October 1, 1999}

OWNER BIRTH DATE OF OWNER
{John J. Doe} {November 5, 1953}

JOINT OWNER BIRTH DATE OF JOINT OWNER
{N/A} {N/A}

ANNUITANT BIRTH DATE OF ANNUITANT
{John J. Doe} {November 5, 1953}

BENEFICIARY ANNUITY COMMENCEMENT DATE
{As contained in our records} {November 5, 2038}
</TABLE>

CONTRACT HOLDER: AmSouth Bank, N.A., as Trustee.

CLASS OF ELIGIBLE OWNERS: Account holders of Broker/Dealers with selling
agreements with Protective Life Insurance Company, its subsidiaries or its
affiliates.

JURISDICTION: This Contract is governed by the laws of the State of Alabama.

INITIAL PURCHASE PAYMENT: {$100,000.00}

ANNUAL EFFECTIVE INTEREST RATE FOR THE FIXED ACCOUNT ON THE EFFECTIVE DATE:
{4.00%}

ANNUAL EFFECTIVE INTEREST RATE FOR DCA FIXED ACCOUNT 1 ON THE EFFECTIVE DATE:
{11.00%}

ANNUAL EFFECTIVE INTEREST RATE FOR DCA FIXED ACCOUNT 2 ON THE EFFECTIVE DATE:
{8.00%}

BENEFIT PACKAGE: {Standard}

MORTALITY AND EXPENSE RISK CHARGE: {1.10%} per annum prior to the Annuity
Commencement Date, and {1.10%} per annum on or after the Annuity Commencement
Date.

ADMINISTRATION CHARGE: {0.15%} per annum.

TRANSFER FEE: {$25} per transfer in excess of 12 in any Contract Year.

IPV-2050C 12/99

<PAGE>

SURRENDER CHARGE

<TABLE>
<CAPTION>
NUMBER OF FULL YEARS ELAPSED BETWEEN SURRENDER CHARGE PERCENTAGE
THE DATE PURCHASE PAYMENT WAS ACCEPTED
AND THE DATE OF SURRENDER
<S> <C>
0 {7%}

1 {6%}

2 {6%}

3 {5%}

4 {4%}

5 {3%}

6 {2%}

7+ {0%}
</TABLE>

ALLOCATION OPTIONS AVAILABLE ON THE EFFECTIVE DATE

<TABLE>
<S> <C>
{PROTECTIVE LIFE GUARANTEED ACCOUNT} {OPPENHEIMERFUNDS}
{Fixed Account} {Aggressive Growth}
{DCA Fixed Account 1} {Global Securities}
{DCA Fixed Account 2} {Capital Appreciation}
{Main Street Growth & Income}
{GOLDMAN SACHS/PIC} {High Income}
{International Equity} {Strategic Bond}
{Small Cap Value} {Money Fund}
{Capital Growth}
{CORE U.S. Equity} {VAN KAMPEN LIFE INVESTMENT TRUST}
{Growth and Income} {Emerging Growth}
{Global Income} {Enterprise}
{Comstock}
{MASSACHUSETTS FINANCIAL SERVICES (MFS)} {Growth and Income}
{New Discovery} {Strategic Stock}
{Emerging Growth} {Asset Allocation}
{Research}
{Growth With Income} {CALVERT}
{Utilities} {Social Small Cap Growth}
{Total Return} {Social Balanced}
{Growth Series}
{VAN ECK}
{Worldwide Hard Assets}
{Worldwide Real Estate}
</TABLE>

IPV-2050C 12/99

<PAGE>

PROTECTIVE LIFE INSURANCE COMPANY P. O. BOX 10648
- --------------------------------------------------------------------------------
BIRMINGHAM, ALABAMA 35202-0648
- --------------------------------------------------------------------------------

ANNUAL RESET DEATH BENEFIT RIDER
INCLUDING WAIVER OF SURRENDER CHARGES FOR TERMINAL ILLNESS
OR NURSING HOME CONFINEMENT

We are amending the Contract to which this rider is attached by adding the
following provisions and making them a part of the Contract as of its Effective
Date:

ANNUAL RESET DEATH BENEFIT - We will determine an annual reset anniversary value
on each Contract Anniversary occurring before the earlier of the deceased
Owner's 80th birthday or the deceased Owner's date of death. Each annual reset
anniversary value is equal to the sum of: the Contract Value on that Contract
Anniversary; plus all Purchase Payments since that Contract Anniversary; minus
all amounts surrendered including associated surrender charges since that
Contract Anniversary.

The death benefit will equal the greatest of: (1) the Contract Value; or (2)
aggregate Purchase Payments less aggregate surrenders including associated
surrender charges; or (3) the greatest annual reset anniversary value attained.

WAIVER OF SURRENDER CHARGES - We will waive any applicable surrender charge if,
at any time after the first Contract Year:

(1) you are first diagnosed as having a terminal illness by a physician
that is not related to you or the Annuitant; or,

(2) you enter, for a period of at least ninety (90) days, a facility which
is both
(a) licensed by the state; and,
(b) qualified as a skilled nursing home facility under Medicare or
Medicaid.

