CG VARIABLE ANNUITY SEPARATE ACCOUNT II, 485BPOS, 1997-04-22

CG VARIABLE ANNUITY SEPARATE ACCOUNT II
485BPOS, 1997-04-22

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1997

1933 Act Registration No. 33-83020
1940 Act Registration No. 811-8714
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

PRE-EFFECTIVE AMENDMENT NO.

POST-EFFECTIVE AMENDMENT NO. 7 /X/

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/

AMENDMENT NO. 8 /X/

CG VARIABLE ANNUITY SEPARATE ACCOUNT II
(EXACT NAME OF REGISTRANT)
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)

900 Cottage Grove Road, Hartford, Connecticut 06152
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)

DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE
(860) 726-6000

COPY TO:

<TABLE>
<S> <C>
Robert A. Picarello, Esquire Edwin L. Kerr, Esquire
Connecticut General Life Insurance Connecticut General Life Insurance
Company Company
900 Cottage Grove Road 900 Cottage Grove Road
Hartford, Connecticut 06152 Hartford, Connecticut 06152
(NAME AND ADDRESS OF
AGENT FOR SERVICE)
</TABLE>

Approximate date of proposed public offering: Continuous

An indefinite amount of the securities offered by this Registration
Statement has been registered pursuant to Rule 24f-2 under the Investment
Company Act of 1940, and the initial registration fee of $500 was paid with the
Rule 24f-2 declaration. Form 24f-2 for Registrant's most recent fiscal year,
which ended December 31, 1996, was filed February 26, 1997.

It is proposed that this filing will become effective:

_________ immediately upon filing pursuant to paragraph (b)
of Rule 485
___X___ on May 1, 1997 pursuant to paragraph (b) of Rule
485
_________ 60 days after filing pursuant to paragraph (a) of
Rule 485
_________ on , pursuant to paragraph (a) of
Rule 485

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<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 481
SHOWING LOCATION IN PART A (PROSPECTUS) AND
PART B (STATEMENT OF ADDITIONAL INFORMATION)
OF REGISTRATION STATEMENT OF INFORMATION REQUIRED BY FORM N-4
PART A

<TABLE>
<CAPTION>
ITEM OF FORM N-4 PROSPECTUS CAPTION
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<C> <S> <C>
1. Cover Page...................................... Cover Page
2. Definitions..................................... Definitions
3. Synopsis........................................ Highlights; Fees and Expenses
4. Condensed Financial Information................. Condensed Financial Information
5. General.........................................
(a) Depositor................................... The Company and the Variable Account
(b) Registrant.................................. The Company and the Variable Account
(c) Portfolio Company The Funds
(d) Fund Prospectus The Funds
(e) Voting Rights............................... The Funds -- Voting Rights
6. Deductions and Expenses
(a) General..................................... Charges and Deductions
(b) Sales Load %................................ Charges and Deductions -- Contingent Deferred Sales
Charge (Sales Load)
(c) Special Purchase Plan....................... N/A
(d) Commissions................................. Distribution of the Contracts
(e) Fund Expenses............................... Fees and Expenses -- Fund Portfolio Annual Expenses
(f) Organizational Expenses..................... N/A
7. Contracts
(a) Persons with Rights......................... Other Contract Features (Ownership, Assignment,
Beneficiary, Change of Beneficiary, Annuitant,
Surrenders and Partial Withdrawals, Death of Owner,
Death of Annuitant); Annuity Provisions; Voting Rights
(b) (i) Allocation of Premium Payments.......... Premium Payments and Contract Value -- Allocation of
Premium Payments
(ii) Transfers.................................. Transfer of Contract Values Between Sub-Accounts
(iii) Exchanges................................. N/A
(c) Changes..................................... Modification; Substitution of Securities; Change in
Operation of Variable Account
(d) Inquiries................................... Cover Page; Highlights
8. Annuity Period.................................. Annuity Provisions
9. Death Benefit................................... Death of the Owner; Death of the Annuitant; Optional
Death Benefit (not in New York prospectus or Prospectus
No. 3)
10. Purchase and Contract Values
(a) Purchases................................... Premium Payments
(b) Valuation................................... Contract Value; Accumulation Unit;
(c) Daily Calculation........................... Accumulation Unit; Allocation of Premium Payments
(d) Underwriter................................. Distribution of the Contracts
11. Redemptions
(a) By Owners................................... Surrenders
By Annuitant.................................... Annuity Provisions -- Variable Options
(b) Texas ORP................................... N/A
(c) Check Delay................................. Delay of Payments and Transfers
(d) Lapse....................................... N/A
(e) Free Look................................... Highlights
12. Taxes........................................... Tax Matters
13. Legal Proceedings............................... Legal Proceedings
</TABLE>

i
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<TABLE>
<CAPTION>
ITEM OF FORM N-4 PROSPECTUS CAPTION
- ----------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
14. Table of Contents for the Statement of
Additional Information......................... Table of Contents of the Statement of Additional
Information
</TABLE>

PART B

<TABLE>
<CAPTION>
ITEM OF FORM N-4 STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ----------------------------------------------------- --------------------------------------------------------
<C> <S> <C>
15. Cover Page...................................... Cover Page
16. Table of Contents............................... Table of Contents
17. General Information and History................. a) N/A
b) N/A
c) (Prospectus) The Company and the Variable Account;
the Fixed Account
18. Services
(a) Fees and Expenses of Registrant............. N/A
(b) Management Contracts........................ N/A
(c) Custodian................................... Custody of Assets
Independent Accountant.......................... Experts
(d) Assets of Registrant........................ N/A
(e) Affiliated Person........................... N/A
(f) Principal Underwriter....................... N/A
19. Purchase of Securities Being Offered............ Distribution of the Contracts
Offering Sales Load............................. Distribution of the Contracts; (Prospectus) Charges and
Deductions -- Contingent Deferred Sales Charge (Sales
Load)
20. Underwriters.................................... Distribution of the Contracts; (Prospectus) Distribution
of the Contracts
21. Calculation of Performance Data................. Investment Experience; Historical Performance Data
22. Annuity Payments................................ (Prospectus) Annuity Provisions
23. Financial Statements............................ Financial Statements
</TABLE>

PART C -- OTHER INFORMATION

<TABLE>
<CAPTION>
ITEM OF FORM N-4 PART C CAPTION
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<C> <S> <C>
24. Financial Statements and Exhibits............... Financial Statements and Exhibits
(a) Financial Statements........................ Financial Statements
(b) Exhibits.................................... Exhibits
25. Directors and Officers of the Depositor......... Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control
with the Depositor or Registrant............... Persons Controlled By or Under Common Control with the
Depositor or Registrant
27. Number of Owners................................ Number of Owners
28. Indemnification................................. Indemnification
29. Principal Underwriters.......................... Principal Underwriter
30. Location of Accounts and Records................ Location of Accounts and Records
31. Management Services............................. Management Services
32. Undertakings.................................... Undertakings
Signature Page.................................. Signatures
</TABLE>

ii
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PART A. PROSPECTUS NO. 1
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CONNECTICUT GENERAL LIFE INSURANCE COMPANY

CG VARIABLE ANNUITY SEPARATE ACCOUNT II

<TABLE>
<S> <C> <C> <C>
HOME OFFICE LOCATION: MAILING ADDRESS: LOCKBOX ADDRESS: BY MAIL LOCKBOX ADDRESS: BY
900 COTTAGE GROVE ROAD CIGNA INDIVIDUAL INSURANCE CONNECTICUT GENERAL LIFE OVERNIGHT
BLOOMFIELD, CT ANNUITY & VARIABLE LIFE INSURANCE COMPANY CONNECTICUT GENERAL LIFE
SERVICES P.O. BOX 30790 INSURANCE COMPANY
CENTER: ROUTING S-249 HARTFORD, CT 06150 C/O FLEET BANK
HARTFORD, CT 06152-2249 20 CHURCH STREET
TELEPHONE: (800) (552-9898) 20TH FLOOR, MSN275
HARTFORD, CT 06120
ATTN: LOCKBOX 30790
</TABLE>

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FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACTS - NEW YORK
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The Flexible Payment Deferred Variable Annuity Contracts (the "Contracts")
described in this prospectus provide for accumulation of Contract Values and
eventual payment of monthly annuity payments on a fixed or variable basis. The
Contracts are designed to aid individuals in long term planning for retirement
or other long term purposes. The Contracts are available for retirement plans
which do not qualify for the special federal tax advantages available under the
Internal Revenue Code ("Non-Qualified Plans") and for retirement plans which do
qualify for the federal tax advantages available under the Internal Revenue Code
("Qualified Plans"). (See "Tax Matters -- Qualified Plans.") Premium payments
for the Contracts will be allocated to a segregated investment account of
Connecticut General Life Insurance Company (the "Company"), designated CG
Variable Annuity Separate Account II (the "Variable Account"), or to the Fixed
Account, or some combination of them, as selected by the owner of the Contract.

The following funding options are available under a Contract: Through the
Variable Account, the Company offers nineteen diversified open-end management
investment companies (commonly called mutual funds), each with a different
investment objective: Alger American Fund -- Alger American Small Capitalization
Portfolio, Alger American Leveraged AllCap Portfolio, Alger American MidCap
Growth Portfolio and Alger American Growth Portfolio; Fidelity Variable
Insurance Products Fund -- Equity-Income Portfolio, Money Market Portfolio; High
Income Portfolio and Overseas Portfolio; Fidelity Variable Insurance Products
Fund II -- Investment Grade Bond Portfolio and Asset Manager Portfolio;
MFS-Registered Trademark- Variable Insurance Trust -- MFS Total Return Series,
MFS Utilities Series and MFS World Governments Series; Neuberger & Berman
Advisers Management Trust -- Balanced Portfolio, Limited Maturity Bond Portfolio
and Partners Portfolio; OCC Accumulation Trust -- Global Equity Portfolio,
Managed Portfolio and Small Cap Portfolio. The fixed interest option offered
under a Contract is the Fixed Account. Premium payments or transfers allocated
to the Fixed Account, and 3% interest per year thereon, are guaranteed, and
additional interest may be credited, with certain withdrawals subject to a
market value adjustment and withdrawal charges. Unless specifically mentioned,
this prospectus only describes the variable investment options.

This entire prospectus, and those of the Funds, should be read carefully
before investing to understand the Contracts being offered. The "Statement of
Additional Information" dated May 1, 1997, available at no charge by calling or
writing the Company's Annuity & Variable Life Services Center as shown above,
provides further information. Its Table of Contents is at the end of this
prospectus.

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES
OF THE MUTUAL FUNDS AVAILABLE AS FUNDING OPTIONS FOR THE CONTRACTS OFFERED BY
THIS PROSPECTUS. ALL PROSPECTUSES SHOULD BE RETAINED FOR FUTURE REFERENCE.

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

PROSPECTUS DATED: MAY 1, 1997
<PAGE>
TABLE OF CONTENTS

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<CAPTION>
CONTENTS PAGE
<S> <C>
DEFINITIONS..................................... 3
HIGHLIGHTS...................................... 5
FEES AND EXPENSES............................... 7
CONDENSED FINANCIAL INFORMATION................. 11
THE COMPANY AND THE VARIABLE ACCOUNT............ 11
THE FUNDS....................................... 12
General....................................... 15
Substitution of Securities.................... 15
Voting Rights................................. 15
PREMIUM PAYMENTS AND CONTRACT VALUE............. 16
Premium Payments.............................. 16
Allocation of Premium Payments................ 16
Optional Variable Account Sub-Account
Allocation Programs.......................... 17
Dollar Cost Averaging....................... 17
Automatic Rebalancing....................... 18
Contract Value................................ 18
Accumulation Unit............................. 18
CHARGES AND DEDUCTIONS.......................... 19
Contingent Deferred Sales Charge (Sales
Load)........................................ 19
Mortality and Expense Risk Charge............. 20
Administrative Expense Charge................. 20
Account Fee................................... 21
Premium Tax Equivalents....................... 21
Income Taxes.................................. 21
Fund Expenses................................. 21
Transfer Fee.................................. 21
OTHER CONTRACT FEATURES......................... 22
Ownership..................................... 22
Assignment.................................... 22
Beneficiary................................... 22
Change of Beneficiary......................... 22
Annuitant..................................... 23
Transfer of Contract Values between
Sub-Accounts................................. 23
Procedures for Telephone Transfers............ 24
Surrenders and Partial Withdrawals............ 24
Delay of Payments and Transfers............... 25
Death of the Owner before the
Annuity Date................................. 25
Death of the Annuitant before the
Annuity Date................................. 26
Death of the Annuitant after the
Annuity Date................................. 26

<CAPTION>
CONTENTS PAGE
<S> <C>

Change in Operation of Variable Account....... 26
Modification.................................. 27
Discontinuance................................ 27
ANNUITY PROVISIONS.............................. 27
Annuity Date; Change in Annuity Date and
Annuity Option............................... 27
Annuity Options............................... 27
Fixed Options................................. 28
Variable Options.............................. 28
Evidence of Survival.......................... 29
Endorsement of Annuity Payment................ 29
THE FIXED ACCOUNT............................... 29
Market Value Adjustment....................... 31
DISTRIBUTION OF THE CONTRACTS................... 32
PERFORMANCE DATA................................ 32
Money Market Sub-Account...................... 32
Other Variable Account Sub-Accounts........... 33
Performance Ranking or Rating................. 33
TAX MATTERS..................................... 34
General....................................... 34
Diversification............................... 34
Distribution Requirements..................... 35
Multiple Contracts............................ 36
Tax Treatment of Assignments.................. 36
Withholding................................... 36
Section 1035 Exchanges........................ 36
Tax Treatment of Withdrawals --
Non-Qualified Contracts...................... 37
Qualified Plans............................... 37
Section 403(b) Plans.......................... 38
Individual Retirement Annuities............... 38
Corporate Pension and Profit-Sharing Plans and
H.R. 10 Plans................................ 38
Deferred Compensation Plans................... 38
Tax Treatment of Withdrawals -- Qualified
Contracts.................................... 39
FINANCIAL STATEMENTS............................ 39
LEGAL PROCEEDINGS............................... 39
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL
INFORMATION................................... 40
APPENDIX I...................................... 32
Separate Account Annual Expenses for New York
Contracts Issued Before May 1, 1996..........
</TABLE>

2
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DEFINITIONS

ACCUMULATION PERIOD: The period from the Effective Date to
the Annuity Date, the date on which the Death Benefit
becomes payable or the date on which the Contract is
surrendered or annuitized, whichever is earliest.

ACCUMULATION UNIT: A measuring unit used to calculate the
value of the Owner's interest in each funding option used in
the variable portion of the Contract prior to the Annuity
Date.

ANNUITANT: A person designated by the Owner in writing upon
whose continuation of life any series of payments for a
definite period or involving life contingencies depends. If
the Annuitant dies before the Annuity Date, the Owner
becomes the Annuitant until naming a new Annuitant.

ANNUITY & VARIABLE LIFE SERVICES CENTER: The office of the
Company to which notices are given and any customer service
requests are made. Mailing address: CIGNA Individual
Insurance, Annuity & Variable Life Services Center, Routing
S-249, Hartford, CT 06152-2249. Premium payments must be
sent, and all other correspondence may be sent, to either
Lockbox address: If by mail: P.O. Box 30790, Hartford, CT
06150; If by overnight courier: c/o Fleet Bank, 20 Church
Street, 20th Floor, MSN275, Hartford, CT 06120, Attn:
Lockbox 30790.

ANNUITY ACCOUNT VALUE: The value of the Contract at any
point in time.

ANNUITY DATE: The date on which annuity payments commence.

ANNUITY OPTION: The arrangement under which annuity payments
are made.

ANNUITY PERIOD: The period starting on the Annuity Date.

ANNUITY UNIT: A measuring unit used to calculate the portion
of annuity payments attributable to each funding option used
in the variable portion of the Contract on and after the
Annuity Date.

BENEFICIARY: The person entitled to the Death Benefit, who
must also be the "Designated Beneficiary", for purposes of
Section 72(s) of the Code, upon the Owner's death.

CERTIFICATE: The document which evidences the participation
of an Owner in a group contract.

CODE: The Internal Revenue Code of 1986, as amended.

COMPANY: Connecticut General Life Insurance Company.

CONTRACT: The Variable Annuity Contract described in this
prospectus, i.e., the Certificate evidencing the Owner's
participation in a group contract.

CONTRACT ANNIVERSARY, CONTRACT YEAR, EFFECTIVE DATE: The
Contract's Effective Date is the date it is issued. It is
also the date on which the first Contract Year, a 12-month
period, begins. Subsequent Contract Years begin on each
Contract Anniversary, which is the anniversary of the
Effective Date.

CONTRACT MONTH: The period from one Monthly Anniversary Date
to the next.

FIXED ACCOUNT: The portion of the Contract under which
principal is guaranteed and interest is credited. Fixed
Account Assets are maintained in the Company's General
Account and not allocated to the Variable Account.

FIXED ANNUITY: An annuity with payments which do not vary as
to dollar amount.

3
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FUND(S): One or more of Alger American Fund -- Alger
American Small Capitalization Portfolio, Alger American
Leveraged AllCap Portfolio, Alger American MidCap Growth
Portfolio and Alger American Growth Portfolio; Fidelity
Variable Insurance Products Fund -- Equity-Income Portfolio,
Money Market Portfolio, High Income Portfolio and Overseas
Portfolio; Fidelity Variable Insurance Products Fund II --
Investment Grade Bond Portfolio and Asset Manager Portfolio;
MFS-Registered Trademark- Variable Insurance Trust -- MFS
Total Return Series, MFS Utilities Series and MFS World
Governments Series; Neuberger & Berman Advisers Management
Trust -- Balanced Portfolio, Limited Maturity Bond Portfolio
and Partners Portfolio; OCC Accumulation Trust -- Global
Equity Portfolio, Managed Portfolio and Small Cap Portfolio.
Each is an open-end management investment company (mutual
fund) whose shares are available to fund the benefits
provided by the Contract.

GUARANTEED INTEREST RATE: The rate of interest credited by
the Company on a compound annual basis during a Guaranteed
Period.

GUARANTEED PERIOD: The period for which interest, at either
an initial or subsequent Guaranteed Interest Rate, will be
credited to any amounts which an Owner allocates to a Fixed
Account Sub-Account. In most states in which these Contracts
are issued, this period may be one, three, five, seven or
ten years, as elected by the Owner.

GUARANTEED PERIOD AMOUNT: Any portion of a Purchaser's
Annuity Account Value allocated to a specific Guaranteed
Period with a specified Expiration Date (including credited
interest thereon).

INDEX RATE: An index rate based on the Treasury Constant
Maturity Series published by the Federal Reserve Board.

IN WRITING: In a written form satisfactory to the Company
and received by the Company at its Annuity & Variable Life
Services Center.

NON-QUALIFIED CONTRACTS: A Contract used in connection with
a retirement plan which does not receive favorable federal
income tax treatment under Code Section 401, 403, 408, or
457. The owner of a Non-Qualified Contract must be a natural
person or an agent for a natural person in order for the
Contract to receive favorable income tax treatment as an
annuity.

OWNER: The person(s) initially designated in the application
or order to purchase or otherwise, unless later changed, as
having all ownership rights under the Contract; is the
Certificate Owner under a group contract.

PAYEE: A recipient of payments under the Contract.

PREMIUM PAYMENT: Any amount paid to the Company cleared in
good funds as consideration for the benefits provided by the
Contract. Includes the initial Premium Payment and
subsequent Premium Payments.

QUALIFIED CONTRACT: A Contract used in connection with a
retirement plan which receives favorable federal income tax
treatment under Code Section 401, 403, 408 or 457.

SEVENTH YEAR ANNIVERSARY: The seventh Contract Anniversary
and each succeeding Contract Anniversary occurring at any
seven year interval thereafter, for example, the 7th, 14th,
21st and 28th Contract Anniversaries.

SHARES: Shares of a Fund.

SUB-ACCOUNT: That portion of the Fixed Account associated
with specific Guaranteed Period(s) and Guaranteed Interest
Rate(s) and that portion of the Variable Account which
invests in shares of a specific Fund.

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SURRENDER (OR WITHDRAWAL): When a lump sum amount
representing all or part of the Annuity Account Value (minus
any applicable withdrawal charges, contract fees, and
premium tax equivalents and adjusted by any market value
adjustment) is paid to the Owner. After a full surrender,
all of the Owner's rights under the Contract are terminated.
In this prospectus, the terms "surrender" and "withdrawal"
are used interchangeably.

SURRENDER DATE: The date the Company processes the Owner's
election to surrender the Contract or to receive a partial
withdrawal.

VALUATION DATE: Every day on which Accumulation Units are
valued, which is each day on which the New York Stock
Exchange ("NYSE") is open for business, except any day on
which trading on the NYSE is restricted, or on which an
emergency exists, as determined by the Securities and
Exchange Commission ("Commission"), so that valuation or
disposal of securities is not practicable.

VALUATION PERIOD: The period of time beginning on the day
following the Valuation Date and ending on the next
Valuation Date. A Valuation Period may be more than one day
in length.

VARIABLE ACCOUNT: CG Variable Annuity Separate Account II, a
separate account of the Company under Connecticut law, in
which the assets of the Sub-Account(s) funded through shares
of one or more of the Funds are maintained. Assets of the
Variable Account attributable to the Contracts are not
chargeable with the general liabilities of the Company.

VARIABLE ACCUMULATION UNIT: A unit of measure used in the
calculation of the value of each variable portion of the
Owner's Annuity Account during the Accumulation Period.

VARIABLE ANNUITY UNIT: A unit of measure used in the
calculation of the value of each variable portion of the
Owner's Annuity Account during the Annuity Period, to
determine the amount of each variable annuity payment.

HIGHLIGHTS

Premium Payments attributable to the variable portion of the
Contracts will be allocated to a segregated asset account of
Connecticut General Life Insurance Company (the "Company")
which has been designated CG Variable Annuity Separate
Account II (the "Variable Account"). The Variable Account
invests in shares of one or more of the Funds available to
fund the Contract as selected by the Owner. Owners bear the
investment risk for all amounts allocated to the Variable
Account. Inquiries about the Contracts may be made to the
Company's Annuity & Variable Life Services Center.

The Contract may be returned within 10 days after it is
received, longer in some states. It can be mailed or
delivered to either the Company or the agent who sold it.
Return of the Contract by mail is effective on being
postmarked, properly addressed and postage prepaid. The
Company will promptly refund the Contract Value. This may be
more or less than the Premium Payment. The Company has the
right to allocate initial Premium Payments to the Money
Market Sub-Account until the expiration of the
right-to-examine period. If the Company does so allocate an
initial Premium Payment, it will refund the greater of the
Premium Payment, less any partial surrenders, or the
Contract Value. It is the Company's current practice to
directly allocate the initial Premium Payment to the Fund(s)
designated in the application or order to purchase, unless
state law requires a refund of Premium Payments rather than
of Annuity Account Value.

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or any remaining portion thereof, ("the Fifteen Percent
Free") without incurring a Contingent Deferred Sales Charge.
The Contingent Deferred Sales Charge will vary in amount,
depending upon the Contract Year in which the Premium
Payment being surrendered or withdrawn was made. For
purposes of determining the applicability of the Contingent
Deferred Sales Charge, surrenders and withdrawals are deemed
to be on a first-in, first-out basis.

The Contingent Deferred Sales Charge is found in the fee
table (See "Charges and Deductions -- Contingent Deferred
Sales Charge (Sales Load)"). The maximum Contingent Deferred
Sales Charge is 7% of Premium Payments. There may also be a
Market Value Adjustment on surrenders, withdrawals or
transfers from the Fixed Account portion of the Contract.

There is a Mortality and Expense Risk Charge which is equal,
on an annual basis, to 1.25%* of the average daily net
assets of the Variable Account. This Charge compensates the
Company for assuming the mortality and expense risks under
the Contract (See "Charges and Deductions -- Mortality and
Expense Risk Charge").

There is an Administrative Expense Charge which is equal, on
an annual basis, to 0.15%* of the average daily net assets
of the Variable Account (See "Charges and Deductions --
Administrative Expense Charge").

There is an annual Account Fee of $30 which is waived if the
Annuity Account Value equals or exceeds $100,000 at the end
of the Contract Year (See "Charges and Deductions -- Account
Fee").

Premium tax equivalents or other taxes payable to a state or
other governmental entity will be charged against Annuity
Account Value (See "Charges and Deductions -- Premium
Taxes").

Under certain circumstances there may be assessed a $10
transfer fee when a Owner transfers Annuity Account Values
from one Sub-Account to another (See "Charges and Deductions
-- Transfer Fee").

There is a ten percent (10%) federal income tax penalty
applied to the income portion of any premature distribution
from Non-Qualified Contracts. However, the penalty is not
imposed on amounts distributed:

(a) after the Payee reaches age 59 1/2; (b) after the death
of the Owner (or, if the Owner is not a natural person, the
Annuitant); (c) if the Payee is totally disabled (for this
purpose, disability is as defined in Section 72(m)(7) of the
Code); (d) in a series of substantially equal periodic
payments made not less frequently than annually for the life
(or life expectancy) of the Payee or for the joint lives (or
joint life expectancies) of the Payee and his or her
beneficiary; (e) under an immediate annuity; or (f) which
are allocable to Premium Payments made prior to August 14,
1982. For federal income tax purposes, distributions are
deemed to be on a last-in, first-out basis. Different tax
withdrawal penalties and restrictions apply to Qualified
Contracts issued pursuant to plans qualified under Code
Section 401, 403(b), 408 or 457. (See "Tax Matters -- Tax
Treatment of Withdrawals -- Qualified Contracts.") For a
further discussion of the taxation of the Contracts, see
"Tax Matters."

* (For New York Contracts issued before May 1, 1996, see
Appendix I.)

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Generally, if the Index Rate at the time of surrender or
transfer is lower than the Index Rate at the time the
Premium Payment was allocated, then the application of the
Market Value Adjustment will result in a higher payment upon
surrender or transfer. Similarly, if the Index Rate at the
time of surrender or transfer is higher than the Index Rate
at the time the Premium Payment was allocated, the
application of the Market Value Adjustment will generally
result in a lower payment upon surrender or transfer. It is
not applied against a surrender or transfer taking place at
the end of the Guaranteed Period.

FEES AND EXPENSES

OWNER TRANSACTION FEES

Contingent Deferred Sales Charge (as a percentage of Premium
Payments):

YEARS
SINCE
PAYMENT CHARGE
---------- --------
0-1 7%
1-2 6%
An Owner may, during each Contract Year,
withdraw up to 15%
2-3 of Premium Payments made, or the
5% remaining portion thereof,
3-4 without incurring a Contingent Deferred
4% Sales Charge.
4-5 3%
5-6 2%
6-7 1%
7+ 0

Transfer Fee........ $10

- Not imposed on the first twelve transfers during a
Contract Year. Pre-scheduled automatic dollar cost averaging
or automatic rebalancing transfers are not counted.

Account Fee.............. $30 per Contract Year

- Waived if Annuity Account Value at the end of the
Contract Year is $100,000 or more.

VARIABLE ACCOUNT ANNUAL EXPENSES

(as a percentage of average account
value)
Mortality and Expense Risk Charge........ 1.25%*
Administrative Expense Charge............ 0.15%*
----------
Total Variable Account Annual Expenses... 1.40%*

* For New York Contracts issued before May 1, 1996, see
Appendix I.

7
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EXPENSE DATA

The purpose of the following Table is to help Purchasers and prospective
purchasers understand the costs and expenses that are borne, directly and
indirectly, by Purchasers assuming that all Premium Payments are allocated to
the Variable Account. The table reflects expenses of the Variable Account as
well as of the Individual Funds underlying the Variable Sub-Accounts.

FEE TABLE

<TABLE>
<CAPTION>
ALGER AMERICAN FUND
-------------------------------------------
ALGER ALGER
ALGER AMERICAN AMERICAN ALGER
AMERICAN LEVERAGED MIDCAP AMERICAN
GROWTH ALLCAP GROWTH SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------- --------- -------- ---------
SEPARATE ACCOUNT ANNUAL EXPENSES
<S> <C> <C> <C> <C>
Mortality and Expense Risk
Charge*.......................... 1.25% 1.25% 1.25% 1.25%
Administrative Expense Charge*..... 0.15% 0.15% 0.15% 0.15%
Total Separate Account Annual
Expenses*........................ 1.40% 1.40% 1.40% 1.40%
FUND PORTFOLIO ANNUAL EXPENSES
Management Fees.................... 0.75% 0.85% 0.80% 0.85%
Other Expenses..................... 0.04% 0.24% 0.04% 0.03%
Total Fund
Portfolio Annual
Expenses......................... 0.79% 1.09%(1) 0.84% 0.88%

FIDELITY VARIABLE INSURANCE
PRODUCTS FUNDS
----------------------------------------------------------------
VIP II VIP VIP II VIP
ASSET EQUITY- INVESTMENT VIP MONEY HIGH VIP
MANAGER INCOME GRADE BOND MARKET INCOME OVERSEAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND PORTFOLIO
------- --------- ---------- --------- ------ --------
SEPARATE ACCOUNT ANNUAL EXPENSES
<S> <C> <C> <C> <C> <C> <C>
Mortality and Expense Risk
Charge*.......................... 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Administrative Expense Charge*..... 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%
Total Separate Account Annual
Expenses*........................ 1.40% 1.40% 1.40% 1.40% 1.40% 1.40%
FUND PORTFOLIO ANNUAL EXPENSES
Management Fees.................... 0.64% 0.51% 0.45% 0.21% 0.59% 0.76%
Other Expenses..................... 0.10% 0.07% 0.13% 0.09% 0.12% 0.17%
Total Fund
Portfolio Annual
Expenses......................... 0.74%(2) 0.58%(2) 0.58% 0.30% 0.71% 0.93%(2)
</TABLE>

- ------------------------
* For New York Contracts issued before May 1, 1996, see Appendix I.

(1) Included in Other Expenses of the Alger American Leveraged AllCap Portfolio
is .03% of interest expense.

(2) A portion of the brokerage commissions the certain funds pay was used to
reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest earned
on uninvested cash balances was used to reduce custodian and transfer agent
expenses. Including these reductions, Total Fund Portfolio Annual Expenses
would have been 0.73% for the VIP II Asset Manager Portfolio, 0.56% for the
VIP Equity-Income Portfolio and 0.92% for the VIP Overseas Portfolio.

8
<PAGE>

The table does not reflect the deductions for the annual $30 Account Fee. The
information set forth should be considered together with the information
provided in this Prospectus under the heading "Fees and Expenses", and in each
Fund's Prospectus. All expenses are expressed as a percentage of average account
value.

<TABLE>
<CAPTION>
MFS VARIABLE INSURANCE TRUST NEUBERGER&BERMAN
- ---------------------------------------- ADVISERS MANAGEMENT TRUST(5)
--------------------------------------- OCC ACCUMULATION TRUST
MFS LIMITED -----------------------------------------
TOTAL MFS MFS WORLD MATURITY GLOBAL
RETURN UTILITIES GOVERNMENTS BALANCED BOND PARTNERS EQUITY MANAGED SMALL CAP
SERIES SERIES SERIES PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%
1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40%
0.75% 0.75% 0.75% 0.85%(6) 0.65%(6) 0.84%(6) 0.80% 0.80% 0.80%
0.25%(4) 0.25%(4) 0.25%(4) 0.24% 0.13% 0.11% 0.63% 0.10% 0.22%
1.00%(3) 1.00%(3) 1.00%(3) 1.09% 0.78% 0.95% 1.43%(7) 0.90%(7) 1.02%(7)
</TABLE>

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

(3) The Adviser has agreed to bear expenses for each Series, subject to
reimbursement by each Series, such that each Series' "Other Expenses" shall
not exceed) 0.25% of the average daily net assets of the Series during the
current fiscal year. Otherwise, "Other Expenses" for the Total Return
Series, Utilities Series and World Government Series would be 1.35%, 2.00%
and 1.28% respectively, and "Total Fund Portfolio Expenses" would be 2.10%,
2.75% and 2.03% respectively, for these Series. See "Information Concerning
Shares of Each Series--Expenses."

(4) Each series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the Series' expenses). Any such fee reductions are not
reflected under "Other Expenses".

(5) Neuberger&Berman Advisers Management Trust is divided into portfolios
("Portfolios"), each of which invests all of its net investable assets in a
corresponding series ("Series") of Advisers Managers Trust.

(6) The figures reported here are "Investment Management and Administration
Fees" which include the aggregate of the administration fees paid by the
Portfolio and the management fees paid by its corresponding Series.
Similarly, "Other Expenses" includes all other expenses of the Portfolio and
its corresponding Series.

(7) The annual expenses of OCC Accumulation Trust Portfolios (the "Portfolios")
as of December 31, 1996 have been restated to reflect new management fee and
expense limitation arrangements in effect as of May 1, 1996. Additionally,
Other Expenses are shown gross of certain expense offsets afforded the
Portfolios which effectively lowered overall custody expenses. Effective May
1, 1996, the expenses of the Portfolios were contractually limited by OpCap
Advisors so that their respective annualized operating expenses (net of any
expense offsets) do not exceed 1.25% of their respective average daily net
assets. Furthermore, through December 31, 1997, the annualized operating
expenses of the Managed and Small Cap Portfolios will be voluntarily limited
by OpCap Advisors so that annualized operating expenses (net of any expense
offsets) of these Portfolios do not exceed 1.00% of their respective average
daily net assets. Without such contractual and voluntary expense limitations
and without giving effect to any expense offsets, the Management Fees, Other
Expenses and Total Portfolio Annual Expenses incurred for the fiscal year
ended December 31, 1996 would have been: .80%, 1.04% and 1.84%,
respectively, for the Global Equity Portfolio; .80%, .10% and .90%,
respectively, for the Managed Portfolio; and .80%, .26% and 1.06%,
respectively, for the Small Cap Portfolio.

9
<PAGE>
EXAMPLES

The Owner would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets, and
assuming all Premium Payments are allocated to the Variable
Account:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
1. IF THE CONTRACT IS SURRENDERED AT THE END OF THE APPLICABLE TIME PERIOD:
Alger American Growth Portfolio........................... $82 $113 $146 $258
Alger American Leveraged AllCap Portfolio................. $85 $122 $161 $289
Alger American MidCap Growth Portfolio.................... $83 $114 $149 $264
Alger American Small Capitalization Portfolio............. $83 $116 $151 $268
Fidelity VIP Equity-Income Portfolio...................... $80 $106 $135 $237
Fidelity VIP Money Market Portfolio....................... $77 $ 98 $121 $207
Fidelity VIP High Income Portfolio........................ $84 $117 $153 $273
Fidelity VIP Overseas Portfolio........................... $85 $122 $161 $289
Fidelity VIP II Asset Manager Portfolio................... $82 $111 $143 $253
Fidelity VIP II Investment Grade Bond Portfolio........... $80 $106 $135 $237
MFS Total Return Series................................... $84 $119 $157 $280
MFS Utilities Series...................................... $84 $119 $157 $280
MFS World Governments Series.............................. $84 $119 $157 $280
AMT Balanced Portfolio.................................... $85 $122 $161 $289
AMT Limited Maturity Bond Portfolio....................... $82 $113 $145 $257
AMT Partners Portfolio.................................... $84 $118 $154 $275
OCC Global Equity Portfolio............................... $89 $132 $178 $321
OCC Managed Portfolio..................................... $83 $116 $152 $270
OCC Small Cap Portfolio................................... $85 $120 $158 $282
</TABLE>

2. IF THE CONTRACT IS NOT SURRENDERED OR IF IT IS
ANNUITIZED:

<TABLE>
<S> <C> <C> <C> <C>
Alger American Growth Portfolio........................... $23 $ 70 $120 $258
Alger American Leveraged AllCap Portfolio................. $26 $ 79 $136 $289
Alger American MidCap Growth Portfolio.................... $23 $ 72 $123 $264
Alger American Small Capitalization Portfolio............. $24 $ 73 $125 $268
Fidelity VIP Equity-Income Portfolio...................... $21 $ 64 $110 $237
Fidelity VIP Money Market Portfolio....................... $18 $ 55 $ 95 $207
Fidelity VIP High Income Portfolio........................ $24 $ 75 $128 $273
Fidelity VIP Overseas Portfolio........................... $26 $ 79 $136 $289
Fidelity VIP II Asset Manager Portfolio................... $22 $ 69 $118 $253
Fidelity VIP II Investment Grade Bond Portfolio........... $21 $ 64 $110 $237
MFS Total Return Series................................... $25 $ 77 $131 $280
MFS Utilities Series...................................... $25 $ 77 $131 $280
MFS World Governments Series.............................. $25 $ 77 $131 $280
AMT Balanced Portfolio.................................... $26 $ 79 $136 $289
AMT Limited Maturity Bond Portfolio....................... $23 $ 70 $120 $257
AMT Partners Portfolio.................................... $24 $ 75 $129 $275
OCC Global Equity Portfolio............................... $29 $ 89 $152 $321
OCC Managed Portfolio..................................... $24 $ 74 $126 $270
OCC Small Cap Portfolio................................... $25 $ 77 $132 $282
</TABLE>

The preceding tables are intended to assist the Owner in
understanding the costs and expenses borne, directly or
indirectly, by Premium Payments allocated to the Variable
Account. These include the expenses of the Funds, certain of
which are subject to expense reimbursement arrangements
which may be subject to change. See the Funds' Prospectuses.
In addition to the expenses listed above, charges for
premium tax equivalents may be applicable.

10
<PAGE>
These examples reflect the annual $30 Annuity Account Fee as
an annual charge of .06% of assets, based upon an
anticipated average Annuity Account Value of $50,000.

THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.

CONDENSED FINANCIAL INFORMATION

The Variable Account commenced operations on April 10, 1995.
The Sub-Accounts commenced operation on various dates
thereafter. There follows, for each of the nineteen Variable
Account Sub-Accounts available under the Contracts,
information regarding the changes in the Accumulation Unit
values from date of inception through December 31, 1995 and
from January 1, 1996 through December 31, 1996, and the
number of Accumulation Units outstanding at December 31,
1996:

<TABLE>
<CAPTION>
(IN DOLLARS) NUMBER OF
--------------------------------------------- ACCUMULATION
ACCUMULATION ACCUMULATION ACCUMULATION UNITS
UNIT BEGINNING UNIT VALUE UNIT VALUE OUTSTANDING
SUB-ACCOUNT VALUE AT 12/31/95 AT 12/31/96 12/31/96
------------------------- --------------- --------------- ----------- ----------------
<C> <S> <C> <C> <C> <C>
Alger American Growth
Portfolio 10.00 12.385784 13.855323 94,174
Alger American Leveraged
AllCap Portfolio 10.00 13.895178 15.364036 25,272
Alger American MidCap
Growth Portfolio 10.00 13.106537 14.473761 51,632
Alger American Small Cap
Portfolio 10.00 13.092181 13.460941 97,173
Fidelity VIP Equity-
Income Portfolio 10.00 12.128673 13.679456 133,553
Fidelity VIP Money Market
Portfolio 10.00 10.245402 10.658014 10,588
Fidelity VIP High Income
Portfolio 10.00 * 10.802349 26,114
Fidelity VIP Overseas
Portfolio 10.00 * 10.614394 11,164
Fidelity VIP II Asset
Manager Portfolio 10.00 11.280365 12.758423 39,293
Fidelity VIP II
Investment Grade Bond
Portfolio 10.00 10.541110 10.734479 15,245
MFS Total Return Series 10.00 11.003903 12.420693 52,465
MFS Utilities Series 10.00 11.365171 13.292608 7,641
MFS World Governments
Series 10.00 10.277969 10.552213 3,787
AMT Balanced Portfolio 10.00 10.269633 10.832872 18,307
AMT Limited Maturity Bond
Portfolio 10.00 10.547360 10.857343 6,716
AMT Partners Portfolio 10.00 12.122020 15.500823 60,560
OCC Global Equity
Portfolio 10.00 11.758951 13.347358 35,443
OCC Managed Portfolio 10.00 11.143831 13.502565 176,181
OCC Small Cap Portfolio 10.00 10.855343 12.718827 17,578
* Had not commenced operations as of December 31, 1995
</TABLE>

THE COMPANY AND THE VARIABLE ACCOUNT

11
<PAGE>
owned subsidiary of Connecticut General Corporation,
Bloomfield, Connecticut. Connecticut General Corporation is
wholly-owned by CIGNA Holdings Inc., Philadelphia,
Pennsylvania which is in turn wholly-owned by CIGNA
Corporation, Philadelphia, Pennsylvania. Connecticut General
Corporation is the holding company of various insurance
companies, one of which is Connecticut General Life
Insurance Company.

THE VARIABLE ACCOUNT. The Variable Account was established
by the Company as a separate account on January 25, 1994
pursuant to a resolution of its Board of Directors. Under
Connecticut insurance law, the income, gains or losses of
the Variable Account are credited to or charged against the
assets of the Variable Account without regard to the other
income, gains, or losses of the Company. These assets are
held in relation to the Contracts described in this
Prospectus, to the extent necessary to meet the Company's
obligations thereunder. Although that portion of the assets
maintained in the Variable Account equal to the reserves and
other contract liabilities with respect to the Variable
Account will not be charged with any liabilities arising out
of any other business conducted by the Company, all
obligations arising under the Contracts, including the
promise to make annuity payments, are general corporate
obligations of the Company.

The Variable Account is registered with the Securities and
Exchange Commission ("Commission") as a unit investment
trust under the Investment Company Act of 1940, as amended
(the "1940 Act") and meets the definition of a separate
account under the federal securities laws. Registration with
the Commission does not involve supervision of the
management or investment practices or policies of the
Variable Account or of the Company by the Commission.

The assets of the Variable Account are divided into
Sub-Accounts. Each Sub-Account invests exclusively in shares
of a specific Fund. All amounts allocated to the Variable
Account will be used to purchase Fund shares as designated
by the Owner at their net asset value. Any and all
distributions made by the Fund with respect to the shares
held by the Variable Account will be reinvested to purchase
additional shares at their net asset value. Deductions from
the Variable Account for cash withdrawals, annuity payments,
death benefits, account fees, mortality and expense risk
charges, administrative expense charges and any applicable
taxes will, in effect, be made by redeeming the number of
Fund shares at their net asset value equal in total value to
the amount to be deducted. The Variable Account will
purchase and redeem Fund shares on an aggregate basis and
will be fully invested in Fund shares at all times.

THE FUNDS

Each of the nineteen Sub-Accounts of the Variable Account is
invested solely in shares of one of the nineteen Funds
available as funding vehicles under the Contracts. Each of
the Funds is a series of one of six Massachusetts or
Delaware business trusts, collectively referred to herein as
the "Trusts", each of which is registered as an open-end,
diversified management investment company under the 1940
Act.

The Trusts and their investment advisers and distributors
are:

Alger American Fund ("Alger Trust"), managed by Fred
Alger Management, Inc., 75 Maiden Lane, New York, NY
10038; and distributed by Fred Alger & Company,
Incorporated, 30 Montgomery Street, Jersey City, NJ
07302;

Variable Insurance Products Fund ("Fidelity VIP"), and
Variable Insurance Products Fund II ("Fidelity VIP II"),
managed by Fidelity Management & Research Company and
distributed by Fidelity Distribution Corporation, 82
Devonshire Street, Boston, MA 02103;

12
<PAGE>
MFS-Registered Trademark- Variable Insurance Trust ("MFS
Trust"), managed by Massachusetts Financial Services
Company and distributed by MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116;

Neuberger & Berman Advisers Management Trust ("AMT
Trust"), managed and distributed by Neuberger & Berman
Management Incorporated, 605 Third Avenue, 2nd Floor,
New York, NY 10158-0006;

OCC Accumulation Trust ("OCC Trust") (formerly Quest for
Value Accumulation Trust), managed by OpCap Advisors
(formerly Quest for Value Advisors), and distributed by
OCC Distributors (formerly Quest for Value
Distributors),One World Financial Center, New York, NY
10281.

Four Funds of ALGER Trust are available under the Contracts:
Alger American Growth Portfolio;
Alger American Leveraged AllCap Portfolio;
Alger American MidCap Growth Portfolio;
Alger American Small Capitalization Portfolio.

Four Funds of FIDELITY VIP are available under the
Contracts:

Equity-Income Portfolio ("Fidelity VIP Equity-Income
Portfolio");
Money Market Portfolio ("Fidelity VIP Money Market
Portfolio");
High Income Portfolio ("Fidelity VIP High Income
Portfolio");
Overseas Portfolio ("Fidelity VIP Overseas Portfolio").

Two Funds of FIDELITY VIP II are available under the
Contracts:

Asset Manager Portfolio ("Fidelity VIP II Asset Manager
Portfolio");
Investment Grade Bond Portfolio ("Fidelity VIP II
Investment Grade Bond Portfolio").

Three Funds of MFS Trust are available under the Contracts:
MFS Total Return Series;
MFS Utilities Series;
MFS World Governments Series.

Three Funds of AMT Trust are available under the Contracts:
Balanced Portfolio;
Limited Maturity Bond Portfolio;
Partners Portfolio.

Three Funds of OCC Trust are available under the Contracts:
Global Equity Portfolio;
Managed Portfolio;
Small Cap Portfolio.

The investment advisory fees charged the Funds by their
advisers are shown in the Fee Table at pages 8 and 9 of this
Prospectus.

There follows a brief description of the investment
objective and program of each Fund. There can be no
assurance that any of the stated investment objectives will
be achieved.

ALGER AMERICAN GROWTH PORTFOLIO (Large Cap Stocks): Seeks
long-term capital appreciation by investing in a
diversified, actively managed portfolio of equity
securities, primarily of companies with total market
capitalization of $1 billion or greater.

ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO (Large Cap
Stocks): Seeks long-term capital appreciation by investing
in a diversified, actively managed portfolio of equity
securities, with the ability to engage in leveraging (up to
one-third of assets) and options and futures transactions.

13
<PAGE>

ALGER AMERICAN MIDCAP GROWTH PORTFOLIO (Mid Cap Stocks):
Seeks long-term capital appreciation by investing in a
diversified, actively managed portfolio of equity
securities, primarily of companies whose total market
capitalization lies within the range of companies included
in the S & P MidCap 400 Index.

ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO (Small Cap
Stocks): Seeks long-term capital appreciation by investing
in a diversified, actively managed portfolio of equity
securities, primarily of companies whose total market
capitalization lies within the range of companies included
in the Russell 2000 Growth Index or the S&P SmallCap 600
Index.

FIDELITY VIP II ASSET MANAGER PORTFOLIO (Balanced or Total
Return): Seeks high total return with reduced risk over the
long-term by allocating its assets among domestic and
foreign stocks, bonds and short-term fixed-income
instruments.

FIDELITY VIP II INVESTMENT GRADE BOND PORTFOLIO (Fixed
Income -- Intermediate Term Bonds): Seeks as high a level of
current income as is consistent with the preservation of
capital by investing in a broad range of investment-grade
fixed-income securities.

FIDELITY VIP EQUITY-INCOME PORTFOLIO (Large Cap Stocks):
Seeks reasonable income by investing primarily in
income-producing equity securities, with some potential for
capital appreciation, seeking a yield that exceeds the
composite yield on the securities comprising the Standard
and Poor's Composite Index of 500 Stocks.

FIDELITY VIP MONEY MARKET PORTFOLIO (Money Market): Seeks as
high a level of current income as is consistent with
preserving capital and providing liquidity, through
investment in high quality U.S. dollar denominated money
market securities of domestic and foreign issuers.

FIDELITY VIP HIGH INCOME PORTFOLIO (High Yield Bonds): Seeks
high current income by investing mainly in high yielding
debt securities, with an emphasis on lower quality
securities.

FIDELITY VIP OVERSEAS PORTFOLIO (International Equity):
Seeks long term growth of capital by investing mainly in
foreign securities.

MFS TOTAL RETURN SERIES (Balanced or Total Return): Seeks
primarily to obtain above-average income, (compared to a
portfolio invested entirely in equity securities) consistent
with the prudent employment of capital, and secondarily to
provide a reasonable opportunity for growth of capital and
income.

MFS UTILITIES SERIES (Specialty): Seeks capital growth and
current income (income above that available from a portfolio
invested entirely in equity securities), by investing, under
normal circumstances, at least 65% of its assets in equity
and debt securities of utility companies.

MFS WORLD GOVERNMENTS SERIES (International Fixed Income):
Seeks not only preservation, but also growth, of capital
together with moderate current income through a
professionally managed, internationally diversified
portfolio consisting primarily of debt securities and to a
lesser extent equity securities.

NEUBERGER & BERMAN AMT BALANCED PORTFOLIO (Balanced or Total
Return): Seeks long-term capital growth and reasonable
current income without undue risk to principal.

NEUBERGER & BERMAN AMT LIMITED MATURITY BOND PORTFOLIO
(Short to Intermediate Term Bonds): Seeks the highest
current income consistent with low risk to principal and
liquidity; and secondarily, total return.

14
<PAGE>

reasonable risk. The portfolio manager seeks securities
believed to be undervalued based on strong fundamentals such
as low price-to-earnings ratios, consistent cash flow, and
support from asset values.

OCC GLOBAL EQUITY PORTFOLIO (International Stocks): Seeks
long-term capital appreciation through a global investment
strategy primarily involving equity securities.

OCC MANAGED PORTFOLIO (Balanced or Total Return): Seeks
growth of capital over time through investment in a
portfolio of common stocks, bonds and cash equivalents, the
percentage of which will vary based on management's
assessments of relative investment values.

OCC SMALL CAP PORTFOLIO (Small Cap Stocks): Seeks capital
appreciation through investments in a diversified portfolio
of equity securities of companies with market
capitalizations of under $1 billion.

