INHEIRITAGE ACCOUNT OF STATE MUTUAL LIFE ASSURANCE CO OF AME, 485BPOS, 1995-10-13

INHEIRITAGE ACCOUNT OF STATE MUTUAL LIFE ASSURANCE CO OF AME
485BPOS, 1995-10-13

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<PAGE>

Registration Number 33-74184
811-8304

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

INHEIRITAGE 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
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 17, 1995.

<PAGE>

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

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

1. . . . . . . . . . . . . . . . Cover Page
2. . . . . . . . . . . . . . . . Cover Page
3. . . . . . . . . . . . . . . . Not Applicable
4. . . . . . . . . . . . . . . . Distribution
5. . . . . . . . . . . . . . . . The Company, The Inheiritage Account
6. . . . . . . . . . . . . . . . The Inheiritage Account
7. . . . . . . . . . . . . . . . Not Applicable
8. . . . . . . . . . . . . . . . Not Applicable
9. . . . . . . . . . . . . . . . Legal Proceedings
10 . . . . . . . . . . . . . . . Summary; Description of the Company, The
Inheiritage Account, Allmerica Investment
Trust, Variable Insurance Products Fund,
Variable Insurance 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 Inheiritage Account; Allmerica
Investment Trust; Variable Insurance Products
Fund; Variable Insurance Products Fund II; T.
Rowe Price International Series, Inc.;
Delaware Group Premium Fund, Inc.; Premium
Payments; Allocation of Net Premiums
17 . . . . . . . . . . . . . . . Summary; Surrender; Partial Withdrawal;
Charges and Deductions; Policy
Termination and Reinstatement

<PAGE>

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

<PAGE>

PROSPECTUS SUPPLEMENT
INHEIRITAGE 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 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 61 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 joint survivorship flexible premium
variable life insurance policies ("Policies") offered by State Mutual Life
Assurance Company of America ("Company") to applicants Age 80 or under
respecting the younger Insured and Age 85 or under respecting the older Insured.
Life insurance coverage is provided for two Insureds, with death proceeds
payable at death of the last surviving Insured. Within limits, the Policyowner
may choose the amount of initial premium desired and the initial Sum Insured.
The Policyowner has the flexibility to vary the frequency and amount of premium
payments, subject to certain restrictions and conditions. The Policyowner 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 the Policyowner to allocate net premiums among up to seven
of eighteen sub-accounts ("Sub-Accounts") of the Inheiritage Account, a separate
account of the Company, and a fixed interest account ("General Account") of the
Company (together "Accounts"). Each Sub-Account invests its assets in a
corresponding investment portfolio of Allmerica Investment Trust ("Trust"),
Variable Insurance Products Fund ("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 THE POLICYOWNER'S CURRENT LIFE INSURANCE OR IF THE
POLICYOWNER ALREADY OWNS A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES OF THE
ALLMERICA INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, T. ROWE PRICE INTERNATIONAL SERIES, INC. AND DELAWARE GROUP
PREMIUM FUND, INC. 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, Select International Equity Fund,
Government Bond Fund, Select Aggressive Growth Fund, Select Capital Appreciation
Fund, Select Growth Fund, Select Growth and Income Fund and Small Cap Value Fund
(the "Funds"). Four different investment portfolios of 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 last surviving Insured, the
Company will pay a death benefit (the "Death Proceeds") to the beneficiary.
Prior to the Final Premium Payment Date, the Death Proceeds equal the Sum
Insured, less any debt, partial withdrawals, and any due and unpaid charges.
The Policyowner 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.

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

<PAGE>

TABLE OF CONTENTS

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

THE POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
APPLICATION FOR A POLICY. . . . . . . . . . . . . . . . . . . . . . 26
FREE LOOK PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . 26
CONVERSION PRIVILEGES . . . . . . . . . . . . . . . . . . . . . . . 27
PREMIUM PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 27
ALLOCATION OF NET PREMIUMS. . . . . . . . . . . . . . . . . . . . . 27
TRANSFER PRIVILEGE. . . . . . . . . . . . . . . . . . . . . . . . . 28
DEATH PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SUM INSURED OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . 29
CHANGE IN SUM INSURED OPTION. . . . . . . . . . . . . . . . . . . . 31
CHANGE IN FACE AMOUNT . . . . . . . . . . . . . . . . . . . . . . . 32
POLICY VALUE AND SURRENDER VALUE. . . . . . . . . . . . . . . . . . 33
PAYMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 34
OPTIONAL INSURANCE BENEFITS . . . . . . . . . . . . . . . . . . . . 34
SURRENDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
PARTIAL WITHDRAWAL. . . . . . . . . . . . . . . . . . . . . . . . . 34
PAID-UP INSURANCE OPTION. . . . . . . . . . . . . . . . . . . . . . 35

CHARGES AND DEDUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 35
TAX EXPENSE CHARGE. . . . . . . . . . . . . . . . . . . . . . . . . 35
PREMIUM EXPENSE CHARGE. . . . . . . . . . . . . . . . . . . . . . . 35
MONTHLY DEDUCTION FROM POLICY VALUE . . . . . . . . . . . . . . . . 35
CHARGES AGAINST ASSETS OF THE INHEIRITAGE ACCOUNT . . . . . . . . . 37
SURRENDER CHARGE. . . . . . . . . . . . . . . . . . . . . . . . . . 38
CHARGES ON PARTIAL WITHDRAWAL . . . . . . . . . . . . . . . . . . . 39
TRANSFER CHARGES. . . . . . . . . . . . . . . . . . . . . . . . . . 39
CHARGE FOR INCREASE IN FACE AMOUNT. . . . . . . . . . . . . . . . . 40
OTHER ADMINISTRATIVE CHARGES. . . . . . . . . . . . . . . . . . . . 40

POLICY LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
LOAN INTEREST CHARGED . . . . . . . . . . . . . . . . . . . . . . . 40
REPAYMENT OF DEBT. . . . . . . . . . . . . . . . . . . . . . . . . 40
EFFECT OF POLICY LOANS. . . . . . . . . . . . . . . . . . . . . . . 40

<PAGE>

POLICY TERMINATION AND REINSTATEMENT . . . . . . . . . . . . . . . . . . 41
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
REINSTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
OTHER POLICY PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . 42
POLICYOWNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
INCONTESTABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 42
SUICIDE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
NOTICE OF FIRST INSURED TO DIE. . . . . . . . . . . . . . . . . . . 42
AGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
POSTPONEMENT OF PAYMENTS. . . . . . . . . . . . . . . . . . . . . . 43

DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY. . . . . . . . . . . . . 44

DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

FURTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 49

INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . 49

FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . 49
THE COMPANY AND THE INHEIRITAGE ACCOUNT . . . . . . . . . . . . . . 50
TAXATION OF THE POLICIES. . . . . . . . . . . . . . . . . . . . . . 50
MODIFIED ENDOWMENT CONTRACTS. . . . . . . . . . . . . . . . . . . . 51
ESTATE AND GENERATION SKIPPING TAXES. . . . . . . . . . . . . . . . 51

MORE INFORMATION ABOUT THE GENERAL ACCOUNT . . . . . . . . . . . . . . . 52
GENERAL DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . 52
GENERAL ACCOUNT VALUE . . . . . . . . . . . . . . . . . . . . . . . 52
THE POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND
POLICY LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 53

APPENDIX A - OPTIONAL BENEFITS . . . . . . . . . . . . . . . . . . . . . 90

APPENDIX B - PAYMENT OPTIONS . . . . . . . . . . . . . . . . . . . . . . 90

APPENDIX C - ILLUSTRATIONS OF SUM INSURED, POLICY VALUES AND
ACCUMULATED PREMIUMS . . . . . . . . . . . . . . . . . . . . . . . . . . 93

APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES. . . . . . . . . . 99

<PAGE>

SPECIAL TERMS

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

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

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

COMPANY: 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 death of the last surviving Insured, partial
withdrawals, if any, partial withdrawal charges, and any due and unpaid Monthly
Deductions. After the Final Premium Payment Date, the Death Proceeds equal the
Surrender Value.

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 Insureds' Premium
Class.

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

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

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

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

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

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

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

INSUREDS: The two persons covered under the Policy.

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

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

<PAGE>

to the Minimum Monthly Factor multiplied by the number of months since the
Date of Issue or the effective date of an increase.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

VALUATION PERIOD: The interval between two consecutive Valuation Dates.

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

<PAGE>

SUMMARY

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

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

The Policy will remain in force until the Surrender Value is insufficient to
cover the next Monthly Deduction and loan interest accrued, if any, and a grace
period of 62 days has expired without adequate payment being made by the
Policyowner. 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. The surrender charge
is only imposed if, during its duration, the Policyowner requests a full
surrender or a decrease in Face Amount.

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

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

<PAGE>

during the first two Policy years following an increase in Face Amount
before making premium payments associated with the increase in Face
Amount which are at least equal to one Guideline Annual Premium, the deferred
administrative charge will be $8.50 per thousand dollars of Face Amount
increase, as described above, but the deferred sales charge will not exceed 25%
of premiums associated with the increase. See "THE POLICY - Surrender" and
"CHARGES AND DEDUCTIONS - Surrender Charge."