The term "terminal illness" means that you are diagnosed as having a
non-correctable medical condition that, with a reasonable degree of medical
certainty, will result in your death in less than 12 months. A "physician" is a
medical doctor licensed by a state's Board of Medical Examiners, or similar
authority in the United States, acting within the scope of his or her license.
Written proof of a terminal illness satisfactory to the Company must be
submitted. The Company reserves the right to require an examination by a
physician of its choice.

<PAGE>

Once the waiver of surrender charges has been granted no surrender charges will
apply to the Contract in the future and no additional Purchase Payments will be
accepted by the Company.

If any Owner is not an individual, the Waiver of Surrender Charge provisions
will apply to the Annuitant.

SUSPENSION OF BENEFITS - For a period of one year after any change of ownership
involving a natural person, the death benefit will equal the Contract Value and
the surrender charges will not be waived under the provision above.

Signed for the Company as of the Effective Date.

PROTECTIVE LIFE INSURANCE COMPANY

/s/ Deborah J. Long

Secretary

<PAGE>

PROTECTIVE LIFE INSURANCE COMPANY P.O. BOX 10648 BIRMINGHAM, ALABAMA 35202-0648
- --------------------------------------------------------------------------------

COMPOUND AND 3-YEAR RESET DEATH BENEFIT RIDER
INCLUDING WAIVER OF SURRENDER CHARGES FOR TERMINAL ILLNESS
OR NURSING HOME CONFINEMENT

We are amending the Contract to which this rider is attached by adding the
following provisions and making them a part of the Contract as of its Effective
Date:

COMPOUND DEATH BENEFIT - We will determine a compound anniversary value on the
most recent Contract Anniversary before the earlier of the deceased Owner's 80th
birthday or the deceased Owner's date of death.

The compound anniversary value is equal to the sum of:

(a) the accumulation to the Contract Anniversary of all Purchase Payments
prior to that Contract Anniversary, minus the accumulation of amounts
surrendered including associated surrender charges prior to that
Contract Anniversary; plus,

(b) any Purchase Payments on or since that Contract Anniversary, minus any
amounts surrendered including associated surrender charges on or since
that Contract Anniversary.

If the Effective Date is before the deceased Owner's 71st birthday, the amounts
in (a) will accumulate at an annual effective interest rate of 4.00%. If the
Effective Date is on or after the deceased Owner's 71st birthday, the amounts in
(a) will accumulate at an annual effective interest rate of 3.00%

3-YEAR RESET DEATH BENEFIT - We will determine a 3-year reset anniversary value
every 3rd Contract Anniversary occurring before the earlier of the deceased
Owner's 80th birthday or the deceased Owner's date of death. Each 3-year reset
anniversary value is equal the sum of: the Contract Value on that Contract
Anniversary; plus all Purchase Payments since that Contract Anniversary; minus
all amounts surrendered including associated surrender charges since that
Contract Anniversary.

1
IPV-2052 12/99

<PAGE>

WAIVER OF SURRENDER CHARGES - We will waive any applicable surrender charge if,
at any time after the first Contract Year:

(1) you are first diagnosed as having a terminal illness by a
physician that is not related to you or the Annuitant; or,

(2) you enter, for a period of at least ninety (90) days, a facility
which is both
(a) licensed by the state; and,
(b) qualified as a skilled nursing home facility under Medicare
or Medicaid.

The term "terminal illness" means that you are diagnosed as having a
non-correctable medical condition that, with a reasonable degree of medical
certainty, will result in your death in less than 12 months. A "physician" is a
medical doctor licensed by a state's Board of Medical Examiners, or similar
authority in the United States, acting within the scope of his or her license.
Written proof of a terminal illness satisfactory to the Company must be
submitted. The Company reserves the right to require an examination by a
physician of its choice.

Once the waiver of surrender charges has been granted no surrender charges will
apply to the Contract in the future and no additional Purchase Payments will be
accepted by the Company.

If any Owner is not an individual, the Waiver of Surrender Charge provisions
will apply to the Annuitant.

Signed for the Company as of the Effective Date.

PROTECTIVE LIFE INSURANCE COMPANY

/s/ Deborah J. Long

Secretary

2
IPV-2052 12/99

<PAGE>

<TABLE>
<S> <C>
PLEASE MAKE CHECKS PAYABLE TO:
{THE PROTECTIVE VARIABLE ANNUITY} PROTECTIVE LIFE INSURANCE COMPANY
OVERNIGHT: POSTAL MAIL:
2801 Hwy 280 South - 3-7 IPS P.O. Box 10648
Birmingham, AL 35223 Birmingham, AL 35202-0648
ANNUITY APPLICATION Home Office: 28 White Bridge Road, #104 Nashville, Tennessee 37205
- -----------------------------------------------------------------------------------------------------------------------------------
OWNER NAME, STREET, CITY, STATE, ZIP CODE Phone Number ( ) -

/ / Male Birthdate (MO./DAY/YR.) / /

/ / Female Tax ID/Social Security No. - -
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY NAME, ADDRESS, RELATIONSHIP TO OWNER, SS# & PERCENTAGE (USE 'SPECIAL REMARKS' IF ADDITIONAL SPACE IS NEEDED.)

