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USAA Life Insurance Company Variable Annuity
SUPPLEMENT dated July 9, 1998
to PROSPECTUS dated May 1, 1998
of Separate Account of USAA Life Insurance Company
This supplement amends certain disclosures contained in the Prospectus.
Please retain it for future reference.
Special Investment Considerations
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The section entitled "special considerations," located on page 14A, is revised
to read as follows:
The Scudder Fund, the Alger Fund, and the BT Funds offer shares to separate
accounts of unaffiliated life insurance companies to fund benefits under
variable annuity contracts and variable life insurance policies. The Trust
offers its shares to separate accounts of the Company to fund benefits under
the Contracts and variable life insurance policies. The Company does not
foresee any disadvantage to Contract Owners arising out of these arrangements.
Nevertheless, differences in treatment under tax and other laws, as well as
other considerations, could cause the interests of various purchasers of
contracts and policies to conflict. For example, violation of the federal tax
laws by one separate account investing in a Mutual Fund could cause the
contracts or policies funded through another separate account to lose their
tax-deferred status, unless remedial action were taken. If a material
irreconcilable conflict arises between separate accounts, a separate account
may be required to withdraw its participation in a Mutual Fund. If it becomes
necessary for any separate account to replace shares of a Mutual Fund with
another investment, the Mutual Fund may have to liquidate portfolio securities
on a disadvantageous basis. At the same time, the Scudder Fund, the Alger
Fund, the BT Funds, and the Company are subject to conditions imposed by the
Securities and Exchange Commission that are designed to prevent or remedy any
conflict of interest. The Trust, which is not subject to such conditions, has
nevertheless adopted certain procedures that substantially reflect and
implement the substance of such conditions. In this connection, the Board of
Trustees of each Mutual Fund has the obligation to monitor events in order to
identify any material irreconcilable conflict that may possibly arise and to
determine what action, if any, should be taken to remedy or eliminate the
conflict.
Texas Optional Retirement Program
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A new sentence is inserted in the section entitled "Texas Optional Retirement
Program ("ORP")" located on page 31A, immediately following the first sentence
of the first paragraph as follows:
The ORP provisions contained in this Prospectus are applicable to those Texas
institutions of higher education who have approved the Contract as a funding
vehicle.
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The second sentence of the third paragraph in the section entitled "Texas
Optional Retirement Program ("ORP")" located on page 32A, is deleted so that
the paragraph now reads as follows:
ALL QUALIFIED PLANS REFERENCED IN THIS PROSPECTUS INCLUDE SPECIAL PROVISIONS
CHANGING OR RESTRICTING CERTAIN RIGHTS AND BENEFITS OTHERWISE AVAILABLE TO
NONQUALIFIED PLANS FUNDED BY THE CONTRACT. YOU SHOULD CAREFULLY READ YOUR
CONTRACT, RIDERS AND ENDORSEMENTS TO REVIEW SUCH CHANGES OR LIMITATIONS.
ADDITIONAL CHANGES AND LIMITATIONS MAY APPEAR IN ANY OTHER QUALIFIED PLAN
DOCUMENTS OR IN LAWS OR REGULATIONS APPLICABLE TO QUALIFIED PLANS. THE CHANGES
AND LIMITATIONS MAY INCLUDE: RESTRICTIONS ON OWNERSHIP, TRANSFERABILITY,
ASSIGNABILITY, CONTRIBUTIONS, DISTRIBUTIONS, AS WELL AS REDUCTIONS TO THE
MINIMUM ALLOWABLE PREMIUM PAYMENT FOR AN ANNUITY CONTRACT AND ANY SUBSEQUENT
ANNUITY YOU MAY PURCHASE FOR USE AS A QUALIFIED PLAN. ADDITIONALLY, VARIOUS
PENALTY AND EXCISE TAXES MAY APPLY TO CONTRIBUTIONS OR DISTRIBUTIONS MADE IN
VIOLATION OF APPLICABLE LIMITATIONS.
