VEL II ACCT OF STATE MUTUAL LIFE ASSUR CO OF AMERICA, 485BPOS, 1995-10-16

VEL II ACCT OF STATE MUTUAL LIFE ASSUR CO OF AMERICA
485BPOS, 1995-10-16

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<PAGE>
File 33-71056
811-8130

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-6

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

Post-Effective Amendment No. 3
_____

VEL II ACCOUNT OF STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA
________________________________________________________________
(Exact Name of Registrant)

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA
440 Lincoln Street
Worcester MA 01653
(Address of Principal Executive Office)

Richard J. Baker, Vice President and Secretary
State Mutual Life Assurance Company of America
440 Lincoln Street
Worcester MA 01653
(Name and Address of Agent for Service of Process)

It is proposed that this filing will become effective:

___on _______________pursuant to paragraph (a) of Rule 485
___60 days after filing pursuant to paragraph (a) of Rule 485
___immediately after filing pursuant to paragraph (b) of Rule 485

X on October 16, 1995 pursuant to paragraph (b) of Rule 485
___ ____________________

FLEXIBLE PREMIUM VARIABLE LIFE

Pursuant to Reg. Section 270.24f-2 of the Investment Company Act of 1940,
Registrant hereby declares that an indefinite amount of its securities is
being registered under the Securities Act of 1933. The Rule 24f-2 Notice for
the issuer's fiscal year ended December 31, 1994 was filed on February 21,
1995.

SMVEL93.FAC

<PAGE>

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

ITEM NO. OF
FORM N-8B-82 CAPTION IN PROSPECTUS

1. . . . . . . . . . . . . . . . . . . . Cover Page
2. . . . . . . . . . . . . . . . . . . . Cover Page
3. . . . . . . . . . . . . . . . . . . . Not Applicable
4. . . . . . . . . . . . . . . . . . . . Distribution
5. . . . . . . . . . . . . . . . . . . . The Company, The VEL II Account
6. . . . . . . . . . . . . . . . . . . . The VEL II Account
7. . . . . . . . . . . . . . . . . . . . Not Applicable
8. . . . . . . . . . . . . . . . . . . . Not Applicable
9. . . . . . . . . . . . . . . . . . . . Legal Proceedings
10 . . . . . . . . . . . . . . . . . . . Summary; Description of the Company,
The VEL II Account, Allmerica
Investment Trust, Variable Insurance
Products Fund, Variable Insurance
Products Fund II, T. Rowe Price
International Series, Inc. and
Delaware Group Premium Fund; The
Policy; Policy Termination and
Reinstatement; Other Policy
Provisions
11 . . . . . . . . . . . . . . . . . . . Summary; Allmerica Investment
Trust; Variable Insurance Products
Fund; Variable Insurance Products
Fund II; T. Rowe Price International
Series, Inc.; Delaware Group Premium
Fund, Inc.; Investment Objectives
and Policies
12 . . . . . . . . . . . . . . . . . . . Summary; Allmerica Investment Trust;
Variable Insurance Products Fund;
Variable Insurance Products Fund II;
T. Rowe Price International Series,
Inc.; Delaware Group Premium Fund,
Inc.
13 . . . . . . . . . . . . . . . . . . . Summary; Allmerica Investment
Trust;Variable Insurance Products
Fund; Variable Insurance Products
Fund II; T. Rowe Price International
Series, Inc.; Delaware Group Premium
Fund, Inc.; Investment Advisory
Services to the Trust; Investment
Advisory Services to Variable
Insurance Products Fund; Investment
Advisory Services to Variable
Insurance Products Fund II;
Investment Advisory Services to T.
Rowe Price International Series,
Inc.; Investment Advisory Services
to Delaware Group Premium Fund,
Inc.; Charges and Deductions
14 . . . . . . . . . . . . . . . . . . . Summary; Application for a Policy
15 . . . . . . . . . . . . . . . . . . . Summary; Application for a
Policy;Premium Payments; Allocation
of Net Premiums
16 . . . . . . . . . . . . . . . . . . . The VEL II Account; Allmerica
Investment Trust; Variable Insurance
Products Fund; Variable Insurance
Products Fund II; T. Rowe Price
International Series, Inc.; Delaware
Group Premium Fund, Inc.; Premium
Payments; Allocation of Net Premiums
17 . . . . . . . . . . . . . . . . . . . Summary; Surrender; Partial
Withdrawal; Charges and Deductions;
Policy Termination and Reinstatement
<PAGE>
18 . . . . . . . . . . . . . . . . . . . The VEL II Account; Allmerica
Investment Trust; Variable Insurance
Products Fund; Variable Insurance
Products Fund II; T. Rowe Price
International Series, Inc.; Delaware
Group Premium Fund, Inc.; Premium
Payments
19 . . . . . . . . . . . . . . . . . . . Reports; Voting Rights
20 . . . . . . . . . . . . . . . . . . . Not Applicable
21 . . . . . . . . . . . . . . . . . . . Summary; Policy Loans; Other Policy
Provisions
22 . . . . . . . . . . . . . . . . . . . Other Policy Provisions
23 . . . . . . . . . . . . . . . . . . . Not Required
24 . . . . . . . . . . . . . . . . . . . Other Policy Provisions
25 . . . . . . . . . . . . . . . . . . . The Company
26 . . . . . . . . . . . . . . . . . . . Not Applicable
27 . . . . . . . . . . . . . . . . . . . The Company
28 . . . . . . . . . . . . . . . . . . . Directors and Principal Officers of
the Company
29 . . . . . . . . . . . . . . . . . . . The Company
30 . . . . . . . . . . . . . . . . . . . Not Applicable
31 . . . . . . . . . . . . . . . . . . . Not Applicable
32 . . . . . . . . . . . . . . . . . . . Not Applicable
33 . . . . . . . . . . . . . . . . . . . Not Applicable
34 . . . . . . . . . . . . . . . . . . . Not Applicable
35 . . . . . . . . . . . . . . . . . . . Distribution
36 . . . . . . . . . . . . . . . . . . . Not Applicable
37 . . . . . . . . . . . . . . . . . . . Not Applicable
38 . . . . . . . . . . . . . . . . . . . Summary; Distribution
39 . . . . . . . . . . . . . . . . . . . Summary; Distribution
40 . . . . . . . . . . . . . . . . . . . Not Applicable
41 . . . . . . . . . . . . . . . . . . . The Company, Distribution
42 . . . . . . . . . . . . . . . . . . . Not Applicable
43 . . . . . . . . . . . . . . . . . . . Not Applicable
44 . . . . . . . . . . . . . . . . . . . Premium Payments; Policy Value and
CashSurrender Value
45 . . . . . . . . . . . . . . . . . . . Not Applicable
46 . . . . . . . . . . . . . . . . . . . Policy Value and Cash Surrender
Value; Federal Tax Considerations
47 . . . . . . . . . . . . . . . . . . . The Company
48 . . . . . . . . . . . . . . . . . . . Not Applicable
49 . . . . . . . . . . . . . . . . . . . Not Applicable
50 . . . . . . . . . . . . . . . . . . . The VEL II Account
51 . . . . . . . . . . . . . . . . . . . Cover Page; Summary; Charges and
Deductions; The Policy; Policy
Termination and Reinstatement;
Other Policy Provisions
52 . . . . . . . . . . . . . . . . . . . Addition, Deletion or Substitution
of Investments
53 . . . . . . . . . . . . . . . . . . . Federal Tax Considerations
54 . . . . . . . . . . . . . . . . . . . Not Applicable
55 . . . . . . . . . . . . . . . . . . . Not Applicable
56 . . . . . . . . . . . . . . . . . . . Not Applicable
57 . . . . . . . . . . . . . . . . . . . Not Applicable
58 . . . . . . . . . . . . . . . . . . . Not Applicable
59 . . . . . . . . . . . . . . . . . . . Not Applicable
<PAGE>

PROSPECTUS SUPPLEMENT
VEL II ACCOUNT
(Supplement to prospectus dated May 1, 1995)

Effective October 16, 1995, State Mutual Life Assurance Company of America
converted from a Massachusetts mutual life insurance company to a Massachusetts
stock life company, and concurrently changed its name to FIRST ALLMERICA
FINANCIAL LIFE INSURANCE COMPANY ("Company"). The Company is a wholly-owned
subsidiary of Allmerica Financial Corporation, 440 Lincoln Street, Worcester,
Massachusetts, 01653. The attached prospectus is hereby amended to delete the
name "State Mutual Life Assurance Company of America" and to substitute FIRST
ALLMERICA FINANCIAL LIFE INSURANCE COMPANY.

* * *

The first paragraph of Note 2 to the December 31, 1994 financial statements of
State Mutual Life Assurance Company of America which begins on page 58 of the
prospectus has been replaced with the following:

UNAUDITED

On February 28, 1995, State Mutual's Board of Directors adopted, pursuant to
Massachusetts insurance law, a plan of reorganization (the "plan") whereby State
Mutual will convert from a Massachusetts mutual life insurance company to a
Massachusetts stock life company and will become a wholly-owned subsidiary of
Allmerica Financial Corporation ("AFC"). On June 30, 1995, the policyholders
approved the Plan and on August 2, 1995 (following a hearing on the Plan), the
Commissioner of the Massachusetts Division of Insurance approved the Plan. In
October, 1995, the closing of an initial public offering of AFC Common Stock and
other financings were completed, and certain proceeds thereof were contributed
to State Mutual which was concurrently renamed First Allmerica Financial Life
Insurance Company. As a result, all conditions to the effectiveness of the Plan
have been satisfied and the Plan is effective.

* * *

CHANGES IN DIRECTORS AND OFFICERS

Bradford K. Gallagher and Ruben P. Moreno have resigned as Vice Presidents of
the Company.

SUPPLEMENT DATED OCTOBER 16, 1995

<PAGE>

This prospectus describes individual flexible premium variable life insurance
policies ("Policies") offered by State Mutual Life Assurance Company of
America ("Company") to applicants Age 80 years old and under. Within limits,
you may choose the amount of initial premium desired and the initial Sum
Insured. You have the flexibility to vary the frequency and amount of
premium payments, subject to certain restrictions and conditions. You may
withdraw a portion of the Policy's surrender value, or the Policy may be
fully surrendered at any time, subject to certain limitations. Because of
the substantial nature of the surrender charge, the Policy is not suitable
for short-term investment purposes. A Policyowner contemplating surrender of
a Policy should pay special attention to the limitation of deferred sales
charges on surrenders in the first two years following issuance or Face
Amount increase.

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

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

----------

IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY
OWN A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES OF THE
ALLMERICA INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE
INSURANCE PRODUCTS FUND II, T. ROWE PRICE INTERNATIONAL SERIES, INC. AND
DELAWARE GROUP PREMIUM FUND, INC. FIDELITY'S HIGH INCOME PORTFOLIO INVESTS
IN HIGHER YIELDING, HIGHER RISK, LOWER RATED DEBT SECURITIES (SEE "INVESTMENT
OBJECTIVES AND POLICIES" IN THIS PROSPECTUS). INVESTORS SHOULD RETAIN A COPY
OF THIS PROSPECTUS FOR FUTURE REFERENCE.

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

Dated May 1, 1995
440 Lincoln Street
Worcester, Massachusetts 01653
(508) 855-1000

<PAGE>

(Continued from cover page)
The Trust, VIPF, VIPF II, T. Rowe and DGPF are open-end, diversified series
investment companies. Eleven different investment portfolios of the Trust
are available under the Policies: the Growth Fund, Investment Grade Income
Fund, Money Market Fund, Equity Index Fund, Government Bond Fund, Select
International Equity Fund, Select Aggressive Growth Fund, Select Capital
Appreciation Fund, Select Growth Fund, Select Growth and Income Fund and
Small Cap Value Fund (the "Funds"). Four different investment portfolios of
VIPF are available under the Policies: High Income Portfolio, Equity-Income
Portfolio, Growth Portfolio, and Overseas Portfolio ("Portfolios"). One
investment portfolio of VIPF II ("Portfolio") is available under the
Policies: the Asset Manager Portfolio. One investment portfolio of T. Rowe
("Portfolio") is available under the Policies: the International Stock
Portfolio. One investment portfolio of DGPF ("Series") is available under
the Policies: the International Equity Series. Each Fund, Portfolio and
Series has its own investment objectives. The accompanying prospectuses of
the Trust, VIPF, VIPF II, T. Rowe and DGPF describe the investment objectives
and certain attendant risks of each Underlying Fund.

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

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

<PAGE>

Table of Contents

SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . 5

SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . 7

PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . .14

DESCRIPTION OF THE COMPANY, THE VEL II ACCOUNT, ALLMERICA
INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, T. ROWE PRICE INTERNATIONAL
SERIES, INC. AND DELAWARE GROUP PREMIUM FUND, INC. . . . .17
THE COMPANY . . . . . . . . . . . . . . . . . . . . .17
THE VEL II ACCOUNT . . . . . . . . . . . . . . . . .17
ALLMERICA INVESTMENT TRUST . . . . . . . . . . . . .17
VARIABLE INSURANCE PRODUCTS FUND. . . . . . . . . . .18
VARIABLE INSURANCE PRODUCTS FUND II . . . . . . . . .18
T. ROWE PRICE INTERNATIONAL SERIES, INC.. . . . . . .18
DELAWARE GROUP PREMIUM FUND, INC. . . . . . . . . . .18
INVESTMENT OBJECTIVES AND POLICIES. . . . . . . . . .18
INVESTMENT ADVISORY SERVICES TO THE TRUST . . . . . .20
INVESTMENT ADVISORY SERVICES TO VIPF AND VIPF II. . .23
INVESTMENT ADVISORY SERVICES TO T. ROWE . . . . . . .23
INVESTMENT ADVISORY SERVICES TO DGPF. . . . . . . . .23
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS . .23
VOTING RIGHTS . . . . . . . . . . . . . . . . . . . .24

THE POLICY . . . . . . . . . . . . . . . . . . . . . . . .25
APPLICATION FOR A POLICY. . . . . . . . . . . . . . .25
FREE LOOK PERIOD. . . . . . . . . . . . . . . . . . .25
CONVERSION PRIVILEGES . . . . . . . . . . . . . . . .26
PREMIUM PAYMENTS. . . . . . . . . . . . . . . . . . .26
ALLOCATION OF NET PREMIUMS. . . . . . . . . . . . . .27
TRANSFER PRIVILEGE. . . . . . . . . . . . . . . . . .27
DEATH PROCEEDS. . . . . . . . . . . . . . . . . . . .28
SUM INSURED OPTIONS . . . . . . . . . . . . . . . . .28
CHANGE IN SUM INSURED OPTION. . . . . . . . . . . . .30
CHANGE IN FACE AMOUNT . . . . . . . . . . . . . . . .30
POLICY VALUE AND SURRENDER VALUE. . . . . . . . . . .31
PAYMENT OPTIONS . . . . . . . . . . . . . . . . . . .32
OPTIONAL INSURANCE BENEFITS . . . . . . . . . . . . .32
SURRENDER . . . . . . . . . . . . . . . . . . . . . .32
PARTIAL WITHDRAWAL. . . . . . . . . . . . . . . . . .33

CHARGES AND DEDUCTIONS . . . . . . . . . . . . . . . . . .33
TAX EXPENSE CHARGE. . . . . . . . . . . . . . . . . .33
MONTHLY DEDUCTION FROM POLICY VALUE . . . . . . . . .33
CHARGES AGAINST ASSETS OF THE VEL II ACCOUNT. . . . .35
SURRENDER CHARGE. . . . . . . . . . . . . . . . . . .36
CHARGES ON PARTIAL WITHDRAWAL . . . . . . . . . . . .37
TRANSFER CHARGES. . . . . . . . . . . . . . . . . . .38
CHARGE FOR INCREASE IN FACE AMOUNT. . . . . . . . . .38
OTHER ADMINISTRATIVE CHARGES. . . . . . . . . . . . .38

POLICY LOANS . . . . . . . . . . . . . . . . . . . . . . .38
LOAN INTEREST CHARGED . . . . . . . . . . . . . . . .39
REPAYMENT OF DEBT. . . . . . . . . . . . . . . . . .39
EFFECT OF POLICY LOANS. . . . . . . . . . . . . . . .39

POLICY TERMINATION AND REINSTATEMENT . . . . . . . . . . .39
TERMINATION . . . . . . . . . . . . . . . . . . . . .39
REINSTATEMENT . . . . . . . . . . . . . . . . . . . .39

OTHER POLICY PROVISIONS. . . . . . . . . . . . . . . . . .40
POLICYOWNER . . . . . . . . . . . . . . . . . . . . .40
BENEFICIARY . . . . . . . . . . . . . . . . . . . . .40

<PAGE>

INCONTESTABILITY. . . . . . . . . . . . . . . . . . .41
SUICIDE . . . . . . . . . . . . . . . . . . . . . . .41
AGE AND SEX . . . . . . . . . . . . . . . . . . . . .41
ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . .41
POSTPONEMENT OF PAYMENTS. . . . . . . . . . . . . . .41

DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY. . . . . .42

DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . .46

REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . .47

LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . .47

FURTHER INFORMATION. . . . . . . . . . . . . . . . . . . .47

INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . .47

FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . .48
THE COMPANY AND THE VEL II ACCOUNT. . . . . . . . . .48
TAXATION OF THE POLICIES. . . . . . . . . . . . . . .48
MODIFIED ENDOWMENT CONTRACTS. . . . . . . . . . . . .49

MORE INFORMATION ABOUT THE GENERAL ACCOUNT . . . . . . . .49
GENERAL DESCRIPTION . . . . . . . . . . . . . . . . .49
GENERAL ACCOUNT VALUE . . . . . . . . . . . . . . . .49
THE POLICY. . . . . . . . . . . . . . . . . . . . . .50
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS
AND POLICY LOANS . . . . . . . . . . . . . . . . . .50

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . .50

APPENDIX A - OPTIONAL BENEFITS . . . . . . . . . . . . . .87
APPENDIX B - PAYMENT OPTIONS . . . . . . . . . . . . . . .87
APPENDIX C - ILLUSTRATIONS OF SUM INSURED, POLICY VALUES
AND ACCUMULATED PREMIUMS. . . . . . . .89
APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES. . .95

<PAGE>

SPECIAL TERMS

ACCUMULATION UNIT: A measure of your interest in a Sub-Account.

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

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

COMPANY: State Mutual Life Assurance Company of America.

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

MONTHLY DEDUCTION: Charges deducted monthly from the Policy Value of a Policy
prior to the Final Premium Payment Date. The charges include the monthly
cost of insurance, the monthly cost of any benefits provided by riders, and
the monthly administrative charge.

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

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

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

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

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

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

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

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

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

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

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

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

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

VALUATION DATE: A day on which the net asset value of the shares of any of
the Underlying Funds is determined and Accumulation Unit values of the
Sub-Accounts are determined. Valuation Dates currently occur on each day on
which the New York Stock Exchange is open for trading, and on such

6
<PAGE>

other days (other than a day during which no payment, partial withdrawal, or
surrender of a Policy is received) when there is a sufficient degree of
trading in an Underlying Fund's securities such that the current net asset
value of the Sub-Accounts may be materially affected.

VALUATION PERIOD: The interval between two consecutive Valuation Dates.

VEL II ACCOUNT: A separate account of the Company to which the Policyowner
may make Net Premium allocations.

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

YOU OR YOUR: The Policyowner, as shown in the application or the latest
change filed with the Company.

SUMMARY

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

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

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

SURRENDER CHARGES - At any time that a Policy is in effect, a Policyowner may
elect to surrender the Policy and receive its Surrender Value. A surrender
charge is calculated upon issuance of the Policy and upon each increase in
Face Amount. The duration of the surrender charge is 15 years for issue Ages
0 through 50, grading down to 10 years for issue Ages 55 and above. The
surrender charge is only imposed if, during its duration, you request a full
surrender or a decrease in Face Amount.

The maximum surrender charge calculated upon issuance of the Policy is equal
to the sum of (a) plus (b) where (a) is a deferred administrative charge
equal to $8.50 per thousand dollars of the initial Face Amount and (b) is a
deferred sales charge of 49% of premiums received up to a maximum number of
Guideline Annual Premiums subject to the deferred sales charge that varies by
issue Age from 1.660714 (for Ages 0 through 55) to 0.948980 (for Age 80). In
accordance with limitations under state insurance regulations, the amount of
the maximum surrender charge will not exceed a specified amount per $1,000 of
initial Face Amount, as indicated in "APPENDIX D - CALCULATION OF MAXIMUM
SURRENDER CHARGES." The maximum surrender charge remains level for the first
40 Policy months and reduces by 0.5% or more per month (depending on issue
Age) thereafter, as described in "APPENDIX D - CALCULATION OF MAXIMUM
SURRENDER CHARGES." If you surrender the Policy during the first two Policy
years before making premium payments associated with the initial Face Amount
which are at least equal to one Guideline Annual Premium, the actual
surrender charge imposed may be less than the maximum. See "THE POLICY -
Surrender" and "CHARGES AND DEDUCTIONS -Surrender Charge."

<PAGE>

A separate surrender charge will apply to and is calculated for each increase
in Face Amount. The maximum surrender charge for the increase is equal to
the sum of (a) plus (b) where (a) is equal to $8.50 per thousand dollars of
increase, and (b) is a deferred sales charge, of 49% of premiums associated
with the increase, up to a maximum number of Guideline Annual Premiums (for
the increase) subject to the deferred sales charge that varies by Age (at the
time of increase) from 1.660714 (for Ages 0 through 55) to 0.948980 (for Age
80). In accordance with limitations under state insurance regulations, the
amount of the surrender charge will not exceed a specified amount per $1,000
of increase, as indicated in "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER
CHARGES." As is true for the initial Face Amount, (a) is a deferred
administrative charge and (b) is a deferred sales charge. This maximum
surrender charge remains level for the first 40 Policy months following the
increase and reduces by 0.5% or more per month (depending on Age at increase)
thereafter, as described in "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER
CHARGES." The actual surrender charge with respect to the increase may be
less than the maximum. See "THE POLICY - Surrender" and "CHARGES AND
DEDUCTIONS - Surrender Charge."

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

TAX EXPENSE CHARGE - A current charge of 2.25% of premiums will be deducted from
each premium payment to compensate the Company for premium taxes imposed by
various states and local jurisdictions and for federal taxes imposed for
deferred acquisition costs ("DAC tax"). The DAC tax deduction is a factor the
Company must use when calculating the maximum sales load it can charge under SEC
rules. See "CHARGES AND DEDUCTIONS - Tax Expense Charge."

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

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

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

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

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

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

MONTHLY ADMINISTRATIVE CHARGES - A component of the Monthly Deduction from
Policy Value is a charge for administrative expenses. Prior to the Final
Premium Payment Date, the charge is $5 per month. The charges are designed
to reimburse the Company for the costs associated with issuing and
administering the Policies, such as processing premium payments, policy loans
and loan repayments,

<PAGE>

change in Sum Insured Options, and death claims. These charges also
help cover the cost of providing annual statements and responding to
Policyholder inquiries. See "CHARGES AND DEDUCTIONS - Monthly Deduction From
Policy Value."

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

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

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

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

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

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

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

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

DEATH PROCEEDS - The Policy provides for the payment of certain Death
Proceeds to the named Beneficiary upon the death of the Insured. Prior to
the Final Premium Payment Date, the Death Proceeds will be equal to the Sum
Insured, reduced by any outstanding Debt, partial withdrawals, partial
withdrawal charges, and any Monthly Deductions due and not yet deducted
through the policy month in which the Insured dies. Two Sum Insured Options
are available. Under Option 1, the Sum Insured is the greater of the Face
Amount of the Policy or the Guideline Minimum Sum Insured. Under Option 2,
the Sum Insured is the greater of the Face Amount of the Policy plus the
Policy Value or the Guideline Minimum Sum Insured. The Guideline Minimum Sum
Insured is equivalent to a percentage (determined each month based on the
Insured's Age) of the Policy Value. On or after the Final Premium

<PAGE>

Payment Date, the Death Proceeds will equal the Surrender Value. See "THE
POLICY - Death Proceeds."

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

FLEXIBILITY TO ADJUST SUM INSURED - Subject to certain limitations, you may
adjust the Sum Insured, and thus the Death Proceeds, at any time prior to the
Final Premium Payment Date, by increasing or decreasing the Face Amount of
the Policy. Any change in the Face Amount will affect the monthly cost of
insurance charges and the amount of the surrender charge. If the Face Amount
is decreased, a pro rata surrender charge may be imposed. The Policy Value
is reduced by the amount of the charge. See "THE POLICY - Change In Face
Amount."

The minimum increase in Face Amount is $10,000, and any increase may also
require additional Evidence of Insurability satisfactory to the Company. The
increase is subject to a "free look period" and, during the first 24 months
after the increase, to a conversion privilege. See "THE POLICY - Free Look
Period - Conversion Privileges."

ADDITIONAL INSURANCE BENEFITS - You have the flexibility to add additional
insurance benefits by rider. These include the Waiver of Premium Rider,
Accidental Death Benefit Rider, Guaranteed Insurability Rider, Other Insured
Rider, Children's Insurance Rider, Exchange Option Rider and Living Benefits
Rider. See "APPENDIX A - Optional Benefits."

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

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

If any premiums are paid prior to the issuance of the Policy, such premiums
will be held in the Company's General Account. If your application is
approved and the Policy is issued and accepted, the initial premiums held in
the General Account will be credited with interest at a specified rate
beginning not later than the date of receipt of the premiums at the Company's
Principal Office. IF A POLICY IS NOT ISSUED AND ACCEPTED, THE INITIAL
PREMIUMS WILL BE RETURNED TO YOU WITHOUT INTEREST.

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

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

ALLOCATION OF NET PREMIUMS - Net premiums are the premiums paid less the tax
expense charge. Net premiums may be allocated to one or more Sub-Accounts of
the VEL II Account, to the

<PAGE>

General Account, or to any combination of Accounts. You bear the investment
risk of Net Premiums allocated to the Sub-Accounts. Allocations may be made
to no more than seven Sub-Accounts at any one time. The minimum allocation
is 1% of Net Premium. All allocations must be in whole numbers and must
total 100%. See "THE POLICY - Allocation Of Net Premiums."

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

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

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

Each of the Underlying Funds has its own investment objectives. However,
certain Portfolios have investment objectives similar to certain Funds or
Series.

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

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

FREE LOOK PERIOD - The Policy provides for an initial Free Look Period. You
may cancel the Policy by mailing or delivering it to the Principal Office or
to an agent of the Company on or before the latest of (a) 45 days after the
application for the Policy is signed, (b) 10 days after you receive the
Policy, or (c) 10 days after the Company mails or personally delivers a
Notice of Withdrawal Rights to you. Upon returning the Policy you will
receive a refund equal to the premiums paid. A free look privilege also
applies after a requested increase in Face Amount. See "THE POLICY - Free
Look Period."

CONVERSION PRIVILEGES - During the first 24 Policy months after the Date of
Issue, or within 60 days after the later of a material change in the
investment policy of a Sub-Account or notice thereof, subject to certain
restrictions you may convert this Policy to a flexible premium fixed
adjustable life insurance policy. The new policy, including any riders then
in effect, will have the same face amount, issue age, date of issue, and risk
classifications as the original Policy. A different conversion privilege is
in effect for 24 Policy months after the date of an increase in Face Amount.
See "THE POLICY - Conversion Privileges."

PARTIAL WITHDRAWAL - After the first Policy year, you may make partial
withdrawals in a

<PAGE>

minimum amount of $500 from the Policy Value. Under Option 1, the Face
Amount is reduced by the amount of the partial withdrawal, and a partial
withdrawal will not be allowed if it would reduce the Face Amount below
$40,000.