Primary(s) -

Contingent(s) -

- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
PLAN TYPE: Check all that apply.
/ / Non-Qualified / / Roth IRA If an IRA purchase payment includes new
/ / CD Transfer / / IRA Transfer contributions, please complete below:
/ / Sec. 1035 Exchange / / IRA Rollover
/ / TSA Direct Rollover / / IRA Direct Rollover Allocate IRA Contribution to Tax Year
/ / ________________ $ __________ (AMOUNT) _______ (PREVIOUS TAX YEAR)
(OTHER) $ __________ (AMOUNT) _______ (CURRENT TAX YEAR)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
BENEFIT PACKAGE - Check only one. (SEE PROSPECTUS FOR DETAILS.)
/ / STANDARD (MORTALITY AND EXPENSE RISK CHARGE = {1.10%}; ADMINISTRATIVE CHARGE ={ 0.15%}.)
Death Benefit - Return of Purchase Payments
Surrender Charge Waivers - None

/ / ANNUAL RESET DEATH BENEFIT (MORTALITY AND EXPENSE RISK CHARGE = {1.25%}; ADMINISTRATIVE CHARGE = {0.15%.})
Death Benefit - Return of Purchase Payments, Annual Reset
Surrender Charge Waivers - Nursing Home and Terminal Illness

/ / COMPOUND AND 3-YEAR RESET DEATH BENEFIT (MORTALITY AND EXPENSE RISK CHARGE = {1.25%}; ADMINISTRATIVE CHARGE = {0.15%}.)
Death Benefit - Return of Purchase Payments, Compound, 3-Year Reset
Surrender Charge Waivers - Nursing Home and Terminal Illness
- -----------------------------------------------------------------------------------------------------------------------------------
A VARIABLE ANNUITY CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED BY ANY BANK OR FINANCIAL INSTITUTION. IT IS NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY AND IS SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

IPV-2047 12/99
</TABLE>

<PAGE>

<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
PURCHASE PAYMENT: $ ____________ (MINIMUM $2,000) Unless you give us instructions for allocating subsequent Purchase Payments
now by completing column 2, or by giving us instructions when you make the subsequent Purchase Payment, we will allocate subsequent
Purchase Payments using the DCA Destination Allocation (column 3) if completed, and if not the Initial Purchase Payment Allocation.
(PLEASE ALLOCATE USING WHOLE PERCENTAGES.)
</TABLE>

<TABLE>
<CAPTION>
1. Initial Purchase 2. Subsequent Purchase 3. DCA Destination
Payment Allocation Payment Allocation Allocation
------------------ ------------------ ----------
<S> <C> <C>
{PROTECTIVE LIFE GUARANTEED ACCOUNT}
60-day Rate Lock for the Guaranteed Account? / / Yes / / No
_________% {Fixed Account} _________% _________%
_________% {DCA Fixed Account 1} N/A N/A
_________% {DCA Fixed Account 2} N/A N/A
{GOLDMAN SACHS / PIC}
_________% {International Equity} _________% _________%
_________% {Small Cap Value} _________% _________%
_________% {Capital Growth} _________% _________%
_________% {CORE U.S. Equity} _________% _________%
_________% {Growth and Income} _________% _________%
_________% {Global Income} _________% _________%
{MASSACHUSETTS FINANCIAL SERVICES (MFS)}
_________% {New Discovery} _________% _________%
_________% {Emerging Growth} _________% _________%
_________% {Research} _________% _________%
_________% {Growth With Income} _________% _________%
_________% {Utilities} _________% _________%
_________% {Total Return} _________% _________%
_________% {Growth Series} _________% _________%
{OPPENHEIMERFUNDS}
_________% {Aggressive Growth} _________% _________%
_________% {Global Securities} _________% _________%
_________% {Capital Appreciation} _________% _________%
_________% {Main Street Growth & Income} _________% _________%
_________% {High Income} _________% _________%
_________% {Strategic Bond} _________% _________%
_________% {Money Fund} _________% _________%
{VAN KAMPEN LIFE INVESTMENT TRUST}
_________% {Emerging Growth} _________% _________%
_________% {Enterprise} _________% _________%
_________% {Comstock} _________% _________%
_________% {Growth and Income} _________% _________%
_________% {Strategic Stock} _________% _________%
_________% {Asset Allocation} _________% _________%
{CALVERT}
_________% {Social Small Cap Growth} _________% _________%
_________% {Social Balanced} _________% _________%
{VAN ECK}
_________% {Worldwide Hard Assets} _________% _________%
_________% {Worldwide Real Estate} _________% _________%
{MODEL PORTFOLIOS}
_________% {Growth} _________% _________%
_________% {Balanced} _________% _________%
_________% {Conservative Growth} _________% _________%
_________% {Capital Appreciation} _________% _________%

100% TOTAL 100% 100%
- -----------------------------------------------------------------------------------------------------------------------------------