The Neuberger & Berman AMT Partners Portfolio, Neuberger &
Berman AMT Limited Maturity Bond Porfolio, Fidelity VIP
Equity-Income Portfolio, Fidelity VIP II Asset Manager
Portfolio, Fidelity VIP High Income Portfolio, Fidelity VIP
Overseas Portfolio, MFS Total Return Series, MFS Utilities
Series, MFS World Governments Series, OCC Global Equity
Portfolio, OCC Managed Portfolio, and the OCC Small Cap
Portfolio funds may invest in non-investment grade, high
yield, high-risk debt securities (commonly referred to as
"junk bonds"), as detailed in the individual Fund
prospectuses.

GENERAL

There is no assurance that the investment objective of any
of the Funds will be met. Owners bear the complete
investment risk for Annuity Account Values allocated to a
Variable Account Sub-Account. Each such Sub-Account involves
inherent investment risk, and such risk varies significantly
among the Sub-Accounts. Owners should read each Fund's
prospectus carefully and understand the Funds' relative
degrees of risk before making or changing investment
choices. Additional Funds may, from time to time, be made
available as investments to underlie the Contracts. However,
the right to make such selections will be limited by the
terms and conditions imposed on such transactions by the
Company (See "Premium Payments and Contract Value --
Allocation of Premium Payments").

SUBSTITUTION OF SECURITIES

If the shares of any Fund should no longer be available for
investment by the Variable Account or if, in the judgment of
the Company, further investment in such shares should become
inappropriate in view of the purpose of the Contracts, the
Company may substitute shares of another Fund. No
substitution of securities in any Sub-Account may take place
without prior approval of the Commission and under such
requirements as it may impose.

VOTING RIGHTS

In accordance with its view of present applicable law, the
Company will vote the shares of each Fund held in the
Variable Account at special meetings of the shareholders of
the particular Trust in accordance with written instructions
received from persons having the voting interest in the
Variable Account. The Company will vote shares for which it
has not received instructions, as well as shares
attributable to it, in the same proportion as it votes
shares for which it has received instructions. The Trusts do
not hold regular meetings of shareholders. Shareholder votes
take place whenever state law or the

15
<PAGE>
1940 Act so require, for example on certain elections of
Boards of Trustees, the initial approval of investment
advisory contracts and changes in investment objectives and
fundamental investment policies.

The number of shares which a person has a right to vote will
be determined as of a date to be chosen by the Company not
more than sixty (60) days prior to the meeting of the
particular Trust. Voting instructions will be solicited by
written communication at least fourteen (14) days prior to
the meeting.

The Funds' shares are issued and redeemed only in connection
with variable annuity contracts and variable life insurance
policies issued through separate accounts of the Company and
other life insurance companies. The Trusts do not foresee
any disadvantage to Owners arising out of the fact that
shares may be made available to separate accounts which are
used in connection with both variable annuity and variable
life insurance products. Nevertheless, the Trusts' Boards
intend to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to
determine what action, if any, should be taken in response
thereto. If such a conflict were to occur, one of the
separate accounts might withdraw its investment in a Fund.
This might force a Fund to sell portfolio securities at
disadvantageous prices.

PREMIUM PAYMENTS AND CONTRACT VALUE

PREMIUM PAYMENTS

The Contracts may be purchased under a flexible premium
payment plan. Premium Payments are payable in the frequency
and in the amount selected by the Owner. The initial Premium
Payment is due on the Effective Date. It must be at least
$2,000. Subsequent Premium Payments must be at least $100.
These minimum amounts are not waived for Qualified Plans.
The Company reserves the right to decline any application or
order to purchase or Premium Payment. A Premium Payment in
excess of $1 million requires preapproval by the Company.

The Company may, at its sole discretion, offer special
premium payment programs and/ or waive the minimum payment
requirements.

The Owner may elect to increase, decrease or change the
frequency of Premium Payments.

ALLOCATION OF PREMIUM PAYMENTS

Premium Payments are allocated to one or more of the
appropriate Sub-Accounts within the Variable Account and
Fixed Account as selected by the Owner. For each Variable
Account Sub-Account, the Premium Payments are converted into
Accumulation Units. The number of Accumulation Units
credited to the Contract is determined by dividing the
Premium Payment allocated to the Sub-Account by the value of
the Accumulation Unit for the Sub-Account.

The Company will allocate the initial Premium Payment
directly to the Sub-Account(s) selected by the Owner unless
state law requires, during the right-to-examine period, a
refund of Premium Payments rather than Annuity Account
Value.

Transfers do not necessarily affect the allocation
instructions for payments. Subsequent payments will be
allocated as directed by the Owner; if no direction is
given, the allocation will be that which has been most
recently directed for payments by the Owner. The Owner may
change the allocation of future payments without fee,
penalty or other charge upon written notice to the Annuity &
Variable Life Services Center. A change will be effective
for payments received on or after receipt of the written
notice of change.

16
<PAGE>
Any Premium Payment at the time of any allocation may be
allocated to a single or multiple sub-accounts in whole
precentages (e.g., 12%). No allocation can be made which
would result in a Variable Account Sub-Account of less than
$50 or a Fixed Account Sub-Account value of less than
$2,000. Further, at this time, no more than 18 Fixed Account
and Variable Account Sub-Accounts may be opened during the
life of the Contract. The Company may expand this number at
a future date.

The Company may, at its sole discretion, waive minimum
premium allocation requirements or minimum Variable Account
Sub-Account requirements.

For initial Premium Payments, if the application or order to
purchase for a Contract is in good order, the Company will
apply the Premium Payment to the Variable Account and credit
the Contract with Accumulation Units within two business
days of receipt at the Accumulation Unit Value for the
Valuation Period during which the Premium Payment is
accepted unless state law requires, during the
right-to-examine period, a refund of Premium Payments rather
than Annuity Account Value.

If the application or order to purchase for a Contract is
not in good order, the Company will attempt to get it in
good order or the Company will return the application or
order to purchase and the Premium Payment within five
business days. The Company will not retain a Premium Payment
for more than five business days while processing an
incomplete application or order to purchase unless it has
been so authorized by the purchaser.

For each subsequent Premium Payment, the Company will apply
such payment to the Variable Account and credit the Contract
with Accumulation Units at the Accumulation Unit Value for
the Valuation Period during which each such payment was
received in good order.

OPTIONAL VARIABLE ACCOUNT SUB-ACCOUNT ALLOCATION PROGRAMS

The Contract Owner may elect to enroll in either of the
following programs. However, both programs cannot be in
effect at the same time.

DOLLAR COST AVERAGING

Dollar Cost Averaging is a program which, if elected by the
Contract Owner, systematically allocates specified dollar
amounts from the Money Market Sub-Account or the One-Year
Fixed Account Sub-Account to one or more of the Contract's
Variable Account Sub-Accounts at regular intervals as
selected by the Contract Owner. By allocating on a regularly
scheduled basis as opposed to allocating the total amount at
one particular time, an Owner may be less susceptible to the
impact of market fluctuations.

Dollar Cost Averaging may be selected by establishing a
Money Market Sub-Account of at least $1,000 or the One-Year
Fixed Account Sub-Account value of at least $2,000. The
minimum amount per month to allocate is $50 (subject to the
18 Sub-Account limitation described under "Allocation of
Premium Payments" above). Enrollment in this program may
occur at any time by calling or writing the Annuity &
Variable Life Services Center or by providing the
information requested on the Dollar Cost Averaging election
form to the Company and ensuring that sufficient value is in
the Money Market Sub-Account or the One-year Fixed Account
Sub-Account. Transfers to any Fixed Account Sub-Account or
from a Fixed Account Sub-Account other than the One-Year
Fixed Account Sub-Account are not permitted under Dollar
Cost Averaging. The Company may, at its sole discretion,
waive Dollar Cost Averaging minimum deposit and transfer
requirements.

Dollar Cost Averaging will terminate when any of the
following occurs: (1) the number of designated transfers has
been completed; (2) the value of the Money Market

17
<PAGE>

Sub-Account or the One-Year Fixed Sub-Account is
insufficient to complete the next transfer; (3) the Owner
requests termination by telephone or in writing and such
request is received at least one week prior to the next
scheduled transfer date to take effect that month; or (4)
the Contract is surrendered.

The Dollar Cost Averaging program is not available following
the Annuity Date. There is no current charge for Dollar Cost
Averaging but the Company reserves the right to charge for
this program.

AUTOMATIC REBALANCING

Automatic Rebalancing is an option which, if elected by the
Contract Owner, periodically restores to a pre-determined
level the percentage of Contract Value allocated to each
Variable Account Sub-Account (e.g. 20% Money Market, 50%
Growth, 30% Utilities). This pre-determined level will be
the allocation initially selected when the Contract was
purchased, unless subsequently changed. The Automatic
Rebalancing allocation may be changed at any time by
submitting a request to the Company.

If Automatic Rebalancing is elected, all Net Premium
Payments allocated to the Variable Account Sub-Accounts must
be subject to Automatic Rebalancing. The Fixed Account
Sub-Account is not available for Automatic Rebalancing.

Automatic Rebalancing may take place on either a quarterly,
semi-annual or annual basis, as selected by the Owner. Once
the rebalancing option is activated, any Variable Account
Sub-Account transfers executed outside of the rebalancing
option will terminate the Automatic Rebalancing option. Any
subsequent premium payment or withdrawal that modifies the
net account balance within each Variable Account Sub-Account
may also cause termination of the Automatic Rebalancing
option. Any such termination will be confirmed to the Owner.
The Owner may terminate the Automatic Rebalancing option or
re-enroll at any time by calling or writing the Annuity &
Variable Life Services Center.

The Automatic Rebalancing program is not available following
the Annuity Date. There is no current charge for Automatic
Rebalancing but the Company reserves the right to charge for
this program.

CONTRACT VALUE

The value of the Contract is the sum of the values
attributable to the Contract for each Fixed and Variable
Sub-Account. The value of each Variable Sub-Account is
determined by multiplying the number of Accumulation Units
attributable to the Contract in the Sub-Account by the value
of an Accumulation Unit for the Sub-Account.

ACCUMULATION UNIT

Premium Payments allocated to the Variable Account are
converted into Accumulation Units. This is done by dividing
each Premium Payment by the value of an Accumulation Unit
for the Valuation Period during which the Premium Payment is
allocated to the Variable Account. The Accumulation Unit
value for each Sub-Account was or will be set initially at
$10. It may increase or decrease from Valuation Period to
Valuation Period. The Accumulation Unit value for any later
Valuation Period is determined by multiplying

18
<PAGE>
the Accumulation Unit Value for that Sub-Account for the
preceding Valuation Period by the Net Investment Factor for
the current Valuation Period. The Net Investment Factor is
calculated as follows:

The Net Investment Factor for any Variable Account
Sub-Account for any Valuation Period is determined by
dividing (a) by (b) and then subtracting (c) from the
result, where:
(a) is the net result of:
(1)the net asset value (as described in the prospectus
for the Fund) of a Fund share held in the Variable
Account Sub-Account determined as of the end of the
Valuation Period, plus
(2)the per share amount of any dividend or other
distribution declared by the Fund on the shares held
in the Variable Account Sub-Account if the
"ex-dividend" date occurs during the Valuation Period,
plus or minus
(3)a per share credit or charge with respect to any taxes
paid or reserved for by the Company during the
Valuation Period which are determined by the Company
to be attributable to the operation of the Variable
Account Sub-Account;
(b) is the net asset value of a Fund share held in the
Variable Account Sub-Account determined as of the end of
the preceding Valuation Period; and
(c) is the asset charge factor determined by the Company for
the Valuation Period to reflect the charges for assuming
the mortality and expense risks and for administrative
expenses.

The asset charge factor for any Valuation Period is equal to
the daily asset charge factor multiplied by the number of
24-hour periods in the Valuation Period.

CHARGES AND DEDUCTIONS

Various charges and deductions are made from Annuity Account
Values and the Variable Account. These charges and
deductions are:

CONTINGENT DEFERRED SALES CHARGE (SALES LOAD)

Upon a partial withdrawal or full surrender, a Contingent
Deferred Sales Charge (sales load) will be calculated and
will be deducted from the Annuity Account Value. This Charge
reimburses the Company for expenses incurred in connection
with the promotion, sale and distribution of the Contracts.
The Contingent Deferred Sales Charge applies only to those
Premium Payments received within seven (7) years of the date
of partial withdrawal or full surrender. In calculating the
Contingent Deferred Sales Charge, Premium Payments are
allocated to the amount surrendered or withdrawn on a
first-in, first-out basis. The amount of the Contingent
Deferred Sales Charge is calculated by: (a) allocating
Premium Payments to the amount withdrawn or surrendered; (b)
multiplying each allocated Premium Payment that has been
held under the Contract for the period shown below by the
charge shown below:

<TABLE>
<CAPTION>
YEARS SINCE
PAYMENT CHARGE
-------------- ------
<S> <C>
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5-6 2%
6-7 1%
7+ 0
</TABLE>

and (c) adding the products of each multiplication in (b)
above. The charge will not exceed 7% of the Premium
Payments. Any applicable negative Market Value Adjustment

19
<PAGE>
and Account Fee will be deducted before application of the
Contingent Deferred Sales Charge. The charge is not imposed
on any death benefit paid or upon amounts applied to an
annuity option.

An Owner may, during each Contract Year, withdraw up to
fifteen percent (15%) of Premium Payments, or any remaining
portion thereof, without incurring a Contingent Deferred
Sales Charge. The earliest Premium Payments remaining in the
Contract will be deemed withdrawn first under this Fifteen
Percent Free provision. No Contingent Deferred Sales Charge
will be deducted on withdrawals from Premium Payments which
have been held under the Contract for more than seven (7)
Contract Years or from annuity payments. The Company may
also eliminate or reduce the Contingent Deferred Sales
Charge under the Company procedures then in effect.

For a partial withdrawal, unless the Owner designates
otherwise, the Contingent Deferred Sales Charge will be
deducted proportionately from the Sub-Account(s) from which
the withdrawal is to be made by cancelling Accumulation
Units from each applicable Sub-Account in the ratio that the
value of each Sub-Account bears to the total of the values
of the Sub-Accounts from which the partial withdrawal is
made. If the value(s) of such Sub-Account(s) are
insufficient, the amount payable on the withdrawal will be
net of any remaining Contingent Deferred Sales Charges
unless the Owner and the Company agree otherwise.

Commissions of up to 7.00% will be paid to broker-dealers
who sell the Contracts, and the Company will incur other
promotional or distribution expenses associated with the
marketing of the Contracts. To the extent that the
Contingent Deferred Sales Charge is insufficient to cover
the actual cost of distribution, the Company may use any of
its corporate assets, including potential profit which may
arise from the Mortality and Expense Risk Charge, to make up
any difference.

MORTALITY AND EXPENSE RISK CHARGE

The Company deducts on each Valuation Date a Mortality and
Expense Risk Charge which is equal, on an annual basis, to
1.25%* of the average daily net assets of the Variable
Account (consisting of approximately .75% for mortality
risks and approximately .50% for expense risks). The
mortality risks assumed by the Company arise from its
contractual obligation to make annuity payments after the
Annuity Date for the life of the Annuitant in accordance
with annuity rates guaranteed in the Contracts. The expense
risk assumed by the Company is that all actual expenses
involved in administering the Contracts, including Contract
maintenance costs, administrative costs, mailing costs, data
processing costs, legal fees, accounting fees, filing fees,
and the costs of other services may exceed the amount
recovered from the Account Fee and the Administrative
Expense Charge.

If the Mortality and Expense Risk Charge is insufficient to
cover the actual costs, the loss will be borne by the
Company. Conversely, if the amount deducted proves more than
sufficient, the excess will be a profit to the Company. The
Company expects to profit from this charge.

The Mortality and Expense Risk Charge is guaranteed by the
Company and cannot be increased.

* For New York Contracts issued before May 1, 1996, see
Appendix I.

ADMINISTRATIVE EXPENSE CHARGE

The Company deducts on each Valuation Date an Administrative
Expense Charge which is equal, on an annual basis, to 0.15%*
of the average daily net assets of the Variable

20
<PAGE>
Account. This charge is to reimburse the Company for a
portion of its expenses in administering the Contracts. This
charge is guaranteed by the Company and cannot be increased,
and the Company will not derive a profit from this charge.

* For New York Contracts issued before May 1, 1996, see
Appendix I.

ACCOUNT FEE

The Company deducts an annual Account Fee of $30 from the
Annuity Account Value on the last Valuation Date of each
Contract Year. This charge, like the Administrative Expense
Charge, is to reimburse the Company for a portion of its
administrative expenses (see above). Prior to the Annuity
Date, this charge is deducted by cancelling Accumulation
Units from each applicable Sub-Account in the ratio that the
value of each Sub-Account bears to the total Annuity Account
Value. When the Contract is annuitized or surrendered for
its full Surrender Value on other than a Contract
Anniversary, the Account Fee will be prorated at the time of
surrender or annuitization. On and after the Annuity Date,
the Account Fee will be collected proportionately from the
Sub-Account(s) on which the Variable Annuity payment is
based, prorated on a monthly basis and will result in a
reduction of the annuity payments. The Account Fee will be
waived for any Contract Year in which the Annuity Account
Value equals or exceeds $100,000 as of the last Valuation
Date of the Contract Year.

PREMIUM TAX EQUIVALENTS

Premium tax equivalents or other taxes payable to a state,
municipality or other governmental entity will be charged
against Annuity Account Value. No premium taxes are
currently imposed by the State of New York on the Contracts
offered hereby. Some states assess premium taxes at the time
Premium Payments are made; others assess premium taxes at
the time annuity payments begin. The Company will, in its
sole discretion, determine when taxes have resulted from:
the investment experience of the Variable Account; receipt
by the Company of the Premium Payment(s); or commencement of
annuity payments. The Company may, at its sole discretion,
pay taxes when due and deduct an equivalent amount
reflecting investment experience from the Annuity Account
Value at a later date. Payment at an earlier date does not
waive any right the Company may have to deduct amounts at a
later date.

INCOME TAXES

While the Company is not currently maintaining a provision
for federal income taxes, the Company has reserved the right
to establish a provision for income taxes if it determines,
in its sole discretion, that it will incur a tax as a result
of the operation of the Variable Account. The Company will
deduct for any income taxes incurred by it as a result of
the operation of the Variable Account whether or not there
was a provision for taxes and whether or not it was
sufficient.

FUND EXPENSES

There are other deductions from, and expenses paid out of,
the assets of the Funds which are described in the
accompanying Funds' prospectuses.

TRANSFER FEE

Prior to the Annuity Date, a Owner may transfer all or a
part of the Annuity Account Value in a Sub-Account to
another Sub-Account without the imposition of any transfer
fee or charge if there have been no more than twelve
transfers made in the Contract Year. For additional
transfers, the Company reserves the right to deduct a
transfer fee of

21
<PAGE>
up to $10 per transfer. Prescheduled automatic Dollar Cost
Averaging or Automatic Rebalancing transfers are not counted
toward the twelve transfer limit. The Company reserves the
right to charge a fee of up to $10 for each transfer after
the Annuity Date. The transfer fee at any given time is
guaranteed not to exceed $10, will not be set at a level
greater than its cost and will contain no element of profit.

OTHER CONTRACT FEATURES

OWNERSHIP

The Owner has all rights and may receive all benefits under
the Contract. The Owner may change the Owner at any time. If
the Owner dies, a death benefit will be paid to the
Beneficiary upon proof of the Owner's death. If the Owner is
a corporation, partnership or other non-natural person, the
death benefit is paid upon receipt of due proof of the
Annuitant's death. A change of Owner will automatically
revoke any prior designation of Owner. A request for change
must be: (1) made in writing; and (2) received by the
Company at its Annuity & Variable Life Services Center. The
change will become effective as of the date the written
request is signed. A new designation of Owner will not apply
to any payment made or action taken by the Company prior to
the time it was received.

For non-qualified contracts, in accordance with Code Section
72(u), a deferred annuity contract held by a corporation or
other entity that is not a natural person is not treated as
an annuity contract for tax purposes. Income on the contract
is treated as ordinary income received by the owner during
the taxable year. But in accordance with Code Section 72(u),
an annuity contract held by a trust or other entity as agent
for a natural person is considered held by a natural person.

ASSIGNMENT

The Owner may assign the Contract at any time during his or
her lifetime. Unless provided otherwise, an assignment will
not affect the interest of any previously indicated
Beneficiary. The Company will not be bound by any assignment
until written notice is received by the Company at its
Variable Products Service Center. The Company is not
responsible for the validity of any assignment. The Company
will not be liable as to any payment or other settlement
made by the Company before such assignment has been recorded
at the Company's Annuity & Variable Life Services Center.

If the Contract is issued pursuant to a Qualified Plan, it
may not be assigned, pledged or otherwise transferred except
as may be allowed under applicable law.

BENEFICIARY

The Beneficiary is named when the Contract is applied for
and, unless changed, is entitled to receive any death
benefits to be paid. Prior to the Annuity Date, death
benefits are paid to the Beneficiary on the death of the
Owner.

CHANGE OF BENEFICIARY

The Owner may change a Beneficiary by filing a written
request with the Company at its Annuity & Variable Life
Services Center unless an irrevocable Beneficiary
designation was previously filed. After the change is
recorded, it will take effect as of the date the request was
signed. If the request reaches the Annuity & Variable Life
Services Center after the Annuitant or Owner, as applicable,
dies but before any payment is made, the change will be
valid. The Company will not be liable for any payment made
or action taken before it records the change.

22
<PAGE>
ANNUITANT

The Annuitant must be a natural person. The maximum age of
the Annuitant on the Effective Date is 85 years old. The
Annuitant may be changed at any time prior to the Annuity
Date. Joint Annuitants are allowed at the time of
annuitization only, if the Company chooses to make a joint
and survivor annuity payment option available in addition to
the options provided in the Contract. The Annuitant has no
rights or privileges prior to the Annuity Date. When an
Annuity Option is elected, the amount payable as of the
Annuity Date is based on the age and gender classification
(in accordance with state law) of the Annuitant, as well as
the Option selected and the Annuity Account Value.

TRANSFER OF CONTRACT VALUES BETWEEN SUB-ACCOUNTS

Prior to the Annuity Date, the Owner may transfer all or
part of the Annuity Account Value in a Sub-Account to
another Sub-Account without the imposition of any fee or
charge if there have been no more than twelve transfers made
in the Contract Year. For additional transfers, the Company
reserves the right to deduct a transfer fee of up to $10
(See "Charges and Deductions -- Transfer Fee"). This
Contract is not designed for professional market timing
organizations or other entities using programmed and
frequent transfers.

After the Annuity Date, provided a variable annuity option
was selected, the Owner may make up to three transfers
between Variable Sub-Accounts in any Contract Year.

All transfers are subject to the following:

a. The deduction of any transfer fee that may be imposed.
The transfer fee will be deducted from the amount which
is transferred if the entire amount in the Sub-Account is
being transferred, otherwise from the Sub-Account from which
the transfer is made.

b. The minimum amount which may be transferred is the lesser
of (i) $2,000 per Fixed Account Sub-Account or $50 per
Variable Account Sub-Account. (The Company, at its sole
discretion may waive these minimum requirements); or (ii)
the Owner's entire interest in the Sub-Account.

c. No partial transfer will be made if the Owner's remaining
Contract Value in the Sub-Account will be less than $50.

d. Transfers will be effected during the Valuation Period
next following receipt by the Company of a written
transfer request (or by telephone, if authorized) containing
all required information. However, no transfer may be made
effective within seven calendar days of the date on which
the first annuity payment is due. Transfers are not
permitted during the right-to-examine period.

e. Any transfer request must clearly specify the amount
which is to be transferred and the Sub-Accounts which are
to be affected.

f. Transfers of all or a portion of any Fixed Account
Sub-Account values (other than transfers pursuant to the
Dollar Cost Averaging program) are subject to any applicable
Market Value Adjustment;

g. The Company reserves the right to defer transfers from
any Fixed Account Sub-Account for up to six months after
date of receipt of the transfer request;

23
<PAGE>
h. Transfers involving the Variable Account Sub-Accounts are
subject to such restrictions as may be imposed by the
Funds;

i. The Company reserves the right at any time and without
prior notice to any party to terminate, suspend or modify
the transfer privileges described above.

j. After the Annuity Date, transfers may not take place
between a Fixed Annuity Option and a Variable Annuity
Option.

k. The Company reserves the right to reject any premium
allocation or transfer which would cause the Fixed
Account Sub-Account values in aggregate to exceed then
current Company limits.

Transfers between Sub-Accounts may be made by calling or
writing the Annuity & Variable Life Services Center.
Transfer requests must be received prior to 4:00 pm Eastern
Time in order to be effective that day.

Transfers between any Sub-Accounts may be suspended or
postponed during any period in which the New York Stock
Exchange is closed or has suspended trading.

PROCEDURES FOR TELEPHONE TRANSFERS

Owners may effect telephone transfers by calling the Annuity
& Variable Life Services Center.

The Company will take the following procedures to confirm
that instructions communicated by telephone are genuine.
Before a service representative accepts any request, the
caller will be asked for specific information to validate
the request. All calls will be recorded. All transactions
performed will be confirmed by the Company in writing. The
Company is not liable for any loss, cost or expense for
acting on telephone instructions which are believed to be
genuine in accordance with these procedures.

SURRENDERS AND PARTIAL WITHDRAWALS

While the Contract is in force and before the Annuity Date,
the Company will, upon written request to the Company by the
Owner, allow the surrender or partial withdrawal of all or a
portion of the Contract for its Surrender Value. Such
request may also be made by telephone if telephone transfers
have been previously authorized in writing. Surrenders or
partial withdrawals will result in the cancellation of
Accumulation Units from each applicable Sub-Account in the
ratio that the value of each Sub-Account bears to the total
Annuity Account Value, unless the Owner specifies in writing
in advance which units are to be cancelled. The Company will
pay the amount of any surrender or partial withdrawal within
seven (7) days of receipt of a valid request, unless the
"Delay of Payments" provision is in effect (See "Delay of
Payments and Transfers").

Certain tax withdrawal penalties and restrictions may apply
to surrenders and partial withdrawals from Contracts (See
"Tax Status"). Owners should consult their own tax counsel
or other tax adviser regarding any surrenders and partial
withdrawals.

a. any applicable premium tax equivalents not previously
deducted;

b. any applicable Account Fee;

24
<PAGE>
c. any applicable Contingent Deferred Sales Charge; and

in the case of partial withdrawals, by the sum: of a and c
above.

DELAY OF PAYMENTS AND TRANSFERS

The Company reserves the right to suspend or postpone
payments or transfers for any period when:

1. the New York Stock Exchange is closed (other than
customary weekend and holiday closings);

2. trading on the New York Stock Exchange is restricted;

3. an emergency exists as a result of which disposal of
securities held in the Variable Account is not reasonably
practicable or it is not reasonably practicable to determine
the value of the Variable Account's net assets; or

4. during any other period when the Commission, by order, so
permits for the protection of Owners.

The applicable rules and regulations of the Commission will
govern as to whether the conditions described in 2. and 3.
exist.

The Company reserves the right to defer the payment or
transfer of amounts withdrawn from any Fixed Account
Sub-Account for a period not to exceed six months from the
date written request for such withdrawal or transfer is
received by the Company. If payment or transfer is deferred
beyond thirty (30) days, the Company will pay interest of
not less than 3% per year on amounts so deferred.

In addition, payment of the amount of any withdrawal
derived, all or in part, from any Premium Payment paid to
the Company by check or draft may be postponed until the
Company determines the check or draft has been honored.

DEATH OF THE OWNER BEFORE THE ANNUITY DATE

In the event of death of the Owner (or the Annuitant, if the
Owner is a non-natural person) prior to the Annuity Date, a
death benefit is payable to the Beneficiary designated by
the Owner. The value of the death benefit will be determined
as of the Valuation Period next following the date both due
proof of death (a certified copy of the Death Certificate)
and a payment election are received by the Company. The
value of the death benefit is determined as of the effective
date of the death benefit election (see "Election and
Effective Date of Election") and is equal to the greatest of
(a) Premium Payments made, less partial withdrawals; (b) the
Annuity Account Value or (c) the Purchasers' Annuity Account
Value on the Seven Year Anniversary immediately preceding
the date that the death benefit election is effective or is
deemed to become effective, adjusted for any subsequent
Premium Payments and partial withdrawals and charges. If the
death benefit is payable after the Owner's (or Annuitant's)
85th birthday, the amount payable will be the greater of (a)
or (b) above. The Beneficiary may, at any time before the
end of the sixty (60) day period immediately following
receipt of due proof of death by the Company, elect the
death benefit to be paid as follows:

1. the payment of the entire death benefit within five years
of the date of the death of the Owner or Annuitant,
whichever is applicable; or

25
<PAGE>
2. payment over the lifetime of the designated Beneficiary
or over a period not extending beyond the life expectancy
of the Beneficiary, with distribution beginning within one
year of the date of death of the Owner or Annuitant,
whichever is applicable (see "Annuity Provisions -- Annuity
Options"); or

3. payment in accordance with one of the settlement options
under the Contract (see "Annuity Provisions -- Annuity
Options"); or

4. if the designated Beneficiary is the Owner's spouse,
he/she can continue the Contract in his/her own name.

Payment amounts may vary with their frequency and duration
(see "Annuity Provisions -- Annuity Options"). To the extent
that the Beneficiary elects a variable payment option, the
Beneficiary will bear the investment risk associated with
the performance of the underlying Fund(s) in which the
relevant Variable Sub Account invest(s).

If no payment option is elected, a single sum settlement
will be made by the Company within seven (7) days of the end
of the sixty (60) day period following receipt of due proof
of death of the Owner or Annuitant as applicable.

If the Owner is a non-natural person, then for purposes of
the death benefit, the Annuitant shall be treated as the
Owner.

DEATH OF THE ANNUITANT BEFORE THE ANNUITY DATE

If the Annuitant dies prior to the Annuity Date and the
Annuitant is different from the Owner, the Owner, if a
natural person, may designate a new Annuitant. Unless and
until one is designated, the Owner will be the Annuitant. If
the Owner is not a natural person, then the death benefit,
valued as described in "Death of the Owner before the
Annuity Date", is paid on due proof of the Annuitant's
death.

DEATH OF THE ANNUITANT AFTER THE ANNUITY DATE

If the Annuitant dies after the Annuity Date, the death
benefit, if any, will be as specified in the Annuity Option
elected. The Company will require due proof of the
Annuitant's death. Death benefits will be paid at least as
rapidly as under the method of distribution in effect at the
Annuitant's death.

CHANGE IN OPERATION OF VARIABLE ACCOUNT

At the Company's election and if deemed in the best
interests of persons having voting rights under the
Contracts, the Variable Account may be operated as a
management company under the 1940 Act or any other form
permitted by law; de-registered under the 1940 Act in the
event registration is no longer required (deregistration of
the Variable Account requires an order by the Commission);
or combined with one or more other separate accounts. To the
extent permitted by applicable law, the Company also may
transfer the assets of the Variable Account associated with
the Contracts to another account or accounts. In the event
of any change in the operation of the Variable Account
pursuant to this provision, the Company may make appropriate
endorsement to the Contracts to reflect the change and take
such other action as may be necessary and appropriate to
effect the change.

26
<PAGE>
MODIFICATION

Upon notice to the Owner (or the Payee(s) during the Annuity
Period), the Contracts may be modified by the Company if
such modification: (i) is necessary to make the Contracts or
the Variable Account comply with, or take advantage of, any
law or regulation issued by a governmental agency to which
the Company or the Variable Account is subject; or (ii) is
necessary to attempt to assure continued qualification of
the Contracts under the Code or other federal or state laws
relating to retirement annuities or annuity contracts; or
(iii) is necessary to reflect a change in the operation of
the Variable Account or its Sub-Account(s) (See "Change in
Operation of Variable Account"); or (iv) provides additional
Variable Account and/or fixed accumulation options. In the
event of any such modification, the Company may make
appropriate endorsement to the Contracts to reflect such
modification.

In addition, upon notice to the Owner, the Contracts may be
modified by the Company to change the withdrawal charges,
Account Fees, mortality and expense risk charges,
administrative expense charges, the tables used in
determining the amount of the first monthly fixed annuity
payment, and the formula used to calculate the Market Value
Adjustment, provided that such modification shall apply only
to Contracts established after the effective date of such
modification. In order to exercise its modification rights
in these particular instances, the Company must notify the
Owner of such modification in writing. All of the charges
and the annuity tables which are provided in the Contracts
prior to any such modification will remain in effect
permanently, unless improved by the Company, with respect to
Contracts established prior to the effective date of such
modification.

DISCONTINUANCE

The Company reserves the right to limit or discontinue the
offer and issuance of new Contracts. Such limitation or
discontinuance shall have no effect on rights or benefits
with respect to any Contracts issued prior to the effective
date of such limitation or discontinuance.

ANNUITY PROVISIONS

ANNUITY DATE; CHANGE IN ANNUITY DATE AND ANNUITY OPTION

The Owner selects an Annuity Date at the time of application
or order to purchase. The Owner may, upon at least
forty-five (45) days prior written notice to the Company, at
any time prior to the Annuity Date, change the Annuity Date.
The Annuity Date must always be the first day of a calendar
month. The Annuity Date may not be later than the month
following the Annuitant's 85th birthday.

The Owner may, upon at least forty-five (45) days prior
written notice to the Company, at any time prior to the
Annuity Date, select and/or change the Annuity Option.

ANNUITY OPTIONS

Instead of having the proceeds paid in one sum, the Owner
may select one of the Annuity Options. These may be on a
fixed or variable basis, or a combination thereof. The
Annuity Option must be selected at least 30 days prior to
the Annuity Date. The Company may, at the time of election
of an Annuity Option, offer more favorable rates in lieu of
those guaranteed. The Company also may make available other
settlement options. The Company uses sex distinct or unisex
annuity rate tables when determining appropriate annuity
payments.

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FIXED OPTIONS

Under a fixed option, once the selection has been made and
payments have begun, the amount of the payments will not
vary. The fixed options currently available are:

FIRST OPTION -- LIFE ANNUITY. The Company will make equal
monthly payments during the life of the Annuitant, ceasing
with the last payment due prior to the death of the
Annuitant. Under this option, it is possible only one
monthly annuity payment would be made, if the Annuitant died
before the second monthly annuity payment was due.

SECOND OPTION -- LIFE ANNUITY WITH CERTAIN PERIOD. The
Company will make equal monthly payments during the life of
the Annuitant, but at least for the minimum period shown in
the annuity tables contained in the Contract. The amount of
each monthly payment per $1,000 of proceeds is based on the
age and gender classification (in accordance with state law)
of the Annuitant when the first payment is made and on the
minimum period chosen.

THIRD OPTION -- LIFE ANNUITY WITH CASH REFUND. The Company
will make equal monthly payments during the life of the
Annuitant. Upon the death of the Annuitant, after payments
have started, the Company will pay in one sum any excess of
the amount of the proceeds applied under this Option over
the total of all payments made under this Option. The amount
of each monthly payment per $1,000 of proceeds is based on
the age and gender (in accordance with state law) of the
Annuitant when the first payment is made.

FOURTH OPTION -- ANNUITY CERTAIN. The Company will make
equal monthly payments for a number of years selected, not
less than five or more than thirty years.

VARIABLE OPTIONS

The actual dollar amount of variable annuity payments is
dependent upon (i) the Annuity Account Value at the time of
annuitization, (ii) the annuity table specified in the
Contract, (iii) the Annuity Option selected, and (iv) the
investment performance of the Sub-Account selected. Each
annuity payment will be less if payments are to be made more
frequently or for longer periods of time.

The dollar amount of the first monthly variable annuity
payment is determined by applying the available value (after
deduction of any premium tax equivalents not previously
deducted) to the table using the age and gender (in
accordance with state law) of the Annuitant. The number of
Annuity Units is then determined by dividing this dollar
amount by the then current Annuity Unit value. Thereafter,
the number of Annuity Units remains unchanged during the
period of annuity payments. This determination is made
separately for each Sub-Account of the Variable Account. The
number of Annuity Units is determined for each Sub-Account
and is based upon the available value in each Sub-Account as
of the date annuity payments are to begin.

The dollar amount determined for each Sub-Account will then
be aggregated for purposes of making payments.

The dollar amount of the second and later variable annuity
payments is equal to the number of Annuity Units determined
for each Sub-Account times the Annuity Unit value for that
Sub-Account as of the due date of the payment. This amount
may increase or decrease from month to month.

The annuity tables contained in the Contract are based on a
three percent (3%) assumed net investment rate. If the
actual net investment rate exceeds three percent (3%),
payments will increase. Conversely, if the actual rate is
less than three percent (3%), annuity payments will
decrease.

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The Annuitant receives the value of a fixed number of
Annuity Units each month. The value of a fixed number of
Annuity Units will reflect the investment performance of the
Sub-Account selected and the amount of each annuity payment
will vary accordingly.

The Annuity Unit Value for a Sub-Account is determined by
multiplying the Annuity Unit Value for that Sub-Account for
the preceding Valuation Period by the Net Investment Factor
for the current Valuation Period (calculated as described on
pages 18 and 19 of this Prospectus) and multiplying the
result by 0.999919020, the daily factor to neutralize the
assumed net investment rate, discussed above, of 3% per
annum which is built into the annuity rate table. It may
increase or decrease from Valuation Period to Valuation
Period.

The variable options currently available, assuming the
Annuity Account Value is at least $1,000 when variable
annuity payments commence, are:

OPTION I -- VARIABLE LIFE ANNUITY. Monthly annuity payments
are paid during the life of an Annuitant, ceasing with the
last annuity payment due prior to the Annuitant's death.

OPTION II -- VARIABLE LIFE ANNUITY WITH CERTAIN
PERIOD. Monthly annuity payments are paid during the life of
an Annuitant, but at least for the minimum period selected,
which may be five, ten, fifteen or twenty years;

OPTION III -- VARIABLE ANNUITY CERTAIN. Monthly annuity
payments are paid for a number of years selected, not less
than five or more than thirty years.

After the Annuity Date, the payee may, by written request to
the Annuity & Variable Life Services Center, exchange
Annuity Units of one Variable Sub-Account for Annuity Units
of equivalent value in another Variable Sub-Account up to
three times each Contract Year.

EVIDENCE OF SURVIVAL

The Company reserves the right to require evidence of the
survival of any Payee at the time any payment payable to
such Payee is due under the following Annuity Options: Life
Annuity (fixed), Life Annuity with Certain Period (fixed),
Cash Refund Life Annuity (fixed), Variable Life Annuity, and
Variable Life Annuity with Certain Period.

ENDORSEMENT OF ANNUITY PAYMENTS

The Company will make each annuity payment at its Home
Office by check. Each check must be personally endorsed by
the Payee or the Company may require that proof of the
Annuitant's survival be furnished.

THE FIXED ACCOUNT

THE FIXED ACCOUNT IS MADE UP OF THE GENERAL ASSETS OF THE
COMPANY OTHER THAN THOSE ALLOCATED TO ANY SEPARATE ACCOUNT.
THE FIXED ACCOUNT IS PART OF THE COMPANY'S GENERAL ACCOUNT.
BECAUSE OF APPLICABLE EXEMPTIVE AND EXCLUSIONARY PROVISIONS,
INTERESTS IN THE FIXED ACCOUNT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), AND
NEITHER THE FIXED ACCOUNT NOR THE COMPANY'S GENERAL ACCOUNT
HAS BEEN REGISTERED UNDER THE 1940 ACT. THEREFORE, NEITHER
THE FIXED ACCOUNT NOR ANY INTEREST THEREIN IS GENERALLY
SUBJECT TO REGULATION UNDER THE PROVISIONS OF THE 1933 ACT
OR THE 1940 ACT. ACCORDINGLY, THE COMPANY HAS BEEN ADVISED
THAT THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING TO
THE FIXED ACCOUNT.

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<PAGE>
Owner's Annuity Account Value may be transferred among
Sub-Accounts available under the Contract as described under
"Transfer of Contract Values between Sub-Accounts." Instead
of the Owner's assuming all of the investment risk as is the
case for Premium Payments allocated to the Variable Account,
the Company guarantees it will credit interest of at least
3% per year to amounts allocated to the Fixed Account.

Assets supporting amounts allocated to Sub-Accounts within
the Fixed Account become part of the Company's general
account assets and are available to fund the claims of all
creditors of the Company. All of the Company's general
account assets will be available to fund benefits under the
Contracts. The Owner does not participate in the investment
performance of the assets of the Fixed Account or the
Company's general account.

The Company will invest the assets of the general account in
those assets chosen by the Company and allowed by applicable
state laws regarding the nature and quality of investments
that may be made by life insurance companies and the
percentage of their assets that may be committed to any
particular type of investment. In general, these laws permit
investments, within specified limits and subject to certain
qualifications, in federal, state and municipal obligations,
corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments.

If the Account Value within a Fixed Account Sub-Account is
maintained for the duration of the Sub-Account's Guaranteed
Period, the Company guarantees that it will credit interest
to that amount at the guaranteed rate specified for the
Sub-Account which may but need not be more than 3% per year.
Any amount withdrawn from or transferred out of the
Sub-Account prior to the expiration of the Sub-Account's
Guaranteed Period is subject to a Market Value Adjustment
(see "Market Value Adjustment") and a Deferred Sales Charge,
if applicable. The Company guarantees, however, that a
Contract will be credited with interest at a rate of not
less than 3% per year, compounded annually, on amounts
allocated to any Fixed Account Sub-Account, regardless of
any application of the Market Value Adjustment (that is, the
Market Value Adjustment will not reduce the amount available
for surrender, withdrawal or transfer to an amount less than
the initial amount allocated or transferred to the Fixed
Account Sub-Account plus interest of 3% per year). The
Company reserves the right to defer the payment or transfer
of amounts withdrawn from the Fixed Account for a period not
to exceed six (6) months from the date a proper request for
surrender, withdrawal or transfer is received by the
Company.

FIXED ACCUMULATION VALUE. The fixed accumulation value of an
Annuity Account, if any, for any Valuation Period is equal
to the sum of the values of all Fixed Account Sub-Accounts
which are part of the Annuity Account for such Valuation
Period.

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<PAGE>
will be referred to herein as a "Guaranteed Period Amount."
Interest will be credited daily at a rate equivalent to the
compound annual rate. As a result of renewals and transfers
of portions of the Annuity Account Value described under
"Transfer of Contract Values between Sub-Accounts" above,
which will begin new Sub-Account Guaranteed Periods, amounts
allocated to Sub-Accounts of the same duration may have
different Expiration Dates. Thus each Guaranteed Period
Amount will be treated separately for purposes of
determining any applicable Market Value Adjustment (see
"Market Value Adjustment").

The Company will notify the Owner in writing prior to the
Expiration Date for any Guaranteed Period Amount. A new
Sub-Account Guaranteed Period of the same duration as the
previous Sub-Account Guaranteed Period will commence
automatically at the end of the previous Guaranteed Period
unless the Company receives, following such notification but
prior to the end of such Guaranteed Period, a written
election by the Owner to transfer the Guaranteed Period
Amount to a different Fixed Account Sub-Account or to a
Variable Account Sub-Account from among those being offered
by the Company at such time. Transfers of any Guaranteed
Period Amount which become effective upon the expiration of
the applicable Guaranteed Period are not subject to the
twelve transfers per Contract Year limitations or the
additional Fixed Sub-Account transfer restrictions (see
"Transfer of Contract Values between Sub-Accounts").

GUARANTEED INTEREST RATES. The Company periodically will
establish an applicable Guaranteed Interest Rate for each of
the Sub-Account Guaranteed Periods within the Fixed Account.
Current Guaranteed Interest Rates may be changed by the
Company frequently or infrequently depending on interest
rates on investments available to the Company and other
factors as described below, but once established, rates will
be guaranteed for the entire duration of the respective
Sub-Account's Guaranteed Period. However, any amount
withdrawn from the Sub-Account may be subject to any
applicable withdrawal charges, Account Fees, Market Value
Adjustment, premium taxes or other fees. Amounts transferred
out of a Fixed Account Sub-Account prior to the end of the
Guaranteed Period will be subject to the Market Value
Adjustment.

The Guaranteed Interest Rate will not be less than 3% per
year compounded annually, regardless of any application of
the Market Value Adjustment. The Company has no specific
formula for determining the rate of interest that it will
declare as a Guaranteed Interest Rate, as these rates will
be reflective of interest rates available on the types of
debt instruments in which the Company intends to invest
amounts allocated to the Fixed Account (see "The Fixed
Account"). In addition, the Company's management may
consider other factors in determining Guaranteed Interest
Rates for a particular Sub-Account including: regulatory and
tax requirements; sales commissions and administrative
expenses borne by the Company; general economic trends; and
competitive factors. THERE IS NO OBLIGATION TO DECLARE A
RATE IN EXCESS OF 3% PER YEAR; THE OWNER ASSUMES THE RISK
THAT DECLARED RATES WILL NOT EXCEED 3% PER YEAR. THE COMPANY
HAS COMPLETE DISCRETION TO DECLARE ANY RATE, SO LONG AS THAT
RATE IS AT LEAST 3% PER YEAR.

MARKET VALUE ADJUSTMENT

Any surrender or transfer of a Fixed Account Guaranteed
Period Amount, other than a surrender or transfer pursuant
to an election which becomes effective upon the Expiration
Date of the Guaranteed Period, will be subject to a Market
Value Adjustment ("MVA"). The MVA will be applied to the
amount being surrendered or transferred after deduction of
any applicable Annuity Account Fee and before deduction of
any applicable surrender charge.

The MVA generally reflects the relationship between the
Index Rate (based upon the Treasury Constant Maturity Series
published by the Federal Reserve) in effect at the time

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<PAGE>
a Premium Payment is allocated to a Sub-Account's Guaranteed
Period under the Contract and the Index Rate in effect at
the time of the Premium Payment's surrender or transfer. It
also reflects the time remaining in the Sub-Account's
Guaranteed Period. Generally, if the Index Rate at the time
of surrender or transfer is lower than the Index Rate at the
time the Premium Payment was allocated, then the application
of the MVA will result in a higher payment upon surrender or
transfer. Similarly, if the Index Rate at the time of
surrender or transfer is higher than the Index Rate at the
time the Premium Payment was allocated, the application of
the MVA will generally result in a lower payment upon
surrender or transfer.

The MVA is computed by applying the following formula:

(1+A)to the power N
---------------------------------------
(1+B)to the power N

where:

A = an Index Rate (based on the Treasury Constant Maturity
Series published by the Federal Reserve) for a security with
time to maturity equal to the Sub-Account's Guaranteed
Period, determined at the beginning of the Guaranteed
Period.

B = an Index Rate (based on the Treasury Constant Maturity
Series published by the Federal Reserve) for a security with
time to maturity equal to the Sub-Account's Guaranteed
Period, determined at the time of surrender or transfer,
plus a 0.25% adjustment. If Index Rates "A" and "B" are
within .25% of each other when the index rate factor is
determined, no such percentage adjustment to "B" will be
made, unless otherwise required by state law. This
adjustment builds into the formula a factor representing
direct and indirect costs to the Company associated with
liquidating general account assets in order to satisfy
surrender requests. This adjustment of 0.25% has been added
to the denominator of the formula because it is anticipated
that a substantial portion of applicable general account
portfolio assets will be in relatively illiquid securities.
Thus, in addition to direct transaction costs, if such
securities must be sold (E.G., because of surrenders), the
market price may be lower. Accordingly, even if interest
rates decline, there will not be a positive adjustment until
this factor is overcome, and then any adjustment will be
lower than otherwise, to compensate for this factor.
Similarly, if interest rates rise, any negative adjustment
will be greater than otherwise, to compensate for this
factor. If interest rates stay the same, this factor will
result in a small but negative Market Value Adjustment.

N = The number of years remaining in the Guaranteed Period
(E.G. 1 year and 73 days = 1 + (73 divided by 365) = 1.2
years)

See the Statement of Additional information for examples of
the application of the Market Value Adjustment.

DISTRIBUTION OF THE CONTRACTS

CIGNA Financial Advisors, Inc. ("CFA"), located at 900
Cottage Grove Road, Bloomfield, CT, acts as the principal
underwriter and the distributor of the Contracts as well as
of variable life insurance policies and other variable
annuity contracts issued by the Company. CFA, a registered
broker-dealer under the Securities Exchange Act of 1934 and
a member of the National Association of Securities Dealers
(NASD), is a wholly-owned subsidiary of Connecticut General
Corporation. The Contracts are offered on a continuous
basis. CFA and the Company may enter into agreements to sell
the Contracts through various broker-dealers whose agents
are licensed to sell the Contracts.

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<PAGE>
PERFORMANCE DATA

MONEY MARKET SUB-ACCOUNT

From time to time, the Money Market Sub-Account may
advertise its "yield" and "effective yield." Both yield
figures will be based on historical earnings and are not
intended to indicate future performance. The "yield" of the
Money Market Sub-Account refers to the income generated by
Annuity Account Values in the Money Market Sub-Account over
a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is,
the amount of income generated by the investment during that
week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the Annuity Account
Values in the Money Market Sub-Account. The "effective
yield" is calculated similarly but, when annualized, the
income earned by Annuity Account Values in the Money Market
Sub-Account is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of
the compounding effect of this assumed reinvestment. The
computation of the yield calculation includes a deduction
for the Mortality and Expense Risk Charge, the
Administrative Expense Charge, and the Account Fee.

OTHER VARIABLE ACCOUNT SUB-ACCOUNTS

From time to time, the other Variable Account Sub-Accounts
may publish their current yields and total returns in
advertisements and communications to Owners. The current
yield for each Variable Account Sub-Account will be
calculated by dividing the annualization of the dividend and
interest income earned by the underlying Fund during a
recent 30-day period by the maximum Accumulation Unit value
at the end of such period. Total return information will
include the underlying Fund's average annual compounded rate
of return over the most recent four calendar quarters and
the period from the underlying Fund's inception of
operations, based upon the value of the Accumulation Units
acquired through a hypothetical $1,000 investment at the
Accumulation Unit value at the beginning of the specified
period and upon the value of the Accumulation Unit at the
end of such period, assuming reinvestment of all
distributions and the deduction of the Mortality and Expense
Risk Charge, the Administrative Expense Charge and the
Account Fee. Each Variable Account Sub-Account may also
advertise aggregate and average total return information
over different periods of time.