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

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

Policy loans will be allocated among the General Account and the Sub-Accounts
in accordance with your instructions. If no allocation is made by you, the
Company will make a Pro Rata Allocation among the Accounts. In either case,
Policy Value equal to the Policy loan will be transferred from the
appropriate Sub-Account(s) to the General Account, and will earn monthly
interest at an effective annual rate of at least 6%. Therefore, a Policy
loan may have a permanent impact on the Policy Value even though it is
eventually repaid. Although the loan amount is a part of the Policy Value,
the Death Proceeds will be reduced by the amount of outstanding Debt at the
time of death.

Policy loans will bear interest at a fixed rate of 8% per year, due and
payable in arrears at the end of each Policy year. If interest is not paid
when due, it will be added to the loan balance. Policy loans may be repaid
at any time. You must notify the Company if a payment is a loan repayment;
otherwise, it will be considered a premium payment. Any partial or full
repayment of Debt by you will be allocated to the General Account or
Sub-Accounts in accordance with your instructions. If you do not specify an
allocation, the Company will allocate the loan repayment in accordance with
your most recent premium allocation instructions. See "POLICY LOANS."

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

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

<PAGE>

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

----------

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

<PAGE>

PERFORMANCE INFORMATION

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

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

Table I: SUB-ACCOUNT PERFORMANCE
Net of all Charges and Assuming Surrender of the Policy
-------------------------------------------------------
The following performance information is based on the periods that the
Underlying Funds have been in existence. The data is net of expenses of the
Underlying Funds, all Sub-Account charges, and all Policy charges (including
surrender charges) for a representative Policy. It is assumed that the
Insured is male, Age 36, standard (nonsmoker) Premium Class, that the Face
Amount of the Policy is $250,000, that an annual premium payment of $3,000
(approximately one Guideline Annual Premium) was made at the beginning of
each Policy year, that ALL premiums were allocated to EACH Sub-Account
individually, and that there was a full surrender of the Policy at the end of
the applicable period.

<TABLE>
<CAPTION>
Average Annual Total Return as of 12/31/94
------------------------------------------
Sub- Underlying One-Year 3 years 5 years Since Years Since
Account Fund Total Return Inception Inception*
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Growth -100.00% -37.74% -6.82% 7.65% 9.67
2 Investment Grade -100.00% -36.73% -9.28% 2.10% 9.67
3 Money Market -100.00% -39.35% -13.24% -1.04% 9.67
4 Equity Index -100.00% -35.70% N/A -8.62% 4.26
5 Government Bond -100.00% -38.12% N/A -29.83% 3.35
6 Select Aggressive Growth -100.00% N/A N/A -32.40% 2.36
7 Select Growth -100.00% N/A N/A -47.70% 2.36
8 Select Growth and Income -100.00% N/A N/A -47.39% 2.36
9 Small Cap Value -100.00% N/A N/A -66.80% 1.67
11 Select Int'l Equity N/A N/A N/A -99.33% 0.67
12 Select Cap. Appreciation N/A N/A N/A N/A N/A
102 VIPF High Income -100.00% -24.41% -1.62% 4.22% 9.28
103 VIPF Equity Income -100.00% -23.64% -6.04% 3.15% 8.23
104 VIPF Growth -100.00% -30.52% -5.56% 4.98% 8.23
105 VIPF Overseas -100.00% -32.97% -12.18% -0.55% 7.92
106 VIPF II Asset Manager -100.00% -31.90% -5.78% -5.08% 5.32
150 T. Rowe Int'l Stock N/A N/A N/A -99.15% 0.58
207 DGPF Int'l Equity -100.00% N/A N/A -31.11% 2.17
- ---------------------------------------------------------------------------------------------------
</TABLE>

PERFORMANCE INFORMATION REFLECTS ONLY THE PERFORMANCE OF A HYPOTHETICAL
INVESTMENT DURING THE PARTICULAR TIME PERIOD ON WHICH THE CALCULATIONS ARE
BASED. ONE-YEAR TOTAL RETURN AND AVERAGE ANNUAL TOTAL RETURN FIGURES ARE
BASED ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE
PERFORMANCE. PERFORMANCE INFORMATION SHOULD BE CONSIDERED IN LIGHT OF THE
INVESTMENT OBJECTIVES AND POLICIES, CHARACTERISTICS AND QUALITY OF THE
PORTFOLIO OF THE UNDERLYING FUND IN WHICH A SUB-ACCOUNT INVESTS AND THE
MARKET CONDITIONS DURING THE GIVEN TIME PERIOD, AND SHOULD NOT BE CONSIDERED
AS A REPRESENTATION OF WHAT MAY BE ACHIEVED IN THE FUTURE.

<PAGE>

TABLE II: SUB-ACCOUNT PERFORMANCE
EXCLUDING MONTHLY POLICY CHARGES AND SURRENDER CHARGES
The following performance information is based on the periods that
the underlying funds have been in existence. the performance information is
net of total underlying fund expenses, all sub-account charges, and premium
tax and expense charges. THE DATA DOES NOT REFLECT MONTHLY CHARGES UNDER THE
POLICIES OR SURRENDER CHARGES. It is assumed that an annual premium payment
of $3,000 (approximately one Guideline Annual Premium) was made at the
beginning of each policy year and that ALL premiums were allocated to EACH
sub-account individually.

<TABLE>
<CAPTION>
Average Annual Total Return as of 12/31/94
------------------------------------------
Sub- Underlying One-Year 3 years 5 years Since Years Since
Account Fund Total Return Inception Inception*
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Growth -1.01% 3.37% 8.61% 12.38% 9.67
2 Investment Grade -4.09% 4.00% 6.73% 7.45% 9.67
3 Money Market 2.72% 2.36% 3.78% 4.74% 9.67
4 Equity Index -0.12% 4.65% N/A 11.49% 4.26
5 Government Bond -2.03% 3.13% N/A 4.93% 3.35
6 Select Aggressive Growth -3.45% N/A N/A 14.01% 2.36
7 Select Growth -2.64% N/A N/A 3.13% 2.36
8 Select Growth and Income -0.44% N/A N/A 3.34% 2.36
9 Small Cap Value -7.60% N/A N/A 4.99% 1.67
11 Select Int'l Equity N/A N/A N/A -4.61% 0.67
12 Select Cap. Appreciation N/A N/A N/A N/A N/A
102 VIPF High Income -2.70% 12.12% 12.70% 9.61% 9.28
103 VIPF Equity Income 5.82% 12.64% 9.22% 9.65% 8.23
104 VIPF Growth -1.18% 8.00% 9.59% 11.24% 8.23
105 VIPF Overseas 0.54% 6.40% 4.56% 5.76% 7.92
106 VIPF II Asset Manager -7.18% 7.09% 9.42% 8.92% 5.32
150 T. Rowe Int'l Stock N/A N/A N/A 1.11% 0.58
207 DGPF Int'l Equity 1.45% N/A N/A 17.41% 2.17
- ---------------------------------------------------------------------------------------------------
</TABLE>

----

*The inception dates for the Underlying Funds are: 4/29/85 for Growth,
Investment Grade and Money Market; 9/28/90 for Equity Index; 8/26/91 for
Government Bond; 8/21/92 for Select Aggressive Growth, Select Growth, and
Select Growth and Income; 4/30/93 for Small Cap Value; 5/01/94 for Select
International Equity; 10/09/86 for VIPF Equity-Income and VIPF Growth;
9/19/85 for VIPF High Income; 1/28/87 for VIPF Overseas; 9/06/89 for VIPF II
Asset Manager; 10/29/92 for DGPF International Equity; and 6/01/94 for the T.
Rowe International Stock. The Select Capital Appreciation Fund of the Trust
was not in existence in 1994.

<PAGE>

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

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

<PAGE>

THE COMPANY - The Company, organized under the laws of Massachusetts in 1844,
is the fifth oldest life insurance company in America. Its Principal Office
is located at 440 Lincoln Street, Worcester, Massachusetts 01653, Telephone
508-855-1000. The Company is subject to the laws of the Commonwealth of
Massachusetts governing insurance companies and to regulation by the
Commissioner of Insurance of Massachusetts. In addition, the Company is
subject to the insurance laws and regulations of other states and
jurisdictions in which it is licensed to operate. As of December 31, 1994,
the Company and its subsidiaries had over $10 billion in assets and over $42
billion of life insurance in force.

THE VEL II ACCOUNT - The VEL II Account was established pursuant to a vote of
the Board of Directors of the Company on August 20, 1991. The VEL II Account
is registered with the Securities and Exchange Commission ("Commission") as a
unit investment trust under the Investment Company Act of 1940 ("1940 Act").
Such registration does not involve the supervision of its management or
investment practices or policies of the VEL II Account or the Company by the
Commission.

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

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

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

The Trust was established by the Company as a Massachusetts business trust on
October 11, 1984, for the purpose of providing a vehicle for the investment
of assets of various separate accounts established by the Company and other
affiliated insurance companies. Eleven investment portfolios ("Funds") of
the Trust are available under the Policies, each issuing a series of shares:
the Growth Fund, Investment Grade Income Fund, Money Market Fund, Equity
Index Fund, Government Bond Fund, Select International Equity Fund, Select
Aggressive Growth Fund, Select Capital Appreciation Fund, Select Growth Fund,
Select Growth and Income Fund, and Small Cap Value Fund.

<PAGE>

Allmerica Investment serves as investment adviser of the Trust and has
entered into sub-advisory agreements with other investment managers
("Sub-Advisers") who manage the investments of the Funds. See "INVESTMENT
ADVISORY SERVICES TO THE TRUST."

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

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

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

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

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

DGPF was established to provide a vehicle for the investment of assets of
various separate accounts supporting variable insurance policies. One
investment portfolio ("Series") is available under the Policies: the
International Equity Series.

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

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

GROWTH FUND (SUB-ACCOUNT 1) - The Growth Fund of the Trust is invested in
common stocks and securities convertible into common stocks that are believed
to represent significant underlying value in relation to current market
prices. The objective of the Growth Fund is to achieve long-term growth of
capital. Realization of current investment income, if any, is incidental to
this objective.

INVESTMENT GRADE INCOME FUND (SUB-ACCOUNT 2) - The Investment Grade Income
Fund of the Trust is invested in a diversified portfolio of fixed income
securities with the objective of seeking as high a level of total return
(including both income and realized and unrealized capital gains) as is
consistent with prudent investment management.

<PAGE>

MONEY MARKET FUND (SUB-ACCOUNT 3) - The Money Market Fund of the Trust is
invested in a diversified portfolio of high-quality, short-term debt
instruments with the objective of obtaining maximum current income consistent
with the preservation of capital and liquidity.

EQUITY INDEX FUND (SUB-ACCOUNT 4) - The Equity Index Fund of the Trust seeks
to provide investment results that correspond generally to the composite
price and yield performance of United States publicly traded common stocks.
The Equity Index Fund seeks to achieve its objective by attempting to
replicate the composite price and yield performance of the Standard & Poor's
500 Composite Stock Price Index.

GOVERNMENT BOND FUND (SUB-ACCOUNT 5) - The Government Bond Fund of the Trust
has the investment objectives of seeking high income, preservation of capital
and maintenance of liquidity, primarily through investments in debt
instruments issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and in related options, futures and repurchase agreements.

SELECT AGGRESSIVE GROWTH FUND (SUB-ACCOUNT 6) - The Select Aggressive Growth
Fund of the Trust seeks above-average capital appreciation by investing
primarily in common stocks of companies which are believed to have
significant potential for capital appreciation.

SELECT GROWTH FUND (SUB-ACCOUNT 7) - The Select Growth Fund of the Trust
seeks to achieve growth of capital by investing in a diversified portfolio
consisting primarily of common stocks selected on the basis of their
long-term growth potential.

SELECT GROWTH AND INCOME FUND (SUB-ACCOUNT 8) - The select Growth and Income
Fund of the Trust seeks a combination of long-term growth of capital and
current income. The Fund will invest primarily in dividend-paying common
stocks and securities convertible into common stocks.

SMALL CAP VALUE FUND (SUB-ACCOUNT 9) - The Small Cap Value Fund of the Trust
seeks long-term growth by investing principally in a diversified portfolio of
common stocks of smaller, faster-growing companies considered to be
attractively valued in the smaller company sector of the market.

SELECT INTERNATIONAL EQUITY FUND (SUB-ACCOUNT 11) - The Select International
Equity Fund of the Trust seeks maximum long-term total return (capital
appreciation and income) primarily by investing in common stocks of
established non-U.S. companies.

SELECT CAPITAL APPRECIATION FUND (SUB-ACCOUNT 12) - The Select Capital
Appreciation Fund of the Trust seeks long-term growth of capital in a manner
consistent with the preservation of capital. Realization of income is not a
significant investment consideration and any income realized on the Fund's
investments will be incidental to its primary objective. The Fund will
invest primarily in common stock of industries and companies which are
experiencing favorable demand for their products and services, and which
operate in a favorable competitive environment and regulatory climate. The
Sub-Adviser for the Select Capital Appreciation Fund is Janus Capital
Corporation.

HIGH INCOME PORTFOLIO (SUB-ACCOUNT 102) - The High Income Portfolio of VIPF
seeks to obtain a high level of current income by investing primarily in
high-yielding, lower-rated fixed-income securities (commonly referred to as
"junk bonds"), while also considering growth of capital. These securities
are often considered to be speculative and involve greater risk of default or
price changes than securities assigned a high quality rating. For more
information about these lower-rated securities, see "Risks of Lower-Rated
Debt Securities" in the VIPF prospectus.

EQUITY-INCOME PORTFOLIO (SUB-ACCOUNT 103) - The Equity-Income Portfolio of
VIPF seeks reasonable income by investing primarily in income-producing
equity securities. In choosing these securities, the Portfolio will also
consider the potential for capital appreciation. The Portfolio's goal is to
achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's 500 Composite Stock Price Index. The
Portfolio may invest in high yielding, lower-rated fixed-income securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. For a further discussion of
lower-rated securities, please see "Risks of Lower-Rated Debt Securities" in
the VIPF prospectus.

GROWTH PORTFOLIO (SUB-ACCOUNT 104) - The Growth Portfolio of VIPF seeks to
achieve capital appreciation. The Portfolio normally purchases common
stocks, although its investments are not restricted to any one type of
security. Capital appreciation may also be found in other types of

<PAGE>

securities, including bonds and preferred stocks.

OVERSEAS PORTFOLIO (SUB-ACCOUNT 105) - The Overseas Portfolio of VIPF seeks
long-term growth of capital primarily through investments in foreign
securities and provides a means for aggressive investors to diversify their
own portfolios by participating in companies and economies outside of the
United States.

ASSET MANAGER PORTFOLIO (SUB-ACCOUNT 106) - The Asset Manager Portfolio of
VIPF II seeks high total return with reduced risk over the long-term by
allocating its assets among stocks, bonds and short-term fixed-income
instruments.

INTERNATIONAL STOCK PORTFOLIO (SUB-ACCOUNT 150) - The International Stock
Portfolio of T. Rowe seeks long-term growth of capital through investments
primarily in common stocks of established, non-U.S. companies.

INTERNATIONAL EQUITY SERIES (SUB-ACCOUNT 207) - The International Equity
Series of DGPF seeks long-term growth without undue risk to principal by
investing primarily in equity securities of foreign issuers providing the
potential for capital appreciation and income.

CERTAIN PORTFOLIOS HAVE INVESTMENT OBJECTIVES AND/OR POLICIES SIMILAR TO
THOSE OF CERTAIN FUNDS OR SERIES. THEREFORE, TO CHOOSE THE SUB-ACCOUNTS
WHICH WILL BEST MEET YOUR NEEDS AND OBJECTIVES, CAREFULLY READ THE
PROSPECTUSES OF THE TRUST, VIPF, VIPF II, T. ROWE AND DGPF ALONG WITH THIS
PROSPECTUS.

In the event of a material change in the investment policy of a Sub-Account
or the Underlying Fund in which it invests, you will be notified of the
change. No material change in the investment policy of a Sub-Account will be
made without approval pursuant to the applicable state insurance laws. If
you have Policy Value in that Sub-Account, the Company will transfer it
without charge on written request by you to another Sub-Account or to the
General Account. The Company must receive your written request within sixty
(60) days of the later of (a) the effective date of such change in the
investment policy or (b) the receipt of the notice of your right to transfer.
You may then change your premium and deduction allocation percentages.

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

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

Pursuant to the Management Agreement with the Trust, Allmerica Investment has
entered into agreements ("Sub-Adviser Agreements") with other investment
advisers ("Sub-Advisers") under which each Sub-Adviser manages the
investments of one or more of the Funds. Under the Sub-Adviser Agreement,
the Sub-Adviser is authorized to engage in portfolio transactions on behalf
of the applicable Fund, subject to such general or specific instructions as
may be given by the Trustees. The terms of a Sub-Adviser Agreement cannot be
materially changed without the approval of a majority in interest of the
shareholders of the affected Fund.

<PAGE>

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

Growth Fund Miller, Anderson & Sherrerd
Investment Grade Income Allmerica Asset Management, Inc.
Money Market Fund Allmerica Asset Management, Inc.
Equity Index Fund Allmerica Asset Management, Inc.
Government Bond Fund Allmerica Asset Management, Inc.
Select International Equity Bank of Ireland Asset Management
Select Aggressive Growth Fund Nicholas-Applegate Capital Management
Select Capital Appreciation Fund Janus Capital Corporation
Select Growth Fund United Asset Management Corporation
Select Growth and Income Fund John A. Levin & Co., Inc.
Small Cap Value Fund David L. Babson & Co. Inc.

Allmerica Asset Management, Inc. is an indirect wholly owned subsidiary of
the Company.

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

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

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

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

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

Government Bond * 0.50%

Select International Equity * 1.00%

Select Aggresive Growth * 1.00%

Select Capital Appreciation * 1.00%

Select Growth * 0.85%

Select Growth and Income * 0.75%

Small Cap Value * 0.85%

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

Aggregate Average Assets Rate
------------------------ ----
First $50 million 0.500%
$50 - 100 million 0.375%
$100 - 500 million 0.250%
$500 - 850 million 0.200%
Over $850 million 0.500%

** For the Investment Grade Income Fund, Money Market Fund, Equity Index
Fund, Government Bond Fund, Select Aggressive Growth Fund and Small Cap Value
Fund, each rate applicable to the Sub-Advisers does not vary according to the
level of assets in the Fund.
</TABLE>
22

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

INVESTMENT ADVISORY SERVICES TO T. ROWE - The Investment Adviser for the
International Stock Portfolio is Rowe Price-Fleming International, Inc.
("Price-Fleming"). Price-Fleming, founded in 1979 as a joint venture between
T. Rowe Price Associates, Inc. and Robert Fleming Holdings, Limited, is one
of America's largest international mutual fund asset managers with
approximately $9 billion under management in its offices in Baltimore,
London, Tokyo and Hong Kong. To cover investment management and operating
expenses, the International Stock Portfolio pays Price-Fleming a single,
all-inclusive fee of 1.05% of its average daily net assets.

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

<PAGE>

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

The Company also reserves the right to establish additional Sub-Accounts of
the VEL II Account, each of which would invest in shares corresponding to a
new Underlying Fund or in shares of another investment company having a
specified investment objective. Subject to applicable law and any required
Commission approval, the Company 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. Any new Sub-Accounts may be
made available to existing Policyowners on a basis to be determined by the
Company.

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

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

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

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

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

The Company may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as (a) to cause a change in the subclassification or investment
objective of one or more of the Underlying Funds, or (b) to approve or
disapprove an

<PAGE>

investment advisory contract for the Underlying Funds. In addition, the
Company may disregard voting instructions in favor of any change in the
investment policies or in any investment adviser or principal underwriter
initiated by Policyowners or the Trustees. The Company's disapproval of any
such change must be reasonable and, in the case of a change in investment
policies or investment adviser, based on a good faith determination that such
change would be contrary to state law or otherwise is inappropriate in light
of the objectives and purposes of the Underlying Funds. In the event the
Company does disregard voting instructions, a summary of and the reasons for
that action will be included in the next periodic report to Policyowners.

THE POLICY

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

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

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

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

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

FREE LOOK PERIOD - The Policy provides for an initial Free Look Period. You
may cancel the Policy by mailing or delivering the Policy to the Principal
Office or an agent of the Company on or before the latest of (a) 45 days
after the application for the Policy is signed, (b) 10 days after you receive
the Policy, or (c) 10 days after the Company mails or personally delivers a
notice of withdrawal rights to you. When you return the Policy, the Company
will mail within 7 days a refund equal to the premiums paid. The refund of
any premium paid by check, however, may be delayed until the check has
cleared your bank.

<PAGE>

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

CONVERSION PRIVILEGES - Without Evidence of Insurability, you may convert
this Policy to a flexible premium adjustable life insurance policy with fixed
and guaranteed minimum benefits if your request is made: (a) within 24
months of the Date of Issue, or (b) within 60 days after the later of the
effective date of a material change in the investment policy of a Sub-Account
or the date notice is mailed to your last known address. The new policy,
including any riders then in effect, will have the same Face Amount, issue
ages, dates of issue, and risk classifications as the original Policy.

Within 24 months after the effective date of each increase in Face Amount,
you can transfer, without charge, all or part of the Policy Value in the VEL
II Account to the General Account and simultaneously change your premium
allocation instructions to allocate all or part of future premium payments to
the General Account.

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

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

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

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

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

<PAGE>

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

You may change the allocation of future Net Premiums at any time pursuant to
written or telephone request. If allocation changes by telephone are elected
by the Policyowner, a properly completed authorization form must be on file
before telephone requests will be honored. The policy of the Company and its
agents and affiliates is that they will not be responsible for losses
resulting from acting upon telephone requests reasonably believed to be
genuine. The Company will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine; otherwise, the Company
may be liable for any losses due to unauthorized or fraudulent instructions.
The procedures the Company follows for transactions initiated by telephone
include requirements that callers on behalf of a Policyowner identify
themselves by name and identify the Policyowner by name, date of birth and
social security number. All transfer instructions by telephone are tape
recorded. An allocation change will be effective as of the date of receipt
of the notice at the Principal Office. No charge is currently imposed for
changing premium allocation instructions. The Company reserves the right to
impose such a charge in the future, but guarantees that the charge will not
exceed $25.

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

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

All requests for transfers must be made to the Principal Office. The amount
transferred will be based on the Policy Value in the Account(s) next computed
after receipt of the transfer order. The Company will make transfers
pursuant to written or telephone request. As discussed under "THE POLICY -
Allocation of Net Premiums," a properly completed authorization form must be
on file at the Principal Office before telephone instructions will be honored.

Transfers involving the General Account are currently permitted only if:

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

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

These rules are subject to change by the Company.

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

The transfer privilege is subject to the consent of the Company. The Company
reserves the right to impose limitations on transfers including, but not
limited to: (1) the minimum amount that may be transferred (which minimum
amount will never be greater than $500), (2) the minimum amount that may
remain in a Sub-Account following a transfer from that Sub-Account, (3) the
minimum period of time between transfers involving the General Account, and
(4) the maximum amount that may be transferred each time from the General
Account (which maximum amount will never be less than the lesser of

<PAGE>

$100,000 or 10% of Policy Value).

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

DEATH PROCEEDS - As long as the Policy remains in force (see "POLICY
TERMINATION AND REINSTATEMENT"), the Company will, upon due proof of the
Insured's death, pay the Death Proceeds of the Policy to the named
Beneficiary. The Company will normally pay the Death Proceeds within seven
days of receiving due proof of the Insured's death, but the Company may delay
payments under certain circumstances. See "OTHER POLICY PROVISIONS -
Postponement Of Payments." The Death Proceeds may be received by the
Beneficiary in cash or under one or more of the payment options set forth in
the Policy. See "APPENDIX B - PAYMENT OPTIONS."

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

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

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

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

GUIDELINE MINIMUM SUM INSURED - The Guideline Minimum Sum Insured is equal to
a percentage of the Policy Value as set forth in the table below. The
Guideline Minimum Sum Insured is determined in accordance with Internal
Revenue Code regulations to ensure that the Policy qualifies as a life
insurance contract and that the insurance proceeds will be excluded from the
gross income of the Beneficiary.

GUIDELINE MINIMUM SUM INSURED TABLE

<TABLE>
<CAPTION>
Age of Insured
on Date of Percentage of
Death Policy Value
<S> <C>
40 and under . . . . . . . . . . . . 250%
45. . . . . . . . . . . . . . . . . . 215%
50. . . . . . . . . . . . . . . . . . 185%
55. . . . . . . . . . . . . . . . . . 150%
60. . . . . . . . . . . . . . . . . . 130%
65. . . . . . . . . . . . . . . . . . 120%
70. . . . . . . . . . . . . . . . . . 115%
75. . . . . . . . . . . . . . . . . . 105%
80. . . . . . . . . . . . . . . . . . 105%
85. . . . . . . . . . . . . . . . . . 105%
90. . . . . . . . . . . . . . . . . . 105%
95 and above. . . . . . . . . . . . . 100%

</TABLE>

For the Ages not listed, the progression between the listed Ages is linear.

<PAGE>

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

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

Illustration of Option 1 - For purposes of this illustration, assume that the
Insured is under the Age of 40, and that there is no outstanding Debt.

Under Option 1, a Policy with a $50,000 Face Amount will generally have a Sum
Insured equal to $50,000. However, because the Sum Insured must be equal to
or greater than 250% of Policy Value, if at any time the Policy Value exceeds
$20,000, the Sum Insured will exceed the $50,000 Face Amount. In this
example, each additional dollar of Policy Value above $20,000 will increase
the Sum Insured by $2.50. For example, a Policy with a Policy Value of
$35,000 will have a Guideline Minimum Sum Insured of $87,500 ($35,000 x
2.50); Policy Value of $40,000 will produce a Guideline Minimum Sum Insured
of $100,000 ($40,000 x 2.50); and Policy Value of $50,000 will produce a
Guideline Minimum Sum Insured of $125,000 ($50,000 x 2.50).

Similarly, so long as Policy Value exceeds $20,000, each dollar taken out of
Policy Value will reduce the Sum Insured by $2.50. If, for example, the
Policy Value is reduced from $25,000 to $20,000 because of partial
withdrawals, charges or negative investment performance, the Sum Insured will
be reduced from $62,500 to $50,000. If at any time, however, the Policy
Value multiplied by the applicable percentage is less than the Face Amount,
the Sum Insured will equal the Face Amount of the Policy.

The applicable percentage becomes lower as the Insured's Age increases. If
the Insured's Age in the above example were, for example, 50 (rather than
between 0 and 40), the applicable percentage would be 185%. The Sum Insured
would not exceed the $50,000 Face Amount unless the Policy Value exceeded
$27,027 (rather than $20,000), and each dollar then added to or taken from
Policy Value would change the Sum Insured by $1.85.

Illustration of Option 2 - For purposes of this illustration, assume that the
Insured is under the Age of 40 and that there is no outstanding Debt.

Under Option 2, a Policy with a Face Amount of $50,000 will generally produce
a Sum Insured of $50,000 plus Policy Value. For example, a Policy with
Policy Value of $5,000 will produce a Sum Insured of $55,000 ($50,000 +
$5,000); Policy Value of $10,000 will produce a Sum Insured of $60,000
($50,000 + $10,000); Policy Value of $25,000 will produce a Sum Insured of
$75,000 ($50,000 + $25,000). However, the Sum Insured must be at least 250%
of the Policy Value. Therefore, if the Policy Value is greater than $33,333,
250% of that amount will be the Sum Insured, which will be greater than the
Face Amount plus Policy Value. In this example, each additional dollar of
Policy Value above $33,333 will increase the Sum Insured by $2.50. For
example, if the Policy Value is $35,000, the Guideline Minimum Sum Insured
will be $87,500 ($35,000 x 2.50); Policy Value of $40,000 will produce a
Guideline Minimum Sum Insured of $100,000 ($40,000 x 2.50); and Policy Value
of $50,000 will produce a Guideline Minimum Sum Insured of $125,000 ($50,000
x 2.50).