IPV-2047 12/99
</TABLE>

<PAGE>

<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
/ / DOLLAR COST AVERAGING: Please transfer my initial allocation on the _____ day of the month ( 1ST - 28TH ) from the account(s)
below into the Allocation Options indicated on the previous page in the column headed 'DCA Destination Allocation'.
/ / DCA Fixed Account 1 for _____ months (1 - 6 MONTHS) or for _____ quarters (1 - 2 QUARTERS).
/ / DCA Fixed Account 2 for _____ months (7 - 12 MONTHS) or for _____ quarters (3 - 4 QUARTERS).
/ / __________________________________________ for _____ months (NO LIMIT) or for _____ quarters (NO LIMIT).
(OTHER ALLOCATION OPTION - DO NOT USE FOR DCA FIXED ACCOUNTS)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
/ / AUTOMATIC PURCHASE PAYMENTS: A minimum initial Purchase Payment of $2,000 is required, after which Automatic
Purchase Payments may begin. Use column 2, 'SUBSEQUENT PURCHASE PAYMENT ALLOCATION' to allocate Automatic Purchase
Payments. If Automatic Purchase Payments are made, Partial Automatic Withdrawals cannot be selected. I authorize Protective
Life to collect $ ___________ (MINIMUM $50) / / monthly / / quarterly on the _____ day of the month ( 1ST - 28TH ) by
initiating automatic deductions from my account. (PLEASE ATTACH A VOIDED CHECK OR WITHDRAWAL TICKET.)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
/ / PARTIAL AUTOMATIC WITHDRAWALS: A minimum Purchase Payment of $5,000 is required to begin surrenders through Partial
Automatic Withdrawals. You may withdraw up to 15% of your initial Purchase Payment(s) without a surrender charge during the
first Contract Year. The minimum withdrawal amount is $100. Partial Automatic Withdrawals will be taken pro-rata from the
Allocation Options and will be made only by electronic funds transfer. If Partial Automatic Withdrawals are made, Automatic
Purchase Payments will not be accepted by the Company. Please withdraw $________ / / monthly / / quarterly on the _____
day of the month (1ST - 28TH). This election will remain in effect until changed or revoked, which you may do at any time. (PLEASE
ATTACH A VOIDED CHECK OR WITHDRAWAL TICKET.)

NOTICE OF TAX WITHHOLDING ON DISTRIBUTIONS OR WITHDRAWALS
The taxable portion of these distributions is subject to federal income tax withholding tax unless you elect not to have any
withholding apply. You may elect not to have withholding apply to your distribution by checking the appropriate box, signing and
dating this form. You may change or revoke your election at any time. This withholding election will not apply to withdrawals from
your Contract that are not Partial Automatic Withdrawals. You will need to make a separate election for each non-automatic
withdrawal. You must provide us your correct Social Security or Tax Identification Number in order to elect out of withholding. If
you do not respond by the date your distributions are scheduled to begin, federal income tax and any applicable state income tax
will be withheld from the taxable portion of your distributions.

If you elect not to have withholding apply to your distributions or if you do not have enough federal income tax withheld, you may
be responsible for payment of estimated tax and may incur a penalty under the estimated tax rules if your withholding and estimated
tax payments are not sufficient. Even if you elect not to have federal income tax withheld from your distributions you are liable
for payment of federal income tax on the taxable portion of each payment to you. Withdrawals prior to age 59 1/2 may be subject to a
10% penalty on the taxable portion of your distribution.

WITHHOLDING ELECTION
PLEASE CHECK ONLY ONE BOX BELOW:
/ / I have read the above information and I DO NOT want to have federal income tax or state income tax (where applicable) withheld
from my distribution.
/ / I have read the above information and I DO want to have federal income tax withheld from my distribution at the rate of _____%.
(If no percent is indicated, we will withhold at the applicable tax rate. Do not elect a percentage less than 10%. In some states,
state withholding may also apply.)
/ / I have read the above information and I DO want to have federal income tax withheld from my distribution at the applicable rate.
Please withhold an additional $ _________. (flat dollar amount) (In some states if federal tax is withheld, state tax withholding
will also apply.)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
/ / PORTFOLIO REBALANCING: Please rebalance my Variable Account / / quarterly / / semi-annually / / annually on the _____ day of the
month ( 1ST - 28TH ) according to my current Variable Account Purchase Payment allocation.
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
SPECIAL REMARKS

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

IPV-2047 12/99
</TABLE>

<PAGE>

<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
SUITABILITY
Did you receive a current prospectus? Yes / / No / /
Do you believe this Contract meets your financial objectives and anticipated financial needs? Yes / / No / /
AUTHORIZATION
My telephone and other non-written instructions should be honored, subject to the terms of the prospectus. Yes / / No / /
The Agent who signs this application is authorized to make transfers on my behalf. Yes / / No / /
REPLACEMENT
Does this annuity change or replace any existing annuity contract or life insurance policy? Yes / / No / /
If 'Yes' please complete below: (USE 'SPECIAL REMARKS' IF ADDITIONAL SPACE IS NEEDED.)
Company Name(s): ____________________________________________________________ Policy Number(s): _______________________
____________________________________________________________ _______________________