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

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

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

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

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

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

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

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

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

TRANSACTION CHARGE ON PARTIAL WITHDRAWALS - A transaction charge, which is the
smaller of 2% of the amount withdrawn or $25, is assessed at the time of each
partial withdrawal to reimburse the Company

<PAGE>

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

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

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

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

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

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

FLEXIBILITY TO ADJUST SUM INSURED - Subject to certain limitations, the
Policyowner may adjust the Sum Insured, and thus the Death Proceeds, at any time
prior to the Final Premium Payment Date,

<PAGE>

by increasing or decreasing the Face Amount of the Policy. Any change in the
Face Amount will affect the monthly cost of insurance charges and the amount
of the surrender charge. If the Face Amount is decreased, a pro rata
surrender charge may be imposed. The Policy Value is reduced by the amount
of the charge. See "THE POLICY - Change In Face Amount." The minimum
increase in Face Amount is $100,000, and any increase may also require
additional Evidence of Insurability satisfactory to the Company. The increase
is subject to a "free look period" and, during the first 24 months after the
increase, to a conversion privilege. See "THE POLICY - Free Look Period -
Conversion Privileges."

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

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

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

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

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

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

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

INVESTMENT OPTIONS - The Policies permit Net Premiums to be allocated either to
the Company's General Account or to the Inheiritage Account. The Inheiritage
Account is currently comprised of eighteen Sub-Accounts ("Sub-Accounts"). Each
Sub-Account invests exclusively in a corresponding Underlying Fund of the
Allmerica Investment Trust ("Trust") managed by Allmerica Investment, the

<PAGE>

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. In some states, insurance regulations may restrict
the availability of particular Underlying Funds. The Policies permit the
Policyowner 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
INHEIRITAGE ACCOUNT, ALLMERICA INVESTMENT TRUST, VARIABLE INSURANCE PRODUCTS
FUND, VARIABLE INSURANCE PRODUCTS FUND II, T. ROWE PRICE INTERNATIONAL SERIES,
INC. AND DELAWARE GROUP PREMIUM FUND, INC."

FREE LOOK PERIOD - The Policy provides for an initial Free Look Period. The
Policyowner 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 the
Policyowner receives the Policy, or (c) 10 days after the Company mails or
personally delivers a Notice of Withdrawal Rights to the Policyowner.

Upon return of the Policy, the Company will refund an amount equal to the entire
amount of premiums paid. A free look privilege also applies after a requested
increase in Face Amount. See "THE POLICY - Free Look Period."

CONVERSION PRIVILEGES - During the first 24 Policy months after the Date of
Issue, 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, the
Policyowner may convert this Policy to a flexible premium fixed adjustable joint
survivorship life insurance policy. The new policy, including any riders then
in effect, will have the same face amount, issue ages, 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, the Policyowner may make
partial withdrawals in a minimum amount of $500 from the Policy Value. Under
Option 1, the Face Amount is reduced by the amount of the partial withdrawal,
and a partial withdrawal will not be allowed if it would reduce the Face Amount
below $100,000.

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

<PAGE>

POLICY - Partial Withdrawal" and "CHARGES AND DEDUCTIONS - Charges On
Partial Withdrawal."

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

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

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

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

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

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

<PAGE>

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

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

<PAGE>

PERFORMANCE INFORMATION

The Policies were first offered to the public in 1995. However, the Company may
advertise "Total Return" and "Average Annual Total Return" performance
information based on the periods that the Underlying Funds have been in
existence. The results for any period prior to the Policies being offered will
be calculated as if the Policies had been offered during that period of time,
with all charges assumed to be those applicable to the Sub-Accounts, the
Underlying Funds, and (in Table I) under a "representative" Policy that is
surrendered at the end of the applicable period. For more information on
charges under the policies, see CHARGES AND DEDUCTIONS.

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

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

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

<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*
<C> <S> <C> <C> <C> <C> <C>
1 Growth -100.00% -24.32% -0.19% 10.55% 9.67
2 Investment Grade -100.00% -23.43% -2.47% 5.30% 9.67
3 Money Market -100.00% -25.76% -6.10% 2.36% 9.67
4 Equity Index -100.00% -22.52% N/A -0.71% 4.26
5 Government Bond -100.00% -24.66% N/A -18.06% 3.35
6 Select Aggressive Growth -100.00% N/A N/A -18.65% 2.36
7 Select Growth -100.00% N/A N/A -32.84% 2.36
8 Select Growth and Income -100.00% N/A N/A -32.56% 2.36
9 Small Cap Value -100.00% N/A N/A -55.71% 1.67
11 Select Int'l Equity N/A N/A N/A -99.35% 0.67
12 Select Cap. Appreciation N/A N/A N/A N/A N/A
102 VIPF High Income -100.00% -12.34% 4.66% 7.42% 9.28
103 VIPF Equity Income -97.08% -11.65% 0.54% 6.81% 8.23
104 VIPF Growth -100.00% -17.88% 0.98% 8.53% 8.23
105 VIPF Overseas -100.00% -20.08% -5.13% 2.27% 7.92
106 VIPF II Asset Manager -100.00% -7.09% 0.78% 1.10% 5.32
150 T. Rowe Int'l Stock N/A N/A N/A -99.18% 0.58
207 DGPF Int'l Equity -100.00% N/A N/A -17.02% 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 $5,500
(approximately one Guideline Annual Premium) was made at the beginning of each
Policy year and that ALL premiums were allocated to EACH Sub-Account
individually.

Average Annual Total Return as of 12/31/94
------------------------------------------
Sub- Underlying One-Year 3 years 5 years Since Years Since
Account Fund Total Return Inception Inception*
<C> <S> <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 Capital 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>

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

THE COMPANY - The Company, 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 in 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 combined assets and over $42 billion of
life insurance in force.

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

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

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

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

The Trust was established 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.

Allmerica Investment serves as investment adviser of the Trust and has entered
into sub-advisory

<PAGE>

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.

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.

<PAGE>

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.

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 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

<PAGE>

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 THE POLICYOWNER'S 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, the Policyowner 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 the
Policyowner has Policy Value in that Sub-Account, the Company will transfer it
without charge on written request by the Policyowner to another Sub-Account or
to the General Account. The Company must receive the Policyowner's written
request within sixty (60) days of the later of (a) the effective date of such
change in the investment policy or (b) the receipt of the notice of the
Policyowner's right to transfer. The Policyowner may then change the premium
and deduction allocation percentages.

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

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

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.

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

<TABLE>
<S> <C>
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 Fund . . . .Bank of Ireland Asset Management Limited
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.
</TABLE>

<PAGE>

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

<PAGE>

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

<TABLE>
<CAPTION>
Fund Net Asset Value Rate
---- --------------- ----

<S> <C> <C>
Growth First $50 million 0.60%
$50 - 250 million 0.50%
Over $250 million 0.35%

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

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

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

Government Bond * 0.50%

Select International Equity Fund * 1.00%

Select Aggressive Growth * 1.00%

Select Capital Appreciation * 1.00%

Select Growth * 0.85%

Select Growth and Income * 0.75%

Small Cap Value * 0.85%

<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 Management Select International Equity Fund First $50 million 0.45%
Limited Next $50 million 0.40%
Over $100 million 0.30%

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

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

United Asset Management Corporation Select Growth First $50 million 0.50%
$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 0.150%

** 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>

<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.

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS - The Company reserves the
right, subject to applicable law, to make additions to, deletions from, or
substitutions for the shares that are held in the Sub-Accounts or that the
Sub-Accounts may purchase. If the shares of any Underlying Fund are no longer
available for investment or if in the Company's judgment further investment in
any Underlying Fund should become inappropriate in view of the purposes of the
Inheiritage Account or the affected Sub-Account, the Company may redeem the
shares of that Underlying Fund and substitute shares of another registered
open-end management company. The Company will not substitute any

<PAGE>

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 Inheiritage Account may, to the extent permitted by law, purchase other
securities for other policies or permit a conversion between policies upon
request by a Policyowner.

The Company also reserves the right to establish additional Sub-Accounts of the
Inheiritage 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 Inheiritage Account or any Sub-Account(s) may
be operated as a management company under the 1940 Act, may be deregistered
under the 1940 Act if registration is no longer required, or may be combined
with other Sub-Accounts or other separate accounts of the Company.

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

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

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

THE POLICY

<PAGE>

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
Insureds are 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 the death of either Insured
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 THE POLICYOWNER 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 the Policyowner's
instructions) not later than three days after underwriting approval of the
Policy. If the initial net premiums equal or exceed $10,000, or if the Policy
provides for planned premium payments during the first year equal to or
exceeding $10,000 annually, $5,000 semi-annually, $2,500 quarterly or $1,000
monthly, the entire Net Premium plus any interest earned will remain in the
General Account until return of a Delivery Receipt to the Principal Office. The
entire amount held in the General Account for allocation to the Inheiritage
Account will then be allocated to the Sub-Accounts according to the
Policyowner's instructions. Amounts remaining in the General Account will
continue to be credited interest from date of receipt of the premium at the
Principal Office.

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

When the Policyowner returns 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 the bank.

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

CONVERSION PRIVILEGES - Without Evidence of Insurability, the Policyowner may
convert the Policy to a flexible premium adjustable joint survivorship life
insurance Policy with fixed and guaranteed

<PAGE>

minimum benefits if the request is made: (a) within 24 months after 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 the
notice is mailed to the Policyowner's last known address. The new policy,
including any riders then in effect, will have the same face amount, issue
ages, date of issue, and risk classifications as the original Policy.