Similarly, if Policy Value exceeds $33,333, each dollar taken out of Policy
Value will reduce the Sum Insured by $2.50. If, for example, the Policy
Value is reduced from $45,000 to $40,000 because of partial withdrawals,
charges or negative investment performance, the Sum Insured will be reduced
from $112,500 to $100,000. If at any time, however, Policy Value multiplied
by the applicable percentage is less than the Face Amount plus Policy Value,
then the Sum Insured will be the current Face Amount plus Policy Value.

<PAGE>

The applicable percentage becomes lower as the Insured's Age increases. If
the Insured's Age in the above example were 50, the Sum Insured must be at
least 1.85 times the Policy Value. The amount of the Sum Insured would be
the sum of the Policy Value plus $50,000 unless the Policy Value exceeded
$58,824 (rather than $33,000). Each dollar added to or subtracted from the
Policy would change the Sum Insured by $1.85.

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

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

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

If the Sum Insured Option is changed from Option 1 to Option 2, the Face
Amount will be decreased to equal the Sum Insured less the Policy Value on
the effective date of the change. This change may not be made if it would
result in a Face Amount less than $40,000. A change from Option 1 to Option
2 will not alter the amount of the Sum Insured at the time of the change, but
will affect the determination of the Sum Insured from that point on. Because
the Policy Value will be added to the new specified Face Amount, the Sum
Insured will vary with the Policy Value. Thus, under Option 2, the Insurance
Amount at Risk will always equal the Face Amount unless the Guideline Minimum
Sum Insured is in effect. The cost of insurance may also be higher or lower
than it otherwise would have been without the change in Sum Insured Option.
See "CHARGES AND DEDUCTIONS - Monthly Deduction From Policy Value."

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

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

Increases - Along with the written request for an increase, you must submit
satisfactory Evidence of Insurability. The consent of the Insured is also
required whenever the Face Amount is increased. A request for an increase in
Face Amount may not be less than $10,000. You may not increase the Face
Amount after the Insured reaches Age 80. An increase must be accompanied by
an additional premium if the Surrender Value is less than $50 plus an amount
equal to the sum of two Minimum Monthly Factors. On the effective date of
each increase in Face Amount, a transaction charge of $50 will be deducted
from Policy Value for administrative costs. The effective date of the
increase will be the first Monthly Payment Date on or following the date all
of the conditions for the increase are met.

An increase in the Face Amount will generally affect the Insurance Amount at
Risk and may affect the portion of the Insurance Amount at Risk included in
various Premium Classes (if more than one

<PAGE>

Premium Class applies), both of which may affect the monthly cost of
insurance charges. A surrender charge will also be calculated for the
increase. See "CHARGES AND DEDUCTIONS - Monthly Deduction From Policy Value -
Surrender Charge."

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

DECREASES - The minimum amount for a decrease in Face Amount is $10,000.
The Face Amount in force after any decrease may not be less than $50,000.
If, following a decrease in Face Amount, the Policy would not comply with the
maximum premium limitation applicable under the Internal Revenue Service
Rules, the decrease may be limited or Policy Value may be returned to the
Policyowner (at your election) to the extent necessary to meet the
requirements. A return of Policy Value may result in tax liability to you.

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

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

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

CALCULATION OF POLICY VALUE - The Policy Value is determined first on the
Date of Issue and thereafter on each Valuation Date. On the Date of Issue,
the Policy Value will be the Net Premiums received, plus any interest earned
during the period when premiums are held in the General Account (before being
transferred to the VEL II Account; see THE POLICY - Application For A
Policy") less any Monthly Deductions due. On each Valuation Date after the
Date of Issue the Policy Value will be:
(a) the aggregate of the values in each of the Sub-Accounts on the
Valuation Date, determined for each Sub-Account by multiplying
the value of an Accumulation Unit in that Sub-Account on that
date by the number of such Accumulations Units allocated to the
Policy; plus

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

OPTIONAL INSURANCE BENEFITS - Subject to certain requirements, one or more of
the optional insurance benefits described in "APPENDIX A - OPTIONAL BENEFITS"
may be added to a Policy by rider. The cost of any optional insurance
benefits will be deducted as part of the Monthly Deduction. See "CHARGES AND
DEDUCTIONS - Monthly Deduction From Policy Value."

SURRENDER - You may at any time surrender the Policy and receive its
Surrender Value. The

<PAGE>

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

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

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

PARTIAL WITHDRAWAL - Any time after the first Policy year, you may withdraw a
portion of the Surrender Value of your Policy, subject to the limits stated
below, upon written request filed at the Principal Office. The written
request must indicate the dollar amount you wish to receive and the Accounts
from which such amount is to be withdrawn. You may allocate the amount
withdrawn among the Sub-Accounts and the General Account. If you do not
provide allocation instructions the Company will make a Pro Rata Allocation.
Each partial withdrawal must be in a minimum amount of $500. Under Option 1,
the Face Amount is reduced by the amount of the partial withdrawal, and a
partial withdrawal will not be allowed if it would reduce the Face Amount
below $40,000.

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

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

CHARGES AND DEDUCTIONS

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

TAX EXPENSE CHARGE - Currently, a deduction of 2.25% of premiums for state
and local premium taxes and federal taxes imposed for deferred acquisition
costs ("DAC taxes") is made from each premium payment. The premium payment
less the tax expense charge equals the Net Premium. The total charge is a
combined state and local premium tax deduction of 1.25% of premiums and a DAC
tax deduction of 1% of premiums. While the premium tax of 1.25% is deducted
from each premium payment, some jurisdictions may not impose premium taxes.
Premium taxes vary from state to state, ranging from zero to 4.0%, and the
1.25% rate attributable to premiums for state and local premium taxes
approximates the average expenses to the Company associated with the premium
taxes. The 1.25% charge may be higher or lower than the actual premium tax
imposed by the applicable jurisdiction. However, the Company does not expect
to make a profit from this charge.

The 1% rate attributable to premiums for DAC taxes approximates the
Company's expenses in paying federal taxes for deferred acquisition costs
associated with the changes in the Company's expenses for premium taxes and
DAC taxes. The DAC tax deduction is a factor the Company must use when
calculating the maximum sales load it can charge under SEC rules.

MONTHLY DEDUCTION FROM POLICY VALUE - Prior to the Final Premium Payment
Date, a Monthly Deduction from Policy Value will be made to cover a charge
for the cost of insurance, a charge

<PAGE>

for any optional insurance benefits added by rider and a monthly administrative
charge. The cost of insurance charge and the monthly administrative charges
are discussed below. The Monthly Deduction on or following the effective date
of a requested increase in the Face Amount will also include a $50
administrative charge for the increase. See "THE POLICY - Change In Face
Amount."

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

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

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

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

If the Guideline Minimum Sum Insured is in effect under either Option, a
monthly cost of insurance charge will also be calculated for that portion of
the Sum Insured which exceeds the current Face Amount. This charge will be
calculated by multiplying the cost of insurance rate applicable to the
initial Face Amount times the Guideline Minimum Sum Insured (Policy Value
times the applicable percentage) less the greater of the Face Amount or the
Policy Value if you selected Sum Insured Option 1, or less the Face Amount
plus the Policy Value if you selected Sum Insured Option 2. When the
Guideline Minimum Sum Insured is in effect, the cost of insurance charge for
the initial Face Amount and for any increases will be calculated as set forth
in the preceding two paragraphs.

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

COST OF INSURANCE RATES - Cost of insurance rates are based on male and
female rate tables, Age and Premium Class of the Insured at the Date of
Issue, the effective date of an increase or date of rider, as applicable, the
amount of premiums paid less debt, any partial withdrawals and withdrawal
charges, and risk classification. The cost of insurance rates are determined
at the beginning of each Policy year for the initial Face Amount. The cost
of insurance rates for an increase in Face Amount or rider are determined
annually on the anniversary of the effective date of each increase or rider.
The cost of insurance rates generally increase as the Insured's Age
increases. The actual monthly cost of insurance rates will be based on the
Company's expectations as to future mortality experience. They will not,
however, be greater than the guaranteed cost of insurance rates set forth in
the Policy. These guaranteed rates are based on the 1980 Commissioners
Standard Ordinary Mortality Tables (Mortality Table B, Smoker or Non-Smoker,
Male or Female) and the Insured's sex and Age. The Tables used for

<PAGE>

this purpose set forth different mortality estimates for males and females
and for smokers and non-smokers. Any change in the cost of insurance rates
will apply to all persons of the same insuring Age, sex and Premium Class
whose Policies have been in force for the same length of time.

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

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

MONTHLY ADMINISTRATIVE CHARGES - Prior to the Final Premium Payment Date, a
monthly administrative charge of $5 per month will be deducted from Policy
Value. This charge will be used to compensate the Company for expenses
incurred in the administration of the Policy and will compensate the Company
for first year underwriting and other start-up expenses incurred in
connection with the Policy. These expenses include the cost of processing
applications, conducting medical examinations, determining insurability and
the Insured's Premium Class, and establishing Policy records. The Company
does not expect to derive a profit from these charges.

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

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

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

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

<PAGE>

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

Other Charges Against the Assets of the VEL II Account - Because the
Sub-Accounts purchase shares of the Underlying Investment Companies, the
value of the Accumulation Units of the Sub-Accounts will reflect the
investment advisory fee and other expenses incurred by the Underlying
Investment Companies. The prospectuses and statements of additional
information of the Trust, VIPF, VIPF II, T. Rowe and DGPF contain additional
information concerning such fees and expenses.

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

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

A surrender charge may be deducted if you request a full surrender of the
Policy or a decrease in Face Amount. The duration of the surrender charge is
15 years from Date of Issue or from the effective date of any increase in the
Face Amount for issue Ages 0 through 50, grading down to 10 years for issue
Ages 55 and above. The maximum surrender charge calculated upon issuance of
the Policy is equal to the sum of (a) plus (b), where (a) is equal to $8.50
per thousand dollars of increase, and (b) is a deferred sales charge of 49%
of premiums associated with the increase, up to a maximum number of Guideline
Annual Premiums (for the increase) subject to the deferred sales charge that
varies by Age (at the time of increase) from 1.660714 (for Ages 0 through 55)
to 0.948980 (for Age 80). In accordance with limitations under state
insurance regulations, the amount of the surrender charge will not exceed a
specified amount per $1,000 of increase, as indicated in "APPENDIX D -
CALCULATION OF MAXIMUM SURRENDER CHARGES." The maximum surrender charge
continues in a level amount for 40 Policy months and reduces by 0.5% or more
per month (depending on issue Age) thereafter, as described in "APPENDIX D -
CALCULATION OF MAXIMUM SURRENDER CHARGES." This reduction in the maximum
surrender charge will reduce the deferred sales charge and the deferred
administrative charge proportionately.

If you surrender the Policy during the first two Policy years following the
Date of Issue before making premium payments associated with the initial Face
Amount which are at least equal to one Guideline Annual Premium, the deferred
administrative charge will be $8.50 per thousand dollars of initial Face
Amount, as described above, but the deferred sales charge will not exceed 29%
of premiums received, up to one Guideline Annual Premium, plus 9% of premiums
received in excess of one Guideline Annual Premium, but less than the maximum
number of Guideline Annual Premiums subject to the deferred sales charge.
See "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES."

A separate surrender charge will apply to and is calculated for each increase
in Face Amount. The surrender charge for the increase is in addition to that
for the initial Face Amount. The maximum surrender charge for the increase
is equal to the sum of (a) plus (b), where (a) is equal to $8.50 per thousand
dollars of increase, and (b) is a deferred sales charge of 49% of premiums
associated with the increase, up to a maximum number of Guideline Annual
Premiums (for the increase) subject to the deferred sales charge that varies
by Age (at the time of increase) from 1.660714 (for Ages 0 through 55) to
0.948980 (for Age 80). In accordance with limitations under state insurance
regulations, the amount of the surrender charge will not exceed a specified
amount per $1,000 of increase, as indicated in

<PAGE>

"APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES." As is true for the
initial Face Amount, (a) is a deferred administrative charge and (b) is a
deferred sales charge. The maximum surrender charge for the increase
continues in a level amount for 40 Policy months and reduces by 0.5% or more
per month (depending on Age) thereafter, as provided in"APPENDIX D -
CALCULATION OF MAXIMUM SURRENDER CHARGES." During the first two Policy years
following an increase in Face Amount before making premium payments
associated with the increase in Face Amount which are at least equal to one
Guideline Annual Premium, the deferred administrative charge will be $8.50
per thousand dollars of Face Amount increase, as described above, but the
deferred sales charge imposed will be less than the maximum described above.
Upon such a surrender, the deferred sales charge will not exceed 29% of
premiums associated with the increase, up to one Guideline Annual Premium
(for the increase), plus 9% of premiums associated with the increase in
excess of one Guideline Annual Premium, but less than the maximum number of
Guideline Annual Premiums (for the increase) subject to the deferred sales
charge. See "APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES." The
premiums associated with the increase are determined as described below.

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

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

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

CHARGES ON PARTIAL WITHDRAWAL - After the first policy year, partial
withdrawals of Surrender Value may be made. The minimum withdrawal is $500.
Under Option 1, the Face Amount is reduced by the amount of the partial
withdrawal, and a partial withdrawal will not be allowed if it would reduce
the Face Amount below $40,000.

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

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

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

<PAGE>

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

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

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

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

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

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

POLICY LOANS

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

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

As long as the Policy is in force, Policy Value in the General Account equal
to the loan amount will be credited with interest at an effective annual
yield of at least 6.00% per year. NO ADDITIONAL INTEREST WILL BE CREDITED TO
SUCH POLICY VALUE.

LOAN INTEREST CHARGED - Interest accrues daily and is payable in arrears at
the annual rate of 8%. Interest is due and payable at the end of each Policy
year or on a pro rata basis for such shorter period as the loan may exist.
Interest not paid when due will be added to the loan amount and bear interest
at the same rate. After the due and unpaid interest is added to loan amount,
if the new loan

<PAGE>

amount exceeds the Policy Value in the General Account, the Company will
transfer Policy Value equal to that excess loan amount from the Policy Value
in each Sub-Account to the General Account as security for the excess loan
amount. The Company will allocate the amount transferred among the
Sub-Accounts in the same proportion that the Policy Value in each Sub-Account
bears to the total Policy Value in all Sub-Accounts.

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

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

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

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

POLICY TERMINATION AND REINSTATEMENT

TERMINATION - The failure to make premium payments will not cause the Policy
to lapse unless: (a) the Surrender Value is insufficient to cover the next
Monthly Deduction plus loan interest accrued; or (b) Debt exceeds the Policy
Value less surrender charges. If one of these situations occurs, the Policy
will be in default. You will then have a grace period of 62 days, measured
from the date of default, to make sufficient payments to prevent termination.
On the date of default, the Company will send a notice to you and to any
assignee of record. The notice will state the amount of premium due and the
date on which it is due. The Company will also send a notice to you at least
15 days and not more than 45 days prior to the end of the grace period if the
surrender value is not adequate to prevent lapse.

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

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

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

<PAGE>

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

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

Under B, the minimum amount payable is the sum of

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

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

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

Surrender Charge - The surrender charge on the date of reinstatement is the
surrender charge which would have been in effect had the Policy remained in
force from the Date of Issue. The Policy Value less Debt on the date of
default will be restored to the Policy to the extent it does not exceed the
surrender charge on the date of reinstatement. Any Policy Value less Debt as
of the date of default which exceeds the surrender charge on the date of
reinstatement will not be restored.

Policy Value on Reinstatement - The Policy Value on the date of reinstatement
is:

. the Net Premium paid to reinstate the Policy increased by interest from
the date the payment was received at the Company's Principal Office;

. plus an amount equal to the Policy Value less Debt on the date of
default to the extent it does not exceed the surrender charge on the date
of reinstatement;

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

You may not reinstate any Debt outstanding on the date of default or
foreclosure.

OTHER POLICY PROVISIONS

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

POLICYOWNER - The Policyowner is the Insured unless another Policyowner has
been named in the application for the Policy. The Policyowner is generally
entitled to exercise all rights under a Policy while the Insured is alive,
subject to the consent of any irrevocable Beneficiary (the consent of a
revocable Beneficiary is not required). The consent of the Insured is
required whenever the Face Amount of insurance is increased.

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

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

<PAGE>

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

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

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

POSTPONEMENT OF PAYMENTS - Payments of any amount due from the VEL II Account
upon surrender, partial withdrawals, or death of the Insured, as well as
payments of a Policy loan and transfers may be postponed whenever: (a) the
New York Stock Exchange is closed other than customary weekend and holiday
closings, or (b) an emergency exists, as determined by the SEC, as a result
of which disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of the VEL II Account's net
assets. Payments under the Policy of any amounts derived from the premiums
paid by check may be delayed until such time as the check has cleared your
bank.

The Company also reserves the right to defer payment of any amount due from
the General Account upon surrender, partial withdrawal or death of the
Insured, as well as payments of policy loans and transfers from the General
Account, for a period not to exceed six months. (No payment will be deferred
to pay premiums on policies with the Company.) If payment is not mailed or
delivered within ten days of receipt of your written request, the Company
will pay interest at least equal to an effective annual yield of 3 1/2% per
year for the period of deferment; however, no interest will be paid if less
than $25 or the delay in payment is pursuant to state law.

41
<PAGE>

DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>

Name and Position Principal Occupation(s) During Past Five Years
- ---------------------------- ----------------------------------------------
<S> <C>

Barry Z. Aframe Vice President and Counsel, State Mutual
Vice President and Counsel

Bruce C. Anderson Vice President, State Mutual
Vice President & Assistant
Secretary

Michael P. Angelini, Esq. Esq., Bowditch & Dewey
Director

Richard J. Baker Vice President and Secretary, State Mutual
Vice President and
Secretary

David A. Barrett Consultant, MCCM, Inc. and The Medical
Director Center of Central Massachusetts

Whitworth F. Bird, Jr., M.D. Vice President and Medical Director, State
Vice President and Medical Mutual since, 1990; Vice President and
Director Medical Director, Phoenix Mutual Life
Insurance Company, 1988 to 1990

William P. Bishop Vice President, State Mutual, since
Vice President 1990; District Group Manager, 1989 to 1990

Lawrence E. Blanchard Vice President, State Mutual, since
Vice Presdient 1990; Assistant Vice President, 1989 to 1990

Alan R. Boyer Vice President, State Mutual, since 1991;
Vice President Second Vice President 1989 to 1991

Mark R. Colborn Vice President and Controller, State Mutual
Vice President and Controller

Lisa M. Coleman Vice President, State Mutual, since 1994;
Vice President Deputy Manager, Brown Brothers Harriman and
Company, 1989 to 1994

Deborah A. Culhane Vice President, State Mutual, since 1994;
Vice President Vice President and General Manager, The
Shareholder Service Group, 1992 to 1994;
Vice President, 440 Financial Group of
Worcester, Inc. 1990 to 1992; Vice President
and Chief Financial Officer, Boston
Financial Data Services, 1988 to 1990

Dix F. Davis Vice President, State Mutual
Vice President

</TABLE>

<PAGE>

Name and Position Principal Occupation(s) During Past Five Years
- ---------------------------- ----------------------------------------------
<S> <C>

Valentina T. Dingle Vice President, State Mutual, since 1994;
Vice President AVP, State Mutual, Multimedia, 1994; Dir.,
Multimedia 1993 to 1994; Manager, AV
Production, 1991; Manager, AV Services, 1991;
Dir., Advertising Services, 1990 to 1991;
Manager, Bull Worldwide Info. Systems, 1990
Denzil C Drewry Vice President, State Mutual, since 1994;
Vice President Regional Manager, Great-West Life, 1984 to 1994

Leonard D. Driscoll Vice President, State Mutual, since 1993; Vice
Vice President President, Fleet Bank, 1991 to 1993; Vice
President, Bank of New England, 1990 to 1991

Bruce A. Emond Vice President, State Mutual, since 1994;
Second Vice President, State Mutual 1983 to
1993

Edward W. Ford Vice President, State Mutual, since 1993;
Vice President Senior Vice President, Plymouth Rock
Assurance Corporation, 1990 to 1993

Bruce H. Freedman Vice President, State Mutual, since 1992;
Vice President Principal, Aldridge, Eastman and Waltch,
L.P., 1985 to 1991

Bradford K. Gallagher Director and President SMA Life, since 1990;
Vice President Vice President, State Mutual, since 1990;
Managing Director, FMR Corp., 1986 to 1990;
Director, Fidelity Investments Brokerage
Services, Ltd., 1986 to 1990; Director,
Fidelity Brokerage Services, Inc.,1986 to
1990; President, Plymouth Investments, 1986
to 1990; Exec. Committee Member, Fidelity
Investments Southwest Co., 1986 to 1990;
President, Fidelity Investments Institutional
Services Co., 1985 to 1990

Thomas E. Hardy Vice President, State Mutual, since 1993;
Vice President Assistant Vice President, Mutual Life
Insurance Company of New York, 1986 to 1993

Gail L. Harrison Senior Vice President, The Wexler Group
Director

William Hayward Vice President, State Mutual, since 1994;
Vice President Financial Service Executive, North American
Securities Life, 1991 to 1994; Financial
Service Executive, (MFS-SUNLIFE), Mass
Financial Services, 1989 to 1991

</TABLE>
43

<PAGE>

Name and Position Principal Occupation(s) During Past Five Years
- ---------------------------- ----------------------------------------------
<S> <C>
Brian L. Hirst Vice President and Actuary, State Mutual
Vice President and Actuary

Kruno Huitzingh Vice President & Chief Information Officer,
Vice President and State Mutual, since 1993; Executive Vice
Chief Information President, Chicago Board Options Exchange,
Officer 1985 to 1993

Richard E. Johnson Vice President, State Mutual, since 1991;
Vice President Second Vice President, 1989 to 1991

John P. Kavanaugh Vice President, State Mutual
Vice President

John F. Kelly Senior Vice President, General Counsel and
Senior Vice President, Assistant Secretary, State Mutual
General Counsel and
Assistant Secretary

Kathleen M. Klein Vice President, State Mutual, since 1995;
Vice President Assistant Vice President 1993 to 1995;
Assistant Vice President, Fidelity, 1986 to
1993

Richard H. Kremer Vice President, State Mutual, since 1994;
Vice President Senior Vice President, Union Central Life
Insurance Company 1991 to 1994; Senior Vice
President, Cigna Individual Financial Service
Company 1988 to 1991

Jeffrey P. Lagarce Vice President, State Mutual, since 1994;
Vice President National Sales Director, Metropolitan Life
Insurance Company, 1976 to 1994

Walter M. Laliberte Vice President, State Mutual, since 1994;
Vice President Partner, Andersen Consulting 1988 to 1994

Frank A. LoPiccolo Vice President, State Mutual, since 1994;
Vice President Senior Vice President, Putnam Investment 1993
to 1994; Vice President, 440 Financial Group
of Worcester, Inc. 1990 to 1993

Joseph W. MacDougall, Jr. Vice President, Associate General Counsel and
Vice President, Associate Assistant Secretary, State Mutual
General Counsel and
Assistant Secretary

William H. Mawdsley Vice President and Actuary, State Mutual
Vice President

Roderick A. McGarry, II Vice President, State Mutual
Vice President

Ruben P. Moreno Vice President, State Mutual
Vice President

</TABLE>

<PAGE>

Name and Position Principal Occupation(s) During Past Five Years
- ---------------------------- ----------------------------------------------
<S> <C>
J. Terrence Murray Chairman, President and Chief Executive Officer,
Director Fleet/Norstar Financial Group, Inc.

Guy W. Nichols Woods Hole Oceanographic Institution
Director

John W. Nunley Vice President, State Mutual
Vice President

John F. O'Brien Director, President and Chief Executive
Director, President and Officer, State Mutual, since 1989; Director
Chief Executive Officer and Chairman of the Board, SMA Life, since
1989

Stephen Parker Vice President, State Mutual, SMA Life,
Vice President Allmerica Investments, Inc., since 1991;
Investment Executive, Tucker Anthony, Inc.,
1990 to 1991; Chief Executive Officer,
Freedom Capital Mgmt., 1989 to 1990

Edward J. Parry, III Vice President and Treasurer, State Mutual
Vice President and Treasurer since, 1993; Asst. Vice President, 1992 to
1993; Manager, Price Waterhouse, 1987 to 1992

Jean S. Peters Vice President, since 1994; Senior Vice
Vice President President, Providian Corp. 1989 to 1994

Richard M. Reilly Vice President, State Mutual, since 1990;
Vice President Director and President, Allmerica Investments,
Inc., since 1990; Director and President,
Allmerica Investment Management Company, Inc.,
since 1990; Director, President and Chief
Executive Officer, Allmerica Investment
Services, Inc., since 1990

Rachelle Reisberg Vice President, State Mutual, since 1994;
Vice President Systems Manager, State Mutual 1989 to 1994

Larry C. Renfro Vice President, State Mutual, since 1990;
Vice President Director, President and Chief Executive
Officer, 440 Financial Group, since 1990;
Director, SMA Life, since 1990; Executive
Vice President, State Street Bank & Trust
Co., 1989 to 1990

Winifred "Una" Rice Vice President, State Mutual, since 1995;
Vice President Second Vice President, 1992 to 1995; Vice
President 1990 to 1992

Stephen P. Rutman Vice President, State Mutual, since 1994;
Vice President Second Vice President, 1987 to 1994

</TABLE>
45

<PAGE>

Name and Position Principal Occupation(s) During Past Five Years
- ---------------------------- ----------------------------------------------
<S> <C>

Henry P. St. Cyr Vice President and Asst. Treasurer, State
Vice President and Mutual, since 1988
Asst. Treasurer

Eric Simonsen Vice President and Chief Financial Officer,
Vice President and State Mutual, since 1990; Partner, The
Chief Financial Officer Lincoln Group, 1987 to 1990

Mark T. Smith Vice President, State Mutual, since 1994; Vice
Vice President President, European Operation, Stratus Computer,
1988 to 1994

Phillip E. Soule Vice President, State Mutual
Vice President

Dr. John L. Sprague President, John L. Sprague Associates
Director

Robert G. Stachler, Esq. Esq., Taft, Stettinius & Hollister
Director

Ann K. Tripp Vice President, State Mutual, since 1994;
Vice President Asst. Vice President, 1991 to 1994; Senior
Investment Officer and Asst. Treasurer, 1989
to 1991

Herbert M. Varnum Chairman and Chief Executive Officer, Quabaug
Director Corporation

James S. Wakefield Vice President, State Mutual, since 1995; Vice
Vice President President, Merganser Capital Management, 1987 to 1995

Richard Manning Wall, Esq. General Counsel and Asst. to the Chairman,
Flexcon Company, Inc.

Jerome F. Weihs Vice President, State Mutual, since 1991; Second
Vice President Vice President, 1988 to 1991

Diane E. Wood Vice President, State Mutual, since 1991;
Vice President Second Vice President, 1989 to 1991

</TABLE>

DISTRIBUTION

Allmerica Investments, Inc. an indirect wholly owned subsidiary of the
Company, acts as the principal underwriter of the Policies pursuant to a
Sales and Administrative Services Agreement with the Company and the VEL II
Account. Allmerica Investments, Inc. is registered with the Securities and
Exchange Commission as a broker-dealer and is a member of the National
Association of Securities Dealers ("NASD"). The Policies are sold by agents
of the Company who are registered representatives of Allmerica Investments,
Inc. or of certain independent broker-dealers which are members of the NASD.