CONSENT FOR ELECTRONIC DELIVERY Yes / / No / /
I (We) authorize Protective Life and the Funds in which the Sub-Accounts invest to deliver prospectuses, periodic reports, proxy
solicitation materials and other notices and disclosure materials to me electronically. When this material becomes available on
Protective Life's web site (www. protective.com) I will receive an e-mail notification describing the material. I understand that I
may incur on-line charges from an internet service provider to access it. (There is no access charge from Protective Life.) This
authorization will be in effect until I revoke it, which I may do at any time by calling or writing the Company. I may receive a
paper copy of this without charge material whenever I request it.
ELECTRONIC MAIL ADDRESS: ______________________________________________________ (EXAMPLE: [email protected])

THIS APPLICATION SHALL BECOME PART OF THE ANNUITY CONTRACT ISSUED BY PROTECTIVE LIFE.

THE CONTRACT VALUE AND ANNUITY INCOME PAYMENTS, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE
ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT.

{NOTICE TO RESIDENTS OF AZ: On written request you may ask us to provide you
within ten business days additional factual information regarding the benefits and provisions of this Contract. If for any reason
you are not satisfied with the Contract, you may cancel it within ten days after you receive it by returning the Contract to our
office, or the agent who sold it with a written request for cancellation. Return of this Contract by mail is effective on receipt
by us. The returned Contract will be treated as if we had never issued it. We will promptly return the Contract Value. This may be
more or less than the Purchase Payment(s).
NOTICE TO RESIDENTS OF CO: It is unlawful to knowingly provide false, incomplete or misleading facts or information to an insurance
company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of
insurance and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete or
misleading facts or information to a policy holder or claimant for the purpose of defrauding or attempting to defraud the policy
holder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado Division
of Insurance within the Department of Regulatory agencies.
NOTICE TO RESIDENTS OF AR, DC, KY, LA, ME, NM, OH AND PA: Any person who knowingly and with intent to defraud any insurance company
or other person, files an application for insurance or statement of claim containing any materially false information or conceals
for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime
and subjects such person to criminal and civil penalties.}

I (WE) ACKNOWLEDGE THAT THE INFORMATION CONTAINED IN THIS ANNUITY APPLICATION IS TRUE AND CORRECT.

Application signed at: ____________________________________________ on __________________________.
(CITY, STATE) (DATE)
Owner: ________________________________________ Joint Owner: _______________________________
(IF ANY)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
AGENT REPORT - The agent acknowledges that to the best of his or her knowledge and belief this annuity / / does / / does not
change or replace any existing life insurance or annuity policy.

Agent's signature: ________________________________ Print agent's name: ______________________________

Agent number: ___________________________________ Broker/Dealer name: _____________________________

Branch: ________________________________________ Agent phone number: _____________________________

Client account number: ____________________________
- -----------------------------------------------------------------------------------------------------------------------------------

IPV-2047 12/99
</TABLE>

<PAGE>

EXHIBIT 5(b)

PLEASE MAKE CHECKS PAYABLE TO:
{THE PROTECTIVE VARIABLE ANNUITY} PROTECTIVE LIFE INSURANCE COMPANY

OVERNIGHT: POSTAL MAIL:
2801 HWY 280 SOUTH - 3-7 IPS P.O. BOX 10648
BIRMINGHAM, AL 35223 BIRMINGHAM, AL 35202-0648

CERTIFICATE APPLICATION HOME OFFICE: 28 WHITE BRIDGE ROAD, #104 NASHVILLE,
TENNESSEE 37205
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
OWNER NAME, STREET, CITY, STATE, ZIP CODE Phone Number ( ) -
/ / Male Birthdate (MO./DAY/YR.) / /
/ / Female Tax ID/Social Security No. -- --
- ---------------------------------------------------------------------------------------------------------------------------------
JOINT OWNER (IF ANY) NAME, STREET, CITY, STATE, ZIP CODE
/ / Male Birthdate (MO./DAY/YR.) / /
/ / Female Tax ID/Social Security No. -- --
- ---------------------------------------------------------------------------------------------------------------------------------
ANNUITANT (IF OTHER THAN OWNER) NAME, STREET, CITY, STATE, ZIP CODE
/ / Male Birthdate (MO./DAY/YR.) / /
/ / Female Tax ID/Social Security No. -- --
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
BENEFICIARY NAME, ADDRESS, RELATIONSHIP TO OWNER SS# & PERCENTAGE (USE `SPECIAL REMARKS' IF ADDITIONAL SPACE IS NEEDED.)