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

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

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

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

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

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

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

The Policyowner may change the allocation of future Net Premiums at any time
pursuant to written or telephone request. A properly completed authorization
form must be on file before telephone requests

<PAGE>

will be honored. The change will be effective as of the date of receipt of
the notice at the Principal Office. No charge is currently imposed for
changing premium allocation instructions. The Company reserves the right to
impose such a charge in the future, but guarantees that the charge will not
exceed $25.

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

TRANSFER PRIVILEGE - Subject to the Company's then current rules, the
Policyowner 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. A properly completed authorization form must
be on file at the Principal Office before telephone instructions will be
honored.

Transfers involving the General Account are currently permitted only if:

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

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

These rules are subject to change by the Company.

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

The transfer privilege is subject to the consent of the Company. The Company
reserves the right to impose limitations on transfers including, but not limited
to: (1) the minimum amount that may be transferred (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 $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 - The Policy provides for the payment of the Death Proceeds of
the Policy to the named Beneficiary on the death of the last surviving Insured.
There are no Death Proceeds payable on the death of the first Insured to die.
Within 90 days of the death of the first Insured to die, or as soon thereafter
as is reasonably possible, the Policyowner must mail to the Principal Office due
proof of such death. As long as the Policy remains in force (see "POLICY
TERMINATION AND REINSTATEMENT"), the Company will, upon due proof of the death
of the last surviving Insured, pay the Death Proceeds of the Policy to the named
Beneficiary. The Company will normally pay the Death Proceeds within seven days
of receiving due proof of the death of the last surviving Insured, but the
Company may delay payments under certain circumstances. See "OTHER POLICY
PROVISIONS - Postponement Of

<PAGE>

Payments." The Death Proceeds may be received by the Beneficiary in cash or
under one or more of the payment options set forth in the Policy. See
"APPENDIX B - PAYMENT OPTIONS."

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

SUM INSURED OPTIONS - The Policy provides two Sum Insured Options: Option 1 and
Option 2, as described below. The Policyowner designates the desired Sum
Insured Option in the application. The Policyowner 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.

<PAGE>

GUIDELINE MINIMUM SUM INSURED TABLE
<TABLE>
<CAPTION>

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

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

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

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

Under Option 1, a Policy with a $300,000 Face Amount will generally have a Sum
Insured equal to $300,000. However, because the Sum Insured must be equal to or
greater than 300% of Policy Value, if at any time the Policy Value exceeds
$100,000, the Sum Insured will exceed the $300,000 Face

<PAGE>

Amount. In this example, each additional dollar of Policy Value above
$100,000 will increase the Sum Insured by $3.00. For example, a Policy with
a Policy Value of $125,000 will have a Guideline Minimum Sum Insured of
$375,000 ($125,000 x 3.00); Policy Value of $150,000 will produce a Guideline
Minimum Sum Insured of $450,000 ($150,000 x 3.00); and Policy Value of
$200,000 will produce a Guideline Minimum Sum Insured of $600,000 ($200,000 x
3.00).

Similarly, so long as Policy Value exceeds $100,000, each dollar taken out of
Policy Value will reduce the Sum Insured by $3.00. If, for example, the Policy
Value is reduced from $125,000 to $100,000 because of partial withdrawals,
charges or negative investment performance, the Sum Insured will be reduced from
$375,000 to $300,000. If at any time, however, the Policy Value multiplied by
the applicable percentage is less than the Face Amount, the Sum Insured will
equal the Face Amount of the Policy.

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

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

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

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

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

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

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

If the Sum Insured Option is changed from Option 2 to Option 1, the Face Amount
will be increased to equal the Sum Insured which would have been payable under
Option 2 on the effective date of the change (i.e. the Face Amount immediately
prior to the change plus the Policy Value on the date of the change). The
amount of the Sum Insured will not be altered at the time of the change.
However, the change in option will affect the determination of the Sum Insured
from that point on, since the Policy Value will no longer be added to the Face
Amount in determining the Sum Insured; the Sum Insured will equal the new Face
Amount (or, if higher, the Guideline Minimum Sum Insured). The cost of
insurance may be higher or lower than it otherwise would have been since any
increases or decreases in Policy Value will, respectively, reduce or increase
the Insurance Amount at Risk under Option 1.

<PAGE>

Assuming a positive net investment return with respect to any amounts in the
Inheiritage Account, changing the Sum Insured Option from Option 2 to Option
1 will reduce the Insurance Amount at Risk and therefore the cost of
insurance charge for all subsequent Monthly Deductions, compared to what such
charge would have been if no such change were made.

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

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

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

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

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

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

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 the Policyowner
requests a decrease in the Face Amount, the amount of any surrender charge
deducted

<PAGE>

will reduce the current Policy Value. The Policyowner may specify one
Sub-Account from which the surrender charge will be deducted. If no
specification is provided, the Company will make a Pro Rata Allocation. The
current surrender charge will be reduced by the amount deducted. See "CHARGES
AND DEDUCTIONS - Surrender Charge."

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

A partial withdrawal from a Sub-Account will result in the cancellation of the
number of Accumulation Units equivalent in value to the amount withdrawn. The
amount withdrawn equals the amount requested by the Policyowner 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
32

<PAGE>

CONSIDERATIONS."

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

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

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

CHARGES AND DEDUCTIONS

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

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

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

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

Prior to the Final Premium Payment Date, the Monthly Deduction will be deducted
as of each Monthly Payment Date commencing with the Date of Issue of the Policy.
It will be allocated to one Sub-Account according to the Policyowner's
instructions, or, if no allocation is specified, the Company will make a Pro

<PAGE>

Rata Allocation. If the Sub-Account the Policyowner specifies does not have
sufficient funds to cover the Monthly Deduction, the Company will deduct the
charge for that month as if no specification were made. However, if on
subsequent Monthly Payment Dates there is sufficient Policy Value in the
Sub-Account the Policyowner specified, the Monthly Deduction will be deducted
from that Sub-Account. No Monthly Deductions will be made on or after the Final
Premium Payment Date.

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

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

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

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 the
Policyowner selected Sum Insured Option 1, or less the Face Amount plus the
Policy Value if the Policyowner 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 Insureds at the Date of Issue, the
effective date of an increase or date of rider, as applicable, the amount of
premiums paid less debt, any partial withdrawals and withdrawal charges, and
risk classification. The cost of insurance rates are determined at the
beginning of each Policy year for the initial Face Amount. The cost of
insurance rates for an increase in Face Amount or rider are determined annually
on the anniversary of the effective date of each increase or rider. The cost of
insurance rates generally increase as the Insureds' Ages increase. The actual
monthly cost of insurance rates will be based on the Company's expectations as
to future mortality experience. They will not, however, be greater than the
guaranteed cost of insurance rates set forth in the Policy. These guaranteed
rates are based on the 1980 Commissioners Standard Ordinary Mortality Tables
(Mortality Table D, Smoker or Non-Smoker, Male or Female) and the Insureds'
Ages. The Tables used for this purpose set forth different mortality estimates
for smokers and non-smokers. Any change in the cost of insurance rates will
apply to all persons of the same insuring Age and Premium Class whose Policies
have been in force for the same length of time.

The premium class of an Insured will affect the cost of insurance rates. The
Company currently places Insureds into standard premium classes and substandard
premium classes. In an otherwise identical Contract, an Insured in the standard
premium class will have a lower cost of insurance than an Insured in a
substandard premium class with a higher mortality risk. The premium classes are
also divided into two categories: smokers and nonsmokers. Nonsmoking Insureds
will incur lower cost of insurance rates than Insureds who are classified as
smokers but who are otherwise in the same premium class. Any Insured with an
Age at issuance under 18 will be classified initially as regular or substandard.
The

<PAGE>

Insured then will be classified as a smoker at Age 18 unless the Insured
provides satisfactory evidence that the Insured is a nonsmoker. The Company
will provide notice to the Policyowner of the opportunity for an Insured to be
classified as a nonsmoker when the Insured reaches Age 18.

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

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

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

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

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

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

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

OTHER CHARGES AGAINST THE ASSETS OF THE INHEIRITAGE ACCOUNT - Because the
Sub-Accounts purchase shares of the Underlying Investment Companies, the value
of the Accumulation Units of the Sub-Accounts will reflect the investment
advisory fee and other expenses incurred by the Underlying

<PAGE>

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
the issuance of the Policy and for each increase in the Face Amount. The
surrender charge is comprised of a contingent deferred administrative charge and
a contingent deferred sales charge. The contingent deferred administrative
charge compensates the Company for expenses incurred in administering the
Policy. The contingent deferred sales charge compensates the Company for
expenses relating to the distribution of the Policy, including Agent's
commissions, advertising and the printing of the prospectus and sales
literature.

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

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

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

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

<PAGE>

and 25% to the increase. Thus, existing Policy Value associated with the
increase will equal the portion of Policy Value allocated to the increase on the
effective date of the increase, before any deductions are made. Premiums
associated with the increase will equal the portion of the premium payments
actually made on or after the effective date of the increase which are allocated
to the increase.