The Company pays registered representatives who sell the Policy commissions
based on a commission schedule. After issue of the Policy or an increase in
Face Amount, commissions generally will equal 50 percent of the first year
premiums up to a basic premium amount established by the Company.
Thereafter, commissions will generally equal 4 percent of any additional
premiums. Certain

<PAGE>

registered representatives, including registered representatives enrolled in
the Company's training program for new agents, may receive additional first
year and renewal commissions and training reimbursements. General Agents of
the Company and certain registered representatives may also be eligible to
receive expense reimbursements based on the amount of earned commissions.
General Agents may also receive overriding commissions, which will not exceed
10 percent of first year or 14 percent of renewal premiums.

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

REPORTS

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

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

LEGAL PROCEEDINGS

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

FURTHER INFORMATION

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

INDEPENDENT ACCOUNTANTS

The financial statements of the Company as of December 31, 1994 and 1993 and
for each of the three years in the period ended December 31, 1994 and of the
VEL II Account of State Mutual Life Assurance Company of America as of
December 31, 1994 and the period then ended, included in this Prospectus
constituting part of the Registration Statement, have been so included in
reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

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

FEDERAL TAX CONSIDERATIONS

The effect of federal income taxes on the value of a Policy, on loans,
withdrawals, or surrenders, on

<PAGE>

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

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

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

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

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

TAXATION OF THE POLICIES - The Company believes that the Policies described
in this prospectus will be considered life insurance contracts under Section
7702 of the Code, which generally provides for the taxation of life insurance
policies and places limitations on the relationship of the Policy Value to
the Insurance Amount at Risk. As a result, the Death Proceeds payable are
excludable from the gross income of the Beneficiary. Moreover, any increase
in Policy Value is not taxable until received by the Policyowner or the
Policyowner's designee. But see "MODIFIED ENDOWMENT CONTRACTS."

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

The Company believes that loans received under a Policy will be treated as
indebtedness of the Policyowner for federal tax purposes, and under current
law will not constitute income to the Policyowner so long as the Policy
remains in force. But see "MODIFIED ENDOWMENT CONTRACTS." Deducting interest
on policy loans is, however, subject to the restrictions of Section 264 of
the Code. Consumer interest paid on Policy loans under a Policy owned by an
individual is

<PAGE>

not tax deductible. In addition, no tax deduction is allowed for any
interest on any loan under one or more life insurance policies (purchased
after June 20, 1986) owned by a taxpayer covering the life of any individual
who is an officer or employee of or is financially interested in, any
business carried on by that taxpayer, to the extent the aggregate amount of
such loans exceeds $50,000.

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

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

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

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

MORE INFORMATION ABOUT THE GENERAL ACCOUNT

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

Transfers, surrenders, partial withdrawals, Death Proceeds and Policy loans
payable from the General Account may be delayed up to six months. However,
if payment is delayed for 10 days or more, the Company will pay interest at
least equal to an effective annual yield of 3 1/2% per year for the period of
deferment. Amounts from the General Account used to pay premiums on policies
with the Company will not be delayed.

FINANCIAL STATEMENTS

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

<PAGE>
VEL II ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1994

<TABLE>
<CAPTION>
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
1 2 3 4 5 6 7 8
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in shares of
Allmerica Investment Trust.........$ 36,326 $ 67,361 $ 317,999 $ 26,555 $ 153,499 $ 135,977 $ 37,357 $ 52,909
Investment in shares of Fidelity
Variable Insurance Products Fund... -- -- -- -- -- -- -- --
Investment in shares of Delaware
Group Premium Fund, Inc............ -- -- -- -- -- -- -- --
Receivable from State Mutual
Life Assurance Company of
America (Sponsor).................. 670 -- -- -- -- 812 693 24
-------- -------- -------- --------- --------- --------- --------- ---------
Total assets..................... 36,996 67,361 317,999 26,555 153,499 136,789 38,050 52,933

LIABILITIES:
Payable to State Mutual Life
Assurance Company of America
(Sponsor).......................... -- 66 391 25 139 -- -- --
-------- -------- -------- --------- --------- --------- --------- ---------
Net assets.........................$ 36,996 $ 67,295 $ 317,608 $ 26,530 $ 153,360 $ 136,789 $ 38,050 $ 52,933
-------- -------- -------- --------- --------- --------- --------- ---------
-------- -------- -------- --------- --------- --------- --------- ---------
Net asset distribution by category:
Variable life policies.............$ 36,996 $ 67,295 $ 317,608 $ 26,530 $ 153,360 $ 136,789 $ 38,050 $ 52,933
Value of investment by State
Mutual Life Assurance Company
of America (Sponsor).............. -- -- -- -- -- -- -- --
-------- -------- -------- --------- --------- --------- --------- ---------
$ 36,996 $ 67,295 $ 317,608 $ 26,530 $ 153,360 $ 136,789 $ 38,050 $ 52,933
-------- -------- -------- --------- --------- --------- --------- ---------
-------- -------- -------- --------- --------- --------- --------- ---------
Units outstanding,
December 31, 1994.................. 36,441 67,437 311,160 25,217 150,809 145,112 38,177 51,397
Net asset value per unit,
December 31, 1994..................$1.015217 $0.997887 $1.020721 $1.052064 $1.016913 $ .942648 $ .996653 $1.029896
</TABLE>

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

78 79

<PAGE>
VEL II ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1994, CONTINUED

<TABLE>
<CAPTION>
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
9 11 102 103 104 105 106 207
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in shares of
Allmerica Investment Trust.........$ 84,122 $ 14,288 -- -- -- -- -- --
Investment in shares of Fidelity
Variable Insurance Products Fund... -- -- $ 94,100 $ 193,548 $ 214,907 $ 211,600 $ 188,737 --
Investment in shares of Delaware
Group Premium Fund, Inc............ -- -- -- -- -- -- -- $ 55,765
Receivable from State Mutual
Life Assurance Company of
America (Sponsor).................. 724 -- 157 -- 1,003 526 -- 487
-------- -------- -------- --------- --------- --------- --------- ---------
Total assets..................... 84,846 14,288 94,257 193,548 215,910 212,126 188,737 56,252

LIABILITIES:
Payable to State Mutual Life
Assurance Company of America
(Sponsor).......................... -- 13 -- 107 -- -- 110 --
-------- -------- -------- --------- --------- --------- --------- ---------
Net assets.........................$ 84,846 $ 14,275 $ 94,257 $ 193,441 $ 215,910 $ 212,126 $ 188,627 $ 56,252
-------- -------- -------- --------- --------- --------- --------- ---------
-------- -------- -------- --------- --------- --------- --------- ---------
Net asset distribution by category:
Variable life policies.............$ 84,846 $ 14,179 $ 94,257 $ 193,441 $ 215,910 $ 212,126 $ 188,528 $ 56,252
Value of investment by State
Mutual Life Assurance Company
of America (Sponsor).............. -- 96 -- -- -- -- 99 --
-------- -------- -------- --------- --------- --------- --------- ---------
$ 84,846 $ 14,275 $ 94,257 $ 193,441 $ 215,910 $ 212,126 $ 188,627 $ 56,252
-------- -------- -------- --------- --------- --------- --------- ---------
-------- -------- -------- --------- --------- --------- --------- ---------
Units outstanding,
December 31, 1994.................. 89,952 14,904 95,576 179,208 215,619 214,677 190,971 55,775
Net asset value per unit,
December 31, 1994..................$ .943239 $ .957756 $ .986194 $1.079425 $1.001349 $ .988118 $ .987728 $1.008538
</TABLE>

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

80 81

<PAGE>

STATE MUTUAL LIFE
ASSURANCE COMPANY
OF AMERICA

FINANCIAL STATEMENTS

DECEMBER 31, 1994 and 1993

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

December 31, 1994

Financial Statements

Report of Independent Accountants...................................... 1
Statement of Financial Position ...................................... 2
Statement of Operations and Contingency Reserves....................... 3
Statement of Cash Flows................................................ 4
Notes to Financial Statements.......................................... 5

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

February 13, 1995, except as to Note 2,
which is as of February 28, 1995

To the Board of Directors and Policyholders of
State Mutual Life Assurance Company of America

In our opinion, the accompanying statement of financial position and the
related statements of operations and changes in contingency reserves and of
cash flows present fairly, in all material respects, the financial position
of State Mutual Life Assurance Company of America at December 31, 1994 and
1993, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits 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.

As discussed in Note 1 to the financial statements, the Company implemented a
new accounting pronouncement in 1993 and may adopt Statement of Financial
Accounting Standards No. 120, "Accounting and Reporting by Mutual Life
Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts", and Financial Accounting Standards Board
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises", in 1996. If
these pronouncements are adopted, the financial statements for the year ended
December 31, 1994 will be retroactively restated for the effects of these
changes in accounting principles.

Price Waterhouse LLP
Boston, Massachusetts

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

STATEMENT OF FINANCIAL POSITION
as of December 31
(In thousands)

<TABLE>
<CAPTION>
ASSETS 1994 1993
---- ----
<S> <C> <C>
Cash $ 21,931 $ 22,378
Investments:
Bonds 3,063,890 3,172,304
Stocks 14,638 48,713
Investments in subsidiaries 797,879 971,339
Mortgage loans 825,611 1,045,748
Policy loans 248,310 258,845
Real estate, including home office property 185,128 192,333
Short term investments 72,159 61,176
Other invested assets 45,978 22,180
---------- ----------
Total cash and investments 5,275,524 5,795,016

Premiums deferred and uncollected 95,890 91,434
Investment income due and accrued 84,066 89,756
Other assets 79,165 87,238
Assets held in separate accounts 1,096,032 922,069
---------- ----------
$6,630,677 $6,985,513
---------- ----------
---------- ----------

LIABILITIES AND CONTINGENCY RESERVES
Liabilities:

Policy liabilities:
Life reserves $ 965,896 $ 969,223
Annuity and other fund reserves 3,561,965 3,981,281
Accident and health reserves 50,096 45,424
Claims payable 122,677 112,509
Dividends payable 33,930 35,406
---------- ----------
Total policy liabilities 4,734,564 5,143,843

Expenses and taxes payable 137,676 99,301
Other liabilities 73,427 33,616
Asset valuation reserve 124,254 260,714
Obligations related to separate account business 1,095,430 921,648
---------- ----------
Total liabilities 6,165,351 6,459,122
---------- ----------
---------- ----------
Contingency reserves:

Special contingency reserves 26,522 25,238
General contingency reserves 438,804 501,153
---------- ----------
Total contingency reserves 465,326 526,391
---------- ----------
$6,630,677 $6,985,513
---------- ----------
---------- ----------
</TABLE>

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

2
<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

STATEMENT OF OPERATIONS AND
CHANGES IN CONTINGENCY RESERVES
for the year ended December 31
(In thousands)

<TABLE>
<CAPTION>
REVENUE 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Premiums and other considerations:
Life $ 100,956 $ 92,314 $ 101,929
Annuities 950,980 762,724 768,050
Accident and health 225,132 246,842 338,534
Reinsurance commissions and reserve adjustments 10,117 10,853 11,700
---------- ---------- ----------
Total premiums and other considerations 1,287,185 1,112,733 1,220,213

Net investment income 406,071 520,508 503,754
Realized capital losses, net of tax (28,341) (33,334) (5,261)
Other revenue 43,651 29,121 14,849
---------- ---------- ----------
Total revenue 1,708,566 1,629,028 1,733,555
---------- ---------- ----------
POLICY BENEFITS AND OPERATING EXPENSES
Policy benefits:
Claims, surrenders and other benefits 1,697,943 1,314,540 1,459,941
Decrease in policy reserves (412,090) (175,726) (153,971)
Dividends to policyholders 33,233 32,773 25,955
---------- ---------- ----------
Total policy benefits 1,319,086 1,171,587 1,331,925

Operating and selling expenses 141,460 138,566 141,456
Taxes, except capital gains tax 33,747 18,664 14,565
Net transfers to separate accounts 173,607 185,374 141,183
---------- ---------- ----------
Total policy benefits and operating expenses 1,667,900 1,514,191 1,629,129
---------- ---------- ----------
NET INCOME 40,666 114,837 104,426

CONTINGENCY RESERVES AT BEGINNING OF YEAR 526,391 444,427 338,683
Unrealized capital gains (losses) on investments:
Unconsolidated subsidiaries (222,155) 47,292 101,155
Other investments 24,579 (14,159) (61,479)
---------- ---------- ----------
(197,576) 33,133 39,676
---------- ---------- ----------
Transfer from (to) asset valuation reserve 136,460 (25,173) (40,188)
Other adjustments (40,615) (40,833) 1,830
---------- ---------- ----------
CONTINGENCY RESERVES AT END OF YEAR $ 465,326 $ 526,391 $ 444,427
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

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

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

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

<TABLE>
<CAPTION>
CASH FLOW FROM OPERATING ACTIVITIES 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Premiums, deposits and other income $ 1,327,496 $ 1,120,816 $ 1,230,872
Allowances and reserve adjustments
on reinsurance ceded 10,862 11,773 8,836
Net investment income 372,428 432,631 443,668
Net repayments on policy loans 10,535 17,637 21,062
Benefits to policyholders and
beneficiaries (1,684,684) (1,313,978) (1,467,104)
Operating and selling expenses and
taxes (155,162) (111,125) (177,946)
Net transfers to separate accounts (160,623) (201,442) (135,921)
Dividends to policyholders (34,709) (27,777) (42,874)
Other sources (applications) 3,775 (40,938) 9,560
---------- ---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (310,082) (112,403) (109,847)
---------- ---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES
New borrowings 932,497 116,800 261,000
Repayment of borrowings (932,497) (116,800) (261,000)
---------- ---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- -- --
---------- ---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Sales and maturities of long term investments:
Bonds 993,365 841,548 776,693
Stocks 1,835 4,361 2,948
Real estate and other invested assets 19,200 24,122 23,886
Repayment of mortgage principal 193,842 211,360 136,252
Capital gains tax (1,086) (2,232) --
Acquisition of long term investments:
Bonds (881,081) (887,976) (821,694)
Stocks (4,557) (62,318) (6,674)
Real estate and other invested assets (31,504) (3,931) (32,404)
Mortgage loans (1,529) (1,185) (6,313)
Other investing activities 32,133 (5,199) (743)
---------- ---------- ----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 320,618 118,550 71,951
---------- ---------- ----------
Net change in cash and short term investments 10,536 6,147 (37,896)

CASH AND SHORT TERM INVESTMENTS
Beginning of year 83,554 77,407 115,303
---------- ---------- ----------
End of year $ 94,090 $ 83,554 $ 77,407
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

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

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION - State Mutual Life Assurance Company
of America (State Mutual or the "Company") is presently organized as a mutual
life insurance company and accordingly, the Company's financial statements
have been prepared on the basis of accounting practices prescribed or
permitted by the Division of Insurance of the Commonwealth of Massachusetts
and in conformity with practices prescribed by the National Association of
Insurance Commissioners (NAIC), which are generally accepted accounting
principles for mutual life insurance companies. The Company is pursuing a
plan of reorganization which includes conversion to a stock life insurance
company. (Refer to Note 2 for a description of the reorganization.)

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

ACCOUNTING FOR UNCONSOLIDATED SUBSIDIARIES - State Mutual's interest in
unconsolidated subsidiaries consists primarily of SMA Life Assurance Company
(SMA Life), a wholly owned life insurance company, a 57.4% interest in
Allmerica Property & Casualty Companies, Inc. (Allmerica P&C), a Delaware
domiciled business corporation which owns The Hanover Insurance Company
(Hanover), and several wholly owned non-insurance subsidiaries. Hanover owns
an 80.6% interest in Citizens Corporation, parent company of Citizens
Insurance Company of America (Citizens). Allmerica P&C is accounted for at
market value. During 1993, the Securities Valuation Office of the NAIC
instituted a discount to market values for subsidiaries previously carried at
market value. The discount applied to Allmerica P&C was determined to be
16%, to be phased in over a five year period (3% per year in 1993 to 1996
and 4% in 1997). SMA Life and the non-insurance subsidiaries are accounted
for under the equity method. The Company's equity in the earnings of
unconsolidated subsidiaries is reflected in net income. Any remaining
changes in Allmerica P&C's value and direct charges to SMA Life's surplus are
reflected in contingency reserves.

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

Mortgage loans on real estate are stated at unpaid principal balances, net of
unamortized discounts. Mortgage loans are reduced for losses expected by
management to be realized on transfers of mortgage loans to real estate (upon
foreclosure), on the disposition or settlement of mortgage loans and on
mortgage loans which management believes may not be collectible in full. In
determining the amount of the loss, management considers, among other things,
the estimated fair value of the underlying collateral.

Investment real estate and real estate acquired through foreclosure are
carried at the lower of depreciated cost or market value. Home office
property is carried at depreciated cost.

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

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

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

SEPARATE ACCOUNTS - Separate account assets and liabilities represent
segregated funds administered and invested by the Company for the benefit of
certain variable life insurance policyholders and certain pension and annuity
contractholders.

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

Assets consist principally of bonds, common stocks, and short term
obligations at market value. The investment income, gains, and losses of
these accounts generally accrue to the contractholders and, therefore, are
not included in the Company's net income. Appreciation and depreciation of
the Company's interest in the separate accounts, including undistributed net
investment income, is reflected in contingency reserves.

INSURANCE RESERVES AND ANNUITY AND OTHER FUND RESERVES - Reserves for life
insurance, annuities, and accident and health insurance are established in
amounts adequate to meet the estimated future obligations of policies in
force based on accepted actuarial methods. These liabilities are computed
based upon mortality, morbidity and interest rate assumptions applicable to
these coverages, including a provision for adverse deviation. Interest rates
range from 2 1/2% to 6% for life insurance and 2% to 9 1/2% for annuities, and
mortality and morbidity assumptions reflect the Company's experience and
industry standards. The assumptions vary by plan, age at issue, year of
issue and duration.

Reserves for group accident and health claims include estimated provisions
for both reported and unreported claims incurred and related expenses.
Claims reserves are computed based on historical experience modified for
expected trends in frequency and severity. Other fund reserves are for
guaranteed investment contracts and other group and individual contract
deposit funds and consist of deposits received from customer's and investment
earnings on their fund balances.

Withdrawal characteristics of annuity and other fund reserves vary by
contract. At both December 31, 1994 and 1993, approximately 87% of the
contracts (included in both the general account and the separate accounts of
the Company) were not subject to discretionary withdrawal or were subject to
withdrawal at book value less surrender charge.

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

The Federal income tax for the non-life insurance subsidiaries is calculated
on a separate return basis. Any current tax liability (benefit) is paid to
(reimbursed by) State Mutual. Tax benefits resulting from taxable operating
losses of the non-life subsidiaries are not reimbursed currently by State
Mutual. However, to the extent such losses are utilized by the consolidated
group, they are reflected as a liability of State Mutual.

The Federal income tax for the life companies is calculated on a line of
business basis, excluding the operating results of the non-insurance
subsidiaries and Allmerica P&C. The tax is allocated to each life company
based on its contribution to the taxable income or loss of each line of
business.

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

DIVIDENDS TO POLICYHOLDERS - Certain life, health and annuity insurance
policies contain dividend payment provisions that enable the policyholder to
participate in the earnings of the Company. The amount of policyholders'
dividends to be paid is determined annually by the Board of Directors. The
aggregate amount of policyholders' dividends is related to the actual
interest, mortality, morbidity and expense experience for the year and the
Company's judgment as to the appropriate level of statutory surplus to be
retained.

Dividends on individual life insurance, individual accident and health
insurance, and individual annuity policies are provided on the basis of
amounts payable in the following calendar year. Dividends on all other
insurance are provided on the basis of amounts incurred for the current year.

6
<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

PENDING ACCOUNTING PRONOUNCEMENT - In April 1993, the Financial Accounting
Standards Board (FASB) issued Interpretation No. 40, "Applicability of
Generally Accepted Accounting Principles to Mutual Life Insurance and Other
Enterprises" (FIN 40), which establishes a different definition of generally
accepted accounting principles for mutual life insurance companies. Under the
Interpretation, financial statements of mutual life insurance companies which
are prepared on the basis of statutory accounting, will no longer be
characterized as in conformity with generally accepted accounting principles.

In January 1995, the FASB issued Statement of Financial Accounting Standards
No. 120, "Accounting and Reporting by Mutual Life Insurance Enterprises and
by Insurance Enterprises for Certain Long-Duration Participating Contracts"
(SFAS No. 120), and the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position No. 95-1, "Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises" (SOP 95-1). SFAS
No. 120 extends the requirements of SFAS No. 60, "Accounting and Reporting by
Insurance Enterprises," No. 97, "Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized Gains and
Losses from the Sale of Investments," and No. 113, "Accounting and Reporting
for Reinsurance of Short-Duration and Long-Duration Contracts," to mutual
life insurance enterprises. SOP 95-1 establishes accounting for certain
participating life insurance contracts for mutual life insurance enterprises.
SFAS No. 120 requires mutual life insurance enterprises (and permits stock
life insurance enterprises) to apply the provisions of SOP 95-1 to those
contracts which meet the conditions in SFAS No. 120.

FIN 40, SFAS No. 120 and SOP 95-1 are all effective for financial statements
issued for fiscal years beginning after December 15, 1995.

In as much as the Company is pursuing a plan of reorganization which includes
conversion to a stock life insurance company, and would result in future
financial statements being prepared in accordance with generally accepted
accounting principles for stock life insurance companies, the new
pronouncement may not be applicable to future financial statements. If the
Company does not demutualize, the new pronouncement will be adopted in 1996,
by retroactive restatement of the earliest year presented. Management of the
Company has not yet determined the effect on its financial statements of
applying these new pronouncements.

ACCOUNTING CHANGES - In December 1992, the NAIC issued a statutory accounting
policy for accounting for postretirement benefits other than pensions for
current retirees and employees who have vested rights in those benefits. The
Company implemented this statutory requirement in 1993 and elected to
immediately recognize the unfunded postretirement benefit obligation and
reported the cumulative effect of this change as a direct charge to
contingency reserves (see Note 9 for additional information).

NOTE 2 - REORGANIZATION

On February 28, 1995, State Mutual's Board of Directors adopted, pursuant to
Massachusetts insurance law, a plan of reorganization (the "Plan") whereby
State Mutual will convert from a Massachusetts mutual life insurance company
to a Massachusetts stock life insurance company and will become a wholly
owned subsidiary of Allmerica Financial Corporation ("AFC"). Currently, the
unsatisfied conditions to the effectiveness of the Plan of Demutualization
are the approval of the Commissioner of the Massachusetts Division of
Insurance (the "Commissioner") of the Plan after a hearing thereon, the
approval of the policyholders of the Plan, the closing of an initial public
offering of AFC Common Stock and certain other conditions set forth in the
Plan. The Plan is also subject to the review of other insurance regulators.
The Plan will become effective on the date of the closing of the initial
public offering of the Common Stock of AFC.

Under the Plan, the eligible policyholders of State Mutual will receive
shares of Common Stock of AFC, policy credits or cash in exchange for the
policyholders' membership interest in State Mutual.

Under the Plan, State Mutual will establish and operate a closed block of
participating business for the benefit of the policies included therein (the
"Closed Block"). Such business (the" Closed Block Business") will contain
those classes of individual or joint life insurance participating policies,
individual deferred annuity contracts and supplementary contracts not
involving life contingencies which are in force on the effective date. The
Closed Block will continue in effect until no more policies included therein
are in force or until the Commissioner consents to the termination of the
Closed Block. The duration of the Closed Block is expected to be in excess
of 50 years.

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

State Mutual will allocate to the Closed Block an amount of assets expected
to produce cash flows which, together with anticipated revenues from the
Closed Block Business, are reasonably sufficient to support the Closed Block
Business, including provision for payments of claims, certain expenses and
taxes, and for continuation of 1994 dividend scales if experience underlying
such scales continues. Future changes in actual reinvestment rates over the
long term from assumed reinvestment rates, like changes in other assumptions
made in funding the Closed Block, may cause dividend scales to change.

To the extent that over time cash flows from the assets allocated to the
Closed Block and other experience related to the Closed Block Business are,
in the aggregate, more favorable than assumed in establishing the Closed
Block, total dividends paid to Closed Block policyholders in future years
will be greater than the total dividends that would have been paid to such
policyholders if the dividend scales payable in 1994 had been continued.
Conversely, to the extent that over time such cash flows and other experience
are, in the aggregate, less favorable than assumed in setting up the Closed
Block, total dividends paid to Closed Block policyholders in future years
will be less than the total dividends that would have been paid to such
policyholders if the dividend scales payable in 1994 had been continued. In
addition, if the assets allocated to the Closed Block, the cash flows
therefrom and the revenues from the Closed Block Business prove to be
insufficient to pay the benefits guaranteed under the policies and contracts
included in the Closed Block, State Mutual will be required to make such
payments from its general funds. Since the Closed Block will be funded to
provide for payment of guaranteed benefits on such policies and contracts
and, in addition, for continuation of dividends paid under 1994 dividend
scales, it will not be necessary to use general funds to pay guaranteed
benefits unless the Closed Block Business experiences very substantial
adverse deviations in investment, mortality, persistency or other experience
factors.

NOTE 3 - INVESTMENTS

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

<TABLE>
<CAPTION>
December 31, 1994
-----------------
Gross Gross
Carrying Unrealized Unrealized Fair
(In thousands) Value Appreciation Depreciation Value
----- ------------ ------------ -----
<S> <C> <C> <C> <C>
Federal government bonds $ 13,250 $ 246 $ 534 $ 12,962
State, local and government agency bonds 550 7 -- 557
Foreign government bonds 70,217 1,126 6,510 64,833
Corporate securities 2,939,333 22,052 96,285 2,865,100
Mortgage-backed securities 40,540 58 1,895 38,703
---------- -------- -------- ----------
Total $3,063,890 $ 23,489 $105,224 $2,982,155
---------- -------- -------- ----------
---------- -------- -------- ----------

December 31, 1993
-----------------
Federal government bonds $ 19,442 $ 1,484 $ 40 $ 20,886
State, local and government agency bonds 12,048 235 -- 12,283
Foreign government bonds 64,951 4,417 14 69,354
Corporate securities 3,075,146 182,272 18,589 3,238,829
Mortgage-backed securities 717 43 -- 760
---------- -------- -------- ----------
Total $3,172,304 $188,451 $ 18,643 $3,342,112
---------- -------- -------- ----------
---------- -------- -------- ----------
</TABLE>

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

The carrying value and fair value by contractual maturity at December 31,
1994, are shown below. Actual maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties or the Company may have the
right to put or sell the obligation back to the issuer. Mortgage-backed
securities are classified based on expected maturities.