Primary(s)-

Contingent(s)-
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PLAN TYPE: Check all that apply.
/ / Non-Qualified / / Roth IRA If an IRA purchase payment includes new
/ / CD Transfer / / IRA Transfer contributions, please complete below:
/ / Sec. 1035 Exchange / / IRA Rollover
/ / TSA Direct Rollover / / IRA Direct Rollover Allocate IRA Contribution to Tax Year
/ / ___________________ $_________ (AMOUNT) _________ (PREVIOUS TAX YEAR)
(OTHER) $_________ (AMOUNT) _________ (CURRENT TAX YEAR)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
BENEFIT PACKAGE - Check only one. (SEE PROSPECTUS FOR DETAILS).
/ / STANDARD (MORTALITY AND EXPENSE RISK CHARGE - (1.10%); ADMINISTRATIVE CHARGE - (0.15%).)
Death Benefit - Return of Purchase Payments
Surrender Charge Waivers - None

/ / ANNUAL RESET DEATH BENEFIT (MORTALITY AND EXPENSE RISK CHARGE - (1.25%); ADMINISTRATIVE CHARGE - (0.15%).)
Death Benefit - Return of Purchase Payments, Annual Reset
Surrender Charge Waivers - Nursing Home and Terminal Illness

/ / COMPOUND AND 3-YEAR RESET DEATH BENEFIT (MORTALITY AND EXPENSE RISK CHARGE - (1.25%); ADMINISTRATIVE CHARGE - (0.15%).)
Death Benefit - Return of Purchase Payments, Compound, 3-Year Reset
Surrender Charge Waivers - Nursing Home and Terminal Illness
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
A VARIABLE ANNUITY CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED BY ANY BANK OR FINANCIAL INSTITUTION. IT IS NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY AND IS SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

IPV-2049 12/99
</TABLE>

<PAGE>

<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PURCHASE PAYMENT: $_____________ (MINIMUM $2,000) Unless you give us instructions for allocating subsequent Purchase Payments now
by completing column 2, or by giving us instructions when you make the subsequent Purchase Payment, we will allocate subsequent
Purchase Payments using the DCA Destination Allocation (column 3) if completed, and if not the Initial Purchase Payment
Allocation. (PLEASE ALLOCATE USING WHOLE PERCENTAGES.)

1. INITIAL PURCHASE 2. SUBSEQUENT PURCHASE 3. DCA DESTINATION
PAYMENT ALLOCATION PAYMENT ALLOCATION ALLOCATION
- ------------------ ------------------ ----------

{PROTECTIVE LIFE GUARANTEED ACCOUNT}
60-day Rate Lock for the Guaranteed Account? / / Yes / / No
_______% {Fixed Account} ________% ________%
_______% {DCA Fixed Account 1} N/A N/A
_______% {DCA Fixed Account 2} N/A N/A
{GOLDMAN SACHS/PIC}
_______% {International Equity} ________% ________%
_______% {Small Cap Value} ________% ________%
_______% {Capital Growth} ________% ________%
_______% {CORE U.S. Equity} ________% ________%
_______% {Growth and Income} ________% ________%
_______% {Global Income} ________% ________%
{MASSACHUSETTS FINANCIAL SERVICES (MFS)}
_______% {New Discovery} ________% ________%
_______% {Emerging Growth} ________% ________%
_______% {Research} ________% ________%
_______% {Growth With Income} ________% ________%
_______% {Utilities} ________% ________%
_______% {Total Return} ________% ________%
_______% {Growth Series} ________% ________%
{OPPENHEIMERFUNDS}
_______% {Aggressive Growth} ________% ________%
_______% {Global Securities} ________% ________%
_______% {Capital Appreciation} ________% ________%
_______% {Main Street Growth & Income} ________% ________%
_______% {High Income} ________% ________%
_______% {Strategic Bond} ________% ________%
_______% {Money Fund} ________% ________%
{VAN KAMPEN LIFE INVESTMENT TRUST}
_______% {Emerging Growth} ________% ________%
_______% {Enterprise} ________% ________%
_______% {Comstock} ________% ________%
_______% {Growth and Income} ________% ________%
_______% {Strategic Stock} ________% ________%
_______% {Asset Allocation} ________% ________%
{CALVERT}
_______% {Social Small Cap Growth} ________% ________%
_______% {Social Balanced} ________% ________%
{VAN ECK}
_______% {Worldwide Hard Assets} ________% ________%
_______% {Worldwide Real Estate} ________% ________%
{MODEL PORTFOLIOS}
_______% {Growth} ________% ________%
_______% {Balanced} ________% ________%
_______% {Capital Appreciation} ________% ________%

100% TOTAL 100% 100%
- ---------------------------------------------------------------------------------------------------------------------------------
IPV-2049 12/99
</TABLE>