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

POLICY LOANS

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

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

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

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

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

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

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

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

<PAGE>

POLICY TERMINATION AND REINSTATEMENT

TERMINATION - The failure to make premium payments will not cause the Policy to
lapse unless: (a) the Surrender Value is insufficient to cover the next Monthly
Deduction plus loan interest accrued; or (b) Debt exceeds the Policy Value less
surrender charges. If one of these situations occurs, the Policy will be in
default. The Policyowner will then have a grace period of 62 days, measured from
the date of default, to make sufficient payments to prevent termination. On the
date of default, the Company will send a notice to the Policyowner 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 the Policyowner 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 last surviving Insured dies during the grace
period, the Death Proceeds will still be payable, but any Monthly Deductions due
and unpaid through the policy month in which the last surviving Insured dies and
any other overdue charge will be deducted from the Death Proceeds.

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

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

MINIMUM AMOUNT PAYABLE - If reinstatement is requested when less than 48 Monthly
Deductions have been made since the Date of Issue or the effective date of an
increase in the Face Amount, the Policyowner 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.

<PAGE>

Under B, the minimum amount payable is the sum of

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

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

If reinstatement is requested after 48 Monthly Deductions have been made since
the Date of Issue of the policy or any increase in the Face Amount, the
Policyowner 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.

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

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

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

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

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

<PAGE>

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

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

POSTPONEMENT OF PAYMENTS - Payments of any amount due from the Inheiritage
Account upon surrender, partial withdrawals, or death of the last surviving
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 trading on the New York Stock Exchange is
restricted as determined by the SEC or (b) an emergency exists, as determined by
the SEC, as a result of which disposal of securities is not reasonably
practicable or it is not reasonably practicable to determine the value of the
Inheiritage Account's net assets. Payments under the Policy of any amounts
derived from the premiums paid by check may be delayed until such time as the
check has cleared the bank.

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

<PAGE>

DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY

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 Director Mutual since, 1990; Vice President and
Medical Director, Phoenix Mutual Life
Insurance Company, 1988 to 1990

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

Lawrence E. Blanchard Vice President, State Mutual, since 1990;
Vice President 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
Vice President 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>

<TABLE>
<CAPTION>
Name and Position Principal Occupation(s) During Past Five Years
- --------------------------------- ----------------------------------------------
<S> <C>
Valentina T. Dingle Vice President, State Mutual, since 1994; AVP,
Vice President 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;
Vice President 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>

<PAGE>

Kruno Huitzingh Vice President & Chief Information Officer,
Vice President and State Mutual, since 1993; Executive Vice
Chief Information Officer President, Chicago Board Options Exchange,
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, General Counsel Assistant Secretary, State Mutual
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
Vice President, Associate General and Assistant Secretary, State Mutual
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>

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 Chief Officer, State Mutual, since 1989;
Executive Officer Director 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>

<PAGE>

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 President Vice 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,
Director Quabaug Corporation

James S. Wakefield Vice President, State Mutual, since 1995;
Vice President Vice 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;
Vice President Second 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 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 Inheiritage Account. Allmerica
Investments, Inc. is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities Dealers.
The Policies are sold by agents of the Company who are registered
representatives of Allmerica Investments, Inc.

The Company pays to registered representatives who sell the Policy commissions
based on a commission schedule. After issue of the Policy or an increase in
Face Amount, commissions generally will equal 50 percent of the first year
premiums up to a basic premium amount established by the Company. Thereafter,
commissions will generally equal 3.5 percent of any additional premiums.
Certain registered representatives, including registered representatives
enrolled in the Company's training program for new agents, may receive
additional first year and renewal commissions and training reimbursements.
General Agents of the Company and certain registered representatives may also be
eligible to receive expense reimbursements based on the amount of earned
commissions.

<PAGE>

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

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

LEGAL PROCEEDINGS

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

FURTHER INFORMATION

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

INDEPENDENT ACCOUNTANTS

The financial statements of the Company as of December 31, 1994 and 1993 and for
each of the three years in the period ended December 31, 1994 and of the
Inheiritage 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 death benefit payments, and on the economic
benefit to the Policyowner 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

<PAGE>

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 INHEIRITAGE 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 Inheiritage Account. Based on these expectations, no
charge is made for federal income taxes which may be attributable to the
Inheiritage Account.

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

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

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

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

<PAGE>

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

Depending upon the circumstances, a surrender, partial withdrawal, change in the
Sum Insured Option, change in the Face Amount, lapse with policy loan
outstanding, or assignment of the Policy may have tax consequences. In
particular, under specified conditions, a distribution under the Policy during
the first fifteen years from Date of Issue that reduces future benefits under
the Policy will be taxed to the 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.

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

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

If a Policy is considered a modified endowment contract, all distributions under
the Policy will be taxed on an "income first" basis. Most distributions
received by a 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. In addition, with certain
exceptions, an additional 10% tax will be imposed on the portion of any
distribution that is includible in income. All modified endowment contracts
issued by the same insurance company to the same 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. The refund process must be completed within 60 days after the
Policy anniversary, or the Policy will be permanently classified as a modified
endowment contract.

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

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

As a general rule, if an Insured is the Policyowner and Death Proceeds are
payable to a person two or more generations younger than the Policyowner, a
generation-skipping tax may be payable on the

<PAGE>

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

MORE INFORMATION ABOUT THE GENERAL ACCOUNT

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

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

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

GENERAL ACCOUNT VALUE - The Company bears the full investment risk for amounts
allocated to the General Account and guarantees that interest credited to each
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 Inheiritage Account. For
complete details regarding the General Account, see the Policy itself.

<PAGE>

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 30 days (10 days in New York) or more, the Company will
pay interest at least equal to an effective annual yield of 3.5% per year for
the period of deferment. Amounts from the General Account used to pay premiums
on policies with the Company will not be delayed.

FINANCIAL STATEMENTS

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

<PAGE>

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>
INHEIRITAGE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1994
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
1 2 3
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica
Investment Trust . . . . . . . . $ -- $ -- $ --
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) . . . . . . . . . . . . -- -- --
---------- ---------- ----------
Total assets . . . . . . . . . . -- -- --

LIABILITIES:
Payable to State Mutual Life
Assurance Company of
America(Sponsor). . . . . . . . . -- -- --
---------- ---------- ----------
Net assets . . . . . . . . . . . $ -- $ -- $ --
---------- ---------- ----------
---------- ---------- ----------

Net asset distribution by category:
Variable life policies . . . . . . $ -- $ -- $ --
Value of investment by State Mutual
Life Assurance Company of
America(Sponsor). . . . . . . . -- -- --
---------- ---------- ----------
$ -- $ -- $ --
---------- ---------- ----------
---------- ---------- ----------

Units outstanding, December 31, 1994 -- -- --
Net asset value per unit,
December 31, 1994. . . . . . . . $ -- $ -- $ --
</TABLE>

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

78
<PAGE>
INHEIRITAGE ACCOUNT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
4 5 6 7 8
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica
Investment Trust. . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ -- $ --

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). . . . . . . -- -- -- -- --
-------- -------- -------- -------- --------
Total assets. . . . . . . . . . . . . . . . . . . . -- -- -- -- --

LIABILITIES:
Payable to State Mutual Life Assurance
Company of America(Sponsor) . . . . . . . . . . . . -- -- -- -- --
-------- -------- -------- -------- --------
Net assets. . . . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ -- $ --
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . $ -- $ -- $ -- $ -- $ --
Value of investment by State Mutual
Life Assurance Company of America(Sponsor). . . . . -- -- -- -- --
-------- -------- -------- -------- --------
$ -- $ -- $ -- $ -- $ --
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Units outstanding, December 31, 1994 . . . . . . . . . -- -- -- -- --
Net asset value per unit, December 31, 1994. . . . . . $ -- $ -- $ -- $ -- $ --
</TABLE>

79
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES - DECEMBER 31, 1994, CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
9 11 102
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica
Investment Trust. . . . . . . . . . . . . . . . . $ -- $ 96 $ --
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). . . . . . . . . . . -- -- --
--------- --------- ---------
Total assets. . . . . . . . . . . . . . . . . . . -- 96 --

LIABILITIES:
Payable to State Mutual Life Assurance
Company of America(Sponsor) . . . . . . . . . . . -- -- --
--------- --------- ---------
Net assets. . . . . . . . . . . . . . . . . . . . $ -- $ 96 $ --
--------- --------- ---------
--------- --------- ---------

Net asset distribution by category:
Variable life policies. . . . . . . . . . . . . . $ -- $ -- $ --
Value of investment by State Mutual Life
Assurance Company of America(Sponsor). . . . . -- 96 --
--------- --------- ---------
$ -- $ 96 $ --
--------- --------- ---------
--------- --------- ---------

Units outstanding, December 31, 1994 . . . . . . . . -- 100 --
Net asset value per unit, December 31, 1994. . . . . $ -- $ .957836 $ --
</TABLE>

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

80
<PAGE>

INHEIRITAGE ACCOUNT

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
103 104 105 106 207
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investment in shares of Allmerica
Investment Trust. . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ -- $ --
Investment in shares of Fidelity
Variable Insurance Products Fund. . . . . . . . . -- -- -- 98 --
Investment in shares of Delaware
Group Premium Fund, Inc.. . . . . . . . . . . . . -- -- -- -- --
Receivable from State Mutual Life Assurance
Company of America (Sponsor). . . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total assets. . . . . . . . . . . . . . . . . . . -- -- -- 98 --

LIABILITIES:
Payable to State Mutual Life Assurance
Company of America(Sponsor) . . . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net assets. . . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ 98 $ --
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------