In each case, the yield and total return figures will
reflect all recurring charges against the Variable Account
Sub-Account's income, including the deduction for the
Mortality and Expense Risk Charge, the Administrative
Expense Charge and the Account Fee for the applicable time
period. Owners should note that the investment results of
each Sub-Account will fluctuate over time, and any
presentation of a Variable Account Sub-Account's current
yield or total return for any prior period should not be
considered as a representation of what an investment may
earn or what a Owner's yield or total return may be in any
future period. See "Historical Performance Data" in the
Statement of Additional Information.

PERFORMANCE RANKING OR RATING

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<PAGE>

("Morningstar") and the Variable Annuity Research and Data
Service ("VARDS-Registered Trademark-") are independent
services which monitor and rank or rate the performance of
variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis. Generally,
these services may not be used, and such comparisons may not
be made, in advertising or sales literature for variable
annuities.

Lipper's rankings include variable life issuers as well as
variable annuity issuers. VARDS-Registered Trademark-
rankings compare only variable annuity issuers. Morningstar
ratings include funds used by both variable life and
variable annuity issuers. The performance analyses prepared
by Lipper and VARDS-Registered Trademark- rank such issuers
on the basis of total return, assuming reinvestment of
distributions, but do not take sales charges, redemption
fees or certain expense deductions at the separate account
level into consideration. In addition,
VARDS-Registered Trademark- prepares risk-adjusted rankings,
which consider the effects of market risk on total return
performance. This type of ranking may address the question
as to which funds provide the highest total return with the
least amount of risk. Morningstar assigns ratings of zero to
five stars to the mutual funds taking into account primarily
historical performance and risk factors.

TAX MATTERS

NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S
UNDERSTANDING OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE
TO ANNUITIES IN GENERAL. THE COMPANY CANNOT PREDICT THE
PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
OWNERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING
THE POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT
GUARANTEE THE TAX STATUS OF THE CONTRACTS. OWNERS BEAR THE
COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS.

GENERAL

Section 72 of the Code governs taxation of annuities in
general. An Owner is not taxed on increases in the value of
a Contract until distribution occurs, either in the form of
a lump sum payment or as annuity payments under the
Settlement Option elected. For a lump sum payment received
as a total surrender (total redemption), the recipient is
taxed on the portion of the payment that exceeds the cost
basis of the Contract. For Non-Qualified Contracts, this
cost basis is generally the Premium Payments, while for
Qualified Contracts there may be no cost basis. The taxable
portion of the lump sum payment is taxed at ordinary income
tax rates.

For annuity payments, the taxable portion is determined by a
formula which establishes the ratio that the cost basis of
the Contract bears to the total value of annuity payments
for the term of the Contract. The taxable portion is taxed
at ordinary income rates. For certain types of Qualified
Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Owners, Annuitants and
Beneficiaries under the Contracts should seek competent
financial advice about the tax consequences of any
distributions.

The Company is taxed as a life insurance company under
Subchapter L of the Code. For federal income tax purposes,
the Variable Account is not a separate entity from the
Company, and its operations form a part of the Company.
Accordingly, the Variable Account will not be taxed
separately as a "regulated investment company" under
Subchapter M of the Code. The Company does not expect to
incur any federal income tax liability with respect to
investment income and net capital gains arising from the
activities of the Variable Account retained as part of the
reserves under the Contract. Based on this expectation, it
is anticipated that no charges will be made against the
Variable Account for federal income taxes. If, in future
years, any federal income taxes

34
<PAGE>
or other economic burden are incurred by the Company with
respect to the Variable Account or the Contracts, the
Company may make a charge for any such amounts that are
attributable to the Variable Account.

DIVERSIFICATION

Section 817(h) of the Code imposes certain diversification
standards on the underlying assets of variable annuity
contracts. The Code provides that a variable annuity
contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments
are not adequately diversified in accordance with
regulations prescribed by the United States Treasury
Department ("Treasury Department"). Disqualification of the
Contract as an annuity contract would result in imposition
of federal income tax to the Owner with respect to earnings
allocable to the Contract prior to the receipt of payments
under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the
Contracts meet the diversification requirements if, as of
the end of each quarter, the underlying assets meet the
diversification standards for a regulated investment company
and no more than fifty-five percent (55%) of the total
assets consist of cash, cash items, U.S. government
securities and securities of other regulated investment
companies.

Treasury Department regulations (Treas. Reg. 1.817-5)
established diversification requirements for the investment
portfolios underlying variable contracts such as the
Contracts. The regulations amplify the diversification
requirements for variable contracts set forth in the Code
and provide an alternative to the safe harbor provision
described above. Under the regulations, an investment
portfolio will be deemed adequately diversified if: (1) no
more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more
than 70% of the value of the total assets of the portfolio
is represented by any two investments; (3) no more than 80%
of the value of the total assets of the portfolio is
represented by any three investments; and (4) no more than
90% of the value of the total assets of the portfolio is
represented by any four investments.

The Code provides that for purposes of determining whether
or not the diversification standards imposed on the
underlying assets of variable contracts by Section 817(h) of
the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate
issuer."

The Company intends, and the Trusts have undertaken, that
all Funds underlying the Contracts will be managed in such a
manner as to comply with these diversification requirements.

The Treasury Department has indicated that guidelines may be
forthcoming under which a variable annuity contract will not
be treated as an annuity contract for tax purposes if the
owner of the contract has excessive control over the
investments underlying the contract (i.e., by being able to
transfer values among sub-accounts with only limited
restrictions). The issuance of such guidelines may require
the Company to impose limitations on a Owner's right to
control the investment. It is not known whether any such
guidelines would have a retroactive effect.

DISTRIBUTION REQUIREMENTS

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<PAGE>
and (b) if any Owner dies prior to the Annuity Date, the
entire interest in the Contract will be distributed within
five years after such death. These requirements will be
considered satisfied as to any portion of the Owner's
interest which is payable to or for the benefit of a
"designated beneficiary" and which is distributed over the
life of such "designated beneficiary" or over a period not
extending beyond the life expectancy of that beneficiary,
provided that such distributions begin within one year of
the Owner's death. The Owner's "designated beneficiary" is
the person designated by such Owner as a Beneficiary and to
whom ownership of the Contract passes by reason of death and
must be a natural person. However, if the Owner's
"designated beneficiary" is the surviving spouse of the
Owner, the Contract may be continued with the surviving
spouse as the new Owner.

The Contracts contain provisions which are intended to
comply with the requirements of Section 72(s) of the Code,
although no regulations interpreting these requirements have
yet been issued. The Company intends to review such
provisions and modify them if necessary to try to assure
that they comply with the Section 72(s) requirements when
clarified by regulation or otherwise. Similar rules may
apply to a Qualified Contract.

MULTIPLE CONTRACTS

The Code provides that multiple non-qualified annuity
Contracts which are issued during a calendar year to the
same Owner by one company or its affiliates are treated as
one annuity Contract for purposes of determining the tax
consequences of any distribution. Such treatment may result
in adverse tax consequences, including more rapid taxation
of the distributed amounts from such combination of
Contracts. Owners should consult a tax adviser prior to
purchasing more than one nonqualified annuity Contract in
any single calendar year.

TAX TREATMENT OF ASSIGNMENTS

An assignment or pledge of a Contract may be a taxable
event. Owners should therefore consult competent tax
advisers should they wish to assign their Contracts.

WITHHOLDING

Withholding of federal income taxes on the taxable portion
of all distributions may be required unless the recipient
elects not to have any such amounts withheld and properly
notifies the Company of that election. Different rules may
apply to United States citizens or expatriates living
abroad. Withholding is mandatory for certain distributions
from Qualified Contracts. In addition, some states have
enacted legislation requiring withholding.

SECTION 1035 EXCHANGES

Code Section 1035 generally provides that no gain or loss
shall be recognized on the exchange of one annuity contract
for another. If the surrendered contract was issued prior to
August 14, 1982, the tax rules that formerly provided that
the surrender was taxable only to the extent the amount
received exceeds the owner's investment in the contract will
continue to apply to amounts allocable to investment in the
contract before August 14, 1982. Special rules and
procedures apply to Code Section 1035 transactions.
Prospective purchasers wishing to take advantage of Code
Section 1035 should consult their tax advisers.

36
<PAGE>
TAX TREATMENT OF WITHDRAWALS --
NON-QUALIFIED CONTRACTS

Section 72 of the Code governs the treatment of
distributions from annuity contracts. It provides that if
the Annuity Account Value exceeds the aggregate Premium
Payments made, any amount withdrawn will be treated as
coming first from the earnings and then, only after the
income portion is exhausted, as coming from the principal.
Withdrawn earnings are includable in gross income. It
further provides that a ten percent (10%) penalty will apply
to the income portion of any premature distribution.
However, the penalty is not imposed on amounts received: (a)
after the Payee reaches age 59 1/2; (b) after the death of
the Owner (or, if the Owner is a non-natural person, the
Annuitant); (c) if the Payee is totally disabled (for this
purpose disability is as defined in Section 72(m)(7) of the
Code); (d) in a series of substantially equal periodic
payments made not less frequently than annually for the life
(or life expectancy) of the Payee or for the joint lives (or
joint life expectancies) of the Payee and his/her
beneficiary; (e) under an immediate annuity; or (f) which
are allocable to Premium Payments made prior to August 14,
1982.

The above information does not apply, except where noted, to
Qualified Contracts. However, separate tax withdrawal
penalties and restrictions may apply to such Qualified
Contracts (See "Tax Treatment of Withdrawals -- Qualified
Contracts").

QUALIFIED PLANS

The Contracts offered by this Prospectus are designed to be
suitable for use under various types of Qualified Plans.
Because of the minimum purchase payment requirements, these
Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified
Plan varies with the type of plan and terms and conditions
of each specific plan. Owners, Annuitants and Beneficiaries
are cautioned that benefits under a Qualified Plan may be
subject to the terms and conditions of the plan regardless
of the terms and conditions of the Contracts issued pursuant
to the plan. Although the Company provides administration
for the Contract, it does not provide administrative support
for Qualified Plans. Following are general descriptions of
the types of Qualified Plans with which the Contracts may be
used. Such descriptions are not exhaustive and are for
general informational purposes only. The tax rules regarding
Qualified Plans are very complex and will have differing
applications, depending on individual facts and
circumstances. Each purchaser should obtain competent tax
advice prior to purchasing a Contract issued in connection
with a Qualified Plan.

Special favorable tax treatment may be available for certain
types of contributions and distributions (including special
rules for certain lump sum distributions). Adverse tax
consequences may result from contributions in excess of
specified limits, distributions prior to age 59 1/2 (subject
to certain exceptions), distributions that do not conform to
specified minimum distribution rules, aggregate
distributions in excess of a specified annual amount, and in
certain other circumstances. Therefore, the Company makes no
attempt to provide more than general information about use
of the Contract with the various types of qualified plans.
Purchasers and participants under qualified plans as well as
Annuitants, Payees and Beneficiaries are cautioned that the
rights of any person to any benefits under qualified plans
may be subject to the terms and conditions of the plan
themselves, regardless of the terms and conditions of the
Contract issued in connection therewith.

37
<PAGE>
SECTION 403(b)PLANS

Under Section 403(b) of the Code, payments made by public
school systems and certain tax exempt organizations to
purchase annuity policies for their employees are excludable
from the gross income of the employee, subject to certain
limitations. However, such payments may be subject to FICA
(Social Security) taxes. Additionally, in accordance with
the requirements of the Code, Section 403(b) annuities
generally may not permit distribution of (i) elective
contributions made in years beginning after December 31,
1988, and (ii) earnings on those contributions and (iii)
earnings on amounts attributed to elective contributions
held as of the end of the last year beginning before January
1, 1989. Distributions of such amounts will be allowed only
upon the death of the employee, on or after attainment of
age 59 1/2, separation from service, disability, or
financial hardship, except that income attributable to
elective contributions may not be distributed in the case of
hardship.

INDIVIDUAL RETIREMENT ANNUITIES

Sections 219 and 408 of the Code permit individuals or their
employers to contribute to an individual retirement program
known as an "Individual Retirement Annuity" or an "IRA".
Individual Retirement Annuities are subject to limitation on
the amount which may be contributed and deducted and the
time when distributions may commence. In addition,
distributions from certain other types of qualified plans
may be placed into an Individual Retirement Annuity on a
tax-deferred basis.

CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS

Section 401(a) and 403(a) of the Code permit corporate
employers to establish various types of retirement plans for
employees and self-employed individuals to establish
qualified plans for themselves and their employees. Such
retirement plans may permit the purchase of the Contracts to
provide benefits under the plans.

DEFERRED COMPENSATION PLANS

Section 457 of the Code, while not actually providing for a
qualified plan as that term is normally used, provides for
certain deferred compensation plans with respect to service
for state governments, local governments, political
sub-divisions, agencies, instrumentalities and certain
affiliates of such entities and tax exempt organizations
which enjoy special treatment. The Contracts can be used
with such plans. Under such plans a participant may specify
the form of investment in which his or her participation
will be made. All such investments, however, are owned by,
and are subject to, the claims of the general creditors of
the sponsoring employer.

The above description of federal income tax consequences
pertaining to the different types of Qualified Plans that
may be funded by the Contracts is only a brief summary and
is not intended as tax advice. The rules governing the
provisions of Qualified Plans are extremely complex and
often difficult to comprehend. Anything less than full
compliance with the applicable rules, all of which are
subject to change, may have significant adverse tax
consequences. A prospective purchaser considering the
purchase of a Contract in connection with a Qualified Plan
should first consult a qualified and competent tax adviser
with regard to the suitability of the Contract as an
investment vehicle for the Qualified Plan.

38
<PAGE>
TAX TREATMENT OF WITHDRAWALS --
QUALIFIED CONTRACTS

Section 72(t) of the Code imposes a 10% penalty tax on the
taxable portion of any distribution from qualified
retirement plans, including Contracts issued and qualified
under Code Sections 401, 403(b), 408 and 457. To the extent
amounts are not includable in gross income because they have
been properly rolled over to an IRA or to another eligible
Qualified Plan, no tax penalty will be imposed. The tax
penalty will not apply to the following distributions: (a)
if distribution is made on or after the date on which the
Payee reaches age 59 1/2; (b) distributions following the
death of the Owner or Annuitant (as applicable) or
disability of the Payee (for this purpose disability is as
defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of
substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy)
of the Payee or the joint lives (or joint life expectancies)
of such Payee and his/her designated beneficiary; (d)
distributions to a Payee who has separated from service
after attaining age 55; (e) distributions made to the extent
such distributions do not exceed the amount allowable as a
deduction under Code Section 213 to the Payee for amounts
paid during the taxable year for medical care: and (f)
distributions made to an alternate payee pursuant to a
qualified domestic relations order.

The exceptions stated in Items (d), (e) and (f) above do not
apply in the case of an Individual Retirement Annuity.

FINANCIAL STATEMENTS

Audited financial statements of the Company as of December
31, 1996 and 1995 and for each of the three years in the
period ended December 31, 1996 are included in the Statement
of Additional Information, as are audited financial
statements for the Variable Account, which commenced
operations April 10, 1995, as of and for the periods (as
defined in the financial statements) ended December 31,
1996.

LEGAL PROCEEDINGS

There are no legal proceedings to which the Variable
Account, the Distributor or the Company is a party except
for routine litigation which the Company does not believe is
relevant to the Contracts offered by this Prospectus.

39
<PAGE>
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION

A Statement of Additional Information which contains more details concerning
some subjects discussed in this Prospectus is available (at no cost) by calling
or writing the Annuity & Variable Life Services Center. The following is the
Table of Contents for that Statement:

<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
THE CONTRACTS-GENERAL PROVISIONS................ 3
The Contracts................................. 3
Loans......................................... 3
Non-Participating Contracts................... 3
Misstatement of Age........................... 3
CALCULATION OF VARIABLE ACCOUNT VALUES.......... 3
Variable Accumulation Unit Value and
Variable Accumulation Value.................. 3
Net Investment Factor......................... 4
SAMPLE CALCULATIONS AND TABLES.................. 4
Variable Account Unit Value Calculations...... 4
Withdrawal Charge and Market Value Adjustment
Tables....................................... 5
STATE REGULATION OF THE COMPANY................. 6
ADMINISTRATION.................................. 7
ACCOUNT INFORMATION............................. 7

<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
DISTRIBUTION OF THE CONTRACTS................... 7
CUSTODY OF ASSETS............................... 7
HISTORICAL PERFORMANCE DATA..................... 8
Money Market Sub-Account Yield................ 8
Other Sub-Account Yields...................... 8
Total Returns................................. 9
Other Performance Data........................ 9
LEGAL MATTERS................................... 10
LEGAL PROCEEDINGS............................... 10
EXPERTS......................................... 10
FINANCIAL STATEMENTS............................ 10
Connecticut General Life Insurance Company.... 12
CG Variable Annuity Separate Account II....... 32
APPENDIX I...................................... 47
Variable Account Unit Value Sample
Calculations for New York Contracts Issued
Before May 1, 1996........................... 47
</TABLE>

40
<PAGE>
APPENDIX I

SEPARATE ACCOUNT ANNUAL EXPENSES FOR
NEW YORK CONTRACTS ISSUED BEFORE MAY 1, 1996

For New York Contracts issued before May 1, 1996, the daily deduction for
the Company's assumption of mortality and expense risks is at an annual rate of
1.20%, not 1.25%. For these Contracts, the daily deduction for administrative
expenses is at an annual rate of 0.10%, not 0.15%. Total Separate Account Annual
Expenses for these contracts are then 1.30%, not 1.40%.

41
<PAGE>

[LOGO]

561283 (5/97)

<PAGE>
PART A. PROSPECTUS NO. 2
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY

[LOGO]
CG VARIABLE ANNUITY SEPARATE ACCOUNT II

<TABLE>
<S> <C> <C> <C>
HOME OFFICE LOCATION: MAILING ADDRESS: LOCKBOX ADDRESS: BY MAIL: LOCKBOX ADDRESS: BY OVERNIGHT:
900 COTTAGE GROVE ROAD CIGNA INDIVIDUAL INSURANCE CONNECTICUT GENERAL LIFE CONNECTICUT GENERAL LIFE
BLOOMFIELD, CT ANNUITY & VARIABLE LIFE INSURANCE COMPANY INSURANCE COMPANY
SERVICES P.O. BOX 30790 C/O FLEET BANK
CENTER: ROUTING S-249 HARTFORD, CT 06150 20 CHURCH STREET
HARTFORD, CT 06152 - 2249 20TH FLOOR, MSN275
HARTFORD, CT 06120
ATTN: LOCKBOX 30790
TELEPHONE: (800) (552-9898)
</TABLE>

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

FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACTS
- --------------------------------------------------------------------------------

The following funding options are available under a Contract: Through the
Variable Account, the Company offers nineteen diversified open-end management
investment companies (commonly called mutual funds), each with a different
investment objective: Alger American Fund -- Alger American Small Capitalization
Portfolio, Alger American Leveraged AllCap Portfolio, Alger American MidCap
Growth Portfolio and Alger American Growth Portfolio; Fidelity Variable
Insurance Products Fund -- Equity-Income Portfolio, Money Market Portfolio, High
Income Portfolio and Overseas Portfolio; Fidelity Variable Insurance Products
Fund II -- Investment Grade Bond Portfolio and Asset Manager Portfolio;
MFS-Registered Trademark- Variable Insurance Trust -- MFS Total Return Series,
MFS Utilities Series and MFS World Governments Series; Neuberger & Berman
Advisers Management Trust -- Balanced Portfolio, Limited Maturity Bond Portfolio
and Partners Portfolio; OCC Accumulation Trust -- Global Equity Portfolio,
Managed Portfolio and Small Cap Portfolio. The fixed interest option offered
under a Contract is the Fixed Account. Premium payments or transfers allocated
to the Fixed Account, and 3% interest per year thereon, are guaranteed, and
additional interest may be credited, with certain withdrawals subject to a
market value adjustment and withdrawal charges. Unless specifically mentioned,
this prospectus only describes the variable investment options.

This entire prospectus, and those of the Funds, should be read carefully
before investing to understand the Contracts being offered. The "Statement of
Additional Information" dated May 1, 1997, available at no charge by calling or
writing the Company's Annuity & Variable Life Services Center as shown above,
provides further information. Its table of contents is at the end of this
prospectus.

PROSPECTUS DATED: MAY 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C>
DEFINITIONS.................................... 3
HIGHLIGHTS..................................... 5
FEES AND EXPENSES.............................. 7
CONDENSED FINANCIAL INFORMATION................ 11
THE COMPANY AND THE VARIABLE ACCOUNT........... 12
THE FUNDS...................................... 12
General...................................... 15
Substitution of Securities................... 15
Voting Rights................................ 16
PREMIUM PAYMENTS AND CONTRACT VALUE............ 16
Premium Payments............................. 16
Allocation of Premium Payments............... 16
Optional Variable Account Sub-Account
Allocation Programs......................... 17
Dollar Cost Averaging........................ 17
Automatic Rebalancing........................ 18
Contract Value............................... 19
Accumulation Unit............................ 19
CHARGES AND DEDUCTIONS......................... 19
Contingent Deferred Sales Charge (Sales
Load)....................................... 19
Mortality and Expense Risk Charge............ 20
Administrative Expense Charge................ 21
Account Fee.................................. 21
Premium Tax Equivalents...................... 21
Income Taxes................................. 21
Fund Expenses................................ 22
Transfer Fee................................. 22
Optional Death Benefit....................... 22
OTHER CONTRACT FEATURES........................ 24
Ownership.................................... 24
Assignment................................... 24
Beneficiary.................................. 24
Change of Beneficiary........................ 24
Annuitant.................................... 25
Transfer of Contract Values between Sub-
Accounts.................................... 25
Procedures for Telephone Transfers........... 26
Surrenders and Partial Withdrawals........... 26
Delay of Payments and Transfers.............. 26
Death of the Contract Owner before the
Annuity Date................................ 27
Death of the Annuitant before the Annuity
Date........................................ 28

<CAPTION>
CONTENTS PAGE
<S> <C>

Death of the Annuitant after
the Annuity Date 28
Change in Operation of Variable Account...... 28
Modification................................. 28
Discontinuance............................... 29
ANNUITY PROVISIONS............................. 29
Annuity Date; Change in Annuity Date and
Annuity Option.............................. 29
Annuity Options.............................. 29
Fixed Options................................ 29
Variable Options............................. 30
Evidence of Survival......................... 31
Endorsement of Annuity Payments.............. 31
THE FIXED ACCOUNT.............................. 31
Market Value Adjustment...................... 33
DISTRIBUTION OF THE CONTRACTS.................. 34
PERFORMANCE DATA............................... 34
Money Market Sub-Account..................... 34
Other Variable Account Sub-Accounts.......... 34
Performance Ranking or Rating................ 35
TAX MATTERS.................................... 35
General...................................... 35
Diversification.............................. 36
Distribution Requirements.................... 37
Multiple Contracts........................... 37
Tax Treatment of Assignments................. 37
Withholding.................................. 38
Section 1035 Exchanges....................... 38
Tax Treatment of Withdrawals Non-Qualified
Contracts................................... 38
Qualified Plans.............................. 38
Section 403(b) Plans......................... 39
Individual Retirement Annuities.............. 39
Corporate Pension and Profit-Sharing Plans
and H.R. 10 Plans........................... 39
Deferred Compensation Plans.................. 39
Tax Treatment of Withdrawals Qualified
Contracts................................... 40
FINANCIAL STATEMENTS........................... 40
LEGAL PROCEEDINGS.............................. 40
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION........................ 41
APPENDIX I..................................... 42
Illustration of Cost of Optional Death
Benefits.................................... 42
</TABLE>

2
<PAGE>
DEFINITIONS

ACCUMULATION UNIT: A measuring unit used to calculate the
value of the Owner's interest in each funding option used in
the variable portion of the Contract prior to the Annuity
Date.

ANNUITY ACCOUNT VALUE: The value of the Contract at any
point in time.

ANNUITY DATE: The date on which annuity payments commence.

ANNUITY OPTION: The arrangement under which annuity payments
are made.

ANNUITY PERIOD: The period starting on the Annuity Date.

ANNUITY UNIT: A measuring unit used to calculate the portion
of annuity payments attributable to each funding option used
in the variable portion of the Contract on and after the
Annuity Date.

BENEFICIARY: The person entitled to the Death Benefit, who
must also be the "Designated Beneficiary", for purposes of
Section 72(s) of the Code, upon the Owner's death.

CODE: The Internal Revenue Code of 1986, as amended.

COMPANY: Connecticut General Life Insurance Company.

CONTRACT: The Variable Annuity Contract described in this
prospectus.

CONTRACT MONTH: The period from one Monthly Anniversary Date
to the next.

CONTRACT OWNER (OR OWNER): The person(s) initially
designated in the application or order to purchase or
otherwise, unless later changed, as having all ownership
rights under the Contract.

FIXED ANNUITY: An annuity with payments which do not vary as
to dollar amount.

GUARANTEED INTEREST RATE: The rate of interest credited by
the Company on a compound annual basis during a Guaranteed
Period.

GUARANTEED PERIOD AMOUNT: Any portion of a Purchaser's
Annuity Account Value allocated to a specific Guaranteed
Period with a specified Expiration Date (including credited
interest thereon).

INDEX RATE: An index rate based on the Treasury Constant
Maturity Series published by the Federal Reserve Board.

IN WRITING: In a written form satisfactory to the Company
and received by the Company at its Annuity & Variable Life
Services Center.

MONTHLY ANNIVERSARY DATE: The monthly anniversary of the
Effective Date, as shown on the specifications page of the
Contract, when the Company makes the monthly calculation of
any charge for the Optional Death Benefit.

PAYEE: A recipient of payments under the Contract.

PREMIUM PAYMENT: Any amount paid to the Company cleared in
good funds as consideration for the benefits provided by the
Contract. Includes the initial Premium Payment and
subsequent Premium Payments.

QUALIFIED CONTRACT: A Contract used in connection with a
retirement plan which receives favorable federal income tax
treatment under Code Section 401, 403, 408 or 457.

SEVEN YEAR ANNIVERSARY: The seventh Contract Anniversary and
each succeeding Contract Anniversary occurring at any seven
year interval thereafter, for example, the 7th, 14th, 21st
and 28th Contract Anniversaries.

SHARES: Shares of a Fund.

4
<PAGE>
SURRENDER (OR WITHDRAWAL): When a lump sum amount
representing all or part of the Annuity Account Value (minus
any applicable withdrawal charges, contract fees, and
premium tax equivalents and adjusted for any Market Value
Adjustment) is paid to the Owner. After a full surrender,
all of the Owner's rights under the Contract are terminated.
In this prospectus, the terms "surrender" and "withdrawal"
are used interchangeably.

SURRENDER DATE: The date the Company processes the Owner's
election to surrender the Contract or to receive a partial
withdrawal.

VALUATION PERIOD: The period of time beginning on the day
following the Valuation Date and ending on the next
Valuation Date. A Valuation Period may be more than one day
in length.

VARIABLE ACCUMULATION UNIT: A unit of measure used in the
calculation of the value of each variable portion of the
Owner's Annuity Account during the Accumulation Period.

HIGHLIGHTS

Premium Payments attributable to the variable portion of the
Contracts will be allocated to a segregated asset account of
Connecticut General Life Insurance Company (the "Company")
which has been designated CG Variable Annuity Separate
Account II (the "Variable Account"). The Variable Account
invests in shares of one or more of the Funds available to
fund the Contract as selected by the Owner. Contract Owners
bear the investment risk for all amounts allocated to the
Variable Account. The Contract's provisions may vary in some
states. Inquiries about the Contracts may be made to the
Company's Annuity & Variable Life Services Center.

The Contract may be returned within 10 days after it is
received, longer in some states. It can be mailed or
delivered to either the Company or the agent who sold it.
Return of the Contract by mail is effective on being
postmarked, properly addressed and postage prepaid. The
Company will promptly refund the Contract Value in states
where permitted. This may be more or less than the Premium
Payment. In states where required, the Company will promptly
refund the Premium Payment, less any partial surrenders. The
Company has the right to allocate initial Premium Payments
to the Money Market Sub-Account until the expiration of the
right-to-examine period. If the Company does so allocate an
initial Premium Payment, it will refund the greater of the
Premium Payment, less any partial surrenders, or the
Contract Value. It is the Company's current practice to
directly allocate the initial Premium Payment to the Fund(s)
designated in the application or order to purchase, unless
state law requires a refund of Premium Payments rather than
of Annuity Account Value.

5
<PAGE>
A Contingent Deferred Sales Charge (sales load) may be
deducted in the event of a full surrender or partial
withdrawal. The Contingent Deferred Sales Charge is imposed
on Premium Payments within seven (7) years after their being
made. Contract Owners may, during each Contract Year,
withdraw up to fifteen percent (15%) of Premium Payments
made, or any remaining portion thereof, ("the Fifteen
Percent Free") without incurring a Contingent Deferred Sales
Charge. The Contingent Deferred Sales Charge will vary in
amount, depending upon the Contract Year in which the
Premium Payment being surrendered or withdrawn was made. For
purposes of determining the applicability of the Contingent
Deferred Sales Charge, surrenders and withdrawals are deemed
to be on a first-in, first-out basis.

There is a Mortality and Expense Risk Charge which is equal,
on an annual basis, to 1.20% of the average daily net assets
of the Variable Account. This Charge compensates the Company
for assuming the mortality and expense risks under the
Contract (See "Charges and Deductions -- Mortality and
Expense Risk Charge"), other than the Optional Death Benefit
risk (See "Charges and Deductions -- Optional Death
Benefit").

There is an Administrative Expense Charge which is equal, on
an annual basis, to 0.10% of the average daily net assets of
the Variable Account (See "Charges and Deductions --
Administrative Expense Charge").

There is an annual Account Fee of $35 unless the Annuity
Account Value equals or exceeds $100,000 at the end of the
Contract Year (See "Charges and Deductions -- Account Fee").

There is a charge for any Optional Death Benefit(s) elected
(See "Charges and Deductions -- Optional Death Benefit").

Premium tax equivalents or other taxes payable to a state or
other governmental entity will be charged against Annuity
Account Value (See "Charges and Deductions -- Premium
Taxes").

Under certain circumstances there may be assessed a $10
transfer fee when a Contract Owner transfers Annuity Account
Values from one Sub-Account to another (See "Charges and
Deductions -- Transfer Fee").

(a) after the Payee reaches age 59 1/2; (b) after the death
of the Contract Owner (or, if the Contract Owner is not a
natural person, the Annuitant); (c) if the Payee is totally
disabled (for this purpose, disability is as defined in
Section 72(m)(7) of the Code); (d) in a series of
substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy)
of the Payee or for the joint lives (or joint life
expectancies) of the Payee and his or her beneficiary; (e)
under an immediate annuity; or (f) which are allocable to
Premium Payments made prior to August 14, 1982. For federal
income tax purposes, distributions are deemed to be on a
last-in, first-out basis. Different tax withdrawal penalties
and restrictions apply to Qualified Contracts issued

6
<PAGE>
pursuant to plans qualified under Code Section 401, 403(b),
408 or 457. (See "Tax Matters -- Tax Treatment of
Withdrawals -- Qualified Contracts.") For a further
discussion of the taxation of the Contracts, see "Tax
Matters."

MARKET VALUE ADJUSTMENT. In certain situations, a surrender
or transfer of amounts from the Fixed Account will be
subject to a Market Value Adjustment. The Market Value
Adjustment will reflect the relationship between a rate
based on an index published by the Federal Reserve Board as
to current yields on U.S. government securities of various
maturities at the time a surrender or transfer is made
("Index Rate"), and the Index Rate at the time that the
Premium Payments being surrendered or transferred were made.
Generally, if the Index Rate at the time of surrender or
transfer is lower than the Index Rate at the time the
Premium Payment was allocated, then the application of the
Market Value Adjustment will result in a higher payment upon
surrender or transfer. Similarly, if the Index Rate at the
time of surrender or transfer is higher than the Index Rate
at the time the Premium Payment was allocated, the
application of the Market Value Adjustment will generally
result in a lower payment upon surrender or transfer. It is
not applied against a surrender or transfer taking place at
the end of the Guaranteed Period.

FEES AND EXPENSES

CONTRACT OWNER TRANSACTION FEES

Contingent Deferred Sales Charge (as a percentage of Premium
Payments):

<TABLE>
<CAPTION>
YEARS SINCE
PAYMENT CHARGE
------------- ------
<S> <C> <C> <C>
0-1 7%
1-2 6%
A Contract Owner may, during each Contract Year, withdraw up to
2-3 5% 15% of Premium Payments made, or the remaining portion thereof,
3-4 4% without incurring a Contingent Deferred Sales Charge.
4-5 3%
5-6 2%
6-7 1%
7+ 0
</TABLE>

<TABLE>
<S> <C> <C> <C>
Transfer Fee........ $10

- Not imposed on the first twelve transfers during a Contract Year.
Pre-scheduled automatic dollar cost averaging or automatic
rebalancing transfers are not counted.

Account Fee......... $35 per Contract Year

- Waived if Annuity Account Value at the end of the Contract Year
is $100,000 or more. A Contract Owner may also elect the Optional
Death Benefit(s) for which there is a charge, prorated among the
Sub-Accounts, which depends on the age and gender classification
(in accordance with state law) of the Owner (or the Annuitant, if
the Owner is a non-natural person) and on the dollar amount which
is at risk. (See "Charges and Deductions -- Optional Death
Benefit.")
</TABLE>

VARIABLE ACCOUNT ANNUAL EXPENSES

<TABLE>
<S> <C> <C>
(as a percentage of average account
value)

Mortality and Expense Risk Charge....... 1.20%
Administrative Expense Charge........... 0.10%
---
Total Variable Account Annual 1.30%
Expenses................................
</TABLE>

7
<PAGE>
EXPENSE DATA

FEE TABLE

<TABLE>
<CAPTION>
ALGER AMERICAN FUND
-------------------------------------------
ALGER ALGER
ALGER AMERICAN AMERICAN ALGER
AMERICAN LEVERAGED MIDCAP AMERICAN
GROWTH ALLCAP GROWTH SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Charge............. 1.20% 1.20% 1.20% 1.20%
Administrative Expense Charge................. 0.10% 0.10% 0.10% 0.10%
Total Separate Account Annual Expenses........ 1.30% 1.30% 1.30% 1.30%
FUND PORTFOLIO ANNUAL EXPENSES
Management Fees............................... 0.75% 0.85% 0.80% 0.85%
Other Expenses................................ 0.04% 0.24% 0.04% 0.03%
Total Fund Portfolio Annual Expenses.......... 0.79% 1.09%(1) 0.84% 0.88%

<CAPTION>
FIDELITY VARIABLE INSURANCE
PRODUCTS FUNDS
----------------------------------------------------------------
VIP II VIP VIP II VIP
ASSET EQUITY- INVESTMENT VIP MONEY HIGH VIP
MANAGER INCOME GRADE BOND MARKET INCOME OVERSEAS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND PORTFOLIO
------- --------- ---------- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Charge............. 1.20% 1.20% 1.20% 1.20% 1.20% 1.20%
Administrative Expense Charge................. 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
Total Separate Account Annual Expenses........ 1.30% 1.30% 1.30% 1.30% 1.30% 1.30%
FUND PORTFOLIO ANNUAL EXPENSES
Management Fees............................... 0.64% 0.51% 0.45% 0.21% 0.59% 0.76%
Other Expenses................................ 0.10% 0.07% 0.13% 0.09% 0.12% 0.17%
Total Fund Portfolio Annual Expenses.......... 0.74%(2) 0.58%(2) 0.58% 0.30% 0.71% 0.93%(2)
</TABLE>

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

(1) Included in Other Expenses of the Alger American Leveraged AllCap Portfolio
is .03% of interest expense.

8
<PAGE>

The table does not reflect the deductions for the annual $35 Account Fee,
charges for any Optional Death Benefits selected, or premium tax equivalents.
The information set forth should be considered together with the information
provided in this Prospectus under the heading "Fees and Expenses", and in each
Fund's Prospectus. All expenses are expressed as a percentage of average account
value.

<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20%

0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%

1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30%

0.75% 0.75% 0.75% 0.85%(6) 0.65%(6) 0.84%(6) 0.80% 0.80% 0.80%
0.25%(4) 0.25%(4) 0.25%(4) 0.24% 0.13% 0.11% 0.63% 0.10% 0.22%

1.00%(3) 1.00%(3) 1.00%(3) 1.09% 0.78% 0.95% 1.43%(7) 0.90%(7) 1.02%(7)
</TABLE>

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

(3) The Adviser has agreed to bear expenses for each Series, subject to
reimbursement by each Series, such that each Series' "Other Expenses" shall
not exceed 0.25% of the average daily net assets of the Series during the
current fiscal year. Otherwise, "Other Expenses" for the Total Return
Series, Utilities Series and World Government Series would be 1.35%, 2.00%
and 1.28% respectively, and "Total Fund Portfolio Expenses" would be 2.10%,
2.75% and 2.03% respectively, for these Series. See "Information Concerning
Shares of Each Series -- Expenses."

(4) Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the Series' expenses). Any such fee reductions are not
reflected under "Other Expenses".

(7) The annual expenses of the OCC Accumulation Trust Portfolios (the
"Portfolios") as of December 31, 1996 have been restated to reflect new
management fee and expense limitation arrangements in effect as of May 1,
1996. Additionally, Other Expenses are shown gross of certain expense
offsets afforded the Portfolios which effectively lowered overall custody
expenses. Effective May 1, 1996, the expenses of the Portfolios were
contractually limited by OpCap Advisors so that their respective annualized
operating expenses (net of any expense offsets) do not exceed 1.25% of their
respective average daily net assets. Furthermore, through December 31, 1997,
the annualized operating expenses of the Managed and Small Cap Portfolios
will be voluntarily limited by OpCap Advisors so that annualized operating
expenses (net of any expense offsets) of these Portfolios do not exceed
1.00% of their respective average daily net assets. Without such contractual
and voluntary expense limitations and without giving effect to any expense
offsets, the Management Fees, Other Expenses and Total Portfolio Annual
Expenses incurred for the fiscal year ended December 31, 1996 would have
been: .80%, 1.04% and 1.84%, respectively, for the Global Equity Portfolio;
and .80%, .10% and .90%, respectively, for the Managed Portfolio; and .80%,
.26% and 1.06%, respectively, for the Small Cap Portfolio.

9
<PAGE>
EXAMPLES

The Contract Owner would pay the following expenses on a
$1,000 investment, assuming a 5% annual return on assets,
and assuming all Premium Payments are allocated to the
Variable Account:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1. IF THE CONTRACT IS SURRENDERED AT THE END OF THE APPLICABLE TIME PERIOD:
Alger American Growth Portfolio.......................... $ 81 $ 110 $ 141 $ 249
Alger American Leveraged AllCap Portfolio................ $ 84 $ 119 $ 157 $ 280
Alger American MidCap Growth Portfolio................... $ 82 $ 112 $ 144 $ 254
Alger American Small Capitalization Portfolio............ $ 82 $ 113 $ 146 $ 258
Fidelity VIP Equity-Income Portfolio..................... $ 79 $ 104 $ 131 $ 227
Fidelity VIP Money Market Portfolio...................... $ 76 $ 95 $ 116 $ 198
Fidelity VIP High Income Portfolio....................... $ 83 $ 114 $ 149 $ 264
Fidelity VIP Overseas Portfolios......................... $ 84 $ 119 $ 157 $ 280
Fidelity VIP II Asset Manager Portfolio.................. $ 81 $ 109 $ 139 $ 244
Fidelity VIP II Investment Grade Bond Portfolio.......... $ 79 $ 104 $ 131 $ 227
MFS Total Return Series.................................. $ 84 $ 116 $ 152 $ 271
MFS Utilities Series..................................... $ 84 $ 116 $ 152 $ 271
MFS World Governments Series............................. $ 84 $ 116 $ 152 $ 271
AMT Balanced Portfolio................................... $ 84 $ 119 $ 157 $ 280
AMT Limited Maturity Bond Portfolio...................... $ 81 $ 110 $ 141 $ 248
AMT Partners Portfolio................................... $ 83 $ 115 $ 150 $ 266
OCC Global Equity Portfolio.............................. $ 88 $ 129 $ 173 $ 313
OCC Managed Portfolio.................................... $ 83 $ 113 $ 147 $ 261
OCC Small Cap Portfolio.................................. $ 84 $ 117 $ 153 $ 273
</TABLE>

2. IF THE CONTRACT IS NOT SURRENDERED OR IF IT IS
ANNUITIZED:

<TABLE>
<S> <C> <C> <C> <C>
Alger American Growth Portfolio.......... $ 22 $ 68 $ 116 $ 249
Alger American Leveraged AllCap
Portfolio............................... $ 25 $ 77 $ 131 $ 280
Alger American MidCap Growth Portfolio... $ 22 $ 69 $ 118 $ 254
Alger American Small Capitalization
Portfolio............................... $ 23 $ 70 $ 120 $ 258
Fidelity VIP Equity-Income Portfolio..... $ 20 $ 61 $ 105 $ 227
Fidelity VIP Money Market Portfolio...... $ 17 $ 53 $ 91 $ 198
Fidelity VIP High Income Portfolio....... $ 23 $ 72 $ 123 $ 264
Fidelity VIP Overseas Portfolios......... $ 25 $ 77 $ 131 $ 280
Fidelity VIP II Asset Manager
Portfolio............................... $ 21 $ 66 $ 113 $ 244
Fidelity VIP II Investment Grade Bond
Portfolio............................... $ 20 $ 61 $ 105 $ 227
MFS Total Return Series.................. $ 24 $ 74 $ 127 $ 271
MFS Utilities Series..................... $ 24 $ 74 $ 127 $ 271
MFS World Governments Series............. $ 24 $ 74 $ 127 $ 271
AMT Balanced Portfolio................... $ 25 $ 77 $ 131 $ 280
AMT Limited Maturity Bond Portfolio...... $ 22 $ 67 $ 115 $ 248
AMT Partners Portfolio................... $ 24 $ 72 $ 124 $ 266
OCC Global Equity Portfolio.............. $ 28 $ 87 $ 148 $ 313
OCC Managed Portfolio.................... $ 23 $ 71 $ 122 $ 261
OCC Small Cap Portfolio.................. $ 24 $ 75 $ 128 $ 273
</TABLE>

10
<PAGE>
These examples reflect the annual $35 Account Fee as an
annual charge of .07% of assets, based upon an anticipated
average Annuity Account Value of $50,000.

THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.

CONDENSED FINANCIAL INFORMATION

The Variable Account commenced operations on April 10, 1995.
The Sub-Accounts commenced operation on various dates
thereafter. There follows, for each of the nineteen Variable
Account Sub-Accounts available under the Contracts,
information regarding the changes in the Accumulation Unit
values from date of inception through December 31, 199 and
January 1, 1996 through December 31, 1996, and the number of
Accumulation Units outstanding at December 31, 1996:

<TABLE>
<CAPTION>
(IN DOLLARS) NUMBER OF
----------------------------------------- ACCUMULATION
ACCUMULATION ACCUMULATION ACCUMULATION UNITS
UNIT BEGINNING UNIT VALUE UNIT VALUE OUTSTANDING
SUB-ACCOUNT VALUE AT 12/31/95 AT 12/31/96 12/31/96
------------------------------ --------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Alger American Growth
Portfolio 10.00 12.385784 13.855323 1,330,936
Alger American Leveraged
AllCap Portfolio 10.00 13.895178 15.364036 372,332
Alger American MidCap Growth
Portfolio 10.00 13.106537 14.473761 677,431
Alger American Small Cap
Portfolio 10.00 13.092181 13.460941 1,098,865
Fidelity VIP Equity-Income
Portfolio 10.00 12.128673 13.679456 2,085,260
Fidelity VIP Money Market
Portfolio 10.00 10.245402 10.658014 979,117
Fidelity VIP High Income
Portfolio 10.00 * 10.802349 452,555
Fidelity VIP Overseas
Portfolio 10.00 * 10.614394 178,578
Fidelity VIP II Asset Manager
Portfolio 10.00 11.280365 12.758423 335,518
Fidelity VIP II Investment
Grade Bond Portfolio 10.00 10.541110 10.734479 544,386
MFS Total Return Series 10.00 11.003903 12.420693 706,567
MFS Utilities Series 10.00 11.365171 13.292608 211,116
MFS World Governments Series 10.00 10.277969 10.552213 142,899
AMT Balanced Portfolio 10.00 10.269633 10.832872 308,939
AMT Limited Maturity Bond
Portfolio 10.00 10.547360 10.857343 337,716
AMT Partners Portfolio 10.00 12.122020 15.500823 641,124
OCC Global Equity Portfolio 10.00 11.758951 13.347358 767,854
OCC Managed Portfolio 10.00 11.143831 13.502565 2,477,621
OCC Small Cap Portfolio 10.00 10.855343 12.718827 219,684
* Had not commenced operations as of December 31, 1995
</TABLE>

11
<PAGE>
THE COMPANY AND THE VARIABLE ACCOUNT

THE COMPANY. The Company is a stock life insurance company
incorporated under the laws of Connecticut by special act of
the Connecticut General Assembly in 1865. Its Home Office
mailing address is Hartford, Connecticut 06152, Telephone
(203) 726-6000. It has obtained authorization to do business
in fifty states, the District of Columbia and Puerto Rico.
The Company issues group and individual life and health
insurance policies and annuities. The Company has various
wholly-owned subsidiaries which are generally engaged in the
insurance business. The Company is a wholly-owned subsidiary
of Connecticut General Corporation, Bloomfield, Connecticut.
Connecticut General Corporation is wholly-owned by CIGNA
Holdings Inc., Philadelphia, Pennsylvania which is in turn
wholly-owned by CIGNA Corporation, Philadelphia,
Pennsylvania. Connecticut General Corporation is the holding
company of various insurance companies, one of which is
Connecticut General Life Insurance Company.

The Variable Account is registered with the Securities and
Exchange Commission ("Commission") as a unit investment
trust under the 1940 Act and meets the definition of a
separate account under the federal securities laws.
Registration with the Commission does not involve
supervision of the management or investment practices or
policies of the Variable Account or of the Company by the
Commission.

The assets of the Variable Account are divided into
Sub-Accounts. Each Sub-Account invests exclusively in shares
of a specific Fund. All amounts allocated to the Variable
Account will be used to purchase Fund shares as designated
by the Owner at their net asset value. Any and all
distributions made by the Fund with respect to the shares
held by the Variable Account will be reinvested to purchase
additional shares at their net asset value. Deductions from
the Variable Account for cash withdrawals, annuity payments,
death benefits, account fees, mortality and expense risk
charges, administrative expense charges, the cost of any
Optional Death Benefit(s) and any applicable taxes will, in
effect, be made by redeeming the number of Fund shares at
their net asset value equal in total value to the amount to
be deducted. The Variable Account will purchase and redeem
Fund shares on an aggregate basis and will be fully invested
in Fund shares at all times.

THE FUNDS

12
<PAGE>
The Trusts and their investment advisers and distributors
are:

MFS-Registered Trademark- Variable Insurance Trust ("MFS
Trust"), managed by Massachusetts Financial Services
Company and distributed by MFS Fund Distributors, Inc.,
500 Boylston Street, Boston, MA 02116;

Neuberger & Berman Advisers Management Trust ("AMT
Trust"), managed and distributed by Neuberger & Berman
Management Incorporated, 605 Third Avenue, 2nd Floor New
York, NY 10158-0006;

OCC Accumulation Trust ("OCC Trust") (formerly Quest for
Value Accumulation Trust), managed by OpCap Advisors
(formerly Quest for Value Advisors) and distributed by
OCC Distributors (formerly Quest for Value
Distributors), One World Financial Center, New York, NY
10281.

Four Funds of FIDELITY VIP are available under the
Contracts:

Two Funds of FIDELITY VIP II are available under the
Contracts:

Asset Manager Portfolio ("Fidelity VIP II Asset Manager
Portfolio");
Investment Grade Bond Portfolio ("Fidelity VIP II
Investment Grade Bond Portfolio").

Three Funds of MFS Trust are available under the Contracts:
MFS Total Return Series;
MFS Utilities Series;
MFS World Governments Series.

Three Funds of AMT Trust are available under the Contracts:
Balanced Portfolio;
Limited Maturity Bond Portfolio;
Partners Portfolio.

Three Funds of OCC Trust are available under the Contracts:
Global Equity Portfolio;
Managed Portfolio;
Small Cap Portfolio.

The investment advisory fees charged the Funds by their
advisers are shown in the Fee Table at pages 8 and 9 of this
Prospectus.

13
<PAGE>
There follows a brief description of the investment
objective and program of each Fund. There can be no
assurance that any of the stated investment objectives will
be achieved.

FIDELITY VIP HIGH INCOME PORTFOLIO (High Yield Bonds): Seeks
high current income by investing mainly in high yielding
debt securities, with an emphasis on lower quality
securities.

FIDELITY VIP OVERSEAS PORTFOLIO (International Equity):
Seeks long term growth of capital by investing mainly in
foreign securities.

MFS UTILITIES SERIES (Specialty): Seeks capital growth and
current income (income above that available from a portfolio
invested entirely in equity securities) by investing, under
normal circumstances, at least 65% of its assets in equity
and debt securities of utility companies.

14
<PAGE>
MFS WORLD GOVERNMENTS SERIES (International Fixed Income):
Seeks not only preservation, but also growth, of capital
together with moderate current income through a
professionally managed, internationally diversified
portfolio consisting primarily of debt securities and to a
lesser extent equity securities.