Carrying Fair
(In thousands) Value Value
----- -----
<S> <C> <C>
Due in one year or less $ 566,301 $ 567,013
Due after one year through five years 1,691,897 1,651,469
Due after five years through ten years 607,819 571,345
Due after ten years 197,873 192,328
---------- ----------
Total $3,063,890 $2,982,155
---------- ----------
---------- ----------
</TABLE>

MORTGAGE LOANS AND REAL ESTATE Mortgage loans and real estate investments
are diversified by property type and location. Real estate investments,
except home office, have been obtained primarily through foreclosure.
Mortgage loans are collateralized by the related properties and are generally
no more than 75% of the property value at the time the original loan is made.
Mortgage loan and real estate investments, including home office of $67,920
thousand and $61,363 thousand at December 31, 1994 and 1993, respectively,
were distributed by the following types and geographic regions at December 31:

<TABLE>
<CAPTION>
(In thousands)
Property Type 1994 1993
- ------------- ---- ----
<S> <C> <C>
Office buildings $ 445,222 $ 514,575
Residential 148,155 233,459
Retail 168,536 197,496
Industrial/Warehouse 93,323 135,766
Other 155,503 156,785
---------- ----------
Total $1,010,739 $1,238,081
---------- ----------
---------- ----------

Geographic Region
- -----------------
South Atlantic $ 263,883 $ 342,345
Pacific 189,547 212,371
New England 142,371 142,263
West South Central 99,065 141,375
Middle Atlantic 108,531 113,716
East North Central 71,937 114,694
East South Central 48,232 66,139
West North Central 72,919 82,883
Mountain 14,254 22,295
---------- ----------
Total $1,010,739 $1,238,081
---------- ----------
---------- ----------
</TABLE>

FUTURES CONTRACTS - State Mutual purchases and sells futures contracts on
margin to hedge against interest rate fluctuations and their effect on the
net cash flows from the sales of guaranteed investment contracts. Because
the Company purchases and sells futures contracts through brokers who assume
the risk of loss, the Company's exposure to credit risk under futures
contracts is limited to the margin deposited with the broker. The maturity of
all futures contracts outstanding is less than one year.

Gains and losses on hedge contracts related to interest rate fluctuations are
deferred and recognized in income over the period being hedged corresponding
to related guaranteed investment contracts. The amount of hedging gains
(losses) explicitly deferred were $(7,658) thousand, $6,953 thousand and
$4,976 thousand for the years ended December 31, 1994,

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

1993 and 1992, respectively. Gains and losses on hedges that are deemed
ineffective by management are immediately recognized into income.

A reconciliation of notional amounts for all futures contracts outstanding
for the year ended December 31 is as follows:

<TABLE>
<CAPTION>
(In thousands) 1994 1993
---- ----
<S> <C> <C>
Contracts outstanding, January 1 $ 141,700 $ 120,000
New contracts 816,000 493,300
Contracts expired -- --
Contracts terminated (831,000) (471,600)
--------- ---------
Contracts outstanding, December 31 $ 126,700 $ 141,700
--------- ---------
--------- ---------
</TABLE>

FOREIGN CURRENCY SWAP CONTRACTS - The Company enters into foreign currency
swap contracts to hedge the exposure to currency risks on fixed maturity
investments. Interest and principal related to foreign fixed maturity
investments payable in foreign currencies, at market currency exchange rates,
are exchanged for the equivalent payment translated at a specific currency
exchange rate. The Company's maximum exposure to counterparty credit risk is
the difference between the foreign currency exchange rates, as agreed upon in
the swap contract, and the foreign currency spot rate on the date of
exchange. State Mutual recognizes net interest received or paid over the life
of the swap contract as an adjustment to net investment income. The decrease
in net investment income related to foreign currency swap contracts was
$(1,400) thousand, $(800) thousand and $(200) thousand for the years ended
December 31, 1994, 1993 and 1992, respectively.

The contractual amounts and maturity dates of foreign currency swap contracts
were as follows:

<TABLE>
<CAPTION>
December 31, 1994
-----------------
After
(In thousands) 1995 1996 1997 1998 1998 Total
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Currency:
Swiss franc $14,100 $10,600 $ -- $ -- $ 6,600 $ 31,300
Canadian dollar -- -- -- -- 15,000 15,000
British pound sterling -- -- 8,200 -- 18,800 27,000
Italian lire -- 20,000 -- -- -- 20,000
Other -- 5,400 10,000 -- 10,000 25,400
------- ------- ------- ------- ------- --------
Balance, December 31 $14,100 $36,000 $18,200 $ -- $50,400 $118,700
------- ------- ------- ------- ------- --------
------- ------- ------- ------- ------- --------

December 31, 1993
-----------------
After
(In thousands) 1994 1995 1996 1997 1997 Total
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Currency:
Swiss franc $ 5,000 $14,100 $10,600 $ -- $ 6,600 $ 36,300
Canadian dollar -- -- -- -- 15,000 15,000
British pound sterling -- -- -- 8,200 18,800 27,000
Italian lire -- -- 20,000 -- -- 20,000
Other 10,100 -- 5,400 10,000 5,000 30,500
------- ------- ------- ------- ------- --------
Balance, December 31 $15,100 $14,100 $36,000 $18,200 $45,400 $128,800
------- ------- ------- ------- ------- --------
------- ------- ------- ------- ------- --------
</TABLE>

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

A reconciliation of the contractual amounts of foreign currency swap
contracts outstanding for the year ended December 31 is as follows:

<TABLE>
<CAPTION>
(In thousands) 1994 1993
---- ----
<S> <C> <C>
Contracts outstanding, January 1 $128,800 $ 95,000
New contracts 10,100 50,700
Contracts expired (15,100) (16,900)
Contracts terminated (5,100) --
-------- --------
Contracts outstanding, December 31 $118,700 $128,800
-------- --------
-------- --------
</TABLE>

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

<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Bonds $261,176 $276,077 $285,415
Stocks 1,305 1,062 938
Investments in subsidiaries 37,478 107,603 67,239
Mortgage loans 87,670 114,831 130,480
Real estate 50,431 48,072 47,061
Policy loans 14,457 15,282 16,271
Other investments 2,765 (264) 2,649
Short term investments 359 2,284 1,045
-------- -------- --------
455,641 564,947 551,098
Less investment expenses 52,123 45,556 47,405
-------- -------- --------
Net investment income, before IMR amortization 403,518 519,391 503,693
IMR amortization 2,553 1,117 61
-------- -------- --------
Net investment income $406,071 $520,508 $503,754
-------- -------- --------
-------- -------- --------
</TABLE>

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

<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Bonds $ 2,144 $ 4,953 $ 1,855
Stocks 84 87 472
Mortgage loans (21,351) (12,709) 49
Real estate (8,990) (11,743) (5,799)
Other 2,505 (2,734) (572)
-------- -------- --------
(25,608) (22,146) (3,995)
Less Federal income tax 1,086 2,232 961
-------- -------- --------
Net realized capital losses before transfer to IMR (26,694) (24,378) (4,956)
Net realized capital gains transferred to IMR (1,647) (8,956) (305)
-------- -------- --------
Net realized capital losses $(28,341) $(33,334) $ (5,261)
-------- -------- --------
-------- -------- --------
</TABLE>

Proceeds from voluntary sales of investments in bonds during 1994, 1993 and
1992 were $222,644 thousand, $222,865 thousand and $136,458 thousand,
respectively. Gross gains of $3,753 thousand, $3,337 thousand and $1,504
thousand and gross losses of $2,945 thousand, $1,300 thousand and $1,159
thousand, respectively, were realized on those sales.

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

NOTE 4 - INVESTMENTS IN SUBSIDIARIES

Summarized financial information concerning all unconsolidated subsidiaries
as of December 31 is as follows:

<TABLE>
<CAPTION>
Property & Casualty
(In thousands) Life Insurance Insurance Non-Insurance
-------------- --------- -------------
<S> <C> <C> <C>
1994
- ----
Assets $4,072,045 $4,337,564 $ 74,597
Liabilities 3,882,722 3,347,785 29,883
Equity in net income (loss) 6,403 42,753 (11,678)

1993
- ----
Assets $3,504,724 $4,200,463 $ 70,014
Liabilities 3,322,508 3,240,364 26,479
Equity in net income (loss) 19,782 95,741 (7,920)
</TABLE>

The Company provides management, operating personnel, facilities and other
services to various subsidiaries and affiliates. Reimbursements for such
services and facilities amounted to $261,913 thousand, $225,044 thousand and
$112,777 thousand in 1994, 1993 and 1992, respectively. Net amounts
receivable from subsidiaries and affiliates were $37,514 thousand and $30,188
thousand at December 31, 1994 and 1993, respectively.

NOTE 5 - FAIR VALUE DISCLOSURES OF FINANCIAL INFORMATION

Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments" requires disclosure of fair value information
about certain financial instruments (insurance contracts, real estate,
goodwill and taxes are excluded) for which it is practicable to estimate such
values, whether or not these instruments are included in the balance sheet.
The fair values presented for certain financial instruments are estimates
which, in many cases, may differ significantly from the amounts which could
be realized upon immediate liquidation. In cases where market prices are not
available, estimates of fair value are based on discounted cash flow analyses
which utilize current interest rates for similar financial instruments which
have comparable terms and credit quality. Fair values of futures contracts
and foreign currency swaps were not material to State Mutual as of December 31,
1994 and 1993.

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

FINANCIAL ASSETS:

CASH AND SHORT TERM INVESTMENTS - The carrying amounts reported in the
statement of financial position approximate fair value.

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

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

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

POLICY LOANS - The carrying amount reported in the statement of financial
position approximates fair value since policy loans have no defined maturity
dates and are inseparable from the insurance contracts.

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

FINANCIAL LIABILITIES:

INVESTMENT CONTRACTS (WITHOUT MORTALITY/MORBIDITY FEATURES) - Fair values
for the Company's liabilities under guaranteed investment type contracts are
estimated using discounted cash flow calculations using current interest
rates for similar contracts with maturities consistent with those remaining
for the contracts being valued. Other liabilities are based on surrender
values.

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

<TABLE>
<CAPTION>
1994 1993
---- ----
Carrying Fair Carrying Fair
(In thousands) Value Value Value Value
----- ----- ----- -----
<S> <C> <C> <C> <C>
Financial Assets:
Cash $ 21,931 $ 21,931 $ 22,378 $ 22,378
Short term investments 72,159 72,159 61,176 61,176
Bonds 3,063,890 2,982,155 3,172,304 3,342,112
Stocks 14,638 14,638 48,713 48,713
Mortgage loans 825,611 814,047 1,045,748 1,077,707
Policy loans 248,310 248,310 258,845 258,845

Financial Liabilities:
Guaranteed investment contracts $2,170,643 $2,134,046 $2,463,938 $2,582,392
Other group contract deposit funds 980,327 969,627 1,087,732 1,116,800
Supplemental contracts without life contingencies 8,647 8,647 11,013 11,013
Dividend accumulations 84,482 84,482 84,808 84,808
Other individual contract deposit funds 107,400 106,893 124,081 122,908
Individual annuity contracts 8,185 7,943 -- --
</TABLE>

NOTE 6 - BORROWED MONEY

State Mutual issues commercial paper primarily to manage imbalances between
operating cash flows and existing commitments. Commercial paper borrowing
arrangements are supported by various lines of credit. As of December 31,
1994, State Mutual has approximately $165,000 thousand in unused committed
lines of credit provided by U.S. banks. These lines of credit generally have
terms of less than one year, and require the Company to pay annual commitment
fees ranging from 0.10% to 0.125% of the available credit. Interest that
would be charged for usage of these lines of credit is based upon negotiated
arrangements.

State Mutual has no borrowed money outstanding at December 31, 1994 and 1993.
Interest expense related to borrowed money was $2,485 thousand, $154
thousand and $580 thousand for the years ended December 31, 1994, 1993 and
1992, respectively.

NOTE 7 - FEDERAL INCOME TAXES

The federal income tax provisions (benefit) for 1994, 1993 and 1992 were
$17,476 thousand, $9,265 thousand and $(208) thousand, respectively, which
include taxes applicable to realized capital gains of $1,086 thousand, $2,232
thousand and $961 thousand.

The effective federal income tax rates were 30.1%, 7.5% and (0.2)% in 1994,
1993 and 1992, respectively. The differences between the federal statutory
rate and the Company's effective tax rates are primarily related to:
decreases in taxable income for the utilization of net operating loss
carryforwards and write-offs of mortgage loans and real estate; increases in
taxable income for differences in policyholder liabilities for federal income
tax purposes and financial reporting purposes, the accrual of market
discounts on investments and the deferral of policy acquisition costs for
federal tax purposes. The

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

policyholder dividends adjustment affecting mutual life insurance companies
resulted in an increase in taxable income in 1994 and 1992 and a decrease in
taxable income in 1993. At December 31, 1994, the Company has no available
net operating loss carryforwards; however, there are available alternative
minimum tax credit carryforwards of $1,540 thousand.

The Company's Federal income tax returns are routinely audited by the
Internal Revenue Service (IRS) and provisions are routinely made in the
financial statements in anticipation of the results of these audits. The
Internal Revenue Service (IRS) has completed its examination of all of the
Company's federal income tax returns through 1988. Deficiencies asserted
with respect to tax years 1977 through 1981 have been paid and recorded and
the Company has filed a recomputation of such years with appeals claiming a
refund with respect to certain agreed upon issues, but has not recognized any
benefit in its financial statements. The Company is currently considering
its response to certain adjustments proposed by the IRS with respect to the
Company's federal income tax returns for 1982 and 1983. If upheld, these
proposed adjustments would result in additional payments; however, the
Company will vigorously defend its position with respect to these
adjustments. In management's opinion, adequate tax liabilities have been
established for all years.

NOTE 8 - PENSION PLANS

The Company provides retirement benefits to substantially all of its
employees and all agents hired prior to 1982 under defined benefit pension
plans. Through December 31, 1994, retirement benefits were based primarily
on years of service and compensation. Benefit accruals under the defined
benefit formula were frozen for most employees (but not for eligible agents)
effective December 31, 1994. In their place, the Company plans to adopt a
defined benefit cash balance formula, under which the Company would annually
provide a contribution to each eligible employee as a percentage of that
employee's salary, similar to a defined contribution plan arrangement.
Employees would then be allowed to direct the investment of their awards and
to borrow against them. Adoption of the defined benefit cash balance formula
is subject to the resolution of certain technical and design issues, and may
be subject to receipt of a favorable determination letter from the IRS that
the Company's pension plans, as amended to reflect the cash balance formula,
will continue to satisfy the requirements of Section 401(a) of the Internal
Revenue Code. The Company's funding policy is to contribute annually the
minimum contribution determined using the net unit credit cost method and
applicable regulations of the Employee Retirement Income Security Act of
1974. The Company's accounting policy follows FASB Statement No. 87,
"Employers' Accounting for Pensions".

Components of net pension expense (benefit) for the years ended December 31,
were as follows:

<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits earned during the year $ 5,403 $ 3,980 $ 3,222
Interest accrued on projected benefit
obligations 11,706 11,675 9,948
Actual return on plan assets (1,671) (13,942) (13,071)
Net amortization and deferral (10,399) 302 (1,192)
-------- -------- --------
Net pension expense (benefit) $ 5,039 $ 2,015 $ (1,093)
-------- -------- --------
-------- -------- --------
</TABLE>

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

The following table summarizes the status as of December 31, of the Company's
pension plans. The plans' assets exceeded accumulated benefits. The net
pension asset is included in the statement of financial position with Other
Assets.

<TABLE>
<CAPTION>
(In thousands) 1994 1993
---- ----
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $140,230 $153,244
-------- --------
-------- --------
Accumulated benefit obligation $141,727 $154,058
-------- --------
-------- --------
Pension asset included in Other Assets:
Projected benefit obligation for service rendered to date $153,334 $171,506
Plan assets at fair value 154,209 161,224
-------- --------
Plan assets in excess (deficit) of projected benefit obligation 875 (10,282)
Unrecognized net loss from past experience 41,438 45,945
Unrecognized prior service cost (12,568) 403
Unamortized transition asset (18,184) (19,466)
-------- --------
Net pension asset $ 11,561 $ 16,600
-------- --------
-------- --------
</TABLE>

Determination of the projected benefit obligation was based on a weighted
average discount rate of 8.5% in 1994 and 7% in 1993. The assumed long-term
rate of return on plan assets was 9% for both years. The actuarial present
value of the projected benefit obligation was determined using assumed rates
of increase in future compensation levels ranging from 5.5% to 6% for both
years. Updated mortality tables were used in 1993 to reflect the longer life
expectancy of retirees. Plan assets are invested primarily in various
separate accounts and the general account of State Mutual.

The Company has a Profit Sharing and 401(k) Plan for which substantially all
employees are eligible. The Company also has a similar integrated defined
contribution plan for substantially all of its agents. Effective for plan
years beginning after 1994, the profit sharing formula for employees has been
discontinued and a 401(k) match feature has been added to the continuing
401(k) plan for the employees.

NOTE 9 - OTHER POSTRETIREMENT BENEFIT PLANS

In addition to the Company's pension plans, the Company currently provides
postretirement medical and death benefits to certain full-time employees and
dependents, under a plan sponsored by State Mutual. Generally, employees
become eligible at age 55 with at least 15 years of service. Spousal
coverage is generally provided for up to two years after death of the
retiree. Benefits include hospital, major medical and a payment at death
equal to retirees' final compensation up to certain limits. The medical
plans have varying copayments and deductibles, depending on the plan. This
plan is unfunded.

Effective January 1, 1993, the Company adopted the statutory accounting
policy for employers' accounting for postretirement benefits other than
pensions for its postretirement benefit plans. The accounting policy
requires companies to recognize the estimated future cost of providing health
and other postretirement benefits on an accrual basis. Previously, such
costs were generally recognized as an expense when paid. The Company elected
to immediately record the transition obligation in the amount of $23,495
thousand as a direct charge to contingency reserves. The cost for benefits
earned during 1993, subsequent to adoption, and charged to operating expenses
was approximately $1,600 thousand more than the expense that would have been
recorded under the previous accounting method.

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

The status of the Company's plan at December 31, was as follows:

<TABLE>
<CAPTION>
(In thousands) 1994 1993
---- ----
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $20,156 $21,143
Active employees eligible to retire 7,512 5,806
------- -------
Accumulated postretirement benefit obligation accrued 27,668 26,949
Unrecognized actuarial loss (772) (1,800)
------- -------
Net postretirement benefit liability $26,896 $25,149
------- -------
------- -------
</TABLE>

The components of net periodic postretirement benefit expense
for the years ended December 31, 1994 and 1993 are as follows:

<TABLE>
<CAPTION>
(In thousands) 1994 1993
---- ----
<S> <C> <C>
Service cost $1,291 $1,400
Interest cost on accumulated postretirement benefit obligation 2,051 1,932
Amortization of unrecognized (gain) loss 214 --
------ ------
Net periodic postretirement benefit expense $3,556 $3,332
------ ------
------ ------
</TABLE>

For purposes of measuring the accumulated postretirement benefit obligation
at December 31, 1994, health care costs were assumed to increase 11%,
declining thereafter to an ultimate rate of 6% over seven years. At
December 31, 1993, health care costs were assumed to increase 12%, declining
to an ultimate rate of 5.5% over eight years. The weighted average discount
rate used in determining the accumulated postretirement benefit obligation was
8.5% and 7.0% at December 31, 1994 and 1993, respectively.

For purposes of measuring the accumulated postretirement benefit obligation
at January 1, 1993 (the transition adjustment), health care costs were
assumed to increase 15% for pre-1965 retirees and 13% for post-1965 retirees,
declining thereafter to 6% over 10 years for pre-1965 retirees and 8 years
for post-1965 retirees. The weighted average discount rate used in
determining the accumulated postretirement benefit obligation at January 1,
1993 was 8.5%.

The health care costs trend rate assumption has a significant effect on the
amounts reported. For example, increasing the assumed health care cost trend
rate by 1% in each year would increase the accumulated postretirement benefit
obligation as of December 31, 1994 by $1,800 thousand, and the estimated
service cost and interest cost components of net periodic postretirement
benefit costs for 1994 by $265 thousand.

NOTE 10 - CONTINGENCY RESERVES

Other adjustments to contingency reserves for the years ended December 31 are
as follows:

<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Change in non-admitted assets:
Demutualization costs $(10,299) $ (4,000) $ --
Other (3,711) 171 (372)
-------- -------- ------
Total change in non-admitted assets (14,010) (3,829) (372)
Transition adjustment for post retirement benefit obligation -- (23,495) --
Prior year taxes (3,383) (13,915) --
Prior year expense (13,827) -- --
FAS 87 adjustment for non-qualified pension plans (7,132) -- --
Other miscellaneous changes (2,263) 406 2,202
-------- -------- ------
Total other adjustments $(40,615) $(40,833) $1,830
-------- -------- ------
-------- -------- ------
</TABLE>

<PAGE>
STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

NOTE 11 - REINSURANCE

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

<TABLE>
<CAPTION>
(In thousands) 1994 1993 1992
---- ---- ----
<S> <C> <C>
Reinsurance premiums assumed $ 62,127 $40,289 $ 35,679
Reinsurance premiums ceded $105,142 $81,545 $ 64,366
Deduction from insurance liability
including reinsurance recoverable on unpaid claims $ 90,244 $83,768 $106,774
</TABLE>

The Company assumes from SMA Life approximately 10% of the individual life
business of SMA Life. Premiums assumed by State Mutual aggregated $7,771
thousand, $9,000 thousand and $9,586 thousand in 1994, 1993 and 1992,
respectively. The Company also has entered into reinsurance agreements
whereby the Company cedes to SMA Life certain insurance risks related to
individual accident and health business, premium income and related expenses.
Premiums ceded pursuant to these agreements aggregated $3,788 thousand,
$4,190 thousand and $4,614 thousand in 1994, 1993 and 1992, respectively.

NOTE 12 - DIVIDEND RESTRICTIONS

Delaware, New Hampshire and Michigan have enacted laws governing the payment
of dividends and other distributions to stockholders by insurers. These laws
affect the dividend paying ability of SMA Life, Hanover and Citizens,
respectively.

Pursuant to Delaware's statute, the maximum amount of dividends and other
distributions that an insurer may pay in any twelve month period, without the
prior approval of the Delaware Commissioner of Insurance, is limited to the
greater of (i) 10% of its statutory policyholders' surplus as of the
preceding December 31 or (ii) the individual company's statutory net gain
from operations for the preceding calendar year (if such insurer is a life
company) or its net income (not including realized capital gains) for the
preceding calendar year (if such insurer is not a life company). Any
dividends to be paid by an insurer, whether or not in excess of the
aforementioned threshold, from a source other than earned surplus would also
require the prior approval of the Delaware Commissioner of Insurance. While
SMA Life is currently operating on a profitable basis, it has a negative
earned surplus position and, accordingly, is precluded from paying dividends
to State Mutual without the approval of the Delaware Commissioner of
Insurance.

Pursuant to New Hampshire's statute, extraordinary dividends and other
distributions may only be paid from statutory policyholders' surplus,
excluding dividends paid, as of the December 31st preceding. An
extraordinary dividend or distribution includes any dividend or distribution
of cash or other property, whose fair market value together with that of
other dividends or distributions made within the preceding 12 months exceeds
10% of such insurers surplus as regards policyholders as of December 31, next
preceding. Based on the 1994 statutory financial statements of Hanover, the
maximum dividend that may be paid to Allmerica P&C at January 1, 1995 without
prior approval from the New Hampshire Commissioner of Insurance is $92,400
thousand.

Under the Michigan Insurance Code, cash dividends may be paid by Citizens
only from earnings and policyholders' surplus. In addition, a Michigan
insurer may not pay an "extraordinary" dividend to its stockholders without
prior approval of the Michigan Insurance Commissioner. An extraordinary
dividend or distribution is defined as a dividend or distribution of cash or
other property whose fair market value, together with that of other dividends
and distributions made within the preceding 12 months, exceeds the greater of
10% of policyholders' surplus as of December 31 of the preceding year or the
statutory net income less realized gains, for the immediately preceding
calendar year. At January 1, 1995, Citizens could pay dividends of $32,700
thousand without approval of the Michigan Insurance Commissioner.

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

NOTE 13 - LITIGATION

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

<PAGE>
VEL II ACCOUNT
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 1994

<TABLE>
<CAPTION>
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
1(b) 2(d) 3(e) 4(d) 5(f) 6(a) 7(b) 8(c)
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................... $1,998 $1,541 $2,989 $ 551 $2,751 -- $ 113 $1,673

EXPENSES:
Mortality and expense risk fees.... 69 137 563 92 246 $ 449 45 174
Administrative expense fees........ 19 38 156 26 68 125 12 48
------ ------ ------ ------ ------ ------ ------ ------
Total expenses................... 88 175 719 118 314 574 57 222
------ ------ ------ ------ ------ ------ ------ ------
Net investment income (loss)....... 1,910 1,366 2,270 433 2,437 (574) 56 1,451
------ ------ ------ ------ ------ ------ ------ ------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss)........... 6 (4) -- 1 35 (10) 23 (24)
Net unrealized gain (loss)......... (1,891) (1,166) -- (631) (2,305) 563 47 (2,617)
------ ------ ------ ------ ------ ------ ------ ------
Net realized and unrealized gain
(loss) on investments............. (1,885) (1,170) -- (630) (2,270) 553 70 (2,641)
------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease) in net
assets from operations........... $ 25 $ 196 $2,270 $ (197) $ 167 $ (21) $ 126 $(1,190)
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
<FN>
(a) For the period April 5, 1994 (date of initial investment) to
December 31, 1994.
(b) For the period April 6, 1994 (date of initial investment) to
December 31, 1994.
(c) For the period April 15, 1994 (date of initial investment) to
December 31, 1994.
(d) For the period April 19, 1994 (date of initial investment) to
December 31, 1994.
(e) For the period May 3, 1994 (date of initial investment) to
December 31, 1994.
(f) For the period May 9, 1994 (date of initial investment) to
December 31, 1994.
(g) For the period May 20, 1994 (date of initial investment) to
December 31, 1994.
</TABLE>

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

82 83

<PAGE>
VEL II ACCOUNT
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 1994, CONTINUED

<TABLE>
<CAPTION>
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
9(a) 11(g) 102(a) 103(a) 104(a) 105(a) 106(b) 207(a)
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................... $ 370 $ 31 -- $2,239 -- -- $ 27 --

EXPENSES:
Mortality and expense risk fees.... 327 35 $ 297 413 $ 524 $ 724 410 $ 150
Administrative expense fees........ 91 10 82 115 146 201 114 42
------ ------ ------ ------ ------ ------ ------ ------
Total expenses................... 418 45 379 528 670 925 524 192
------ ------ ------ ------ ------ ------ ------ ------
Net investment income (loss)....... (48) (14) (379) 1,711 (670) (925) (497) (192)
------ ------ ------ ------ ------ ------ ------ ------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss)........... (244) (6) (38) 129 101 14 39 (4)
Net unrealized gain (loss)......... (1,797) (537) (163) 1,283 8,600 (5,398) (4,843) (840)
------ ------ ------ ------ ------ ------ ------ ------
Net realized and unrealized gain
(loss) on investments............. (2,041) (543) (201) 1,412 8,701 (5,384) (4,804) (844)
------ ------ ------ ------ ------ ------ ------ ------
Net increase (decrease) in net
assets from operations........... $(2,089) $ (557) $ (580) $3,123 $8,031 $(6,309) $(5,301) $(1,036)
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
<FN>
(a) For the period April 5, 1994 (date of initial investment) to
December 31, 1994.
(b) For the period April 6, 1994 (date of initial investment) to
December 31, 1994.
(c) For the period April 15, 1994 (date of initial investment) to
December 31, 1994.
(d) For the period April 19, 1994 (date of initial investment) to
December 31, 1994.
(e) For the period May 3, 1994 (date of initial investment) to
December 31, 1994.
(f) For the period May 9, 1994 (date of initial investment) to
December 31, 1994.
(g) For the period May 20, 1994 (date of initial investment) to
December 31, 1994.
</TABLE>