Net asset distribution by category:
Variable life policies. . . . . . . . . . . . . . $ -- $ -- $ -- $ -- $ --
Value of investment by State Mutual Life
Assurance Company of America(Sponsor) . . . . -- -- -- 98 --
---------- ---------- ---------- ---------- ----------
$ -- $ -- $ -- $ 98 $ --
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Units outstanding, December 31, 1994 . . . . . . . . -- -- -- 99 --
Net asset value per unit, December 31, 1994. . . . . $ -- $ -- $ -- $ .987728 $ --
</TABLE>

81
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 1994

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
1 2 3
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . $ -- $ -- $ --

EXPENSES:
Mortality and expense risk fees . . . . . . . . . . -- -- --
Administrative expense fees . . . . . . . . . . . . -- -- --
---------- ---------- ----------
Total expenses . . . . . . . . . . . . . . . . . -- -- --
---------- ---------- ----------

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

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain(loss) . . . . . . . . . . . . . . -- -- --
Net unrealized gain (loss). . . . . . . . . . . . . -- -- --
---------- ---------- ----------

Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . -- -- --
---------- ---------- ----------

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

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

82
<PAGE>
INHEIRITAGE ACCOUNT

EXPENSES:
Mortality and expense risk fees . . . . . . . . . -- -- -- -- --
Administrative expense fees . . . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total expenses . . . . . . . . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------

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

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain(loss) . . . . . . . . . . . . . -- -- -- -- --
Net unrealized gain (loss). . . . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------

Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------

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

83
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 1994, CONTINUED

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
9 11(a) 102
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . $ -- $ -- $ --

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

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain(loss) . . . . . . . . . . . . . . -- -- --
Net unrealized gain (loss). . . . . . . . . . . . . -- (4) --
---------- ---------- ----------

Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . -- (4) --
---------- ---------- ----------

Net increase(decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . $ -- $ (4) $ --
---------- ---------- ----------
---------- ---------- ----------
<FN>
(a) For the period May 2, 1994 (date of initial investment) to
December 31, 1994.
(b) For the period May 10, 1994 (date of initial investment) to
December 31, 1994.

</TABLE>

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

84
<PAGE>
INHEIRITAGE ACCOUNT

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
103 104 105 106(B) 207
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ -- $ --

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

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain(loss) . . . . . . . . . . . . . -- -- -- -- --
Net unrealized gain (loss). . . . . . . . . . . . -- -- -- (1) --
---------- ---------- ---------- ---------- ----------

Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . -- -- -- (1) --
---------- ---------- ---------- ---------- ----------

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

85
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT 1 SUB-ACCOUNT 2 SUB-ACCOUNT 3

- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . . . . . . . . $ -- $ -- $ --
Net realized gain (loss) from security
transactions . . . . . . . . . . . . . . . . . . . -- -- --
Net unrealized gain (loss) on investments . . . . . -- -- --
---------- ---------- ----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . -- -- --
---------- ---------- ----------
FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . . . . . . . . -- -- --
Terminations. . . . . . . . . . . . . . . . . . . . -- -- --
Other transfers from (to) the General Account
of the State Mutual Life Assurance Company
of America (Sponsor) . . . . . . . . . . . . . . . -- -- --
Net increase in investment by State Mutual Life
Assurance Company of America (Sponsor) . . . . . . -- -- --
---------- ---------- ----------
Net increase in net assets from capital
transactions . . . . . . . . . . . . . . . . . . . -- -- --
---------- ---------- ----------

Net increase in net assets. . . . . . . . . . . . . -- -- --

NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . -- -- --
---------- ---------- ----------
End of period . . . . . . . . . . . . . . . . . . . $ -- $ -- $ --
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

86
<PAGE>
INHEIRITAGE ACCOUNT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT 4 SUB-ACCOUNT 5 SUB-ACCOUNT 6 SUB-ACCOUNT 7 SUB-ACCOUNT 8

- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . . . . . $ -- $ -- $ -- $ -- $ --
Net realized gain (loss) from security
transactions . . . . . . . . . . . . . . . . -- -- -- -- --
Net unrealized gain (loss) on investments . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . . . . . -- -- -- -- --
Terminations. . . . . . . . . . . . . . . . . -- -- -- -- --
Other transfers from (to) the General Account
of the State Mutual Life Assurance Company
of America (Sponsor) . . . . . . . . . . . . -- -- -- -- --
Net increase in investment by State Mutual Life
Assurance Company of America (Sponsor) . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net increase in net assets from capital
transactions . . . . . . . . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------

Net increase in net assets. . . . . . . . . . -- -- -- -- --

NET ASSETS:
Beginning of period . . . . . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------
End of period . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
87
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT 9 SUB-ACCOUNT 11 SUB-ACCOUNT 102
FOR THE PERIOD
5/02/94* TO 12/31/94
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . . . . . . . . . . . . . $ -- $ -- $ --
Net realized gain (loss) from security transactions . . . . . -- -- --
Net unrealized gain (loss) on investments . . . . . . . . . . -- (4) --
---------- ---------- ----------

Net increase (decrease) in net assets from operations . . . . -- (4) --
---------- ---------- ----------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . . . . . . . . . . . . . -- -- --
Terminations . . . . . . . . . . . . . . . . . . . . . . . . -- -- --
Other transfers from (to) the General Account of State
Mutual Life Assurance Company of America (Sponsor) . . . . -- -- --
Net increase in investment by State Mutual Life
Assurance Company of America (Sponsor) . . . . . . . . . . -- 100 --
---------- ---------- ----------

Net increase in net assets from capital transactions. . . . . -- 100 --
---------- ---------- ----------

Net increase in net assets . . . . . . . . . . . . . . . . . -- 96 --

NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . -- -- --
---------- ---------- ----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ 96 $ --
---------- ---------- ----------
---------- ---------- ----------

<FN>

* Date of initial investment.

</TABLE>

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

88
<PAGE>
INHEIRITAGE ACCOUNT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT 106 SUB-ACCOUNT
103 104 105 FOR THE PERIOD 207
5/10/94* TO 12/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS:
Net investment income (loss). . . . . . . $ -- $ -- $ -- $ -- $ --
Net realized gain (loss) from security
transactions . . . . . . . . . . . . . . -- -- -- -- --
Net unrealized gain (loss) on
investments. . . . . . . . . . . . . . . -- -- -- (1) --
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
from operations. . . . . . . . . . . . . -- -- -- (1) --
---------- ---------- ---------- ---------- ----------

FROM CAPITAL TRANSACTIONS:
Net premiums. . . . . . . . . . . . . . . -- -- -- -- --
Terminations. . . . . . . . . . . . . . . -- -- -- -- --
Other transfers from (to) the General
Account of the State Mutual Life
Assurance Company of America
(Sponsor). . . . . . . . . . . . . . . . -- -- -- -- --
Net increase in investment by State
Mutual Life Assurance Company of
America (Sponsor). . . . . . . . . . . . -- -- -- 99 --
---------- ---------- ---------- ---------- ----------
Net increase in assets from capital
transactions . . . . . . . . . . . . . . -- -- -- 99 --
---------- ---------- ---------- ---------- ----------

Net increase in net assets. . . . . . . . -- -- -- 98 --

NET ASSETS:
Beginning of period . . . . . . . . . . . -- -- -- -- --
---------- ---------- ---------- ---------- ----------
End of period . . . . . . . . . . . . . . $ -- $ -- $ -- $ 98 $ --
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>

89
<PAGE>
INHEIRITAGE ACCOUNT
NOTES TO FINANCIAL STATEMENTS - December 31, 1994

NOTE 1 - ORGANIZATION

The Inheiritage Account (Inheiritage) is a separate investment account of
State Mutual Life Assurance Company of America (the Company), established on May
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 Inheiritage are clearly identified and distinguished from the
other assets and liabilities of the Company. Inheiritage cannot be charged with
liabilities arising out of any other business of the Company.

Inheiritage is registered as a unit investment trust under the Investment
Company Act of 1940, as amended (the 1940 Act). Inheiritage currently offers
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 of 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 Inheiritage. Therefore, no provision for income taxes has been
charged against Inheiritage.

90
<PAGE>
INHEIRITAGE 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:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PORTFOLIO INFORMATION
SUB- INVESTMENT NUMBER OF AGGREGATE NET ASSET
ACCOUNT PORTFOLIO SHARES COST VALUE PER SHARE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allmerica Investment Trust:
1 Growth . . . . . . . . . . . . . . . . . -- $ -- $ --
2 Investment Grade Income. . . . . . . . . -- -- --
3 Money Market . . . . . . . . . . . . . . -- -- --
4 Equity Index . . . . . . . . . . . . . . -- -- --
5 Government Bond. . . . . . . . . . . . . -- -- --
6 Select Aggressive Growth . . . . . . . . -- -- --
7 Select Growth. . . . . . . . . . . . . . -- -- --
8 Select Growth and Income . . . . . . . . -- -- --
9 Small Cap Value. . . . . . . . . . . . . -- -- --
11 Select International Equity. . . . . . . 99 100 0.963

Fidelity Variable Insurance Products Fund:
102 High Income. . . . . . . . . . . . . . . -- -- --
103 Equity Income. . . . . . . . . . . . . . -- -- --
104 Growth . . . . . . . . . . . . . . . . . -- -- --
105 Overseas . . . . . . . . . . . . . . . . -- -- --

Fidelity Variable Insurance Products
Fund II:
106 Asset Manager. . . . . . . . . . . . . . 7 99 13.790

Delaware Group Premium Fund:
207 International Equities . . . . . . . . . -- -- --
</TABLE>
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
$6. The policyowner may instruct the Company to deduct this monthly charge from
a specific Sub-Account,

91
<PAGE>
INHEIRITAGE ACCOUNT
NOTES TO FINANCIAL STATEMENTS - December 31, 1994, Continued

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, there were no monthly deductions from sub-account
policy values.