NEUBERGER&BERMAN AMT BALANCED PORTFOLIO (Balanced or Total
Return): Seeks long-term capital growth and reasonable
current income without undue risk to principal.

NEUBERGER&BERMAN AMT LIMITED MATURITY BOND PORTFOLIO (Short
to Intermediate-Term Bonds): Seeks the highest current
income consistent with low risk to principal and liquidity;
and secondarily, total return.

NEUBERGER&BERMAN AMT PARTNERS PORTFOLIO (Large Cap Stocks):
Seeks capital growth. Invests primarily in common stocks of
medium to large capitalization established companies, using
the value-oriented investment approach. The Portfolio seeks
capital growth through an investment approach that is
designed to increase capital with reasonable risk. The
portfolio manager seeks securities believed to be
undervalued based on strong fundamentals such as low
price-to-earnings ratios, consistent cash flow, and support
from asset values.

OCC GLOBAL EQUITY PORTFOLIO (International Stocks): Seeks
long-term capital appreciation through a global investment
strategy primarily involving equity securities.

The Neuberger&Berman AMT Partners Portfolio,
Neuberger&Berman AMT Limited Maturity Bond Portfolio,
Fidelity VIP Equity-Income Portfolio, Fidelity VIP II Asset
Manager Portfolio, Fidelity VIP High Income Portfolio,
Fidelity VIP Overseas Portfolio, MFS Total Return Series,
MFS Utilities Series, MFS World Governments Series, OCC
Global Equity Portfolio, OCC Managed Portfolio, and the OCC
Small Cap Portfolio funds may invest in non-investment
grade, high yield, high-risk debt securities (commonly
referred to as "junk bonds"), as detailed in the individual
Fund prospectuses.

GENERAL

There is no assurance that the investment objective of any
of the Funds will be met. Contract Owners bear the complete
investment risk for Annuity Account Values allocated to a
Variable Account Sub-Account. Each such Sub-Account involves
inherent investment risk, and such risk varies significantly
among the Sub-Accounts. Contract Owners should read each
Fund's prospectus carefully and understand the Funds'
relative degrees of risk before making or changing
investment choices. Additional Funds may, from time to time,
be made available as investments to underlie the Contracts.
However, the right to make such selections will be limited
by the terms and conditions imposed on such transactions by
the Company (See "Premium Payments and Contract Value --
Allocation of Premium Payments").

SUBSTITUTION OF SECURITIES

15
<PAGE>
substitute shares of another Fund. No substitution of
securities in any Sub-Account may take place without prior
approval of the Commission and under such requirements as it
may impose.

VOTING RIGHTS

The Funds' shares are issued and redeemed only in connection
with variable annuity contracts and variable life insurance
policies issued through separate accounts of the Company and
other life insurance companies. The Trusts do not foresee
any disadvantage to Contract Owners arising out of the fact
that shares may be made available to separate accounts which
are used in connection with both variable annuity and
variable life insurance products. Nevertheless, the Trusts'
Boards intend to monitor events in order to identify any
material irreconcilable conflicts which may possibly arise
and to determine what action, if any, should be taken in
response thereto. If such a conflict were to occur, one of
the separate accounts might withdraw its investment in a
Fund. This might force a Fund to sell portfolio securities
at disadvantageous prices.

PREMIUM PAYMENTS AND CONTRACT VALUE

PREMIUM PAYMENTS

The Contracts may be purchased under a flexible premium
payment plan. Premium Payments are payable in the frequency
and in the amount selected by the Contract Owner. The
initial Premium Payment is due on the Effective Date. It
must be at least $2,000. Subsequent Premium Payments must be
at least $100. These minimum amounts are not waived for
Qualified Plans. The Company reserves the right to decline
any application or order to purchase or Premium Payment. A
Premium Payment in excess of $1 million requires preapproval
by the Company.

The Company may, at its sole discretion, offer special
premium payment programs and/ or waive the minimum payment
requirements.

The Contract Owner may elect to increase, decrease or change
the frequency of Premium Payments.

ALLOCATION OF PREMIUM PAYMENTS

16
<PAGE>
Units. The number of Accumulation Units credited to the
Contract is determined by dividing the Premium Payment
allocated to the Sub-Account by the value of the
Accumulation Unit for the Sub-Account.

Any Premium Payment at the time of any allocation may be
allocated to a single or multiple sub-accounts in whole
percentages (e.g., 12%). No allocation can be made which
would result in a Variable Account Sub-Account of less than
$50 or a Fixed Account Sub-Account value of less than
$2,000. Further, at this time, no more than 18 Fixed Account
and Variable Account Sub-Accounts may be opened during the
life of the Contract. The Company may expand this number at
a future date.

The Company may, at its sole discretion, waive minimum
premium allocation requirements or minimum Variable Account
Sub-Account requirements.

OPTIONAL VARIABLE ACCOUNT SUB-ACCOUNT ALLOCATION PROGRAMS

The Contract Owner may elect to enroll in either of the
following programs. However, both programs cannot be in
effect at the same time.

DOLLAR COST AVERAGING

17
<PAGE>
allocating on a regularly scheduled basis as opposed to
allocating the total amount at one particular time, an Owner
may be less susceptible to the impact of market
fluctuations.

Dollar Cost Averaging may be selected by establishing a
Money Market Sub-Account of at least $1,000 or the One-Year
Fixed Account Sub-Account value of at least $2,000. The
minimum amount per month to allocate is $50 (subject to the
18 Sub-Account limitation described under "Allocation of
Premium Payments" above). Enrollment in this program may
occur at any time by calling the Annuity & Variable Life
Services Center or by providing the information requested on
the Dollar Cost Averaging election form to the Company and
ensuring that sufficient value is in the Money Market
Sub-Account or the One-year Fixed Account Sub-Account.
Transfers to any Fixed Account Sub-Account or from a Fixed
Account Sub-Account other than the One-Year Fixed Account
Sub-Account are not permitted under Dollar Cost Averaging.
The Company may, at its sole discretion, waive Dollar Cost
Averaging minimum deposit and transfer requirements.

Dollar Cost Averaging will terminate when any of the
following occurs: (1) the number of designated transfers has
been completed; (2) the value of the Money Market Sub-
Account or the One-Year Fixed Sub-Account is insufficient to
complete the next transfer; (3) the Owner requests
termination by telephone or in writing and such request is
received at least one week prior to the next scheduled
transfer date to take effect that month; or (4) the Contract
is surrendered.

The Dollar Cost Averaging program is not available following
the Annuity Date. There is no current charge for Dollar Cost
Averaging but the Company reserves the right to charge for
this program.

AUTOMATIC REBALANCING

The Automatic Rebalancing program is not available following
the Annuity Date. There is no current charge for Automatic
Rebalancing but the Company reserves the right to charge for
this program.

18
<PAGE>
CONTRACT VALUE

ACCUMULATION UNIT

The asset charge factor for any Valuation Period is equal to
the daily asset charge factor multiplied by the number of
24-hour periods in the Valuation Period.

CHARGES AND DEDUCTIONS

Various charges and deductions are made from Annuity Account
Values and the Variable Account. These charges and
deductions are:

CONTINGENT DEFERRED SALES CHARGE (SALES LOAD)

19
<PAGE>
(a) allocating Premium Payments to the amount withdrawn or
surrendered; (b) multiplying each allocated Premium Payment
that has been held under the Contract for the period shown
below by the charge shown below:

<TABLE>
<CAPTION>
YEARS SINCE
PAYMENT CHARGE
- ------------------ ------
<S> <C>
0-1 7%
1-2 6%
2-3 5%
3-4 4%
4-5 3%
5-6 2%
6-7 1%
7+ 0
</TABLE>

and (c) adding the products of each multiplication in (b)
above. The charge will not exceed 7% of the Premium
Payments. Any applicable negative Market Value Adjustment
and Account Fee will be deducted before application of the
Contingent Deferred Sales Charge. The charge is not imposed
on any death benefit paid or upon amounts applied to an
annuity option.

A Contract Owner may, not more frequently than once each
Contract Year, make a withdrawal of up to fifteen percent
(15%) of Premium Payments, or any remaining portion thereof,
without incurring a Contingent Deferred Sales Charge. The
earliest Premium Payments remaining in the Contract will be
deemed withdrawn first under this Fifteen Percent Free, even
if no Contingent Deferred Sales Charge would have been
assessed on such a withdrawal. No Contingent Deferred Sales
Charge will be deducted on withdrawals from Premium Payments
which have been held under the Contract for more than seven
(7) Contract Years or from annuity payments. The Company may
also eliminate or reduce the Contingent Deferred Sales
Charge under the Company procedures then in effect.

Commissions of up to 7.00% will be paid to broker-dealers
who sell the Contracts, and the Company will incur
promotional or distribution expenses associated with the
marketing of the Contracts. To the extent that the
Contingent Deferred Sales Charge is insufficient to cover
the actual cost of distribution, the Company may use any of
its corporate assets, including potential profit which may
arise from the Mortality and Expense Risk Charge, to make up
any difference.

MORTALITY AND EXPENSE RISK CHARGE

The Company deducts on each Valuation Date a Mortality and
Expense Risk Charge which is equal, on an annual basis, to
1.20% of the average daily net assets of the Variable
Account (consisting of approximately .70% for mortality
risks and approximately .50% for expense risks). The
mortality risks assumed by the Company arise from its
contractual obligation to make annuity payments after the
Annuity Date for the life of the Annuitant in accordance
with annuity rates guaranteed in the Contracts. The expense
risk assumed by the Company is that all actual expenses
involved in administering the Contracts, including Contract
maintenance costs, administrative costs, mailing costs,

20
<PAGE>
data processing costs, legal fees, accounting fees, filing
fees, and the costs of other services may exceed the amount
recovered from the Account Fee and the Administrative
Expense Charge.

The Mortality and Expense Risk Charge is guaranteed by the
Company and cannot be increased.

ADMINISTRATIVE EXPENSE CHARGE

The Company deducts on each Valuation Date an Administrative
Expense Charge which is equal, on an annual basis, to 0.10%
of the average daily net assets of the Variable Account.
This charge is to reimburse the Company for a portion of its
expenses in administering the Contracts. This charge is
guaranteed by the Company and cannot be increased, and the
Company will not derive a profit from this charge.

ACCOUNT FEE

The Company deducts an annual Account Fee of $35 from the
Annuity Account Value on the last Valuation Date of each
Contract Year. This charge, like the Administrative Expense
Charge, is to reimburse the Company for a portion of its
administrative expenses (see above). Prior to the Annuity
Date, this charge is deducted by cancelling Accumulation
Units from each applicable Sub-Account in the ratio that the
value of each Sub-Account bears to the total Annuity Account
Value. When the Contract is annuitized or surrendered for
its full Surrender Value on other than a Contract
Anniversary, the Account Fee will be prorated at the time of
surrender or annuitization. On and after the Annuity Date,
the Account Fee will be collected proportionately from the
Sub-Account(s) on which the Variable Annuity payment is
based, prorated on a monthly basis and will result in a
reduction of the annuity payments. The Account Fee will be
waived for any Contract Year in which the Annuity Account
Value equals or exceeds $100,000 as of the last Valuation
Date of the Contract Year.

PREMIUM TAX EQUIVALENTS

Premium tax equivalents or other taxes payable to a state,
municipality or other governmental entity will be charged
against Annuity Account Value. Premium taxes currently
imposed by certain states on the Contracts offered hereby
range from 0% to 3.5% of Premiums paid. Some states assess
premium taxes at the time Premium Payments are made; others
assess premium taxes at the time annuity payments begin. The
Company will, in its sole discretion, determine when taxes
have resulted from: the investment experience of the
Variable Account; receipt by the Company of the Premium
Payment(s); or commencement of annuity payments. The Company
may, at its sole discretion, pay taxes when due and deduct
an equivalent amount reflecting investment experience from
the Annuity Account Value at a later date. Payment at an
earlier date does not waive any right the Company may have
to deduct amounts at a later date.

INCOME TAXES

21
<PAGE>
the Variable Account. The Company will deduct for any income
taxes incurred by it as a result of the operation of the
Variable Account whether or not there was a provision for
taxes and whether or not it was sufficient.

FUND EXPENSES

There are other deductions from, and expenses paid out of,
the assets of the Funds which are described in the
accompanying Funds' prospectuses.

TRANSFER FEE

Prior to the Annuity Date, a Contract Owner may transfer all
or a part of the Annuity Account Value in a Sub-Account to
another Sub-Account without the imposition of any transfer
fee or charge if there have been no more than twelve
transfers made in the Contract Year. For additional
transfers, the Company reserves the right to deduct a
transfer fee of up to $10 per transfer. Prescheduled
automatic Dollar Cost Averaging or Automatic Rebalancing
transfers are not counted toward the twelve transfer limit.
The Company reserves the right to charge a fee of up to $10
for each transfer after the Annuity Date. The transfer fee
at any given time will not be set at a level greater than
its cost and will contain no element of profit.

OPTIONAL DEATH BENEFIT

If no Optional Death Benefit is selected, the death benefit
under the Contract will be the Annuity Account Value as of
the date of payment of the death benefit. No additional
charge is imposed for that death benefit.

For an additional charge, as described below, an Optional
Death Benefit can be selected at the time the Contract is
applied for. Under each form of Optional Death Benefit, the
death benefit payable will be the greater of the Annuity
Account Value or some other amount as of the date of payment
of the death benefit. That other amount can be one or more
of

OPTION A. Premium Payments made, less partial withdrawals.

OPTION B. Premium Payments made, less partial withdrawals,
with interest compounded daily at a rate equivalent to 5%
per year during the first seven Contract Years. As of the
beginning of the eighth Contract Year, the amount of death
benefit will decrease and thereafter be equal to total
Premium Payments made, less partial withdrawals. Only
available if the Owner (or the Annuitant, if the Owner is a
non-natural person) has not reached his or her 72nd birthday
at the Effective Date.

OPTION C. The Annuity Account Value on the seven-year
Contract Anniversary immediately preceding the date the
death benefit election is effective or is deemed to become
effective, adjusted for any subsequent Premium Payments and
partial withdrawals and charges made between the immediate
preceding seven-year Contract Anniversary and the date and
death benefit election is effective or is deemed to become
effective (as referenced herein, seven-year Contract
Anniversary means the seventh Contract Anniversary and each
succeeding Contract Anniversary occurring at any seven-year
interval thereafter, for example, the 7th, 14th and 21st
Contract Anniversaries).

OPTION D. The highest Annuity Account Value ever attained on
a Contract Anniversary date, with adjustments for any
subsequent Premium Payments and partial withdrawals made
since the last determination of such highest value.

Once an election of one or more of these Optional Death
Benefits has been made, it will remain in effect for the
life of the Contract unless the Owner chooses, by written
notice to the Annuity & Variable Life Services Center, to
discontinue such election. The Owner

22
<PAGE>
can only give one notice of discontinuance; such notice must
address the discontinuance of one or more of the Optional
Death Benefit(s) previously chosen. If no Optional Death
Benefit(s) are selected initially, they cannot be added
later, nor can the Owner change an initial selection to add
Optional Death Benefit(s) after the Contract is issued.

At each Contract Anniversary, a charge may be made against
Annuity Account Value (prorated among the Sub-Accounts used
in the Contract, if more than one be used) for any Optional
Death Benefit in effect for all or a portion of the Contract
Year then ended. Such charge will be computed in the
following manner, assuming for the sake of illustration that
the Optional Death Benefit is in effect for the entire
Contract Year.

On the last business day of each Contract Month during the
Contract Year, the Company will calculate whether the amount
payable under any of the Optional Death Benefits in effect
on that date would exceed the Annuity Account Value on that
date. If it would not exceed the Annuity Account Value on
that date, then no charge for the Optional Death Benefit is
accrued as of that date. If it would exceed the Annuity
Account Value on that date, then a charge for the Optional
Death Benefit is accrued as of that date. That charge is
computed in accordance with mortality tables which are made
a part of the Contract reflecting the Owner's age and gender
classification (in accordance with state law) is computed on
the Amount at Risk, which is the excess of the Optional
Death Benefit over the Annuity Account Value on the last
business day of the Contract Month. If the Owner is a
corporation, partnership or other non-natural person, the
measuring life will be the Annuitant's. No deduction is
actually made from Annuity Account Value for the Optional
Death Benefit until the Contract Anniversary except upon a
full surrender or annuitization of the Contract or upon the
payment of a Death Benefit, when the sum of any charges
accrued at the end of each Contract Month during the
Contract Year is deducted.

The annual rate per $1,000 of Amount at Risk charged for the
Optional Death Benefit(s) is set forth in the following
table:

<TABLE>
<CAPTION>
COST OF OPTIONAL DEATH
BENEFIT(S)
ANNUAL RATE PER $1,000
OF AMOUNT AT RISK
-------------------------------
ATTAINED AGE MALE FEMALE UNISEX
- ------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
less than 40............................ $ 2.40 $ 1.99 $ 2.20
40-45................................... 3.02 2.54 2.78
46-50................................... 4.92 4.02 4.47
51-55................................... 7.30 5.70 6.50
56-60................................... 11.46 8.34 9.90
61-65................................... 17.54 11.55 14.55
66-70................................... 27.85 18.19 23.02
71-75................................... 43.30 27.57 35.44
76-80................................... 70.53 47.33 58.93
81-85................................... 117.25 87.04 102.15
86-90................................... 179.55 147.37 163.46
91+..................................... 400.00 380.00 390.00
</TABLE>

If, for example, at the end of a Contract Month the Optional
Death Benefit (assuming payment of a death benefit on that
date) were $40,000 and the Annuity Account Value were
$30,000, the Amount at Risk would be $10,000. Suppose the
Owner (or, if applicable, the Annuitant) were a female age
57. The charge accrued for the Optional Death Benefit that
month would be 10 X $8.34, divided by 12 (reflecting
one-twelfth of a year), or $6.95. If that proved to be the
only Contract Month end during the Contract Year at which
there were an Amount at Risk, that would be the only
Optional Death Benefit charge accrued during the Contract
Year. There is no daily deduction of a percentage of Annuity
Account Values for any Optional Death Benefit. (See Appendix
1).

23
<PAGE>
OTHER CONTRACT FEATURES

OWNERSHIP

The Contract Owner has all rights and may receive all
benefits under the Contract. The Contract Owner may change
the Contract Owner at any time. If the Contract Owner dies,
a death benefit will be paid to the Beneficiary upon proof
of the Contract Owner's death. If the Owner is a
corporation, partnership or other non-natural person, the
death benefit is paid upon receipt of due proof of the
Annuitant's death. A change of Contract Owner will
automatically revoke any prior designation of Contract
Owner. A request for change must be: (1) made in writing;
and (2) received by the Company at its Annuity & Variable
Life Services Center. The change will become effective as of
the date the written request is signed. A new designation of
Contract Owner will not apply to any payment made or action
taken by the Company prior to the time it was received. Any
Optional Death Benefit in effect at the time of a change of
ownership will remain in effect. The cost of the Optional
Death Benefit(s) will be based on the attained age of the
new Owner (or the Annuitant, if the new Owner is a
non-natural person).

ASSIGNMENT

The Contract Owner may assign the Contract at any time
during his or her lifetime. Unless provided otherwise, an
assignment will not affect the interest of any previously
indicated Beneficiary. The Company will not be bound by any
assignment until written notice is received by the Company
at its Annuity & Variable Life Services Center. The Company
is not responsible for the validity of any assignment. The
Company will not be liable as to any payment or other
settlement made by the Company before such assignment has
been recorded at the Company's Annuity & Variable Life
Services Center.

If the Contract is issued pursuant to a Qualified Plan, it
may not be assigned, pledged or otherwise transferred except
as may be allowed under applicable law.

BENEFICIARY

CHANGE OF BENEFICIARY

The Contract Owner may change a Beneficiary by filing a
written request with the Company at its Annuity & Variable
Life Services Center unless an irrevocable Beneficiary
designation was previously filed. After the change is
recorded, it will take effect as of the date the request was
signed. If the request reaches the Annuity & Variable Life
Services Center after the Annuitant or Contract Owner, as
applicable, dies but before any payment is made, the change
will be valid. The Company will not be liable for any
payment made or action taken before it records the change.

24
<PAGE>
ANNUITANT

The Annuitant must be a natural person. The maximum age of
the Annuitant on the Effective Date is 90 years old. The
Annuitant may be changed at any time prior to the Annuity
Date. Joint Annuitants are allowed at the time of
annuitization only, if the Company chooses to make a joint
and survivor annuity payment option available in addition to
the options provided in the Contract. The Annuitant has no
rights or privileges prior to the Annuity Date. When an
Annuity Option is elected, the amount payable as of the
Annuity Date is based on the age and gender classification
(in accordance with state law) of the Annuitant, as well as
the Option selected and the Annuity Account Value.

TRANSFER OF CONTRACT VALUES BETWEEN SUB-ACCOUNTS

Prior to the Annuity Date, the Contract Owner may transfer
all or part of the Annuity Account Value in a Sub-Account to
another Sub-Account without the imposition of any fee or
charge if there have been no more than twelve transfers made
in the Contract Year. For additional transfers, the Company
reserves the right to deduct a transfer fee of up to $10
(See "Charges and Deductions -- Transfer Fee"). This
Contract is not designed for professional market timing
organizations or other entities using programmed and
frequent transfers.

After the Annuity Date, provided a variable annuity option
was selected, the Contract Owner may make up to three
transfers between Variable Sub-Accounts in any Contract
Year.

All transfers are subject to the following:
a. The deduction of any transfer fee that may be imposed.
The transfer fee will be deducted from the amount which
is transferred if the entire amount in the Sub-Account is
being transferred, otherwise from the Sub-Account from
which the transfer is made.
b. The minimum amount which may be transferred is the lesser
of (i) $2,000 per Fixed Account Sub-Account or $50 per
Variable Account Sub-Account; or (ii) the Contract
Owner's entire interest in the Sub-Account. The Company,
at its sole discretion may waive these minimum
requirements.
c. No partial transfer will be made if the Contract Owner's
remaining Contract Value in the Sub-Account will be less
than $100.
d. Transfers will be effected during the Valuation Period
next following receipt by the Company of a written
transfer request (or by telephone, if authorized)
containing all required information. However, no transfer
may be made effective within seven calendar days of the
date on which the first annuity payment is due. Transfers
are not permitted during the right-to-examine period.
e. Any transfer request must clearly specify the amount
which is to be transferred and the Sub-Accounts which are
to be affected.
f. Transfers of all or a portion of any Fixed Account
Sub-Account values are subject to any applicable Market
Value Adjustment;
g. The Company reserves the right to defer transfers from
any Fixed Account Sub-Account for up to six months after
date of receipt of the transfer request;
h. Transfers involving the Variable Account Sub-Accounts are
subject to such restrictions as may be imposed by the
Funds;
i. The Company reserves the right at any time and without
prior notice to any party to terminate, suspend or modify
the transfer privileges described above.
j. After the Annuity Date, transfers may not take place
between a Fixed Annuity Option and a Variable Annuity
Option.

25
<PAGE>
k. The Company reserves the right to reject any premium
allocation or transfer which would cause the Fixed
Account Sub-Account values in aggregate to exceed then
current Company limits.

Transfers between Sub-Accounts may be made by calling or
writing the Annuity & Variable Life Services Center.
Transfer requests must be received prior to 4:00 Eastern
Time in order to be effective that day.

Transfers between any Sub-Accounts may be suspended or
postponed during any periiod in which the New York Stock
Exchange is closed or has suspended trading.

PROCEDURES FOR TELEPHONE TRANSFERS

Owners may effect telephone transfers by calling the Annuity
& Variable Life Services Center.

SURRENDERS AND PARTIAL WITHDRAWALS

While the Contract is in force and before the Annuity Date,
the Company will, upon written request to the Company by the
Contract Owner, allow the surrender or partial withdrawal of
all or a portion of the Contract for its Surrender Value.
Surrenders or partial withdrawals will result in the
cancellation of Accumulation Units from each applicable
Sub-Account in the ratio that the value of each Sub-Account
bears to the total Annuity Account Value, unless the
Contract Owner specifies in writing in advance which units
are to be cancelled. The Company will pay the amount of any
surrender or partial withdrawal within seven (7) days of
receipt of a valid request, unless the "Delay of Payments"
provision is in effect. (See "Delay of Payments and
Transfers")

Certain tax withdrawal penalties and restrictions may apply
to surrenders and partial withdrawals from Contracts. (See
"Tax Matters.") Contract Owners should consult their own tax
counsel or other tax adviser regarding any surrenders and
partial withdrawals.

The Surrender Value is the Annuity Account Value for the
Valuation Period next following the Valuation Period during
which the written request to the Company for surrender is
received, reduced, in the case of full surrender, by the sum
of:
a. any applicable premium tax equivalents not previously
deducted;
b. any applicable Account Fee;
c. any applicable Contingent Deferred Sales Charge; and
d. any applicable accrued charges for the Optional Death
Benefit(s), and in the case of partial withdrawals, by
the sum of: a and c above.

DELAY OF PAYMENTS AND TRANSFERS

26
<PAGE>
3. an emergency exists as a result of which disposal of
securities held in the Variable Account is not reasonably
practicable or it is not reasonably practicable to
determine the value of the Variable Account's net assets;
or
4. during any other period when the Commission, by order, so
permits for the protection of Contract Owners.

The applicable rules and regulations of the Commission will
govern as to whether the conditions described in 2. and 3.
exist.

DEATH OF THE CONTRACT OWNER BEFORE THE ANNUITY DATE

In the event of death of the Contract Owner (or the
Annuitant, if the Owner is a non-natural person) prior to
the Annuity Date, a death benefit is payable to the
Beneficiary designated by the Owner. The value of the death
benefit will be determined as of the Valuation Period next
following the date both due proof of death (a certified copy
of the Death Certificate) and a payment election are
received by the Company. Unless an Optional Death Benefit is
selected and in effect, the value of the death benefit is
equal to the Annuity Account Value. The Beneficiary may, at
any time before the end of the sixty (60) day period
immediately following receipt of due proof of death by the
Company, elect the death benefit to be paid as follows:
1. the payment of the entire death benefit within five years
of the date of the death of the Owner or Annuitant,
whichever is applicable; or
2. payment over the lifetime of the designated Beneficiary
or over a period not extending beyond the life expectancy
of the Beneficiary, with distribution beginning within
one year of the date of death of the Owner or Annuitant,
whichever is applicable (see "Annuity Provisions --
Annuity Options"); or
3. payment in accordance with one of the settlement options
under the Contract (see "Annuity Provisions -- Annuity
Options"); or
4. if the designated Beneficiary is the Owner's spouse,
he/she can continue the Contract in his/her own name.

If the Owner is a non-natural person, then for purposes of
the death benefit, the Annuitant shall be treated as the
Owner.

27
<PAGE>
DEATH OF THE ANNUITANT BEFORE THE ANNUITY DATE

If the Annuitant dies prior to the Annuity Date and the
Annuitant is different from the Contract Owner, the Contract
Owner, if a natural person, may designate a new Annuitant.
Unless and until one is designated, the Contract Owner will
be the Annuitant. If the Contract Owner is not a natural
person, then the death benefit, valued as described in
"Death of the Contract Owner before the Annuity Date", is
paid on due proof of the Annuitant's death.

DEATH OF THE ANNUITANT AFTER THE ANNUITY DATE

CHANGE IN OPERATION OF VARIABLE ACCOUNT

MODIFICATION

28
<PAGE>
DISCONTINUANCE

ANNUITY PROVISIONS

ANNUITY DATE; CHANGE IN ANNUITY DATE AND ANNUITY OPTION

The Contract Owner selects an Annuity Date at the time of
application or order to purchase. The Contract Owner may,
upon at least forty-five (45) days prior written notice to
the Company, at any time prior to the Annuity Date, change
the Annuity Date. The Annuity Date must always be the first
day of a calendar month. The Annuity Date may not be later
than the month following the Annuitant's 90th birthday.

The Contract Owner may, upon at least forty-five (45) days
prior written notice to the Company, at any time prior to
the Annuity Date, select and/or change the Annuity Option.

ANNUITY OPTIONS

Instead of having the proceeds paid in one sum, the Contract
Owner may select one of the Annuity Options. These may be on
a fixed or variable basis, or a combination thereof. The
Annuity Option must be selected at least 30 days prior to
the Annuity Date. The Company may, at the time of election
of an Annuity Option, offer more favorable rates in lieu of
those guaranteed. The Company also may make available other
settlement options. The Company uses sex distinct or unisex
annuity rate tables when determining appropriate annuity
payments.

FIXED OPTIONS

Under a fixed option, once the selection has been made and
payments have begun, the amount of the payments will not
vary. The fixed options currently available are:

FIRST OPTION -- LIFE ANNUITY. The Company will make equal
monthly payments during the life of the Annuitant, ceasing
with the last payment due prior to the death of the
Annuitant.

FOURTH OPTION -- ANNUITY CERTAIN. The Company will make
equal monthly payments for a number of years selected, not
less than five or more than thirty years.

29
<PAGE>
VARIABLE OPTIONS

The dollar amount determined for each Sub-Account will then
be aggregated for purposes of making payments.

The Annuitant receives the value of a fixed number of
Annuity Units each month. The value of a fixed number of
Annuity Units will reflect the investment performance of the
Sub-Account selected and the amount of each annuity payment
will vary accordingly.

The variable options currently available are:

OPTION I -- VARIABLE LIFE ANNUITY. Monthly annuity payments
are paid during the life of an Annuitant, ceasing with the
last annuity payment due prior to the Annuitant's death.

OPTION III -- VARIABLE ANNUITY CERTAIN. Monthly annuity
payments are paid for a number of years selected, not less
than five or more than thirty years.

30
<PAGE>
EVIDENCE OF SURVIVAL

ENDORSEMENT OF ANNUITY PAYMENTS

THE FIXED ACCOUNT

THE FIXED ACCOUNT IS MADE UP OF THE GENERAL ASSETS OF THE
COMPANY OTHER THAN THOSE ALLOCATED TO ANY SEPARATE ACCOUNT.
THE FIXED ACCOUNT IS PART OF THE COMPANY'S GENERAL ACCOUNT.
BECAUSE OF APPLICABLE EXEMPTIVE AND EXCLUSIONARY PROVISIONS,
INTERESTS IN THE FIXED ACCOUNT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), AND
NEITHER THE FIXED ACCOUNT NOR THE COMPANY'S GENERAL ACCOUNT
HAS BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940
(THE "1940 ACT"). THEREFORE, NEITHER THE FIXED ACCOUNT NOR
ANY INTEREST THEREIN IS GENERALLY SUBJECT TO REGULATION
UNDER THE PROVISIONS OF THE 1933 ACT OR THE 1940 ACT.
ACCORDINGLY, THE COMPANY HAS BEEN ADVISED THAT THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE
DISCLOSURE IN THIS PROSPECTUS RELATING TO THE FIXED ACCOUNT.

The initial Premium Payment and any subsequent Premium
Payment(s) will be allocated to Sub-Accounts available in
connection with the Fixed Account to the extent elected by
the Owner at the time such Premium Payment is made. In
addition, all or part of the Owner's Annuity Account Value
may be transferred among Sub-Accounts available under the
Contract as described under "Transfer of Contract Values
between Sub-Accounts." Instead of the Owner's assuming all
of the investment risk as is the case for Premium Payments
allocated to the Variable Account, the Company guarantees it
will credit interest of at least 3% per year to amounts
allocated to the Fixed Account.

31
<PAGE>
allocated to any Fixed Account Sub-Account, regardless of
any application of the Market Value Adjustment (that is, the
Market Value Adjustment will not reduce the amount available
for surrender, withdrawal or transfer to an amount less than
the initial amount allocated or transferred to the Fixed
Account Sub-Account plus interest of 3% per year). The
Company reserves the right to defer the payment or transfer
of amounts withdrawn from the Fixed Account for a period not
to exceed six (6) months from the date a proper request for
surrender, withdrawal or transfer is received by the
Company.

GUARANTEED PERIODS. The Owner may elect to allocate Premium
Payments to one or more Sub-Accounts within the Fixed
Account. Each Sub-Account will maintain a Guaranteed Period
with a duration of one, three, five, seven or ten years.
Every Premium Payment allocated to a Fixed Account
Sub-Account starts a new Sub-Account with its own duration
and Guaranteed Interest Rate. The duration of the Guaranteed
Period will affect the Guaranteed Interest Rate of the
Sub-Account. Initial Premium Payments and subsequent Premium
Payments, or portions thereof, and transferred amounts
allocated to a Fixed Account Sub-Account, less any amounts
subsequently withdrawn, will earn interest at the Guaranteed
Interest Rate during the particular Sub-Account's Guaranteed
Period unless prematurely withdrawn prior to the end of the
Guaranteed Period. Initial Sub-Account Guaranteed Periods
begin on the date a Premium Payment is accepted or, in the
case of a transfer, on the effective date of the transfer,
and end on the date after the number of calendar years in
the Sub-Account's Guaranteed Period elected from the date on
which the amount was allocated to the Sub-Account (the
"Expiration Date"). Any portion of Annuity Account Value
allocated to a specific Sub-Account with a specified
Expiration Date (including interest earned thereon) will be
referred to herein as a "Guaranteed Period Amount." Interest
will be credited daily at a rate equivalent to the compound
annual rate. As a result of renewals and transfers of
portions of the Annuity Account Value described under
"Transfer of Contract Values between Sub-Accounts" above,
which will begin new Sub-Account Guaranteed Periods, amounts
allocated to Sub-Accounts of the same duration may have
different Expiration Dates. Thus each Guaranteed Period
Amount will be treated separately for purposes of
determining any applicable Market Value Adjustment (see
"Market Value Adjustment").

The Company will notify the Owner in writing prior to the
Expiration Date for any Guaranteed Period Amount. A new
Sub-Account Guaranteed Period of the same duration as the
previous Sub-Account Guaranteed Period will commence
automatically at the end of the previous Guaranteed Period
unless the Company receives, following such notification but
prior to the end of such Guaranteed Period, a written
election by the Owner to transfer the Guaranteed Period
Amount to a different Fixed Account Sub-Account or to a
Variable Account Sub-Account from among those being offered
by the Company at such time. Transfers of any Guaranteed
Period Amount which become effective upon the expiration of
the applicable Guaranteed Period are not subject to the
twelve (or three) transfers per Contract Year limitations or
the additional Fixed Sub-Account transfer restrictions (see
"Transfer of Contract Values between Sub-Accounts").

32
<PAGE>
applicable withdrawal charges, Account Fees, Market Value
Adjustment, premium taxes or other fees. Amounts transferred
out of a Fixed Account Sub-Account prior to the end of the
Guaranteed Period will be subject to the Market Value
Adjustment.

MARKET VALUE ADJUSTMENT

The MVA generally reflects the relationship between the
Index Rate (based upon the Treasury Constant Maturity Series
published by the Federal Reserve) in effect at the time a
Premium Payment is allocated to a Sub-Account's Guaranteed
Period under the Contract and the Index Rate in effect at
the time of the Premium Payment's surrender or transfer. It
also reflects the time remaining in the Sub-Account's
Guaranteed Period. Generally, if the Index Rate at the time
of surrender or transfer is lower than the Index Rate at the
time the Premium Payment was allocated, then the application
of the MVA will result in a higher payment upon surrender or
transfer. Similarly, if the Index Rate at the time of
surrender or transfer is higher than the Index Rate at the
time the Premium Payment was allocated, the application of
the MVA will generally result in a lower payment upon
surrender or transfer.

The MVA is computed by applying the following formula:

(1+A)to the power N
------------------
(1+B)to the power N

where:

33
<PAGE>
because it is anticipated that a substantial portion of
applicable general account portfolio assets will be in
relatively illiquid securities. Thus, in addition to direct
transaction costs, if such securities must be sold (E.G.,
because of surrenders), the market price may be lower.
Accordingly, even if interest rates decline, there will not
be a positive adjustment until this factor is overcome, and
then any adjustment will be lower than otherwise, to
compensate for this factor. Similarly, if interest rates
rise, any negative adjustment will be greater than
otherwise, to compensate for this factor. If interest rates
stay the same, this factor will result in a small but
negative Market Value Adjustment.

N = The number of years remaining in the Guaranteed Period
(E.G. 1 year and 73 days = 1 + (73 divided by 365) = 1.2
years)

See the Statement of Additional information for examples of
the application of the Market Value Adjustment.

DISTRIBUTION OF THE CONTRACTS

CIGNA Financial Advisors, Inc. ("CFA"), located at 900
Cottage Grove Road, Bloomfield, CT acts as the principal
underwriter and the distributor of the Contracts as well as
of variable life insurance policies and other variable
annuity contracts issued by the Company. CFA, a registered
broker-dealer under the Securities Exchange Act of 1934 and
a member of the National Association of Securities Dealers
(NASD), is a wholly-owned subsidiary of Connecticut General
Corporation. The Contracts are offered on a continuous
basis. CFA and the Company may enter into agreements to sell
the Contracts through various broker-dealers whose agents
are licensed to sell the Contracts.

PERFORMANCE DATA

MONEY MARKET SUB-ACCOUNT

OTHER VARIABLE ACCOUNT SUB-ACCOUNTS

34
<PAGE>
Accumulation Unit value at the beginning of the specified
period and upon the value of the Accumulation Unit at the
end of such period, assuming reinvestment of all
distributions and the deduction of the Mortality and Expense
Risk Charge, the Administrative Expense Charge and the
Annuity Account Fee. Each Variable Account Sub-Account may
also advertise aggregate and average total return
information over different periods of time.

In each case, the yield and total return figures will
reflect all recurring charges against the Variable Account
Sub-Account's income, including the deduction for the
Mortality and Expense Risk Charge, the Administrative
Expense Charge and the Account Fee for the applicable time
period. Contract Owners should note that the investment
results of each Sub-Account will fluctuate over time, and
any presentation of a Variable Account Sub-Account's current
yield or total return for any prior period should not be
considered as a representation of what an investment may
earn or what a Contract Owner's yield or total return may be
in any future period. See "Historical Performance Data" in
the Statement of Additional Information.

PERFORMANCE RANKING OR RATING

The performance of each or all of the Sub-Accounts of the
Variable Account may sometimes be published and compared to
the performance of other variable annuity issuers in general
or to the performance of particular types of variable
annuities investing in funds, or series of funds with
investment objectives similar to each of the Sub-Accounts of
the Variable Account. Lipper Analytical Services, Inc.
("Lipper") Morningstar Variable Annuity/Life Performance
Report of Morningstar, Inc. ("Morningstar") and the Variable
Annuity Research and Data Service
("VARDS-Registered Trademark-") are independent services
which monitor and rank or rate the performance of variable
annuity issuers in each of the major categories of
investment objectives on an industry-wide basis. Generally,
these services may not be used, and such comparisons may not
be made, in advertising or sales literature for variable
annuities.

TAX MATTERS

GENERAL

Section 72 of the Code governs taxation of annuities in
general. A Contract Owner is not taxed on increases in the
value of a Contract until distribution occurs, either in the
form

35
<PAGE>
of a lump sum payment or as annuity payments under the
Settlement Option elected. For a lump sum payment received
as a total surrender (total redemption), the recipient is
taxed on the portion of the payment that exceeds the cost
basis of the Contract. For Non-Qualified Contracts, this
cost basis is generally the Premium Payments, while for
Qualified Contracts there may be no cost basis. The taxable
portion of the lump sum payment is taxed at ordinary income
tax rates.

For annuity payments, the taxable portion is determined by a
formula which establishes the ratio that the cost basis of
the Contract bears to the total value of annuity payments
for the term of the Contract. The taxable portion is taxed
at ordinary income rates. For certain types of Qualified
Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Contract Owners,
Annuitants and Beneficiaries under the Contracts should seek
competent financial advice about the tax consequences of any
distributions.

DIVERSIFICATION

Section 817(h) of the Code imposes certain diversification
standards on the underlying assets of variable annuity
contracts. The Code provides that a variable annuity
contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments
are not adequately diversified in accordance with
regulations prescribed by the United States Treasury
Department ("Treasury Department"). Disqualification of the
Contract as an annuity contract would result in imposition
of federal income tax to the Contract Owner with respect to
earnings allocable to the Contract prior to the receipt of
payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the
Contracts meet the diversification requirements if, as of
the end of each quarter, the underlying assets meet the
diversification standards for a regulated investment company
and no more than fifty-five percent (55%) of the total
assets consist of cash, cash items, U.S. government
securities and securities of other regulated investment
companies.

The Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for
the investment portfolios underlying variable contracts such
as the Contracts. The regulations amplify the
diversification requirements for variable contracts set
forth in the Code and provide an alternative to the safe
harbor provision described above. Under the regulations, an
investment portfolio will be deemed adequately diversified
if: (1) no more than 55% of the value of the total assets of
the portfolio is represented by any one investment; (2) no
more than 70% of the value of the total assets of the
portfolio is represented by any two investments; (3) no more
than 80% of the value of the total assets of the portfolio
is represented by any three investments; and (4) no more
than 90% of the value of the total assets of the portfolio
is represented by any four investments.

36
<PAGE>
The Code provides that for purposes of determining whether
or not the diversification standards imposed on the
underlying assets of variable contracts by Section 817(h) of
the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate
issuer."

The Company intends, and the Trusts have undertaken, that
all Funds underlying the Contracts will be managed in such a
manner as to comply with these diversification requirements.

The Treasury Department has indicated that guidelines may be
forthcoming under which a variable annuity contract will not
be treated as an annuity contract for tax purposes if the
owner of the contract has excessive control over the
investments underlying the contract (i.e., by being able to
transfer values among sub-accounts with only limited
restrictions). The issuance of such guidelines may require
the Company to impose limitations on a Contract Owner's
right to control the investment. It is not known whether any
such guidelines would have a retroactive effect.

DISTRIBUTION REQUIREMENTS

Section 72(s) of the Code requires that in order to be
treated as an annuity contract for Federal income tax
purposes, any Nonqualified Contract must provide that (a) if
any Owner dies on or after the Annuity Date but prior to the
time the entire interest in the Contract has been
distributed, the remaining portion of such interest will be
distributed at least as rapidly as under the method of
distribution being used when the Owner died; and (b) if any
Owner dies prior to the Annuity Date, the entire interest in
the Contract will be distributed within five years after
such death. These requirements will be considered satisfied
as to any portion of the Owner's interest which is payable
to or for the benefit of a "designated beneficiary" and
which is distributed over the life of such "designated
beneficiary" or over a period not extending beyond the life
expectancy of that beneficiary, provided that such
distributions begin within one year of the Owner's death.
The Owner's "designated beneficiary" is the person
designated by such Owner as a Beneficiary and to whom
ownership of the Contract passes by reason of death and must
be a natural person. However, if the Owner's "designated
beneficiary" is the surviving spouse of the Owner, the
Contract may be continued with the surviving spouse as the
new Owner.

MULTIPLE CONTRACTS

The Code provides that multiple non-qualified annuity
contracts which are issued during a calendar year to the
same contract owner by one company or its affiliates are
treated as one annuity contract for purposes of determining
the tax consequences of any distribution. Such treatment may
result in adverse tax consequences, including more rapid
taxation of the distributed amounts from such combination of
contracts. Contract Owners should consult a tax adviser
prior to purchasing more than one nonqualified annuity
contract in any single calendar year.

TAX TREATMENT OF ASSIGNMENTS

An assignment or pledge of a Contract may be a taxable
event. Contract Owners should therefore consult competent
tax advisers should they wish to assign their Contracts.

37
<PAGE>
WITHHOLDING

SECTION 1035 EXCHANGES

TAX TREATMENT OF WITHDRAWALS --
NON-QUALIFIED CONTRACTS

Section 72 of the Code governs the treatment of
distributions from annuity contracts. It provides that if
the Annuity Account Value exceeds the aggregate Premium
Payments made, any amount withdrawn will be treated as
coming first from the earnings and then, only after the
income portion is exhausted, as coming from the principal.
Withdrawn earnings are includable in gross income. It
further provides that a ten percent (10%) penalty will apply
to the income portion of any premature distribution.
However, the penalty is not imposed on amounts received: (a)
after the Payee reaches age 59 1/2; (b) after the death of
the Contract Owner (or, if the Contract Owner is a
non-natural person, the Annuitant); (c) if the Payee is
totally disabled (for this purpose disability is as defined
in Section 72(m)(7) of the Code); (d) in a series of
substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy)
of the Payee or for the joint lives (or joint life
expectancies) of the Payee and his/her beneficiary; (e)
under an immediate annuity; or (f) which are allocable to
Premium Payments made prior to August 14, 1982.

The above information does not apply, except where noted, to
Qualified Contracts. However, separate tax withdrawal
penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals -- Qualified
Contracts.")

QUALIFIED PLANS

The Contracts offered by this Prospectus are designed to be
suitable for use under various types of Qualified Plans.
Because of the minimum purchase payment requirements, these
Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified
Plan varies with the type of plan and terms and conditions
of each specific plan. Contract Owners, Annuitants and
Beneficiaries are cautioned that benefits under a Qualified
Plan may be subject to the terms and conditions of the plan
regardless of the terms and conditions of the Contracts
issued pursuant to the plan. Although the Company provides
administration for the Contract, it does not provide
administrative support for Qualified Plans. Following are
general descriptions of the types of Qualified Plans with
which the Contracts may be used. Such descriptions are not
exhaustive and are for general informational purposes

38
<PAGE>
only. The tax rules regarding Qualified Plans are very
complex and will have differing applications, depending on
individual facts and circumstances. Each purchaser should
obtain competent tax advice prior to purchasing a Contract
issued in connection with a Qualified Plan.

SECTION 403(b) PLANS

INDIVIDUAL RETIREMENT ANNUITIES

CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS

DEFERRED COMPENSATION PLANS

39
<PAGE>
special treatment. The Contracts can be used with such
plans. Under such plans a participant may specify the form
of investment in which his or her participation will be
made. All such investments, however, are owned by, and are
subject to, the claims of the general creditors of the
sponsoring employer.

TAX TREATMENT OF WITHDRAWALS --
QUALIFIED CONTRACTS

Section 72(t) of the Code imposes a 10% penalty tax on the
taxable portion of any distribution from qualified
retirement plans, including Contracts issued and qualified
under Code Sections 401, 403(b), 408 and 457. To the extent
amounts are not includable in gross income because they have
been properly rolled over to an IRA or to another eligible
Qualified Plan, no tax penalty will be imposed. The tax
penalty will not apply to the following distributions: (a)
if distribution is made on or after the date on which the
Payee reaches age 59 1/2; (b) distributions following the
death of the Contract Owner or Annuitant (as applicable) or
disability of the Payee (for this purpose disability is as
defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of
substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy)
of the Payee or the joint lives (or joint life expectancies)
of such Payee and his/her designated beneficiary; (d)
distributions to a Payee who has separated from service
after attaining age 55; (e) distributions made to the extent
such distributions do not exceed the amount allowable as a
deduction under Code Section 213 to the Payee for amounts
paid during the taxable year for medical care: and (f)
distributions made to an alternate payee pursuant to a
qualified domestic relations order.

The exceptions stated in Items (d), (e) and (f) above do not
apply in the case of an Individual Retirement Annuity.

FINANCIAL STATEMENTS

Audited financial statements of the Company as of December
31, 1996 and 1995 and for each of the three years in the
period ended December 31, 1996 are included in the Statement
of Additional Information. Also included are audited
financial statements for the Variable Account, which
commenced operations April 10, 1995, as of and for the
periods (as defined in the financial statements) ended
December 31, 1996.

LEGAL PROCEEDINGS

40
<PAGE>
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
THE CONTRACTS-GENERAL PROVISIONS................ 3
The Contracts................................. 3
Loans......................................... 3
Non-Participating Contracts................... 3
Misstatement of Age........................... 3
CALCULATION OF VARIABLE ACCOUNT VALUES.......... 3
Variable Accumulation Unit Value.............. 3
Net Investment Factor......................... 4
SAMPLE CALCULATIONS AND TABLES.................. 4
Variable Account Unit Value Calculations...... 4
Withdrawal Charge and Market Value Adjustment
Tables....................................... 5
STATE REGULATION OF THE COMPANY................. 6
ADMINISTRATION.................................. 7

<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
ACCOUNT INFORMATION............................. 7
DISTRIBUTION OF THE CONTRACTS................... 7
CUSTODY OF ASSETS............................... 7
HISTORICAL PERFORMANCE DATA..................... 8
Money Market Sub-Account Yield................ 8
Other Sub-Account Yields...................... 8
Total Returns................................. 9
Other Performance Data........................ 9
LEGAL MATTERS................................... 10
LEGAL PROCEEDINGS............................... 10
EXPERTS......................................... 10
FINANCIAL STATEMENTS............................ 10
Connecticut General Life Insurance Company.... 11
CG Variable Annuity Separate Account II....... 31
</TABLE>

41
<PAGE>
APPENDIX 1

ILLUSTRATION OF
COST OF OPTIONAL DEATH BENEFITS
- --------------------------------------------------------------------------------
SIMPLIFIED EXAMPLE

Contract Owner: Mrs. Smith, female, age 57
Death Benefit Choice: D (annual step-up)

<TABLE>
<CAPTION>
GUARANTEED
DEATH
DATE ACCOUNT VALUE* BENEFIT AMOUNT AT RISK
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
May 15, Year 1 $30,000 $30,000 $0.00
(New contract --
date policy is in
force)
- ---------------------------------------------------------------------------------------------
May 15, Year 2 $40,000 $40,000 $0.00
(First contract (Death
anniversary) benefit
steps up.)
- ---------------------------------------------------------------------------------------------
June 15, Year 2 $30,000 $40,000 Guar. Death Bene. equals: $40,000
(Last day of (Market correction Account Value equals: -$30,000
month. Account is has occurred. Account AMOUNT AT RISK EQUALS: --------
assessed for death value has fallen (Owner WILL be charged $10,000
benefit charges.) below guaranteed for death benefit this
death benefit.) month.)
- ---------------------------------------------------------------------------------------------
July 15, Year 2 $40,000 $40,000 Guar. Death Bene. equals: $40,000
(One month later.) (Market recovers. Account Value equals: -$40,000
Account value has AMOUNT AT RISK EQUALS: --------
increased.) (Owner will NOT be $0.00
charged for death benefit
this month.)
- ---------------------------------------------------------------------------------------------
</TABLE>

In the case shown above, the Amount at Risk on June 15, Yr. 2 would be $10,000.
Now refer to the chart below, also found on page 23 of this prospectus. A 57
year old female will pay $8.34 per thousand of Amount at Risk. 10 X $8.34 =
$83.40. That amount is an annual charge. It is divided by 12 to determine the
monthly charge of $6.95.