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

84 85

<PAGE>
VEL II ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
SUB-ACCOUNT 1 SUB-ACCOUNT 2 SUB-ACCOUNT 3 SUB-ACCOUNT 4
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
4/06/94* TO 12/31/94 4/19/94* TO 12/31/94 5/03/94* TO 12/31/94 4/19/94* TO 12/31/94
-------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss)........ $ 1,910 $ 1,366 $ 2,270 $ 433
Net realized gain (loss) from
security transactions.............. 6 (4) -- 1
Net unrealized gain (loss)
on investments..................... (1,891) (1,166) -- (631)
------- ------- ------- -------
Net increase (decrease) in net
assets from operations............. 25 196 2,270 (197)
------- ------- ------- -------
FROM CAPITAL TRANSACTIONS:
Net premiums........................ 27,126 43,549 368,294 11,918
Terminations........................ (1,879) (1,473) (146) --
Other transfers from (to) the
General Account of State Mutual
Life Company of America (Sponsor)... 11,724 25,023 (52,810) 14,809
Net increase in investment by State
Mutual Life Assurance Company of
America (Sponsor)................... -- -- -- --
------- ------- ------- -------
Net increase in net assets from
capital transactions................ 36,971 67,099 315,338 26,727
------- ------- ------- -------

Net increase in net assets........... 36,996 67,295 317,608 26,530

NET ASSETS:
Beginning of period.................. -- -- -- --
------- ------- ------- -------
End of period........................ $36,996 $67,295 $317,608 $26,530
------- ------- ------- -------
------- ------- ------- -------
</TABLE>

<TABLE>
<CAPTION>
SUB-ACCOUNT 5 SUB-ACCOUNT 6 SUB-ACCOUNT 7 SUB-ACCOUNT 8
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
5/09/94* TO 12/31/94 4/05/94* TO 12/31/94 4/06/94* TO 12/31/94 4/15/94* TO 12/31/94
-------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss)........ $ 2,437 $ (574) $ 56 $ 1,451
Net realized gain (loss) from
security transactions.............. 35 (10) 23 (24)
Net unrealized gain (loss)
on investments..................... (2,305) 563 47 (2,617)
------- ------- ------- -------
Net increase (decrease) in net
assets from operations............. 167 (21) 126 (1,190)
------- ------- ------- -------
FROM CAPITAL TRANSACTIONS:
Net premiums........................ 150,537 81,409 23,133 45,043
Terminations........................ -- (1,652) (48) (206)
Other transfers from (to) the
General Account of State Mutual
Life Company of America (Sponsor)... 2,656 57,053 14,839 9,286
Net increase in investment by State
Mutual Life Assurance Company of
America (Sponsor)................... -- -- -- --
------- ------- ------- -------
Net increase in net assets from
capital transactions................ 153,193 136,810 37,924 54,123
------- ------- ------- -------

Net increase in net assets........... 153,360 136,789 38,050 52,933

NET ASSETS:
Beginning of period.................. -- -- -- --
------- ------- ------- -------
End of period........................ $153,360 $136,789 $ 38,050 $52,933
------- ------- ------- -------
------- ------- ------- -------

</TABLE>

86 87

<PAGE>
VEL II ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED

<TABLE>
<CAPTION>
SUB-ACCOUNT 9 SUB-ACCOUNT 11 SUB-ACCOUNT 102 SUB-ACCOUNT 103
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
4/05/94* TO 12/31/94 5/20/94* TO 12/31/94 4/05/94* TO 12/31/94 4/05/94* TO 12/31/94
-------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss)........ $ (48) $ (14) $ (379) $ 1,711
Net realized gain (loss) from
security transactions.............. (244) (6) (38) 129
Net unrealized gain (loss)
on investments..................... (1,797) (537) (163) 1,283
------- ------- ------- -------
Net increase (decrease) in net
assets from operations............. (2,089) (557) (580) 3,123
------- ------- ------- -------
FROM CAPITAL TRANSACTIONS:
Net premiums........................ 77,321 9,176 90,016 130,274
Terminations........................ (367) -- (714) (1,557)
Other transfers from (to) the
General Account of State Mutual
Life Company of America (Sponsor)... 9,981 5,556 5,535 61,601
Net increase in investment by State
Mutual Life Assurance Company of
America (Sponsor)................... -- 100 -- --
------- ------- ------- --------
Net increase in net assets from
capital transactions................ 86,935 14,832 94,837 190,318
------- ------- ------- --------

Net increase in net assets........... 84,846 14,275 94,257 193,441

NET ASSETS:
Beginning of period.................. -- -- -- --
------- ------- ------- --------
End of period........................ $84,846 $14,275 $ 94,257 $193,441
------- ------- ------- --------
------- ------- ------- --------

</TABLE>

<TABLE>
<CAPTION>
SUB-ACCOUNT 104 SUB-ACCOUNT 105 SUB-ACCOUNT 106 SUB-ACCOUNT 207
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
4/05/94* TO 12/31/94 4/05/94* TO 12/31/94 4/06/94* TO 12/31/94 4/05/94* TO 12/31/94
-------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss)........ $ (670) $ (925) $ (497) $ (192)
Net realized gain (loss) from
security transactions.............. 101 14 39 (4)
Net unrealized gain (loss)
on investments..................... 8,600 (5,398) (4,843) (840)
------- ------- ------- -------
Net increase (decrease) in net
assets from operations............. 8,031 (6,309) (5,301) (1,036)
------- ------- ------- -------
FROM CAPITAL TRANSACTIONS:
Net premiums........................ 142,021 163,685 84,953 47,581
Terminations........................ (2,575) (1,640) -- --
Other transfers from (to) the
General Account of State Mutual
Life Company of America (Sponsor)... 68,433 56,390 108,875 9,707
Net increase in investment by State
Mutual Life Assurance Company of
America (Sponsor)................... -- -- 100 --
------- ------- ------- --------
Net increase in net assets from
capital transactions................ 207,879 218,435 193,928 57,288
------- ------- ------- --------

Net increase in net assets........... 215,910 212,126 188,627 56,252

NET ASSETS:
Beginning of period.................. -- -- -- --
------- ------- ------- --------
End of period........................ $215,910 $212,126 $188,627 $ 56,252
------- ------- ------- --------
------- ------- ------- --------

<FN>
* Date of initial investment.
</TABLE>
The accompanying notes are an integral part of these financial statements.

88 89

<PAGE>
VEL II ACCOUNT
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1994

NOTE 1 - ORGANIZATION

The VEL II Account (VEL II) is a separate investment account of State
Mutual Life Assurance Company of America (the Company), established on April
1, 1994 for the purpose of separating from the general assets of the Company
those assets used to fund the variable portion of flexible premium variable
life policies issued by the Company. Under applicable insurance law, the
assets and liabilities of VEL II are clearly identified and distinguished
from the other assets and liabilities of the Company. VEL II cannot be
charged with liabilities arising out of any other business of the Company.

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

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

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

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

<PAGE>
VEL II ACCOUNT
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1994, CONTINUED

NOTE 3 - INVESTMENTS

The number of shares owned, aggregate cost, and net asset value per share
of each Sub-Account's investment in the Trust, VIPF, VIPF II and DGPF at
December 31, 1994 were as follows:

- ----------------------------------------------------------------------------
PORTFOLIO INFORMATION
SUB INVESTMENT NUMBER OF AGGREGATE NET ASSET
ACCOUNT PORTFOLIO SHARES COST VALUE PER SHARE
- -----------------------------------------------------------------------------
Allmerica Investment Trust:
1 Growth.................... 20,025 $ 38,217 $ 1.814
2 Investment Grade Income... 66,562 68,527 1.012
3 Money Market.............. 317,999 317,999 1.000
4 Equity Index.............. 18,089 27,186 1.468
5 Government Bond........... 153,961 155,804 0.997
6 Select Aggressive Growth.. 97,335 135,414 1.397
7 Select Growth............. 33,992 37,310 1.099
8 Select Growth and Income.. 51,518 55,526 1.027
9 Small Cap Value........... 77,247 85,919 1.089
11 Select International
Equity................... 14,837 14,825 0.963

Fidelity Variable Insurance
Products Fund:
102 High Income............... 8,745 94,263 10.760
103 Equity Income............. 12,609 192,265 15.350
104 Growth.................... 9,908 206,307 21.690
105 Overseas.................. 13,503 216,998 15.670

Fidelity Variable Insurance
Products Fund II:
106 Asset Manager............. 13,687 193,580 13.790

Delaware Group Premium Fund:
207 International Equities.... 4,706 56,605 11.850

NOTE 4 - RELATED PARTY TRANSACTIONS

Net premiums represent gross policy premiums recorded by the Company less
applicable premium taxes. On the date of issue and each monthly payment date
thereafter, a monthly charge is deducted from the policy value to compensate
the Company for the cost of insurance, which varies by policy, the cost of
any additional benefits provided by rider, and a monthly administrative
charge of $5. The policyowner may instruct

91
<PAGE>
VEL II ACCOUNT
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1994

the Company to deduct this monthly charge from a specific Sub-Account, but if
not so specified, it will be deducted on a pro-rata basis of allocation which
is the same proportion that the policy value in the General Account of the
Company and in each Sub-Account bear to the total policy value. For the
period ended December 31, 1994, these monthly deductions from Sub-Account
policy values amounted to $127,002.

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

Allmerica Investments, Inc., (Allmerica Investments), a wholly-owned
subsidiary of the Company, is principal underwriter and general distributor
of VEL II, and does not receive any compensation for sales of VEL II
policies. Commissions are paid to registered representatives of Allmerica
Investments and of certain independent broker-dealers by the Company. As the
current series of policies have a contingent deferred sales charge, no
deduction is made for sales charges at the time of the sale. For the period
ended December 31, 1994, the Company received $8,186 for contingent deferred
sales charges applicable to VEL II.

NOTE 5 - DIVERSIFICATION REQUIREMENTS

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

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

<PAGE>

VEL II ACCOUNT
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1994, CONTINUED

NOTE 6 - PURCHASES AND SALES OF SECURITIES

Cost of purchases and proceeds from sales of the Trust, VIPF, VIPF II and
DGPF shares by VEL II during the period ended December 31, 1994 were as
follows:

SUB-
ACCOUNT INVESTMENT PORTFOLIO PURCHASES SALES
- ------- -------------------------------- ------------ --------
Allmerica Investment Trust:
1 Growth.......................... $ 41,608 $ 3,397
2 Investment Grade Income......... 72,778 4,248
3 Money Market.................... 422,745 104,746
4 Equity Index.................... 27,768 583
5 Government Bond................. 191,379 35,610
6 Select Aggressive Growth........ 137,267 1,843
7 Select Growth................... 38,374 1,087
8 Select Growth and Income........ 56,984 1,434
9 Small Cap Value................. 100,991 14,828
11 Select International Equity..... 15,213 382

Fidelity Variable Insurance
Products Fund:
102 High Income..................... 106,021 11,720
103 Equity Income................... 198,647 6,511
104 Growth.......................... 213,301 7,095
105 Overseas........................ 222,290 5,305

Fidelity Variable Insurance
Products Fund II:
106 Asset Manager................... 199,078 5,538

Delaware Group Premium Fund:
207 International Equities.......... 57,702 1,094
----------- ---------
Totals.......................... $ 2,102,146 $ 205,421
----------- ---------
----------- ---------

93
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of State Mutual Life
Assurance Company of America and Policyowners
of VEL II Account of State Mutual Life Assurance
Company of America

In our opinion, the accompanying statements of assets and
liabilities and the related statements of operations and of changes in net
assets present fairly, in all material respects, the financial position of
Sub-Accounts 1, 2, 3, 4, 5, 6, 7, 8, 9, 11, 102, 103, 104, 105, 106 and 207
(constituting the VEL II Account of State Mutual Life Assurance Company of
America) at December 31, 1994, the results of each of their operations and
the changes in each of their net assets for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of State Mutual Life Assurance Company of
America'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,
which included confirmation of securities at December 31, 1994 by
correspondence with the Trust and Funds, provide a reasonable basis for the
opinion expressed above.

PRICE WATERHOUSE LLP
Boston, Massachusetts

February 13, 1995

94
<PAGE>
APPENDIX A - OPTIONAL BENEFITS

This Appendix is intended to provide only a very brief overview of additional
insurance benefits available by rider. For more information, contact your
agent.

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

WAIVER OF PREMIUM RIDER

This rider provides that during periods of total disability continuing more
than four months the Company will add to the Policy Value each month an amount
selected by you or the amount needed to pay the Policy charges, whichever is
greater. This value will be used to keep the Policy in force. This benefit
is subject to the Company's maximum issue benefits. Its cost will change
yearly.

GUARANTEED INSURABILITY RIDER

This rider guarantees that insurance may be added at various option dates
without Evidence of Insurability. This benefit may be exercised on the option
dates even if the Insured is disabled.

OTHER INSURED RIDER

This rider provides a term insurance benefit for up to five Insureds. At
present this benefit is only available for the spouse and minor children of
the primary Insured. The rider includes a feature that allows the "other
Insured" to convert the coverage to a flexible premium adjustable life
insurance policy.

CHILDREN'S INSURANCE RIDER

This rider provides coverage for eligible minor children. It also covers
future children, including adopted children and step children.

ACCIDENTAL DEATH BENEFIT RIDER

This rider pays an additional benefit for death resulting from a covered
accident prior to the Policy anniversary nearest the Insured's Age 70.

EXCHANGE OPTION RIDER

This rider allows you to use the Policy to insure a different person, subject
to Company guidelines.

LIVING BENEFITS RIDER

This rider permits part of the proceeds of the Policy to be available before
death if the Insured becomes terminally ill or is permanently confined to a
nursing home.

APPENDIX B - PAYMENT OPTIONS

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

87
<PAGE>
If a payment option is selected, the Beneficiary may pay to the Company any
amount that would otherwise be deducted from the Sum Insured.

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

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

(b)the rate in the Policy for the applicable payment option.

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

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

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

(a) upon the death of the payee, with no further payments due
(Life Annuity), or

(b) upon the death of the payee, but not before the sum of the
payments made first equals or exceeds the amount applied
under this option (Life Annuity with Installment Refund),

(c) upon the death of the payee, but not before a selected
period (5, 10 or 20 years) has elapsed (Life Annuity with
Period Certain).

Option C: INTEREST PAYMENTS. The Company will pay interest at a rate determined
by the Company each year but which will not be less than 3 1/2%.
Payments may be made annually, semi-annually, quarterly or monthly.
Payments will end when the amount left with the Company has been
withdrawn. However, payments will not continue after the death of the
payee. Any unpaid balance plus accrued interest will be paid in a
lump sum.

Option D: PAYMENTS FOR A SPECIFIED AMOUNT. Payments will be made until the
unpaid balance is exhausted. Interest will be credited to the unpaid
balance. The rate of interest will be determined by the Company each
year but will not be less than 3 1/2%. Payments may be made annually,
semi-annually, quarterly or monthly. The payment level selected must
provide for the payment each year of at least 8% of the amount
applied.

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

(a) in the same amount as the original amount;

(b) in an amount equal to 2/3 of the original amount; or

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

SELECTION OF PAYMENT OPTIONS - The amount applied under any one option for any
one payee must be at least $5,000. The periodic payment for any one payee must
be at least $50. Subject to your and/or the Beneficiary's provision, any option
selection may be changed before the Death Proceeds become payable. If you make
no selection, the Beneficiary may select an option when the Death Proceeds
become payable.

If the amount of monthly income payments under Option B, choice (c) for the
attained Age of the

88
<PAGE>
payee are the same for different periods certain, the Company will deem an
election to have been made for the longest period certain which could have been
elected for such Age and amount.

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

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

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

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

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

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

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

The tables on pages 91-94 illustrate the way in which a Policy's Sum Insured and
Policy Value could vary over an extended period of time. They assume that all
premiums are allocated to and remain in the VEL II Account for the entire period
shown and are based on hypothetical gross investment rates of return for the
Underlying Fund (i.e., investment income and capital gains and losses, realized
or unrealized) equivalent to constant gross (after tax) annual rates of 0%, 6%,
and 12%.

The tables on pages 91 and 92 illustrate a Policy issued to a male, Age 30,
under a standard Premium Class and qualifying for the non-smoker discount. The
tables on pages 93 and 94 illustrate a Policy issued to a male, Age 45, under a
standard Premium Class and qualifying for the non-smoker discount.

The columns on pages 92 and 94 are based on the guaranteed cost of insurance
rates; columns on pages 91 and 93 are based on the current cost of insurance
rates as presently in effect.

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

The amounts shown for the Death Proceeds and Policy Values take into account the
deduction from premium for the tax expense charge, the Monthly Deduction from
Policy Value, and the daily charge against the VEL II Account for mortality and
expense risks and the VEL II Account administrative

89
<PAGE>
charge for the first ten Policy years, equivalent to an effective annual rate of
1.15% of the average daily value of the assets in the VEL II Account
attributable to the Policies, and 0.90% thereafter. The amounts shown in the
tables also take into account the Underlying Investment Company advisory fees
and operating expenses, which are assumed to be at an annual rate of 0.85% of
the average daily net assets of the Underlying Investment Company. The actual
fees and expenses of each Underlying Investment Company vary, and in 1994 ranged
from an annual rate of 0.45% to an annual rate of 1.50% of average daily net
assets. The fees and expenses associated with your Policy may be more or less
than 0.85% in the aggregate, depending upon how you make allocations of Policy
Value among the Sub-Accounts. Under its Management Agreement with the Trust,
Allmerica Investments has declared a voluntary expense limitation of 1.50% of
average net average assets for the Select International Equity Fund, 1.20% for
the Growth Fund, 1.00% for the Investment Grade Income Fund, 0.60% for the Money
Market Fund, 0.60% for the Equity Index Fund, 1.00% for the Government Bond
Fund, 1.35% for the Select Capital Appreciation Fund and the Select Aggressive
Growth Fund, 1.20% for the Select Growth Fund, 1.10% for the Select Growth and
Income Fund, and 1.25% for the Small Cap Value Fund. Without the effect of the
expense limitation, in 1994 the total operation expenses of the Select
International Equity Fund and Small Cap Value Fund would have been 1.78% and
1.01%, respectively, of average net assets. Fidelity Management has voluntarily
agreed to temporarily limit the total operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) of the Equity-Income,
Growth and Overseas Portfolios to an annual rate of 1.50%, and of the High
Income Portfolio to an annual rate of 1.00%, and of the Asset Manager Portfolio
to an annual rate of 1.25%, of each Portfolio's average net assets. The total
operating expenses of the Portfolios of VIPF and VIPF II were less than their
respective caps in 1994. Price-Fleming has voluntarily agreed to limit the
total operating expenses (except interest, taxes, brokerage commissions,
directors' fees and expenses and extraordinary expenses) of the International
Stock Portfolio to 1.05% of its average daily net assets. Delaware
International has agreed voluntarily to waive its management fees and reimburse
the International Equity Series to limit certain expenses to 8/10 of 1% of the
average daily net assets. Without the effect of the expense limitations, in
1994 the total operating expenses of the International Equity Series would have
been 1.01% of its average net assets.

Taking into account the mortality and expense risk charge and the VEL II Account
administrative charge and the assumed 0.85% charge for Underlying Investment
Company advisory fees and operating expenses, the gross annual rates of
investment return of 0%, 6% and 12% correspond to net annual rates of -2.00%,
4.00%, 10.00%, respectively, during the first 10 Policy years and -1.75%, 4.25%
and 10.25%, respectively, thereafter.

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

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

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

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

To choose the Sub-Accounts which will best meet your needs and objectives,
carefully read the prospectuses of the Trust, VIPF, VIPF, VIPF II, T. Rowe and
DGPF along with this prospectus.

90
<PAGE>
STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA
VARI-EXCEPTIONAL LIFE POLICY
<TABLE>
<CAPTION>
Male Non-Smoker Age 30
Specified Face Amount = $75,000
Sum Insured Option 2
CURRENT COST OF INSURANCE CHARGES
---------------------------------
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,470 297 1,191 76,191 375 1,268 76,268 452 1,345 76,345
2 3,014 1,335 2,354 77,354 1,563 2,583 77,583 1,802 2,821 77,821
3 4,634 2,423 3,491 78,491 2,880 3,947 78,947 3,374 4,441 79,441
4 6,336 3,575 4,599 79,599 4,335 5,360 80,360 5,193 6,217 81,217
5 8,123 4,720 5,681 80,681 5,864 6,825 81,825 7,205 8,166 83,166

6 9,999 5,839 6,735 81,735 7,445 8,342 83,342 9,407 10,303 85,303
7 11,969 6,930 7,762 82,762 9,081 9,913 84,913 11,815 12,648 87,648
8 14,037 7,988 8,757 83,757 10,767 11,536 86,536 14,446 15,214 90,214
9 16,209 9,020 9,724 84,724 12,511 13,215 88,215 17,325 18,030 93,030
10 18,490 10,013 10,653 85,653 14,302 14,942 89,942 20,466 21,106 96,106

11 20,884 11,100 11,612 86,612 16,286 16,798 91,798 24,054 24,566 99,566
12 23,398 12,161 12,545 87,545 18,340 18,724 93,724 27,987 28,371 103,371
13 26,038 13,196 13,452 88,452 20,465 20,721 95,721 32,300 32,556 107,556
14 28,810 14,202 14,330 89,330 22,662 22,790 97,790 37,028 37,156 112,156
15 31,720 15,179 15,179 90,179 24,932 24,932 99,932 42,212 42,212 117,212

16 34,777 15,996 15,996 90,996 27,147 27,147 102,147 47,768 47,768 122,768
17 37,985 16,775 16,775 91,775 29,433 29,433 104,433 53,869 53,869 128,869
18 41,355 17,514 17,514 92,514 31,789 31,789 106,789 60,568 60,568 135,568
19 44,892 18,214 18,214 93,214 34,217 34,217 109,217 67,925 67,925 142,925
20 48,607 18,871 18,871 93,871 36,718 36,718 111,718 76,004 76,004 151,004

Age 60 97,665 23,046 23,046 98,046 66,184 66,184 141,184 216,966 216,966 291,966
Age 65 132,771 22,890 22,890 97,890 83,841 83,841 158,841 356,415 356,415 434,826
Age 70 177,576 20,395 20,395 95,395 102,867 102,867 177,867 579,651 579,651 672,395
Age 75 234,759 14,625 14,625 89,625 122,284 122,284 197,284 938,228 938,228 1,013,228
<FN>
(1) Assumes a $1,400 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.

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

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

91
<PAGE>
STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA
VARI-EXCEPTIONAL LIFE POLICY
<TABLE>
<CAPTION>

Male Non-Smoker Age 30
Specified Face Amount = $75,000
Sum Insured Option 2

GUARANTEED COST OF INSURANCE CHARGES
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest

Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,470 281 1,175 76,175 358 1,251 76,251 435 1,328 76,328
2 3,014 1,304 2,324 77,324 1,531 2,551 77,551 1,767 2,787 77,787
3 4,634 2,381 3,448 78,448 2,832 3,900 78,900 3,322 4,389 79,389
4 6,336 3,521 4,546 79,546 4,274 5,299 80,299 5,123 6,148 81,148
5 8,123 4,656 5,617 80,617 5,789 6,749 81,749 7,117 8,077 83,077

6 9,999 5,764 6,661 81,661 7,355 8,252 83,252 9,297 10,194 85,194
7 11,969 6,846 7,678 82,678 8,975 9,808 84,808 11,683 12,515 87,515
8 14,037 7,898 8,667 83,667 10,650 11,418 86,418 14,292 15,060 90,060
9 16,209 8,922 9,627 84,627 12,379 13,083 88,083 17,146 17,850 92,850
10 18,490 9,917 10,557 85,557 14,164 14,804 89,804 20,268 20,908 95,908

11 20,884 10,975 11,487 86,487 16,111 16,623 91,623 23,803 24,315 99,315
12 23,398 12,003 12,387 87,387 18,121 18,505 93,505 27,673 28,058 103,058
13 26,038 13,002 13,259 88,259 20,197 20,453 95,453 31,913 32,169 107,169
14 28,810 13,971 14,099 89,099 22,340 22,468 97,468 36,557 36,685 111,685
15 31,720 14,909 14,909 89,909 24,552 24,552 99,552 41,648 41,648 116,648

16 34,777 15,686 15,686 90,686 26,706 26,706 101,706 47,099 47,099 122,099
17 37,985 16,429 16,429 91,429 28,930 28,930 103,930 53,088 53,088 128,088
18 41,355 17,138 17,138 92,138 31,227 31,227 106,227 59,667 59,667 134,667
19 44,892 17,811 17,811 92,811 33,597 33,597 108,597 66,896 66,896 141,897
20 48,607 18,447 18,447 93,447 36,041 36,041 111,041 74,839 74,839 149,839

Age 60 97,665 21,926 21,926 96,926 64,210 64,210 139,210 212,687 212,687 287,687
Age 65 132,771 20,604 20,604 95,604 79,971 79,971 154,971 347,814 347,814 424,333
Age 70 177,576 15,553 15,553 90,553 94,955 94,955 169,955 562,022 562,022 651,946
Age 75 234,759 4,472 4,472 79,166 105,993 105,993 180,993 901,865 901,865 976,865

<FN>
(1) Assumes a $1,400 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.

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

92
<PAGE>
STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA
VARI-EXCEPTIONAL LIFE POLICY
<TABLE>
<CAPTION>

Male Non-Smoker Age 45
Specified Face Amount = $250,000
Sum Insured Option 1

CURRENT COST OF INSURANCE CHARGES
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest

Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,410 0 3,239 250,000 117 3,460 250,000 339 3,682 250,000
2 9,040 2,643 6,367 250,000 3,287 7,011 250,000 3,960 7,684 250,000
3 13,903 3,466 9,369 250,000 4,739 10,641 250,000 6,120 12,023 250,000
4 19,008 6,582 12,248 250,000 8,689 14,355 250,000 11,070 16,737 250,000
5 24,368 9,692 15,004 250,000 12,842 18,154 250,000 16,549 21,862 250,000

6 29,996 12,663 17,621 250,000 17,067 22,025 250,000 22,467 27,425 250,000
7 35,906 15,510 20,114 250,000 21,381 25,985 250,000 28,885 33,489 250,000
8 42,112 18,231 22,481 250,000 25,785 30,035 250,000 35,854 40,104 250,000
9 48,627 20,827 24,722 250,000 30,284 34,180 250,000 43,436 47,332 250,000
10 55,469 23,285 26,826 250,000 34,869 38,411 250,000 51,686 55,228 250,000

11 62,652 26,158 28,991 250,000 40,125 42,958 250,000 61,296 64,129 250,000
12 70,195 28,900 31,025 250,000 45,500 47,625 250,000 71,785 73,910 250,000
13 78,114 31,493 32,910 250,000 50,987 52,404 250,000 83,243 84,659 250,000
14 86,430 33,928 34,637 250,000 56,584 57,292 250,000 95,779 96,488 250,000
15 95,161 36,189 36,189 250,000 62,285 62,285 250,000 109,517 109,517 250,000

16 104,330 37,583 37,583 250,000 67,405 67,405 250,000 123,910 123,910 250,000
17 113,956 38,799 38,799 250,000 72,647 72,647 250,000 139,828 139,828 250,000
18 124,064 39,818 39,818 250,000 78,006 78,006 250,000 157,460 157,460 250,000
19 134,677 40,597 40,597 250,000 83,461 83,461 250,000 177,017 177,017 250,000
20 145,820 41,162 41,162 250,000 89,048 89,048 250,000 198,776 198,776 250,000

Age 60 95,161 36,189 36,189 250,000 62,285 62,285 250,000 109,517 109,517 250,000
Age 65 142,820 41,162 41,162 250,000 89,048 89,048 250,000 198,776 198,776 250,000
Age 70 210,477 39,920 39,920 250,000 119,010 119,010 250,000 345,970 345,970 401,325
Age 75 292,995 29,328 29,328 250,000 153,524 153,524 250,000 582,985 582,985 623,794
<FN>

(1) Assumes a $4,200 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.