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 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. The total 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.

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

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.

92
<PAGE>
INHEIRITAGE ACCOUNT
NOTES TO FINANCIAL STATEMENTS - December 31, 1994, Continued

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

NOTE 6 - PURCHASES AND SALES OF SECURITIES

Cost of purchases and proceeds from sales of the Trust, VIPF, VIPF II and
DGPF shares by Inheiritage during the period ended December 31, 1994 were as
follows:
<TABLE>
<CAPTION>
SUB-
ACCOUNT INVESTMENT PORTFOLIO PURCHASES SALES
------- -------------------- -------------- --------
<S> <C> <C> <C>
Allmerica Investment Trust:
1 Growth. . . . . . . . . . . . . . . $ -- $ --
2 Investment Grade Income . . . . . . -- --
3 Money Market . . . . . . . . . . . -- --
4 Equity Index. . . . . . . . . . . . -- --
5 Government Bond . . . . . . . . . . -- --
6 Select Aggressive Growth . . . . . -- --
7 Select Growth . . . . . . . . . . . -- --
8 Select Growth and Income. . . . . . -- --
9 Small Cap Value . . . . . . . . . . -- --
11 Select International Equity . . . . 100 --

Fidelity Variable Insurance Products Fund:
102 High Income.. . . . . . . . . . . . -- --
103 Equity Income.. . . . . . . . . . . -- --
104 Growth. . . . . . . . . . . . . . . -- --
105 Overseas. . . . . . . . . . . . . . -- --

Fidelity Variable Insurance Products Fund II:
106 Asset Manager . . . . . . . . . . . 99 --

Delaware Group Premium Fund:
207 International Equities. . . . . . . -- --
-------------- --------

Totals. . . . . . . . . . . . . . . $ 199 $ --
-------------- --------
-------------- --------
</TABLE>

93
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of State Mutual Life
Assurance Company of America and Policyowners
of Inheiritage 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
Inheiritage 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 Fund, provide a reasonable basis
for the opinion expressed above.

Price Waterhouse LLP
Boston, Massachusetts

February 13, 1995

<PAGE>

APPENDIX A - OPTIONAL BENEFITS

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

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

SPLIT OPTION RIDER

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

OTHER INSURED RIDER

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

FOUR-YEAR TERM RIDER

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

APPENDIX B - PAYMENT OPTIONS

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

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

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

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

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

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

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

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

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

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

<PAGE>

elapsed (Life Annuity with Period Certain).

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

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

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

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

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

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

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

The Policyowner 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.

<PAGE>

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.

<PAGE>

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

The tables on pages 93-96 illustrate the way in which a Policy's Sum Insured and
Policy Value could vary over an extended period of time. They assume that all
premiums are allocated to and remain in the Inheiritage Account for the entire
period shown and are based on hypothetical gross investment rates of return for
the Underlying Fund (i.e., investment income and capital gains and losses,
realized or unrealized) equivalent to constant gross (after tax) annual rates of
0%, 6%, and 12%.

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

The columns on pages 93 and 95 are based on the guaranteed cost of insurance
rates; columns on pages 94 and 96 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 Inheiritage Account,
if the actual rates of return averaged 0%, 6% or 12, but the rates of each
Underlying Fund varied above and below such averages.

The amounts shown for the Death Proceeds and Policy Values take into account the
deduction from premium for the tax expense charge, the Monthly Deduction from
Policy Value, and the daily charge against the Inheiritage Account for mortality
and expense risks and the Inheiritage Account administrative charge for the
first fifteen Policy years, equivalent to an effective annual rate of 1.15% of
the average daily value of the assets in the Inheiritage Account attributable to
the Policies, and 0.90% thereafter. The amounts shown in the tables also take
into account the Underlying Investment Company advisory fees and operating
expenses, which are assumed to be at an annual rate of 0.85% of the average
daily net assets of the Underlying Investment Company. The actual fees and
expenses of each Underlying Investment Company vary, and in 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 Inheiritage
Account administrative charge and the assumed 0.85% charge for Underlying
Investment Company advisory fees and operating expenses, the gross annual rates
of investment return of 0%, 6% and 12% correspond to net annual rates of -2.00%,
4.00%, 10.00%, respectively, during the first 15 Policy years and -1.75%, 4.25%
and 10.25%, respectively, thereafter.

The hypothetical returns shown in the table do not reflect any charges for
income taxes against the Inheiritage Account since no charges are currently
made. However, if in the future such charges are made, in order to produce
illustrated death benefits and cash values, the gross annual investment

<PAGE>

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 the Policyowner has not
requested an increase or decrease in the initial Face Amount, that no partial
withdrawals have been made, and that no transfers above 6 have been made in any
Policy year (so that no transaction or transfer charges have been incurred).

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

TO CHOOSE THE SUB-ACCOUNTS WHICH WILL BEST MEET THE POLICYOWNER'S NEEDS AND
OBJECTIVES, CAREFULLY READ THE PROSPECTUSES OF THE TRUST, VIPF, VIPF II, T. ROWE
AND DGPF ALONG WITH THIS PROSPECTUS.

<PAGE>

GUARANTEED COST OF INSURANCE CHARGES

Insured 1: Male Nonsmoker Issue Age 55
Insured 2: Female Nonsmoker Issue Age 55
$1,000,000 Sum Insured Option 1

<TABLE>
<CAPTION>
Hypothetical Gross 0% Hypothetical Gross 6% Hypothetical Gross 12%

Policy Premium Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year + Interest Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 0 9,378 1,000,000 0 9,956 1,000,000 0 10,533 1,000,000
2 21,525 5,833 18,460 1,000,000 7,570 20,198 1,000,000 9,378 22,005 1,000,000
3 33,101 8,230 27,230 1,000,000 11,715 30,715 1,000,000 15,485 34,485 1,000,000
4 45,256 17,429 35,669 1,000,000 23,254 41,494 1,000,000 29,812 48,052 1,000,000
5 58,019 26,654 43,754 1,000,000 35,416 52,516 1,000,000 45,684 62,784 1,000,000
6 71,420 35,496 51,456 1,000,000 47,795 63,755 1,000,000 62,804 78,764 1,000,000
7 85,491 43,917 58,737 1,000,000 60,355 75,175 1,000,000 81,257 96,077 1,000,000
8 100,266 51,864 65,544 1,000,000 73,044 86,724 1,000,000 101,120 114,800 1,000,000
9 115,779 59,263 71,803 1,000,000 85,791 98,331 1,000,000 122,467 135,007 1,000,000
10 132,068 66,028 77,428 1,000,000 98,505 109,905 1,000,000 145,367 156,767 1,000,000
11 149,171 73,205 82,325 1,000,000 112,227 121,347 1,000,000 171,037 180,157 1,000,000
12 167,130 79,549 86,389 1,000,000 125,707 132,547 1,000,000 198,425 205,265 1,000,000
13 185,986 84,952 89,512 1,000,000 138,828 143,388 1,000,000 227,639 232,199 1,000,000
14 205,786 89,299 91,579 1,000,000 151,464 153,744 1,000,000 258,808 261,088 1,000,000
15 226,575 92,446 92,446 1,000,000 163,461 163,461 1,000,000 292,068 292,068 1,000,000
16 248,404 92,151 92,151 1,000,000 172,745 172,745 1,000,000 326,020 326,020 1,000,000
17 271,324 90,086 90,086 1,000,000 180,855 180,855 1,000,000 362,431 362,431 1,000,000
18 295,390 86,023 86,023 1,000,000 187,545 187,545 1,000,000 401,567 401,567 1,000,000
19 320,660 79,387 79,387 1,000,000 192,252 192,252 1,000,000 443,553 443,553 1,000,000
20 347,193 69,589 69,589 1,000,000 194,383 194,383 1,000,000 488,645 488,645 1,000,000
Age 60 58,019 26,654 43,754 1,000,000 35,416 52,516 1,000,000 45,684 62,784 1,000,000
Age 65 132,068 66,028 77,428 1,000,000 98,505 109,905 1,000,000 145,367 156,767 1,000,000
Age 70 226,575 92,446 92,446 1,000,000 163,461 163,461 1,000,000 292,068 292,068 1,000,000
Age 75 347,193 69,589 69,589 1,000,000 194,383 194,383 1,000,000 488,645 488,645 1,000,000

<FN>

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

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

</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.