<PAGE>

<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
/ / DOLLAR COST AVERAGING: Please transfer my initial allocation on the ____ day of the month (1ST - 28TH) from the account(s)
below into the Allocation Options indicated on the previous page in the column headed `DCA DESTINATION ALLOCATION'.
/ / DCA Fixed Account 1 for ____ months (1 - 6 MONTHS) or for ____ quarters (1 - 2 QUARTERS).
/ / DCA Fixed Account 2 for ____ months (7 - 12 MONTHS) or for ____ quarters (3 - 4 QUARTERS).
/ / _____________________________________________________________ for ____ months (NO LIMIT) or for ____ quarters (NO LIMIT).
(OTHER ALLOCATION OPTION - DO NOT USE FOR DCA FIXED ACCOUNTS)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
/ / AUTOMATIC PURCHASE PAYMENTS: A minimum initial Purchase Payment of $2,000 is required, after which Automatic Purchase
Payments may begin. Use column 2, `SUBSEQUENT PURCHASE PAYMENT ALLOCATION' to allocate Automatic Purchase Payments. If Automatic
Purchase Payments are made, Partial Automatic Withdrawals cannot be selected. I authorize Protective Life to collect $_______
(MINIMUM $50) / / monthly / / quarterly on the ____ day of the month (1ST - 28TH) by initiating automatic deductions from my
account. (PLEASE ATTACH A VOIDED CHECK OR WITHDRAWAL TICKET.)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
/ / PARTIAL AUTOMATIC WITHDRAWALS: A minimum Purchase Payment of $5,000 is required to begin surrenders through Partial Automatic
Withdrawals. You may withdraw up to 15% of your initial Purchase Payment(s) without a surrender charge during the first Contract
Year. The minimum withdrawal amount is $100. Partial Automatic Withdrawals will be taken pro-rata from the Allocation Options and
will be made only by electronic funds transfer. If Partial Automatic Withdrawals are made, Automatic Purchase Payments will not
be accepted by the Company. Please withdraw $______ / / monthly / / quarterly on the ____ day of the month (1ST - 28TH). This
election will remain in effect until changed or revoked, which you may do at any time. (PLEASE ATTACH A VOIDED CHECK OR
WITHDRAWAL TICKET.)

NOTICE OF TAX WITHHOLDING ON DISTRIBUTIONS OR WITHDRAWALS
The taxable portion of these distributions is subject to federal income tax withholding tax unless you elect not to have any
withholding apply. You may elect not to have withholding apply to your distribution by checking the appropriate box, signing and
dating this form. You may change or revoke your election at any time. This withholding election will not apply to withdrawals
from your Contract that are not Partial Automatic Withdrawals. You will need to make a separate election for each non-automatic
withdrawal. You must provide us your correct Social Security or Tax Identification Number in order to elect out of withholding.
IF YOU DO NOT RESPOND BY THE DATE YOUR DISTRIBUTIONS ARE SCHEDULED TO BEGIN, FEDERAL INCOME TAX AND ANY APPLICABLE STATE INCOME
TAX WILL BE WITHHELD FROM THE TAXABLE PORTION OF YOUR DISTRIBUTIONS.

If you elect not to have withholding apply to your distributions or if you do not have enough federal income tax withheld, you
may be responsible for payment of estimated tax and may incur a penalty under the estimated tax rules if your withholding and
estimated tax payments are not sufficient. Even if you elect not to have federal income tax withheld from your distributions you
are liable for payment of federal income tax on the taxable portion of each payment to you. WITHDRAWALS PRIOR TO AGE 59 1/2 MAY
BE SUBJECT TO A 10% PENALTY ON THE TAXABLE PORTION OF YOUR DISTRIBUTION.

WITHHOLDING ELECTION
PLEASE CHECK ONLY ONE BOX BELOW:
--------------------------------

/ / I have read the above information and I DO NOT want to have federal income tax or state income tax (where applicable)
withheld from my distribution.
/ / I have read the above information and I DO want to have federal income tax withheld from my distribution at the rate of ___%.
(If no percent is indicated, we will withhold at the applicable tax rate. Do no elect a percentage less than 10%. In some states,
state withholding may also apply.)
/ / I have read the above information and I DO want to have federal income tax withheld from my distribution at the applicable
tax rate. Please withhold an additional $_______, (flat dollar amount) (In some states if federal tax is withheld, state tax
withholding will also apply.)
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/ / PORTFOLIO REBALANCING: Please rebalance my Variable Account / / quarterly / / semi-annually / / annually on the ____ day
of the month (1ST - 28TH) according to my current Variable Account Purchase Payment allocation.
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
SPECIAL REMARKS

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IPV-2049 12/99
</TABLE>

<PAGE>

<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
SUITABILITY
Did you receive a current prospectus? Yes / / No / /
Do you believe this Contract meets your financial objectives and anticipated financial needs? Yes / / No / /
AUTHORIZATION
My telephone and other non-written instructions should be honored, subject to the terms of the prospectus. Yes / / No / /
The Agent who signs this application is authorized to make transfers on my behalf. Yes / / No / /
REPLACEMENT
Does this annuity change or replace any existing annuity contract or life insurance policy? Yes / / No / /
If `Yes' please complete below: (USE `SPECIAL REMARKS' IF ADDITIONAL SPACE IS NEEDED.)
Company Name(s): _____________________________________________________________________ Policy Number(s): ______________________
_____________________________________________________________________ ______________________

CONSENT FOR ELECTRONIC DELIVERY Yes / / No / /
I (We) authorize Protective Life and the Funds in which the Sub-Accounts invest to deliver prospectuses, periodic reports, proxy
solicitation materials and other notices and disclosure materials to me electronically. When this material becomes available on
Protective Life's web site (www.protective.com) I will receive an e-mail notification describing the material. I understand that
I may incur on-line charges from an internet service provider to access it. (There is no access charge from Protective Life.)
This authorization will be in effect until I revoke it, which I may do at any time by calling or writing the Company. I may
receive a paper copy of this without charge material whenever I request it.