(2) Assumes that no policy loan has been made. Excessive loans or withdrawals
may cause this Policy to lapse because of insufficient Policy Value.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY, AND SHOULD
NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN, AND WILL DEPEND
ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS BY A POLICYOWNER,
AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE UNDERLYING FUNDS. THE VALUE
OF UNITS, CASH VALUE, AND DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF INVESTMENT RETURN AVERAGES 0%, 6%, AND 12%
OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE AND BELOW THOSE AVERAGES FOR
INDIVIDUAL POLICY YEARS, OR IF ANY PREMIUMS WERE ALLOCATED OR CASH VALUE
TRANSFERRED TO THE FIXED ACCOUNT. NO REPRESENTATIONS CAN BE MADE THAT THESE
HYPOTHETICAL INVESTMENT RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.

93
<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA
VARI-EXCEPTIONAL LIFE POLICY

<TABLE>
<CAPTION>
Male Non-Smoker Age 45
Specified Face Amount = $250,000
Sum Insured Option 1

GUARANTEED COST OF INSURANCE CHARGES

Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest

Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,410 0 3,154 250,000 29 3,372 250,000 248 3,591 250,000
2 9,040 2,465 6,189 250,000 3,099 6,823 250,000 3,760 7,484 250,000
3 13,903 3,203 9,105 250,000 4,451 10,354 250,000 5,806 11,709 250,000
4 19,008 6,235 11,901 250,000 8,298 13,965 250,000 10,631 16,298 250,000
5 24,368 9,259 14,571 250,000 12,340 17,653 250,000 15,969 21,281 250,000

6 29,996 12,155 17,113 250,000 16,460 21,418 250,000 21,742 26,701 250,000
7 35,906 14,913 19,517 250,000 20,649 25,253 250,000 27,985 32,589 250,000
8 42,112 17,519 21,769 250,000 24,896 29,145 250,000 34,736 38,986 250,000
9 48,627 19,966 23,861 250,000 29,195 33,090 250,000 42,044 45,940 250,000
10 55,469 22,237 25,778 250,000 33,533 37,075 250,000 49,957 53,499 250,000

11 62,652 24,747 27,581 250,000 38,359 41,192 250,000 59,034 61,868 250,000
12 70,195 27,062 29,187 250,000 43,221 45,346 250,000 68,885 71,010 250,000
13 78,114 29,175 30,591 250,000 48,118 49,535 250,000 79,601 81,018 250,000
14 86,430 31,073 31,782 250,000 53,046 53,755 250,000 91,288 91,996 250,000
15 95,161 32,735 32,735 250,000 57,990 57,990 250,000 104,058 104,058 250,000

16 104,330 33,430 33,430 250,000 62,228 62,228 250,000 117,338 117,338 250,000
17 113,956 33,839 33,839 250,000 66,453 66,453 250,000 131,992 131,992 250,000
18 124,064 33,926 33,926 250,000 70,642 70,642 250,000 148,204 148,204 250,000
19 134,677 33,646 33,646 250,000 74,767 74,767 250,000 166,190 166,190 250,000
20 145,820 32,949 32,949 250,000 78,799 78,799 250,000 186,214 186,214 250,000

Age 60 95,161 32,735 32,735 250,000 57,990 57,990 250,000 104,058 104,058 250,000
Age 65 142,820 32,949 32,949 250,000 78,799 78,799 250,000 186,214 186,214 250,000
Age 70 210,477 21,466 21,466 250,000 96,725 96,725 250,000 322,843 322,843 374,498
Age 75 292,995 0 0 0 106,594 106,594 250,000 540,681 540,681 578,528
<FN>
(1) Assumes a $4,200 premium is paid at the beginning of each Policy Year.
Values will be different if premiums are paid with a different frequency or
in different amounts.

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

94
<PAGE>
APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES

A separate surrender charge is calculated upon issuance of the Policy and upon
each increase in Face Amount. The maximum surrender charge is equal to the sum
of (a) plus (b), where (a) is a deferred administrative charge equal to $8.50
per $1,000 of initial Face Amount (or Face Amount increase) and (b) is a
deferred sales charge of 49% of premiums received up to a maximum number of
Guideline Annual Premiums (GAPs) subject to the deferred sales charge that
varies by issue Age or Age at time of increase as applicable:
<TABLE>
<CAPTION>
Applicable Age Maximum GAPs Applicable Age Maximum GAPs
-------------- ------------ -------------- ------------

<S> <C> <C> <C>
0-55 1.660714 68 1.290612
56 1.632245 69 1.262143
57 1.603776 70 1.233673
58 1.575306 71 1.205204
59 1.546837 72 1.176735
60 1.518367 73 1.148265
61 1.489898 74 1.119796
62 1.461429 75 1.091327
63 1.432959 76 1.062857
64 1.404490 77 1.034388
65 1.376020 78 1.005918
66 1.347551 79 0.977449
67 1.319082 80 0.948980
</TABLE>
A further limitation is imposed based on the Standard Non-Forfeiture Law of each
state. The maximum surrender charges upon issuance of the Policy and upon each
increase in Face Amount are shown in the table below. During the first two
Policy years following issue or an increase in Face Amount, the actual surrender
charge may be less than the maximum. See "CHARGES AND DEDUCTIONS - Surrender
Charge."

The maximum surrender charge initially remains level and then grades down
according to the following schedule:

Ages
- ----
0-50 The maximum surrender charge remains level for the first 40 Policy
months, reduces by 0.5% for the next 80 Policy months, then decreases
by 1% per month to zero at the end of 180 Policy months (15 Policy
years).

51 and The maximum surrender charge remains level for 40 Policy months and
above decreases per month by the percentages below:

age 51 - 0.78% per month for 128 months
age 52 - 0.86% per month for 116 months
age 53 - 0.96% per month for 104 months
age 54 - 1.09% per month for 92 months
age 55 and over - 1.25% per month for 80 months

95
<PAGE>
The Factors used in calculating the maximum surrender charges vary with the
issue Age, sex and Premium Class (Smoker) as indicated in the table below.

MAXIMUM SURRENDER CHARGE PER $1,000 FACE AMOUNT
<TABLE>
<CAPTION>
Age of
issue or Male Male Female Female
increase Nonsmoker Smoker Nonsmoker Smoker
-------- --------- ------ --------- ------
<S> <C> <C> <C> <C>
0 8.63 7.68
1 8.63 7.70
2 8.78 7.81
3 8.94 7.93
4 9.10 8.05
5 9.27 8.18
6 9.46 8.32
7 9.65 8.47
8 9.86 8.62
9 10.08 8.78
10 10.31 8.95
11 10.55 9.13
12 10.81 9.32
13 11.07 9.51
14 11.34 9.71
15 11.62 9.92
16 11.89 10.14
17 12.16 10.36
18 10.65 12.44 9.73 10.59
19 10.87 12.73 9.93 10.83
20 11.10 13.02 10.15 11.09
21 11.34 13.33 10.37 11.35
22 11.59 13.66 10.60 11.63
23 11.85 14.01 10.85 11.92
24 12.14 14.38 11.10 12.22
25 12.44 14.77 11.37 12.54
26 12.75 15.19 11.66 12.88
27 13.09 15.64 11.95 13.23
28 13.45 16.11 12.26 13.60
29 13.83 16.62 12.59 13.99
30 14.23 17.15 12.93 14.40
31 14.66 17.72 13.29 14.83
32 15.10 18.32 13.67 15.28
33 15.58 18.96 14.07 15.75
34 16.08 19.63 14.49 16.25
35 16.60 20.35 14.93 16.77
</TABLE>

96
<PAGE>
MAXIMUM SURRENDER CHARGE PER $1,000 FACE AMOUNT (continued)

<TABLE>
<CAPTION>
Age of
issue or Male Male Female Female
increase Nonsmoker Smoker Nonsmoker Smoker
-------- --------- ------ --------- ------
<S> <C> <C> <C> <C>
36 17.16 21.10 15.39 17.33
37 17.75 21.89 15.88 17.91
38 18.37 22.73 16.39 18.51
39 19.02 23.55 16.93 19.15
40 19.71 24.28 17.50 19.81
41 20.44 25.04 18.09 20.51
42 21.20 25.85 18.71 21.23
43 22.02 26.71 19.36 21.98
44 22.87 27.61 20.04 22.77
45 23.61 28.56 20.76 23.56
46 24.36 29.57 21.52 24.23
47 25.15 30.63 22.33 24.94
48 26.00 31.16 23.14 24.69
49 26.90 32.95 23.83 26.47
50 27.85 34.21 24.57 27.31
51 28.87 35.56 25.35 28.18
52 29.96 36.99 26.17 29.11
53 31.12 38.25 27.05 30.09
54 32.56 38.25 27.95 31.12
55 33.67 38.25 28.97 32.21
56 34.62 38.25 29.65 32.94
57 35.61 38.25 30.36 33.70
58 36.65 38.25 31.11 34.49
59 37.73 38.25 31.90 35.33
60 38.25 38.25 32.74 36.23
</TABLE>

97
<PAGE>
MAXIMUM SURRENDER CHARGE PER $1,000 FACE AMOUNT (continued)
<TABLE>
<CAPTION>
Age of
issue or Male Male Female Female
increase Nonsmoker Smoker Nonsmoker Smoker
-------- --------- ------ --------- ------
<S> <C> <C> <C> <C>
61 38.25 38.25 33.63 37.18
62 38.25 38.25 34.57 38.18
63 38.25 38.25 35.56 38.25
64 38.25 38.25 36.60 38.25
65 38.25 38.25 37.68 38.25
66 38.25 38.25 38.25 38.25
67 38.25 38.25 38.25 38.25
68 38.25 38.25 38.25 38.25
69 38.25 38.25 38.25 38.25
70 38.25 38.25 38.25 38.25
71 38.25 38.25 38.25 38.25
72 38.25 38.25 38.25 38.25
73 38.25 38.25 38.25 38.25
74 38.25 38.25 38.25 38.25
75 38.25 38.25 38.25 38.25
76 38.25 38.25 38.25 38.25
77 38.25 38.25 38.25 38.25
78 38.25 38.25 38.25 38.25
79 38.25 38.25 38.25 38.25
80 38.25 38.25 38.25 38.25
</TABLE>
EXAMPLES

For the purposes of these examples, assume that a male, Age 35, non-smoker
purchases a $100,000 Policy. In this example the Guideline Annual Premium
("GAP") equals $1,118.22. His maximum surrender charge is calculated as
follows:
<TABLE>
<CAPTION>
<S> <C>
(a) Deferred Administrative Charge $850.00
($8.50/$1,000 of Face Amount)

(b) Deferred Sales Charge $909.95
(49% x 1.660714 GAPs)

______________

TOTAL $1,759.95

Maximum Surrender Charge per Table on page 84 (16.60 x 100) $1,660.00
</TABLE>

98
<PAGE>
During the first two Policy years after the Date of Issue, the actual surrender
charge is the smaller of the maximum surrender charge and the following sum:
<TABLE>
<CAPTION>
<S> <C>
(a) Deferred Administrative Charge $850.00
($8.50/$1,000 of Face Amount)

(b) Deferred Sales Charge Varies
(not to exceed 29% of Premiums received,
up to one GAP, plus 9% of premiums
received in excess of one GAP, but
less than the maximum number of GAPs
subject to the deferred sales charge)

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

Sum of (a) and (b)
</TABLE>
The maximum surrender charge is $1,660.00. All premiums are associated with the
initial face amount unless the face amount is increased.

EXAMPLE 1:

Assume the Policyowner surrenders the Policy in the 10th policy month, having
paid total premiums of $900. The actual surrender charge would be $1,111.

EXAMPLE 2:

Assume the Policyowner surrenders the Policy in the 120th month. After the 40th
policy month, the maximum surrender charge decreases by 0.5% per month ($8.30
per month in this example). In this example, the maximum surrender charge would
be $996.00.

<PAGE>

Part II

UNDERTAKING TO FILE REPORTS

Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.

RULE 484 UNDERTAKING

To the fullest extent permissible under Massachusetts General Laws, no
director shall be personally liable to the Company or any policy holder for
monetary damages for any breach of fiduciary duty as a director,
notwithstanding any provisions of law to the contrary; provided, however,
that this provision shall not eliminate or limit the liability of a director;

1. for any breach of the director's duty of loyalty to the Company or its
policy holders;

2. for acts or omissions not in good faith, or which involve intentional
misconduct or a knowing violation of law;

3. for liability, if any, imposed on directors of insurance companies
pursuant to M.G.L.A. c. 156B Section 61 or M.G.L.A. c. 156B Section 62;

4. for any transactions from which the director derived an improper personal
benefit.

RULE 6e-3(T) REPRESENTATIONS, DESCRIPTIONS AND UNDERTAKINGS

Registrant makes the following representations pursuant to the requirements of
Rule 6e-3(T) under the Investment Company Act of 1940:

A. Risk Charge

Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(1), Registrant represents that Rule
6e-3(T)(b)(13)(iii)(F) has been relied upon in deducting charges for
mortality expense and risks assumed by the Company.

Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(2), Registrant represents that the
mortality and expense risk charge is within the range of industry practice
for comparable flexible premium variable life insurance contracts. The
methodology used to support this representation is based upon an analysis of
the mortality and expense risk charges adopted under other flexible premium
variable life insurance contracts. Registrant undertakes to keep and make
available to the Commission on request the documents used to support the
foregoing representation.

<PAGE>

B. Distribution Costs

Pursuant to Rule 6e-3(T)(b)(13)(iii)(F)(4)(ii)(A), Registrant represents that
the Company has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the Registrant will benefit the
Registrant and contract holders and will keep and make available to the
Commission on request a memorandum setting forth the basis for this
representation. Pursuant to Section 6e-3(T)(b)(13)(iii)(F)(4)(ii)(B)(2),
Registrant also represents that it will invest only in management investment
companies which have undertaken to have a board of directors, a majority of
whom are not interested persons of the company, formulate and approve any
plan under Rule 12b-1 under the Investment Company Act of 1940 to finance
distribution expenses.

UNDERTAKINGS CONCERNING MORTALITY AND EXPENSE RISK CHARGE

The flexible premium variable life policies offered by this registration
statement provide for a mortality and expense risk charge of 0.90%, on an
annual basis, of the daily net asset value of each Sub-Account of the VEL II
Account. The Company acknowledges that any mortality and expense risk charge
above 0.90% is currently considered above the range of industry practice. If
the Company proposes to increase the charges above the range of industry
practice, the Company hereby undertakes to file an exemption request with the
Securities and Exchange Commission ("Commission") in which it would
demonstrate that the proposed charge is reasonable in relation to the risks
assumed under the Policy.

This undertaking is given subject to the applicability of future federal
legislation or Commission rules or regulation which might permit an increase
in the mortality and expense risk charge beyond the range of industry
practice, without submitting an exemption application and/or making the
demonstration described above. In such case, in lieu of the undertaking
described above, the Company hereby undertakes to comply with the provisions
of such legislation, rules, or regulations in implementing any increase in
the mortality and expense risk charge.

CONTENTS OF THE REGISTRATION STATEMENT

This registration statement comprises the following papers and documents:

The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of ____ pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representatives, descriptions and undertaking pursuant to Rule
6e-3(T)(b)(13)(iii)(F) under the Investment Company Act of 1940
(the "1940 Act").
The signatures.

<PAGE>

Written consents of the following persons:

1. Price Waterhouse

2. Opinion of Counsel

The following exhibits:

1. Exhibit 1

(Exhibits required by paragraph A of the instructions to Form N-8B-2)

(1) Certified copy of Resolutions of the Board of Directors of the
Company of August 20, 1991 authorizing the VEL II Account was
previously filed on November 1, 1993 and is herein
incorporated by reference.

(2) Not Applicable.

(3) (a) Form of Underwriting and Administrative Services
Agreement between the Company and Allmerica
Investments, Inc. was previously filed on November 1,
1993 and is herein incorporated by reference.

(b) Sales Agreement between Allmerica Investments, Inc. and
G.R. Phelps & Co., Inc. was previously filed on
February 27, 1995 and is herein incorporated by
reference.

(4) Not Applicable.

(5) Forms of Policy and Policy riders were previously filed on
November 1, 1993 and is herein incorporated by reference.

(6) Company's Restated Articles of Incorporation and Bylaws

(7) Not Applicable.

(8) (a) Form of Participation Agreement with Allmerica
Investment Trust was previously filed by the Company on
May 11, 1992 in Registration Statement No. 33-47858,
and is incorporated herein by reference.

(b) Form of Participation Agreement with Variable Insurance
Products Fund was previously filed on June 3, 1987 in
Registration Statement No. 33-14672 and is incorporated
herein by reference.

(c) Form of Participation Agreement with Delaware Group
Premium Fund, Inc. was previously filed on June 3, 1987
in Registration Statement No. 33-14672 and is
incorporated herein by reference.

(d) Form of Participation Agreement with T. Rowe Price
International Series, Inc. was previously filed on
May 1, 1995 and is incorporated herein by reference.

(9) Not Applicable.

(10) Form of Application was previously filed on November 1, 1993
and is herein incorporated by reference.

<PAGE>

2. Form of Policy and Policy riders are included in Exhibit 1 above.

3. Opinion of Counsel.

4. Not Applicable.

5. Not Applicable.

6. Actuarial Consent was previously filed on May 1, 1995 and is
incorporated herein by reference.

7. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under the
1940 Act which includes conversion procedures pursuant to Rule
6e-3(T)(b)(13)(v)(B) was previously filed on November 1, 1993 and is
incorporated herein by reference.

8. Consent of Independent Accountants.

9. AUV Calculation Services Agreement with The Shareholder Services
Group dated March 31, 1995 was previously filed on May 1, 1995 and
is incorporated herein by reference.

<PAGE>

EXHIBIT TABLE

Exhibit 1(6) Company's Restated Articles of Incorporation and Bylaws

Exhibit 3 Opinion of Counsel

Exhibit 8 Consent of Independent Accountants

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, Registrant has duly caused the Post-Effective Amendment
to its Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, all in the City of Worcester and Commonwealth of
Massachusetts on the 10th day of October, 1995. Registrant certifies that
it meets the requirement of Securities Act Rule 485(b) for effectiveness of
this Post-Effective Amendment to its Registration Statement.

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA
VEL II ACCOUNT

Attest:/s/RICHARD J. BAKER
-------------------
Richard J. Baker
Vice President and Secretary

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.

Signature Title Date
_________ _____ ____
/S/ JOHN F. O'BRIEN
- ---------------------------- Director, President and October 10, 1995
John F. O'Brien Chief Executive Officer

/S/ ERIC A. SIMONSEN
- ---------------------------- Vice President and
Eric A. Simonsen Chief Financial Officer

/S/ MARK R. COLBORN
- ---------------------------- Vice President and
Mark R. Colborn Controller

Michael P. Angelini, Esq.
Mr. David A. Barrett
Ms. Gail L. Harrison
Mr. J. Terrence Murray
Mr. Guy W. Nichols A majority of the Directors
Dr. John L. Sprague
Robert G. Stachler, Esq.
Mr. Herbert M. Varnum
Richard Manning Wall, Esq.

Richard J. Baker, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named Directors of State Mutual Life Assurance
Company of America pursuant to the Powers of Attorney duly executed by such
persons.

/S/ RICHARD J. BAKER
- -----------------------------
Richard J. Baker
Attorney-In-Fact

<PAGE>

THE COMMONWEALTH OF MASSACHUSETTS
FEDERAL IDENTIFICATION
NO. 04-1867050
-------------------

MICHAEL JOSEPH CONNOLLY
SECRETARY OF STATE
ONE ASHBURTON PLACE, BOSTON, MASS: 02108

RESTATED ARTICLES OF ORGANIZATION

GENERAL LAWS, CHAPTER 175

This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
restated articles of organization. The fee for filing this certificate is
prescribed by General Laws, Chapter 156B, Section 114. Make check payable to
the Commonwealth of Massachusetts.
-----------

We, John F. O'Brien PRESIDENT

and Richard J. Baker SECRETARY

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Name of Corporation)

located at 440 Lincoln Street, Worcester, Massachusetts
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
do hereby certify that the following restatement of the articles of organization
of the corporation was duly adopted at a meeting held on June 30, 1995, by
vote of

. . . . . . . shares of . . . . . . . . . . , out of . . . . . . . . . . . . . .
(Class of Stock)

. . . . . . . shares of . . . . . . . . . . , out of . . . . shares outstanding,
(Class of Stock)

being at least two-thirds of the policyholders present in person or by proxy or
mail and entitled to vote

1. The name by which the corporation shall be known is; -

FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

2. The purposes for which the corporation is formed are as follows: -

SEE PAGE 2A

<PAGE>

3. The total number of shares and the par value, if any, of each class of
stock which the corporation is authorized to issue is as follows:
<TABLE>
<CAPTION>

WITHOUT PAR VALUE WITH PAR VALUE
----------------- --------------
CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
- -------------- ---------------- ---------------- ----------
<S> <C> <C> <C>
Preferred -- -- --

Common -- 1,000,000 $10.00
</TABLE>

*4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting
powers, qualifications, special or relative rights or privileges as to
each class thereof and any series now established:
N/A

*5. The restrictions, if any, imposed by the articles of organization upon
the transfer of shares of stock of any class are as follows:

Transfer is subject in certain circumstances to approval of the
commissioner of insurance of The Commonwealth of Massachusetts.

*6. Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary
dissolution, or for limiting, defining, or regulating the powers of
the corporation, or of its directors or stockholders, or of any class
of stockholders:

See pages 6A through D hereof.

*If there are no provisions, state "None".

<PAGE>

Foregoing restated articles of organization effect no amendments to the articles
of organization of the corporation as heretofore amended, except amendments to
the following articles. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(*If there are no such amendments, state "None".)

Briefly describe amendments in space below:

To effect amendments related to the conversion of the corporation
from a mutual life insurance company to a stock life insurance
company including change of name to "First Allmerica Financial
Life Insurance Company", the authorization of 1,000,000 shares of
Common Stock, $10.00 par value, the restatement and amendment of
corporate purposes, and the addition of Article 6 provisions.

IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed
our names this
day of October in the year 1995

/s/ John F. O'Brien, President/Vice President
/s/ Richard J. Baker, Secretary
SEE PAGE 7A

<PAGE>

THE COMMONWEALTH OF MASSACHUSETTS

RESTATED ARTICLES OF ORGANIZATION
(GENERAL LAWS, CHAPTER 156B, SECTION 74)

I hereby approve the within restated
articles of organization and, the filing
fee in the amount of $ having
been paid, said articles are deemed to have
been filed with me this
day of October, 1995.

MICHAEL JOSEPH CONNOLLY
SECRETARY OF STATE

TO BE FILLED IN BY CORPORATION

PHOTO COPY OF RESTATED ARTICLES OF ORGANIZATION TO BE SENT
TO:
Richard J. Baker, Esq.
440 Lincoln Street
Worcester, MA 01653

Telephone (588) 855-1000

Copy Mailed
<PAGE>
Article 2. CORPORATE PURPOSES
The Corporation is constituted for the purpose of transacting on the
stock plan, and when qualified and licensed by law to do so, the kinds of
insurance now or hereafter described in or permitted by Clauses 6th and 16th
of Section 47 and Sections 47A and 54G of Chapter 175 of the General Laws of
The Commonwealth of Massachusetts and any acts in amendment thereof or in
addition thereto, and such other kinds of insurance as may be permitted now
or hereafter to be transacted by insurance corporations organized or
authorized to transact any of the kinds of insurance now or hereafter
described or permitted by said Clauses of Section 47 and Sections 47A and
54G; and including any form of insurance which may be permitted by paragraphs
(b) and (g) of Section 51 of said Chapter 175; and any acts in amendment
thereof or in addition thereto; thus including the authority pursuant to said
Clauses of Section 47 and Sections 47A and 54G; and including, pursuant to
the provisions of paragraph (g) of said Section 51, authority to write such
other form or forms of insurance coverage not included in the provisions of
said Section 47 and Sections 47A and 54G, and not contrary to the law, as
the Commissioner of Insurance, in his or her discretion, may authorize and
license subject to such terms and conditions as he or she may from time to
time prescribe.

The Board of Directors may permit the issuance of participating
policies, and may permit the policyholders of the Company from time to time
to participate in the profits of its operations through the payment of
dividends. The Board of Directors shall have the power to make reasonable
classification or classifications of policies and to take such other action,
in accordance with the law, as may be necessary or desirable to carry into
effect any participation by policyholders in the profits of the operations of
the Company. No policyholder shall have any right to participate in the
profits of the operations of the Company unless and until the Directors of
the Company, in the exercise of their discretion, affirmatively authorize
such participation, and then only to the extent so authorized.

-2A-

<PAGE>

ARTICLE 6
Other Lawful Provisions

6.1 The corporation may carry on any business, operation or activity
referred to in Article 2 to the same extent as might an individual, whether as
principal, agent, contractor or otherwise, and either alone or in conjunction or
a joint venture or other arrangement with any corporation, association, trust,
firm or individual.

6.2 The corporation may carry on any business, operation or activity
through a wholly or partly owned subsidiary.

6.3 The corporation may be a partner in any business enterprise which it
would have power to conduct by itself.

6.4 The directors may make, amend or repeal the by-laws in whole or in
part, except with respect to any provision thereof which by law or the by-laws
requires action by the stockholders.

6.5 Meetings of the stockholders may be held anywhere in the United
States.

6.6 Except as otherwise provided by law, no stockholder shall have any
right to examine any property or any books, accounts or other writings of the
corporation if there is reasonable ground for belief that such examination will
for any reason be adverse to the interests of the corporation, and a vote of the
directors refusing permission to make such examination and setting forth that in
the opinion of the directors such examination would be adverse to the interests
of the corporation shall be prima facie evidence that such examination would be
adverse to the interests of the corporation. Every such examination shall be
subject to such reasonable regulations as the directors may establish in regard
thereto.

6.7 The directors may specify the manner in which the accounts of the
corporation shall be kept and may determine what constitutes net earnings,
profits and surplus, what amounts, if any, shall be reserved for any corporate
purpose, and what amounts, if any, shall be declared as dividends. Unless the
board of directors otherwise specifies, the excess of the consideration for any
share of its capital stock with par value issued by it over such par value shall
be surplus. The board of directors may allocate to capital stock less than all
of the consideration for any share of its capital stock without par value issued
by it, in which case the balance of such consideration shall be surplus. All
surplus shall be available for any corporate purpose, including the payment of
dividends.

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<PAGE>
6.8 The purchase or other acquisition or retention by the corporation of
shares of its own capital stock shall not be deemed a reduction of its capital
stock. Upon any reduction of capital or capital stock, no stockholder shall
have any right to demand any distribution from the corporation, except as and to
the extent that the stockholders shall have provided at the time of authorizing
such reduction.