<PAGE>

CURRENT COST OF INSURANCE CHARGES

Insured 1: Male Nonsmoker Issue Age 55
Insured 2: Female Nonsmoker Issue Age 55
$1,000,000 Sum Insured Option 1

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

Policy Premium Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year + Interest Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 0 9,381 1,000,000 0 9,959 1,000,000 0 10,537 1,000,000
2 21,525 5,854 18,481 1,000,000 7,592 20,220 1,000,000 9,400 22,028 1,000,000
3 33,101 8,294 27,294 1,000,000 11,783 30,783 1,000,000 15,557 34,557 1,000,000
4 45,256 17,576 35,816 1,000,000 23,411 41,651 1,000,000 29,979 48,219 1,000,000
5 58,019 26,943 44,043 1,000,000 35,727 52,827 1,000,000 46,019 63,119 1,000,000
6 71,420 36,013 51,973 1,000,000 48,358 64,318 1,000,000 63,417 79,377 1,000,000
7 85,491 44,781 59,601 1,000,000 61,304 76,124 1,000,000 82,298 97,118 1,000,000
8 100,266 53,240 66,920 1,000,000 74,567 88,247 1,000,000 102,804 116,484 1,000,000
9 115,779 61,376 73,916 1,000,000 88,144 100,684 1,000,000 125,084 137,624 1,000,000
10 132,068 69,180 80,580 1,000,000 102,034 113,434 1,000,000 149,310 160,710 1,000,000
11 149,171 77,673 86,793 1,000,000 117,267 126,387 1,000,000 176,705 185,825 1,000,000
12 167,130 85,664 92,504 1,000,000 132,661 139,501 1,000,000 206,297 213,137 1,000,000
13 185,986 93,108 97,668 1,000,000 148,175 152,735 1,000,000 238,282 242,842 1,000,000
14 205,786 99,953 102,233 1,000,000 163,765 166,045 1,000,000 272,879 275,159 1,000,000
15 226,575 106,139 106,139 1,000,000 179,377 179,377 1,000,000 310,334 310,334 1,000,000
16 248,404 109,616 109,616 1,000,000 193,153 193,153 1,000,000 349,456 349,456 1,000,000
17 271,324 112,239 112,239 1,000,000 206,830 206,830 1,000,000 392,180 392,180 1,000,000
18 295,390 113,957 113,957 1,000,000 220,368 220,368 1,000,000 438,935 438,935 1,000,000
19 320,660 114,556 114,556 1,000,000 233,584 233,584 1,000,000 490,114 490,114 1,000,000
20 347,193 113,847 113,847 1,000,000 246,316 246,316 1,000,000 546,228 546,228 1,000,000
Age 60 58,019 26,943 44,043 1,000,000 35,727 52,827 1,000,000 46,019 63,119 1,000,000
Age 65 132,068 69,180 80,580 1,000,000 102,034 113,434 1,000,000 149,310 160,710 1,000,000
Age 70 226,575 106,139 106,139 1,000,000 179,377 179,377 1,000,000 310,334 310,334 1,000,000
Age 75 347,193 113,847 113,847 1,000,000 246,316 246,316 1,000,000 546,228 546,228 1,000,000

<FN>

(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>

<PAGE>

GUARANTEED COST OF INSURANCE CHARGES

Insured 1: Male Nonsmoker Issue Age 55
Insured 2: Female Nonsmoker Issue Age 55
$1,000,000 Sum Insured Option 2

<TABLE>
<CAPTION>
Hypothetical Gross 0% Hypothetical Gross 6% Hypothetical Gross 12%

Policy Premium Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year + Interest Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 0 9,378 1,009,378 0 9,955 1,009,955 0 10,533 1,010,533
2 21,525 5,829 18,457 1,018,457 7,567 20,194 1,020,194 9,373 22,001 1,022,001
3 33,101 8,218 27,218 1,027,218 11,702 30,702 1,030,702 15,471 34,471 1,034,471
4 45,256 17,401 35,641 1,035,641 23,221 41,461 1,041,461 29,773 48,013 1,048,013
5 58,019 26,598 43,698 1,043,698 35,346 52,446 1,052,446 45,599 62,699 1,062,699
6 71,420 35,394 51,354 1,051,354 47,664 63,624 1,063,624 62,640 78,600 1,078,600
7 85,491 43,746 58,566 1,058,566 60,128 74,948 1,074,948 80,960 95,780 1,095,780
8 100,266 51,592 65,272 1,065,272 72,672 86,352 1,086,352 100,613 114,293 1,114,293
9 115,779 58,849 71,389 1,071,390 85,203 97,743 1,097,743 121,633 134,173 1,134,174
10 132,068 65,419 76,819 1,076,819 97,604 109,004 1,109,004 144,039 155,439 1,155,439
11 149,171 72,331 81,451 1,081,451 110,886 120,006 1,120,006 168,978 178,098 1,178,098
12 167,130 78,327 85,167 1,085,167 123,757 130,597 1,130,597 195,307 202,147 1,202,147
13 185,986 83,285 87,845 1,087,845 136,056 140,616 1,140,616 223,013 227,573 1,227,573
14 205,786 87,077 89,357 1,089,357 147,606 149,886 1,149,886 252,078 254,358 1,254,358
15 226,575 89,544 89,544 1,089,544 158,191 158,191 1,158,191 282,442 282,442 1,282,442
16 248,404 88,421 88,421 1,088,421 165,643 165,643 1,165,643 312,411 312,411 1,312,411
17 271,324 85,365 85,365 1,085,365 171,395 171,395 1,171,395 343,372 343,372 1,343,372
18 295,390 80,154 80,154 1,080,154 175,111 175,111 1,175,111 375,156 375,156 1,375,156
19 320,660 72,211 72,211 1,072,211 176,069 176,069 1,176,069 407,191 407,191 1,407,191
20 347,193 60,983 60,983 1,060,983 173,532 173,532 1,173,532 438,864 438,864 1,438,864
Age 60 58,019 26,598 43,698 1,043,698 35,346 52,446 1,052,446 45,599 62,699 1,062,699
Age 65 132,068 65,419 76,819 1,076,819 97,604 109,004 1,109,004 144,039 155,439 1,155,439
Age 70 226,575 89,544 89,544 1,089,544 158,191 158,191 1,158,191 282,442 282,442 1,282,442
Age 75 347,193 60,983 60,983 1,060,983 173,532 173,532 1,173,532 438,864 438,864 1,438,864

<FN>

(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>

<PAGE>

CURRENT COST OF INSURANCE CHARGES

Insured 1: Male Nonsmoker Issue Age 55
Insured 2: Female Nonsmoker Issue Age 55
$1,000,000 Sum Insured Option 2

<TABLE>
<CAPTION>
Hypothetical Gross 0% Hypothetical Gross 6% Hypothetical Gross 12%

Policy Premium Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year + Interest Value Value Benefit Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 0 9,381 1,009,381 0 9,959 1,009,959 0 10,536 1,010,536
2 21,525 5,851 18,478 1,018,478 7,589 20,216 1,020,216 9,397 22,024 1,022,024
3 33,101 8,284 27,284 1,027,284 11,771 30,771 1,030,772 15,544 34,544 1,034,544
4 45,256 17,553 35,793 1,035,793 23,384 41,624 1,041,624 29,947 48,187 1,048,187
5 58,019 26,898 43,998 1,043,998 35,672 52,772 1,052,772 45,952 63,052 1,063,052
6 71,420 35,935 51,895 1,051,895 48,257 64,217 1,064,218 63,290 79,250 1,079,250
7 85,491 44,655 59,475 1,059,475 61,137 75,957 1,075,957 82,079 96,899 1,096,899
8 100,266 53,049 66,729 1,066,729 74,306 87,986 1,087,986 102,447 116,127 1,116,127
9 115,779 61,100 73,640 1,073,640 87,751 100,291 1,100,291 124,527 137,067 1,137,067
10 132,068 68,795 80,195 1,080,195 101,464 112,864 1,112,864 148,468 159,868 1,159,869
11 149,171 77,139 86,259 1,086,260 116,448 125,568 1,125,569 175,448 184,568 1,184,568
12 167,130 84,935 91,775 1,091,775 131,499 138,339 1,138,339 204,441 211,281 1,211,281
13 185,986 92,125 96,685 1,096,685 146,550 151,110 1,151,110 235,579 240,139 1,240,139
14 205,786 98,649 100,929 1,100,929 161,524 163,804 1,163,805 268,998 271,278 1,271,278
15 226,575 104,435 104,435 1,104,435 176,332 176,332 1,176,332 304,835 304,835 1,304,835
16 248,404 107,418 107,418 1,107,418 189,064 189,064 1,189,064 341,748 341,748 1,341,748
17 271,324 109,435 109,435 1,109,435 201,393 201,393 1,201,393 381,473 381,473 1,381,473
18 295,390 110,429 110,429 1,110,429 213,227 213,227 1,213,227 424,217 424,217 1,424,217
19 320,660 110,160 110,160 1,110,160 224,277 224,277 1,224,277 470,016 470,016 1,470,016
20 347,193 108,421 108,421 1,108,421 234,274 234,274 1,234,274 518,940 518,940 1,518,940
Age 60 58,019 26,898 43,998 1,043,998 35,672 52,772 1,052,772 45,952 63,052 1,063,052
Age 65 132,068 68,795 80,195 1,080,195 101,464 112,864 1,112,864 148,468 159,868 1,159,869
Age 70 226,575 104,435 104,435 1,104,435 176,332 176,332 1,176,332 304,835 304,835 1,304,835
Age 75 347,193 108,421 108,421 1,108,421 234,274 234,274 1,234,274 518,940 518,940 1,518,940

<FN>

(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>

<PAGE>

APPENDIX D - CALCULATION OF MAXIMUM SURRENDER CHARGES

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

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

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

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

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

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

<PAGE>

INITIAL MAXIMUM SURRENDER CHARGE PER $1,000 FACE AMOUNT

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

</TABLE>

<PAGE>

EXAMPLES

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

(a)Deferred Administrative Charge $8,500.00
($8.50/$1,000 of Face Amount)

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

TOTAL $24,281.99

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

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

(a) Deferred Administrative Charge $8,500.00
($8.50/$1,000 of Face Amount)

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

The maximum surrender charge is $19,000. All premiums are associated with the
initial face amount unless the face amount is increased.