In the example above, no Amount at Risk exists on July 15, Yr. 2. The Owner will
NOT be charged for a death benefit that month. However a market recovery in June
will not affect a death benefit charge already accrued for May. That charge is
fixed and will appear on the Owner's annual statement at the end of the Contract
Year.

<TABLE>
<CAPTION>
COST OF OPTIONAL DEATH BENEFIT(S)
ACTUAL RATE PER $1,000
OF AMOUNT AT RISK
----------------------------------
ATTAINED AGE MALE FEMALE UNISEX
- ----------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Less than 40................................... $ 2.40 $ 1.99 $ 2.20
40-45.......................................... 3.02 2.54 2.78
46-50.......................................... 4.92 4.02 4.47
51-55.......................................... 7.30 5.70 6.50
56-60.......................................... 11.46 8.34 9.90
61-65.......................................... 17.54 11.55 14.55
66-70.......................................... 27.85 18.19 23.02
71-75.......................................... 43.30 27.57 35.44
76-80.......................................... 70.53 47.33 58.93
81-85.......................................... 117.25 87.04 102.15
86-90.......................................... 179.55 147.37 163.46
91+............................................ 400.00 380.00 390.00
</TABLE>

*After $35 Account Fee is applied.

42
<PAGE>
[LOGO]

561282 (5/97)
<PAGE>
PART A. PROSPECTUS NO. 3
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY

[LOGO]
CG VARIABLE ANNUITY SEPARATE ACCOUNT II

<TABLE>
<S> <C> <C> <C>
HOME OFFICE LOCATION: MAILING ADDRESS: LOCKBOX ADDRESS: BY LOCKBOX ADDRESS: BY
900 COTTAGE GROVE ROAD CIGNA INDIVIDUAL MAIL: OVERNIGHT:
BLOOMFIELD, CT INSURANCE CONNECTICUT GENERAL LIFE CONNECTICUT GENERAL LIFE
ANNUITY & VARIABLE LIFE INSURANCE COMPANY INSURANCE COMPANY
SERVICES CENTER: P.O. BOX 30790 C/O FLEET BANK
ROUTING S-249 HARTFORD, CT 06150 20 CHURCH STREET
HARTFORD, CT 06152-2249 20TH FLOOR, MSN275
TELEPHONE: (800) HARTFORD, CT 06120
(552-9898) ATTN: LOCKBOX 30790
</TABLE>

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

FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACTS
- --------------------------------------------------------------------------------

The following funding options are available under a Contract: Through the
Variable Account, the Company offers twenty-one diversified open-end management
investment companies (commonly called mutual funds), each with a different
investment objective: Alger American Fund -- Alger American Small Capitalization
Portfolio, Alger American Leveraged AllCap Portfolio, Alger American MidCap
Growth Portfolio and Alger American Growth Portfolio; CIGNA Variable Products
Group -- VP Money Market Fund; Fidelity Variable Insurance Products Fund --
Equity-Income Portfolio, High Income Portfolio and Overseas Portfolio; Fidelity
Variable Insurance Products Fund II -- Investment Grade Bond Portfolio and
Contra Fund Portfolio; Fidelity Variable Insurance Products Fund III -- Growth
Opportunities Portfolio; MFS-Registered Trademark- Variable Insurance Trust --
MFS Total Return Series, MFS Utilities Series, MFS Emerging Growth Series, MFS
Research Series and MFS Growth With Income Series; Neuberger & Berman Advisers
Management Trust -- Limited Maturity Bond Portfolio and Partners Portfolio; OCC
Accumulation Trust -- Global Equity Portfolio, Managed Portfolio and Small Cap
Portfolio. The fixed interest option offered under a Contract is the Fixed
Account. Premium payments or transfers allocated to the Fixed Account, and 3%
interest per year thereon, are guaranteed, and additional interest may be
credited, with certain withdrawals subject to a Market Value Adjustment and
withdrawal charges. Unless specifically mentioned, this prospectus only
describes the variable investment options.

This entire prospectus, and those of the Funds, should be read carefully before
investing to understand the Contracts being offered. The "Statement of
Additional Information" dated May 1, 1997, available at no charge by calling or
writing the Company's Annuity & Variable Life Services Center as shown above,
provides further information. Its Table of Contents is at the end of this
prospectus.

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE MUTUAL FUNDS AVAILABLE AS FUNDING OPTIONS FOR THE CONTRACTS OFFERED BY THIS
PROSPECTUS. ALL PROSPECTUSES SHOULD BE RETAINED FOR FUTURE REFERENCE.

PROSPECTUS DATED: MAY 1, 1997
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C>
DEFINITIONS.................................... 3
HIGHLIGHTS..................................... 5
FEES AND EXPENSES.............................. 7
CONDENSED FINANCIAL INFORMATION................ 12
THE COMPANY AND THE VARIABLE ACCOUNT........... 12
THE FUNDS...................................... 13
General...................................... 16
Substitution of Securities................... 16
Voting Rights................................ 17
PREMIUM PAYMENTS AND CONTRACT VALUE............ 17
Premium Payments............................. 17
Allocation of Premium Payments............... 17
Optional Variable Account Sub-Account
Allocation Programs......................... 18
Dollar Cost Averaging...................... 18
Automatic Rebalancing...................... 19
Contract Value............................... 19
Accumulation Unit............................ 20
CHARGES AND DEDUCTIONS......................... 20
Contingent Deferred Sales Charge (Sales
Load)....................................... 20
Mortality and Expense Risk Charge............ 21
Administrative Expense Charge................ 22
Account Fee.................................. 22
Premium Tax Equivalents...................... 22
Income Taxes................................. 22
Fund Expenses................................ 23
Transfer Fee................................. 23
DEATH BENEFITS................................. 23
Death Benefits Provided by the Contract...... 23
Amount of Death Benefit...................... 23
Election and Effective Date of Election...... 24
Death of the Annuitant before the Annuity
Date........................................ 24
Death of the Annuitant after the Annuity
Date........................................ 25
OTHER CONTRACT FEATURES........................ 25
Ownership.................................... 25
Assignment................................... 25
Beneficiary.................................. 25
Change of Beneficiary........................ 25
Annuitant.................................... 26
Transfer of Contract Values between Sub-
Accounts.................................... 26

<CAPTION>
CONTENTS PAGE
<S> <C>
Procedures for Telephone Transfers........... 27
Surrenders and Partial Withdrawals........... 27
Delay of Payments and Transfers.............. 28
Change in Operation of Variable Account...... 28
Modification................................. 28
Discontinuance............................... 29
ANNUITY PROVISIONS............................. 29
Annuity Date; Change in Annuity Date and
Annuity Option.............................. 29
Annuity Options.............................. 29
Fixed Options................................ 29
Variable Options............................. 30
Evidence of Survival......................... 31
Endorsement of Annuity Payments.............. 31
THE FIXED ACCOUNT.............................. 31
Market Value Adjustment...................... 33
DISTRIBUTION OF THE CONTRACTS.................. 34
PERFORMANCE DATA............................... 34
Money Market Sub-Account..................... 34
Other Variable Account Sub-Accounts.......... 35
Performance Ranking or Rating................ 35
TAX MATTERS.................................... 36
General...................................... 36
Diversification.............................. 36
Distribution Requirements.................... 37
Multiple Contracts........................... 38
Tax Treatment of Assignments................. 38
Withholding.................................. 38
Section 1035 Exchanges....................... 38
Tax Treatment of Withdrawals -- Non-Qualified
Contracts................................... 38
Qualified Plans.............................. 39
Section 403(b) Plans......................... 39
Individual Retirement Annuities.............. 40
Corporate Pension and Profit-Sharing Plans
and H.R. 10 Plans........................... 40
Deferred Compensation Plans.................. 40
Tax Treatment of Withdrawals -- Qualified
Contracts................................... 40
FINANCIAL STATEMENTS........................... 41
LEGAL PROCEEDINGS.............................. 41
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION........................ 42
</TABLE>

2
<PAGE>
DEFINITIONS

ACCUMULATION UNIT: A measuring unit used to calculate the
value of the Owner's interest in each funding option used in
the variable portion of the Contract prior to the Annuity
Date.

ANNUITY & VARIABLE LIFE SERVICES CENTER: The office of the
Company to which notices are given and any customer service
requests are made. Mailing address: CIGNA Individual
Insurance, Annuity & Variable Life Services Center, Routing
S-249, Hartford, CT 06152-2249. Premium Payments must be
sent, and all other correspondence may be sent, to either
Lockbox address: If by mail: P.O. Box 30790, Hartford, CT
06150; If by overnight courier: c/o Fleet Bank, 20 Church
Street, 20th Floor, MSN275, Hartford, CT 06120, Attn:
Lockbox 30790.

ANNUITY ACCOUNT VALUE: The value of the Contract at any
point in time.

ANNUITY DATE: The date on which annuity payments commence.

ANNUITY OPTION: The arrangement under which annuity payments
are made.

ANNUITY PERIOD: The period starting on the Annuity Date.

ANNUITY UNIT: A measuring unit used to calculate the portion
of annuity payments attributable to each funding option used
in the fixed and variable portion of the Contract on and
after the Annuity Date.

BENEFICIARY: The person entitled to the Death Benefit, who
must also be the "Designated Beneficiary", for purposes of
Section 72(s) of the Code, upon the Owner's death.

CERTIFICATE: The document which evidences the participation
of an Owner in a group contract.

CODE: The Internal Revenue Code of 1986, as amended.

COMPANY: Connecticut General Life Insurance Company.

CONTRACT: The Variable Annuity Contract described in this
prospectus (or the certificate evidencing the Owner's
participation in a group contract).

CONTRACT MONTH: The period from one Monthly Anniversary Date
to the next.

CONTRACT OWNER (OR OWNER): The person(s) initially
designated in the application or order to purchase or
otherwise, unless later changed, as having all ownership
rights under the Contract; is the Certificate Owner under a
group contract.

3
<PAGE>
FIXED ACCOUNT: Those Sub-Accounts associated with Guaranteed
Periods and Guaranteed Rates. Fixed Account Assets are
maintained in the Company's General Account and not
allocated to the Variable Account.

FIXED ANNUITY: An annuity with payments which do not vary as
to dollar amount.

FUND(S): One or more of Alger American Fund -- Alger
American Small Capitalization Portfolio, Alger American
Leveraged AllCap Portfolio, Alger American MidCap Growth
Portfolio and Alger American Growth Portfolio; CIGNA
Variable Products Group -- Money Market Fund; Fidelity
Variable Insurance Products -- Fund Equity-Income Portfolio,
High Income Portfolio and Overseas Portfolio; Fidelity
Variable Insurance Products Fund II -- Investment Grade Bond
Portfolio and Contra Fund Portfolio; Fidelity Variable
Insurance Products Fund III -- Growth Opportunities
Portfolio; MFS-Registered Trademark- Variable Insurance
Trust -- MFS Total Return Series, MFS Utilities Series and
MFS Emerging Growth Series, MFS Research Series and MFS
Growth with Income Series; Neuberger & Berman Advisers
Management Trust -- Limited Maturity Bond Portfolio and
Partners Portfolio; OCC Accumulation Trust -- Global Equity
Portfolio, Managed Portfolio and Small Cap Portfolio. Each
is an open-end management investment company (mutual fund)
whose shares are available to fund the benefits provided by
the Contract.

GUARANTEED INTEREST RATE: The rate of interest credited by
the Company on a compound annual basis during a Guaranteed
Period.

GUARANTEED PERIOD AMOUNT: Any portion of a Purchaser's
Annuity Account Value allocated to a specific Guaranteed
Period with a specified Expiration Date (including credited
interest thereon).

INDEX RATE: An index rate based on the Treasury Constant
Maturity Series published by the Federal Reserve Board.

IN WRITING: In a written form satisfactory to the Company
and received by the Company at its Annuity & Variable Life
Services Center.

PAYEE: A recipient of payments under the Contract.

PREMIUM PAYMENT: Any amount paid to the Company cleared in
good funds as consideration for the benefits provided by the
Contract. Includes the initial Premium Payment and
subsequent Premium Payments.

QUALIFIED CONTRACT: A Contract used in connection with a
retirement plan which receives favorable federal income tax
treatment under Code Section 401, 403, 408 or 457.

SHARES: Shares of a Fund.

4
<PAGE>
SUB-ACCOUNT: That portion of the Fixed Account associated
with specific Guaranteed Period(s) and Guaranteed Interest
Rate(s) and that portion of the Variable Account which
invests in shares of a specific Fund.

SURRENDER (OR WITHDRAWAL): When a lump sum amount
representing all or part of the Annuity Account Value (minus
any applicable withdrawal charges, contract fees and premium
tax equivalents and adjusted by any Market Value Adjustment)
is paid to the Owner. After a full surrender, all of the
Owner's rights under the Contract are terminated. In this
prospectus, the terms "surrender" and "withdrawal" are used
interchangeably.

SURRENDER DATE: The date the Company processes the Owner's
election to surrender the Contract or to receive a partial
withdrawal.

VALUATION PERIOD: The period of time beginning on the day
following the Valuation Date and ending on the next
Valuation Date. A Valuation Period may be more than one day
in length.

VARIABLE ACCUMULATION UNIT: A unit of measure used in the
calculation of the value of each variable portion of the
Owner's Annuity Account Value during the Accumulation
Period.

VARIABLE ANNUITY UNIT: A unit of measure used in the
calculation of the value of each variable portion of the
Owner's Annuity Account Value during the Annuity Period, to
determine the amount of each variable annuity payment.

HIGHLIGHTS

Premium Payments attributable to the variable portion of the
Contracts will be allocated to a segregated asset account of
Connecticut General Life Insurance Company (the "Company")
which has been designated CG Variable Annuity Separate
Account II (the "Variable Account"). The Variable Account
invests in shares of one or more of the Funds available to
fund the Contract as selected by the Owner. Contract Owners
bear the investment risk for all amounts allocated to the
Variable Account. The Contract's provisions may vary in some
states. Inquiries about the Contracts may be made to the
Company's Annuity & Variable Life Services Center.

The Contract may be returned within 10 days after it is
received, longer in some states. It can be mailed or
delivered to either the Company or the agent who sold it.
Return of the Contract by mail is effective on being
postmarked, properly addressed and postage prepaid. The
Company will promptly refund the Contract Value in states
where permitted. This may be more or less than the Premium
Payment. In states where required, the Company will promptly
refund the Premium Payment, less any partial surrenders. The
Company has the right to allocate initial Premium Payments
to the Money Market Sub-Account until the expiration of the
right-to-examine period. If the Company does so allocate an
initial Premium Payment, it will refund the greater of the
Premium Payment, less any partial surrenders, or the
Contract Value. It is the Company's current practice

5
<PAGE>
to directly allocate the initial Premium Payment to the
Fund(s) designated in the application or order to purchase,
unless state law requires a refund of Premium Payments
rather than of Annuity Account Value.

A Contingent Deferred Sales Charge (sales load) may be
deducted in the event of a full surrender or partial
withdrawal. The Contingent Deferred Sales Charge is imposed
on Premium Payments within seven (7) years after their being
made. Contract Owners may, during each Contract Year,
withdraw up to fifteen percent (15%) of Premium Payments
made, or any remaining portion thereof, ("the Fifteen
Percent Free") without incurring a Contingent Deferred Sales
Charge. The Contingent Deferred Sales Charge will vary in
amount, depending upon the Contract Year in which the
Premium Payment being surrendered or withdrawn was made. For
purposes of determining the applicability of the Contingent
Deferred Sales Charge, surrenders and withdrawals are deemed
to be on a first-in, first-out basis.

There is a Mortality and Expense Risk Charge which is equal,
on an annual basis, to 1.25% of the average daily net assets
of the Variable Account. This Charge compensates the Company
for assuming the mortality and expense risks under the
Contract (See "Charges and Deductions -- Mortality and
Expense Risk Charge").

There is an Administrative Expense Charge which is equal, on
an annual basis, to 0.15% of the average daily net assets of
the Variable Account (See "Charges and Deductions --
Administrative Expense Charge").

There is an annual Account Fee of $35 ($30 for New York
Contracts) which is waived if the Annuity Account Value
equals or exceeds $100,000 at the end of the Contract Year
(See "Charges and Deductions -- Account Fee").

Premium tax equivalents or other taxes payable to a state or
other governmental entity will be charged against Annuity
Account Value (See "Charges and Deductions -- Premium Tax
Equivalents").

6
<PAGE>
MARKET VALUE ADJUSTMENT. In certain situations, a surrender
or transfer of amounts from the Fixed Account will be
subject to a Market Value Adjustment. The Market Value
Adjustment will reflect the relationship between a rate
based on an index published by the Federal Reserve Board as
to current yields on U.S. government securities of various
maturities at the time a surrender or transfer is made
("Index Rate"), and the Index Rate at the time that the
Premium Payments being surrendered or transferred were made.
Generally, if the Index Rate at the time of surrender or
transfer is lower than the Index Rate at the time the
Premium Payment was allocated, then the application of the
Market Value Adjustment will result in a higher payment upon
surrender or transfer. Similarly, if the Index Rate at the
time of surrender or transfer is higher than the Index Rate
at the time the Premium Payment was allocated, the
application of the Market Value Adjustment will generally
result in a lower payment upon surrender or transfer. It is
not applied against a surrender or transfer taking place at
the end of the Guaranteed Period.

FEES AND EXPENSES

CONTRACT OWNER TRANSACTION FEES

Contingent Deferred Sales Charge (as a percentage of Premium
Payments):

<TABLE>
<CAPTION>
YEARS
SINCE
PAYMENT CHARGE
---------- ------
<S> <C> <C> <C>
0-1 7%
1-2 7%
A Contract Owner may, during each Contract Year, withdraw up to
2-3 7% 15% of Premium Payments made, or any remaining portion
3-4 6% thereof, without incurring a Contingent Deferred Sales Charge.
4-5 6%
5-6 5%
6-7 4%
7+ 0
</TABLE>

<TABLE>
<S> <C> <C>
Transfer Fee........ $10

- Not imposed on the first twelve transfers during a Contract
Year. Pre-scheduled automatic dollar cost averaging or
automatic rebalancing transfers are not counted.

Account Fee......... $35 per Contract Year ($30 for New York
Contracts)

- Waived if Annuity Account Value at the end of the Contract
Year is $100,000 or more.
</TABLE>

VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)

<TABLE>
<S> <C>
Mortality and Expense Risk Charge......... 1.25%
Administrative Expense Charge............. 0.15%
---
Total Variable Account Annual Expenses.... 1.40%
</TABLE>

7
<PAGE>
EXPENSE DATA

The purpose of the following Table is to help Purchasers and prospective
purchasers understand the costs and expenses that are borne, directly and
indirectly, by Purchasers assuming that all Premium Payments are allocated to
the Variable Account. The table reflects expenses of the Variable Account as
well as of the individual Funds underlying the Variable Sub-Accounts.

FEE TABLE

<TABLE>
<CAPTION>
ALGER AMERICAN FUND
--------------------------------------------
ALGER ALGER ALGER
ALGER AMERICAN AMERICAN AMERICAN
AMERICAN LEVERAGED MIDCAP SMALL
GROWTH ALLCAP GROWTH CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------- ----------- -------- --------
<S> <C> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Charge....... 1.25% 1.25% 1.25% 1.25%
Administrative Expense Charge........... 0.15% 0.15% 0.15% 0.15%
Total Separate Account Annual
Expenses............................... 1.40% 1.40% 1.40% 1.40%
FUND PORTFOLIO ANNUAL EXPENSES
Management Fees......................... 0.75% 0.85% 0.80% 0.85%
Other Expenses.......................... 0.04% 0.24% 0.04% 0.03%
Total Fund Portfolio Annual Expenses.... 0.79% 1.09%(1) 0.84% 0.88%

<CAPTION>
FIDELITY VARIABLE INSURANCE
PRODUCTS TRUSTS
-----------------------------------------------------------------------------

VIP II
VIP II INVESTMENT VIP III
CONTRA VIP EQUITY GRADE VIP HIGH VIP GROWTH
FUND INCOME BOND INCOME OVERSEAS OPPORTUNITIES
PORTFOLIO PORTFOLIO PORTFOLIO FUND PORTFOLIO PORTFOLIO
----------- ----------- -------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Charge....... 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Administrative Expense Charge........... 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%
Total Separate Account Annual
Expenses............................... 1.40% 1.40% 1.40% 1.40% 1.40% 1.40%
FUND PORTFOLIO ANNUAL EXPENSES
Management Fees......................... 0.61% 0.51% 0.45% 0.59% 0.76% 0.61%
Other Expenses.......................... 0.13% 0.07% 0.13% 0.12% 0.17% 0.16%
Total Fund Portfolio Annual Expenses.... 0.74%(2) 0.58%(2) 0.58% 0.71% 0.93%(2) 0.77%(2)
</TABLE>

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

(1) Included in Other Expenses of the Alger American Leveraged AllCap Portfolio
is .03% of interest expense.

(2) A portion of the brokerage commissions the certain funds pay was used to
reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest earned
on uninvested cash balances was used to reduce custodian and transfer agent
expenses. Including these reductions, Total Fund Portfolio Annual Expenses
would have been 0.56 for the VIP Equity-Income Portfolio, 0.92% for the VIP
Overseas Portfolio, 0.71% for the VIP II Contrafund Portfolio and VIP III
Growth Opportunities Portfolio.

8
<PAGE>

The table does not reflect the deductions for the annual $35 Account Fee ($30
for New York Contracts) or premium tax equivalents. The information set forth
should be considered together with the information provided in this Prospectus
under the heading "Fees and Expenses", and in each Fund's Prospectus. All
expenses are expressed as a percentage of average account value.

<TABLE>
<CAPTION>
NEUBERGER&BERMAN
ADVISERS MANAGEMENT
MFS VARIABLE INSURANCE TRUST CIGNA
- --------------------------------------------------------- TRUST(5) FUNDS
MFS --------------------- --------- OCC ACCUMULATION TRUST
MFS MFS GROWTH LIMITED VP ---------------------------------
TOTAL MFS EMERGING MFS WITH MATURITY MONEY GLOBAL
RETURN UTILITIES GROWTH RESEARCH INCOME PARTNERS BOND MARKET EQUITY MANAGED SMALL CAP
SERIES SERIES SERIES SERIES SERIES PORTFOLIO PORTFOLIO FUND PORTFOLIO PORTFOLIO PORTFOLIO
- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%

1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.30%

0.75% 0.75% 0.75% 0.75% 0.75% 0.85%(6) 0.65%(6) 0.35% 0.80% 0.80% 0.80%
0.25%(4) 0.25%(4) 0.25%(4) 0.25%(4) 0.25%(4) 0.30% 0.10% 0.15% 0.63% 0.10% 0.22%

1.00%(3) 1.00%(3) 1.00%(3) 1.00%(3) 1.00%(3) 1.15% 0.75% 0.50%(7) 1.43%(8) 0.90%(8) 1.02%(8)
</TABLE>

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

(3) The Adviser has agreed to bear expenses for each Series, subject to
reimbursement by each Series, such that each Series' "Other Expenses" shall
not exceed 0.25% of the average daily net assets of the Series during the
current fiscal year. Otherwise, "Other Expenses" for the Emerging Growth
Series, Research Series, Growth With Income Series, Total Return Series and
Utilities Series would be 0.41%, 0.73%, 1.32%, 1.35% and 2.00% respectively,
and "Total Fund Portfolio Expenses" would be 1.16%, 1.48%, 2.07%, 2.10% and
2.75% respectively, for these Series. See "Information Concerning Shares of
Each Series--Expenses."

(7) The Funds' investment adviser has voluntarily agreed to waive such portion
of its management fee as is necessary to cause the Total Fund Portfolio
Annual Expenses of the Fund not to exceed .50% of the Money Market Fund's
average daily net asset value. If this waiver is not sufficient to cause the
Total Fund Portfolio Annual Expenses of the Fund not to exceed 0.50% of
average daily net asset value the adviser has agreed to pay such other
expenses of the Fund as is necessary to keep Total Fund Portfolio Annual
Expenses from exceeding 0.50%. This arrangement will continue in effect
until May 31, 1998 and afterwards to the extent described in the Funds' then
current prospectus. To the extent management fees are waived by the adviser,
or expenses of a Fund are paid by the adviser, the total return to
shareholders will increase. Total return to shareholders will decrease to
the extent management fees are no longer waived or expenses of the Fund are
no longer paid. Total Fund Portfolio Annual Expenses would have been 1.53%
for VP Money Market Fund prior to reimbursement by the adviser.

(8) The annual expenses of OCC Accumulation Trust Portfolios (the "Portfolios")
as of December 31, 1996 have been restated to reflect new management fee and
expense limitation arrangements in effect as of May 1, 1996. Additionally,
Other Expenses are shown gross of certain expense offsets afforded the
Portfolios which effectively lowered overall custody expenses. Effective May
1, 1996, the expenses of the Portfolios were contractually limited by OpCap
Advisors so that their respective annualized operating expenses (net of any
expense offsets) do not exceed 1.25% of their respective average daily net
assets. Furthermore, through December 31, 1997, the annualized operating
expenses of the Managed and Small Cap Portfolios will be voluntarily limited
by OpCap Advisors so that annualized operating expenses (net of any expense
offsets) of these Portfolios do not exceed 1.00% of their respective average
daily net assets. Without such contractual and voluntary expense limitations
and without giving effect to any expense offsets, the Management Fees, Other
Expenses and Total Portfolio Annual Expenses incurred for the fiscal year
ended December 31, 1996 would have been: .80%, 1.04% and 1.84%,
respectively, for the Global Equity Portfolio; .80%, .10% and .90%,
respectively, for the Managed Portfolio; and .80%, .26% and 1.06%,
respectively, for the Small Cap Portfolio.

9
<PAGE>
EXAMPLES

The Contract Owner would pay the following expenses on a
$1,000 investment, assuming a 5% annual return on assets,
and assuming all Premium Payments are allocated to the
Variable Account:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1. IF THE CONTRACT IS SURRENDERED AT THE END OF THE APPLICABLE TIME PERIOD:
Alger Small Capitalization Portfolio..................... $ 83 $ 133 $ 177 $ 269
Alger Leveraged AllCap Portfolio......................... $ 85 $ 139 $ 187 $ 290
Alger MidCap Growth Portfolio............................ $ 83 $ 132 $ 175 $ 265
Alger Growth Portfolio................................... $ 82 $ 130 $ 172 $ 260
CIGNA VP Money Market Fund............................... $ 79 $ 121 $ 157 $ 230
Fidelity VIP Equity-Income Portfolio..................... $ 80 $ 124 $ 161 $ 238
Fidelity VIP High Income Portfolio....................... $ 82 $ 128 $ 168 $ 251
Fidelity VIP Overseas Portfolio.......................... $ 84 $ 134 $ 179 $ 274
Fidelity VIP II Investment Grade Bond Portfolio.......... $ 80 $ 124 $ 161 $ 238
Fidelity VIP II Contra Fund Portfolio.................... $ 82 $ 129 $ 169 $ 254
Fidelity VIP III Growth Opportunities Portfolio.......... $ 82 $ 130 $ 171 $ 257
MFS Total Return Series.................................. $ 85 $ 136 $ 183 $ 281
MFS Utilities Series..................................... $ 85 $ 136 $ 183 $ 281
MFS Emerging Growth Series............................... $ 85 $ 136 $ 183 $ 281
MFS Research Series...................................... $ 85 $ 136 $ 183 $ 281
MFS Growth With Income Series............................ $ 85 $ 136 $ 183 $ 281
AMT Limited Maturity Bond Portfolio...................... $ 82 $ 130 $ 171 $ 258
AMT Partners Portfolio................................... $ 84 $ 135 $ 180 $ 276
OCC Global Equity Portfolio.............................. $ 89 $ 149 $ 204 $ 322
OCC Managed Portfolio.................................... $ 84 $ 133 $ 178 $ 271
OCC Small Cap Portfolio.................................. $ 85 $ 137 $ 184 $ 283

2. IF THE CONTRACT IS NOT SURRENDERED OR IF IT IS ANNUITIZED:
Alger Small Capitalization Portfolio..................... $ 24 $ 73 $ 126 $ 269
Alger Leveraged AllCap Portfolio......................... $ 26 $ 80 $ 136 $ 290
Alger MidCap Growth Portfolio............................ $ 23 $ 72 $ 124 $ 265
Alger Growth Portfolio................................... $ 23 $ 71 $ 121 $ 260
CIGNA VP Money Market Fund............................... $ 20 $ 62 $ 106 $ 230
Fidelity VIP Equity-Income Portfolio..................... $ 21 $ 64 $ 110 $ 238
Fidelity VIP High Income Portfolio....................... $ 24 $ 75 $ 128 $ 274
Fidelity VIP Overseas Portfolio.......................... $ 22 $ 69 $ 118 $ 254
Fidelity VIP II Investment Grade Bond Portfolio.......... $ 21 $ 64 $ 110 $ 238
Fidelity VIP II Contra Fund Portfolio.................... $ 23 $ 70 $ 120 $ 258
Fidelity VIP III Growth Opportunities Portfolio.......... $ 25 $ 75 $ 129 $ 276
MFS Total Return Series.................................. $ 25 $ 77 $ 132 $ 281
MFS Utilities Series..................................... $ 25 $ 77 $ 132 $ 281
MFS Emerging Growth Series............................... $ 25 $ 77 $ 132 $ 281
MFS Research Series...................................... $ 25 $ 77 $ 132 $ 281
MFS Growth With Income Series............................ $ 25 $ 77 $ 132 $ 281
AMT Limited Maturity Bond Portfolio...................... $ 23 $ 70 $ 120 $ 258
AMT Partners Portfolio................................... $ 25 $ 75 $ 129 $ 276
OCC Global Equity Portfolio.............................. $ 29 $ 90 $ 153 $ 322
OCC Managed Portfolio.................................... $ 24 $ 74 $ 127 $ 271
OCC Small Cap Portfolio.................................. $ 25 $ 78 $ 133 $ 283
</TABLE>

10
<PAGE>
expense reimbursement arrangements which may be subject to
change. See the Funds' Prospectuses. In addition to the
expenses listed above, charges for premium tax equivalents
may be applicable.

These examples reflect the annual $35 Account Fee as an
annual charge of .07% of assets, based upon an anticipated
average Annuity Account Value of $50,000. The results would
be slightly different for New York Contracts which have a
$30 annual Account Fee.

THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.

11
<PAGE>
CONDENSED FINANCIAL INFORMATION

The Variable Account commenced operations on April 10, 1995.
The Sub-Accounts commenced operation on various dates
thereafter. There follows, for each of the twenty-one
Variable Account Sub-Accounts available under the Contracts,
information regarding the changes in the Accumulation Unit
values from date of inception through December 31, 1995, and
from January 1, 1996 through December 31, 1996, and the
number of Accumulation Units outstanding at December 31,
1996:

<TABLE>
<CAPTION>
(IN DOLLARS) NUMBER OF
ACCUMULATION ---------------------------- ACCUMULATION
UNIT ACCUMULATION ACCUMULATION UNITS
BEGINNING UNIT VALUE UNIT VALUE OUTSTANDING
SUB-ACCOUNT VALUE AT 12/31/95 AT 12/31/96 12/31/96
-------------------------------- ------------- --------------- ----------- -----------
<C> <S> <C> <C> <C> <C>
Alger American Growth Portfolio 10.00 12.385784 13.855323 1,330,936
Alger American Leveraged AllCap
Portfolio 10.00 13.895178 15.364036 372,332
Alger American MidCap Growth
Portfolio 10.00 13.106537 14.473761 677,431
Alger American Small Cap
Portfolio 10.00 13.092181 13.460941 1,098,865
CIGNA VIP Money Market Fund 10.00 * ** **
Fidelity VIP Equity-Income
Portfolio 10.00 12.128673 13.679456 2,085,260
Fidelity VIP High Income
Portfolio 10.00 * 10.802349 452,556
Fidelity VIP Overseas Portfolio 10.00 * 10.614394 178,578
Fidelity VIP II Contra Fund
Portfolio 10.00 * ** **
Fidelity VIP II Investment Grade
Bond Portfolio 10.00 10.541110 10.734479 544,386
Fidelity VIP III Growth
Opportunities Portfolio 10.00 * ** **
MFS Total Return Series 10.00 11.003903 12.420693 706,567
MFS Utilities Series 10.00 11.365171 13.292608 211,116
MFS Emerging Growth Series 10.00 * ** **
MFS Research Series 10.00 * ** **
MFS Growth with Income Series 10.00 * ** **
AMT Limited Maturity Bond
Portfolio 10.00 10.547360 10.857343 337,716
AMT Partners Portfolio 10.00 12.122020 15.500823 641,124
OCC Global Equity Portfolio 10.00 11.758951 13.347358 767,854
OCC Managed Portfolio 10.00 11.143831 13.502565 2,477,621
OCC Small Cap Portfolio 10.00 10.855343 12.718827 219,684
* Had not commenced operations as of December 31, 1995
** Had not commenced operations as of December 31, 1996
</TABLE>

THE COMPANY AND THE VARIABLE ACCOUNT

12
<PAGE>
relation to the Contracts described in this Prospectus, to
the extent necessary to meet the Company's obligations
thereunder. Although that portion of the assets maintained
in the Variable Account equal to the reserves and other
contract liabilities with respect to the Variable Account
will not be charged with any liabilities arising out of any
other business conducted by the Company, all obligations
arising under the Contracts, including the promise to make
annuity payments, are general corporate obligations of the
Company.

THE FUNDS

Each of the twenty-one Sub-Accounts of the Variable Account
is invested solely in shares of one of the twenty-one Funds
available as funding vehicles under the Contracts. Each of
the Funds is a series of one of eight Massachusetts or
Delaware business trusts, collectively referred to herein as
the "Trusts", each of which is registered as an open-end,
diversified management investment company under the 1940
Act.

The Trusts and their investment advisers and distributors
are:

CIGNA Variable Products Group ("CIGNA Group"), managed
by CIGNA Investments, Inc. and distributed by CIGNA
Financial Advisors, Inc., 900 Cottage Grove Road,
Bloomfield, CT 06002;

Variable Insurance Products Fund ("Fidelity VIP"),
Variable Insurance Products Fund II ("Fidelity VIP II")
and Variable Insurance Products Fund III ("Fidelity VIP
III"), managed by Fidelity Management & Research Company
and distributed by Fidelity Distribution Corporation, 82
Devonshire Street, Boston, MA 02103;

Neuberger & Berman Advisers Management Trust ("AMT
Trust"), managed and distributed by Neuberger & Berman
Management Incorporated, 605 Third Avenue, 2nd Floor New
York, NY 10158-0006;

13
<PAGE>

Four Funds of ALGER Trust are available under the Contracts:

Alger American Growth Portfolio;
Alger American Leveraged AllCap Portfolio;
Alger American MidCap Growth Portfolio;
Alger American Small Capitalization Portfolio.

One Fund of CIGNA Group is available under the Contracts:

Money Market Fund ("CIGNA VP Money Market Fund").

Three Funds of FIDELITY VIP are available under the
Contracts:

Equity-Income Portfolio ("Fidelity VIP Equity-Income
Portfolio");
High Income Portfolio ("Fidelity VIP High Income
Portfolio");
Overseas Portfolio ("Fidelity VIP Overseas Portfolio").

Two Funds of FIDELITY VIP II are available under the
Contracts:

Contra Fund Portfolio ("Fidelity VIP II Contra Fund
Portfolio");
Investment Grade Bond Portfolio ("Fidelity VIP II
Investment Grade Bond Portfolio").

One Fund of FIDELITY VIP III is available under the
Contracts:

Growth Opportunities Portfolio ("Fidelity VIP III Growth
Opportunities Portfolio").

Five Funds of MFS Trust are available under the Contracts:

MFS Total Return Series;
MFS Utilities Series;
MFS Emerging Growth Series;
MFS Research Series;
MFS Growth with Income Series.

Two Funds of AMT Trust are available under the Contracts:

Limited Maturity Bond Portfolio;
Partners Portfolio.

Three Funds of OCC Trust are available under the Contracts:

Global Equity Portfolio;
Managed Portfolio;
Small Cap Portfolio.

The investment advisory fees charged the Funds by their
advisers are shown in the Fee Table at pages [8] and [9] of
this Prospectus.

There follows a brief description of the investment
objective and program of each Fund. There can be no
assurance that any of the stated investment objectives will
be achieved.

14
<PAGE>
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO (Large Cap
Stocks): Seeks long-term capital appreciation by investing
in a diversified, actively managed portfolio of equity
securities, with the ability to engage in leveraging (up to
one-third of assets) and options and futures transactions.

CIGNA VP MONEY MARKET FUND (Money Market): Seeks as high a
level of current income as is consistent with preserving
capital and providing liquidity, through investment in high
quality U.S. dollar denominated money market securities of
domestic and foreign issuers.

FIDELITY VIP II CONTRAFUND PORTFOLIO (Large Cap Stocks)
Seeks capital appreciation by investing primarily in equity
securities of companies that are undervalued or
out-of-favor.

FIDELITY VIP II INVESTMENT GRADE BOND PORTFOLIO (Fixed
Income-Intermediate Term Bonds): Seeks as high a level of
current income as is consistent with the preservation of
capital by investing in a broad range of investment-grade
fixed-income securities.

FIDELITY VIP HIGH INCOME PORTFOLIO (High Yield Bonds): Seeks
high current income by investing mainly in high yielding
debt securities, with an emphasis on lower quality
securities.

FIDELITY VIP OVERSEAS PORTFOLIO (International Equity):
Seeks long term growth of capital by investing mainly in
foreign securities.

FIDELITY VIP III GROWTH OPPORTUNITIES PORTFOLIO (Large Cap
Stocks): Seeks capital growth by investing primarily in
common stocks and securities convertible into common stocks.

MFS EMERGING GROWTH (Large Cap Stocks): Seeks long-term
growth of capital by investing primarily in common stocks of
companies management believes to be early in their life
cycle but which have the potential to become major
enterprises.

MFS GROWTH WITH INCOME (Large Cap Stocks): Seeks reasonable
current income and long-term growth of capital and income.

MFS RESEARCH SERIES (Large Cap Stocks): Seeks to provide
long-term growth of capital and future income.

15
<PAGE>
MFS UTILITIES SERIES (Specialty): Seeks capital growth and
current income (income above that available from a portfolio
invested entirely in equity securities) by investing, under
normal circumstances, at least 65% of its assets in equity
and debt securities of utility companies.

NEUBERGER&BERMAN AMT LIMITED MATURITY BOND PORTFOLIO (Short
to Intermediate Term Bonds): Seeks the highest current
income consistent with low risk to principal and liquidity;
and secondarily, total return.

NEUBERGER&BERMAN AMT PARTNERS PORTFOLIO (Large Cap Stocks):
Seeks capital growth. Invests principally in common stocks
of medium to large capitalization established companies,
using the value-oriented investment approach. The Portfolio
seeks capital growth through an investment approach that is
designed to increase capital with reasonable risk. The
portfolio manager seeks securities believed to be
undervalued based on strong fundamentals such as low
price-to-earnings ratios, consistent cash flow, and support
from asset values.

OCC GLOBAL EQUITY PORTFOLIO (International Stocks): Seeks
long-term capital appreciation through a global investment
strategy primarily involving equity securities.

The Neuberger&Berman AMT Partners Portfolio,
Neuberger&Berman Limited Maturity Bond Portfolio, Fidelity
VIP Equity-Income Portfolio, Fidelity VIP II Contra Fund
Portfolio, Fidelity VIP High Income Portfolio, Fidelity VIP
Overseas Portfolio, MFS Emerging Growth Series, MFS Research
Series, MFS Total Return Series, MFS Utilities Series, OCC
Global Equity Portfolio, OCC Managed Portfolio, and the OCC
Small Cap Portfolio funds may invest in non-investment
grade, high yield, high-risk debt securities (commonly
referred to as "junk bonds"), as detailed in the individual
Fund prospectuses.

GENERAL

SUBSTITUTION OF SECURITIES

16
<PAGE>
VOTING RIGHTS

The Funds' shares are issued and redeemed only in connection
with variable annuity contracts and variable life insurance
policies issued through separate accounts of the Company and
other life insurance companies. The Trusts do not foresee
any disadvantage to Contract Owners arising out of the fact
that shares may be made available to separate accounts which
are used in connection with both variable annuity and
variable life insurance products. Nevertheless, the Trusts'
Boards intend to monitor events in order to identify any
material irreconcilable conflicts which may possibly arise
and to determine what action, if any, should be taken in
response thereto. If such a conflict were to occur, one of
the separate accounts might withdraw its investment in a
Fund. This might force a Fund to sell portfolio securities
at disadvantageous prices.

PREMIUM PAYMENTS AND CONTRACT VALUE

PREMIUM PAYMENTS

The Company may, at its sole discretion, offer special
premium payment programs and/ or waive the minimum payment
requirements.

The Contract Owner may elect to increase, decrease or change
the frequency of Premium Payments.

ALLOCATION OF PREMIUM PAYMENTS

Premium Payments are allocated to one or more of the
appropriate Sub-Accounts within the Variable Account and
Fixed Account as selected by the Contract Owner. For each
Variable Account Sub-Account, the Premium Payments are
converted into Accumulation Units. The number of
Accumulation Units credited to the Contract is determined by
dividing the Premium Payment allocated to the Sub-Account by
the value of the Accumulation Unit for the Sub-Account.

17
<PAGE>
The Company will allocate the initial Premium Payment
directly to the Sub-Account(s) selected by the Owner unless
state law requires, during the right-to-examine period, a
refund of Premium Payments rather than Annuity Account
Value.

In such cases, the initial Premium Payment will be allocated
to the money market account until the right-to-examine
period has expired.

The Company may, at its sole discretion, waive minimum
premium allocation requirements or minimum Variable Account
Sub-Account requirements.

OPTIONAL VARIABLE ACCOUNT SUB-ACCOUNT ALLOCATION PROGRAMS

The Contract Owner may elect to enroll in either of the
following programs. However, both programs cannot be in
effect at the same time.

DOLLAR COST AVERAGING

18
<PAGE>
Dollar Cost Averaging may be selected by establishing a
Money Market Sub-Account of at least $1,000 or a One-Year
Fixed Account Sub-Account with a value of at least $2,000.
The minimum amount per month to allocate is $50 (subject to
the 18 Sub-Account limitation described under "Allocation of
Premium Payments" above). Enrollment in this program may
occur at any time by calling or writing the Annuity &
Variable Life Services Center or by providing the
information requested on the Dollar Cost Averaging election
form to the Company and ensuring that sufficient value is in
the Money Market Sub-Account or the One-year Fixed Account
Sub-Account. Transfers to any Fixed Account Sub-Account or
from a Fixed Account Sub-Account other than the One-Year
Fixed Account Sub-Account are not permitted under Dollar
Cost Averaging. The Company may, at its sole discretion,
waive Dollar Cost Averaging minimum deposit and transfer
requirements.

The Dollar Cost Averaging program is not available following
the Annuity Date. There is no current charge for Dollar Cost
Averaging but the Company reserves the right to charge for
this program.

AUTOMATIC REBALANCING

The Automatic Rebalancing program is not available following
the Annuity Date. There is no current charge for Automatic
Rebalancing but the Company reserves the right to charge for
this program.

CONTRACT VALUE

19
<PAGE>
ACCUMULATION UNIT

The asset charge factor for any Valuation Period is equal to
the daily asset charge factor multiplied by the number of
24-hour periods in the Valuation Period.

CHARGES AND DEDUCTIONS

Various charges and deductions are made from Annuity Account
Values and the Variable Account. These charges and
deductions are:

CONTINGENT DEFERRED SALES CHARGE (SALES LOAD)

20
<PAGE>
by: (a) allocating Premium Payments to the amount withdrawn
or surrendered; (b) multiplying each allocated Premium
Payment that has been held under the Contract for the period
shown below by the charge shown below:

<TABLE>
<CAPTION>
YEARS SINCE
PAYMENT CHARGE
- ------------------ ------
<S> <C>
0-1 7%
1-2 7%
2-3 7%
3-4 6%
4-5 6%
5-6 5%
6-7 4%
7+ 0
</TABLE>

A Contract Owner may, during each Contract Year, withdraw up
to fifteen percent (15%) of Premium Payments, or any
remaining portion thereof, without incurring a Contingent
Deferred Sales Charge. The earliest Premium Payments
remaining in the Contract will be deemed withdrawn first
under this Fifteen Percent Free provision. No Contingent
Deferred Sales Charge will be deducted on withdrawals from
Premium Payments which have been held under the Contract for
more than seven (7) Contract Years or from annuity payments.
The Company may also eliminate or reduce the Contingent
Deferred Sales Charge under the Company procedures then in
effect.

MORTALITY AND EXPENSE RISK CHARGE

The Company deducts on each Valuation Date a Mortality and
Expense Risk Charge which is equal, on an annual basis, to
1.25% of the average daily net assets of the Variable
Account (consisting of approximately .75% for mortality
risks and approximately .50% for expense risks). The
mortality risks assumed by the Company arise from its
contractual obligation to make annuity payments after the
Annuity Date for the life of the Annuitant in accordance
with annuity rates guaranteed in the Contract and to pay
death benefits that may exceed the Annuity Account Value.
The expense risk assumed by the Company is that all actual
expenses involved in administering the Contracts, including
Contract maintenance costs, administrative costs, mailing
costs, data processing costs,

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<PAGE>
legal fees, accounting fees, filing fees, and the costs of
other services may exceed the amount recovered from the
Account Fee and the Administrative Expense Charge, each of
which is described below.

The Mortality and Expense Risk Charge is guaranteed by the
Company and cannot be increased.

ADMINISTRATIVE EXPENSE CHARGE

The Company deducts on each Valuation Date an Administrative
Expense Charge which is equal, on an annual basis, to 0.15%
of the average daily net assets of the Variable Account.
This charge is to reimburse the Company for a portion of its
expenses in administering the Contracts. This charge is
guaranteed by the Company and cannot be increased, and the
Company will not derive a profit from this charge.

ACCOUNT FEE

The Company deducts an annual Account Fee of $35 ($30 for
New York Contracts) from the Annuity Account Value on the
last Valuation Date of each Contract Year. This charge, like
the Administrative Expense Charge, is to reimburse the
Company for a portion of its expenses in administering the
Contracts. Prior to the Annuity Date, this charge is
deducted by cancelling Accumulation Units from each
applicable Sub-Account in the ratio that the value of each
Sub-Account bears to the total Annuity Account Value. When
the Contract is annuitized or surrendered for its full
Surrender Value on other than a Contract Anniversary, the
Account Fee will be prorated at the time of surrender or
annuitization. On and after the Annuity Date, the Account
Fee will be collected proportionately from the
Sub-Account(s) on which the Variable Annuity payment is
based, prorated on a monthly basis and will result in a
reduction of the annuity payments. The Account Fee will be
waived for any Contract Year in which the Annuity Account
Value equals or exceeds $100,000 as of the last Valuation
Date of the Contract Year.

PREMIUM TAX EQUIVALENTS

INCOME TAXES

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<PAGE>
the Variable Account. The Company will deduct for any income
taxes incurred by it as a result of the operation of the
Variable Account whether or not there was a provision for
taxes and whether or not it was sufficient.

FUND EXPENSES

There are other deductions from, and expenses paid out of,
the assets of the Funds which are described in the
accompanying Funds' prospectuses.

TRANSFER FEE

DEATH BENEFITS

DEATH BENEFITS PROVIDED BY THE CONTRACTS

In the event of death of the Contract Owner (or the
Annuitant, if the Owner is a non-natural person) prior to
the Annuity Date, a death benefit is payable to the
Beneficiary designated by the Owner upon due proof of death
(a certified copy of the Death Certificate) of the Owner. If
there is no designated Beneficiary, or contingent
Beneficiary, the Company will, upon receipt of due proof of
death of Owner, Beneficiary and contingent Beneficiary, pay
the death benefit in one lump sum to the deceased Owner's
estate.

If the death of any annuitant occurs on or after the Annuity
Date, no death benefit will be payable under the Contract
except as may be provided under the Annuity Option elected.

AMOUNT OF DEATH BENEFIT

The amount of the death benefit is determined as of the
effective date or deemed effective date of the death benefit
election (see "Election and Effective Date of Election"),
and is equal to the greatest of --
(a) the Annuity Account Value for the Valuation Period
during which the death benefit election is effective or
deemed to become effective;
(b) the sum of all the Premium Payments made under the
Contract, less the sum of all partial withdrawals; or
(c) the highest Annuity Account Value ever attained on a
Contract Anniversary date occurring on or before the
Owner's 80th birthday, with adjustments for any
subsequent Premium Payments, partial withdrawals and
charges made since such Contract Anniversary Date.

On or after Owner's 90th birthday, the amount of the death
benefit is the greater of (a) and (b) above.

No MVA or withdrawal charges are assessed against amounts
which are applied toward payment of a death benefit.