6.9 The directors shall have the power to fix form time to time their
compensation. No person shall be disqualified from holding any office by reason
of any interest. In the absence of fraud, any director, officer or stockholder
of this corporation individually, or any individual having any interest in any
concern which is a stockholder of this corporation, or any concern in which any
of such directors, officers, stockholders or individuals has an interest, may be
a party to, or may be pecuniarily or otherwise interested in, any contract,
transaction or other act of the corporation, and

(1) such contract, transaction or act shall not be in any way invalidated
or otherwise affected by that fact;

(2) no such director, officer, stockholder or individual shall be liable
to account to the corporation for any profit or benefit realized
through any such contract, transaction or act; and

(3) any such director of the corporation may be counted in determining the
existence of a quorum at any meeting of the directors or of any
committee thereof which shall authorize any such contract, transaction
or act, and may vote to authorize the same;

provided, however, that any contract, transaction or act in which any director
or officer of the corporation is so interested individually or as a director,
officer, trustee or member of any concern which is not a subsidiary or affiliate
of the corporation, or in which any directors or officers are so interested as
holders, collectively, of a majority of shares of capital stock or other
beneficial interest at the time outstanding in any concern which is not a
subsidiary or affiliate of the corporation, shall be duly authorized or ratified
by a majority of the directors who are not so interested, to whom the nature of
such interest has been disclosed and who have made any findings required by law;

the term "interest" including personal interest and interest as a
director, officer, stockholder, shareholder, trustee, member or beneficiary
of any concern;

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<PAGE>

the term "concern" meaning any corporation, association, trust,
partnership, firm, person or other entity other than the corporation; and

the phrase "subsidiary or affiliate" meaning a concern in which a majority
of the directors, trustees, partners or controlling persons is elected or
appointed by the directors of the corporation, or is constituted of the
directors or officers of the corporation.

To the extent permitted by law, the authorizing or ratifying vote of the holders
of shares representing a majority of the votes of the capital stock of the
corporation outstanding and entitled to vote for the election of directors at
any annual meeting or a special meeting duly called for the purpose (whether
such vote is passed before or after judgment rendered in a suit with respect to
such contract, transaction or act) shall validate any contract, transaction or
act of the corporation, or of the board of directors or any committee thereof,
with regard to all stockholders of the corporation, whether or not of record at
the time of such vote, and with regard to all creditors and other claimants
under the corporation; provided, however, that

A. with respect to the authorization or ratification of contracts,
transactions or acts in which any of the directors, officers or
stockholders of the corporation have an interest, the nature of such
contracts, transactions or acts and the interest of any director,
officer or stockholder therein shall be summarized in the notice of
any such annual or special meeting, or in a statement or letter
accompanying such notice, and shall be fully disclosed at any such
meeting;

B. the stockholders so voting shall have made any findings required by
law;

C. the stockholders so interested may vote at any such meeting except to
the extent otherwise provided by law; and

D. any failure of the stockholders to authorize or ratify such contract,
transaction or act shall not be deemed in any way to invalidate the
same or to deprive the corporation, its directors, officers or
employees of its or their right to proceed with or enforce such
contract, transaction or act.

If the corporation has more than one class or series of capital stock
outstanding, the vote required by this paragraph shall be governed by the
provisions of the Articles of Organization applicable to such classes or series.

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<PAGE>

No contract, transaction or act shall be avoided by reason of any provision of
this paragraph 6.9 which would be valid but for such provision or provisions.

6.10 A director of the corporation shall not be liable to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent that exculpation from liability is not permitted
under the Massachusetts Business Corporation Law as in effect at the time such
liability is determined. No amendment or repeal of this paragraph 6.10 shall
apply to or have any effect on the liability or alleged liability of any
director of the corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.

6.11 The corporation shall have all powers granted to corporations by the
laws of The Commonwealth of Massachusetts, provided that no such power shall
include any activity inconsistent with the Business Corporation Law or the
general laws of said Commonwealth.

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IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, the undersigned,
constituting a majority of the board of directors have hereto signed our names
this 19th day of September in the year 1995.

/s/ John F. O'Brien
- -------------------------------
John F. O'Brien

- -------------------------------
Michael P. Angelini

/s/ David A. Barrett
- -------------------------------
David A. Barrett

/s/ Gail L. Harrison
- -------------------------------
Gail L. Harrison

/s/ J. Terrence Murray
- -------------------------------
J. Terrence Murray

/s/ Guy W. Nichols
- -------------------------------
Guy W. Nichols

/s/ Robert G. Stachler
- -------------------------------
Robert G. Stachler

/s/ John L. Sprague
- -------------------------------
John L. Sprague

/s/ Richard Manning Wall
- -------------------------------
Richard Manning Wall

/s/ Herbert M. Varnum
- -------------------------------
Herbert M. Varnum

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<PAGE>

EXHIBIT D

AMENDED AND RESTATED

BY-LAWS

FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

Section 1. ARTICLES OF ORGANIZATION

The name and purposes of the corporation shall be as set forth in the
Articles of Organization. These By-laws, the powers of the corporation and of
its directors and stockholders, or of any class of stockholders if there shall
be more than one class of stock, and all matters concerning the conduct and
regulation of the business and affairs of the corporation shall be subject to
such provisions in regard thereto, if any, as are set forth in the Articles of
Organization as from time to time in effect.

Section 2. STOCKHOLDERS

2.1. ANNUAL MEETING. The annual meeting of stockholders shall be held
at 10:00 A.M. on the third Tuesday in March in each year (unless that day be a
legal holiday at the place where the meeting is to be held in which case the
meeting shall be held at the same hour on the next succeeding day not a legal
holiday) or at such other date and time as shall be determined from time to time
by the board of directors. Purposes for which an annual meeting is to be held,
additional to those prescribed by law, by the Articles of Organization or by
these By-laws, may be specified by the president or by the directors.

2.2. SPECIAL MEETINGS. A special meeting of the stockholders may be
called at any time by the president or by the directors. Each call of a meeting
shall state the place, date, hour and purposes of the meeting.

2.3. PLACE OF MEETINGS. All meetings of the stockholders shall be held at
the principal office of the corporation in Massachusetts or, to the extent
permitted by the Articles of Organization, at such other place within the United
States as shall be fixed by the president or the directors. Any adjourned
session of any meeting of the stockholders shall be held at the same city or
town as the initial session, or within Massachusetts, in either case at the
place designated in the vote of adjournment.

<PAGE>

2.4. NOTICE OF MEETINGS. A written notice of each meeting of
stockholders, stating the place, date and hour and the purposes of the
meeting, shall be given at least seven days before the meeting to each
stockholder entitled to vote there at and to each stockholder who, by law, by
the Articles of Organization or by these By-laws, is entitled to notice, by
leaving such notice with him or at his residence or usual place of business,
or by mailing it, postage prepaid, addressed to such stockholder at his
address as it appears in the records of the corporation. Such notice shall
be given by the clerk or an assistant clerk or by an officer designated by
the directors. Whenever notice of a meeting is required to be given to a
stockholder under any provision of the Business Corporation Law of the
Commonwealth of Massachusetts or of the Articles of Organization or these
By-laws, a written waiver thereof, executed before or after the meeting by
such stockholder or his attorney before or after the meeting by such
stockholder or his attorney thereunto authorized and filed with the records
of the meeting, shall be deemed equivalent to such notice.

2.5. QUORUM OF STOCKHOLDERS. At any meeting of the stockholders, a quorum
as to any matter shall consist of a majority of the votes entitled to be cast on
the matter, except when a larger quorum is required by law, by the Articles of
Organization or by these By-laws. Stock owned directly or indirectly by the
corporation, if any, shall not be deemed outstanding for this purpose. Any
meeting may be adjourned from time to time by a majority of the votes properly
cast upon the question, whether or not a quorum is present, and the meeting may
be held as adjourned without further notice.

2.6. ACTION BY VOTE. When a quorum is present at any meeting, a
plurality of the votes properly cast for election to any office shall elect to
such office, and a majority of the votes properly cast upon any question other
than an election to an office shall decide the question, except when a larger
vote is required by law, by the Articles of Organization or by these By-laws.
no ballot shall be required for any election unless requested by a stockholder
present or represented at the meeting and entitled to vote in the election.

2.7. VOTING. Stockholders entitled to vote shall have one vote for each
share of stock entitled to vote held by them of record according to the records
of the corporation, unless otherwise provided by the Articles of Organization.
The corporation shall not, directly or indirectly, vote any share of its own
stock.

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<PAGE>

2.8. ACTION BY WRITING. Any action required or permitted to be taken at
any meeting of the stockholders may be taken without a meeting if all
stockholders entitled to vote on the matter consent to the action in writing and
the written consents are filed with the records of the meetings of stockholders.
Such consents shall be treated for all purposes as a vote at a meeting.

2.9. PROXIES. To the extent permitted by law, stockholders entitled to
vote may vote either in person or by proxy. Except to the extent permitted by
law, no proxy dated more than six months before the meeting named therein shall
be valid. Unless otherwise specifically limited by their terms, such proxies
shall entitle the holders thereof to vote at any adjournment of such meeting but
shall not be valid after the final adjournment of such meeting.

Section 3. BOARD OF DIRECTORS

3.1. NUMBER. At the annual meeting of stockholders such stockholders
as have the right to vote for the election of directors shall fix the number
of directors at not less than seven nor more than fifteen directors and shall
elect the number of directors so fixed. The number of directors may be
increased at any time or from time to time either by the stockholders or by
the directors by vote of a majority of the directors then in office. The
number of directors may be decreased to any number permitted by law at any
time or from time to time either by the stockholders or by the directors by a
vote of a majority of the directors then in office, but only to eliminate
vacancies existing by reason of the death, resignation, removal or
disqualification of one or more directors. No director need be a
stockholder.

3.2. TENURE. Except as otherwise provided by law, by the Articles of
Organization or by these By-laws, each director shall hold office until the next
annual meeting of the stockholders and until his successor is duly elected and
qualified, or until he sooner dies, resigns, is removed or becomes disqualified.

3.3. POWERS. Except as reserved to the stockholders by law, by the
Articles of Organization or by these By-laws, the business of the corporation
shall be managed by the directors who shall have and may exercise all the powers
of the corporation. In particular, and without limiting the generality of the
foregoing, the directors may at any time issue all or from time to time any part
of the unissued capital stock of the corporation from time to time authorized
under the Articles of Organization and may determine, subject to any
requirements of law, the consideration for which stock is to be issued and the
manner of allocating such consideration between capital and surplus.

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<PAGE>

3.4. COMMITTEES. The directors may, by vote of a majority of the
directors then in office, elect from their number an executive committee and
other committees and delegate to any such committee or committees some or all of
the powers of the directors except those which by law, by the Articles of
Organization or these By-laws they are prohibited from delegating. Except as
the directors may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise provided by the directors or such
rules, its business shall be conducted as nearly as may be in the same manner as
is provided by these By-laws for the conduct of business by the directors.

3.5. REGULAR MEETINGS. Regular meetings of the directors may be held
without call or notice at such places and at such times as the directors may
from time to time determine, provided that reasonable notice of the first
regular meeting following any such determination shall be given to absent
directors. A regular meeting of the directors may be held without call or
notice immediately after and at the same place as the annual meeting of the
stockholders.

3.6. SPECIAL MEETINGS. Special meetings of the directors may be held at
any time and at any place designated in the call of the meeting, when called by
the chairman of the board, if any, the president or the secretary, reasonable
notice thereof being given to each director by the secretary or an assistant
secretary, or by the officer calling the meeting.

3.7. NOTICE. It shall be sufficient notice to a director to send notice
by mail at least forty-eight hours or by telegram at least twenty-four hours
before the meeting addressed to him at his usual or last known business or
residence address or to give notice to him in person or by telephone at least
twenty-four hours before the meeting. Notice of a meeting need not be given to
any director if a written waiver of notice, executed by him before or after the
meeting, is filed with the records of the meeting, or to any director who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice to him. Neither notice of a meeting nor a waiver of a notice
need specify the purposes of the meeting.

3.8. QUORUM. At any meeting of the directors a majority of the directors
then in office shall constitute a quorum. Any meeting may be adjourned from
time to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.

3.9. ACTION BY VOTE. When a quorum is present at any meeting, a
majority of the directors present may take any action, except when a larger vote
is required by law, by the Articles of Organization or by these By-laws.

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<PAGE>

3.10. ACTION BY WRITING. Unless the Articles of Organization otherwise
provide, any action required or permitted to be taken at any meeting of the
directors may be taken without a meeting if all the directors consent to the
action in writing and the written consents are filed with the records of the
meetings of the directors. Such consents shall be treated for all purposes as a
vote taken at a meeting.

3.11. PRESENCE THROUGH COMMUNICATIONS EQUIPMENT. Unless otherwise
provided by law or the Articles of Organization, members of the board of
directors may participate in a meeting of such board by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting.

Section 4. OFFICERS AND AGENTS

4.1. ENUMERATION; QUALIFICATION. The officers of the corporation
shall be a president, a treasurer, a secretary, and such other officers, as
the directors from time to time, may in their discretion elect or appoint.
The corporation may also have such agents, if any, as the directors from time
to time, may in their discretion appoint. Any officer may be but none need
be a director or stockholder. Any two or more offices may be held by the
same person. Any officer may be required by the directors to give bond for
the faithful performance of his duties to the corporation in such amount and
with such sureties as the directors may determine.

4.2. POWERS. Subject to law, to the Articles of Organization and to the
other provisions of these By-laws, each officer shall have, in addition to the
duties and powers herein set forth, such duties and powers as are commonly
incident to his office and such duties and powers as the directors may from time
to time designate.

4.3. ELECTION. The president, the treasurer and the secretary shall be
elected annually by the directors. Other officers, if any, may be elected or
appointed by the board of directors at any other time.

4.5. TENURE. Except as otherwise provided by law or by the Articles of
Organization or by these By-laws, the president, the treasurer and the secretary
and other officers shall hold office until their respective successors are
chosen and qualified, unless a shorter period shall have been specified by the
terms of his election or appointment, or in each case until he sooner dies,
resigns, is removed or becomes disqualified.

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<PAGE>

4.5 CHIEF EXECUTIVE OFFICER. The chief executive officer of the
corporation shall be the chairman of the board, if any, the president or such
other officer as is designated by the directors and shall, subject to the
control of the directors, have general charge and supervision of the business of
the corporation. If no such designation is made, the president shall be the
chief executive officer. Unless the board of directors otherwise specifies, if
there is no chairman of the board, the chief executive officer shall preside, or
designate the person who shall preside, at all meetings of the stockholders and
of the board of directors.

4.6 CHAIRMAN OF THE BOARD. If a chairman of the board of directors is
elected, he shall have the duties and powers specified in these By-laws and
shall have such other duties and powers as may be determined by the directors.
Unless the board of directors otherwise specifies, the chairman of the board
shall preside, or designate the person who shall preside, at all meetings of the
stockholders and of the board of directors.

4.7 PRESIDENT AND VICE PRESIDENTS. The president shall have the duties
and powers specified in these By-laws and shall have such other duties and
powers as may be determined by the directors.

Any vice presidents shall have such duties and powers as shall be
designated from time to time by the directors.

4.8 TREASURER AND ASSISTANT TREASURERS. Except as the directors shall
otherwise determine, the treasurer shall be the chief financial and accounting
officer of the corporation and shall be in charge of its funds and valuable
papers, books of account and accounting records, and shall have such other
duties and powers as may be designated from time to time by the directors.

Any assistant treasurers shall have such duties and powers as shall be
designated from time to time by the directors.

4.9 SECRETARY AND ASSISTANT SECRETARY. The secretary shall record all
proceedings of the stockholders in a book or series of books to be kept
therefor, which book or books shall be kept at the principal office of the
corporation or at the office of its transfer agent or of its secretary and
shall be open at all reasonable times to the inspection of any stockholder.
In the absence of the secretary from any meeting of stockholders, an assitant
secretary, or if there be none or he is absent, a temporary secretary chosen
at the meeting, shall record the proceedings thereof in the aforesaid book.
Unless a transfer agent has been appointed the secretary shall keep or cause
to be kept the stock and transfer records of the corporation, which shall
contain the names and record addresses of all stockholders

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<PAGE>

and the amount of stock held by each. The secretary shall keep a true record of
the proceedings of all meetings of the directors and in his absence from any
such meeting an assistant secretary, or if there be none or he is absent, a
temporary secretary chosen at the meeting, shall record the proceedings thereof.

Any assistant secretaries shall have such other duties and powers as shall
be designated from time to time by the directors.

4.10 POWERS. The chief executive officer, Chairman of the board,
President or any one of the Vice Presidents, including any Executive Vice
President, Senior Vice President, Second Vice President or Assistant Vice
President, and such other employees of the Company specifically authorized by
the chief executive officer shall have authority to transfer securities, to
execute releases, extensions, partial releases, and assignments without recourse
of mortgages, and to execute deeds and other instruments or documents on behalf
of the Company, and whenever necessary to affix the seal of the Company to the
same. The chief executive officer, Chairman of the Board, the President, any
Executive Vice President, Senior Vice President, Vice President, Second Vice
President, or Assistant Vice President may, whenever necessary, delegate
authority to perform any of the acts referred to in this paragraph to any person
pursuant to a special power of attorney.

The Treasurer shall have charge of all moneys and securities of the Company
and shall collect all proceeds from investments which the Company's records
establish to be due.

The Treasurer or an Assistant Treasurer shall have authority to transfer
securities; to execute releases, extensions, partial releases, and assignments
without recourse of mortgages; to execute deeds and other instruments or
documents on behalf of the Company, whenever necessary to affix the seal of the
company to the same; and shall have power to vote, on behalf of the Company, in
any case where the Company, as holder of any security, is entitled to vote.

Section 5. RESIGNATIONS AND REMOVALS

Any director or officer may resign at any time by delivering his
resignation in writing to the chairman of the board, if any, the president, the
treasurer or the secretary. In addition, a director may resign by delivering
his resignation in writing to a meeting of the directors. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. A director (including persons elected by directors to fill vacancies in
the board) may be removed from office (a) with or without cause by the vote of
the holders of a majority of the shares issued and outstanding and entitled to
vote in the election of directors, provided that the directors of a class
elected by a particular class of stockholders may be removed only

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<PAGE>

by the vote of the holders of a majority of the shares of such class, or (b)
with cause by the vote of a majority of the directors then in office. The
directors may remove any officer elected by them with or without cause by the
vote of a majority of the directors then in office. A director or officer may
be removed for cause only after reasonable notice and opportunity to be heard
before the body proposing to remove him. No director or officer removed, shall
have any right to any compensation as such director or officer for any period
following his resignation or removal, or any right to damages on account of such
removal, whether his compensation be by the month or by the year or otherwise;
unless the body acting on the removal, shall in their or its discretion provide
for compensation.

Section 6. VACANCIES

Any vacancy in the board of directors, including a vacancy resulting from
the enlargement of the board, may be filled by the stockholders or, in the
absence of stockholder action, by the directors by vote of a majority of the
directors then in office. The directors shall elect a successor if the office
of the president, treasurer or secretary becomes vacant and may elect a
successor if any other office becomes vacant. Each such successor
shall hold office for the unexpired term and in the case of the president,
treasurer and secretary until his successor is chosen and qualified, or in each
case until he sooner dies, resigns, is removed or becomes disqualified. The
directors shall have and may exercise all their powers notwithstanding the
existence of one or more vacancies in their number.

Section 7. CAPITAL STOCK

7.1. NUMBER AND PAR VALUE. The total number of shares and the par value,
if any, of each class of stock which the corporation is authorized to issue
shall be as stated in the Articles of Organization.

7.2. SHARES REPRESENTED BY CERTIFICATES AND UNCERTIFICATED SHARES. The
board of directors may provide by resolution that some or all of any or all
classes and series of shares shall be uncertificated shares. Unless such a
resolution has been adopted, a stockholder shall be entitled to a certificate
stating the number and the class and the designation of the series, if any, of
the shares held by him, in such form as shall, in conformity to law, be
prescribed from time to time by the directors. Such certificate shall be signed
by the chairman of the board, if any, the president or a vice president and by
the treasurer or an assistant treasurer. Such signatures may be facsimiles if
the certificate is signed by a transfer agent, or by a registrar, other than a
director, officer or employee of the corporation. In case any officer who has
signed or whose

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<PAGE>

facsimile signature has been placed on such certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the time of its
issue.

7.3. LOSS OF CERTIFICATES. In the case of the alleged loss or
destruction or the mutilation of a certificate of stock, a duplicate certificate
may by issued in place thereof, upon such conditions as the directors may
prescribe.

Section 8. TRANSFER OF SHARES OF STOCK

8.1. TRANSFER ON BOOKS. Subject to the restrictions, if any, stated or
noted on the stock certificates, shares of stock may be transferred on the
books of the corporation by the surrender to the corporation or its transfer
agent of the certificate therefor properly endorsed or accompanied by a
written assignment and power of attorney properly executed, with necessary
transfer stamps affixed, and with such proof of the authenticity of signature
as the directors or the transfer agent of the corporation may reasonably
require. Except as may be otherwise required by law, by the Articles of
Organization or by these By-laws, the corporation shall be entitled to treat
the record holder of stock as shown on its books as the owner of such stock
for all purposes, including the payment of dividends and the right to receive
notice and to vote with respect thereto, regardless of any transfer, pledge
or other disposition of such stock until the shares have been transferred on
the books of the corporation in accordance with the requirements of these
By-laws.

It shall be the duty of each stockholder to notify the corporation of his
post office address.

8.2 RECORD DATE AND CLOSING TRANSFER BOOKS. The directors may fix in
advance a time, which shall not be more than sixty days before the date of
any meeting of stockholders or the date for the payment of any dividend or
making of any distribution to stockholders or the last day on which the
consent or dissent of stockholders may be effectively expressed for any
purpose, as the record date for determining the stockholders having the right
to notice of and to vote at such meeting and any adjournment thereof or the
right to receive such dividend or distribution or the right to give such
consent or dissent, and in such case only stockholders of record on such
record date shall have such right, notwithstanding any transfer of stock on
the books of the corporation after the record date; or without fixing such
record date the directors may for any of such purposes close the transfer
books for all or any part of such period. If no record date is fixed and the
transfer books are not closed:

(1) The record date for determining stockholders having the right to
notice of or to vote at a meeting of stockholders shall

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be at the close of business on the date next preceding the day on which notice
is given.

(2) the record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the board of directors
acts with respect thereto.

Section 9. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The corporation shall, to the extent legally permissible, indemnify each of
its directors and officers (including persons who serve at its request as
directors, officers or trustees of another organization, or in any capacity with
respect to any employee benefit plan) against all liabilities and expenses,
including amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees, reasonably incurred by him in connection with
the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, in which he may be involved or with which he may be
threatened, while in office or thereafter, by reason of his being or having been
such a director or officer, except with respect to any matter as to which he
shall have been adjudicated in any proceeding not to have acted in good faith
in the reasonable belief that his action was in the best interest of the
corporation (any person serving another organization in one or more of the
indicated capacities at the request of the corporation who shall have acted
in good faith in the reasonable belief that his action was in the best
interest of such other organization to be deemed as having acted in such
manner with respect to the corporation) or, to the extent that such matter
relates to service with respect to any employee benefit plan, in the best
interest of the participants or beneficiaries of such employee benefit plan;
provided, however, that as to any matter disposed of by a compromise payment
by such director or officer, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses
shall be provided unless such compromise shall be approved as in the best
interest of the corporation, after notice that it involves such indemnification:
(a) by a disinterested majority of the directors then in office; or (b) by a
majority of the disinterested directors then in office, provided that there has
been obtained an opinion in writing of independent legal counsel to the effect
that such director or officer appears to have acted in good faith in the
reasonable belief that his action was in the best interest of the corporation;
or (c) by the holders of a majority of the outstanding stock at the time
entitled to vote for directors, voting as a single class, exclusive of any stock
owned by any interested director or officer. Expenses, including counsel fees,
reasonably incurred by any director or officer in connection with the defense or
disposition of any such action, suit or other proceeding may be paid from time
to time by the corporation in advance of the final disposition thereof upon

-10-

<PAGE>

receipt of an undertaking by such director or officer to repay the amounts so
paid to the corporation if it is ultimately determined that indemnification for
such expenses is not authorized under this section. The right of
indemnification hereby provided shall not be exclusive of or affect any other
rights to which any director or officer may be entitled. As used in this
section, the terms "director" and "officer" include the relevant individual's
heirs, executors and administrators, and an "interested" director or officer is
one against whom in such capacity the proceedings in question or another
proceeding on the same or similar grounds is then pending. Nothing contained in
this section shall affect any rights to indemnification to which corporate
personnel other than directors and officers may be entitled by contract or
otherwise under law.

Section 10. CORPORATE SEAL

The seal of the corporation shall, subject to alteration by the directors,
consist of a flat-faced circular die with the word "Massachusetts", together
with the name of the corporation and the year of its organization, cut or
engraved thereon.

Section 11. EXECUTION OF PAPERS

The chief executive officer, Chairman of the Board, President or any one of
the Vice Presidents, including any Executive Vice President, Senior Vice
President, Second Vice President or Assistant Vice President, and such other
employees of the Company specifically authorized by the chief executive officer
shall have authority to transfer securities, to execute releases, extensions,
partial releases, and assignments without recourse of mortgages; and to execute
deeds and other instruments or documents on behalf of the Company, and whenever
necessary to affix the seal of the company to the same. The chief executive
officer, Chairman of the Board, the President, any Executive Vice President,
Senior Vice President, Vice President, Second Vice President, Vice President,
Second Vice President, or Assistant Vice President may, whenever necessary,
delegate authority to perform any of the acts referred to in this paragraph to
any person pursuant to a special power of attorney.

Section 12. FISCAL YEAR

The fiscal year of the corporation shall end on December 31.

Section 13. AMENDMENTS

These By-laws may be altered amended or repealed at any annual or special
meeting of the stockholders called for the purpose, of which the notice shall
specify the subject matter of the proposed alteration, amendment or repeal or
the sections to be affected thereby, by vote of the stockholders. These By-laws
may also be altered, amended or repealed by vote of a majority of

-11-

<PAGE>

the directors then in office, except that the directors shall not take any
action which provides for indemnification of directors nor any action to amend
this Section 13, and except that the directors shall not take any action unless
permitted by law.

Any By-law so altered, amended or repealed by the directors may be further
altered or amended or reinstated by the stockholders in the above manner.

<PAGE>

STATE MUTUAL LIFE ASSURANCE COMPANY OF AMERICA

October 12, 1995
State Mutual Life Assurance Company of America
440 Lincoln Street
Worcester MA 01653

Gentlemen:

In my capacity as Counsel of State Mutual Life Assurance Company of America (the
"Company"), I have participated in the preparation of this Post-Effective
Amendment to the Registration Statement for the VEL II Account on Form S-6 under
the Securities Act of 1933 with respect to the Company's individual flexible
premium variable life insurance policies.

I am of the following opinion:

1. VEL II Account is a separate account of the Company validly existing
pursuant to the Massachusetts Insurance Code and the regulations issued
thereunder.

2. The assets held in the VEL II Account equal to the reserves in other policy
liabilities of the Policies which are supported by the VEL II Account are
not chargeable with liabilities arising out of any other business the
Company may conduct.

3. The individual flexible premium variable life insurance policies, when
issued in accordance with the Prospectus contained in the Registration
Statement and upon compliance with applicable local law, will be legal and
binding obligations of the Company in accordance with their terms and when
sold will be legally issued, fully paid and non-assessable.

In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.

I hereby consent to the filing of this opinion as an exhibit to the Post-
Effective Amendment to the Registration Statement of the VEL II Account on Form
S-6 filed under the Securities Act of 1933.

Very truly yours,

/s/ Sheila B. St. Hilaire
Sheila B. St. Hilaire
Counsel

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this Post-
Effective Amendment No. 3 to the Registration Statement on Form S-6 of our
report dated February 13, 1995, except as to Note 2, which is as of February 28,
1995, relating to the financial statements of State Mutual Life Assurance
Company of America and our report dated February 13, 1995, relating to the
financial statements of the VEL II Account of State Mutual Life Assurance
Company of America, both of which appear in such Prospectus. We also consent to
the reference to us under the heading "Independent Accountants" in such
Prospectus.

/s/ Price Waterhouse LLP
Boston, Massachusetts

October 16, 1995

<PAGE>
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