EXAMPLE 1:

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

EXAMPLE 2:

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

<PAGE>
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 mutual 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
second-to-die 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 second-to-die
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.

II-1

<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
Inheiritage 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 consists 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.

II-2

<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 establishing the Inheiritage Account
was previously filed on May 11, 1992 in Registration Statement
No. 33-47858 and is herein incorporated by reference.

(2) Not Applicable.

(3) (a) Form of Sales and Administrative Services Agreement
between the Company and Allmerica Investments, Inc.
was previously filed on January 21, 1994 and is herein
incorporated by reference.

(b) Registered Representative Agreement and Resident Sponsor
Agreement of Allmerica Investment, Inc. (formerly "SMA
Equities, Inc.") were previously filed by the Company on
June 3, 1987 Registration No. 33-14672, and are
incorporated herein by reference.

(4) Not Applicable.

(5) Form of Policy and Policy riders were previously filed on
January 21, 1994 and are incorporated herein 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 by the Company 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 by the Company on
December 27, 1991 in Registration Statement No. 33-44830,
and is incorporated herein by reference.

II-3

<PAGE>

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

(9) Not Applicable.

(10) Form of Application was previously filed on January 21, 1994 and
is herein incorporated by reference.

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

3. Opinion of Counsel.

4. Not Applicable.

5. Not Applicable.

6. The 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 January 21, 1994 and is
herein incorporated 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.

II-4

<PAGE>

FORM S-6 EXHIBIT TABLE

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

Exhibit 3 Opinion of Counsel

Exhibit 8 Consent of Independent Accountants

II-5

<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
INHEIRITAGE 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.
<TABLE>
<CAPTION>

Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ John F. O Brien Director, President and October 10, 1995
- ------------------------- Chief Executive Officer
John F. O'Brien

/s/ Eric A. Simonsen Vice President and
- ------------------------- Chief Financial Officer
Eric A. Simonsen

/s/ Mark R. Colborn Vice President and
- ------------------------ Controller
Mark R. Colborn

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.

</TABLE>

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

II-6

<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 , 19 ,
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 (508) 855-4194
. . . . . . . . . . . . . . . . . . . . . . . .
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.

-6A-

<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;

-6B-

<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.

-6C-

<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.

-6D-

<PAGE>

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

-7A-
<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.

-2-

<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.

-3-

<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.

-4-

<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.

-5-

<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

-6-

<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

-7-

<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

-8-

<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

-9-

<PAGE>

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 10, 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 the Post-Effective
Amendment to the Registration Statement for the Inheiritage Account on Form S-6
under the Securities Act of 1933 with respect to the Company's Second-To-Die
Flexible Premium Variable Life Insurance Policies.

I am of the following opinion:

1. The Inheiritage 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 Inheiritage Account equal to the reserves in other
policy liabilities of the Policies which are supported by the Inheiritage
Account are not chargeable with liabilities arising out of any other
business the Company may conduct.

3. The 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 Inheiritage 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>

Exhibit 10

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 Inheiritage 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>
<ARTICLE> 6
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<NAME> SM VEL II SUB-ACCOUNT 001

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<PAGE>
<ARTICLE> 6
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<NAME> SM VEL II SUB-ACCOUNT 002

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 68,527
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<EXPENSES-NET> 175
<NET-INVESTMENT-INCOME> 1,366
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</TABLE>

<PAGE>
<ARTICLE> 6
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<NAME> SM VEL II SUB-ACCOUNT 003

<S> <C>
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</TABLE>

<PAGE>
<ARTICLE> 6
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<NAME> SM VEL II SUB-ACCOUNT 004

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<NET-CHANGE-FROM-OPS> (197)
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</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 105
<NAME> SM VEL II SUB-ACCOUNT 005

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 155,804
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,305)
<NET-ASSETS> 153,360
<DIVIDEND-INCOME> 2,751
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<NET-INVESTMENT-INCOME> 2,437
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<APPREC-INCREASE-CURRENT> (2,305)
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<NET-CHANGE-IN-ASSETS> 153,360
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<PER-SHARE-NAV-BEGIN> 1.000
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<PER-SHARE-NAV-END> 1.017
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</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 106
<NAME> SM VEL II SUB-ACCOUNT 006

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 135,414
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<SHARES-COMMON-STOCK> 145,112
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<ACCUM-APPREC-OR-DEPREC> 563
<NET-ASSETS> 136,789
<DIVIDEND-INCOME> 0
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<EXPENSES-NET> 574
<NET-INVESTMENT-INCOME> (574)
<REALIZED-GAINS-CURRENT> (10)
<APPREC-INCREASE-CURRENT> 563
<NET-CHANGE-FROM-OPS> (21)
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 136,789
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<AVERAGE-NET-ASSETS> 68,395
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> (.004)
<PER-SHARE-GAIN-APPREC> (.053)
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> .943
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</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 107
<NAME> SM VEL II SUB-ACCOUNT 007

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 37,310
<INVESTMENTS-AT-VALUE> 37,357
<RECEIVABLES> 693
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<SHARES-COMMON-STOCK> 38,177
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<ACCUM-APPREC-OR-DEPREC> 47
<NET-ASSETS> 38,050
<DIVIDEND-INCOME> 113
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<EXPENSES-NET> 57
<NET-INVESTMENT-INCOME> 56
<REALIZED-GAINS-CURRENT> 23
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<PER-SHARE-NAV-END> .997
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</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 108
<NAME> SM VEL II SUB-ACCOUNT 008

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 55,526
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<ACCUM-APPREC-OR-DEPREC> (2,617)
<NET-ASSETS> 52,933
<DIVIDEND-INCOME> 1,673
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<EXPENSES-NET> 222
<NET-INVESTMENT-INCOME> 1,451
<REALIZED-GAINS-CURRENT> (24)
<APPREC-INCREASE-CURRENT> (2,617)
<NET-CHANGE-FROM-OPS> (1,190)
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</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 109
<NAME> SM VEL II SUB-ACCOUNT 009

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
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<ACCUM-APPREC-OR-DEPREC> (1,797)
<NET-ASSETS> 84,846
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<NET-INVESTMENT-INCOME> (48)
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</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 110
<NAME> SM VEL II SUB-ACCOUNT 011

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
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<ACCUM-APPREC-OR-DEPREC> (537)
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<NET-INVESTMENT-INCOME> (14)
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</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 111
<NAME> SM VEL II SUB-ACCOUNT 102

<S> <C>
<PERIOD-TYPE> YEAR
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<ACCUM-APPREC-OR-DEPREC> (163)
<NET-ASSETS> 94,257
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<NET-INVESTMENT-INCOME> (379)
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</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 112
<NAME> SM VEL II SUB-ACCOUNT 103

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
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</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 113
<NAME> SM VEL II SUB-ACCOUNT 104

<S> <C>
<PERIOD-TYPE> YEAR
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<NET-INVESTMENT-INCOME> (670)
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<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 114
<NAME> SM VEL II SUB-ACCOUNT 105

<S> <C>
<PERIOD-TYPE> YEAR
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<NET-INVESTMENT-INCOME> (925)
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<APPREC-INCREASE-CURRENT> (5,398)
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<NET-CHANGE-IN-ASSETS> 212,126
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 106,063
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> (.004)
<PER-SHARE-GAIN-APPREC> (.008)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> .988
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 115
<NAME> SM VEL II SUB-ACCOUNT 106

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 193,580
<INVESTMENTS-AT-VALUE> 188,737
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<TOTAL-ASSETS> 188,737
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<TOTAL-LIABILITIES> 110
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 190,971
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4,843)
<NET-ASSETS> 188,627
<DIVIDEND-INCOME> 27
<INTEREST-INCOME> 0
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<EXPENSES-NET> 524
<NET-INVESTMENT-INCOME> (497)
<REALIZED-GAINS-CURRENT> 39
<APPREC-INCREASE-CURRENT> (4,843)
<NET-CHANGE-FROM-OPS> (5,301)
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<DISTRIBUTIONS-OF-INCOME> 0
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<NET-CHANGE-IN-ASSETS> 188,627
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<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 94,314
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> (.003)
<PER-SHARE-GAIN-APPREC> (.009)
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> .988
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 116
<NAME> SM VEL II SUB-ACCOUNT 207

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 56,605
<INVESTMENTS-AT-VALUE> 55,765
<RECEIVABLES> 487
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<TOTAL-ASSETS> 56,252
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 0
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<SHARES-COMMON-PRIOR> 0
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<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (840)
<NET-ASSETS> 56,252
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
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<EXPENSES-NET> 192
<NET-INVESTMENT-INCOME> (192)
<REALIZED-GAINS-CURRENT> (4)
<APPREC-INCREASE-CURRENT> (840)
<NET-CHANGE-FROM-OPS> (1,036)
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 56,252
<ACCUMULATED-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 28,126
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> (.003)
<PER-SHARE-GAIN-APPREC> .011
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>