ELECTRONIC MAIL ADDRESS: _______________________________________________ (EXAMPLE: [email protected])

THIS APPLICATION SHALL BECOME PART OF THE ANNUITY CONTRACT ISSUED BY PROTECTIVE LIFE.

THE CONTRACT VALUE AND ANNUITY INCOME PAYMENTS, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE
ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT.

{NOTICE TO RESIDENTS OF AZ: On written request you may ask us to provide you within ten business days additional factual
information regarding the benefits and provisions of this Contract. If for any reason you are not satisfied with the Contract,
you may cancel it within ten days after you receive it by returning the Contract to our office, or the agent who sold it with a
written request for cancellation. Return of this Contract by mail is effective on receipt by us. The returned Contract will be
treated as if we had never issued it. We will promptly return the Contract Value. This may be more or less than the Purchase
Payment(s).
NOTICE TO RESIDENTS OF CO: It is unlawful to knowingly provide false, incomplete or misleading facts or information to an
insurance company for the purchase of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines,
denial of insurance and civil damages. Any insurance company or agent of an insurance company who knowingly provides false,
incomplete or misleading facts or information to a policy holder or claimant for the purpose of defrauding or attempting to
defraud the policy holder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to
the Colorado Division of Insurance within the Department of Regulatory agencies.
NOTICE TO RESIDENTS OF AR, DC, KY, LA, ME, NM, OH AND PA: Any person who knowingly and with intent to defraud any insurance
company or other person, files an application for insurance or statement of claim containing any materially false information or
conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act,
which is a crime and subjects such person to criminal and civil penalties.}

I (WE) ACKNOWLEDGE THAT THE INFORMATION CONTAINED IN THIS ANNUITY APPLICATION IS TRUE AND CORRECT.

Application signed at: ________________________________________________ on _____________________________________________________.
(CITY, STATE) (DATE)
Owner: _________________________________________________ Joint Owner: ________________________________________________________
(IF ANY)
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
AGENT REPORT - The agent acknowledges that to the best of his or her knowledge and belief this annuity / / does / / does not
change or replace any existing life insurance or annuity policy.

Agent's signature: ____________________________________ Print agent's name: __________________________________________________

Agent number: _________________________________________ Broker/Dealer name: __________________________________________________

Branch: _______________________________________________ Agent phone number: __________________________________________________

Client account number: ________________________________
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IPV-2049 12/99
</TABLE>

<PAGE>

DIRECTORS'
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned Directors of
Protective Life Insurance Company, a Tennessee corporation, ("Company") by his
execution hereof or upon an identical counterpart hereof, does hereby
constitute and appoint John D. Johns, Steve M. Callaway or Jerry W. DeFoor, and
each or any of them, his true and lawful attorney-in-fact and agent, for him and
in his name, place and stead, to execute and sign the Registration Statement on
Form N-4 to be filed by the Company in January, 2000 in connection with its
individual flexible premium deferred variable and fixed annuity product, with
the Securities and Exchange Commission, pursuant to the provisions of the
Securities Exchange Act of 1933 and the Investment Company Act of 1940 and,
further, to execute and sign any and all pre-effective and post-effective
amendments to such Registration Statement, and to file same, with all exhibits
and schedules thereto and all other documents in connection therewith, with the
Securities and Exchange Commission and with such state securities authorities
as may be appropriate, granting unto said attorney-in-fact and agent, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes of the undersigned might or could do in person, hereby
ratifying and confirming all the acts of said attorney-in-fact and agent or any
of them which they may lawfully do in the premises or cause to be done by virtue
hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand and
seal this 29th day of December, 1999.

WITNESS TO ALL SIGNATURES:

/s/ Deborah J. Long /s/ Stacey J. Toups
- ------------------------------------ --------------------------------------
Deborah J. Long Witness to Deborah J. Long's signature

/s/ Drayton Nabers, Jr. /s/ Danny L. Bentley
- ------------------------------------ --------------------------------------
Drayton Nabers, Jr. Danny L. Bentley

/s/ John D. Johns /s/ Richard J. Blelen
- ------------------------------------ --------------------------------------
John D. Johns Richard J. Blelen

/s/ R. Stephen Briggs /s/ Carolyn King
- ------------------------------------ --------------------------------------
R. Stephen Briggs Carolyn King

/s/ Deborah J. Long /s/ John E. Massengale
- ------------------------------------ --------------------------------------
Deborah J. Long John E. Massengale

/s/ Steven A. Schultz /s/ Wayne E. Stuenkel
- ------------------------------------ --------------------------------------
Steven A. Schultz Wayne E. Stuenkel

/s/ A. S. Williams III /s/ T. Davis Keyes
- ------------------------------------ --------------------------------------
A. S. Williams III T. Davis Keyes