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<PAGE>
Upon a transfer of ownership, the death benefit becomes the
greatest of --
(a) the Annuity Account Value for the Valuation Period
during which the death benefit election is effective or
deemed to become effective;
(b) the sum of Premium Payments made less the sum of
withdrawals made on or before the date of transfer,
adjusted for any subsequent Premium Payments and partial
withdrawals made under the Contract; or
(c) the highest Annuity Account Value ever attained on a
Contract Anniversary date subsequent to the date of
transfer occurring on or before the new Owner's 80th
birthday, with adjustments for any subsequent Premium
Payments, partial withdrawals and charges made since
such Contract Anniversary Date.

On or after the then current Owner's 90th birthday, the
amount of the death benefit is the greater of (a) and (b)
above.

ELECTION AND EFFECTIVE DATE OF ELECTION

The Beneficiary may, at any time before the end of the sixty
(60) day period immediately following receipt of due proof
of death by the Company, elect the death benefit to be paid
as follows:
1. the payment of the entire death benefit on a specified
date, which must be within five years of the date of the
death of the Owner or Annuitant, whichever is
applicable; or
2. payment over the lifetime of the designated Beneficiary
or over a period not extending beyond the life
expectancy of the Beneficiary, with distribution
beginning within one year of the date of death of the
Owner or Annuitant, whichever is applicable (see
"Annuity Provisions -- Annuity Options"); or
3. payment in accordance with one of the settlement options
under the Contract (see "Annuity Provisions -- Annuity
Options"); or
4. if the designated Beneficiary is the Owner's spouse,
he/she can continue the Contract in his/her own name.

Such election may be made by filing with the Company a
statement in writing specifying the method by which the
death benefit shall be paid and such election shall become
effective on the later of (a) the date the election is
received by the Company, and (b) the date due proof of death
of the Owner is received by the Company.

If the Owner is a non-natural person, then for purposes of
the death benefit, the Annuitant shall be treated as the
Owner, except that in such case a change of annuitant would
be treated as a death of the annuitant.

DEATH OF THE ANNUITANT BEFORE THE ANNUITY DATE

If the Annuitant dies prior to the Annuity Date and the
Annuitant is different from the Contract Owner, the Contract
Owner, if a natural person, may designate a new Annuitant.
Unless and until one is designated, the Contract Owner will
be the Annuitant. If the Contract Owner is not a natural
person, then the death benefit, valued as described in
"Amount of Death Benefit" but based on the Annuitant, is
paid on due proof of the Annuitant's death.

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<PAGE>
DEATH OF THE ANNUITANT AFTER THE ANNUITY DATE

If the Annuitant dies after the Annuity Date, the death
benefit, if any, will be as specified in the Annuity Option
elected.

The Company will require due proof of the Annuitant's death.
Death benefits will be paid at least as rapidly as under the
method of distribution in effect at the Annuitant's death.

OTHER CONTRACT FEATURES

OWNERSHIP

ASSIGNMENT

If the Contract is issued pursuant to a Qualified Plan, it
may not be assigned, pledged or otherwise transferred except
as may be allowed under applicable law.

BENEFICIARY

CHANGE OF BENEFICIARY

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<PAGE>
Services Center after the death of the Annuitant or Contract
Owner, as applicable, but before any payment is made, the
change will be valid. The Company will not be liable for any
payment made or action taken before it records the change.

ANNUITANT

The Annuitant must be a natural person. The maximum age of
the Annuitant on the date the Contract is issued is 90 years
old. The Annuitant may be changed at any time prior to the
Annuity Date unless the Contract is owned by a non-natural
person. Joint Annuitants are allowed at the time of
annuitization only, if the Company chooses to make a joint
and survivor annuity payment option available in addition to
the options provided in the Contract. The Annuitant has no
rights or privileges prior to the Annuity Date. When an
Annuity Option is elected, the amount payable as of the
Annuity Date is based on the age and gender classification
(in accordance with state law) of the Annuitant, as well as
the Option selected and the Annuity Account Value.

TRANSFER OF CONTRACT VALUES BETWEEN SUB-ACCOUNTS

Repeated patterns of frequent transfers are disruptive to
the operation of the Sub-Accounts, and should the Company
become aware of such disruptive practices, the Company may
refuse to permit more than 12 transfers in any year and may
modify the transfer provisions of the Contract.

After the Annuity Date, provided a variable annuity option
was selected, the Contract Owner may make up to three
transfers between Variable Sub-Accounts in any Contract
Year.

All transfers are subject to the following:
a. The deduction of any transfer fee that may be imposed.
The transfer fee will be deducted from the amount which
is transferred if the entire amount in the Sub-Account is
being transferred, otherwise from the Sub-Account from
which the transfer is made.
b. The minimum amount which may be transferred is the lesser
of (i) $2,000 per Fixed Account Sub-Account or $50 per
Variable Account Sub-Account; or (ii) the Contract
Owner's entire interest in the Sub-Account. The Company,
at its sole discretion may waive these minimum
requirements.
c. No partial transfer will be made if the Contract Owner's
remaining Contract Value in the Sub-Account will be less
than $50.
d. Transfers will be effected during the Valuation Period
next following receipt by the Company of a written
transfer request (or by telephone, if authorized)
containing all required information. However, no transfer
may be made effective within seven calendar days of the
date on which the first annuity payment is due. Transfers
are not permitted during the right-to-examine period.
e. Any transfer request must clearly specify the amount
which is to be transferred and the Sub-Accounts which are
to be affected.
f. Transfers of all or a portion of any Fixed Account
Sub-Account values (other than transfers pursuant to the
Dollar Cost Averaging program) are subject to any
applicable Market Value Adjustment;

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<PAGE>
g. The Company reserves the right to defer transfers from
any Fixed Account Sub-Account for up to six months after
date of receipt of the transfer request;
h. Transfers involving the Variable Account Sub-Accounts are
subject to such restrictions as may be imposed by the
Funds;
i. The Company reserves the right at any time and without
prior notice to any party to terminate, suspend or modify
the transfer privileges described above.
j. After the Annuity Date, transfers may not take place
between a Fixed Annuity Option and a Variable Annuity
Option.
k. The Company reserves the right to reject any premium
allocation or transfer which would cause the Fixed
Account Sub-Account values in aggregate to exceed then
current Company limits.

Transfers between any Sub-Accounts may be suspended or
postponed during any period in which the New York Stock
Exchange is closed or has suspended trading.

PROCEDURES FOR TELEPHONE TRANSFERS

Owners may effect telephone transfers by calling the Annuity
& Variable Life Services Center.

SURRENDERS AND PARTIAL WITHDRAWALS

The Surrender Value is the Annuity Account Value for the
Valuation Period next following the Valuation Period during
which the written request to the Company for surrender is
received, reduced, in the case of full surrender, by the sum
of:
A. any applicable premium tax equivalents not previously
deducted;
B. any applicable Account Fee; and
C. any applicable Contingent Deferred Sales Charge; and
for partial withdrawals, by the sum of A and C above.

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<PAGE>
DELAY OF PAYMENTS AND TRANSFERS

The Company reserves the right to suspend or postpone
payments or transfers for any period when:
1. the New York Stock Exchange is closed (other than
customary weekend and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of
securities held in the Variable Account is not reasonably
practicable or it is not reasonably practicable to
determine the value of the Variable Account's net assets;
or
4. during any other period when the Commission, by order, so
permits for the protection of Contract Owners.

The applicable rules and regulations of the Commission will
govern as to whether the conditions described in 2. and 3.
exist.

CHANGE IN OPERATION OF VARIABLE ACCOUNT

MODIFICATION

28
<PAGE>
monthly fixed annuity payment, and the formula used to
calculate the Market Value Adjustment, provided that such
modification shall apply only to Contracts established after
the effective date of such modification. In order to
exercise its modification rights in these particular
instances, the Company must notify the Owner of such
modification in writing. All of the charges and the annuity
tables which are provided in the Contracts prior to any such
modification will remain in effect permanently, unless
improved by the Company, with respect to Contracts
established prior to the effective date of such
modification.

DISCONTINUANCE

ANNUITY PROVISIONS

ANNUITY DATE; CHANGE IN ANNUITY DATE AND ANNUITY OPTION

The Contract Owner may, upon at least forty-five (45) days
prior written notice to the Company, at any time prior to
the Annuity Date, select and/or change the Annuity Option.

ANNUITY OPTIONS

FIXED OPTIONS

Under a fixed option, once the selection has been made and
payments have begun, the amount of the payments will not
vary. The fixed options currently available are:

FIRST OPTION -- LIFE ANNUITY. The Company will make equal
monthly payments during the life of the Annuitant, ceasing
with the last payment due prior to the death of the
Annuitant.

THIRD OPTION -- LIFE ANNUITY WITH CASH REFUND. The Company
will make equal monthly payments during the life of the
Annuitant. Upon the death of the Annuitant, after

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<PAGE>
payments have started, the Company will pay in one sum any
excess of the amount of the proceeds applied under this
Option over the total of all payments made under this
Option. The amount of each monthly payment per $1,000 of
proceeds is based on the age and gender (in accordance with
state law) of the Annuitant when the first payment is made.

FOURTH OPTION -- ANNUITY CERTAIN. The Company will make
equal monthly payments for a number of years selected, not
less than five or more than thirty years.

VARIABLE OPTIONS

The dollar amount determined for each Sub-Account will then
be aggregated for purposes of making payments.

The Annuity Unit Value for a Sub-Account is determined by
multiplying the Annuity Unit Value for that Sub-Account for
the preceding Valuation Period by the Net Investment Factor
for the current Valuation Period (calculated as described on
pages 19 and 20 of this Prospectus) and multiplying the
result by 0.999919020, the daily factor to neutralize the
assumed net investment rate, discussed above, of 3% per
annum which is built into the annuity rate table. It may
increase or decrease from Valuation Period to Valuation
Period.

The variable options currently available are:

OPTION I -- VARIABLE LIFE ANNUITY. Monthly annuity payments
are paid during the life of an Annuitant, ceasing with the
last annuity payment due prior to the Annuitant's death.

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<PAGE>
OPTION II -- VARIABLE LIFE ANNUITY WITH CERTAIN
PERIOD. Monthly annuity payments are paid during the life of
an Annuitant, but at least for the minimum period selected,
which may be five, ten, fifteen or twenty years;

OPTION III -- VARIABLE ANNUITY CERTAIN. Monthly annuity
payments are paid for a number of years selected, not less
than five or more than thirty years.

EVIDENCE OF SURVIVAL

ENDORSEMENT OF ANNUITY PAYMENTS

THE FIXED ACCOUNT

THE FIXED ACCOUNT IS MADE UP OF THE GENERAL ASSETS OF THE
COMPANY OTHER THAN THOSE ALLOCATED TO ANY SEPARATE ACCOUNT.
THE FIXED ACCOUNT IS PART OF THE COMPANY'S GENERAL ACCOUNT.
BECAUSE OF APPLICABLE EXEMPTIVE AND EXCLUSIONARY PROVISIONS,
INTERESTS IN THE FIXED ACCOUNT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), AND
NEITHER THE FIXED ACCOUNT NOR THE COMPANY'S GENERAL ACCOUNT
HAS BEEN REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940
(THE "1940 ACT"). THEREFORE, NEITHER THE FIXED ACCOUNT NOR
ANY INTEREST THEREIN IS GENERALLY SUBJECT TO REGULATION
UNDER THE PROVISIONS OF THE 1933 ACT OR THE 1940 ACT.
ACCORDINGLY, THE COMPANY HAS BEEN ADVISED THAT THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE
DISCLOSURE IN THIS PROSPECTUS RELATING TO THE FIXED ACCOUNT.

31
<PAGE>
laws permit investments, within specified limits and subject
to certain qualifications, in federal, state and municipal
obligations, corporate bonds, preferred and common stocks,
real estate mortgages, real estate and certain other
investments.

GUARANTEED PERIODS. The Owner may elect to allocate Premium
Payments to one or more Sub-Accounts within the Fixed
Account. Each Sub-Account will maintain a Guaranteed Period
with a duration of one, five or ten years. Every Premium
Payment allocated to a Fixed Account Sub-Account starts a
new Sub-Account with its own duration and Guaranteed
Interest Rate. The duration of the Guaranteed Period will
affect the Guaranteed Interest Rate of the Sub-Account.
Initial Premium Payments and subsequent Premium Payments, or
portions thereof, and transferred amounts allocated to a
Fixed Account Sub-Account, less any amounts subsequently
withdrawn, will earn interest at the Guaranteed Interest
Rate during the particular Sub-Account's Guaranteed Period
unless prematurely withdrawn prior to the end of the
Guaranteed Period. Initial Sub-Account Guaranteed Periods
begin on the date a Premium Payment is accepted or, in the
case of a transfer, on the effective date of the transfer,
and end on the date after the number of calendar years in
the Sub-Account's Guaranteed Period elected from the date on
which the amount was allocated to the Sub-Account (the
"Expiration Date"). Any portion of Annuity Account Value
allocated to a specific Sub-Account with a specified
Expiration Date (including interest earned thereon) will be
referred to herein as a "Guaranteed Period Amount." Interest
will be credited daily at a rate equivalent to the compound
annual rate. As a result of renewals and transfers of
portions of the Annuity Account Value described under
"Transfer of Contract Values between Sub-Accounts" above,
which will begin new Sub-Account Guaranteed Periods, amounts
allocated to Sub-Accounts of the same duration may have
different Expiration Dates. Thus each Guaranteed Period
Amount will be treated separately for purposes of
determining any applicable Market Value Adjustment (see
"Market Value Adjustment").

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<PAGE>
effective upon the expiration of the applicable Guaranteed
Period are not subject to the twelve transfers per Contract
Year limitations or the additional Fixed Sub-Account
transfer restrictions (see "Transfer of Contract Values
between Sub-Accounts").

MARKET VALUE ADJUSTMENT

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<PAGE>
The MVA is computed by applying the following formula:

(1+A)to the power N
------------------
(1+B)to the power N

where:

B = an Index Rate (based on the Treasury Constant Maturity
Series published by the Federal Reserve) for a security with
time to maturity equal to the Sub-Account's Guaranteed
Period, determined at the time of surrender or transfer,
plus a 0.50% adjustment (unless otherwise limited by
applicable state law). If Index Rates "A" and "B" are within
.25% of each other when the index rate factor is determined,
no such percentage adjustment to "B" will be made, unless
otherwise required by state law. This adjustment builds into
the formula a factor representing direct and indirect costs
to the Company associated with liquidating general account
assets in order to satisfy surrender requests. This
adjustment of 0.50% has been added to the denominator of the
formula because it is anticipated that a substantial portion
of applicable general account portfolio assets will be in
relatively illiquid securities. Thus, in addition to direct
transaction costs, if such securities must be sold (E.G.,
because of surrenders), the market price may be lower.
Accordingly, even if interest rates decline, there will not
be a positive adjustment until this factor is overcome, and
then any adjustment will be lower than otherwise, to
compensate for this factor. Similarly, if interest rates
rise, any negative adjustment will be greater than
otherwise, to compensate for this factor. If interest rates
stay the same, this factor will result in a small but
negative Market Value Adjustment.

N = The number of years remaining in the Guaranteed Period
(E.G. 1 year and 73 days = 1 + (73 divided by 365) = 1.2
years)

See the Statement of Additional information for examples of
the application of the Market Value Adjustment.

DISTRIBUTION OF THE CONTRACTS

CIGNA Financial Advisors, Inc. ("CFA"), located at 900
Cottage Grove Road, Bloomfield, CT acts as the principal
underwriter and the distributor of the Contracts as well as
of variable life insurance policies and other variable
annuity contracts issued by the Company. CFA, a registered
broker-dealer under the Securities Exchange Act of 1934 and
a member of the National Association of Securities Dealers,
is a wholly-owned subsidiary of Connecticut General
Corporation. The Contracts are offered on a continuous
basis. CFA and the Company may enter into agreements to sell
the Contracts through various broker-dealers whose agents
are licensed to sell the Contracts.

PERFORMANCE DATA

MONEY MARKET SUB-ACCOUNT

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<PAGE>
Market Sub-Account. The "effective yield" is calculated
similarly but, when annualized, the income earned by Annuity
Account Values in the Money Market Sub-Account is assumed to
be reinvested. The "effective yield" will be slightly higher
than the "yield" because of the compounding effect of this
assumed reinvestment. The computation of the yield
calculation includes a deduction for the Mortality and
Expense Risk Charge, the Administrative Expense Charge, and
the Account Fee.

OTHER VARIABLE ACCOUNT SUB-ACCOUNTS

From time to time, the other Variable Account Sub-Accounts
may publish their current yields and total returns in
advertisements and communications to Contract Owners. The
current yield for each Variable Account Sub-Account will be
calculated by dividing the annualization of the dividend and
interest income earned by the underlying Fund during a
recent 30-day period by the maximum Accumulation Unit value
at the end of such period. Total return information will
include the underlying Fund's average annual compounded rate
of return over the most recent four calendar quarters and
the period from the underlying Fund's inception of
operations, based upon the value of the Accumulation Units
acquired through a hypothetical $1,000 investment at the
Accumulation Unit value at the beginning of the specified
period and upon the value of the Accumulation Unit at the
end of such period, assuming reinvestment of all
distributions and the deduction of the Mortality and Expense
Risk Charge, the Administrative Expense Charge and the
Annuity Account Fee. Each Variable Account Sub-Account may
also advertise aggregate and average total return
information over different periods of time.

In each case, the yield and total return figures will
reflect all recurring charges against the Variable Account
Sub-Account's income, including the deduction for the
Mortality and Expense Risk Charge, the Administrative
Expense Charge and the Account Fee for the applicable time
period. Contract Owners should note that the investment
results of each Sub-Account will fluctuate over time, and
any presentation of a Variable Account Sub-Account's current
yield or total return for any prior period should not be
considered as a representation of what an investment may
earn or what a Contract Owner's yield or total return may be
in any future period. See "Historical Performance Data" in
the Statement of Additional Information.

PERFORMANCE RANKING OR RATING

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<PAGE>
addition, VARDS-Registered Trademark- prepares risk-adjusted
rankings, which consider the effects of market risk on total
return performance. This type of ranking may address the
question as to which funds provide the highest total return
with the least amount of risk. Morningstar assigns ratings
of zero to five stars to the mutual funds taking into
account primarily historical performance and risk factors.

TAX MATTERS

GENERAL

Section 72 of the Code governs taxation of annuities in
general. A Contract Owner is not taxed on increases in the
value of a Contract until distribution occurs, either in the
form of a lump sum payment or as annuity payments under the
Settlement Option elected. For a lump sum payment received
as a total surrender (total redemption), the recipient is
taxed on the portion of the payment that exceeds the cost
basis of the Contract. For Non-Qualified Contracts, this
cost basis is generally the Premium Payments, while for
Qualified Contracts there may be no cost basis. The taxable
portion of the lump sum payment is taxed at ordinary income
tax rates.

For annuity payments, the taxable portion is determined by a
formula which establishes the ratio that the cost basis of
the Contract bears to the total value of annuity payments
for the term of the Contract. The taxable portion is taxed
at ordinary income rates. For certain types of Qualified
Plans there may be no cost basis in the Contract within the
meaning of Section 72 of the Code. Contract Owners,
Annuitants and Beneficiaries under the Contracts should seek
competent financial advice about the tax consequences of any
distributions.

DIVERSIFICATION

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<PAGE>
Contract prior to the receipt of payments under the
Contract. The Code contains a safe harbor provision which
provides that annuity contracts such as the Contracts meet
the diversification requirements if, as of the end of each
quarter, the underlying assets meet the diversification
standards for a regulated investment company and no more
than fifty-five percent (55%) of the total assets consist of
cash, cash items, U.S. government securities and securities
of other regulated investment companies.

The Company intends, and the Trusts have undertaken, that
all Funds underlying the Contracts will be managed in such a
manner as to comply with these diversification requirements.

The Treasury Department has indicated that guidelines may be
forthcoming under which a variable annuity contract will not
be treated as an annuity contract for tax purposes if the
owner of the contract has excessive control over the
investments underlying the contract (i.e., by being able to
transfer values among sub-accounts with only limited
restrictions). The issuance of such guidelines may require
the Company to impose limitations on a Contract Owner's
right to control the investment. It is not known whether any
such guidelines would have a retroactive effect.

DISTRIBUTION REQUIREMENTS

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<PAGE>
The Contracts contain provisions which are intended to
comply with the requirements of Section 72(s) of the Code,
although no regulations interpreting these requirements have
yet been issued. The Company intends to review such
provisions and modify them if necessary to try to assure
that they comply with the Section 72(s) requirements when
clarified by regulation or otherwise. Similar rules may
apply to a Qualified Contract.

MULTIPLE CONTRACTS

TAX TREATMENT OF ASSIGNMENTS

An assignment or pledge of a Contract may be a taxable
event. Contract Owners should therefore consult competent
tax advisers should they wish to assign their Contracts.

WITHHOLDING

SECTION 1035 EXCHANGES

TAX TREATMENT OF WITHDRAWALS --
NON-QUALIFIED CONTRACTS

Section 72 of the Code governs the treatment of
distributions from annuity contracts. It provides that if
the Annuity Account Value exceeds the aggregate Premium
Payments made, any amount withdrawn will be treated as
coming first from the earnings and then, only after the
income portion is exhausted, as coming from the principal.
Withdrawn earnings are includable in gross income. It
further provides that a ten percent (10%) penalty will apply
to the income portion of any premature distribution.
However, the penalty is not imposed on amounts received: (a)
after the Payee reaches age 59 1/2; (b) after the death of
the Contract Owner (or, if the Contract Owner is a
non-natural person, the Annuitant); (c) if the Payee is
totally disabled (for this purpose disability is as defined
in Section 72(m)(7) of the Code); (d) in a series of
substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy)

38
<PAGE>
of the Payee or for the joint lives (or joint life
expectancies) of the Payee and his/her beneficiary; (e)
under an immediate annuity; or (f) which are allocable to
Premium Payments made prior to August 14, 1982.

The above information does not apply, except where noted, to
Qualified Contracts. However, separate tax withdrawal
penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals -- Qualified
Contracts.")

QUALIFIED PLANS

The Contracts offered by this Prospectus are designed to be
suitable for use under various types of Qualified Plans.
Because of the minimum purchase payment requirements, these
Contracts may not be appropriate for some periodic payment
retirement plans. Taxation of participants in each Qualified
Plan varies with the type of plan and terms and conditions
of each specific plan. Contract Owners, Annuitants and
Beneficiaries are cautioned that benefits under a Qualified
Plan may be subject to the terms and conditions of the plan
regardless of the terms and conditions of the Contracts
issued pursuant to the plan. Although the Company provides
administration for the Contract, it does not provide
administrative support for Qualified Plans. Following are
general descriptions of the types of Qualified Plans with
which the Contracts may be used. Such descriptions are not
exhaustive and are for general informational purposes only.
The tax rules regarding Qualified Plans are very complex and
will have differing applications, depending on individual
facts and circumstances. Each purchaser should obtain
competent tax advice prior to purchasing a Contract issued
in connection with a Qualified Plan.

SECTION 403(b) Plans

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<PAGE>
INDIVIDUAL RETIREMENT ANNUITIES

CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS

DEFERRED COMPENSATION PLANS

TAX TREATMENT OF WITHDRAWALS --
QUALIFIED CONTRACTS

Section 72(t) of the Code imposes a 10% penalty tax on the
taxable portion of any distribution from qualified
retirement plans, including Contracts issued and qualified
under Code Sections 401, 403(b), 408 and 457. To the extent
amounts are not includable in gross income because they have
been properly rolled over to an IRA or to another eligible
Qualified Plan, no tax penalty will be imposed. The tax
penalty will not apply to the following distributions: (a)
if distribution is made on or after the date on which the
Payee reaches age 59 1/2; (b) distributions following the
death of the Contract Owner or Annuitant (as applicable) or
disability of the Payee (for this purpose disability is as
defined in Section 72(m)(7) of the Code); (c) after
separation from service, distributions that are part of
substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy)
of the Payee or the joint lives (or joint life expectancies)
of such Payee and his/her designated beneficiary; (d)
distributions to a Payee who has separated from service
after attaining age 55; (e) distributions made to the extent
such distributions do not exceed the amount

40
<PAGE>
allowable as a deduction under Code Section 213 to the Payee
for amounts paid during the taxable year for medical care:
and (f) distributions made to an alternate payee pursuant to
a qualified domestic relations order.

The exceptions stated in Items (d), (e) and (f) above do not
apply in the case of an Individual Retirement Annuity.

FINANCIAL STATEMENTS

Audited financial statements of the Company as of December
31, 1996 and 1995 and for each of the three years in the
period ended December 31, 1996 are included in the Statement
of Additional Information. Also included are audited
financial statements for the Variable Account, which
commenced operations April 10, 1995, as of and for the
periods (as defined in the financial statements) ended
December 31, 1995 and 1996.

LEGAL PROCEEDINGS

41
<PAGE>
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
THE CONTRACTS-GENERAL PROVISIONS................ 3
The Contracts................................. 3
Loans......................................... 3
Non-Participating Contracts................... 3
Misstatement of Age........................... 3
CALCULATION OF VARIABLE ACCOUNT VALUES.......... 3
Variable Accumulation Unit Value.............. 3
Net Investment Factor......................... 4
SAMPLE CALCULATIONS AND TABLES.................. 4
Variable Account Unit Value Calculations...... 4
Withdrawal Charge and Market Value Adjustment
Tables....................................... 5
STATE REGULATION OF THE COMPANY................. 6
ADMINISTRATION.................................. 7

42
<PAGE>

[LOGO]

561285 (5/97)

<PAGE>
PART B. STATEMENT OF ADDITIONAL INFORMATION NO. 1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACTS -- NEW YORK

Issued through

CG VARIABLE ANNUITY SEPARATE ACCOUNT II

Offered by

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

<TABLE>
<S> <C>
Home Office Location: Mailing Address:
900 Cottage Grove Road CIGNA Individual Insurance
Bloomfield, Connecticut Annuity & Variable Life Services Center
Routing S-249
Hartford, Connecticut 06152-2249

Telephone: (800) 552-9898

Lockbox Address -- By Overnight:
Connecticut General Life Insurance Company
Lockbox Address -- By Mail: c/o Fleet Bank
Connecticut General Life Insurance Company 20 Church Street
P.O. Box 30790 20th Floor, MSN275
Hartford, CT 06150 Hartford, CT 06120
Attn: Lockbox 30790
</TABLE>

This Statement of Additional Information ("Statement") expands upon subjects
discussed in the current Prospectus for the Variable Annuity Contracts (the
"Contracts") offered by Connecticut General Life Insurance Company through CG
Variable Annuity Separate Account II. You may obtain a copy of the Prospectus
dated May 1, 1997, by calling (800) 552-9898, or by writing to Annuity &
Variable Life Services Center, Routing S-249, Connecticut General Life Insurance
Company, Hartford, Connecticut 06152-2249. Terms used in the current Prospectus
for the Contracts are incorporated in this Statement.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ ONLY IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACTS AND CG VARIABLE
ANNUITY SEPARATE ACCOUNT II.

Dated: May 1, 1997

1
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE CONTRACTS -- GENERAL PROVISIONS........................................................................ 3
The Contracts............................................................................................ 3
Loans.................................................................................................... 3
Non-Participating Contracts.............................................................................. 3
Misstatement of Age...................................................................................... 3

CALCULATION OF VARIABLE ACCOUNT VALUES..................................................................... 3
Variable Accumulation Unit Value......................................................................... 3
Net Investment Factor.................................................................................... 4

SAMPLE CALCULATIONS AND TABLES............................................................................. 4
Variable Account Unit Value Calculations................................................................. 4
Withdrawal Charge and Market Value Adjustment Tables..................................................... 5

STATE REGULATION OF THE COMPANY............................................................................ 6

ADMINISTRATION............................................................................................. 7

ACCOUNT INFORMATION........................................................................................ 7

DISTRIBUTION OF THE CONTRACTS.............................................................................. 7

CUSTODY OF ASSETS.......................................................................................... 7

HISTORICAL PERFORMANCE DATA................................................................................ 8
Money Market Sub-Account Yield........................................................................... 8
Other Sub-Account Yields................................................................................. 8
Total Returns............................................................................................ 9
Other Performance Data................................................................................... 10

LEGAL MATTERS.............................................................................................. 10

LEGAL PROCEEDINGS.......................................................................................... 10

EXPERTS.................................................................................................... 10

FINANCIAL STATEMENTS....................................................................................... 10
Connecticut General Life Insurance Company............................................................... 12
CG Variable Annuity Separate Account II.................................................................. 32

APPENDIX I................................................................................................. 47
Variable Account Unit Value Sample Calculations for New York Contracts Issued Before May 1, 1996......... 47
</TABLE>

2
<PAGE>
In order to supplement the description in the Prospectus, the following
provides additional information about Connecticut General Life Insurance Company
(the "Company") and the Contracts which may be of interest to an Owner. Terms
have the same meaning as in the Prospectus, unless otherwise indicated.

THE CONTRACTS -- GENERAL PROVISIONS

THE CONTRACTS

A Contract, attached riders, amendments and any application, form the entire
contract. Only the President, a Vice President, a Secretary, a Director, or an
Assistant Director of the Company may change or waive any provision in a
Contract. Any changes or waivers must be in writing. The Company may change or
amend the Contracts if such change or amendment is necessary for the Contracts
to comply with or take advantage of any state or federal law, rule or
regulation.

LOANS

Under the Contracts, loans are not permitted.

NON-PARTICIPATING CONTRACTS

The Contracts do not participate or share in the profits or surplus earnings
of the Company.

MISSTATEMENT OF AGE

If the age of the Annuitant is misstated, any amounts payable by the Company
under the Contract will be adjusted to be those amounts which the Premium
Payments would have purchased for the correct age, according to the Company's
rates in effect on the Date of Issue. Any overpayment by the Company, with
interest at the rate of 6% per year, compounded annually, will be charged
against the payments to be made next succeeding the adjustment. Any underpayment
by the Company will be paid in a lump sum.

CALCULATION OF VARIABLE ACCOUNT VALUES

On any Valuation Date, the Variable Account value is equal to the totals of
the values allocated to the Contracts in each Sub-Account. The portion of an
Owner's Annuity Account Value held in any Variable Account Sub-Account is equal
to the number of Sub-Account units allocated to a Contract multiplied by the
Sub-Account accumulation unit value as described below.

VARIABLE ACCUMULATION UNIT VALUE

Upon receipt of a Premium Payment by the Company at its Annuity & Variable
Life Services Center, all or that portion, if any, of the Premium Payment to be
allocated to the Variable Account Sub-Accounts will be credited to the Variable
Account in the form of Variable Accumulation Units. The number of particular
Variable Accumulation Units to be credited is determined by dividing the dollar
amount allocated to the particular Variable Account Sub-Account by the Variable
Accumulation Unit Value for the particular Variable Account Sub-Account for the
Valuation Period during which the Premium Payment is received at the Company's
Variable Products Service Center (for the initial Premium Payment, for the
Valuation Period during which the Premium Payment is accepted).

The Variable Accumulation Unit Value for each Variable Account Sub-Account
was set initially at $10.00 for the first Valuation Period of the particular
Variable Account Sub-Account. The Variable Account commenced operations on April
10, 1995. The Variable Accumulation Unit Value for the particular Variable
Account Sub-Account for any subsequent Valuation Period is determined by
multiplying the Variable Accumulation Unit Value for the particular Variable
Account Sub-Account for the immediately preceding Valuation Period by the Net
Investment Factor for the particular Variable Account Sub-Account for such
subsequent Valuation Period. The Variable Accumulation Unit Value for each
Variable Account Sub-Account for any Valuation Period is the value determined as
of the end of the particular Valuation Period and may increase, decrease, or
remain constant from Valuation Period to Valuation Period.

3
<PAGE>
The Variable Account portion of the Annuity Account Value, if any, for any
Valuation Period is equal to the sum of the value of all Variable Accumulation
Units of each Variable Account Sub-Account credited to the Contract for such
Valuation Period. The value in a Contract of each Variable Account Sub-Account
is determined by multiplying the number of Variable Accumulation Units, if any,
credited to such Variable Account Sub-Account in a Contract by the Variable
Accumulation Unit Value of the particular Variable Account Sub-Account for such
Valuation Period.

NET INVESTMENT FACTOR

The Net Investment Factor is an index applied to measure the investment
performance of a Variable Account Sub-Account from one Valuation Period to the
next. The Net Investment Factor may be greater or less than or equal to 1.0;
therefore, the value of a Variable Accumulation Unit may increase, decrease, or
remain the same.

The Net Investment Factor for any Variable Account Sub-Account for any
Valuation Period is determined by dividing (a) by (b) and then subtracting (c)
from the result where:

(a) is the net result of:

(1) the net asset value of a Fund share held in the Variable Account
Sub-Account determined as of the end of the Valuation Period, plus

(2) the per share amount of any dividend or other distribution declared
by the Fund on the shares held in the Variable Account Sub-Account if
the "ex-dividend" date occurs during the Valuation Period, plus or
minus

(3) a per share credit or charge with respect to any taxes paid or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of the
Variable Account Sub-Account;

(b) is the net asset value of a Fund share held in the Variable Account
Sub-Account determined as of the end of the preceding Valuation Period;
and

(c) is the asset charge factor determined by the Company for the valuation
period to reflect the charges for assuming mortality and expense risks
and for administrative expenses.

SAMPLE CALCULATIONS AND TABLES

VARIABLE ACCOUNT UNIT VALUE CALCULATIONS*

VARIABLE ACCUMULATION UNIT VALUE CALCULATION. Assume the net asset value of
a Fund share at the end of the current Valuation Period is $16.50; and its value
at the end of the immediately preceding Valuation Period was $16.46; the
Valuation Period is one day; and no dividends or distributions caused Fund
shares to go "ex-dividend" during the current Valuation Period. $16.50 divided
by $16.46 is 1.002430134. Subtracting the one day risk factor for mortality and
expense risks and the administrative expense charge of .00003862644 (the daily
equivalent of the current charge of 1.40% on an annual basis) gives a net
investment factor of 1.00239150756. If the value of the Variable Accumulation
Unit for the immediately preceding Valuation Period had been $14.703693, the
value for the current Valuation Period would be $14.738857 ($14.703693 X
1.00239150756).

VARIABLE ANNUITY UNIT VALUE CALCULATION. The assumptions in the above
example exist. Also assume that the value of an Annuity Unit for the immediately
preceding Valuation Period had been $13.579136. As the first variable annuity
payment is determined by using an assumed interest rate of 3% per year, the
value of the Annuity Unit for the current Valuation Period would be $13.610508
[$13.579136 X 1.00239150756 (the net investment factor) X 0.999919020].
0.999919020 is the factor, for a one day Valuation Period, that neutralizes the
assumed interest rate of three percent (3%) per year used to establish the
Annuity Payment Rates found in the Contract.

VARIABLE ANNUITY PAYMENT CALCULATION. Assume that a Participant's Variable
Annuity Account is credited with 5319.7531 Variable Accumulation Units of a
particular Sub-Account; that the Variable

4
<PAGE>
Accumulation Unit Value and the Annuity Unit Value for the particular
Sub-Account for the Valuation Period which ends immediately preceding the
Annuity Date are $14.703693 and $13.579136 respectively; that the Annuity
Payment Rate for the age and option elected is $6.52 per $1,000; and that the
Annuity Unit Value on the day prior to the second variable annuity payment date
is $13.610170. The first variable annuity payment would be $509.99 (5319.7531 X
$14.703693 X 6.52 divided by 1,000). The number of Annuity Units credited would
be 37.5569 ($509.99 divided by $13.579136) and the second variable annuity
payment would be $511.16 (37.5569 X $13.610170).

*For New York Contracts issued before May 1, 1996, see Appendix I.

WITHDRAWAL CHARGE AND MARKET VALUE ADJUSTMENT TABLES

The following example illustrates the detailed calculations for a $50,000
deposit into the Fixed Account with a guaranteed rate of 8% for a duration of
five years. The intent of the example is to show the effect of the Market Value
Adjustment ("MVA") and the 3% minimum guarantee under various interest rates on
the calculation of the cash surrender (withdrawal) value. Any charges for
optional death benefit risks are not taken into account in the example. The
effect of the MVA is reflected in the index rate factor in column (2) and the
minimum 3% guarantee is shown under column (4) under the "Surrender Value
Calculation". The "Surrender Charge Calculation" assumes there have been no
prior withdrawals and illustrates the operation of the Fifteen Percent Free
provision of the Contract. The "Market Value Adjustment Tables" and "Minimum
Value Calculation" contain the explicit calculation of the index factors and the
3% minimum guarantee respectively. The "Annuity Value Calculation" and "Minimum
Value" calculations assume the imposition of the annual $30 Annuity Account Fee
charge, but that fee is waived if the Annuity Account Value at the end of a
Contract Year is $100,000 or more.

WITHDRAWAL CHARGE TABLES

SAMPLE CALCULATIONS FOR MALE 35 ISSUE
CASH SURRENDER VALUES

<TABLE>
<S> <C>
Single premium..................... $50,000
Premium taxes...................... 0
Withdrawals........................ None
Guaranteed period.................. 5 years
Guaranteed interest rate........... 8%
Annuity date....................... Age 70
Index rate A....................... 7.5%
Index rate B (before adjustment)... 8.00% end of contract year 1
7.75% end of contract year 2
7.00% end of contract year 3
6.50% end of contract year 4
Percentage adjustment to B......... 0.5%
</TABLE>

5
<PAGE>
SURRENDER VALUE CALCULATION

<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6) (7)
ANNUITY INDEX RATE ADJUSTED MINIMUM GREATER OF SURRENDER SURRENDER
CONTRACT YEAR VALUE FACTOR ANNUITY VALUE VALUE (3)&(4) CHARGE VALUE
- -------------------------------- ----------- ----------- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1............................... $ 53,970 0.963640 $ 52,008 $ 51,470 $ 52,008 $ 2,975 $ 49,033
2............................... $ 58,258 0.993056 $ 57,853 $ 52,984 $ 57,853 $ 2,550 $ 55,303
3............................... $ 62,888 1.000000 $ 62,888 $ 54,544 $ 62,888 $ 2,125 $ 60,763
4............................... $ 67,889 1.004673 $ 68,207 $ 56,150 $ 68,207 $ 1,700 $ 66,507
5............................... $ 73,290 1.000000 $ 73,290 $ 57,804 $ 73,290 $ 1,275 $ 72,015
</TABLE>

ANNUITY VALUE CALCULATION

<TABLE>
<CAPTION>
CONTRACT YEAR ANNUITY VALUE
- ------------------------------ ------------------------------------------
<S> <C>
1............................. $50,000 X 1.08 - $30 = $53,970
2............................. $53,970 X 1.08 - $30 = $58,258
3............................. $58,258 X 1.08 - $30 = $62,888
4............................. $62,888 X 1.08 - $30 = $67,889
5............................. $67,889 X 1.08 - $30 = $73,290
</TABLE>

SURRENDER CHARGE CALCULATION

<TABLE>
<CAPTION>
(1) (3)
SURRENDER (2) SURRENDER
CONTRACT YEAR CHARGE FACTOR SURRENDER CHARGE FACTOR CHARGE
- -------------------------------------------------------------- --------------- ----------------------- -----------
<S> <C> <C> <C>
1............................................................. 0.07 0.0595 $ 2,975
2............................................................. 0.06 0.0510 $ 2,550
3............................................................. 0.05 0.0425 $ 2,125
4............................................................. 0.04 0.0340 $ 1,700
5............................................................. 0.03 0.0255 $ 1,275
</TABLE>

MARKET VALUE ADJUSTMENT TABLES
INTEREST RATE FACTOR CALCULATION

<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
INDEX INDEX ADJUSTED N (1+A)
CONTRACT YEAR RATE A RATE B INDEX RATE B -- (1+B)
- --------------------------------------------------------------- ----------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
1.............................................................. 7.5% 8.00 8.25 4 0.972573
2.............................................................. 7.5% 7.75 7.75 3 0.993056
3.............................................................. 7.5% 7.00 7.25 2 1.004667
4.............................................................. 7.5% 6.50 6.75 1 1.007026
5.............................................................. 7.5% NA NA 0 NA
</TABLE>

MINIMUM VALUE CALCULATION

<TABLE>
<CAPTION>
CONTRACT YEAR MINIMUM VALUE
- ------------------------------ ------------------------------------------
<S> <C>
1............................. $50,000 X 1.03 - $30 = $51,470
2............................. $51,470 X 1.03 - $30 = $52,984
3............................. $52,984 X 1.03 - $30 = $54,544
4............................. $54,544 X 1.03 - $30 = $56,150
5............................. $56,150 X 1.03 - $30 = $57,804
</TABLE>

STATE REGULATION OF THE COMPANY

The Company, a Connecticut corporation, is subject to regulation by the
Connecticut Department of Insurance. An annual statement is filed with the
Connecticut Department of Insurance each year

6
<PAGE>
covering the operations and reporting on the financial condition of the Company
as of December 31 of the preceding year. Periodically, the Connecticut
Department of Insurance or other authorities examine the liabilities and
reserves of the Company and the Variable Account, and a full examination of the
Company's operations is conducted periodically by the Connecticut Department of
Insurance. In addition, the Company is subject to the insurance laws and
regulations of other states within which it is licensed to operate. Generally,
the Insurance Department of any other state applies the laws of the state of
domicile in determining permissible investments.

A Contract is governed by the laws of the state in which it is delivered.
The values and benefits of each Contract are at least equal to those required by
such state.

ADMINISTRATION

The Company performs certain administrative functions relating to the
Contracts, the individual Annuity Accounts, the Fixed Account, and the Variable
Account. These functions include, among other things, maintaining the books and
records of the Variable Account, the Fixed Account, and the Sub-Accounts, and
maintaining records of the name, address, taxpayer identification number,
contract number, Annuity Account number and type, the status of each Annuity
Account and other pertinent information necessary to the administration and
operation of the Contracts.

ACCOUNT INFORMATION

At least once during each Calendar Year, the Company will furnish the Owner
with a report showing the Annuity Account Value at the end of the preceding
Calendar Year, all transactions during the Calendar Year, the current Annuity
Account Value, the number of Accumulation Units in each Variable Account
Sub-Account Accumulation Account and the applicable Accumulation Unit Value as
of the date of the report. In addition, each person having voting rights in the
Variable Account and a Fund or Funds will receive each such reports or
prospectuses as may be required by the Investment Company Act of 1940 and the
Securities Act of 1933. The Company will also send each Owner such statements
reflecting transactions in the Owner's Annuity Account as may be required by
applicable laws, rules and regulations.

Upon request to the Annuity & Variable Life Services Center, the Company
will provide an Owner with information regarding fixed and variable accumulation
values.

DISTRIBUTION OF THE CONTRACTS

The Contracts will be sold by licensed insurance agents in those states
where the Contracts may lawfully be sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
(NASD). The Contracts will be distributed by the Company's principal
underwriter, CIGNA Financial Advisers, Inc. ("CFA"), located at 900 Cottage
Grove Road, Bloomfield, CT. CFA is a Connecticut corporation organized in 1967,
and is the principal underwriter for the Company's other registered separate
accounts. Commissions and other distribution compensation will be paid by the
Company and will not be more than 7.00% of Premium Payments. The Company
received $39,289 in deferred sales charges attributable to the Variable Account
portion of the Contracts issued pursuant to CG Variable Annuity Separate Account
II for the period ended December 31, 1996.

Sales charges on and exchange privileges under the Contracts are described
in the Prospectus. There are no variations in the prices at which the Contracts
are offered for certain types of purchasers.

CUSTODY OF ASSETS

7
<PAGE>
value for the purpose of meeting the contractual obligations of the Variable
Account, paying charges relative to the Variable Account or making adjustments
for annuity reserves held in the Variable Account. The assets of the
Sub-Accounts of the Variable Account are held separate and apart from the assets
of any other segregated asset accounts of the Company and separate and apart
from the Company's general account assets. The Company maintains records of all
purchases and redemptions of shares of each Fund held by each of the
Sub-Accounts of the Variable Account. Additional protection for the assets of
the Variable Account is afforded by the Company's fidelity bond covering the
acts of officers and employees of the Company which is presently in the amount
of $100,000,000.

HISTORICAL PERFORMANCE DATA

Historical performance data as of December 31, 1996 for each of the
Sub-Accounts of the Separate Account follows in the Financial Statements.

MONEY MARKET SUB-ACCOUNT YIELD

From time to time, the Money Market Sub-Account may advertise its "yield"
and "effective yield." Both yield figures will be based on historical earnings
and are not intended to indicate future performance. The "yield" of the Money
Market Sub-Account refers to the income generated by Annuity Account Values in
the Money Market Sub-Account over a seven-day period (which period will be
stated in the advertisement). This income is then "annualized." That is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
Annuity Account Values in the Money Market Sub-Account. The "effective yield" is
calculated similarly but, when annualized, the income earned by Annuity Account
Values in the Money Market Sub-Account is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The computation of the yield
calculation includes a deduction for the Mortality and Expense Risk Charge, the
Administrative Expense Charge, and the Annuity Account Fee.

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

EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)] - 1

The yield on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Fund, the types and quality of portfolio securities held by the
Money Market Fund and its operating expenses. The yield figures do not reflect
withdrawal charges or premium taxes.

OTHER SUB-ACCOUNT YIELDS

The Company may from time to time advertise or disclose the current
annualized yield of one or more of the Sub-Accounts of the Variable Account
(except the Money Market Sub-Account) for 30-day periods. The annualized yield
of a Sub-Account refers to income generated by the Sub-Account over a specific
30-day period. Because the yield is annualized, the yield generated by a
Sub-Account during the 30-day period is assumed to be generated each 30-day
period over a 12-month period. The yield is

8
<PAGE>
computed by: (i) dividing the net investment income per accumulation unit earned
during the period by the maximum offering price per unit on the last day of the
period, according to the following formula:

Yield = 2 [(a - b + 1) - 1]
-----------
cd

Where: a = Net investment income earned during the period by
the Fund attributable to shares owned by the
Sub-Account.
b = Expenses accrued for the period.
c = The average daily number of accumulation units
outstanding during the period.
d = The maximum offering price per accumulation unit
on the last day of the period.

Because of the charges and deductions imposed by the Variable Account, the
yield for a Sub-Account of the Variable Account will be lower than the yield for
its corresponding Fund. The yield calculations do not reflect the effect of any
premium taxes or deferred sales charges that may be applicable to a particular
Contract. Deferred sales charges range from 7% to 1% of the amount withdrawn or
surrendered on total Premium Payments paid less prior partial withdrawals, based
on the Contract Year in which the withdrawal or surrender occurs.

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

TOTAL RETURNS

The Company may from time to time also advise or disclose annual average
total returns for one or more of the Sub-Accounts of the Variable Account for
various periods of time. When a Sub-Account has been in operation for 1, 5 and
10 years, respectively, the total return for these periods will be provided.
Total returns for other periods of time may from time to time also be disclosed.
Total returns represent the average annual compounded rates of return that would
equate the initial amount invested to the redemption value of that investment as
of the last day of each of the periods.

Total returns will be calculated using Sub-Account Unit Values which the
Company calculates on each Valuation Period based on the performance of the
Sub-Account's underlying Fund, and the deductions for the mortality and expense
risk charge, the administrative expense charge, and the Account Fee. The Account
Fee is reflected by dividing the total amount of such charges collected during
the year that are attributable to the Variable Account by the total average net
assets of all the Variable Sub-Accounts. The resulting percentage is deducted
from the return in calculating the ending redeemable value. These figures will
not reflect any premium taxes. Total return calculations will reflect the effect
of deferred sales charges that may be applicable to a particular period. The
total return will then be calculated according to the following formula:

P(1+T) = ERV

Where: P = A hypothetical initial Premium Payment of $1,000.
T = Average annual total return.
n = Number of years in the period.
ERV = Ending redeemable value of a hypothetical $1,000
payment made at the beginning of the one, five or
ten-year period, at the end of the one, five or
ten-year period (or fractional portion thereof).

9
<PAGE>
OTHER PERFORMANCE DATA

The Company may from time to time also disclose average annual total returns
in a non-standard format in conjunction with the standard format described
above. The non-standard format will be identical to the standard one except that
the deferred sales charge percentage will be assumed to be 0%.

The Company may from time to time disclose cumulative total returns in
conjunction with the standard format described above. The cumulative returns
will be calculated using the following formula assuming that the deferred sales
charge percentage will be 0%.

CTR = (ERV/P) - 1

Where: CTR = The cumulative total return net of Sub-Account
recurring charges for the period.
ERV = The ending redeemable value of the hypothetical
investment made at the beginning of the one, five
or ten-year period, at the end of the one, five or
ten-year period (or fractional portion thereof).
P = A hypothetical initial payment of $10,000

All non-standard performance data will only be advertised if the standard
performance data is also disclosed.

The Company may also from time to time use advertising which includes
hypothetical illustrations to compare the difference between the growth of a
taxable investment and a tax-deferred investment in a variable annuity.

LEGAL MATTERS

Legal advice regarding certain matters relating to the federal securities
laws applicable to the issuance of the Contracts described in the Prospectus and
this Statement has been provided by Edwin L. Kerr, Counsel, Individual
Insurance, CIGNA Companies. All matters of Connecticut law pertaining to the
Contracts, including the validity of the Contracts and the Company's right to
issue the Contracts under Connecticut Insurance Law and any other applicable
state insurance or securities laws, have been passed upon by Robert A.
Picarello, Chief Counsel, Individual Insurance, CIGNA Companies.

LEGAL PROCEEDINGS

There are no legal proceedings to which the Variable Account is a party or
to which the assets of the Variable 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 Variable Account.

EXPERTS

The consolidated financial statements of Connecticut General Life Insurance
Company as of December 31, 1996 and 1995 and for each of the three years in the
period ended December 31, 1996 included in this Statement of Additional
Information 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. Price Waterhouse LLP's consent to this reference to the
firm as an "expert" is filed as an exhibit to the registration statement of
which this Statement of Additional Information is a part.

FINANCIAL STATEMENTS

The consolidated financial statements of the Company which are included in
this Statement should be considered only as bearing on the ability of the
Company to meet the obligations under the

10
<PAGE>

Contracts. They should not be considered as bearing on the investment
performance of the assets held in the Variable Account, or on the Guaranteed
Interest Rate credited by the Company during a Guaranteed Period. The financial
statements of the Variable Account as of and for the period ending December 31,
1996 are also included.

<PAGE>

One Financial Plaza Telephone 860 240 2000
Hartford, CT 06103

PRICE WATERHOUSE LLP [LOGO]

REPORT OF INDEPENDENT ACCOUNTANTS

February 11, 1997

The Board of Directors and Shareholder of
Connecticut General Life Insurance Company

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Connecticut
General Life Insurance Company and its subsidiaries at December 31, 1996 and
1995, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, 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.

[SIG]

12
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------

(IN MILLIONS)
- -----------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996 1995 1994
- -----------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
REVENUES
Premiums and fees................................................... $ 5,314 $ 4,998 $ 4,960
Net investment income............................................... 3,199 3,138 2,805
Realized investment gains (losses).................................. 37 (7) 27
Other revenues...................................................... 9 9 8
--------- --------- ---------
Total revenues.................................................. 8,559 8,138 7,800
--------- --------- ---------
BENEFITS, LOSSES AND EXPENSES
Benefits, losses and settlement expenses............................ 6,069 5,892 5,574
Policy acquisition expenses......................................... 143 127 89
Other operating expenses............................................ 1,477 1,358 1,363
--------- --------- ---------
Total benefits, losses and expenses............................. 7,689 7,377 7,026
--------- --------- ---------
INCOME BEFORE INCOME TAXES.......................................... 870 761 774
--------- --------- ---------
Income taxes (benefits):
Current........................................................... 394 301 220
Deferred.......................................................... (81) (44) 45
--------- --------- ---------
Total taxes..................................................... 313 257 265
--------- --------- ---------
NET INCOME.......................................................... 557 504 509
Dividends declared.................................................. (600) (252) (300)
Retained earnings, beginning of year................................ 3,220 2,968 2,759
- -----------------------------------------------------------------------------------------------------
RETAINED EARNINGS, END OF YEAR...................................... $ 3,177 $ 3,220 $ 2,968
- -----------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>

THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.

13
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------

(IN MILLIONS)
- ------------------------------------------------------------------------------------------------
AS OF DECEMBER 31, 1996 1995
- ------------------------------------------------------------------------------------------------

<S> <C> <C>
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost, $19,882; $20,147)...... $ 20,816 $ 22,162
Mortgage loans.......................................................... 10,152 10,218
Equity securities, at fair value (cost, $59; $54)....................... 41 66
Policy loans............................................................ 7,133 6,925
Real estate............................................................. 1,025 1,158
Other long-term investments............................................. 193 193
Short-term investments.................................................. 417 138
--------- ---------
Total investments................................................... 39,777 40,860
Cash and cash equivalents................................................. -- --
Accrued investment income................................................. 619 626
Premiums and accounts receivable.......................................... 817 991
Reinsurance recoverables.................................................. 1,303 1,258
Deferred policy acquisition costs......................................... 780 689
Property and equipment, net............................................... 276 319
Current income taxes...................................................... 12 21
Deferred income taxes, net................................................ 639 403
Goodwill.................................................................. 488 503
Other assets.............................................................. 249 149
Separate account assets................................................... 22,555 18,177
- ------------------------------------------------------------------------------------------------
Total assets........................................................ $ 67,515 $ 63,996
- ------------------------------------------------------------------------------------------------
--------------------
LIABILITIES
Contractholder deposit funds.............................................. $ 29,621 $ 29,762
Future policy benefits.................................................... 8,187 8,547
Unpaid claims and claim expenses.......................................... 1,170 1,151
Unearned premiums......................................................... 200 95
--------- ---------
Total insurance and contractholder liabilities...................... 39,178 39,555
Accounts payable, accrued expenses and other liabilities.................. 1,808 1,872
Separate account liabilities.............................................. 22,365 18,075
- ------------------------------------------------------------------------------------------------
Total liabilities................................................... 63,351 59,502
- ------------------------------------------------------------------------------------------------
CONTINGENCIES -- NOTE 11
SHAREHOLDER'S EQUITY
Common stock (6 shares outstanding)....................................... 30 30
Additional paid-in capital................................................ 766 766
Net unrealized appreciation on investments................................ 188 476
Net translation of foreign currencies..................................... 3 2
Retained earnings......................................................... 3,177 3,220
- ------------------------------------------------------------------------------------------------
Total shareholder's equity.......................................... 4,164 4,494
- ------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity.......................... $ 67,515 $ 63,996
- ------------------------------------------------------------------------------------------------
--------------------
</TABLE>

THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.

14
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------

(IN MILLIONS)
- ---------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996 1995 1994
- ---------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................................ $ 557 $ 504 $ 509
Adjustments to reconcile net income to net cash provided by
operating activities:
Insurance liabilities........................................... 57 (90) (249)
Reinsurance recoverables........................................ (11) 1,201 282
Premiums and accounts receivable................................ 77 32 (188)
Deferred income taxes, net...................................... (82) (44) 45
Other assets.................................................... 43 (14) 68
Accounts payable, accrued expenses, other liabilities and
current income taxes........................................... (113) 212 (192)
Other, net...................................................... (149) 22 (24)
--------- --------- ---------
Net cash provided by operating activities..................... 379 1,823 251
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investments sold:
Fixed maturities -- available for sale.......................... 1,589 1,070 1,389
Fixed maturities -- held to maturity............................ -- -- 12
Mortgage loans.................................................. 640 383 496
Equity securities............................................... 13 119 41
Real estate..................................................... 345 299 242
Other (primarily short-term investments)........................ 3,613 2,268 1,005
Investment maturities and repayments:
Fixed maturities -- available for sale.......................... 2,634 478 686
Fixed maturities -- held to maturity............................ -- 1,756 1,764
Mortgage loans.................................................. 630 420 194
Investments purchased:
Fixed maturities -- available for sale.......................... (3,834) (3,054) (2,390)
Fixed maturities -- held to maturity............................ -- (1,385) (1,788)
Mortgage loans.................................................. (1,300) (1,908) (882)
Equity securities............................................... (3) (20) (12)
Policy loans.................................................... (207) (2,129) (1,614)
Other (primarily short-term investments)........................ (3,930) (2,334) (1,093)
Other, net........................................................ (94) (119) (129)
--------- --------- ---------
Net cash provided by (used in) investing activities........... 96 (4,156) (2,079)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Contractholder deposit funds:
Deposits and interest credited.................................. 7,260 7,489 6,388
Withdrawals and benefit payments................................ (7,135) (4,985) (4,216)
Dividends paid to Parent.......................................... (600) (252) (300)
Other, net........................................................ -- 1 36
--------- --------- ---------
Net cash (used in) provided by financing activities......... (475) 2,253 1,908
- ---------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents.............. -- (80) 80
Cash and cash equivalents, beginning of year...................... -- 80 --
- ---------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year............................ $ -- $ -- $ 80
- ---------------------------------------------------------------------------------------------------
-------------------------------
Supplemental Disclosure of Cash Information:
Income taxes paid, net of refunds............................... $ 385 $ 211 $ 411
Interest paid................................................... $ 7 $ 7 $ 5
- ---------------------------------------------------------------------------------------------------
</TABLE>

THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.

15
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- DESCRIPTION OF BUSINESS

Connecticut General Life Insurance Company and its subsidiaries (the Company)
provide insurance and related financial services throughout the United States
and in many locations worldwide. Principal products and services include group
life and health insurance, individual life insurance and annuity products, and
retirement and investment products and services. The Company is a wholly-owned
subsidiary of Connecticut General Corporation, which is an indirect wholly-owned
subsidiary of CIGNA Corporation (CIGNA).

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A) BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of the Company and all significant subsidiaries. These consolidated
financial statements have been prepared in conformity with generally accepted
accounting principles, and reflect management's estimates and assumptions, such
as those regarding medical costs and interest rates, that affect the recorded
amounts. Significant estimates used in determining insurance and contractholder
liabilities, related reinsurance recoverables, and valuation allowances for
investment assets are discussed throughout the Notes to Financial Statements.
Certain reclassifications have been made to prior years' amounts to conform with
the 1996 presentation.

B) RECENT ACCOUNTING PRONOUNCEMENTS: In 1996, the Company implemented
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
SFAS No. 121 requires write-down to fair value when long-lived assets to be held
and used are impaired. Long-lived assets to be disposed of, including real
estate held for sale, must be carried at the lower of cost or fair value less
costs to sell. Depreciation of assets to be disposed of is prohibited. The
effect of implementing SFAS No. 121 was not material to the Company.

In 1993, the Company implemented SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which required that debt and equity
securities be classified into different categories and carried at fair value if
they are not classified as held-to-maturity. During the fourth quarter of 1995,
the Financial Accounting Standards Board (FASB) issued a guide to implementation
of SFAS No. 115, which permitted a one-time opportunity to reclassify securities
subject to SFAS No. 115. Consequently, the Company reclassified all held-to-
maturity securities to available-for-sale as of December 31, 1995. The non-cash
reclassification of these securities, which had an aggregate amortized cost of
$9.2 billion and fair value of $10.1 billion, resulted in an increase of
approximately $396 million, net of policyholder-related amounts and deferred
income taxes, in net unrealized appreciation included in Shareholder's Equity as
of December 31, 1995.

In 1993, the FASB issued SFAS No. 114, "Accounting by Creditors for Impairment
of a Loan," which provides guidance on the accounting and disclosure for
impaired loans. In 1994, the FASB issued SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan -- Income Recognition and Disclosures," which
eliminates the income recognition requirements of SFAS No. 114. The Company
adopted SFAS Nos. 114 and 118 in the first quarter of 1995, which resulted in a
$6 million increase in net income.

C) FINANCIAL INSTRUMENTS: In the normal course of business, the Company
enters into transactions involving various types of financial instruments,
including investments such as fixed maturities and equity securities and off-
balance-sheet financial instruments such as investment and loan commitments and
financial guarantees. These instruments are subject to risk of loss due to
interest rate and market fluctuations and most have credit risk. The Company
evaluates and monitors each financial instrument individually and, where
appropriate, uses certain derivative instruments or obtains collateral or other
forms of security to minimize risk of loss.

Financial instruments that are subject to fair value disclosure requirements
(insurance contracts, real estate, goodwill and taxes are excluded) are carried
in the financial statements at amounts that approximate fair value, except for
Mortgage Loans and Contractholder Deposit Funds (non-insurance products). For
these financial instruments, the fair value was not materially different from
the carrying amount as of December 31, 1996 and 1995. Fair values of off-balance
sheet financial instruments as of December 31, 1996 and 1995 were not material.

16
<PAGE>
Fair values for financial instruments are estimates that, in many cases, may
differ significantly from the amounts that 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 with comparable terms and credit
quality. The fair value of liabilities for contractholder deposit funds was
estimated using the amount payable on demand, and for those not payable on
demand, discounted cash flow analyses.

D) INVESTMENTS: Investments in fixed maturities, which are classified as
available-for-sale, include bonds, asset-backed securities, including
collateralized mortgage obligations (CMOs), and redeemable preferred stocks.
Fixed maturities are carried at fair value, with unrealized appreciation or
depreciation included in Shareholder's Equity. Fixed maturities are considered
impaired and written down to fair value when a decline in value is considered to
be other than temporary.

Mortgage loans are carried principally at unpaid principal balances, net of
valuation reserves. Mortgage loans are considered impaired when it is probable
that the Company will not collect all amounts according to the contractual terms
of the loan agreement. If impaired, a valuation reserve is utilized to record
any change in the fair value of the underlying collateral below the carrying
value of the mortgage loan.

Fixed maturities and mortgage loans that are delinquent or restructured to
modify basic financial terms, typically to reduce the interest rate and, in
certain cases, extend the term, are placed on non-accrual status. Net investment
income on such investments is recognized only when payment is received.

Real estate investments are either held for the production of income or held
for sale. Real estate investments held for the production of income are carried
at depreciated cost less any write-downs to fair value. Depreciation is
generally calculated using the straight-line method based on the estimated
useful lives of these assets.

Real estate investments held for sale are generally those which are acquired
through the foreclosure of mortgage loans. The Company's policy is to
rehabilitate, re-lease and sell foreclosed properties, which generally takes two
to four years. At the time of foreclosure, properties are valued at fair value
less estimated costs to sell and reclassified from mortgage loans to real estate
held for sale. Subsequent to foreclosure, these investments are carried at the
lower of cost or current fair value less estimated costs to sell. Adjustments to
the carrying value as a result of changes in fair value subsequent to
foreclosure are recorded as valuation reserves, and reported in realized
investment gains and losses. The Company considers several methods in
determining fair value for real estate, with emphasis placed on the use of
discounted cash flow analyses and, in some cases, the use of third-party
appraisals. Effective with the implementation of SFAS No. 121, real estate held
for sale is no longer depreciated.

Equity securities, which include common and non-redeemable preferred stocks,
are carried at fair value, with unrealized appreciation or depreciation included
in Shareholder's Equity. Short-term investments are carried at fair value, which
approximates cost. Equity securities and short-term investments are classified
as available for sale.

Policy loans are generally carried at unpaid principal balances.

Realized investment gains and losses result from sales, investment asset
write-downs and changes in valuation reserves. Realized investment gains and
losses do not include amounts attributable to experience-rated pension
policyholders' contracts and participating life policies (policyholder share).
Realized investment gains and losses are based upon specific identification of
the investment assets.

Unrealized investment gains and losses for investments carried at fair value
are included in Shareholder's Equity net of policyholder-related amounts and
deferred income taxes.

See Note 3(F) for a discussion of the Company's accounting policies for
derivative financial instruments.

E) CASH AND CASH EQUIVALENTS: Short-term investments with a maturity of three
months or less at the time of purchase are reported as cash equivalents.

F) REINSURANCE RECOVERABLES: Reinsurance recoverables are estimates of
amounts to be received from reinsurers, including amounts under reinsurance
agreements with affiliated companies. Allowances are established for amounts
estimated to be uncollectible.

17
<PAGE>
G) DEFERRED POLICY ACQUISITION COSTS: Acquisition costs consist of
commissions, premium taxes and other costs, which vary with, and are primarily
related to, the production of revenues. Acquisition costs for universal life
products and contractholder deposit funds are deferred and amortized in
proportion to total estimated gross profits over the expected lives of the
contracts. Acquisition costs for annuity and other individual life insurance
products are deferred and amortized, generally in proportion to the ratio of
annual revenue to the estimated total revenues over the contract periods.

Deferred policy acquisition costs are reviewed to determine if they are
recoverable from future income, including investment income. If such costs are
estimated to be unrecoverable, they are expensed. If such costs are estimated to
be unrecoverable or are accelerated as a result of treating unrealized
investment gains and losses as though they had been realized, a deferred
acquisition cost valuation allowance may be established or adjusted, with a
comparable offset in net unrealized appreciation (depreciation).

H) PROPERTY AND EQUIPMENT: Property and equipment are carried at cost less
accumulated depreciation. When applicable, cost includes interest and real
estate taxes incurred during construction and other construction-related costs.
Depreciation is calculated principally on the straight-line method based on the
estimated useful lives of the assets. Accumulated depreciation was $427 million
and $387 million at December 31, 1996 and 1995, respectively.

I) OTHER ASSETS: Other Assets consists of various insurance-related assets,
principally ceded unearned premiums, reinsurance deposits and other amounts due
from affiliated companies.

J) GOODWILL: Goodwill represents the excess of the cost of businesses
acquired over the fair value of their net assets. Goodwill is amortized on
systematic bases over periods, not exceeding 40 years, that correspond with the
benefits estimated to be derived from the acquisitions. The Company evaluates
the carrying amount of goodwill by analyzing historical and estimated future
income and undiscounted estimated cash flows of the related businesses. Goodwill
is written down when impaired. Amortization periods are revised if it is
estimated that the remaining period of benefit of the goodwill has changed.
Accumulated amortization was $99 million and $84 million at December 31, 1996
and 1995, respectively.

K) SEPARATE ACCOUNTS: Separate account assets and liabilities are principally
carried at market value and represent policyholder funds maintained in accounts
having specific investment objectives. The investment income, gains and losses
of these accounts generally accrue to the policyholders and, therefore, are not
included in the Company's revenues and expenses.

L) CONTRACTHOLDER DEPOSIT FUNDS: Liabilities for Contractholder Deposit Funds
consist of deposits received from customers and investment earnings on their
fund balances, less administrative charges and, for universal life fund
balances, mortality charges.

M) FUTURE POLICY BENEFITS: Future policy benefits are liabilities for life,
health and annuity products. Such liabilities are established in amounts
adequate to meet the estimated future obligations of policies in force. These
liabilities are computed using premium assumptions for group annuity policies
and the net level premium method for individual life policies, and are based
upon estimates as to future investment yield, mortality and withdrawals that
include provisions for adverse deviation. Future policy benefits for individual
life insurance and annuity policies are computed using interest rates ranging
from 2% to 11%, generally graded down from 1 to 20 years. Mortality, morbidity,
and withdrawal assumptions are based on either the Company's own experience or
various actuarial tables.

N) UNPAID CLAIMS AND CLAIM EXPENSES: Liabilities for unpaid claims and claim
expenses are estimates of payments to be made on reported and incurred but not
reported insurance claims.

O) UNEARNED PREMIUMS: Premiums for group life, and accident and health
insurance are reported as earned on a pro rata basis over the contract period.
The unexpired portion of these premiums is recorded as Unearned Premiums.

P) OTHER LIABILITIES: Other Liabilities consist principally of postretirement
and postemployment benefits and various insurance-related liabilities, including
amounts related to reinsurance contracts. Also included in Other Liabilities are
liabilities for guaranty fund assessments that can be reasonably estimated.

18
<PAGE>
Q) TRANSLATION OF FOREIGN CURRENCIES: Foreign operations primarily utilize
the local currencies as their functional currencies, and assets and liabilities
are translated at the rates of exchange as of the balance sheet date. The
translation gain or loss on such functional currencies, net of applicable taxes,
is generally reflected in Shareholder's Equity. Revenues and expenses are
translated at the average rates of exchange prevailing during the year.

R) PREMIUM AND FEES, REVENUES AND RELATED EXPENSES: Premiums for group life
and accident and health insurance are recognized as revenue on a pro-rata basis
over their contract periods. Benefits, losses and settlement expenses are
recognized when incurred.

Premiums for individual life insurance as well as individual and group annuity
products, excluding universal life and investment-related products, are
recognized as revenue when due. Benefits, losses and settlement expenses are
matched with premiums.

Revenues for universal life products consist of net investment income and
mortality, administration and surrender fees assessed against the fund balances
during the period. Net investment income represents investment income on assets
supporting universal life products and is recognized as earned. Fees for
mortality are recognized ratably over the policy year. Administration fees are
recognized as services are provided, and surrender charges are recognized as
earned. Benefit expenses for universal life products consist of benefit claims
in excess of fund balances, which are recognized when claims are filed, and
interest credited in accordance with contract provisions.

Revenues for investment-related products consist of net investment income and
contract fees assessed against the fund balances during the period. Net
investment income represents investment income on assets supporting
investment-related products and is recognized as earned. Contract fees are based
upon related administrative expenses and are assessed ratably over the contract
year. Benefit expenses for investment-related products primarily consist of
interest credited in accordance with contract provisions.

S) PARTICIPATING BUSINESS: Certain life insurance policies contain dividend
payment provisions that enable the policyholder to participate in a portion of
the earnings of the Company's business. The participating insurance in force
accounted for approximately 7% of total insurance in force at December 31, 1996,
and 1995, and 5% at December 31, 1994.

T) INCOME TAXES: The Company and its domestic subsidiaries are included in
the consolidated United States federal income tax return filed by CIGNA. In
accordance with a tax sharing agreement with CIGNA, the provision for federal
income tax is computed as if the Company were filing a separate federal income
tax return, except that benefits arising from tax credits and net operating and
capital losses are allocated to those subsidiaries producing such attributes to
the extent they are utilized in CIGNA's consolidated federal income tax
provision.

Deferred income taxes are generally recognized when assets and liabilities
have different values for financial statement and tax reporting purposes. See
Note 6 for additional information.

NOTE 3 -- INVESTMENTS

A) FIXED MATURITIES: Fixed maturities are net of cumulative write-downs of
$95 million and $103 million, including policyholder share, as of December 31,
1996 and 1995, respectively.

The amortized cost and fair value by contractual maturity periods for fixed
maturities, including policyholder share, as of December 31, 1996 were as
follows:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Amortized Fair
(IN MILLIONS) Cost Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less.................................................. $ 936 $ 955
Due after one year through five years.................................... 5,252 5,419
Due after five years through ten years................................... 4,591 4,773
Due after ten years...................................................... 3,301 3,702
Asset-backed securities.................................................. 5,802 5,967
- ------------------------------------------------------------------------------------------------
Total.................................................................... $ 19,882 $ 20,816
- ------------------------------------------------------------------------------------------------
---------------------
</TABLE>

Actual maturities could differ from contractual maturities because issuers may
have the right to call or prepay obligations with or without call or prepayment
penalties. Also, the Company may extend maturities in some cases.

19
<PAGE>
Gross unrealized appreciation (depreciation) for fixed maturities, including
policyholder share, by type of issuer was as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------

December 31, 1996
- -----------------------------------------------------------------------------------------------------
Amortized Unrealized Unrealized Fair
(IN MILLIONS) Cost Appreciation Depreciation Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal government bonds......................... $ 475 $ 160 $ -- $ 635
State and local government bonds................. 174 13 (4) 183
Foreign government bonds......................... 121 6 -- 127
Corporate securities............................. 13,310 742 (148) 13,904
Asset-backed securities.......................... 5,802 226 (61) 5,967
- -----------------------------------------------------------------------------------------------------
Total............................................ $ 19,882 $ 1,147 $ (213) $ 20,816
- -----------------------------------------------------------------------------------------------------

<CAPTION>
--------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------

December 31, 1995
- -----------------------------------------------------------------------------------------------------
Amortized Unrealized Unrealized Fair
(IN MILLIONS) Cost Appreciation Depreciation Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal government bonds......................... $ 503 $ 300 $ -- $ 803
State and local government bonds................. 207 24 (1) 230
Foreign government bonds......................... 131 9 (1) 139
Corporate securities............................. 13,773 1,427 (73) 15,127
Asset-backed securities.......................... 5,533 371 (41) 5,863
- -----------------------------------------------------------------------------------------------------
Total............................................ $ 20,147 $ 2,131 $ (116) $ 22,162
- -----------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------
</TABLE>

Asset-backed securities include investments in CMOs as of December 31, 1996 of
$2.2 billion carried at fair value (amortized cost, $2.1 billion), compared with
$2.1 billion carried at fair value (amortized cost, $2.0 billion) as of December
31, 1995. Certain of these securities are backed by Aaa/AAA-rated government
agencies. All other CMO securities have high quality ratings through use of
credit enhancements provided by subordinated securities or mortgage insurance
from Aaa/AAA-rated insurance companies. CMO holdings are concentrated in
securities with limited prepayment, extension and default risk, such as planned
amortization class bonds. The Company's investments in interest-only and
principal-only CMOs, which are subject to interest rate risk due to accelerated
prepayments, represented approximately 0.1% and 1.9% of total CMO investments at
December 31, 1996 and 1995, respectively.

At December 31, 1996, contractual fixed maturity investment commitments were
$93 million. The majority of investment commitments are for the purchase of
investment grade fixed maturities, bearing interest at a fixed market rate, and
require no collateral. These commitments are diversified by issuer and maturity
date, and it is estimated that approximately 75% will be disbursed in 1997.

B) MORTGAGE LOANS AND REAL ESTATE: The Company's mortgage loans and real
estate investments are diversified by property type and location and, for
mortgage loans, by borrower. Mortgage loans are collateralized by the related
properties and generally approximate 75% of the property's value at the time the
original loan is made.

20
<PAGE>
At December 31, the carrying values of mortgage loans and real estate
investments, including policyholder share, were as follows:

At December 31, mortgage loans and real estate investments comprised the
following property types and geographic regions:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
(IN MILLIONS) 1996 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Property type:
Retail facilities....................................................... $ 4,453 $ 4,327
Office buildings........................................................ 4,241 4,493
Apartment buildings..................................................... 1,272 1,246
Hotels.................................................................. 665 711
Other................................................................... 546 599
- ------------------------------------------------------------------------------------------------
Total..................................................................... $ 11,177 $ 11,376
- ------------------------------------------------------------------------------------------------
--------------------
Geographic region:
Central................................................................. $ 3,452 $ 4,032
Pacific................................................................. 3,132 2,580
Middle Atlantic......................................................... 1,920 1,951
South Atlantic.......................................................... 1,526 1,647
New England............................................................. 1,147 1,166
- ------------------------------------------------------------------------------------------------
Total..................................................................... $ 11,177 $ 11,376
- ------------------------------------------------------------------------------------------------
--------------------
</TABLE>

MORTGAGE LOANS

At December 31, 1996, scheduled mortgage loan maturities were as follows: 1997
- -- $.9 billion; 1998 -- $.7 billion; 1999 -- $1.3 billion; 2000 -- $1.5 billion;
2001 -- $1.2 billion; and $4.7 billion thereafter. Actual maturities could
differ from contractual maturities because borrowers may have the right to
prepay obligations with or without prepayment penalties; the maturity date may
be extended; and loans may be refinanced. During 1996 and 1995, the Company
refinanced at current market rates approximately $477 million and $379 million,
respectively, of its mortgage loans relating to borrowers that were unable to
obtain alternative financing.

At December 31, 1996, contractual commitments to extend credit under
commercial mortgage loan agreements amounted to approximately $397 million, all
of which were at a fixed market rate of interest. These commitments expire
within six months, and are diversified by property type and geographic region.

At December 31, 1996, the Company's impaired mortgage loans were $814 million,
including $442 million before valuation reserves totaling $94 million, and $372
million which had no valuation reserves. At December 31, 1995, the Company's
impaired mortgage loans were $838 million, including $447 million before
valuation reserves totaling $82 million, and $391 million which had no valuation
reserves.

21
<PAGE>
During the year ended December 31, changes in reserves for impaired mortgage
loans, including policyholder share, were as follows:

During 1996 and 1995, impaired mortgage loans, before valuation reserves,
averaged approximately $852 million and $935 million, respectively. Interest
income recorded and cash received on these loans was approximately $73 million
and $71 million in 1996 and 1995, respectively.

REAL ESTATE

During 1996, 1995 and 1994, non-cash investing activities included real estate
acquired through foreclosure of mortgage loans, which totaled $107 million, $144
million and $127 million, respectively.

Valuation reserves and cumulative write-downs related to real estate,
including policyholder share, were $273 million and $310 million as of December
31, 1996 and 1995, respectively.

Net income for 1996 included $19 million and $1 million for net investment
income and write-downs upon foreclosures, respectively, for real estate held for
sale.

C) SHORT-TERM INVESTMENTS AND CASH EQUIVALENTS: At December 31, 1996 and
1995, short-term investments and cash equivalents, in the aggregate, primarily
included debt securities, principally corporate securities of $418 million and
$203 million, respectively.

D) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS: Unrealized
appreciation (depreciation) for investments carried at fair value as of December
31 was as follows:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
(IN MILLIONS) 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Unrealized appreciation:
Fixed maturities.......................................................... $ 1,147 $ 2,131
Equity securities......................................................... 8 23
--------- ---------
1,155 2,154
--------- ---------
Unrealized depreciation:
Fixed maturities.......................................................... (213) (116)
Equity securities......................................................... (26) (11)
--------- ---------
(239) (127)
--------- ---------
Less policyholder-related amounts........................................... 610 1,279
--------- ---------
Shareholder net unrealized appreciation..................................... 306 748
Less deferred income taxes.................................................. 118 272
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation................................................. $ 188 $ 476
- --------------------------------------------------------------------------------------------------
--------------------
</TABLE>

Net unrealized appreciation for investments carried at fair value is included
as a separate component of Shareholder's Equity, net of policyholder-related
amounts and deferred income taxes. The net unrealized (depreciation)
appreciation for these investments, primarily fixed maturities, during 1996,
1995 and 1994 was ($288) million, $542 million and ($494) million, respectively.

During 1995 and 1994, certain fixed maturities were carried at amortized cost
in the financial statements. The change in net unrealized appreciation
(depreciation) for such investments was ($14) million and ($1.2) billion during
1995 and 1994, respectively.

22
<PAGE>
E) NON-INCOME PRODUCING INVESTMENTS: At December 31, the carrying values of
investments, including policyholder share, that were non-income producing during
the preceding 12 months were as follows:

F) DERIVATIVE FINANCIAL INSTRUMENTS: The Company's investment strategy is to
manage the characteristics of investment assets, such as liquidity, currency,
yield and duration, to reflect the underlying characteristics of the related
insurance and contractholder liabilities, which vary among the Company's
principal product lines. In connection with this investment strategy, the
Company's use of derivative instruments, including interest rate and currency
swaps, purchased options and futures contracts, is limited to hedging
applications to minimize market risk.

Hedge accounting treatment requires a probability of high correlation between
the changes in the market value or cash flows of the derivatives and the hedged
assets or liabilities. Under hedge accounting, the changes in market value or
cash flows of the derivatives and the hedged assets or liabilities are
recognized in net income in the same period. If the Company's use of derivatives
does not qualify for hedge accounting treatment, the derivative is recorded at
fair value and changes in its fair value are recognized in net income without
considering changes in the hedged asset or liability.

The Company routinely monitors, by individual counterparty, exposure to credit
risk associated with swap and option contracts and diversifies the portfolio
among approved dealers of high credit quality. Futures contracts are
exchange-traded and, therefore, credit risk is limited since the exchange
assumes the obligations. The Company manages legal risks by following industry
standardized documentation procedures and by monitoring legal developments.

Underlying contract, notional or principal amounts associated with derivatives
at December 31 were as follows:

Under interest rate swaps, the Company agrees with other parties to
periodically exchange the difference between variable rate and fixed rate asset
cash flows to provide stable returns for related liabilities. The Company uses
currency swaps (primarily Canadian dollars, pounds sterling and Swiss francs) to
match the currency of investments to that of the associated liabilities. Under
currency swaps, the parties exchange principal and interest amounts in two
relevant currencies using agreed-upon exchange amounts.

The net interest cash flows from interest rate and currency swaps are
recognized currently as an adjustment to net investment income, and the fair
value of these swaps is reported as an adjustment to the related investments.

Using purchased options to reduce the effect of changes in interest rates or
equity indexes on liabilities, the Company pays an up-front fee to receive cash
flows from third parties when interest rates or equity indexes vary from
specified levels. Purchased options that qualify for hedge accounting are
recorded consistent with the related liabilities, at amortized cost plus
adjustments based on current equity indexes, and income is reported as an
adjustment to benefit expense. Purchased options are reported in other assets,
and fees paid are amortized to benefit expense over their contractual periods.
Purchased options with underlying notional amounts of $112 million at December
31, 1996 that are designated as hedges, but do not qualify for hedge accounting,
are reported in other long-term investments at fair value with changes in fair
value recognized as realized investment gains and losses.

23
<PAGE>
Interest rate futures are used to temporarily hedge against the changes in
market values of bonds and mortgage loans to be purchased or sold. Under futures
contracts, changes in the contract values are settled in cash daily with the
exchange on which the instrument is traded. These changes in contract values are
deferred and recorded as adjustments to the carrying value of the related bond
or mortgage loan. Deferred gains and losses are amortized into net investment
income over the life of the investments purchased or are recognized in full as
realized investment gains and losses if investments are sold. Gains and losses
on futures contracts deferred in anticipation of investment purchases were
immaterial at December 31, 1996 and 1995.

The effects of interest rate and currency swaps, purchased options and futures
on the components of net income for 1996, 1995 and 1994 were not material.

As of December 31, 1996 and 1995, the Company's variable interest rate
investments consisted of approximately $1.3 billion and $1.4 billion of fixed
maturities, respectively. As of December 31, 1996 and 1995, the Company's fixed
interest rate investments consisted of $19.5 billion and $20.6 billion,
respectively, of fixed maturities, and $10.2 billion and $10.0 billion,
respectively, of mortgage loans.

G) OTHER: As of December 31, 1996 and 1995, the Company had no concentration
of investments in a single investee exceeding 10% of Shareholder's Equity.

NOTE 4 -- INVESTMENT INCOME AND GAINS AND LOSSES

A) NET INVESTMENT INCOME: The components of net investment income, including
policyholder share, for the year ended December 31 were as follows:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
(IN MILLIONS) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities.................................................... $ 1,647 $ 1,663 $ 1,596
Equity securities................................................... -- 15 20
Mortgage loans...................................................... 921 866 776
Policy loans........................................................ 548 499 365
Real estate......................................................... 227 301 291
Other long-term investments......................................... 23 33 23
Short-term investments.............................................. 35 46 8
--------- --------- ---------
3,401 3,423 3,079
Less investment expenses............................................ 202 285 274
- -----------------------------------------------------------------------------------------------------
Net investment income............................................... $ 3,199 $ 3,138 $ 2,805
- -----------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>

Net investment income attributable to policyholder contracts, which is
included in the Company's revenues and is primarily offset by amounts included
in Benefits, Losses and Settlement Expenses, was approximately $1.8 billion for
1996 and 1995, and $1.5 billion for 1994 . Net investment income for separate
accounts, which is not reflected in the Company's revenues, was $1.1 billion,
$885 million and $693 million for 1996, 1995 and 1994, respectively.

As of December 31, 1996, fixed maturities and mortgage loans on non-accrual
status, including policyholder share, were $160 million and $360 million,
including restructured investments of $88 million and $304 million,
respectively. As of December 31, 1995, fixed maturities and mortgage loans on
non-accrual status, including policyholder share, were $149 million and $523
million, including restructured investments of $105 million and $447 million,
respectively. If interest on these investments had been recognized in accordance
with their original terms, net income would have been increased by $15 million,
$18 million and $14 million in 1996, 1995 and 1994, respectively.

24
<PAGE>
B) REALIZED INVESTMENT GAINS AND LOSSES: Realized gains and losses on
investments, excluding policyholder share, for the year ended December 31 were
as follows:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
(IN MILLIONS) 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Realized investment gains (losses):
Fixed maturities....................................................... $ 11 $ (10) $ 4
Equity securities...................................................... 1 5 2
Mortgage loans......................................................... (12) (5) --
Real estate............................................................ 15 4 15
Other.................................................................. 22 (1) 6
--- --- ---
37 (7) 27
Income tax expenses (benefits)........................................... 17 (2) 12
- ----------------------------------------------------------------------------------------------------------------
Net realized investment gains (losses)................................... $ 20 $ (5) $ 15
- ----------------------------------------------------------------------------------------------------------------
--------------------
</TABLE>

Realized investment gains and losses include impairments in the value of
investments, net of recoveries, of $40 million, $27 million and $33 million in
1996, 1995 and 1994, respectively.

Realized investment gains (losses) for separate accounts, which are not
reflected in the Company's revenues, were $305 million, $412 million and ($51)
million for the years ended December 31, 1996, 1995 and 1994, respectively.
Realized investment gains (losses) attributable to policyholder contracts, which
also are not reflected in the Company's revenues, were $82 million and ($6)
million for the years ended December 31, 1996 and 1995, respectively. There were
no realized investment gains (losses) attributable to policyholder contracts for
the year ended December 31, 1994.

Sales of available-for-sale fixed maturities and equity securities, including
policyholder share, for the year ended December 31 were as follows:

Prior to the SFAS No. 115 reclassification described in Note 2(B), $171
million of fixed maturities classified as held-to-maturity, including
policyholder share, were transferred to the available-for-sale category in 1995
with no material effect on Shareholder's Equity.

NOTE 5 -- SHAREHOLDER'S EQUITY AND DIVIDEND RESTRICTIONS

The Connecticut Insurance Department (the Department) recognizes as net income
and surplus (shareholder's equity) those amounts determined in conformity with
statutory accounting practices prescribed or permitted by the Department, which
differ in certain respects from generally accepted accounting principles. As of
December 31, 1996, there were no permitted accounting practices utilized by the
Company that were materially different from those prescribed by the Department.

Capital stock of the Company at December 31, 1996 and 1995 consisted of
5,978,322 shares of common stock authorized, issued and outstanding (par value
$5.00).

The Company's statutory net income was $611 million, $390 million and $428
million for 1996, 1995 and 1994, respectively. Statutory surplus was $2.1
billion at December 31, 1996 and 1995. The Connecticut Insurance Holding Company
Act limits the amount of annual dividends or other distributions available to
shareholders of Connecticut insurance companies without the Department's prior
approval. During 1996, the Company paid a total of $600 million in dividends to
its Parent, of which $200 million received prior approval from the Department in
accordance with requirements. Under current law, the maximum dividend
distribution that may be made by the Company during 1997 without prior approval
is $629 million. The amount of restricted net assets as of December 31, 1996 was
approximately $3.5 billion.

25
<PAGE>
NOTE 6 -- INCOME TAXES

The Company's net deferred tax asset of $639 million and $403 million as of
December 31, 1996 and 1995, respectively, reflects management's belief that the
Company's taxable income in future years will be sufficient to realize the net
deferred tax asset based on the Company's earnings history and its future
expectations. In determining the adequacy of future taxable income, management
considered the future reversal of its existing taxable temporary differences and
available tax planning strategies that could be implemented, if necessary.

In accordance with the Life Insurance Company Income Tax Act of 1959, a
portion of the Company's statutory income was not subject to current income
taxation but was accumulated in an account designated Policyholders' Surplus
Account. Under the Tax Reform Act of 1984, no further additions may be made to
the Policyholders' Surplus Account for tax years ending after December 31, 1983.
The balance in the account of approximately $450 million at December 31, 1996
would result in a tax liability of $158 million only if distributed to the
shareholder or if the account balance exceeded a prescribed maximum. No income
taxes have been provided on this amount because, in management's opinion, the
likelihood that these conditions will be met is remote.

CIGNA's federal income tax returns are routinely audited by the Internal
Revenue Service (IRS), and provisions are made in CIGNA's financial statements
in anticipation of the results of these audits.

In management's opinion, adequate tax liabilities have been established for
all years.

The tax effect of temporary differences which give rise to deferred income tax
assets and liabilities as of December 31 were as follows:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
(IN MILLIONS) 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Other insurance and contractholder liabilities............................... $ 387 $ 324
Employee and retiree benefit plans........................................... 177 176
Investments, net............................................................. 228 225
Other........................................................................ 74 72
--- ---
Total deferred tax assets.................................................... 866 797
--- ---
Deferred tax liabilities:
Policy acquisition expenses.................................................. 21 25
Depreciation................................................................. 88 97
Unrealized appreciation on investments....................................... 118 272
--- ---
Total deferred tax liabilities............................................... 227 394
- -----------------------------------------------------------------------------------------------------
Net deferred income tax asset.................................................. $ 639 $ 403
- -----------------------------------------------------------------------------------------------------
--------------------
</TABLE>

Total income taxes for the year ended December 31 were less than the amount
computed using the nominal federal income tax rate of 35% for the following
reasons:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
(IN MILLIONS) 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax expense at nominal rate.............................................. $ 305 $ 266 $ 271
Tax-exempt interest income............................................... (5) (6) (7)
Dividends received deduction............................................. (7) (7) (3)
Amortization of goodwill................................................. 4 4 4
Resolved federal tax audit issues........................................ -- -- (2)
Other.................................................................... 16 -- 2
- ----------------------------------------------------------------------------------------------------------
Total income taxes....................................................... $ 313 $ 257 $ 265
- ----------------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>

NOTE 7 -- PENSION AND OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS PLANS

A) PENSION PLANS: The Company provides retirement benefits to eligible
employees and agents. These benefits are provided through a plan sponsored by
CIGNA covering most domestic employees (the Plan) and by several separate
pension plans for various subsidiaries, agents and foreign employees.

26
<PAGE>
The Plan is a non-contributory, defined benefit, trusteed plan available to
eligible domestic employees. Benefits are based on employees' years of service
and compensation during the highest three or, if service commenced after
December 31, 1988, five consecutive years of employment, offset by a portion of
the Social Security benefit for which they are eligible. CIGNA funds at least
the minimum amount required by the Employee Retirement Income Security Act of
1974. Allocated pension cost for the Company was $26 million, $23 million and
$31 million in 1996, 1995 and 1994, respectively.

The Plan, and several separate pension plans for various subsidiaries and
agents, had deposits with the Company totalling approximately $2.2 billion and
$2.0 billion at December 31, 1996 and 1995, respectively.

B) OTHER POSTRETIREMENT BENEFITS PLANS: In addition to providing pension
benefits, the Company provides certain health care and life insurance benefits
to retired employees, spouses and other eligible dependents through various
plans sponsored by CIGNA. A substantial portion of the Company's employees may
become eligible for these benefits upon retirement. CIGNA's contributions for
health care benefits depend upon a retiree's date of retirement, age, years of
service and other cost-sharing features, such as deductibles and coinsurance.
Under the terms of the benefit plans, benefit provisions and cost-sharing
features can be adjusted. In general, retiree health care benefits are not
funded by CIGNA, but are paid as covered expenses are incurred. Retiree life
insurance benefits are paid from plan assets or as covered expenses are
incurred.

In 1996, CIGNA amended its health care plan for certain current and future
retirees effective January 1, 1997, whereby health benefits will be provided
primarily through CIGNA's managed care networks in exchange for a fixed
reimbursement amount per retiree from Medicare. The effect of the plan amendment
was to reduce CIGNA's other postretirement benefit liability by $110 million.
The reduction of the liability is being amortized into income over the average
remaining employee service period, approximately 17 years, through a reduction
of the expense for postretirement benefits other than pensions allocated to the
Company.

An employer's postretirement benefit liability is primarily measured by
determining the present value of the projected future costs of health benefits
based on an estimate of health care cost trend rates. Expense for postretirement
benefits other than pensions allocated to the Company totalled $16 million for
1996, $20 million for 1995 and $28 million for 1994. The other postretirement
benefit liability included in Accounts Payable, Accrued Expenses and Other
Liabilities as of December 31, 1996 and 1995 was $424 million and $427 million,
including net intercompany payables of $40 million and $28 million,
respectively, for services provided by affiliates' employees.

C) OTHER POSTEMPLOYMENT BENEFITS: The Company provides certain salary
continuation (severance and disability), health care and life insurance benefits
to inactive and former employees, spouses and other eligible dependents through
various employee benefit plans sponsored by CIGNA.

Although severance benefits accumulate with additional service, the Company
recognizes severance expense when severance is probable and the costs can be
reasonably estimated. Postemployment benefits other than severance generally do
not vest or accumulate; therefore, the estimated cost of benefits is accrued
when determined to be probable and estimable, generally upon disability or
termination. See Note 10 for additional information regarding severance accrued
as part of cost reduction initiatives.

D) CAPITAL ACCUMULATION PLANS: CIGNA sponsors various capital accumulation
plans in which employee contributions on a pre-tax basis (401(k)) are
supplemented by CIGNA matching contributions. Contributions are invested, at the
election of the employee, in one or more of the following investments: CIGNA
common stock fund, several non-CIGNA stock and bond portfolios and a
fixed-income fund. The Company's allocated expense for such plans totaled $16
million for 1996 and $14 million for each of 1995 and 1994.

NOTE 8 -- REINSURANCE

In the normal course of business, the Company enters into agreements,
primarily relating to short-duration contracts, to assume and cede reinsurance
with other insurance companies. Reinsurance is ceded primarily to limit losses
from large exposures and to permit recovery of a portion of direct losses,
although ceded reinsurance does not relieve the originating insurer of
liability. The Company evaluates the financial condition of its reinsurers and
monitors concentrations of credit risk arising from similar geographic regions,
activities, or economic characteristic of its reinsurers.

27
<PAGE>
Failure of reinsurers to indemnify the Company, as a result of reinsurer
insolvencies and disputes, could result in losses. As of December 31, 1996 and
1995 there were no allowances for uncollectible amounts. While future charges
for unrecoverable reinsurance may materially affect results of operations in
future periods, such amounts are not expected to have a material adverse effect
on the Company's liquidity or financial condition.

The effects of reinsurance on net earned premiums and fees for the year ended
December 31 were as follows:

LONG-DURATION CONTRACTS
Premiums and fees:
Direct............................................................ $ 1,228 $ 1,189 $ 1,068
Assumed........................................................... 165 127 126
Ceded............................................................. (166) (119) (78)
- -----------------------------------------------------------------------------------------------------
Net earned premiums and fees........................................ $ 1,227 $ 1,197 $ 1,116
- -----------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>

The effects of reinsurance on written premiums and fees for short-duration
contracts were not materially different from the amounts shown in the above
table. Benefits, losses and settlement expenses for 1996, 1995 and 1994 were net
of reinsurance recoveries of $359 million, $442 million and $415 million,
respectively.

NOTE 9 -- LEASES AND RENTALS

Rental expenses for operating leases, principally with respect to buildings,
amounted to $68 million, $60 million and $62 million in 1996, 1995 and 1994,
respectively.

As of December 31, 1996, future net minimum rental payments under
non-cancelable operating leases were $128 million, payable as follows: 1997 -
$42 million; 1998 - $31 million; 1999 - $27 million; 2000 - $13 million; 2001 -
$6 million; and $9 million thereafter.

NOTE 10 -- SEGMENT INFORMATION

The Company operates principally in three segments: Employee Life and Health
Benefits, Employee Retirement and Savings Benefits, and Individual Financial
Services. Other Operations consists principally of the results of the Company's
settlement annuity business.

28
<PAGE>
Summarized financial information with respect to the business segments for the
year ended and as of December 31 was as follows:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
(IN MILLIONS) 1996 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Employee Life and Health Benefits................................ $ 4,510 $ 4,243 $ 4,194
Employee Retirement and Savings Benefits......................... 1,899 1,914 1,887
Individual Financial Services.................................... 1,950 1,800 1,546
Other Operations................................................. 200 181 173
- --------------------------------------------------------------------------------------------------
Total............................................................ $ 8,559 $ 8,138 $ 7,800
- --------------------------------------------------------------------------------------------------
-------------------------------

INCOME (LOSS) BEFORE INCOME TAXES
Employee Life and Health Benefits................................ $ 287 $ 294 $ 323
Employee Retirement and Savings Benefits......................... 293 232 258
Individual Financial Services.................................... 298 252 237
Other Operations................................................. (8) (17) (44)
- --------------------------------------------------------------------------------------------------
Total............................................................ $ 870 $ 761 $ 774
- --------------------------------------------------------------------------------------------------
-------------------------------

IDENTIFIABLE ASSETS
Employee Life and Health Benefits................................ $ 7,065 $ 7,629 $ 7,197
Employee Retirement and Savings Benefits......................... 40,122 37,609 33,588
Individual Financial Services.................................... 17,930 16,189 12,612
Other Operations................................................. 2,398 2,569 2,111
- --------------------------------------------------------------------------------------------------
Total............................................................ $ 67,515 $ 63,996 $ 55,508
- --------------------------------------------------------------------------------------------------
-------------------------------
</TABLE>

During 1995, the Company recorded a $13 million pre-tax charge, included in
Other Operating Expenses, for cost reduction initiatives in the Employee Life
and Health Benefits segment. The charge consisted primarily of severance-related
expenses representing costs associated with nonvoluntary employee terminations
covering approximately 1,100 employees. The cash outlays associated with the
restructuring initiatives began in the third quarter of 1995 and will continue
through 1997, with $6 million paid in 1996. As of December 31, 1996, $7 million
of severance was paid to 625 terminated employees. The Company has funded, and
will continue to fund, these costs through liquid assets, and such funding has
not and will not have a material adverse effect on its liquidity.

NOTE 11 -- CONTINGENCIES

A) FINANCIAL GUARANTEES: The Company is contingently liable for financial
guarantees provided in the ordinary course of business on the repayment of
principal and interest on certain industrial revenue bonds. The contractual
amounts of financial guarantees reflect the Company's maximum exposure to credit
loss in the event of nonperformance. To limit the Company's exposure in the
event of default of any guaranteed obligation, various programs are in place to
ascertain the creditworthiness of guaranteed parties and to monitor this status
on a periodic basis.

The industrial revenue bonds guaranteed directly by the Company have remaining
maturities of up to 19 years. The guarantees provide for payment of debt service
only as it becomes due; consequently, an event of default would not cause an
acceleration of scheduled principal and interest payments. The principal amount
of the bonds guaranteed by the Company at December 31, 1996 and 1995 was $234
million and $266 million, respectively. Revenues in connection with industrial
revenue bond guarantees are derived principally from equity participations in
the related projects and are included in Net Investment Income as earned. Loss
reserves for financial guarantees are established when a default has occurred or
when the Company believes that a loss has been incurred. During 1994, losses for
industrial revenue bonds were $1 million. There were no such losses in 1996 and
1995.

29
<PAGE>
The Company also guarantees a minimum level of benefits for certain separate
account contracts and, in the event that separate account assets are
insufficient to fund minimum policy benefits, the Company is obligated to fund
the difference. As of December 31, 1996 and 1995, the amount of minimum benefit
guarantees for separate account contracts was $4.9 billion and $5.1 billion,
respectively. Reserves in addition to the separate account liabilities are
established when the Company believes a payment will be required under one of
these guarantees. No such reserves were required as of December 31, 1996 and
1995. Guarantee fees are part of the overall management fee charged to separate
accounts and are recognized in income as earned.

Although the ultimate outcome of any loss contingencies arising from the
Company's financial guarantees may adversely affect results of operations in
future periods, they are not expected to have a material adverse effect on the
Company's liquidity or financial condition.

B) REGULATORY AND INDUSTRY DEVELOPMENTS: The Company's businesses are subject
to a changing social, economic, legal, legislative and regulatory environment
that could affect them. Some of the changes include initiatives to: change
certain federal corporate tax laws; restrict insurance pricing and the
application of underwriting standards; reform health care; and expand
regulation. Some of the more significant issues are discussed below.

In August 1996, Congress passed legislation that phases out over a three-year
period the tax deductibility of policy loan interest for most leveraged
corporate-owned life insurance (COLI) products. For 1996, 31% of revenues and
29% of operating income for the Individual Financial Services segment were from
leveraged COLI products that are affected by this legislation. The effect of the
legislation on this segment's income is not expected to be material through
1998. Beginning in 1999, the effect of the legislation is uncertain; however, it
could have a material adverse effect on the segment's income. The Company does
not expect this legislation to have a material effect on its consolidated
results of operations, liquidity or financial condition.

The Company expects proposals for federal and state legislation seeking some
health care insurance reforms. Due to uncertainties associated with the timing
and content of any health care legislation, the effect on the Company's future
results of operations, liquidity or financial condition cannot be reasonably
estimated at this time.

The National Association of Insurance Commissioners is currently developing
standardized statutory accounting principles, which are scheduled to take effect
in 1999. The effect on the Company's statutory net income, surplus and liquidity
cannot be reasonably estimated at this time.

In recent years, the number of insurance companies that are impaired or
insolvent has increased. This is expected to result in an increase in mandatory
assessments by state guaranty funds of, or voluntary payments by, solvent
insurance companies to cover losses to policyholders of insolvent or
rehabilitated companies. Mandatory assessments, which are subject to statutory
limits, can be partially recovered through a reduction in future premium taxes
in some states. The Company recorded pre-tax charges of $53.9 million, $37.0
million and $27.9 million for 1996, 1995 and 1994, respectively, for guaranty
fund assessments that can be reasonably estimated before giving effect to future
premium tax recoveries. Although future assessments and payments may adversely
affect results of operations in future periods, such amounts are not expected to
have a material adverse effect on the Company's liquidity or financial
condition.

The eventual effect on the Company of the changing environment in which it
operates remains uncertain.

C) LITIGATION: The Company is routinely engaged in litigation incidental to
its business. While the outcome of all litigation involving the Company,
including insurance-related litigation, cannot be determined, litigation is not
expected to result in losses that differ from recorded reserves by amounts that
would be material to results of operations, liquidity or financial condition.

NOTE 12 -- RELATED PARTY TRANSACTIONS

The Company has assumed the settlement annuity and group pension business
written by Life Insurance Company of North America (LINA), an affiliate.
Reserves held by the Company with respect to this business were $1.7 billion at
December 31, 1996 and 1995.

The Company cedes long-term disability business to LINA. Reinsurance
recoverables from LINA at December 31, 1996 and 1995 were $917 million and $973
million, respectively.

30
<PAGE>
The Company had lines of credit available from affiliates totaling $600
million at both December 31, 1996 and 1995. All borrowings are payable upon
demand with interest rates equivalent to CIGNA's average monthly short-term
borrowing rate plus 1/4 of 1%. Interest expense was $1 million for 1996, 1995
and 1994. As of December 31, 1996 and 1995, there were no borrowings outstanding
under such lines.

The Company extended lines of credit to affiliates totalling $600 million at
December 31, 1996 and 1995. All loans are payable upon demand with interest
rates equivalent to CIGNA's average monthly short-term borrowing rate. There
were no amounts outstanding as of December 31, 1996 or 1995.

The Company, together with other CIGNA subsidiaries, has entered into a
pooling arrangement known as the CIGNA Corporate Liquidity Account (the Account)
for the purpose of maximizing earnings on funds available for short-term
investments. Withdrawals from the Account, up to the total amount of the
participant's investment in the Account, are allowed on a demand basis. As of
December 31, 1996 and 1995, the Company had a balance in the Account of $80
million and $212 million, respectively.

CIGNA allocates to the Company its share of operating expenses incurred at the
corporate level. The Company also allocates a portion of its operating expenses
to affiliated companies on whose behalf it performs certain administrative
services.

31
<PAGE>
APPENDIX I

Variable Account Unit Value Calculations for New York Contracts Issued
Before May 1, 1996

SAMPLE CALCULATIONS AND TABLES

VARIABLE ACCUMULATION UNIT VALUE CALCULATION. Assume the net asset value of
a Fund share at the end of the current Valuation Period is $16.50; and its value
at the end of the immediately preceding Valuation Period was $16.46; the
Valuation Period is one day; and no dividends or distributions caused Fund
shares to go "ex-dividend" during the current Valuation Period. $16.50 divided
by $16.46 is 1.002430134. Subtracting the one day risk factor for mortality and
expense risks and the administrative expense charge of .00003584933 (the daily
equivalent of the current charge of 1.30% on an annual basis) gives a net
investment factor of 1.00239428467. If the value of the Variable Accumulation
Unit for the immediately preceding Valuation Period had been $14.703693, the
value for the current Valuation Period would be $14.738898 ($14.703693 X
1.00239428467).

VARIABLE ANNUITY UNIT VALUE CALCULATION. The assumptions in the above
example exist. Also assume that the value of an Annuity Unit for the immediately
preceding Valuation Period had been $13.579136. As the first variable annuity
payment is determined by using an assumed interest rate of 3% per year, the
value of the Annuity Unit for the current Valuation Period would be $13.610546
[$13.579136 X 1.00239428467 (the net investment factor) X 0.999919020].
0.999919020 is the factor, for a one day Valuation Period, that neutralizes the
assumed interest rate of three percent (3%) per year used to establish the
Annuity Payment Rates found in the Contract.

VARIABLE ANNUITY PAYMENT CALCULATION. Assume that a Participant's Variable
Annuity Account is credited with 5319.7531 Variable Accumulation Units of a
particular Sub-Account; that the Variable Accumulation Unit Value and the
Annuity Unit Value for the particular Sub-Account for the Valuation Period which
ends immediately preceding the Annuity Date are $14.703693 and $13.579136
respectively; that the Annuity Payment Rate for the age and option elected is
$6.52 per $1,000; and that the Annuity Unit Value on the day prior to the second
variable annuity payment date is $13.610170. The first variable annuity payment
would be $509.99 (5319.7531 X $14.703693 X 6.52 divided by 1,000). The number of
Annuity Units credited would be 37.5569 ($509.99 divided by $13.579136) and the
second variable annuity payment would be $511.16 (37.5569 X $13.610170).

32
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
------------------------------------------------ ---------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- MONEY HIGH
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME MARKET INCOME OVERSEAS
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $18,174,849 $5,583,768 $9,575,698 $14,394,067 $28,183,257 $10,602,830 $4,883,390 $1,894,609
Receivable from Connecticut
General Life Insurance
Company..................... 18,958 -- 12,788 -- 25,905 317,787 6,415 --
Receivable for fund shares
sold........................ -- 342 -- 7,106 -- -- -- 86
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
Total assets................ 18,193,807 5,584,110 9,588,486 14,401,173 28,209,162 10,920,617 4,889,805 1,894,695
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- 342 -- 7,106 -- -- -- 86
Payable for fund shares
purchased................... 18,958 -- 12,788 -- 25,905 317,787 6,415 --
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
Total liabilities........... 18,958 342 12,788 7,106 25,905 317,787 6,415 86
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
Net assets.................. $18,174,849 $5,583,768 $9,575,698 $14,394,067 $28,183,257 $10,602,830 $4,883,390 $1,894,609
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 1,236,762 347,060 625,799 1,001,691 1,951,707 968,529 426,441 167,414
Net asset value per
accumulation unit........... $ 13.855323 $15.364036 $14.473761 $ 13.460941 $ 13.679456 $ 10.658014 $10.802349 $10.614394
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
$17,135,737 $5,332,250 $9,057,661 $13,483,704 $26,698,296 $10,322,591 $4,606,568 $1,776,998
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 94,174 25,272 51,632 97,173 133,553 10,588 26,114 11,164
Net asset value per
accumulation unit........... $ 10.655539 $ 9.952430 $10.033269 $ 9.368431 $ 10.851716 $ 10.223104 $10.600637 $10.534750
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
$ 1,003,480 $ 251,518 $ 518,037 $ 910,363 $ 1,449,274 $ 108,247 $ 276,822 $ 117,611
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------

Accumulation net assets....... $18,139,217 $5,583,768 $9,575,698 $14,394,067 $28,147,570 $10,430,838 $4,883,390 $1,894,609
Annuity reserves.............. 35,632 -- -- -- 35,687 171,992 -- --
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
$18,174,849 $5,583,768 $9,575,698 $14,394,067 $28,183,257 $10,602,830 $4,883,390 $1,894,609
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------

<CAPTION>
FIDELITY VIP II
PORTFOLIO
SUB-ACCOUNTS
---------------------
ASSET INVESTMENT
MANAGER GRADE BOND
---------- ----------
<S> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $4,203,610 $5,840,585
Receivable from Connecticut
General Life Insurance
Company..................... 17,935 12,854
Receivable for fund shares
sold........................ -- --
---------- ----------
Total assets................ 4,221,545 5,853,439
---------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- --
Payable for fund shares
purchased................... 17,935 12,854
---------- ----------
Total liabilities........... 17,935 12,854
---------- ----------
Net assets.................. $4,203,610 $5,840,585
---------- ----------
---------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 296,224 529,141
Net asset value per
accumulation unit........... $12.758423 $10.734479
---------- ----------
$3,779,356 $5,680,056
---------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 39,293 15,245
Net asset value per
accumulation unit........... $10.797117 $10.530045
---------- ----------
$ 424,254 $ 160,529
---------- ----------
Accumulation net assets....... $4,203,610 $5,840,585
Annuity reserves.............. -- --
---------- ----------
$4,203,610 $5,840,585
---------- ----------
---------- ----------
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

33
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS AMT PORTFOLIO SUB-ACCOUNTS
----------------------------------- --------------------------------------
TOTAL WORLD LIMITED
RETURN UTILITIES GOVERNMENTS BALANCED MATURITY BOND PARTNERS
---------- ---------- ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $8,702,389 $2,791,807 $1,507,463 $3,365,177 $3,663,477 $9,696,541
Receivable from Connecticut
General Life Insurance
Company..................... 33,090 -- 12,939 14,831 12,953 15,097
Receivable for fund shares
sold........................ -- 195 -- -- -- --
---------- ---------- ----------- ---------- ------------- ----------
Total assets................ 8,735,479 2,792,002 1,520,402 3,380,008 3,676,430 9,711,638
---------- ---------- ----------- ---------- ------------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- 195 -- -- -- --
Payable for fund shares
purchased................... 33,090 -- 12,939 14,831 12,953 15,097
---------- ---------- ----------- ---------- ------------- ----------
Total liabilities........... 33,090 195 12,939 14,831 12,953 15,097
---------- ---------- ----------- ---------- ------------- ----------
Net assets.................. $8,702,389 $2,791,807 $1,507,463 $3,365,177 $3,663,477 $9,696,541
---------- ---------- ----------- ---------- ------------- ----------
---------- ---------- ----------- ---------- ------------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 654,101 203,475 139,111 290,632 330,999 580,564
Net asset value per
accumulation unit........... $12.420693 $13.292608 $10.552213 $10.832872 $10.857343 $15.500823
---------- ---------- ----------- ---------- ------------- ----------
$8,124,391 $2,704,717 $1,467,933 $3,148,378 $3,593,774 $8,999,227
---------- ---------- ----------- ---------- ------------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 52,465 7,641 3,788 18,307 6,716 60,560
Net asset value per
accumulation unit........... $11.016746 $11.397495 $10.436909 $ 9.983723 $10.377931 $11.514426
---------- ---------- ----------- ---------- ------------- ----------
$ 577,998 $ 87,090 $ 39,530 $ 182,770 $ 69,703 $ 697,314
---------- ---------- ----------- ---------- ------------- ----------
Accumulation net assets....... $8,702,389 $2,791,807 $1,507,463 $3,331,148 $3,663,477 $9,696,541
Annuity reserves.............. -- -- -- 34,029 -- --
---------- ---------- ----------- ---------- ------------- ----------
$8,702,389 $2,791,807 $1,507,463 $3,365,177 $3,663,477 $9,696,541
---------- ---------- ----------- ---------- ------------- ----------
---------- ---------- ----------- ---------- ------------- ----------

<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS*
------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
----------- ----------- ----------
<S> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $10,194,411 $33,126,842 $2,756,326
Receivable from Connecticut
General Life Insurance
Company..................... 34,130 47,270 --
Receivable for fund shares
sold........................ -- -- 23,333
----------- ----------- ----------
Total assets................ 10,228,541 33,174,112 2,779,659
----------- ----------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- -- 23,333
Payable for fund shares
purchased................... 34,130 47,270 --
----------- ----------- ----------
Total liabilities........... 34,130 47,270 23,333
----------- ----------- ----------
Net assets.................. $10,194,411 $33,126,842 $2,756,326
----------- ----------- ----------
----------- ----------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 732,412 2,301,440 202,106
Net asset value per
accumulation unit........... $ 13.347358 $ 13.502565 $12.718827
----------- ----------- ----------
$ 9,775,759 $31,075,345 $2,570,551
----------- ----------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 35,443 176,181 17,578
Net asset value per
accumulation unit........... $ 10.785929 $ 11.432399 $10.568440
----------- ----------- ----------
$ 382,281 $ 2,014,174 $ 185,775
----------- ----------- ----------
Accumulation net assets....... $10,158,040 $33,089,519 $2,756,326
Annuity reserves.............. 36,371 37,323 --
----------- ----------- ----------
$10,194,411 $33,126,842 $2,756,326
----------- ----------- ----------
----------- ----------- ----------
</TABLE>

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

* Formerly Quest for Value Accumulation Trust

The Notes to Financial Statements are an integral part of these statements.

34
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
------------------------------------------------ -------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- MONEY HIGH
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME MARKET INCOME * OVERSEAS **
---------- --------- -------- -------------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 5,644 $ -- $ -- $ -- $ 11,853 $572,187 $ -- $--

EXPENSES:
Mortality and expense risk and
administrative charges...... 143,341 48,267 67,601 126,196 221,540 143,360 19,299 5,307
---------- --------- -------- -------------- ---------- -------- -------- -----------
Net investment gain
(loss).................... (137,697) (48,267) (67,601) (126,196) (209,687) 428,827 (19,299) (5,307)
---------- --------- -------- -------------- ---------- -------- -------- -----------

NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Capital distribution from
portfolio sponsors.......... 238,605 30,845 87,714 34,967 339,772 -- -- --
Net realized gain (loss) on
share transactions.......... (9,498) (22,790) (6,893) (33,203) 749 -- (241) 168
---------- --------- -------- -------------- ---------- -------- -------- -----------
Net realized gain (loss).... 229,107 8,055 80,821 1,764 340,521 -- (241) 168
Net unrealized gain........... 1,131,951 218,998 345,620 109,613 2,059,625 -- 196,922 64,159
---------- --------- -------- -------------- ---------- -------- -------- -----------
Net realized and unrealized
gain on investments....... 1,361,058 227,053 426,441 111,377 2,400,146 -- 196,681 64,327
---------- --------- -------- -------------- ---------- -------- -------- -----------

INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $1,223,361 $ 178,786 $358,840 $ (14,819) $2,190,459 $428,827 $177,382 $59,020
---------- --------- -------- -------------- ---------- -------- -------- -----------
---------- --------- -------- -------------- ---------- -------- -------- -----------

<CAPTION>
FIDELITY VIP II
PORTFOLIO
SUB-ACCOUNTS
--------------------
ASSET INVESTMENT
MANAGER GRADE BOND
-------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 28,793 $ 90,885
EXPENSES:
Mortality and expense risk and
administrative charges...... 32,701 46,709
-------- ----------
Net investment gain
(loss).................... (3,908) 44,176
-------- ----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Capital distribution from
portfolio sponsors.......... 23,742 --
Net realized gain (loss) on
share transactions.......... (551) (39,580)
-------- ----------
Net realized gain (loss).... 23,191 (39,580)
Net unrealized gain........... 318,766 134,649
-------- ----------
Net realized and unrealized
gain on investments....... 341,957 95,069
-------- ----------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $338,049 $139,245
-------- ----------
-------- ----------
</TABLE>

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

* Period from May 22, 1996 (date deposits first received) to December 31, 1996

** Period from May 20, 1996 (date deposits first received) to December 31, 1996

The Notes to Financial Statements are an integral part of these statements.

35
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMT PORTFOLIO SUB-ACCOUNTS
MFS SERIES SUB-ACCOUNTS -----------------------------------
--------------------------------- LIMITED
TOTAL WORLD MATURITY
RETURN UTILITIES GOVERNMENTS BALANCED BOND PARTNERS
--------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................... $ 131,034 $ 64,106 $ -- $ 28,644 $112,452 $ 6,470

EXPENSES:
Mortality and expense risk and
administrative charges................ 60,653 20,389 12,757 29,014 29,820 64,981
--------- --------- --------- --------- --------- -----------
Net investment gain (loss)............ 70,381 43,717 (12,757) (370) 82,632 (58,511)
--------- --------- --------- --------- --------- -----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distribution from portfolio
sponsors.............................. 57,008 166,334 -- 159,289 -- 80,881
Net realized gain (loss) on share
transactions.......................... 2,967 (387) 103 (232) 110 (2,019)
--------- --------- --------- --------- --------- -----------
Net realized gain..................... 59,975 165,947 103 159,057 110 78,862
Net unrealized gain (loss).............. 468,302 99,863 61,456 (27,931) 8,894 1,271,284
--------- --------- --------- --------- --------- -----------
Net realized and unrealized gain
on investments...................... 528,277 265,810 61,559 131,126 9,004 1,350,146
--------- --------- --------- --------- --------- -----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................ $ 598,658 $ 309,527 $ 48,802 $ 130,756 $ 91,636 $ 1,291,635
--------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- -----------

<CAPTION>
OCC ACCUMULATION
TRUST SUB-ACCOUNTS *
-----------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
--------- ----------- ---------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................... $ 36,437 $ 119,991 $ 9,776
EXPENSES:
Mortality and expense risk and
administrative charges................ 76,755 245,571 19,273
--------- ----------- ---------
Net investment gain (loss)............ (40,318) (125,580) (9,497)
--------- ----------- ---------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distribution from portfolio
sponsors.............................. 54,017 76,525 25,134
Net realized gain (loss) on share
transactions.......................... (2,096) 412 (217)
--------- ----------- ---------
Net realized gain..................... 51,921 76,937 24,917
Net unrealized gain (loss).............. 767,457 3,785,792 239,507
--------- ----------- ---------
Net realized and unrealized gain
on investments...................... 819,378 3,862,729 264,424
--------- ----------- ---------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................ $ 779,060 $ 3,737,149 $ 254,927
--------- ----------- ---------
--------- ----------- ---------
</TABLE>

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

* Formerly Quest for Value Accumulation Trust

The Notes to Financial Statements are an integral part of these statements.

36
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
--------------------------------------------------- --------------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- MONEY HIGH
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME MARKET INCOME * OVERSEAS **
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain
(loss)................. $ (137,697) $ (48,267) $ (67,601) $ (126,196) $ (209,687) $ 428,827 $ (19,299) $ (5,307)
Net realized gain
(loss)................. 229,107 8,055 80,821 1,764 340,521 -- (241) 168
Net unrealized gain...... 1,131,951 218,998 345,620 109,613 2,059,625 -- 196,922 64,159
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
Net increase (decrease)
from operations...... 1,223,361 178,786 358,840 (14,819) 2,190,459 428,827 177,382 59,020
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
ACCUMULATION AND ANNUITY
UNIT TRANSACTIONS:
Participant deposits..... 10,783,257 3,476,529 4,553,845 8,786,778 15,889,145 30,385,963 2,685,680 1,005,559
Participant transfers.... 2,602,802 772,742 2,723,340 2,632,177 5,222,220 (26,362,351) 2,257,438 834,182
Participant
withdrawals............ (294,588) (53,503) (98,852) (281,569) (1,664,909) (825,252) (237,110) (4,152)
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
Net increase from
participant
transactions......... 13,091,471 4,195,768 7,178,333 11,137,386 19,446,456 3,198,360 4,706,008 1,835,589
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
Total increase in net
assets............. 14,314,832 4,374,554 7,537,173 11,122,567 21,636,915 3,627,187 4,883,390 1,894,609
NET ASSETS:
Beginning of period...... 3,860,017 1,209,214 2,038,525 3,271,500 6,546,342 6,975,643 -- --
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
End of period............ $18,174,849 $5,583,768 $9,575,698 $14,394,067 $28,183,257 $ 10,602,830 $4,883,390 $1,894,609
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
PARTICIPANT ACCUMULATION
UNIT TRANSACTIONS
(IN UNITS):
Participant deposits..... 754,789 213,846 291,599 581,020 1,139,160 2,865,808 244,193 87,926
Participant transfers.... 195,742 49,618 185,959 191,180 402,052 (2,484,424) 204,741 79,892
Participant
withdrawals............ (25,418) (3,428) (7,294) (20,391) (129,246) (93,711) (22,493) (404)
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
Net increase in units
from participant
transactions......... 925,113 260,036 470,264 751,809 1,411,966 287,673 426,441 167,414
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
PARTICIPANT ACCUMULATION
UNIT TRANSACTIONS--
NEW YORK CONTRACTS (IN
UNITS):
Participant deposits..... 93,002 25,103 46,487 96,924 132,166 46,734 14,874 11,029
Participant transfers.... 1,503 354 5,303 718 2,507 (35,793) 11,453 135
Participant
withdrawals............ (331) (185) (158) (469) (1,120) (353) (213) --
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
Net increase in units
from participant
transactions......... 94,174 25,272 51,632 97,173 133,553 10,588 26,114 11,164
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------

<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
-----------------------
ASSET INVESTMENT
MANAGER GRADE BOND
---------- -----------
<S> <C> <C>
OPERATIONS:
Net investment gain
(loss)................. $ (3,908) $ 44,176
Net realized gain
(loss)................. 23,191 (39,580)
Net unrealized gain...... 318,766 134,649
---------- -----------
Net increase (decrease)
from operations...... 338,049 139,245
---------- -----------
ACCUMULATION AND ANNUITY
UNIT TRANSACTIONS:
Participant deposits..... 2,404,033 4,267,300
Participant transfers.... 837,140 (43,936)
Participant
withdrawals............ (79,225) (43,602)
---------- -----------
Net increase from
participant
transactions......... 3,161,948 4,179,762
---------- -----------
Total increase in net
assets............. 3,499,997 4,319,007
NET ASSETS:
Beginning of period...... 703,613 1,521,578
---------- -----------
End of period............ $4,203,610 $5,840,585
---------- -----------
---------- -----------
PARTICIPANT ACCUMULATION
UNIT TRANSACTIONS
(IN UNITS):
Participant deposits..... 171,951 398,943
Participant transfers.... 69,399 (10,014)
Participant
withdrawals............ (7,501) (4,135)
---------- -----------
Net increase in units
from participant
transactions......... 233,849 384,794
---------- -----------
---------- -----------
PARTICIPANT ACCUMULATION
UNIT TRANSACTIONS--
NEW YORK CONTRACTS (IN
UNITS):
Participant deposits..... 39,182 9,623
Participant transfers.... 111 5,734
Participant
withdrawals............ -- (112)
---------- -----------
Net increase in units
from participant
transactions......... 39,293 15,245
---------- -----------
---------- -----------
</TABLE>

- ------------------------------
* Period from May 22, 1996 (date deposits first received) to December 31, 1996
** Period from May 20, 1996 (date deposits first received) to December 31, 1996

The Notes to Financial Statements are an integral part of these statements.

37
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS AMT PORTFOLIO SUB-ACCOUNTS
----------------------------------- --------------------------------------
TOTAL WORLD LIMITED
RETURN UTILITIES GOVERNMENTS BALANCED MATURITY BOND PARTNERS
---------- ---------- ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).............. $ 70,381 $ 43,717 $ (12,757) $ (370) $ 82,632 $ (58,511)
Net realized gain....................... 59,975 165,947 103 159,057 110 78,862
Net unrealized gain (loss).............. 468,302 99,863 61,456 (27,931) 8,894 1,271,284
---------- ---------- ----------- ---------- ------------- ----------
Net increase from operations.......... 598,658 309,527 48,802 130,756 91,636 1,291,635
---------- ---------- ----------- ---------- ------------- ----------
ACCUMULATION AND ANNUITY UNIT
TRANSACTIONS:
Participant deposits.................... 4,811,832 1,302,058 895,119 1,994,125 1,858,603 4,552,441
Participant transfers................... 1,778,613 721,609 229,235 421,781 669,231 2,538,705
Participant withdrawals................. (126,130) (54,286) (8,402) (59,302) (82,873) (209,905)
---------- ---------- ----------- ---------- ------------- ----------
Net increase from participant
transactions........................ 6,464,315 1,969,381 1,115,952 2,356,604 2,444,961 6,881,241
---------- ---------- ----------- ---------- ------------- ----------
Total increase in net assets........ 7,062,973 2,278,908 1,164,754 2,487,360 2,536,597 8,172,876
NET ASSETS:
Beginning of period..................... 1,639,416 512,899 342,709 877,817 1,126,880 1,523,665
---------- ---------- ----------- ---------- ------------- ----------
End of period........................... $8,702,389 $2,791,807 $1,507,463 $3,365,177 $3,663,477 $9,696,541
---------- ---------- ----------- ---------- ------------- ----------
---------- ---------- ----------- ---------- ------------- ----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.................... 366,797 107,723 83,745 170,775 169,499 292,130
Participant transfers................... 150,703 56,058 22,912 43,636 62,483 177,633
Participant withdrawals................. (12,384) (5,435) (890) (9,256) (7,823) (14,893)
---------- ---------- ----------- ---------- ------------- ----------
Net increase in units from participant
transactions........................ 505,116 158,346 105,767 205,155 224,159 454,870
---------- ---------- ----------- ---------- ------------- ----------
---------- ---------- ----------- ---------- ------------- ----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS--NEW YORK CONTRACTS (IN
UNITS):
Participant deposits.................... 52,285 6,315 3,803 18,125 6,724 55,862
Participant transfers................... 702 1,361 -- 187 -- 5,215
Participant withdrawals................. (522) (35) (15) (5) (8) (517)
---------- ---------- ----------- ---------- ------------- ----------
Net increase in units from participant
transactions........................ 52,465 7,641 3,788 18,307 6,716 60,560
---------- ---------- ----------- ---------- ------------- ----------
---------- ---------- ----------- ---------- ------------- ----------

<CAPTION>
OCC ACCUMULATION
TRUST SUB-ACCOUNTS *
------------------------------------
GLOBAL SMALL
EQUITY MANAGED CAP
----------- ----------- ----------
<S> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).............. $ (40,318) $ (125,580) $ (9,497)
Net realized gain....................... 51,921 76,937 24,917
Net unrealized gain (loss).............. 767,457 3,785,792 239,507
----------- ----------- ----------
Net increase from operations.......... 779,060 3,737,149 254,927
----------- ----------- ----------
ACCUMULATION AND ANNUITY UNIT
TRANSACTIONS:
Participant deposits.................... 5,606,065 17,033,548 1,053,997
Participant transfers................... 2,295,536 7,398,554 835,481
Participant withdrawals................. (124,119) (464,195) (17,732)
----------- ----------- ----------
Net increase from participant
transactions........................ 7,777,482 23,967,907 1,871,746
----------- ----------- ----------
Total increase in net assets........ 8,556,542 27,705,056 2,126,673
NET ASSETS:
Beginning of period..................... 1,637,869 5,421,786 629,653
----------- ----------- ----------
End of period........................... $10,194,411 $33,126,842 $2,756,326
----------- ----------- ----------
----------- ----------- ----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.................... 414,885 1,252,898 76,630
Participant transfers................... 191,626 600,178 68,956
Participant withdrawals................. (13,386) (38,164) (1,484)
----------- ----------- ----------
Net increase in units from participant
transactions........................ 593,125 1,814,912 144,102
----------- ----------- ----------
----------- ----------- ----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS--NEW YORK CONTRACTS (IN
UNITS):
Participant deposits.................... 35,481 172,222 17,377
Participant transfers................... (4) 5,188 222
Participant withdrawals................. (34) (1,229) (21)
----------- ----------- ----------
Net increase in units from participant
transactions........................ 35,443 176,181 17,578
----------- ----------- ----------
----------- ----------- ----------
</TABLE>

- ------------------------------
* Formerly Quest for Value Accumulation Trust

The Notes to Financial Statements are an integral part of these statements.

38
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS FIRST RECEIVED) TO DECEMBER 31,
1995
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS
-----------------------------------------------------------------
LEVERAGED MIDCAP SMALL
GROWTH ALLCAP GROWTH CAPITALIZATION
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Inception date................ April 12, 1995 June 2, 1995 April 10, 1995 April 10, 1995
OPERATIONS:
Net investment gain (loss).... $ (9,984) $ (3,487) $ (5,589) $ (8,458)
Net realized gain............. 977 947 1,696 1,901
Net unrealized gain (loss).... (4,368) 33,801 (36,557) (95,387)
-------------- -------------- -------------- --------------
Net increase (decrease) from
operations................ (13,375) 31,261 (40,450) (101,944)
-------------- -------------- -------------- --------------
ACCUMULATION UNIT
TRANSACTIONS:...............
Participant deposits.......... 3,123,028 1,060,357 1,501,932 2,657,000
Participant transfers......... 758,535 120,303 580,520 720,359
Participant withdrawals....... (8,171) (2,707) (3,477) (3,915)
-------------- -------------- -------------- --------------
Net increase from
participant
transactions.............. 3,873,392 1,177,953 2,078,975 3,373,444
-------------- -------------- -------------- --------------
Total increase in net
assets.................. 3,860,017 1,209,214 2,038,525 3,271,500
NET ASSETS:...................
Beginning of period........... -- -- -- --
-------------- -------------- -------------- --------------
End of period................. $3,860,017 $1,209,214 $2,038,525 $3,271,500
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 251,529 78,344 119,409 197,891
Participant transfers......... 60,779 8,865 36,391 52,277
Participant withdrawals....... (659) (185) (265) (286)
-------------- -------------- -------------- --------------
Net increase in units from
participant
transactions.............. 311,649 87,024 155,535 249,882
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------

<CAPTION>
FIDELITY VIP FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS PORTFOLIO SUB-ACCOUNTS
------------------------------- -------------------------------
EQUITY- MONEY ASSET INVESTMENT
INCOME MARKET MANAGER GRADE BOND
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Inception date................ April 10, 1995 June 8, 1995 April 12, 1995 July 18, 1995
OPERATIONS:
Net investment gain (loss).... $ 22,188 $ 149,438 $ (1,848) $ (1,661)
Net realized gain............. 1,932 -- 9 195
Net unrealized gain (loss).... 268,841 -- 26,341 24,098
-------------- -------------- -------------- --------------
Net increase (decrease) from
operations................ 292,961 149,438 24,502 22,632
-------------- -------------- -------------- --------------
ACCUMULATION UNIT
TRANSACTIONS:...............
Participant deposits.......... 4,631,355 18,278,638 392,841 532,583
Participant transfers......... 1,625,177 (11,136,841) 286,354 971,815
Participant withdrawals....... (3,151) (315,592) (84) (5,452)
-------------- -------------- -------------- --------------
Net increase from
participant
transactions.............. 6,253,381 6,826,205 679,111 1,498,946
-------------- -------------- -------------- --------------
Total increase in net
assets.................. 6,546,342 6,975,643 703,613 1,521,578
NET ASSETS:...................
Beginning of period........... -- -- -- --
-------------- -------------- -------------- --------------
End of period................. $6,546,342 $ 6,975,643 $703,613 $1,521,578
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 397,069 2,022,159 37,964 54,214
Participant transfers......... 142,943 (1,288,028) 24,419 90,676
Participant withdrawals....... (271) (53,275) (8) (543)
-------------- -------------- -------------- --------------
Net increase in units from
participant
transactions.............. 539,741 680,856 62,375 144,347
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>

The Notes to Financial Statements are an integral part of these statements.

39
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS FIRST RECEIVED) TO DECEMBER 31,
1995
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS AMT PORTFOLIO SUB-ACCOUNTS
------------------------------------------ ----------------------------------------------
TOTAL WORLD LIMITED
RETURN UTILITIES GOVERNMENTS BALANCED MATURITY BOND PARTNERS
------------ ------------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
July 7,
Inception date................ July 7, 1995 July 27, 1995 1995 July 18, 1995 May 3, 1995 April 12, 1995
OPERATIONS:
Net investment gain (loss).... $ 26,717 $ 7,004 $ 31,279 $ (2,421) $ (3,879) $ (3,539)
Net realized gain (loss)...... 29,452 19,838 (21,937) 1,133 27 (48)
Net unrealized gain (loss).... 33,974 7,914 -- 408 28,898 54,000
------------ ------------- ----------- ------------- ------------- --------------
Net increase (decrease) from
operations................ 90,143 34,756 9,342 (880) 25,046 50,413
------------ ------------- ----------- ------------- ------------- --------------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits.......... 934,440 174,285 297,436 716,989 363,173 1,246,722
Participant transfers......... 615,736 303,858 36,136 163,266 742,806 229,996
Participant withdrawals....... (903) -- (205) (1,558) (4,145) (3,466)
------------ ------------- ----------- ------------- ------------- --------------
Net increase from
participant
transactions.............. 1,549,273 478,143 333,367 878,697 1,101,834 1,473,252
------------ ------------- ----------- ------------- ------------- --------------
Total increase in net
assets.................. 1,639,416 512,899 342,709 877,817 1,126,880 1,523,665
NET ASSETS:
Beginning of period........... -- -- -- -- -- --
------------ ------------- ----------- ------------- ------------- --------------
End of period................. $1,639,416 $512,899 $342,709 $877,817 $1,126,880 $1,523,665
------------ ------------- ----------- ------------- ------------- --------------
------------ ------------- ----------- ------------- ------------- --------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 89,900 16,955 29,898 71,670 35,022 106,298
Participant transfers......... 59,168 28,174 3,466 13,957 72,221 19,681
Participant withdrawals....... (83) -- (20) (150) (403) (285)
------------ ------------- ----------- ------------- ------------- --------------
Net increase in units from
participant
transactions.............. 148,985 45,129 33,344 85,477 106,840 125,694
------------ ------------- ----------- ------------- ------------- --------------
------------ ------------- ----------- ------------- ------------- --------------

<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS*
----------------------------------------------
GLOBAL SMALL
EQUITY MANAGED CAP
-------------- ------------- -------------
<S> <C> <C> <C>

Inception date................ April 10, 1995 June 19, 1995 June 27, 1995
OPERATIONS:
Net investment gain (loss).... $ 1,199 $ (15,465) $ (1,863)
Net realized gain (loss)...... 31,761 663 3
Net unrealized gain (loss).... (17,464) 234,982 16,355
-------------- ------------- -------------
Net increase (decrease) from
operations................ 15,496 220,180 14,495
-------------- ------------- -------------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits.......... 917,056 3,661,487 263,145
Participant transfers......... 705,765 1,553,474 353,852
Participant withdrawals....... (448) (13,355) (1,839)
-------------- ------------- -------------
Net increase from
participant
transactions.............. 1,622,373 5,201,606 615,158
-------------- ------------- -------------
Total increase in net
assets.................. 1,637,869 5,421,786 629,653
NET ASSETS:
Beginning of period........... -- -- --
-------------- ------------- -------------
End of period................. $1,637,869 $5,421,786 $629,653
-------------- ------------- -------------
-------------- ------------- -------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 79,268 344,364 25,109
Participant transfers......... 60,048 143,046 33,069
Participant withdrawals....... (29) (882) (174)
-------------- ------------- -------------
Net increase in units from
participant
transactions.............. 139,287 486,528 58,004
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>

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

* Formerly Quest for Value Accumulation Trust

The Notes to Financial Statements are an integral part of these statements.

40
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------

1. ORGANIZATION

CG Variable Annuity Separate Account II (the Account) is registered as a
Unit Investment Trust under the Investment Company Act of 1940, as amended. The
operations of the Account are part of the operations of Connecticut General Life
Insurance Company (CG Life). The assets and liabilities of the Account are
clearly identified and distinguished from other assets and liabilities of CG
Life. The assets of the Account are not available to meet the general
obligations of CG Life and are held for the exclusive benefit of the
participants. Beginning in 1996, the Account included two contract types. One
contract is used for all states with the exception of New York; the other is
used only for New York. Each contract has its own terms and fees. (See Note 4)

The assets of the Account are divided into variable sub-accounts each of
which is invested in shares of one of nineteen portfolios (mutual funds) of six
diversified open-end management investment companies, each portfolio with its
own investment objective. The variable sub-accounts are:

ALGER AMERICAN FUND:--

Alger American Growth Portfolio

Alger American Leveraged AllCap Portfolio

Alger American MidCap Growth Portfolio

Alger American Small Capitalization Portfolio

FIDELITY VARIABLE INSURANCE PRODUCTS FUND:--

Equity-Income Portfolio

Money Market Portfolio

High Income Portfolio

Overseas Portfolio

FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:--

Asset Manager Portfolio

Investment Grade Bond Portfolio

MFS VARIABLE INSURANCE TRUST:--

MFS Total Return Series

MFS Utilities Series

MFS World Governments Series

NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:--

AMT Balanced Portfolio

AMT Limited Maturity Bond Portfolio

AMT Partners Portfolio

OCC (FORMERLY QUEST FOR VALUE) ACCUMULATION TRUST:--

OCC Global Equity Portfolio

OCC Managed Portfolio

OCC Small Cap Portfolio

2. SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in conformity with generally
accepted accounting principles. The following is a summary of significant
accounting policies consistently followed in the preparation of the Account's
financial statements.

41
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. INVESTMENT VALUATION: -- Investments held by the sub-accounts are valued at
their respective closing net asset value per share as determined by the
mutual funds as of December 31, 1996. The change in the difference between
cost and value is reflected as unrealized gain (loss) in the Statements of
Operations.

B. INVESTMENT TRANSACTIONS: -- Investment transactions are recorded on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on sales of investments are determined by the last-in, first-out cost
basis of the investment sold. Dividend and capital gain distributions are
recorded on the ex-dividend date. Investment transactions are settled
through CG Life.

C. FEDERAL INCOME TAXES: -- The operations of the Account form a part of, and
are taxed with, the total operations of CG Life, which is taxed as a life
insurance company. Under existing federal income tax law, investment income
(dividends) and capital gains attributable to the Account are not taxed.

D. ANNUITY RESERVES: -- The amount of annuity reserves is determined by
actuarial assumptions which meet statutory requirements. Gains or losses
resulting from the actual mortality experience, the responsibility of which
is assumed by CG Life, are offset by transfers to or from CG Life.

3. INVESTMENTS

Total shares held and cost of investments at December 31, 1996 were:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SHARES COST OF
SUB-ACCOUNT HELD INVESTMENTS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio...................................................... 529,416 $ 17,047,266
Alger American Leveraged AllCap Portfolio............................................ 288,418 5,330,969
Alger American MidCap Growth Portfolio............................................... 448,510 9,266,635
Alger American Small Capitalization Portfolio........................................ 351,847 14,379,841
Fidelity Equity-Income Portfolio..................................................... 1,340,145 25,854,791
Fidelity Money Market Portfolio...................................................... 10,602,830 10,602,830
Fidelity High Income Portfolio....................................................... 390,047 4,686,468
Fidelity Overseas Portfolio.......................................................... 100,563 1,830,450
Fidelity Asset Manager Portfolio..................................................... 248,294 3,858,503
Fidelity Investment Grade Bond Portfolio............................................. 477,172 5,681,838
MFS Total Return Series.............................................................. 634,748 8,200,113
MFS Utilities Series................................................................. 204,378 2,684,030
MFS World Governments Series......................................................... 142,482 1,467,944
AMT Balanced Portfolio............................................................... 211,380 3,392,700
AMT Limited Maturity Bond Portfolio.................................................. 260,746 3,625,685
AMT Partners Portfolio............................................................... 588,382 8,371,257
OCC Global Equity Portfolio.......................................................... 770,553 9,444,418
OCC Managed Portfolio................................................................ 914,853 29,106,068
OCC Small Cap Portfolio.............................................................. 121,907 2,500,464
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

42
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------

3. INVESTMENTS (CONTINUED)
Total purchases and sales of shares of the mutual funds, for the year ended
December 31, 1996, amounted to:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT PURCHASES SALES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio..................................................... $ 13,931,508 $ 739,129
Alger American Leveraged AllCap Portfolio........................................... 7,351,139 3,172,793
Alger American MidCap Growth Portfolio.............................................. 7,682,758 484,312
Alger American Small Capitalization Portfolio....................................... 14,392,699 3,346,542
Fidelity Equity-Income Portfolio.................................................... 21,715,591 2,139,050
Fidelity Money Market Portfolio..................................................... 28,429,874 24,802,687
Fidelity High Income Portfolio*..................................................... 4,876,276 189,567
Fidelity Overseas Portfolio**....................................................... 1,868,587 38,305
Fidelity Asset Manager Portfolio.................................................... 3,462,313 280,531
Fidelity Investment Grade Bond Portfolio............................................ 6,760,574 2,536,636
MFS Total Return Series............................................................. 6,790,994 199,290
MFS Utilities Series................................................................ 2,382,728 203,296
MFS World Governments Series........................................................ 1,272,231 169,036
AMT Balanced Portfolio.............................................................. 2,909,535 394,012
AMT Limited Maturity Bond Portfolio................................................. 2,728,825 201,232
AMT Partners Portfolio.............................................................. 7,173,583 269,972
OCC Global Equity Portfolio......................................................... 9,336,858 1,542,111
OCC Managed Portfolio............................................................... 24,355,269 436,417
OCC Small Cap Portfolio............................................................. 2,036,666 149,283
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

* Period from May 22, 1996 (date deposits first received) to December 31, 1996.

** Period from May 20, 1996 (date deposits first received) to December 31, 1996.

43
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------

4. CHARGES AND DEDUCTIONS

CG Life assumes the risk that annuitants may live longer than expected and
also assumes a mortality risk in connection with the death benefits of the
contract. CG Life also assumes a risk that its actual administrative expenses
may be higher than amounts deducted for such expenses. CG Life charges each
variable sub-account the daily equivalent of 1.20%, on an annual basis, of the
current value of each sub-account's assets for the assumption of these risks.
For contracts sold in the state of New York, after April 30, 1996, annual fees
of 1.25% are charged for mortality and expense risks; .05% of this charge was
waived from May 1, 1996 through June 30, 1996.

CG Life also deducts a daily administrative fee from the assets of each
variable sub-account as partial reimbursement for administrative expenses
relating to the issuance and maintenance of the contract and the participant's
annuity account. This charge is currently at an effective annual rate of .10%.
For contracts sold in the state of New York, after April 30, 1996, the effective
annual rate is .15%.

As partial compensation for administrative services provided, CG Life
additionally receives a $35 ($30 on New York contracts) annuity account fee per
year from each contract. This charge is deducted from the fixed or variable sub-
account of the participant or on a pro-rata basis from two or more fixed or
variable sub-accounts in relation to their values under the contract. Fixed
sub-accounts are part of the general account of CG Life and are not included in
these financial statements. The annuity account fee will be waived for any
contract year in which the annuity account value equals or exceeds $100,000 as
of the last valuation date of the contract year. Annuity account fees, for the
variable sub-accounts, amounting to $25,726, were deducted for the year ended
December 31, 1996.

For an additional charge (optional death benefit fee), an optional death
benefit may be selected by the participant. The optional death benefit fee will
be deducted from the participant's fixed or variable sub-account or on a
pro-rata basis from two or more fixed or variable sub-accounts in relation to
their values under the contract on the date of each contract anniversary. For
contracts that are issued in the state of New York, the optional death benefit
is not available. The optional death benefit fees, for the variable
sub-accounts, amounted to $856 for the year ended December 31, 1996.

Under certain circumstances, CG Life reserves the right to charge a transfer
fee of up to $10 for transfers between sub-accounts. Transfer fees, for the
variable sub-accounts, amounted to $60 for the year ended December 31, 1996.

44
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------

4. CHARGES AND DEDUCTIONS (CONTINUED)
The fees charged by CG Life for mortality and expense risks and
administrative fees, from variable sub-accounts, for the year ended December 31,
1996, amounted to:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
MORTALITY ASSET BASED
AND EXPENSE ADMINISTRATIVE
SUB-ACCOUNT RISK FEES FEES
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio***................................... $ 132,199 $ 11,142
Alger American Leveraged AllCap Portfolio***......................... 44,522 3,745
Alger American MidCap Growth Portfolio***............................ 62,343 5,258
Alger American Small Capitalization Portfolio***..................... 116,366 9,830
Fidelity Equity-Income Portfolio***.................................. 204,313 17,227
Fidelity Money Market Portfolio...................................... 132,303 11,057
Fidelity High Income Portfolio*...................................... 17,787 1,512
Fidelity Overseas Portfolio**........................................ 4,882 425
Fidelity Asset Manager Portfolio***.................................. 30,139 2,562
Fidelity Investment Grade Bond Portfolio............................. 43,098 3,611
MFS Total Return Series***........................................... 55,882 4,771
MFS Utilities Series................................................. 18,810 1,579
MFS World Governments Series***...................................... 11,769 988
AMT Balanced Portfolio***............................................ 26,754 2,260
AMT Limited Maturity Bond Portfolio.................................. 27,516 2,304
AMT Partners Portfolio***............................................ 59,909 5,072
OCC Global Equity Portfolio***....................................... 70,804 5,951
OCC Managed Portfolio***............................................. 226,451 19,120
OCC Small Cap Portfolio***........................................... 17,773 1,500
- -----------------------------------------------------------------------------------------------
</TABLE>

* Period from May 22, 1996 (date deposits first received) to December 31,
1996.

** Period from May 20, 1996 (date deposits first received) to December 31,
1996.

*** Mortality and expense risk fees waived, for the period from May 1, 1996 to
June 30, 1996, amounted to:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MORTALITY AND
EXPENSE RISK
SUB-ACCOUNT FEES WAIVED
- --------------------------------------------------------------------------------
<S> <C>
Alger American Growth Portfolio.................................. $ 2
Alger American Leveraged AllCap Portfolio........................ 2
Alger American MidCap Growth Portfolio........................... 3
Alger American Small Capitalization Portfolio.................... 7
Fidelity Equity-Income Portfolio................................. 13
Fidelity Asset Manager Portfolio................................. 2
MFS Total Return Series.......................................... 4
MFS World Governments Series..................................... 1
AMT Balanced Portfolio........................................... 1
AMT Partners Portfolio........................................... 4
OCC Global Equity Portfolio...................................... 3
OCC Managed Portfolio............................................ 10
OCC Small Cap Portfolio.......................................... 1
- --------------------------------------------------------------------------------
</TABLE>

45
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------

4. CHARGES AND DEDUCTIONS (CONTINUED)
No deduction for sales charges is made from a premium payment. However, if a
cash withdrawal is made, a withdrawal charge (contingent deferred sales charge)
may be assessed by CG Life. The withdrawal charge, if assessed, varies from 0-7%
depending upon the duration of each contract deposit. The withdrawal charge is
deducted from withdrawal proceeds for full withdrawals and reduces the remaining
account value for partial withdrawals. These charges are paid to CG Life as
reimbursement for services provided. These services include commissions paid to
sales personnel, the costs associated with preparation of sales literature and
other promotional costs and acquisition expenses. Withdrawal charges paid to CG
Life for the variable sub-accounts, for the year ended December 31, 1996,
amounted to $39,289.

5. DISTRIBUTION OF NET INCOME

The Account does not expect to declare dividends to participants from
accumulated net income. The accumulated net income is distributed to
participants as part of surrenders, death benefits, transfers to other fixed or
variable sub-accounts or annuity payments in excess of net purchase payments.

6. DIVERSIFICATION REQUIREMENTS

Under the provisions of Section 817(h) of the Internal Revenue Code of 1986
(the Code), a variable annuity contract, other than a contract issued in
connection with certain types of employee benefit plans, will not be treated as
an annuity contract for federal 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 the Treasury. CG Life believes, based on assurances from the
mutual fund managers, that the mutual funds satisfy the requirements of the
regulations.

46
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of Connecticut General
Life Insurance Company and Participants of the
CG Variable Annuity Separate Account II

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 each of the sub-accounts, Alger
American Fund--Alger American Growth Portfolio, Alger American Leveraged AllCap
Portfolio, Alger American MidCap Growth Portfolio, Alger American Small
Capitalization Portfolio; Fidelity Variable Insurance Products
Fund--Equity-Income Portfolio, Money Market Portfolio, High Income Portfolio,
Overseas Portfolio; Fidelity Variable Insurance Products Fund II--Asset Manager
Portfolio, Investment Grade Bond Portfolio; MFS Variable Insurance Trust--MFS
Total Return Series, MFS Utilities Series, MFS World Governments Series;
Neuberger & Berman Advisers Management Trust--AMT Balanced Portfolio, AMT
Limited Maturity Bond Portfolio, AMT Partners Portfolio; OCC (formerly Quest for
Value) Accumulation Trust--OCC Global Equity Portfolio, OCC Managed Portfolio,
OCC Small Cap Portfolio (constituting the CG Variable Annuity Separate Account
II, hereafter referred to as "the Account") at December 31, 1996, 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 the Account's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial 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, 1996 by correspondence with the custodians, provide a reasonable
basis for the opinion expressed above.

PRICE WATERHOUSE LLP
Hartford, Connecticut
February 20, 1997

47
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PART B. STATEMENT OF ADDITIONAL INFORMATION NO. 2
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STATEMENT OF ADDITIONAL INFORMATION

FLEXIBLE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACTS