VARIFLEX LS
485BPOS, 1997-05-01
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<PAGE>
                                                               File No. 33-85592
                                                               File No. 811-8836
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM N-4
  REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                  |_|
           Post-Effective Amendment No.   3                                |X|
                                        -----
  REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940          |_|
           Amendment No.   4                                               |X|
                         -----

                        (Check appropriate box or boxes)
                                   VARIFLEX LS
                           (Exact Name of Registrant)
                     Security Benefit Life Insurance Company
                               (Name of Depositor)
                 700 Harrison Street, Topeka, Kansas 66636-0001
              (Address of Depositor's Principal Executive Offices)
               Depositor's Telephone Number, Including Area Code:
                                 (913) 295-3000
                                                     Copies to:
Amy J. Lee, Associate General Counsel           Jeffrey S. Puretz, Esq.
Security Benefit Group                          Dechert, Price & Rhoads
700 Harrison Street                             1500 K Street, N.W.
Topeka, KS 66636-0001                           Washington, DC 20005
(Name and address of Agent for Service)

It is proposed that this filing will become effective:
|_| immediately  upon filing  pursuant to paragraph (b) of Rule 485
|X| on April 30, 1997 pursuant to paragraph (b) of Rule 485
|_| 60 days after filing pursuant to paragraph (a)(1)of Rule 485
|_| on April 30, 1997,  pursuant to paragraph (a)(1) of Rule 485
|_| 75 days after filing  pursuant to paragraph (a)(2) of Rule 485
|_| on April 30, 1997, pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:
|_|   this  post-effective  amendment  designates  a new  effective  date  for a
      previously filed post-effective amendment.

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

Pursuant to  Regulation  270.24f-2 of the  Investment  Company Act of 1940,  the
Registrant  has elected to  register an  indefinite  number of  securities.  The
Registrant filed the Notice required by 24f-2 on February 26, 1997.

<PAGE>
                              Cross Reference Sheet
                             Pursuant to Rule 495(a)

               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
                                     ------

ITEM OF FORM N-4                                        PROSPECTUS CAPTION
- ----------------                                        ------------------

  1.   Cover Page...................................... Cover Page

  2.   Definitions..................................... Definitions

  3.   Synopsis........................................ Summary;  Expense Table;
                                                        Contractual    Expenses;
                                                        Annual  Separate Account
                                                        Expenses;  Annual Mutual
                                                        Fund Expenses

  4.   Condensed Financial Information

       (a) Accumulated Unit Values..................... N/A

       (b) Performance Data............................ Performance  Information

       (c) Additional Financial Information............ Additional  Information;
                                                        Financial Statements

  5.   General Description of Registrant, Depositor,
       and Portfolio Companies

       (a) Depositor................................... Information about Secur-
                                                        ity Benefit,the Separate
                                                        Account, and  the Mutual
                                                        Fund;  Security  Benefit
                                                        Life Insurance Company

       (b) Registrant.................................. Separate Account; Infor-
                                                        mation   about  Security
                                                        Benefit, the    Separate
                                                        Account, and  the Mutual
                                                        Fund

       (c) Portfolio Company........................... Information about Secur-
                                                        ity Benefit,the Separate
                                                        Account, and  the Mutual
                                                        Fund; SBL Fund;  The In-
                                                        vestment Adviser

       (d) Fund Prospectus............................. SBL Fund

<PAGE>

       (e) Voting Rights............................... Voting  of  Mutual  Fund
                                                        Shares

       (f) Administrators.............................. Security   Benefit  Life
                                                        Insurance Company

  6.   Deductions and Expenses

       (a) General..................................... Charges  and Deductions;
                                                        Mortality   and  Expense
                                                        Risk Charge; Administra-
                                                        tive Charge; Premium Tax
                                                        Charge;  Other  Charges;
                                                        Variations  in  Charges;
                                                        Guarantee   of   Certain
                                                        Charges; Mutual Fund Ex-
                                                        penses; Contract Charges

       (b) Sales Load %................................ N/A

       (c) Special Purchase Plan....................... N/A

       (d) Commissions................................. N/A

       (e) Fund Expenses............................... Annual    Mutual    Fund
                                                        Expenses

       (f) Organization Expenses....................... N/A

  7.   General Description of Contracts

       (a) Persons with Rights......................... The Contract; More About
                                                        the Contract; Ownership;
                                                        Joint  Owners;  Contract
                                                        Benefits;  The Fixed Ac-
                                                        count; Reports to Owners

       (b)   (i) Allocation of Purchase Payments....... Purchase Payments; Allo-
                                                        cation  of Purchase Pay-
                                                        ments

            (ii) Transfers............................. Transfers  of   Contract
                                                        Value;Telephone Transfer
                                                        Privileges;  Dollar Cost
                                                        Averaging Option;  Asset
                                                        Reallocation Option;Full
                                                        and Partial Withdrawals

                 Exchanges............................. N/A

       (c) Changes..................................... Substitution  of Invest-
                                                        ments; Changes to Comply
                                                        with Law  and Amendments

       (d) Inquiries................................... Contacting Security Ben-
                                                        efit

<PAGE>

 8.    Annuity Period.................................. Annuity Period; General;
                                                        Annuity  Options; Selec-
                                                        tion of an Option

 9.    Death Benefit................................... Death Benefit

10.    Purchases and Contract Value

       (a) Purchases................................... The Contract;   General;
                                                        Application  for  a Con-
                                                        tract;Purchase Payments;
                                                        Dollar   Cost  Averaging
                                                        Option;  Asset Realloca-
                                                        tion Option

       (b) Valuation................................... Contract Value; Determi-
                                                        nation    of    Contract
                                                        Value; Transfers of Con-
                                                        tract Value; Interest

       (c) Daily Calculation........................... Determination   of  Con-
                                                        tract Value

       (d) Underwriter................................. Security   Benefit  Life
                                                        Insurance Company

11.    Redemptions

       (a) - By Owners................................. Full  and  Partial With-
                                                        drawals;Systematic With-
                                                        drawals;  Payments  from
                                                        the   Separate  Account;
                                                        Payments from  the Fixed
                                                        Account; Restrictions on
                                                        Withdrawals  from Quali-
                                                        fied Plans; Loans

           - By Annuitant.............................. Annuity Options

       (b) Texas ORP................................... N/A

       (c) Check Delay................................. N/A

       (d) Lapse....................................... Full     and     Partial
                                                        Withdrawals

       (e) Free Look................................... Free-Look Right

12.    Taxes........................................... Federal   Tax   Matters;
                                                        Introduction; Tax Status
                                                        of Security  Benefit and
                                                        the   Separate  Account;
                                                        Income Taxation of Annu-
                                                        ities in General -- Non-
                                                        Qualified  Plans;  Addi-
                                                        tional   Considerations;
                                                        Qualified Plans

13.    Legal Proceedings............................... Legal Proceedings; Legal
                                                        Matters

14.    Table of Contents for the Statement of
       Additional Information.......................... Statement  of Additional
                                                        Information

<PAGE>

                                     PART B
                                     ------

                                                       STATEMENT OF ADDITIONAL
ITEM OF FORM N-4                                         INFORMATION CAPTION
- ----------------                                       ------------------------

15.    Cover Page...................................... Cover Page

16.    Table of Contents............................... Table of Contents

17.    General Information and History................. General  Information and
                                                        History

18.    Services

       (a)  Fees and Expenses of Registrant............ N/A

       (b)  Management Contracts....................... N/A

       (c)  Custodian.................................. N/A

              Independent Public Accountant............ Independent Accountants

       (d)  Assets of Registrant....................... N/A

       (e)  Affiliated Persons......................... N/A

       (f)  Principal Underwriter...................... N/A

19.    Purchase of Securities Being Offered............ Distribution of the Con-
                                                        tract;  Limits  on  Pur-
                                                        chase  Payments Paid Un-
                                                        der   Tax-Qualified  Re-
                                                        tirement Plans

20.  Underwriters...................................... Distribution of the Con-
                                                        tract

21.  Calculation of Performance Data................... Performance Information

22.  Annuity Payments.................................. N/A

23.  Financial Statements.............................. Financial Statements

<PAGE>

                          VARIFLEX LS VARIABLE ANNUITY

                      INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
                       DEFERRED VARIABLE ANNUITY CONTRACT

                                   ISSUED BY:
                     SECURITY BENEFIT LIFE INSURANCE COMPANY
                             700 SW HARRISON STREET
                            TOPEKA, KANSAS 66636-0001
                                 1-800-888-2461

                                MAILING ADDRESS:
                     SECURITY BENEFIT LIFE INSURANCE COMPANY
                             700 SW HARRISON STREET
                            TOPEKA, KANSAS 66636-0001


     This Prospectus describes the Variflex LS Variable Annuity -- an individual
flexible  purchase payment  deferred  variable annuity contract (the "Contract")
offered by Security Benefit Life Insurance  Company  ("Security  Benefit").  The
Contract is available for  individuals as a non-tax  qualified  retirement  plan
("Non-Qualified  Plan") or in connection  with a retirement plan qualified under
Section  401,  403(b),  408, or 457 of the  Internal  Revenue  Code  ("Qualified
Plan"). The Contract is designed to give Contractowners  flexibility in planning
for retirement and other financial goals.

     During the Accumulation  Period, the Contract provides for the accumulation
of a  Contractowner's  value on either a variable basis, a fixed basis, or both.
The Contract  also  provides  several  options for annuity  payments on either a
variable  basis, a fixed basis,  or both to begin on the Annuity Start Date. The
minimum initial purchase payment is $25,000.  Subsequent  purchase  payments are
flexible,  though they must be for at least  $1,000.  Purchase  payments  may be
allocated at the  Contractowner's  discretion to one or more of the  Subaccounts
that comprise a separate account of Security Benefit called the Variable Annuity
Account  VIII (the  "Separate  Account"),  or to the Fixed  Account of  Security
Benefit.  Each  Subaccount of the Separate  Account  invests in a  corresponding
portfolio  ("Series")  of the SBL Fund  (the  "Mutual  Fund"),  which  currently
consists of eleven Series:  (1) Growth Series,  (2)  Growth-Income  Series,  (3)
Money Market Series,  (4) Worldwide Equity Series, (5) High Grade Income Series,
(6) Social Awareness Series,  (7) Emerging Growth Series,  (8) Global Aggressive
Bond Series,  (9)  Specialized  Asset  Allocation  Series,  (10)  Managed  Asset
Allocation  Series,  and (11) Equity Income  Series.  The Contract  Value in the
Fixed Account will accrue interest at rates that are paid by Security Benefit as
described in "The Fixed Account" on page 19. Contract Value in the Fixed Account
is guaranteed by Security Benefit.

     The Contract Value in the  Subaccounts  under a Contract will vary based on
investment  performance  of the  Subaccounts  to  which  the  Contract  Value is
allocated. No minimum amount of Contract Value is guaranteed.

     A Contract may be returned  according to the terms of its Free-Look  Right.
(See  "Free-Look  Right,"  page  15.)

   
     This Prospectus concisely sets forth information about the Contract and the
Separate Account that a prospective  investor should know before  purchasing the
Contract.  Certain  additional  information  is  contained  in a  "Statement  of
Additional  Information,"  dated  May 1,  1997,  which has been  filed  with the
Securities  and Exchange  Commission  (the "SEC").  The  Statement of Additional
Information,  as it may be  supplemented  from time to time, is  incorporated by
reference  into this  Prospectus  and is  available  at no  charge,  by  writing
Security  Benefit at 700  Harrison  Street,  Topeka,  Kansas 66636 or by calling
1-800-888-2461. The table of contents of the Statement of Additional Information
is set forth on page 33 of this Prospectus.
    

- --------------------------------------------------------------------------------
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.

THIS PROSPECTUS IS ACCOMPANIED BY THE CURRENT  PROSPECTUS FOR THE SBL FUND. BOTH
PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.

THE CONTRACT INVOLVES RISK,  INCLUDING POSSIBLE LOSS OF PRINCIPAL,  AND IS NOT A
DEPOSIT OR OBLIGATION  OF, OR GUARANTEED OR ENDORSED BY, ANY BANK.  THE CONTRACT
IS NOT  FEDERALLY  INSURED BY THE FEDERAL  DEPOSIT  INSURANCE  CORPORATION,  THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.

   
DATE: MAY 1, 1997
    
- --------------------------------------------------------------------------------
                                        1
<PAGE>
                                TABLE OF CONTENTS

                                                                            Page
DEFINITIONS..................................................................  5

SUMMARY......................................................................  5
     Purpose of the Contract.................................................  5
     The Separate Account and the Mutual Fund................................  6
     Fixed Account...........................................................  6
     Purchase Payments.......................................................  6
     Contract Benefits.......................................................  6
     Free-Look Right.........................................................  6
     Charges and Deductions..................................................  6
         Mortality and Expense Risk Charge...................................  6
         Administrative Charge...............................................  7
         Premium Tax Charge..................................................  7
         Other Expenses......................................................  7
     Contacting Security Benefit.............................................  7

EXPENSE TABLE ...............................................................  7
     Contractual Expenses....................................................  7
     Annual Separate Account Expenses........................................  7
     Annual Mutual Fund Expenses.............................................  7
     Examples ...............................................................  7
INFORMATION ABOUT SECURITY BENEFIT, THE SEPARATE ACCOUNT, AND THE MUTUAL FUND  9
     Security Benefit Life Insurance Company.................................  9
     Published Ratings.......................................................  9
     Separate Account........................................................  9
     SBL Fund ...............................................................  9
         Series A (Growth Series)............................................ 10
         Series B (Growth-Income Series)..................................... 10
         Series C (Money Market Series)...................................... 10
         Series D (Worldwide Equity Series).................................. 10
         Series E (High Grade Income Series)................................. 10
         Series S (Social Awareness Series).................................. 11
         Series J (Emerging Growth Series)................................... 10
         Series K (Global Aggressive Bond Series)............................ 10
         Series M (Specialized Asset Allocation Series)...................... 11
         Series N (Managed Asset Allocation Series).......................... 11
         Series O (Equity Income Series)..................................... 11
         The Investment Adviser.............................................. 11

THE CONTRACT  ............................................................... 11
     General  ............................................................... 11
     Application for a Contract.............................................. 11
     Purchase Payments....................................................... 12
     Allocation of Purchase Payments......................................... 12
     Dollar Cost Averaging Option............................................ 12
     Asset Reallocation Option............................................... 13
     Transfers of Contract Value............................................. 13
     Contract Value.......................................................... 14
     Determination of Contract Value......................................... 14
     Full and Partial Withdrawals............................................ 14
     Systematic Withdrawals.................................................. 15
     Free-Look Right......................................................... 15
     Death Benefit........................................................... 16
     Distribution Requirements............................................... 16
     Death of the Annuitant.................................................. 16

- --------------------------------------------------------------------------------
                                       2
<PAGE>
                          TABLE OF CONTENTS (CONTINUED)

                                                                            Page
CHARGES AND DEDUCTIONS....................................................... 17
     Mortality and Expense Risk Charge....................................... 17
     Administrative Charge................................................... 17
     Premium Tax Charge...................................................... 17
     Other Charges........................................................... 17
     Variations in Charges................................................... 17
     Guarantee of Certain Charges............................................ 17
     Mutual Fund Expenses.................................................... 17

ANNUITY PERIOD............................................................... 18
     General  ............................................................... 18
     Annuity Options......................................................... 18
         Option 1--Life Income............................................... 18
         Option 2--Life Income with Guaranteed Payment of 5,10,15 or 20 Years 18
         Option 3--Life with Installment Refund Option....................... 18
         Option 4--Joint and Last Survivor................................... 19
         Option 5--Payments for a Specified Period........................... 19
         Option 6--Payments of a Specified Amount............................ 19
     Selection of an Option.................................................. 19

THE FIXED ACCOUNT............................................................ 19
     Interest ............................................................... 19
     Death Benefit........................................................... 20
     Contract Charges........................................................ 20
     Transfers and Withdrawals from the Fixed Account........................ 20
     Payments from the Fixed Account......................................... 21

MORE ABOUT THE CONTRACT...................................................... 21
     Ownership............................................................... 21
         Joint Owners........................................................ 21
     Designation and Change of Beneficiary................................... 21
     Participating........................................................... 21
     Payments from the Separate Account...................................... 21
     Proof of Age and Survival............................................... 22
     Misstatements........................................................... 22
     Loans    ............................................................... 22
     Restrictions on Withdrawals from Qualified Plans........................ 23

FEDERAL TAX MATTERS.......................................................... 23
     Introduction............................................................ 23
     Tax Status of Security Benefit and the Separate Account................. 24
         General............................................................. 24
         Charge for Security Benefit Taxes................................... 24
         Diversification Standards........................................... 24
     Income Taxation of Annuities in General--Non-Qualified Plans............ 25
         Surrenders or Withdrawals Prior to the Annuity Start Date........... 25
         Surrenders or Withdrawals on or after Annuity Start Date............ 25
         Penalty Tax on Certain Surrenders and Withdrawals................... 25

- --------------------------------------------------------------------------------
                                        3
<PAGE>
                          TABLE OF CONTENTS (CONTINUED)

                                                                            Page
     Additional Considerations................................................25
         Distribution-at-Death Rules..........................................25
         Gift of Annuity Contracts............................................26
         Contracts Owned by Non-Natural Persons...............................26
         Multiple Contract Rule...............................................26
         Possible Tax Changes.................................................26
         Transfers, Assignments or Exchanges of a Contract....................26
     Qualified Plans..........................................................26
         Section 401..........................................................27
         Section 403(b).......................................................28
         Section 408..........................................................28
         Section 457..........................................................28
         Rollovers............................................................29
         Tax Penalties........................................................29
         Withholding..........................................................30

OTHER INFORMATION.............................................................30
     Voting of Mutual Fund Shares.............................................30
     Substitution of Investments..............................................30
     Changes to Comply with Law and Amendments................................31
     Reports to Owners........................................................31
     Telephone Transfer Privileges............................................31
     Legal Proceedings........................................................31
     Legal Matters............................................................32

PERFORMANCE INFORMATION.......................................................32

ADDITIONAL INFORMATION........................................................32
     Registration Statement...................................................32
     Financial Statements.....................................................33

STATEMENT OF ADDITIONAL INFORMATION...........................................33


- --------------------------------------------------------------------------------
THE CONTRACT IS NOT AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE.
NO PERSON IS AUTHORIZED  TO MAKE ANY  REPRESENTATIONS  IN  CONNECTION  WITH THIS
OFFERING  OTHER  THAN  AS  CONTAINED  IN THIS  PROSPECTUS  OR THE  STATEMENT  OF
ADDITIONAL  INFORMATION,  THE  MUTUAL  FUND'S  PROSPECTUS  OR THE  STATEMENT  OF
ADDITIONAL INFORMATION OF THE FUND, OR ANY SUPPLEMENT THERETO.
- --------------------------------------------------------------------------------

                                       4
<PAGE>

                                   DEFINITIONS

     Various terms commonly used in this Prospectus are defined as follows:

     ACCUMULATION  PERIOD -- The  period  commencing  on the  Contract  Date and
ending  on the  Annuity  Start  Date  or,  if  earlier,  when  the  Contract  is
terminated, either through a full withdrawal,  payment of charges, or payment of
the death benefit proceeds.

     ACCUMULATION  UNIT -- A unit of measure  used to  calculate  the value of a
Contractowner's  interest in a  Subaccount  during the  Accumulation  Period and
variable annuity payments under Annuity Options 5 and 6.

     ANNUITANT -- The person on whose life annuity payments depend.

     ANNUITY -- A series of periodic income payments made by Security Benefit to
an Annuitant, Joint Annuitant, or Beneficiary during the period specified in the
Annuity Option.

     ANNUITY OPTIONS -- Options under the Contract that prescribe the provisions
under which a series of annuity payments are made.

     ANNUITY PERIOD -- The period during which annuity payments are made.

     ANNUITY START DATE -- The date when annuity payments are to begin.

     AUTOMATIC  INVESTMENT  PROGRAM  -- A  program  pursuant  to which  purchase
payments are automatically paid from the owner's checking account on a specified
day of each month.

     CONTRACT DATE -- The date shown as the Contract Date in a Contract.  Annual
Contract  anniversaries  are measured from the Contract  Date. It is usually the
date that the initial purchase payment is credited to the Contract.

     CONTRACT DEBT -- The unpaid loan balance including accrued loan interest.

     CONTRACTOWNER OR OWNER -- The person entitled to the ownership rights under
the Contract and in whose name the Contract is issued.

     CONTRACT VALUE -- The total value of the amounts in a Contract allocated to
the  Subaccounts  of the Separate  Account and the Fixed  Account as well as any
amount set aside in the loan account to secure loans as of any Valuation Date.

     CONTRACT YEAR -- Each twelve-month period measured from the Contract Date.

     DESIGNATED BENEFICIARY -- The person having the right to the death benefit,
if any,  payable  upon the  death of the  Owner or the Joint  Owner  during  the
Accumulation  Period.  The  Designated  Beneficiary  is the first  person on the
following  list who is alive  on the  date of  death of the  Owner or the  Joint
Owner:  the Owner,  the Joint  Owner;  the Primary  Beneficiary;  the  Secondary
Beneficiary;  the  Annuitant;  or if none of the above are  alive,  the  Owner's
Estate.

     FIXED  ACCOUNT -- An account  that is part of  Security  Benefit's  General
Account  in  which  all or a  portion  of the  Contract  Value  may be held  for
accumulation at fixed rates of interest (which may not be less than 3.0 percent)
declared by Security Benefit periodically at its discretion.

     GENERAL  ACCOUNT  -- All  assets  of  Security  Benefit  other  than  those
allocated to the Separate  Account or to any other separate  account of Security
Benefit.

     HOME OFFICE -- The Annuity  Administration  Department of Security Benefit,
P.O. Box 750497, Topeka, Kansas 66675-0497.

     MUTUAL FUND -- SBL Fund. The Mutual Fund is a diversified, open-end manage-
ment investment company commonly referred to as a mutual fund.

     PURCHASE  PAYMENT -- The amounts paid to Security  Benefit as consideration
for the Contract.

     SEPARATE  ACCOUNT -- The Variable  Annuity Account VIII. A separate account
of Security Benefit that consists of accounts, referred to as Subaccounts,  each
of which invests in a corresponding Series of the SBL Fund.

     SUBACCOUNT -- A division of the Separate  Account of Security Benefit which
invests  in a  corresponding  series  of  the  Mutual  Fund.  Currently,  eleven
Subaccounts are available under the Contract.

     VALUATION DATE -- Each date on which the Separate Account is valued,  which
currently  includes  each  day  that the New  York  Stock  Exchange  is open for
trading.  The New York Stock Exchange is closed on weekends and on the following
holidays:  New Year's Day,  Presidents'  Day,  Good Friday,  Memorial  Day, July
Fourth, Labor Day, Thanksgiving Day, and Christmas Day.

     VALUATION PERIOD -- A period used in measuring the investment experience of
each  Subaccount of the Separate  Account.  The  Valuation  Period begins at the
close  of one  Valuation  Date and  ends at the  close  of the  next  succeeding
Valuation Date.

     WITHDRAWAL  VALUE -- The  amount a  Contractowner  may  receive  upon  full
withdrawal of the Contract,  which is equal to Contract  Value less any Contract
Debt, and any uncollected premium taxes.

                                     SUMMARY

     This  summary  is  intended  to  provide  a  brief  overview  of  the  more
significant  aspects  of the  Contract.  Further  detail  is  provided  in  this
Prospectus,  the Statement of Additional Information,  and the Contract.  Unless
the  context  indicates  otherwise,  the  discussion  in  this  summary  and the
remainder of the Prospectus relates to the portion of the Contract involving the
Separate  Account.  The Fixed  Account  is  briefly  described  under "The Fixed
Account" on page 19 and in the Contract.

PURPOSE OF THE CONTRACT

     The individual flexible purchase payment deferred variable annuity contract
("Contract")  described in this  Prospectus  is designed to give  Contractowners
flexibility in planning for retirement and other financial  goals.  The Contract
provides for the  accumulation  of values on a

- --------------------------------------------------------------------------------
                                       5
<PAGE>

variable basis,  a   fixed  basis, or both, during  the Accumulation  Period and
provides  several  options for annuity  payments  on a variable  basis,  a fixed
basis,  or both.  During the  Accumulation  Period,  an Owner can pursue various
allocation  options by allocating  purchase  payments to the  Subaccounts of the
Separate Account or to the Fixed Account. See "The Contract," page 11.

     The  Contract is eligible for  purchase as a non-tax  qualified  retirement
plan for an individual ("Non-Qualified Plan"). The Contract is also eligible for
an individual in connection  with a retirement plan qualified under Section 401,
403(b),  408, or 457 of the  Internal  Revenue Code of 1986,  as amended.  These
plans are sometimes referred to in this Prospectus as "Qualified Plans."

THE SEPARATE ACCOUNT AND THE MUTUAL FUND

     Purchase  payments  designated  to  accumulate  on  a  variable  basis  are
allocated to the Separate Account.  See "Separate Account," page 9. The Separate
Account is currently  divided into eleven  accounts  referred to as Subaccounts.
Each Subaccount invests  exclusively in shares of a corresponding  Series of the
Mutual  Fund.  The  Series of the  Mutual  Fund,  each of which has a  different
investment objective or objectives, are as follows: Growth Series, Growth-Income
Series, Money Market Series,  Worldwide Equity Series, High Grade Income Series,
Social Awareness Series,  Emerging Growth Series, Global Aggressive Bond Series,
Specialized Asset Allocation Series, Managed Asset Allocation Series, and Equity
Income  Series.  See "SBL  Fund,"  page 9.  Amounts  held in a  Subaccount  will
increase or decrease in dollar value depending on the investment  performance of
the  Series  of  the  Mutual  Fund  in  which  such  Subaccount   invests.   The
Contractowner bears the investment risk for amounts allocated to a Subaccount of
the Separate Account.

FIXED ACCOUNT

     Purchase  payments  designated  to  accumulate  on a  fixed  basis  may  be
allocated  to the Fixed  Account,  which is part of Security  Benefit's  General
Account.  Amounts  allocated  to  the  Fixed  Account  earn  interest  at  rates
determined  at the  discretion of Security  Benefit and are  guaranteed to be at
least an effective annual rate of 3.0 percent.  See "The Fixed Account," on page
19.

PURCHASE PAYMENTS

     The  minimum  initial   purchase  payment  is  $25,000.   Thereafter,   the
Contractowner may choose the amount and frequency of purchase  payments,  except
that the minimum subsequent  purchase payment is $1,000. See "Purchase Payments"
on page 12.

CONTRACT BENEFITS

     During the  Accumulation  Period,  Contract Value may be transferred by the
Contractowner  among the Subaccounts of the Separate Account and to and from the
Fixed Account, subject to certain restrictions as described in "The Contract" on
page 11 and "The Fixed Account" on page 19.

     At any time before the Annuity  Start Date, a Contract  may be  surrendered
for  its  Withdrawal  Value,  and  partial  withdrawals,   including  systematic
withdrawals,   may  be  taken  from  the  Contract  Value,  subject  to  certain
restrictions  described in "The Fixed Account" on page 19. See "Full and Partial
Withdrawals,"  page 14 and "Federal Tax Matters,"  page 23 for more  information
about withdrawals, including the 10 percent penalty tax that may be imposed upon
full and partial withdrawals  (including  systematic  withdrawals) made prior to
the Owner attaining age 59 1/2.

     The  Contract  provides  for a death  benefit  upon the  death of the Owner
during  the  Accumulation  Period.  See  "Death  Benefit,"  on page 16 for  more
information.  The  Contract  provides  for several  Annuity  Options on either a
variable basis, a fixed basis, or both. Payments under the fixed Annuity Options
will be guaranteed by Security Benefit. See "Annuity Period," on page 18.

FREE-LOOK RIGHT

     An Owner may  return a  Contract  within  the  Free-Look  Period,  which is
generally a ten-day period  beginning  when the Owner receives the Contract.  In
this  event,  Security  Benefit  will  refund  to the  Owner  purchase  payments
allocated to the Fixed Account plus the Contract Value in the  Subaccounts  plus
any charges  deducted from Contract Value in the  Subaccounts.  Security Benefit
will refund  purchase  payments  allocated  to the  Subaccounts  rather than the
Contract Value in those states where it is required to do so.

CHARGES AND DEDUCTIONS

     Security  Benefit does not make any deductions for sales load from purchase
payments before allocating them to the Contract Value and no surrender charge is
assessed  upon  withdrawal or surrender of a Contract.  Certain  charges will be
deducted in connection with the Contract as described below.

MORTALITY AND EXPENSE RISK CHARGE

     Security  Benefit deducts a daily charge from the assets of each Subaccount
for  mortality and expense risks equal to an annual rate of 1.25 percent of each
Subaccount's  average daily net assets.  See "Mortality and Expense Risk Charge"
on page 17.

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                                       6
<PAGE>

ADMINISTRATIVE CHARGE
     Security Benefit deducts a daily  administrative  charge equal to an annual
rate  of 0.15  percent  of each  Subaccount's  average  daily  net  assets.  The
Administrative  Charge is not assessed  against  Contract Value which is applied
under Annuity Options 1-4. See "Administrative Charge" on page 17.

PREMIUM TAX CHARGE

     Security  Benefit assesses a premium tax charge to reimburse itself for any
premium  taxes that it incurs with  respect to this  Contract.  This charge will
usually be deducted on  annuitization  or upon full  withdrawal if a premium tax
was incurred by Security  Benefit and is not  refundable.  Partial  withdrawals,
including  systematic  withdrawals,  may be subject to a premium tax charge if a
premium  tax is  incurred  on the  withdrawal  by  Security  Benefit  and is not
refundable. Security Benefit reserves the right to deduct such taxes when due or
anytime  thereafter.  Premium  tax rates  currently  range from 0 percent to 3.5
percent. See "Premium Tax Charge" on page 17.

OTHER EXPENSES

     The  operating  expenses  of the  Separate  Account  are  paid by  Security
Benefit.  Investment advisory fees and operating expenses of the Mutual Fund are
paid by the Mutual Fund and are  reflected  in the net asset value of the Mutual
Fund shares. For a description of these charges and expenses, see the Prospectus
for the Mutual Fund.

CONTACTING SECURITY BENEFIT

     All written requests,  notices, and forms required by the Contract, and any
questions or  inquiries  should be directed to Security  Benefit Life  Insurance
Company, P.O. Box 750497, Topeka, Kansas 66675-0497 or by phone by calling (913)
295-3112 or 1-800-888-2461, extension 3112.

                                  EXPENSE TABLE

     The  purpose  of this table is to assist  investors  in  understanding  the
various  costs and  expenses  borne  directly  and  indirectly  by Owners of the
Contracts with Contract Value allocated to the  Subaccounts.  The table reflects
any  contractual  charges,  expenses of the  Separate  Account,  and charges and
expenses of the Mutual Fund.  The table does not reflect  premium taxes that may
be imposed by various  jurisdictions.  See "Premium Tax Charge," on page 17. The
information  contained  in the  table is not  generally  applicable  to  amounts
allocated to the Fixed Account.

     For a complete description of a Contract's costs and expenses, see "Charges
and  Deductions,"  on page 17.  For a more  complete  description  of the Mutual
Fund's costs and expenses,  see the SBL Fund Prospectus,  which accompanies this
Prospectus.

CONTRACTUAL EXPENSES

Sales load on purchase payments....................     None
Contingent deferred sales charge...................     None
Transfer Fee (per transfer)........................     None

ANNUAL SEPARATE ACCOUNT EXPENSES 
(AS A PERCENTAGE OF EACH SUBACCOUNT'S AVERAGE DAILY NET ASSETS)

Annual Mortality and Expense Risk Charge...........    1.25%
Annual Administrative Charge.......................    0.15%
Total Separate Account Annual Expenses.............    1.40%

ANNUAL MUTUAL FUND EXPENSES
(AS A PERCENTAGE OF EACH SERIES' AVERAGE DAILY NET ASSETS)

   
                                        MANAGEMENT               TOTAL
                                            FEE                 MUTUAL
                                        (AFTER FEE    OTHER      FUND
                                         WAIVER)(1)  EXPENSES  EXPENSES

Growth (Series A)......................   0.75%        0.08%     0.83%
Growth-Income (Series B)...............   0.75%        0.09%     0.84%
Money Market (Series C)................   0.50%        0.08%     0.58%
Worldwide Equity (Series D)............   1.00%        0.30%     1.30%
High Grade Income (Series E)...........   0.75%        0.08%     0.83%
Emerging Growth (Series J).............   0.75%        0.09%     0.84%
Global Aggressive Bond (Series K)......   0.00%        0.84%     0.84%
Specialized Asset Allocation (Series M)   1.00%        0.34%     1.34%
Managed Asset Allocation (Series N)....   1.00%        0.45%     1.45%
Equity Income (Series O)...............   1.00%        0.58%     1.58%
Social Awareness (Series S)............   0.75%        0.09%     0.84%

1.  During the fiscal year ended  December  31,  1996,  the  Investment  Adviser
    waived the  management  fees of Series K and,  during the fiscal year ending
    December 31, 1997, the Investment  Adviser will waive the management fees of
    Series K; absent such  waiver,  the  management  fees of Series K would have
    been .75%.
    


EXAMPLES

     The example  presented below shows expenses that a Contractowner  would pay
at the end of one, three, five and ten years. The information  presented applies
if, at the end of those time  periods,  the  Contract  is (1)  surrendered,  (2)
annuitized,  or (3) not  surrendered or  annuitized.  The example shows expenses
based upon an allocation of $1,000 to each of the Subaccounts.

- --------------------------------------------------------------------------------
                                       7
<PAGE>

     The example  below  should not be  considered a  representation  of past or
future expenses.  Actual expenses may be greater or lesser than those shown. The
5 percent  return  assumed in the  examples  is  hypothetical  and should not be
considered  a  representation  of past or future  actual  returns,  which may be
greater or lesser than the assumed amount.
     Example  -- The  Owner  would  pay the  expenses  shown  below  on a $1,000
investment, assuming 5 percent annual return on assets:

   
                                               1      3       5     10
                                             YEAR   YEARS   YEARS   YEARS

Growth Subaccount..........................   $23    $70     $119    $256
Growth-Income Subaccount...................    23     70      120     257
Money Market Subaccount....................    20     62      107     231
Worldwide Equity Subaccount................    27     84      143     303
High Grade Income Subaccount...............    23     70      119     256
Emerging Growth Subaccount.................    23     70      120     257
Global Aggressive Bond Subaccount..........    23     70      120     257
Specialized Asset Allocation Subaccount....    28     85      145     307
Managed Asset Allocation Subaccount........    29     88      150     318
Equity Income Subaccount...................    30     92      157     330
Social Awareness Subaccount................    23     70      120     257
    

                         CONDENSED FINANCIAL INFORMATION

   
     The following condensed financial  information  presents  accumulation unit
values for the year ended  December 31, 1996, and the period April 1, 1995 (date
of inception)  through December 31, 1995, as well as ending  accumulation  units
outstanding under each Subaccount.

                                                              1995(1)       1996
GROWTH SUBACCOUNT                                             ----          ----
Accumulation unit value:
     Beginning of period................................    $10.00        $13.20
     End of period......................................     13.20         15.96
Accumulation units outstanding at the end of period.....   289,693     1,987,463

GROWTH-INCOME SUBACCOUNT
Accumulation unit value:
     Beginning of period................................    $10.00        $12.70
     End of period......................................     12.70         14.80
Accumulation units outstanding at the end of period.....   248,974     1,388,519

MONEY MARKET SUBACCOUNT
Accumulation unit value:
     Beginning of period................................    $10.00        $10.35
     End of period......................................     10.35         10.72
Accumulation units outstanding at the end of period.....   288,907     1,520,180

WORLDWIDE EQUITY SUBACCOUNT
Accumulation unit value:
     Beginning of period................................    $10.00        $11.42
     End of period......................................     11.42         13.21
Accumulation units outstanding at the end of period.....   126,206     1,183,160

HIGH GRADE INCOME SUBACCOUNT
Accumulation unit value:
     Beginning of period................................    $10.00        $11.56
     End of period......................................     11.56         11.31
Accumulation units outstanding at the end of period.....   240,306     1,631,708

EMERGING GROWTH SUBACCOUNT
Accumulation unit value:
     Beginning of period................................    $10.00        $11.89
     End of period......................................     11.89         13.84
Accumulation units outstanding at the end of period.....   133,581       772,390

GLOBAL AGGRESSIVE BOND SUBACCOUNT
Accumulation unit value:
     Beginning of period................................    $10.00        $10.67
     End of period......................................     10.67         11.96
Accumulation units outstanding at the end of period.....    86,477       328,077

SPECIALIZED ASSET ALLOCATION SUBACCOUNT
Accumulation unit value:
     Beginning of period................................    $10.00        $10.62
     End of period......................................     10.62         11.96
Accumulation units outstanding at the end of period.....   471,091     1,361,078

MANAGED ASSET ALLOCATION SUBACCOUNT
Accumulation unit value:
     Beginning of period................................    $10.00        $10.64
     End of period......................................     10.64         11.84
Accumulation units outstanding at the end of period.....   231,852       715,033

EQUITY INCOME SUBACCOUNT
Accumulation unit value:
     Beginning of period................................    $10.00        $11.61
     End of period......................................     11.61         13.73
Accumulation units outstanding at the end of period.....   267,317     1,764,015
    

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                                       8
<PAGE>

   
                                                            1995[1]       1996
SOCIAL AWARENESS SUBACCOUNT                                 ----          ----
Accumulation unit value:
     Beginning of period................................    $10.00        $12.56
     End of period......................................     12.56         14.69
Accumulation units outstanding at the end of period.....    37,149       220,549

1.  Global Aggressive Bond Subaccount,  Specialized Asset Allocation Subaccount,
    Managed Asset  Allocation  Subaccount  and Equity Income  Subaccount for the
    period June 1, 1995 (inception) through December 31, 1995.
    

                       INFORMATION ABOUT SECURITY BENEFIT,
                          THE SEPARATE ACCOUNT, AND THE
                                   MUTUAL FUND

SECURITY BENEFIT LIFE INSURANCE COMPANY

     Security  Benefit is a mutual life insurance  company  organized  under the
laws of the State of Kansas. It was organized  originally as a fraternal benefit
society  and  commenced  business  February  22,  1892.  It became a mutual life
insurance company under its present name on January 2, 1950.

   
     Security  Benefit  offers a complete  line of life  insurance  policies and
annuity contracts,  as well as financial and retirement services. It is admitted
to do business in the District of Columbia,  and in all states  except New York.
As of December 31, 1996, Security Benefit had $15.5 billion of life insurance in
force  and  total  assets  of  approximately  $5.5  billion.  Together  with its
subsidiaries,  Security  Benefit has total funds under  management  of over $6.6
billion.

     The Principal Underwriter for the Contracts is Security Distributors,  Inc.
("SDI"), 700 SW Harrison Street, Topeka, Kansas 66636-0001. SDI is registered as
a  broker/dealer  with  the SEC and is a  wholly-owned  subsidiary  of  Security
Benefit  Group,  Inc., a financial  services  holding  company  wholly-owned  by
Security Benefit.
    

PUBLISHED RATINGS

     Security  Benefit may from time to time  publish in  advertisements,  sales
literature and reports to Owners, the ratings and other information  assigned to
it by one or more independent  rating  organizations  such as A. M. Best Company
and  Standard & Poor's.  The purpose of the ratings is to reflect the  financial
strength  and/or  claims-paying  ability  of  the  Company  and  should  not  be
considered  as  bearing  on the  investment  performance  of assets  held in the
Separate  Account.  Each year A. M. Best Company reviews the financial status of
thousands of insurers,  culminating in the assignment of Best's  Ratings.  These
ratings  reflect their current  opinion of the relative  financial  strength and
operating  performance of an insurance company in comparison to the norms of the
life/health  insurance industry.  In addition,  the claims-paying ability of the
Company as measured  by  Standard & Poor's  Insurance  Ratings  Services  may be
referred to in advertisements or sales literature or in reports to Owners. These
ratings are opinions of an operating  insurance  company's financial capacity to
meet the  obligations of its insurance and annuity  policies in accordance  with
their  terms.  Such  ratings do not reflect the  investment  performance  of the
Separate  Account or the degree of risk  associated  with an  investment  in the
Separate Account.

SEPARATE ACCOUNT

     The Separate  Account was established by Security  Benefit on September 12,
1994,  under  procedures  established  under Kansas law. The income,  gains,  or
losses of the Separate Account, whether or not realized, are, in accordance with
the Contracts, credited to or charged against the assets of the Separate Account
without regard to other income,  gains,  or losses of Security  Benefit.  K.S.A.
40-436 provides that assets in a separate  account  attributable to the reserves
and other  liabilities  under the contracts are not chargeable with  liabilities
arising from any other business that the insurance  company  conducts if, and to
the extent the  contracts so provide,  the Contract  contains  such a provision.
Security  Benefit  owns the assets in the  Separate  Account  and is required to
maintain  sufficient assets in the Separate Account to meet all Separate Account
obligations  under the Contracts.  Security  Benefit may transfer to its General
Account assets that exceed anticipated  obligations of the Separate Account. All
obligations  arising under the Contracts are general  corporate  obligations  of
Security  Benefit.  Security  Benefit may invest its own assets in the  Separate
Account for other  purposes,  but not to support  contracts  other than variable
annuity  contracts,  and may  accumulate in the Separate  Account  proceeds from
Contract charges and investment results applicable to those assets.

     The Separate Account is currently divided into eleven Subaccounts.  Income,
gains  and  losses,  whether  or not  realized,  are,  in  accordance  with  the
Contracts,  credited  to, or  charged  against,  the  assets of each  Subaccount
without  regard to the income,  gains or losses in the other  Subaccounts.  Each
Subaccount  invests  exclusively  in shares of a  specific  Series of the Mutual
Fund. Security Benefit may in the future establish additional Subaccounts of the
Separate  Account,  which may invest in other  Series of the  Mutual  Fund or in
other securities, mutual funds, or investment vehicles.

     The Separate  Account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"). Registration with the
SEC does not involve  supervision by the SEC of the administration or investment
practices of the Separate Account or of Security Benefit.

SBL FUND

     SBL  Fund  (the  "Mutual  Fund")  is  a  diversified,  open-end  management
investment  company of the series type.  The Mutual Fund is registered  with the
SEC under the 1940 Act.

- --------------------------------------------------------------------------------
                                       9
<PAGE>

     Such  registration  does  not  involve   supervision  by  the  SEC  of  the
investments  or investment  policy of the Mutual Fund. The Mutual Fund currently
has eleven  separate  portfolios  ("Series"),  each of which  pursues  different
investment objectives and policies.

     Shares of the Mutual  Fund  currently  are  offered  only for  purchase  by
separate  accounts  of  Security  Benefit to serve as an  investment  medium for
variable life insurance  policies and for variable  annuity  contracts issued by
Security Benefit.  Thus, the Mutual Fund serves as an investment medium for both
variable life insurance policies and variable annuity contracts.  This is called
"mixed  funding."  Shares of the  Mutual  Fund may also be sold in the future to
separate  accounts  of  other  insurance  companies,  both  affiliated  and  not
affiliated  with Security  Benefit.  This is called "shared  funding."  Security
Benefit currently does not foresee any  disadvantages to Contractowners  arising
from  either  mixed  or  shared  funding;  however,  due to  differences  in tax
treatment  or  other  considerations,  it is  theoretically  possible  that  the
interests of owners of various  contracts for which the Mutual Fund serves as an
investment medium might at some time be in conflict.  However, Security Benefit,
the Mutual Fund's Board of Directors,  and any other  insurance  companies  that
participate  in the Mutual Fund in the future are required to monitor  events in
order to identify any material  conflicts  that arise from the use of the Mutual
Fund for mixed and/or shared  funding.  The Mutual Fund's Board of Directors are
required to determine what action,  if any, should be taken in the event of such
a conflict. If such a conflict were to occur, Security Benefit might be required
to withdraw  the  investment  of one or more of its separate  accounts  from the
Mutual  Fund.   This  might  force  the  Mutual  Fund  to  sell   securities  at
disadvantageous prices.

     A summary of the investment  objective of each Series of the Mutual Fund is
described  below.  There can be no  assurance  that any Series will  achieve its
objective. More detailed information is contained in the accompanying prospectus
of the Mutual  Fund,  including  information  on the risks  associated  with the
investments and investment techniques of each Series.

THE MUTUAL FUND'S  PROSPECTUS  ACCOMPANIES  THIS  PROSPECTUS  AND SHOULD BE READ
CAREFULLY BEFORE INVESTING.

SERIES A (GROWTH SERIES)

     Amounts  allocated to the Growth  Subaccount  are invested in Series A. The
investment  objective  of  Series  A is to  seek  long-term  capital  growth  by
investing  in a  broadly  diversified  portfolio  of common  stocks,  securities
convertible  into  common  stocks,   preferred  stocks,  bonds  and  other  debt
securities.

SERIES B (GROWTH-INCOME SERIES)

     Amounts allocated to the Growth-Income Subaccount are invested in Series B.
Series B seeks long-term growth of capital with secondary  emphasis on income by
investing in various types of securities,  including common stocks,  convertible
securities, preferred stocks and debt securities. Series B's investments in debt
securities may include  securities  rated below investment  grade.  Series B may
also temporarily invest in government bonds or commercial paper.

SERIES C (MONEY MARKET SERIES)

     Amounts  allocated to the Money Market Subaccount are invested in Series C.
The  investment  objective  of Series C is to provide as high a level of current
income as is  consistent  with  preserving  capital.  It invests in high quality
money market instruments with maturities of not longer than thirteen months.

SERIES D (WORLDWIDE EQUITY SERIES)

     Amounts allocated to the Worldwide Equity Subaccount are invested in Series
D. The investment  objective of Series D is to seek long-term  growth of capital
primarily  through  investment  in common  stocks and  equivalents  of companies
domiciled in foreign countries and the United States.

SERIES E (HIGH GRADE INCOME SERIES)

     Amounts  allocated  to the High Grade  Income  Subaccount  are  invested in
Series E. The investment objective of Series E is to provide current income with
security of principal.  Series E seeks to achieve this  investment  objective by
investing  in a broad  range of debt  securities,  including  U.S.  and  foreign
corporate  debt  securities  and  securities  issued  by the  U.S.  and  foreign
governments.

SERIES J (EMERGING GROWTH SERIES)

     Amounts  allocated to the Emerging Growth Subaccount are invested in Series
J. The investment  objective of Series J is to seek capital appreciation through
investment in a broadly  diversified  portfolio of securities  which may include
common stocks, preferred stocks, debt securities and securities convertible into
common stocks.

SERIES K (GLOBAL AGGRESSIVE BOND SERIES)

     Amounts  allocated to the Global Aggressive Bond Subaccount are invested in
Series K. The  investment  objective of Series K is to seek high current  income
and,  as  a  secondary  objective,   capital  appreciation  by  investing  in  a

- --------------------------------------------------------------------------------
                                       10
<PAGE>

combination  of foreign and  domestic  high-yield,  lower rated debt  securities
(commonly known as "junk bonds").

SERIES M ( SPECIALIZED ASSET ALLOCATION SERIES)

     Amounts  allocated  to the  Specialized  Asset  Allocation  Subaccount  are
invested in Series M. The investment objective of Series M is to seek high total
return  consisting of capital  appreciation  and current income.  Series M seeks
this  objective by  following an asset  allocation  strategy  that  contemplates
shifts among a wide range of investment categories and market sectors, including
equity and debt securities of domestic and foreign issues.

SERIES N (MANAGED ASSET ALLOCATION SERIES)

     Amounts  allocated to the Managed Asset Allocation  Subaccount are invested
in Series N. The  investment  objective  of Series N is to seek a high  level of
total  return by  investing  primarily  in a  diversified  portfolio of debt and
equity securities.

SERIES O (EQUITY INCOME SERIES)

     Amounts allocated to the Equity Income Subaccount are invested in Series O.
The investment  objective of Series O is to seek to provide substantial dividend
income and also capital  appreciation by investing  primarily in dividend-paying
common stocks of established companies.

SERIES S (SOCIAL AWARENESS SERIES)

     Amounts allocated to the Social Awareness Subaccount are invested in Series
S. The  investment  objective  of Series S is to seek  capital  appreciation  by
investing in various  types of  securities  which meet certain  social  criteria
established for the Series.  Series S will invest in a diversified  portfolio of
common stocks, convertible securities, preferred stocks and debt securities.
Series S may temporarily invest in government bonds or commercial paper.

THE INVESTMENT ADVISER

   
     Security Management Company, LLC (the "Investment  Adviser") located at 700
SW Harrison Street,  Topeka,  Kansas 66636 serves as investment  adviser to each
Series of the Mutual Fund. The Investment  Adviser is registered with the SEC as
an  investment  adviser.   The  Investment  Adviser  formulates  and  implements
continuing  programs for the purchase and sale of securities in compliance  with
the investment  objectives,  policies,  and restrictions of each Series,  and is
responsible  for the day to day  decisions  to buy and sell  securities  for the
Series except Series D, K, N and O. The Investment Adviser has engaged Lexington
Management Corporation, Park 80 West, Plaza Two, Saddle Brook, New Jersey 07663,
and MFR Advisors, Inc., One Liberty Plaza, 46th Floor, New York, New York 10006,
to provide certain  investment  advisory services to Series D and K of the Fund.
The Investment Adviser has engaged T. Rowe Price Associates,  Inc., 100 E. Pratt
St.,  Baltimore,  Maryland 21202 to provide certain investment advisory services
to  Series N and O. The  Investment  Adviser  has  engaged  Meridian  Investment
Management  Corporation,   12835  East  Arapahoe  Road,  Tower  II,  7th  Floor,
Engelwood,  Colorado 80112, to provide certain  analytic  research  services for
Series M.
    

                                  THE CONTRACT

GENERAL

     The Contract offered by this Prospectus is an individual  flexible purchase
payment  deferred  variable annuity that is issued by Security  Benefit.  To the
extent  that  all  or a  portion  of  purchase  payments  are  allocated  to the
Subaccounts,  the  Contract  is  significantly  different  from a fixed  annuity
contract  in that it is the  Owner  under a  Contract  who  assumes  the risk of
investment  gain or loss rather than  Security  Benefit.  Upon the maturity of a
Contract,  the Contract  provides several Annuity Options on a variable basis, a
fixed basis or both,  under which  Security  Benefit will pay  periodic  annuity
payments  beginning on the Annuity Start Date. The amount that will be available
for  annuity  payments  will  depend  on  the  investment   performance  of  the
Subaccounts  to which  purchase  payments have been  allocated and the amount of
interest  credited  on  Contract  Value  that has been  allocated  to the  Fixed
Account.

     The Contract is available  for purchase as a non-tax  qualified  retirement
plan ("Non-Qualified Plan") by an individual.  The Contract is also eligible for
use in  connection  with certain tax  qualified  retirement  plans that meet the
requirements of Section 401,  403(b),  408, or 457 of the Internal  Revenue Code
("Qualified  Plan").  Certain federal tax advantages are currently  available to
retirement plans that qualify as (1) self-employed individuals' retirement plans
under Section 401, such as HR-10 and Keogh plans, (2) pension or  profit-sharing
plans  established by an employer for the benefit of its employees under Section
401,  (3)  individual   retirement   accounts  or  annuities,   including  those
established by an employer as a simplified  employee pension plan, under Section
408, (4) annuity purchase plans of public school systems and certain  tax-exempt
organizations  under  Section  403(b)  or (5)  deferred  compensation  plans for
employees  established  by a  unit  of a  state  or  local  government  or  by a
tax-exempt  organization under Section 457. Joint Owners are permitted only on a
Contract issued pursuant to a Non-Qualified Plan.

APPLICATION FOR A CONTRACT

     Any person wishing to purchase a Contract may submit an application  and an
initial  purchase  payment  to  Security  Benefit,  as well as any other form or
information  that

- --------------------------------------------------------------------------------
                                       11
<PAGE>

Security  Benefit  may  require.  Security  Benefit reserves the right to reject
an application or purchase payment for any reason, subject to Security Benefit's
underwriting  standards and guidelines  and any applicable  state or federal law
relating to  nondiscrimination.  The maximum  age of an Owner or  Annuitant  for
which a Contract will be issued is 90. If there are Joint Owners or  Annuitants,
the maximum  issue age will be  determined  by  reference  to the older Owner or
Annuitant.

PURCHASE PAYMENTS

     The minimum  initial  purchase  payment  for the  purchase of a Contract is
$25,000  for  both   Non-Qualified   and  Qualified   Plans.   Thereafter,   the
Contractowner may choose the amount and frequency of purchase  payments,  except
that the minimum  subsequent  purchase payment is $1,000 for both  Non-Qualified
and Qualified  Plans.  The minimum  subsequent  purchase  payment pursuant to an
Automatic  Investment  Program is also $1,000.  Security  Benefit may reduce the
minimum purchase payment requirement under certain  circumstances.  Any purchase
payment  exceeding $1 million  will not be accepted  without  prior  approval of
Security Benefit.

     An initial  purchase  payment will be applied not later than the end of the
second  Valuation  Date after the  Valuation  Date it is  received  by  Security
Benefit at its Home Office if the purchase payment is preceded or accompanied by
an application that contains  sufficient  information  necessary to establish an
account and properly credit such purchase payment.  The application form will be
provided by Security  Benefit.  If Security  Benefit does not receive a complete
application, the applicant will be notified by Security Benefit that it does not
have the necessary information to issue a Contract. If the necessary information
is not  provided  to Security  Benefit  within  five  Valuation  Dates after the
Valuation  Date on which Security  Benefit first  receives the initial  purchase
payment  or if  Security  Benefit  determines  it  cannot  otherwise  issue  the
Contract,  Security  Benefit  will  return the initial  purchase  payment to the
applicant  unless the  applicant  consents to  Security  Benefit  retaining  the
purchase payment until the application is made complete.

     Subsequent  purchase  payments  will  be  credited  as of  the  end  of the
Valuation  Period in which they are  received  by  Security  Benefit at its Home
Office.  Purchase payments after the initial purchase payment may be made at any
time prior to the Annuity Start Date, so long as the Owner is living. Subsequent
purchase payments under a Qualified Plan may be limited by the terms of the plan
and provisions of the Internal Revenue Code. Subsequent purchase payments may be
paid  under an  Automatic  Investment  Program.  The  initial  purchase  payment
required must be paid before the Automatic  Investment  Program will be accepted
by Security Benefit.

ALLOCATION OF PURCHASE PAYMENTS

     In an application for a Contract, the Contractowner selects the Subaccounts
or the Fixed Account to which  purchase  payments  will be  allocated.  Purchase
payments  will  be  allocated  according  to  the  Contractowner's  instructions
contained  in the  application  or more recent  instructions  received,  if any,
except that no purchase  payment  allocation  is permitted  that would result in
less than 1 percent of each payment being allocated to any one Subaccount or the
Fixed Account.  The  allocations  must be whole  percentages  and must total 100
percent.  Available  allocation  alternatives include the eleven Subaccounts and
the Fixed Account.

     A Contractowner may change the purchase payment allocation  instructions by
submitting a proper written request to Security  Benefit's Home Office. A proper
change in  allocation  instructions  will be effective  upon receipt by Security
Benefit  at its Home  Office  and will  continue  in effect  until  subsequently
changed.  Changes in  purchase  payment  allocation  and  changes to an existing
Dollar Cost  Averaging  or Asset  Reallocation  Option may be made by  telephone
provided the Telephone  Transfer  Section of the application or an Authorization
for Telephone Requests form is properly completed, signed, and filed at Security
Benefit's  Home Office.  Changes in the allocation of future  purchase  payments
have no effect on existing Contract Value. Such Contract Value,  however, may be
transferred  among the Subaccounts of the Separate  Account or the Fixed Account
in the manner described in "Transfers of Contract Value" on page 13.

DOLLAR COST AVERAGING OPTION

     Security Benefit currently offers an option under which  Contractowners may
dollar cost average their  allocations in the Subaccounts  under the Contract by
authorizing Security Benefit to make periodic allocations of Contract Value from
any  one  Subaccount  to one or  more  of the  other  Subaccounts.  Dollar  cost
averaging is a systematic  method of investing in which securities are purchased
at regular  intervals in fixed dollar amounts so that the cost of the securities
gets averaged over time and possibly over various market cycles. The option will
result in the allocation of Contract Value to one or more Subaccounts, and these
amounts  will be  credited at the  Accumulation  Unit value as of the end of the
Valuation  Dates on  which  the  transfers  are  effected.  Since  the  value of
Accumulation  Units will vary, the amounts allocated to a Subaccount will result
in the crediting of a greater number of units when the  Accumulation  Unit value
is low and a lesser  number of units when the  Accumulation  Unit value is high.
Similarly,  the amounts  transferred from a Subaccount will result in a debiting
of a  greater  number of units  when the  Accumulation  Unit  value is low and a
lesser  number of units when the  Accumulation  Unit value is high.  Dollar cost

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                                       12
<PAGE>

averaging does not guarantee  profits,  nor does it assure that a  Contractowner
will not have losses.

     A Dollar Cost  Averaging  Request form is available  upon  request.  On the
form, the Contractowner  must designate whether a specific dollar amount,  fixed
period or earnings only are to be  transferred,  the  Subaccount or  Subaccounts
from and to which the  transfers  will be made,  the  desired  frequency  of the
transfers,  which may be on a monthly or quarterly basis, and the length of time
during which the transfers  shall continue or the total amount to be transferred
over time.

     After  Security  Benefit has  received a Dollar Cost  Averaging  Request in
proper form at its Home Office, Security Benefit will transfer Contract Value in
amounts designated by the Contractowner from the Subaccount from which transfers
are to be made to the  Subaccount or  Subaccounts  chosen by the  Contractowner.
Each  transfer  will  be  effected  on the  monthly  or  quarterly  anniversary,
whichever  corresponds to the period selected by the Contractowner,  of the date
of receipt at Security  Benefit's Home Office of a Dollar Cost Averaging Request
in proper form.  Transfers  will be made until the total amount elected has been
transferred,  or until Contract Value in the Subaccount from which transfers are
made has been  depleted.  No transfers  will be made pursuant to the Dollar Cost
Averaging Option on the last business day of any month, but instead will be made
as of the next following Valuation Date.

     A Contractowner  may instruct Security Benefit at any time to terminate the
option by written request to Security  Benefit's Home Office. In that event, the
Contract Value in the Subaccount  from which  transfers were being made that has
not been  transferred  will remain in that Subaccount  unless the  Contractowner
instructs  otherwise.  If a Contractowner  wishes to continue  transferring on a
dollar cost averaging basis after the expiration of the applicable  period,  the
total amount elected has been transferred,  or the Subaccount has been depleted,
or after the Dollar Cost Averaging  Option has been canceled,  a new Dollar Cost
Averaging Request must be completed and sent to Security  Benefit's Home Office.
Security Benefit may discontinue,  modify,  or suspend the Dollar Cost Averaging
Option at any time.

     Contract  Value  may also be  dollar  cost  averaged  to or from the  Fixed
Account,  subject to certain  restrictions  described under "The Fixed Account,"
page 19.

ASSET REALLOCATION OPTION

     Security  Benefit  currently  offers an option  under which  Contractowners
authorize  Security Benefit to automatically  transfer their Contract Value each
quarter to maintain a particular  percentage allocation among the Subaccounts as
selected by the  Contractowner.  The Contract Value allocated to each Subaccount
will grow or decline in value at different  rates during the quarter,  and Asset
Reallocation  automatically  reallocates  the Contract Value in the  Subaccounts
each quarter to the allocation selected by the Contractowner. Asset Reallocation
is  intended  to  transfer  Contract  Value  from  those  Subaccounts  that have
increased in value to those  Subaccounts that have declined in value. Over time,
this method of investing may help a  Contractowner  buy low and sell high.  This
investment  method  does  not  guarantee  profits,  nor  does it  assure  that a
Contractowner will not have losses.

     To elect this option an Asset  Reallocation  Request in proper form must be
received by Security Benefit at its Home Office. An Asset  Reallocation  Request
form is available upon request. On the form, the Contractowner must indicate the
applicable Subaccounts and the percentage of Contract Value to be allocated on a
quarterly basis to each Subaccount ("Asset Reallocation Program").

     Upon  receipt of the Asset  Reallocation  Request,  Security  Benefit  will
effect a transfer or, in the case of a new  Contract,  an initial  allocation of
Contract  Value  to  the  allocation  among  the  Subaccounts  selected  by  the
Contractowner.  Thereafter,  transfers to maintain that allocation will occur on
each  quarterly  anniversary  of the date of Security  Benefit's  receipt of the
Asset  Reallocation  Request in proper  form.  The amounts  transferred  will be
credited at the Accumulation  Unit value as of the end of the Valuation Dates on
which the transfers are effected.

     A Contractowner may instruct Security Benefit at any time to terminate this
option  by  written  request  to  Security  Benefit's  Home  Office.  The  Asset
Reallocation  Option will terminate  automatically  if a transfer is made to, or
from, any Subaccount  included in the allocation  selected by the Contractowner.
In that  event,  the  Contract  Value  in the  Subaccounts  that  has  not  been
transferred  will  remain  in those  Subaccounts  regardless  of the  percentage
allocation  unless the  Contractowner  instructs  otherwise.  If a Contractowner
wishes to continue Asset  Reallocation  after it has been canceled,  a new Asset
Reallocation  Request form must be completed and sent to Security Benefit's Home
Office.  Security Benefit may discontinue,  modify, or suspend, and reserves the
right to charge a fee for the Asset Reallocation Option at any time.

     Contract Value  allocated to the Fixed Account may be included in the Asset
Reallocation  Program,  subject to certain restrictions  described in "Transfers
and Withdrawals from the Fixed Account," page 20.

TRANSFERS OF CONTRACT VALUE

     During the Accumulation Period, Contract Value may be transferred among the
Subaccounts  by the  Contractowner  upon  proper  written  request  to  Security
Benefit's Home Office.  Transfers  (other than transfers  pursuant to the Dollar
Cost Averaging and Asset  Reallocation  Options) may be made by telephone if the
Telephone  Transfer section of the application or an Authorization for Telephone
Requests  form  has been  properly  completed,  signed  and  filed  at  Security
Benefit's  Home Office.  The minimum  transfer  amount is $1,000,  or the amount
remaining in a given  Subaccount.

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                                       13
<PAGE>

The  minimum  transfer  amount  does  not  apply  to transfers  under the Dollar
Cost  Averaging  or  Asset  Reallocation  Options.

     Contract  Value may also be transferred  from the  Subaccounts to the Fixed
Account;  however,  transfers  from the Fixed  Account  to the  Subaccounts  are
restricted as described in "The Fixed Account" on page 19.

     The  frequency of transfers  generally  is not limited,  although  Security
Benefit  reserves the right at a future date to limit the number of transfers to
14 in a Contract  Year.  Security  Benefit also  reserves the right to limit the
size and frequency of such transfers, and to discontinue telephone transfers.

CONTRACT VALUE

     The Contract  Value is the sum of the amounts  under the  Contract  held in
each Subaccount of the Separate  Account and Fixed Account as well as any amount
set aside in the loan account to secure loans as of any Valuation Date.

     On each Valuation  Date, the portion of the Contract Value allocated to any
particular  Subaccount will be adjusted to reflect the investment  experience of
that Subaccount. See "Determination of Contract Value," below. No minimum amount
of Contract Value is guaranteed.  A  Contractowner  bears the entire  investment
risk relating to the investment  performance of Contract Value  allocated to the
Subaccounts.

DETERMINATION OF CONTRACT VALUE

     The Contract Value will vary to a degree that depends upon several factors,
including investment  performance of the Subaccounts to which Contract Value has
been  allocated,  payment of purchase  payments,  the amount of any  outstanding
Contract Debt, partial withdrawals,  and the charges assessed in connection with
the  Contract.  The amounts  allocated  to the  Subaccounts  will be invested in
shares  of  the  corresponding   Series  of  the  Mutual  Fund.  The  investment
performance of the  Subaccounts  will reflect  increases or decreases in the net
asset  value  per  share  of the  corresponding  Series  and  any  dividends  or
distributions  declared by a Series.  Any  dividends or  distributions  from any
Series of the Mutual Fund will be automatically reinvested in shares of the same
Series,  unless  Security  Benefit,  on behalf of the Separate  Account,  elects
otherwise.

     Assets in the Subaccounts are divided into  Accumulation  Units,  which are
accounting  units of measure  used to calculate  the value of a  Contractowner's
interest in a Subaccount.  When a Contractowner allocates purchase payments to a
Subaccount,  the Contract is credited  with  Accumulation  Units.  The number of
Accumulation  Units to be credited is  determined  by dividing the dollar amount
allocated to the particular  Subaccount by the  Accumulation  Unit value for the
particular  Subaccount at the end of the Valuation  Period in which the purchase
payment is credited.  In addition,  other transactions  including loans, full or
partial  withdrawals,  transfers,  and assessment of certain charges against the
Contract  affect the number of  Accumulation  Units credited to a Contract.  The
number of units credited or debited in connection  with any such  transaction is
determined by dividing the dollar amount of such  transaction  by the unit value
of the affected  Subaccount.  The Accumulation  Unit value of each Subaccount is
determined on each Valuation Date. The number of Accumulation  Units credited to
a  Contract  shall not be changed  by any  subsequent  change in the value of an
Accumulation  Unit, but the dollar value of an  Accumulation  Unit may vary from
Valuation Date to Valuation Date depending upon the investment experience of the
Subaccount and charges against the Subaccount.

     The Accumulation  Unit value of each  Subaccount's  unit initially was $10.
The unit value of a Subaccount on any  Valuation  Date is calculated by dividing
the value of each  Subaccount's  net assets by the number of Accumulation  Units
credited to the Subaccount on that date.  Determination  of the value of the net
assets of a Subaccount  takes into  account the  following:  (1) the  investment
performance of the Subaccount, which is based upon the investment performance of
the corresponding  Series of the Mutual Fund, (2) any dividends or distributions
paid by the corresponding  Series, (3) the charges, if any, that may be assessed
by Security  Benefit for taxes  attributable to the operation of the Subaccount,
(4) the  mortality  and expense  risk  charge  under the  Contract,  and (5) the
administrative charge under the Contract.

FULL AND PARTIAL WITHDRAWALS

     A Contractowner  may obtain  proceeds from a Contract by  surrendering  the
Contract for its Withdrawal Value or by making a partial  withdrawal.  A full or
partial  withdrawal,  including a systematic  withdrawal,  may be taken from the
Contract  Value at any time while the Owner is living  and  before  the  Annuity
Start Date,  subject to  restrictions  on partial  withdrawals of Contract Value
from the Fixed Account and  limitations  under the applicable plan for Qualified
Plans and applicable law. A full or partial withdrawal request will be effective
as of the end of the Valuation  Period that a proper written request is received
by Security  Benefit at its Home Office.  A proper written  request must include
the written  consent of any effective  assignee or irrevocable  Beneficiary,  if
applicable.

     The  proceeds  received  upon  a full  withdrawal  will  be the  Contract's
Withdrawal  Value. The Withdrawal Value is equal to the Contract Value as of the
end of the Valuation Period during which a proper withdrawal request is received
by Security Benefit at its Home Office, minus any outstanding Contract Debt, and
any  uncollected  premium  taxes.  A partial  withdrawal  may be requested for a
specified percentage or dollar amount of Contract Value. Each partial withdrawal
must be for at least $1,000 except  systematic  withdrawals  discussed  below. A
request for a partial withdrawal will result in a payment by Security Benefit in

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                                       14
<PAGE>

accordance with the amount  specified in the partial  withdrawal  request.  Upon
payment,  the  Contract  Value will be reduced by an amount equal to the payment
and any applicable  premium tax. If a partial withdrawal is requested that would
leave the  Withdrawal  Value in the  Contract  less than $5,000,  then  Security
Benefit  reserves the right to treat the partial  withdrawal  as a request for a
full withdrawal.

     The amount of a partial  withdrawal  will be  allocated  from the  Contract
Value in the Subaccounts and the Fixed Account, according to the Contractowner's
instructions  to  Security  Benefit,  subject  to the  restrictions  on  partial
withdrawals  from the Fixed  Account.  See "The Fixed  Account" on page 19. If a
Contractowner does not specify the allocation,  the withdrawal will be allocated
from  the  Contract  Value  in the  Subaccounts  and the  Fixed  Account  in the
following order: Money Market Subaccount,  High Grade Income Subaccount,  Global
Aggressive Bond Subaccount,  Growth-Income Subaccount, Equity Income Subaccount,
Managed Asset Allocation  Subaccount,  Specialized Asset Allocation  Subaccount,
Growth Subaccount, Worldwide Equity Subaccount, Social Awareness Subaccount, and
Emerging  Growth  Subaccount and then from the Fixed Account.  The value of each
account will be depleted before the next account is charged.

     A full or partial  withdrawal,  including a systematic  withdrawal,  may be
subject to a premium  tax charge to  reimburse  Security  Benefit for any tax on
premiums on a Contract that may be imposed by various states and municipalities.
See "Premium Tax Charge," on page 17.

     A full or partial withdrawal, including a systematic withdrawal, may result
in  receipt  of  taxable  income to the Owner  and,  if made  prior to the Owner
attaining age 59 1/2, may be subject to a 10 percent penalty tax. In the case of
Contracts  issued in connection with retirement plans that meet the requirements
of Section 401(a),  403(b),  408 or 457 of the Internal Revenue Code,  reference
should be made to the terms of the particular Qualified Plan for any limitations
or restrictions on  withdrawals.  For more  information,  see  "Restrictions  on
Withdrawals  from  Qualified  Plans"  on  page  23.  The tax  consequences  of a
withdrawal under the Contract should be carefully  considered.  See "Federal Tax
Matters" on page 23.

SYSTEMATIC WITHDRAWALS

     Security  Benefit   currently  offers  a  feature  under  which  systematic
withdrawals may be elected.  Under this feature,  a  Contractowner  may elect to
receive  systematic  withdrawals  before  the  Annuity  Start  Date by sending a
properly completed Systematic Withdrawal Request form to Security Benefit at its
Home  Office.  This  option  may be  elected at any time.  A  Contractowner  may
designate the  systematic  withdrawal  amount as a percentage of Contract  Value
allocated to the  Subaccounts  and/or Fixed  Account,  as a fixed  period,  as a
specified dollar amount,  as all earnings in the Contract,  or as based upon the
life expectancy of the Owner or the Owner and a Beneficiary. A Contractowner may
also designate the desired frequency of the systematic withdrawals, which may be
monthly,  quarterly,  semiannually  or annually.  Systematic  withdrawals may be
stopped or modified upon proper written request by the Contractowner received by
Security Benefit at its Home Office at least 30 days in advance of the requested
date of termination or  modification.  A proper request must include the written
consent of any effective assignee or irrevocable Beneficiary, if applicable.

     Each  systematic  withdrawal  must be at  least  $100.  Upon  payment,  the
Contractowner's Contract Value will be reduced by an amount equal to the payment
proceeds plus any applicable premium tax. Any systematic  withdrawal that equals
or exceeds  the  Withdrawal  Value will be treated as a full  withdrawal.  In no
event will payment of a systematic  withdrawal  exceed the Withdrawal Value. The
Contract  will  automatically  terminate if a systematic  withdrawal  causes the
Contract's Withdrawal Value to equal zero.

     Each systematic  withdrawal will be effected as of the end of the Valuation
Period during which the  withdrawal is  scheduled.  The deduction  caused by the
systematic withdrawal will be allocated from the Contractowner's  Contract Value
in the Subaccounts and the Fixed Account, as directed by the Contractowner. If a
Contractowner does not specify the allocation, the systematic withdrawal will be
allocated  from the Contract Value in the  Subaccounts  and the Fixed Account in
the following  order:  Money Market  Subaccount,  High Grade Income  Subaccount,
Global  Aggressive  Bond  Subaccount,  Growth-Income  Subaccount,  Equity Income
Subaccount,  Managed Asset Allocation  Subaccount,  Specialized Asset Allocation
Subaccount,  Growth Subaccount,  Worldwide Equity  Subaccount,  Social Awareness
Subaccount,  and Emerging Growth Subaccount and then from the Fixed Account. The
value of each account will be depleted before the next account is charged.

     Security Benefit may, at any time, discontinue, modify, suspend or charge a
fee for  systematic  withdrawals.  Systematic  withdrawals  from Contract  Value
allocated to the Fixed  Account  must provide for payments  over a period of not
less than 36 months as described  under "The Fixed  Account" on page 19. The tax
consequences  of a systematic  withdrawal,  including the 10 percent penalty tax
which may be imposed on  withdrawals  made prior to the Owner  attaining  age 59
1/2, should be carefully considered. See "Federal Tax Matters" on page 23.

FREE-LOOK RIGHT

     An Owner may  return a  Contract  within  the  Free-Look  Period,  which is
generally a ten-day period  beginning when the Owner receives the Contract.  The
returned  Contract will then be deemed void and Security Benefit will refund any
purchase payments  allocated to the Fixed Account plus the Contract Value in the
Subaccounts  as of the end of the  Valuation  Period  during  which the returned
Contract is received by Security Benefit.  Security Benefit will refund

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                                       15
<PAGE>

purchase  payments  allocated to the  Subaccounts  rather than Contract Value in
those states that require it to do so.

DEATH BENEFIT

     If the Owner dies during the Accumulation Period, Security Benefit will pay
the death benefit  proceeds to the  Designated  Beneficiary  upon receipt of due
proof of the Owner's death and instructions  regarding payment to the Designated
Beneficiary.  If there are Joint  Owners,  the death  benefit  proceeds  will be
payable  upon  receipt  of due  proof  of  death  of  either  Owner  during  the
Accumulation Period and instructions  regarding payment. If the surviving spouse
of the deceased Owner is the sole Designated Beneficiary,  such spouse may elect
to  continue  the  Contract  in  force,  subject  to  certain  limitations.  See
"Distribution  Requirements"  below. If the Owner is not a natural  person,  the
death benefit proceeds will be payable upon receipt of due proof of death of the
Annuitant during the Accumulation  Period and  instructions  regarding  payment.
Additionally,  if the Owner is not a  natural  person,  the  amount of the death
benefit  will be  based  on the age of the  oldest  annuitant  on the  date  the
Contract  was issued.  If the death of the Owner  occurs on or after the Annuity
Start Date, no death benefit proceeds will be payable under the Contract, except
that any guaranteed  payments  remaining  unpaid will continue to be paid to the
Annuitant pursuant to the Annuity Option in force at the date of death.

     The  death  benefit  proceeds  will be the  death  benefit  reduced  by any
outstanding  Contract Debt and any  uncollected  premium taxes. If an Owner dies
during  the  Accumulation  Period and the age of each Owner was 75 or younger on
the date the  Contract was issued,  the amount of the death  benefit will be the
greatest of (1) the sum of all Purchase Payments,  less any reductions caused by
previous  withdrawals,  (2) the Contract Value on the date due proof of death is
received  by  Security  Benefit,  or  (3)  the  stepped-up  death  benefit.  The
stepped-up  death  benefit is: (a) the  largest  death  benefit on any  Contract
anniversary  that is both an  exact  multiple  of five and  occurs  prior to the
oldest  Owner  attaining  76,  plus (b) any  Purchase  Payments  made  since the
applicable fifth year  anniversary,  less (c) any reductions  caused by previous
withdrawals since the applicable fifth year anniversary.

     If an Owner dies  during the  Accumulation  Period and the age of any Owner
was 76 or greater on the date the Contract was issued,  or if due proof of death
(regardless  of the age of any Owner on the date the  Contract  was  issued) and
instructions  regarding payment are not received by Security Benefit at its Home
Office  within six months of the date of the Owner's  death,  the death  benefit
will be the  Contract  Value  on the date due  proof  of  death is  received  by
Security Benefit at its Home Office.

     Notwithstanding  the foregoing,  the death benefit for Contracts  issued in
Florida,  regardless  of the age at issue,  is the  greater of (1) the  Contract
Value as of the end of the  Valuation  Period  in which  due  proof of death and
instructions  regarding  payment are  received  by Security  Benefit at its Home
Office,  or (2) the aggregate  purchase  payments  received less any  reductions
caused by previous withdrawals.  However, if due proof of death and instructions
regarding payment are not received by Security Benefit at its Home Office within
six  months of the date of the  Owner's  death,  the death  benefit  will be the
Contract Value on the date due proof of death and instructions regarding payment
are received by Security Benefit at its Home Office.

     The death benefit proceeds will be paid to the Designated  Beneficiary in a
single sum or under one of the Annuity  Options,  as directed by the Owner or as
elected by the  Designated  Beneficiary.  If the  Designated  Beneficiary  is to
receive  annuity  payments  under an Annuity  Option,  there may be limits under
applicable law on the amount and duration of payments that the  Beneficiary  may
receive, and requirements respecting timing of payments. A tax adviser should be
consulted in considering  Annuity Options.  See "Federal Tax Matters" on page 23
for a discussion of the tax consequences in the event of death.

DISTRIBUTION REQUIREMENTS

     For  Contracts  issued  in  connection  with  Non-Qualified  Plans,  if the
surviving spouse of the deceased Owner is the sole Designated Beneficiary,  such
spouse may elect to continue  this  Contract in force until the  earliest of the
spouse's death or the Annuity Start Date or receive the death benefit proceeds.

     For any Designated  Beneficiary other than a surviving  spouse,  only those
options may be chosen that  provide for  complete  distribution  of such Owner's
interest in the  Contract  within  five years of the death of the Owner.  If the
Designated  Beneficiary is a natural person, that person alternatively can elect
to begin receiving  annuity payments within one year of the Owner's death over a
period not extending beyond his or her life or life expectancy.  If the Owner of
the Contract is not a natural person,  these  distribution  rules are applicable
upon the death of or a change in the primary Annuitant.

     For Contracts  issued in connection with Qualified  Plans, the terms of the
particular  Qualified Plan and the Internal Revenue Code should be reviewed with
respect to limitations or restrictions on  distributions  following the death of
the Owner or  Annuitant.  Because the rules  applicable  to Qualified  Plans are
extremely complex, a competent tax adviser should be consulted.

DEATH OF THE ANNUITANT

     If the Annuitant  dies prior to the Annuity Start Date,  and the Owner is a
natural  person and is not the  Annuitant,  no death  benefit  proceeds  will be
payable under the Contract. The Owner may name a new Annuitant within 30 days of
the Annuitant's  death. If a new Annuitant is not named,  Security  Benefit will
designate  the  Owner as  Annuitant.  On

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                                       16
<PAGE>

the death of the Annuitant after the Annuity Start Date, any guaranteed payments
remaining unpaid will continue to be paid to the Designated Beneficiary pursuant
to the Annuity Option in force at the date of death.

                             CHARGES AND DEDUCTIONS

MORTALITY AND EXPENSE RISK CHARGE

     Security  Benefit deducts a daily charge from the assets of each Subaccount
for mortality and expense risks assumed by Security Benefit under the Contracts.
The  charge  is equal to an annual  rate of 1.25  percent  of each  Subaccount's
average daily net assets. This amount is intended to compensate Security Benefit
for certain mortality and expense risks Security Benefit assumes in offering and
administering the Contracts and in operating the Subaccounts.

     The expense risk is the risk that  Security  Benefit's  actual  expenses in
issuing and  administering  the Contracts and operating the Subaccounts  will be
more than the charges  assessed for such  expenses.  The mortality risk borne by
Security Benefit is the risk that Annuitants,  as a group, will live longer than
Security  Benefit's  actuarial tables predict.  In this event,  Security Benefit
guarantees  that annuity  payments will not be affected by a change in mortality
experience  that results in the payment of greater  annuity  income than assumed
under the Annuity  Options in the  Contract.  Security  Benefit  also  assumes a
mortality risk in connection with the death benefit under the Contract.

     Security  Benefit may  ultimately  realize a profit from this charge to the
extent it is not needed to cover  mortality  and  administrative  expenses,  but
Security  Benefit may realize a loss to the extent the charge is not sufficient.
Security  Benefit  may use any profit  derived  from this  charge for any lawful
purpose, including distribution expenses.

ADMINISTRATIVE CHARGE

     Security Benefit deducts a daily  administrative  charge equal to an annual
rate of .15 percent of each Subaccount's  average daily net assets.  The purpose
of this charge is to reimburse Security Benefit for the expenses associated with
administration  of the  Contracts  and  operation of the  Subaccounts.  Security
Benefit does not expect to profit from this charge.

PREMIUM TAX CHARGE

     Various  states  and  municipalities  impose a tax on  premiums  on annuity
contracts  received  by  insurance  companies.  Whether or not a premium  tax is
imposed will depend upon,  among other  things,  the Owner's state of residence,
the  Annuitant's  state of  residence,  and the  insurance tax laws and Security
Benefit's status in a particular state.  Security Benefit assesses a premium tax
charge to reimburse itself for premium taxes that it incurs in connection with a
Contract.  This charge is currently  deducted upon annuitization or upon full or
partial withdrawal if a premium tax was incurred and is not refundable. Security
Benefit  reserves  the  right  to  deduct  premium  taxes  when  due or any time
thereafter. Premium tax rates currently range from 0 percent to 3.5 percent, but
are subject to change by a governmental entity.

OTHER CHARGES

     Security Benefit may charge the Separate Account or the Subaccounts for the
federal,   state,  or  local  taxes  incurred  by  Security   Benefit  that  are
attributable to the Separate Account or the Subaccounts, or to the operations of
Security  Benefit with respect to the  Contracts,  or that are  attributable  to
payment of premiums or acquisition costs under the Contracts.  No such charge is
currently  assessed.  See "Tax  Status  of  Security  Benefit  and the  Separate
Account" and "Charge for Security Benefit Taxes."

VARIATIONS IN CHARGES

     Security  Benefit  may  reduce  or waive the  amount of the  administrative
charge  for a  Contract  where  the  expenses  associated  with  the sale of the
Contract  or the  administrative  and  maintenance  costs  associated  with  the
Contract  are  reduced for  reasons  such as the amount of the initial  purchase
payment or the amounts of projected purchase payments.

GUARANTEE OF CERTAIN CHARGES

     Security Benefit guarantees that the charge for mortality and expense risks
will not  exceed an annual  rate of 1.25  percent of each  Subaccount's  average
daily net assets and the  administrative  charge shall not exceed an annual rate
of .15 percent of each Subaccount's average daily net assets.

MUTUAL FUND EXPENSES

     Each Subaccount of the Separate  Account  purchases shares at the net asset
value of the  corresponding  Series of the Mutual  Fund.  Each Series' net asset
value reflects the investment  advisory fee and other expenses that are deducted
from the assets of the Series. These fees and expenses are not deducted from the
Subaccounts,  but are paid from the  assets of the  corresponding  Series.  As a
result, the Owner indirectly bears a pro rata portion of such fees and expenses.
The advisory fees and other expenses,  if any, which are more fully described in
the Mutual Fund's prospectus,  are not specified or fixed under the terms of the
Contract.

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                                       17
<PAGE>
                                 ANNUITY PERIOD

GENERAL

     The   Contractowner   selects  the  Annuity  Start  Date  at  the  time  of
application.  The  Annuity  Start  Date  may not be prior  to the  first  annual
Contract  anniversary  and may  not be  deferred  beyond  the  Annuitant's  95th
birthday,  although the terms of a Qualified Plan and the laws of certain states
may  require  annuitization  at an earlier  age. If the  Contractowner  does not
select an Annuity  Start Date,  the Annuity  Start Date will be the later of the
Annuitant's  70th  birthday  or  the  tenth  annual  Contract  Anniversary.  See
"Selection  of an  Option,"  on page 19.  If there  are  Joint  Annuitants,  the
birthdate of the older  Annuitant  will be used to determine the latest  Annuity
Start Date.

     On the Annuity Start Date,  the proceeds under the Contract will be applied
to provide an annuity under one of the options  described below.  Each option is
available  in two  forms  --  either  as a  variable  annuity  for use  with the
Subaccounts or as a fixed annuity for use with the Fixed Account.  A combination
variable and fixed annuity is also  available.  Variable  annuity  payments will
fluctuate with the investment  performance of the applicable  Subaccounts  while
fixed annuity  payments will not. Unless the Owner directs  otherwise,  proceeds
derived from  Contract  Value  allocated to the  Subaccounts  will be applied to
purchase a variable  annuity and proceeds  derived from Contract Value allocated
to the Fixed Account will be applied to purchase a fixed  annuity.  The proceeds
under the Contract will be equal to the  Contractowner's  Contract  Value in the
Subaccounts  and the Fixed Account as of the Annuity Start Date,  reduced by any
applicable premium taxes, and any outstanding Contract Debt.

     The Contracts provide for six Annuity Options. Other Annuity Options may be
available upon request at the discretion of Security  Benefit.  Annuity payments
under  Annuity  Options 1 through 4 are based upon annuity  rates that vary with
the  Annuity  Option  selected.  In the case of Options 1 through 4, the annuity
rates will vary based on the age and sex of the  Annuitant,  except  that unisex
rates are available  where  required by law. The annuity rates are based upon an
assumed  interest  rate of 3.5  percent,  compounded  annually.  In the  case of
Options 5 and 6 as described  below,  annuity rates based on age and sex are not
used to calculate  annuity  payments.  If no Annuity  Option has been  selected,
annuity  payments will be made to the Annuitant under an automatic  option which
shall be an annuity  payable  during the lifetime of the Annuitant with payments
guaranteed to be made for 120 months under Option 2.

     Annuity payments can be made on a monthly, quarterly, semiannual, or annual
basis, although no payments will be made for less than $100. If the frequency of
payments  selected would result in payments of less than $100,  Security Benefit
reserves the right to change the frequency.

     An Owner may designate or change an Annuity Start Date, Annuity Option, and
Annuitant, provided proper written notice is received by Security Benefit at its
Home  Office at least 30 days prior to the  Annuity  Start Date set forth in the
Contract.  The date  selected as the new Annuity  Start Date must be at least 30
days after the date written notice  requesting a change of Annuity Start Date is
received at Security Benefit's Home Office.

     Once annuity  payments have commenced,  an Annuitant or Owner cannot change
the  Annuity  Option and  cannot  surrender  his or her  annuity  and  receive a
lump-sum  settlement in lieu thereof.  The Contract specifies annuity tables for
Annuity Options 1 through 4 described below which contain the guaranteed minimum
dollar amount of periodic annuity payments for each $1,000 applied to an Annuity
Option for a fixed annuity.

ANNUITY OPTIONS

OPTION 1 -- LIFE INCOME

     Periodic  annuity  payments  will  be  made  during  the  lifetime  of  the
Annuitant.  It is possible  under this Option for any  Annuitant to receive only
one annuity payment if the  Annuitant's  death occurred prior to the due date of
the second  annuity  payment,  two if death  occurred prior to the third annuity
payment due date, etc. THERE IS NO MINIMUM NUMBER OF PAYMENTS  GUARANTEED  UNDER
THIS OPTION.  PAYMENTS CEASE UPON THE DEATH OF THE ANNUITANT,  REGARDLESS OF THE
NUMBER OF PAYMENTS RECEIVED.

Option 2 -- LIFE INCOME WITH GUARANTEED PAYMENTS OF 5, 10, 15 OR 20 YEARS

     Periodic annuity payments will be made during the lifetime of the Annuitant
with the promise that if, at the death of the Annuitant, payments have been made
for less than a stated period,  which may be five, ten, fifteen or twenty years,
as elected,  annuity  payments  will be continued  during the  remainder of such
period to the Designated Beneficiary.

OPTION 3 -- LIFE WITH INSTALLMENT REFUND OPTION

     Periodic annuity payments will be made during the lifetime of the Annuitant
with the promise that, if at the death of the Annuitant,  the number of payments
that has been made is less than the number  determined  by  dividing  the amount
applied under this Option by the amount of the first payment,  annuity  payments
will be continued to the  Designated  Beneficiary  until that number of payments
has been made.

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                                       18
<PAGE>

OPTION 4 -- JOINT AND LAST SURVIVOR

     Periodic  annuity  payments  will be made  during  the  lifetime  of either
Annuitant.  It is possible under this Option for only one annuity  payment to be
made if both  Annuitants  died prior to the second annuity payment due date, two
if both died prior to the third annuity payment due date, etc. AS IN THE CASE OF
OPTION 1, THERE IS NO MINIMUM NUMBER OF PAYMENTS  GUARANTEED  UNDER THIS OPTION.
PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVING ANNUITANT, REGARDLESS OF THE
NUMBER OF PAYMENTS RECEIVED.

OPTION 5 -- PAYMENTS FOR SPECIFIED PERIOD

     Periodic  annuity  payments will be made for a fixed  period,  which may be
from five to twenty years, as elected, with the guarantee that, if, at the death
of all  Annuitants,  payments  have been made for less than the  selected  fixed
period,   the  remaining   unpaid  payments  will  be  paid  to  the  Designated
Beneficiary.

OPTION 6 -- PAYMENTS OF A SPECIFIED AMOUNT

     Periodic  payments  of the  amount  elected  will be made  until the amount
applied and interest thereon are exhausted,  with the guarantee that, if, at the
death of all  Annuitants,  all  guaranteed  payments have not yet been made, the
remaining unpaid payments will be paid to the Designated Beneficiary.

SELECTION OF AN OPTION

     Contractowners  should  carefully  review the  Annuity  Options  with their
financial  or tax  advisers,  and,  for  Contracts  used  in  connection  with a
Qualified Plan, reference should be made to the terms of the particular plan and
the  requirements  of  the  Internal  Revenue  Code  for  pertinent  limitations
respecting  annuity  payments and other matters.  For instance,  Qualified Plans
generally  require  that  annuity  payments  begin no later  than April 1 of the
calendar year  following the year in which the Annuitant  reaches age 70 1/2. In
addition,  under  Qualified  Plans,  the period  elected  for receipt of annuity
payments  under Annuity  Options  generally may be no longer than the joint life
expectancy  of the  Annuitant  and  Beneficiary  in the year that the  Annuitant
reaches age 70 1/2, and must be shorter than such joint life  expectancy  if the
Beneficiary  is not the  Annuitant's  spouse and is more than ten years  younger
than the Annuitant. For Non-Qualified Plans, SBL does not allow annuity payments
to be deferred beyond the Annuitant's 90th birthday.

                                THE FIXED ACCOUNT

     Contractowners may allocate all or a portion of their purchase payments and
transfer  Contract  Value to the Fixed Account.  Amounts  allocated to the Fixed
Account  become part of  Security  Benefit's  General  Account,  which  supports
Security  Benefit's  insurance and annuity  obligations.  The General Account is
subject to regulation and  supervision by the Kansas  Department of Insurance as
well as the insurance laws and regulations of other  jurisdictions  in which the
Contract  is  distributed.  In reliance on certain  exemptive  and  exclusionary
provisions,  interests  in  the  Fixed  Account  have  not  been  registered  as
securities  under  the  Securities  Act of 1933 (the  "1933  Act") and the Fixed
Account has not been  registered as an investment  company under the  Investment
Company Act of 1940 (the "1940 Act"). Accordingly, neither the Fixed Account nor
any interests therein are generally subject to the provisions of the 1933 Act or
the 1940 Act.  Security  Benefit has been  advised that the staff of the SEC has
not reviewed the  disclosure in this  Prospectus  relating to the Fixed Account.
This  disclosure,  however,  may be  subject  to  certain  generally  applicable
provisions  of  the  federal  securities  laws  relating  to  the  accuracy  and
completeness of statements made in the Prospectus.  This Prospectus is generally
intended  to serve as a  disclosure  document  only for  aspects  of a  Contract
involving the Separate Account and contains only selected information  regarding
the Fixed Account.  For more information  regarding the Fixed Account,  see "The
Contract" on page 11.

     Amounts  allocated to the Fixed Account become part of the General  Account
of Security  Benefit,  which  consists of all assets  owned by Security  Benefit
other than those in the Separate Account and other separate accounts of Security
Benefit.  Subject to applicable law,  Security  Benefit has sole discretion over
the investment of the assets of its General Account.

INTEREST

     Amounts  allocated to the Fixed  Account  earn  interest at a fixed rate or
rates that are paid by Security Benefit. The Contract Value in the Fixed Account
earns  interest at an interest  rate that is guaranteed to be at least an annual
effective rate of 3.0 percent which will accrue daily ("Guaranteed  Rate"). Such
interest  will be paid  regardless  of the actual  investment  experience of the
Fixed Account. In addition,  Security Benefit may in its discretion pay interest
at a rate ("Current  Rate") that exceeds the Guaranteed  Rate.  Security Benefit
will determine the Current Rate, if any, from time to time.

     Contract  Value  allocated or  transferred  to the Fixed  Account will earn
interest at the  Current  Rate,  if any,  in effect on the date such  portion of
Contract Value is allocated or  transferred  to the Fixed  Account.  The Current
Rate paid on any such portion of Contract Value  allocated or transferred to the
Fixed Account will be guaranteed for rolling  periods of one or more years (each
a "Guarantee Period").  Security Benefit currently offers only Guarantee Periods
of one year. Upon expiration of any Guarantee  Period, a new Guarantee Period of
the same  duration  begins with respect to that portion of Contract  Value which
will

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                                       19
<PAGE>

earn  interest  at the  Current  Rate,  if any,  in effect on the day of the new
Guarantee Period.

     Contract  Value  allocated or transferred to the Fixed Account at one point
in time may be credited with a different  Current Rate than amounts allocated or
transferred to the Fixed Account at another point in time. For example,  amounts
allocated to the Fixed Account in June may be credited with a different  current
rate than  amounts  allocated  to the Fixed  Account in July.  In  addition,  if
Guarantee Periods of different  durations are offered,  Contract Value allocated
or transferred  to the Fixed Account for a Guarantee  Period of one duration may
be credited with a different  Current Rate than amounts allocated or transferred
to the Fixed Account for a Guarantee Period of a different duration.  Therefore,
at any time,  various portions of a Contractowner's  Contract Value in the Fixed
Account may be earning  interest at different  Current Rates  depending upon the
point in time such portions were  allocated or  transferred to the Fixed Account
and the duration of the Guarantee Period.  Security Benefit bears the investment
risk for the  Contract  Value  allocated  to the Fixed  Account  and for  paying
interest at the Guaranteed Rate on amounts allocated to the Fixed Account.

     For purposes of  determining  the interest rates to be credited on Contract
Value in the Fixed  Account,  withdrawals,  loans,  or transfers  from the Fixed
Account  will be deemed to be taken  first from any  portion of  Contract  Value
allocated to the Fixed Account for which the Guarantee Period expires during the
calendar month in which the withdrawal,  loan, or transfer is effected,  then in
the order  beginning  with that  portion of such  Contract  Value  which has the
longest  amount of time  remaining  before the end of its  Guarantee  Period and
ending with that portion which has the least amount of time remaining before the
end  of  its  Guarantee  Period.   For  more  information  about  transfers  and
withdrawals  from the Fixed Account,  see "Transfers  and  Withdrawals  From the
Fixed Account" below.

DEATH BENEFIT

     The death benefit under the Contract will be determined in the same fashion
for a Contract  that has Contract  Value in the Fixed  Account as for a Contract
that has Contract Value allocated to the  Subaccounts.  See "Death  Benefit," on
page 16.

CONTRACT CHARGES

     Premium  taxes will be the same for  Contractowners  who allocate  purchase
payments  or  transfer  Contract  Value to the  Fixed  Account  as for those who
allocate  purchase  payments to the  Subaccounts.  The charges for mortality and
expense  risks and the  administrative  charge will not be assessed  against the
Fixed  Account,  and any amounts  that  Security  Benefit  pays for income taxes
allocable to the Subaccounts  will not be charged against the Fixed Account.  In
addition, the investment advisory fees and operating expenses paid by the Mutual
Fund will not be paid directly or indirectly by Contractowners to the extent the
Contract Value is allocated to the Fixed Account;  however,  such Contractowners
will not participate in the investment experience of the Subaccounts.

TRANSFERS AND WITHDRAWALS FROM THE FIXED ACCOUNT

     Amounts may be  transferred  from the  Subaccounts to the Fixed Account and
from the Fixed Account to the Subaccounts, subject to the following limitations.
Transfers from the Fixed Account are allowed only (1) from Contract  Value,  the
Guarantee  Period  of which  expires  during  the  calendar  month in which  the
transfer is effected, (2) pursuant to the Dollar Cost Averaging Option, provided
that such  transfers are scheduled to be made over a period of not less than one
year, and (3) pursuant to the Asset  Reallocation  Option,  provided that,  upon
receipt of the Asset Reallocation Request, Contract Value is allocated among the
Fixed  Account  and  the  Subaccounts  in  the   percentages   selected  by  the
Contractowner  without  violating the  restrictions  on transfers from the Fixed
Account  set forth in (1) above.  Accordingly,  a  Contractowner  who desires to
implement  the Asset  Reallocation  Option  should do so at a time when Contract
Value  may be  transferred  from the Fixed  Account  to the  Subaccounts  in the
percentages selected by the Contractowner  without violating the restrictions on
transfers  from  the  Fixed  Account.  Once  an  Asset  Reallocation  Option  is
implemented,  the  restrictions  on transfers  will not apply to transfers  made
pursuant to the Option.

     The minimum  amount that may be  transferred  from the Fixed Account to the
Subaccounts is the lesser of (i) $1,000 or (ii) the amount of Contract Value for
which the Guarantee  Period  expires in the calendar  month that the transfer is
effected.  Transfers of Contract Value pursuant to the Dollar Cost Averaging and
Asset  Reallocation  Options  are not  currently  subject to any  minimums.  The
Company  reserves the right to waive or limit the number of transfers  permitted
each Contract Year to 14 transfers,  to suspend  transfers,  to limit the amount
that may be subject to transfers and the amount  remaining in an account after a
transfer.

     If purchase  payments are allocated (except purchase payments made pursuant
to an Automatic  Investment Program),  or Contract Value is transferred,  to the
Fixed  Account,  any transfers  from the Fixed  Account in  connection  with the
Dollar  Cost  Averaging  or  Asset  Reallocation   Options  and  any  systematic
withdrawals from the Fixed Account will  automatically  terminate as of the date
of such purchase  payment or transfer.  A Contractowner  may reestablish  Dollar
Cost  Averaging,  Asset  Reallocation or systematic  withdrawals  from the Fixed
Account by submitting a written request to Security Benefit. However, if for any
reason a Dollar Cost Averaging or systematic  withdrawal option is cancelled,  a
Contractowner  may only  reestablish the option after the expiration of the next
monthly or quarterly  anniversary  (or  semiannual or annual

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                                       20
<PAGE>

anniversary  in the case of  systematic  withdrawals)  that  corresponds  to the
period selected by the Owner in establishing the option.

     The  Contractowner  may also make full  withdrawals to the same extent as a
Contractowner   who  has  allocated   Contract  Value  to  the  Subaccounts.   A
Contractowner may make a partial withdrawal from the Fixed Account only (1) from
Contract Value,  the Guarantee Period of which expires during the calendar month
in which  the  partial  withdrawal  is  effected,  (2)  pursuant  to  systematic
withdrawals  and (3) once per Contract Year in an amount equal to the greater of
$5,000 or 10 percent of the Contract  Value in the Fixed  Account at the time of
the partial withdrawal. However, no partial withdrawal request will be processed
which would result in the  withdrawal  of Contract  Value from the Loan Account.
Systematic  withdrawals  from Contract Value allocated to the Fixed Account must
provide for payments over a period of not less than 36 months. Any change in the
type,  frequency  or amount of  Systematic  Withdrawals  from the Fixed  Account
requires  that  a new  36  month  period  be  started.  See  "Full  and  Partial
Withdrawals," page 14 and "Systematic Withdrawals," page 15. In addition, to the
same extent as Contractowners with Contract Value in the Subaccounts,  the Owner
of a Contract used in connection  with a Qualified  Plan may obtain a loan if so
permitted under the terms of the Qualified Plan. See "Loans," page 22.

PAYMENTS FROM THE FIXED ACCOUNT

     Full and partial  withdrawals,  loans, and transfers from the Fixed Account
may be delayed  for up to six months  after a written  request in proper form is
received by Security Benefit at its Home Office.  During the period of deferral,
interest at the  applicable  interest rate or rates will continue to be credited
to the amounts allocated to the Fixed Account.  However,  payment of any amounts
will not be deferred if they are to be used to pay  premiums on any  policies or
contracts issued by Security Benefit.

                             MORE ABOUT THE CONTRACT

OWNERSHIP

     The  Contractowner is the person named as such in the application or in any
later  change  shown  in  Security   Benefit's   records.   While  living,   the
Contractowner  alone has the right to receive  all  benefits  and  exercise  all
rights that the Contract grants or Security Benefit allows.  The Owner may be an
entity  that is not a  living  person  such as a trust or  corporation  referred
herein as "Non-natural Persons." See "Federal Tax Matters," page 23.

     JOINT  OWNERS.  The  Joint  Owners  will be joint  tenants  with  rights of
survivorship  and upon the death of an Owner,  the surviving  Owner shall be the
sole Owner. Any Contract transaction requires the signature of all persons named
jointly.

DESIGNATION AND CHANGE OF BENEFICIARY

     The  Designated  Beneficiary  is the  person  having the right to the death
benefit,  if any,  payable upon the death of the Owner or Joint Owner during the
Accumulation  Period.  The  Designated  Beneficiary  is the first  person on the
following  list who is alive  on the  date of  death of the  Owner or the  Joint
Owner:  the Owner;  the Joint  Owner;  the Primary  Beneficiary;  the  Secondary
Beneficiary;  the  Annuitant;  or if none of the above are  alive,  the  Owner's
estate.  The  Primary  Beneficiary  is  the  individual  named  as  such  in the
application or any later change shown in Security Benefit's records. The Primary
Beneficiary  will receive the death benefit of the Contract only if he or she is
alive on the date of death of both the  Owner  and any Joint  Owner  during  the
Accumulation Period. Because the death benefit of the Contract goes to the first
person on the above list who is alive on the date of death of any Owner, careful
consideration should be given to the manner in which the Contract is registered,
as well as the designation of the Primary  Beneficiary.  The  Contractowner  may
change the  Primary  Beneficiary  at any time while the  Contract is in force by
written  request on forms provided by Security  Benefit and received by Security
Benefit at its Home Office.  The change will not be binding on Security  Benefit
until it is  received  and  recorded  at its Home  Office.  The  change  will be
effective  as of the date this form is signed  subject to any  payments  made or
other  actions  taken by  Security  Benefit  before the change is  received  and
recorded. A Secondary  Beneficiary may be designated.  The Owner may designate a
permanent  Beneficiary whose rights under the Contract cannot be changed without
his or her consent.

     Reference  should be made to the terms of a particular  Qualified  Plan and
any applicable law for any  restrictions  or limitations on the designation of a
Beneficiary.

PARTICIPATING

     The  Contract is  participating  and will share in the surplus  earnings of
Security  Benefit.  However,  the current  dividend  scale is zero and  Security
Benefit does not anticipate that dividends will be paid.

PAYMENTS FROM THE SEPARATE ACCOUNT

     Security Benefit will pay any full or partial  withdrawal  benefit or death
benefit  proceeds from Contract  Value  allocated to the  Subaccounts,  and will
effect a transfer between  Subaccounts or from a Subaccount to the Fixed Account
on the Valuation  Date a proper  request is received at Security  Benefit's Home
Office.  However,  Security  Benefit can postpone the  calculation or payment of
such a payment  or  transfer  of  amounts  from the  Subaccounts  to the  extent
permitted  under  applicable  law, which is currently

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                                       21
<PAGE>

permissible only for any period: (a) during which the New York Stock Exchange is
closed  other than  customary  weekend and holiday  closings,  (b) during  which
trading on the New York Stock  Exchange is  restricted as determined by the SEC,
(c) during which an emergency,  as determined by the SEC,  exists as a result of
which (i) disposal of securities held by the Separate  Account is not reasonably
practicable,  or (ii) it is not reasonably practicable to determine the value of
the assets of the Separate Account, or (d) for such other periods as the SEC may
by order permit for the protection of investors.

PROOF OF AGE AND SURVIVAL

     Security  Benefit  may  require  proof of age or  survival of any person on
whose life annuity payments depend.

MISSTATEMENTS

     If the age or sex of an  Annuitant  or age of an Owner has been  misstated,
the correct amount paid or payable by Security  Benefit under the Contract shall
be such as the  Contract  Value would have  provided  for the correct age or sex
(unless unisex rates apply).

LOANS

   
     An Owner of a Contract  issued in connection with a retirement plan that is
qualified  under  Section  403(b) of the Internal  Revenue Code may borrow money
from Security  Benefit using his or her Contract  Value as the only security for
the loan by submitting a proper written request to Security Benefit.  A loan may
be taken  while the Owner is living and prior to the  Annuity  Start  Date.  The
minimum loan that may be taken is $1,000.  Security  Benefit has  developed  and
plans to install new loan processing  procedures before the end of 1997, subject
to state insurance department approvals. Described below are the loan procedures
which are currently in effect.  This is followed by a  description  of how loans
will be administered after implementation of the new procedures.
    
     For Contracts with Contract Value of $20,000 or less, the maximum loan that
can be taken is the amount that  produces a loan balance  immediately  after the
loan that is the lesser of $10,000 or 75  percent  of the  Contract  Value.  For
Contracts with Contract  Value over $20,000,  the maximum loan that can be taken
is the amount that  produces a loan balance  immediately  after the loan that is
the lesser of (1) $50,000  reduced by the excess of (a) the highest  outstanding
loan balance within the preceding  12-month  period ending on the day before the
date the loan is made over (b) the outstanding loan balance on the date the loan
is made or (2) 50 percent of the Contract Value. Reference should be made to the
terms of the particular Qualified Plan for any additional loan restrictions.

     When an eligible  Contractowner  takes a loan,  Contract Value in an amount
equal to the loan amount is transferred  from the  Subaccounts  and/or the Fixed
Account  into an account  called the "Loan  Account" as  security  for the loan.
Amounts  allocated  to the Loan  Account  earn 3 percent,  the  minimum  rate of
interest guaranteed under the Fixed Account.

     Interest  will be charged for the loan and will accrue on the loan  balance
from the effective date of any loan. The loan interest rate will be 5.5 percent.
Because the Contract  Value  maintained in the Loan Account will always be equal
in  amount  to the  outstanding  loan  balance,  the  net  cost of a loan is 2.5
percent.

     Loans must be repaid  within five years and before the Annuity  Start Date,
unless  Security  Benefit  determines  that the loan is to be used to  acquire a
principal  residence of the Owner,  in which case the loan must be repaid within
30 years and before the Annuity Start Date.  Loan payments must be made at least
quarterly.  Loans that are not repaid  within the required  time periods will be
subject to taxation as distributions from the Contract.  Loans may be prepaid at
any time.  Upon  receipt  of a loan  payment,  Security  Benefit  will  transfer
Contract Value from the Loan Account to the Fixed Account and/or the Subaccounts
according to the Owner's current  instructions with respect to purchase payments
in an amount equal to the amount by which the payment  reduces the amount of the
loan  outstanding,  plus the amount of  accrued  interest  credited  on the Loan
Account as of the date of the payment.  If a loan  payment is not received  when
due, a partial  withdrawal  equal to the  repayment  amount due,  including  any
accrued loan  interest,  will be made from  Contract  Value and paid to Security
Benefit.  The partial  withdrawal may be subject to taxation as a  distribution.
Any such partial  withdrawal will be allocated to the Owner's  Contract Value in
the  Subaccounts  and the Fixed  Account in the  following  order:  Money Market
Subaccount,  High Grade Income  Subaccount,  Global  Aggressive Bond Subaccount,
Growth-Income  Subaccount,  Equity Income  Subaccount,  Managed Asset Allocation
Subaccount,   Specialized  Asset  Allocation   Subaccount,   Growth  Subaccount,
Worldwide Equity  Subaccount,  Social  Awareness  Subaccount and Emerging Growth
Subaccount  and then from the Fixed  Account.  The value of each account will be
depleted  before the next  account is charged.  If any such  partial  withdrawal
equals or exceeds the Withdrawal Value, it will be treated as a full withdrawal.
Contractowners should consult with their tax advisers before requesting a loan.
   
     Outlined  below is a description  of how loans will be  administered  after
implementation  of the new  procedures.  The  minimum  loan that may be taken is
$1,000.  The maximum loan that can be taken is generally equal to the lesser of:
(1) $50,000 reduced by the excess of: (a) the highest  outstanding  loan balance
within the preceding  12-month period ending on the day before the date the loan
is made; over (b) the outstanding  loan balance on the date the loan is made; or
(2) 50 percent of the  Contract  Value or $10,000,  whichever  is  greater.  The
Internal  Revenue Code requires  aggregation  of all loans made to an individual
    

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                                       22
<PAGE>

   
employee under a single employer plan.  However,  since Security  Benefit has no
information concerning outstanding loans with other providers,  we will only use
information  available  under  annuity  contracts  issued  by us.  In  addition,
reference  should be made to the terms of the particular  Qualified Plan for any
additional loan restrictions.

     When an eligible  Contractowner  takes a loan,  Contract Value in an amount
equal to the loan amount is transferred  from the  Subaccounts  and/or the Fixed
Account into an account called the "Loan Account." Amounts allocated to the Loan
Account earn 3 percent,  the minimum rate of interest guaranteed under the Fixed
Account.

     Interest  will be charged for the loan and will accrue on the loan  balance
from the effective date of any loan. The loan interest rate will be 5.5 percent.
Because the Contract  Value  maintained in the Loan Account will always be equal
in  amount  to the  outstanding  loan  balance,  the  net  cost of a loan is 2.5
percent.

     Loans must be repaid within five years,  unless Security Benefit determines
that the loan is to be used to acquire a principal  residence  of the Owner,  in
which case the loan must be repaid  within 30 years.  Loan payments must be made
at least  quarterly  and may be  prepaid  at any time.  Upon  receipt  of a loan
payment,  Security Benefit will transfer Contract Value from the Loan Account to
the Fixed  Account  and/or the  Subaccounts  according  to the  Owner's  current
instructions  with respect to purchase payments in an amount equal to the amount
by which the payment reduces the amount of the loan outstanding.

     If any required  loan  payment is not made,  within 30 days of the due date
for loans with a monthly  repayment  schedule  or within 90 days of the due date
for loans  with a  quarterly  repayment  schedule,  the TOTAL  OUTSTANDING  LOAN
BALANCE will be deemed to be in default,  and the entire loan balance,  with any
accrued  interest,  will be reported as income to the Internal  Revenue  Service
("IRS").  Once a loan has gone into default,  regularly  scheduled payments will
not be  accepted,  and no new loans will be allowed  while a loan is in default.
Interest  will  continue to accrue on a loan in default and if such  interest is
not paid by  December  31st of each  year,  it will be added to the  outstanding
balance of the loan and will be reported to the IRS. Contract Value equal to the
amount of the accrued  interest will be  transferred  to the Loan Account.  If a
loan continues to be in default,  the total outstanding balance will be deducted
from Contract Value upon the Contractowner's  attaining age 59 1/2. The Contract
will be  automatically  terminated if the outstanding  loan balance on a loan in
default equals or exceeds the Withdrawal  Value.  The proceeds from the Contract
will be used  to  repay  the  debt.  Because  of the  adverse  tax  consequences
associated with defaulting on a loan, a Contractowner  should carefully consider
his or her  ability  to repay the loan and  should  consult  with a tax  advisor
before requesting a loan.

     While the amount to secure the loan is held in the Loan Account,  the Owner
forgoes the  investment  experience of the  Subaccounts  and the Current Rate of
interest on the Fixed Account.  Outstanding Contract Debt will reduce the amount
of proceeds paid upon full  withdrawal,  upon payment of the death benefit,  and
upon annuitization.  In addition,  no partial withdrawal will be processed which
would result in the withdrawal of Contract Value from the Loan Account.
    
     A Contractowner should consult with his or her tax adviser on the effect of
a loan.

RESTRICTIONS ON WITHDRAWALS FROM QUALIFIED PLANS

     Generally,  a  Qualified  Plan  may not  provide  for the  distribution  or
withdrawal of amounts  accumulated under such Qualified Plan until after a fixed
number of years,  the  attainment  of a stated age or upon the  occurrence  of a
specific event such as hardship, disability, retirement, death or termination of
employment.  Therefore,  the Owner of a Contract  purchased in connection with a
Qualified  Plan may not be  entitled  to make a full or partial  withdrawal,  as
described in this Prospectus,  unless one of the above-described  conditions has
been  satisfied.  For this reason  reference  should be made to the terms of the
particular  Qualified Plan, the Internal  Revenue Code and other  applicable law
for any limitation or restriction on distributions  and  withdrawals,  including
the 10 percent  penalty  tax that may be imposed in the event of a  distribution
from a  Qualified  Plan  before  the  participant  reaches  age 59 1/2.  See the
discussion under "Tax Penalties" on page 29.

     The  distribution  or withdrawal  of amounts under a Contract  purchased in
connection  with a Qualified Plan may result in the receipt of taxable income to
the Owner or Annuitant  and in some  instances may also result in a penalty tax.
Therefore, the tax consequences of a distribution or withdrawal under a Contract
should be carefully  considered and a competent tax adviser should be consulted.
See "Federal Tax Matters" below.

                               FEDERAL TAX MATTERS

INTRODUCTION

     The  Contract   described  in  this  Prospectus  is  designed  for  use  by
individuals  in retirement  plans which may or may not be Qualified  Plans under
the  provisions of the Internal  Revenue Code ("Code").  The ultimate  effect of
federal income taxes on the amounts held under a Contract,  on annuity payments,
and on the economic benefits to the Owner, the Annuitant, and the Beneficiary or
other payee will depend upon the type of retirement  plan, if any, for which the
Contract is purchased, the tax and employment status of the individuals involved
and a number  of other  factors.  The  discussion  contained  herein  and in the
Statement of Additional  Information is general in nature and is not intended to
be an exhaustive discussion of all questions that might arise in connection with
a Contract.  It is based upon Security  Benefit's  understanding  of the present

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                                       23
<PAGE>

federal income tax laws as currently interpreted by the Internal Revenue Service
("IRS"),  and is not intended as tax advice. No representation is made regarding
the likelihood of  continuation of the present federal income tax laws or of the
current  interpretations by the IRS or the courts. Future legislation may affect
annuity contracts adversely.  Moreover, no attempt has been made to consider any
applicable  state or other laws.  Because of the inherent  complexity of the tax
laws and the  fact  that tax  results  will  vary  according  to the  particular
circumstances of the individual involved and, if applicable, the Qualified Plan,
a person should consult with a qualified tax adviser regarding the purchase of a
Contract,  the selection of an Annuity  Option under a Contract,  the receipt of
annuity payments under a Contract or any other transaction involving a Contract.
SECURITY BENEFIT DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF, OR TAX
CONSEQUENCES  ARISING  FROM,  ANY  CONTRACT  OR ANY  TRANSACTION  INVOLVING  THE
CONTRACTS.

TAX STATUS OF SECURITY BENEFIT AND THE SEPARATE ACCOUNT

GENERAL

     Security Benefit intends to be taxed as a life insurance company under Part
I, Subchapter L of the Code. Because the operations of the Separate Account form
a part of Security Benefit, Security Benefit will be responsible for any federal
income  taxes that become  payable  with  respect to the income of the  Separate
Account and its Subaccounts.

CHARGE FOR SECURITY BENEFIT TAXES

     A charge may be made for any federal  taxes  incurred  by Security  Benefit
that  are  attributable  to the  Separate  Account,  the  Subaccounts  or to the
operations of Security  Benefit with respect to the Contracts or attributable to
payments,  premiums, or acquisition costs under the Contracts.  Security Benefit
will review the question of a charge to the Separate Account, the Subaccounts or
the Contracts for Security  Benefit's  federal taxes  periodically.  Charges may
become necessary if, among other reasons,  the tax treatment of Security Benefit
or of income and expenses  under the  Contracts is  ultimately  determined to be
other  than what  Security  Benefit  currently  believes  it to be, if there are
changes made in the federal  income tax  treatment of variable  annuities at the
insurance  company  level,  or if there is a change in  Security  Benefit's  tax
status.

     Under  current laws,  Security  Benefit may incur state and local taxes (in
addition to premium taxes) in several  states.  At present,  these taxes are not
significant.  If there is a  material  change in  applicable  state or local tax
laws,  Security Benefit reserves the right to charge the Separate Account or the
Subaccounts  for such taxes,  if any,  attributable  to the Separate  Account or
Subaccounts.

DIVERSIFICATION STANDARDS

     Each Series of the Mutual  Fund will be  required to adhere to  regulations
adopted  by the  Treasury  Department  pursuant  to  Section  817(h) of the Code
prescribing asset  diversification  requirements for investment  companies whose
shares  are  sold  to  insurance  company  separate  accounts  funding  variable
contracts.  Pursuant  to these  regulations,  on the  last day of each  calendar
quarter  (or on any day within 30 days  thereafter),  no more than 55 percent of
the total assets of a Series may be represented by any one  investment,  no more
than 70  percent  may be  represented  by any two  investments,  no more than 80
percent may be represented by any three investments, and no more than 90 percent
may be  represented  by any four  investments.  For purposes of Section  817(h),
securities  of a single  issuer  generally  are  treated as one  investment  but
obligations  of  the  U.S.  Treasury  and  each  U.S.   Governmental  agency  or
instrumentality  generally are treated as securities  of separate  issuers.  The
Separate Account, through the Series, intends to comply with the diversification
requirements of Section 817(h).

     In certain  circumstances,  owners of  variable  annuity  contracts  may be
considered  the owners,  for federal  income tax purposes,  of the assets of the
separate account used to support their contracts. In those circumstances, income
and gains from the separate  account  assets would be includable in the variable
contractowner's  gross  income.  The IRS has stated in published  rulings that a
variable  contractowner  will be considered the owner of separate account assets
if the contractowner  possesses  incidents of ownership in those assets, such as
the  ability to  exercise  investment  control  over the  assets.  The  Treasury
Department  also  announced,  in  connection  with the  issuance of  regulations
concerning  diversification,  that those  regulations  "do not provide  guidance
concerning the  circumstances  in which investor control of the investments of a
segregated asset account may cause the investor (i.e., the policyowner),  rather
than the  insurance  company,  to be  treated  as the owner of the assets in the
account." This  announcement also stated that guidance would be issued by way of
regulations  or rulings on the "extent to which  policyholders  may direct their
investments  to  particular  subaccounts  without being treated as owners of the
underlying assets." As of the date of this Prospectus, no such guidance has been
issued.

     The  ownership  rights under the Contract are similar to, but  different in
certain  respects  from,  those  described by the IRS in rulings in which it was
determined that  policyowners  were not owners of separate  account assets.  For
example,  the  Contractowner has additional  flexibility in allocating  purchase
payments and Contract Values.  These differences could result in a Contractowner
being  treated as the owner of a pro rata  portion of the assets of the Separate
Account. In addition,  Security Benefit does not know what standards will be set
forth, if any, in the  regulations or rulings which the Treasury  Department has
stated it expects to issue.  Security  Benefit  therefore  reserves the right to
modify  the  Contract,  as

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                                       24
<PAGE>

it  deems  appropriate,  to  attempt  to  prevent  a  Contractowner  from  being
considered the owner of a pro rata share of the assets of the Separate  Account.
Moreover, in the event that regulations or rulings are adopted,  there can be no
assurance that the Series will be able to operate as currently  described in the
Prospectus,  or that  the  Mutual  Fund  will  not have to  change  any  Series'
investment objective or investment policies.

INCOME TAXATION OF ANNUITIES IN GENERAL -- NON-QUALIFIED PLANS

     Section 72 of the Code governs the  taxation of  annuities.  In general,  a
Contractowner is not taxed on increases in value under an annuity contract until
some form of distribution is made under the contract.  However,  the increase in
value  may  be  subject  to  tax  currently  under  certain  circumstances.  See
"Contracts  Owned  by  Non-Natural  Persons"  on  page  26 and  "Diversification
Standards" on page 24.  Withholding of federal income taxes on all distributions
may be  required  unless a  recipient  who is  eligible  elects  not to have any
amounts withheld and properly notifies Security Benefit of that election.

     1.  Surrenders or Withdrawals Prior to the Annuity Start Date

     Code  Section 72 provides  that  amounts  received  upon a total or partial
withdrawal  (including  systematic  withdrawals)  from a  Contract  prior to the
Annuity Start Date  generally will be treated as gross income to the extent that
the cash value of the Contract  immediately  before the  withdrawal  (determined
without  regard to any  surrender  charge  in the case of a partial  withdrawal)
exceeds the  "investment in the  contract." The  "investment in the contract" is
that  portion,  if any,  of  purchase  payments  paid under a Contract  less any
distributions  received previously under the Contract that are excluded from the
recipient's  gross income.  The taxable  portion is taxed at ordinary income tax
rates.  For  purposes  of this rule,  a pledge or  assignment  of a contract  is
treated as a payment received on account of a partial withdrawal of a Contract.

     2.  Surrenders or Withdrawals on or after the Annuity Start Date

     Upon a complete  surrender,  the  receipt is taxable to the extent that the
cash value of the Contract  exceeds the investment in the Contract.  The taxable
portion of such payments will be taxed at ordinary income tax rates.

     For fixed annuity  payments,  the taxable portion of each payment generally
is  determined  by  using  a  formula  known  as the  "exclusion  ratio,"  which
establishes  the ratio that the  investment  in the Contract  bears to the total
expected amount of annuity payments for the term of the Contract.  That ratio is
then  applied  to each  payment  to  determine  the  non-taxable  portion of the
payment.  The  remaining  portion of each  payment is taxed at  ordinary  income
rates.  For variable  annuity  payments,  the taxable portion of each payment is
determined  by  using  a  formula  known  as  the  "excludable   amount,"  which
establishes the non-taxable portion of each payment.  The non-taxable portion is
a fixed dollar amount for each payment, determined by dividing the investment in
the  Contract  by the  number of  payments  to be made.  The  remainder  of each
variable  annuity  payment is taxable.  Once the  excludable  portion of annuity
payments  to date  equals the  investment  in the  Contract,  the balance of the
annuity payments will be fully taxable.

     3.  Penalty Tax on Certain Surrenders and Withdrawals

     With  respect to  amounts  withdrawn  or  distributed  before the  taxpayer
reaches age 59 1/2, a penalty tax is imposed  equal to 10 percent of the portion
of such amount which is includable in gross income.  However, the penalty tax is
not applicable to  withdrawals:  (i) made on or after the death of the owner (or
where the owner is not an individual,  the death of the "primary annuitant," who
is defined as the individual the events in whose life are of primary  importance
in  affecting  the timing and amount of the  payout  under the  Contract);  (ii)
attributable to the taxpayer's  becoming  totally disabled within the meaning of
Code Section 72(m)(7);  (iii) which are part of a series of substantially  equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the taxpayer,  or the joint lives (or joint life expectancies) of
the taxpayer and his or her beneficiary;  (iv) from certain qualified plans; (v)
under a so-called  qualified  funding asset (as defined in Code Section 130(d));
(vi) under an immediate  annuity  contract;  or (vii) which are  purchased by an
employer on termination  of certain types of qualified  plans and which are held
by the employer until the employee separates from service.

     If the penalty tax does not apply to a surrender or  withdrawal as a result
of the  application  of  item  (iii)  above,  and the  series  of  payments  are
subsequently modified (other than by reason of death or disability), the tax for
the first year in which the  modification  occurs will be increased by an amount
(determined  by the  regulations)  equal to the tax that would have been imposed
but for  item  (iii)  above,  plus  interest  for the  deferral  period,  if the
modification  takes place (a) before the close of the period which is five years
from the date of the first payment and after the taxpayer attains age 59 1/2, or
(b) before the taxpayer reaches age 59 1/2.

ADDITIONAL CONSIDERATIONS

     1.  Distribution-at-Death Rules

     In order to be treated as an annuity contract,  a contract must provide the
following two distribution  rules: (a) if any owner dies on or after the Annuity
Start Date, and before the entire interest in the Contract has been distributed,
the remainder of the owner's interest will be distributed at least as quickly as
the method in effect on the owner's death;  and (b) if any owner dies before the
Annuity  Start Date,  the entire  interest in the  Contract  must  generally  be
distributed

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                                       25
<PAGE>

within  five  years  after the date of death,  or, if  payable  to a  designated
beneficiary,  must be annuitized over the life of that designated beneficiary or
over a period not  extending  beyond the life  expectancy  of that  beneficiary,
commencing  within one year  after the date of death of the  owner.  If the sole
designated  beneficiary  is the  spouse  of the  deceased  owner,  the  Contract
(together with the deferral of tax on the accrued and future income  thereunder)
may be continued in the name of the spouse as owner.

     Generally,  for purposes of determining when distributions must begin under
the foregoing rules, where an owner is not an individual,  the primary annuitant
is considered the owner. In that case, a change in the primary annuitant will be
treated as the death of the owner.  Finally,  in the case of joint  owners,  the
distribution-at-death  rules will be applied by treating  the death of the first
owner  as the  one to be  taken  into  account  in  determining  generally  when
distributions must commence, unless the sole Beneficiary is the deceased owner's
spouse.

     2.  Gift of Annuity Contracts

     Generally,  gifts of non-tax qualified Contracts prior to the Annuity Start
Date will  trigger  tax on the gain on the  Contract,  with the donee  getting a
stepped-up  basis for the amount included in the donor's income.  The 10 percent
penalty tax and gift tax also may be  applicable.  This provision does not apply
to transfers between spouses or incident to a divorce.

     3.  Contracts Owned by Non-Natural Persons

     If  the  Contract  is  held  by  a  non-natural   person  (for  example,  a
corporation)  the  income  on  that  Contract  (generally  the  increase  in net
surrender value less the purchase payments) is includable in taxable income each
year.  The rule does not apply where the Contract is acquired by the estate of a
decedent, where the Contract is held by certain types of retirement plans, where
the Contract is a qualified funding asset for structured settlements,  where the
Contract is purchased on behalf of an employee upon  termination  of a qualified
plan,  and in the case of an immediate  annuity.  An annuity  contract held by a
trust or other  entity  as agent for a natural  person is  considered  held by a
natural person.

     4.  Multiple Contract Rule

     For  purposes  of  determining  the amount of any  distribution  under Code
Section 72(e)  (amounts not received as  annuities)  that is includable in gross
income,  all  Non-Qualified  annuity contracts issued by the same insurer to the
same Contractowner  during any calendar year are to be aggregated and treated as
one contract.  Thus,  any amount  received  under any such contract prior to the
contract's Annuity Start Date, such as a partial surrender,  dividend,  or loan,
will be taxable  (and  possibly  subject to the 10 percent  penalty  tax) to the
extent of the combined income in all such contracts.

     In addition,  the Treasury  Department  has broad  regulatory  authority in
applying this provision to prevent avoidance of the purposes of this rule. It is
possible that, under this authority, the Treasury Department may apply this rule
to amounts  that are paid as  annuities  (on and after the  Annuity  Start Date)
under annuity  contracts issued by the same company to the same owner during any
calendar  year.  In this case,  annuity  payments  could be fully  taxable  (and
possibly  subject to the 10 percent  penalty  tax) to the extent of the combined
income  in all such  contracts  and  regardless  of  whether  any  amount  would
otherwise have been excluded from income because of the "exclusion  ratio" under
the contract.

     5.  Possible Tax Changes

     In recent years,  legislation  has been proposed that would have  adversely
modified the federal taxation of certain  annuities.  Although as of the date of
this Prospectus, it does not appear that Congress is considering any legislation
regarding the taxation of annuities,  there is always the  possibility  that the
tax treatment of annuities  could change by  legislation or other means (such as
IRS regulations,  revenue rulings, and judicial decisions).  Moreover,  although
unlikely,  it is also possible that any legislative  change could be retroactive
(that is, effective prior to the date of such change).

     6.  Transfers, Assignments or Exchanges of a Contract

     A transfer of ownership of a Contract,  the  designation  of an  Annuitant,
Payee or other  Beneficiary who is not also the Owner,  the selection of certain
Annuity  Start  Dates or the  exchange  of a Contract  may result in certain tax
consequences to the Owner that are not discussed herein. An Owner  contemplating
any such transfer, assignment,  selection or exchange should contact a competent
tax adviser with respect to the potential effects of such a transaction.

QUALIFIED PLANS

     The Contract may be used with Qualified Plans that meet the requirements of
Section  401,  403(b),  408 or 457 of the  Code.  The tax  rules  applicable  to
participants  in such Qualified Plans vary according to the type of plan and the
terms and  conditions  of the plan itself.  No attempt is made herein to provide
more than general  information  about the use of the  Contract  with the various
types of Qualified  Plans.  These Qualified Plans may permit the purchase of the
Contracts to accumulate retirement savings under the plans. Adverse tax or other
legal consequences to the plan, to the participant or to both may result if this
Contract is  assigned or  transferred  to any  individual  as a means to provide
benefit  payments,   unless  the  plan  complies  with  all  legal  requirements
applicable to such benefits  prior to transfer of the Contract.  Contractowners,
Annuitants,  and  Beneficiaries,  are cautioned that the rights of any person to
any  benefits  under  such  Qualified  Plans  may be  subject  to the  terms and

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                                       26
<PAGE>

conditions of the plans  themselves or limited by applicable law,  regardless of
the terms and  conditions of the Contract  issued in connection  therewith.  For
example,  Security  Benefit  may accept  beneficiary  designations  and  payment
instructions  under  the terms of the  Contract  without  regard to any  spousal
consents that may be required under the Employee  Retirement Income Security Act
of 1974 (ERISA).  Consequently,  a  Contractowner's  Beneficiary  designation or
elected payment option may not be enforceable.

   
     The  amounts  that may be  contributed  to  Qualified  Plans are subject to
limitations  that  vary  depending  on the  type of  Plan.  In  addition,  early
distributions  from most Qualified  Plans may be subject to penalty taxes, or in
the  case  of  distributions  of  amounts  contributed  under  salary  reduction
agreements, could cause the Plan to be disqualified.  Furthermore, distributions
from most Qualified  Plans are subject to certain  minimum  distribution  rules.
Failure to comply with these rules could result in  disqualification of the Plan
or subject the Owner or Annuitant  to penalty  taxes.  As a result,  the minimum
distribution  rules may limit the  availability  of certain  Annuity  Options to
certain  Annuitants  and  their  beneficiaries.  These  requirements  may not be
incorporated into Security Benefit's Contract administration procedures. Owners,
participants   and   beneficiaries   are  responsible   for   determining   that
contributions,   distributions  and  other  transactions  with  respect  to  the
Contracts comply with applicable law.
    

     The  following  are brief  descriptions  of the various  types of Qualified
Plans and the use of the Contract therewith:

     1.  Section 401

     Code Section 401 permits employers to establish various types of retirement
plans (e.g., pension, profit sharing and 401(k) plans) for their employees.  For
this purpose,  self-employed  individuals  (proprietors or partners  operating a
trade  or  business)  are  treated  as  employees  and  therefore   eligible  to
participate  in such plans.  Retirement  plans  established  in accordance  with
Section 401 may permit the purchase of Contracts to provide benefits thereunder.

     In order for a retirement plan to be "qualified" under Code Section 401, it
must: (i) meet certain minimum standards with respect to participation, coverage
and vesting;  (ii) not discriminate in favor of "highly compensated"  employees;
(iii) provide  contributions or benefits that do not exceed certain limitations;
(iv)  prohibit  the use of plan  assets for  purposes  other than the  exclusive
benefit  of the  employees  and their  beneficiaries  covered  by the plan;  (v)
provide  for  distributions  that  comply  with  certain  minimum   distribution
requirements;  (vi) provide for certain  spousal  survivor  benefits;  and (vii)
comply with numerous other qualification requirements.

     A  retirement  plan  qualified  under  Code  Section  401 may be  funded by
employer  contributions,  employee  contributions or a combination of both. Plan
participants are not subject to tax on employer contributions until such amounts
are  actually  distributed  from  the  plan.  Depending  upon  the  terms of the
particular plan,  employee  contributions  may be made on a pre-tax or after-tax
basis. In addition,  plan  participants  are not taxed on plan earnings  derived
from  either  employer  or  employee   contributions  until  such  earnings  are
distributed.

   
     Each employee's  interest in a retirement plan qualified under Code Section
401 must  generally be  distributed  or begin to be  distributed  not later than
April 1 of the calendar  year  following the later of the calendar year in which
the employee reaches age 70 1/2 or retires ("required beginning date"). Periodic
distributions  must not extend  beyond the life of the  employee or the lives of
the employee and a designated beneficiary (or over a period extending beyond the
life expectancy of the employee or the joint life expectancy of the employee and
a designated beneficiary).
    

     If an employee dies before reaching his or her required beginning date, the
employee's entire interest in the plan must generally be distributed within five
years of the  employee's  death.  However,  the  five-year  rule  will be deemed
satisfied,  if  distributions  begin  before  the  close  of the  calendar  year
following the year of the employee's  death to a designated  beneficiary and are
made over the life of the beneficiary (or over a period not extending beyond the
life  expectancy  of the  beneficiary).  If the  designated  beneficiary  is the
employee's  surviving  spouse,  distributions  may be delayed until the employee
would have reached age 70 1/2.

     If an employee dies after reaching his or her required  beginning date, the
employee's  interest  in the plan  must  generally  be  distributed  at least as
rapidly  as under  the  method  of  distribution  in  effect  at the time of the
employee's death.

   
     Annuity  payments  distributed  from a retirement plan qualified under Code
Section 401 are taxable under  Section 72 of the Code.  Section 72 provides that
the portion of each payment  attributable to contributions  that were taxable to
the employee in the year made, if any, is excluded from gross income as a return
of the employee's investment.  The portion so excluded is determined by dividing
the employee's  investment in the plan by (1) the number of anticipated payments
determined  under a table set forth in Section 72 of the Code or (2) in the case
of a contract  calling for installment  payments,  the number of monthly annuity
payments  under such  contract.  The  portion  of each  payment in excess of the
exclusion amount is taxable as ordinary income.  Once the employee's  investment
has been recovered,  the full annuity  payment will be taxable.  If the employee
should die prior to recovering  his or her entire  investment,  the  unrecovered
investment will be allowed as a deduction on the employee's final return. If the
employee made no  contributions  that were taxable when made, the full amount of
each annuity payment is taxable as ordinary income.
    

     A "lump-sum"  distribution  from a  retirement  plan  qualified  under Code
Section 401 is eligible for favorable tax treatment.  A "lump-sum"  distribution
means the  distribution  within one taxable year of the balance to the credit of
the employee which becomes payable: (i) on

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                                       27
<PAGE>

account of the  employee's  death,  (ii) after the employee  attains age 59 1/2,
(iii) on account of the  employee's  termination of employment (in the case of a
common law employee only) or (iv) after the employee has become disabled (in the
case of a self-employed person only).

     As a general  rule, a lump-sum  distribution  is fully  taxable as ordinary
income except for an amount equal to the employee's investment, if any, which is
recovered  tax-free.  However,  special  five-year  averaging  may be available,
provided the employee has reached age 59 1/2 and has not  previously  elected to
use income averaging. Special ten-year averaging and capital-gains treatment may
be available to an employee who reached age 50 before 1986.

     Distributions  from a retirement  plan qualified under Code Section 401 may
be eligible for a tax-free rollover to either another qualified  retirement plan
or to an individual retirement account or annuity (IRA). See "Rollovers" on page
29.

     2.  Section 403(b)

     Code Section  403(b)  permits  public  school  employees  and  employees of
certain types of charitable,  educational and scientific organizations specified
in Section 501(c)(3) of the Code to purchase annuity contracts,  and, subject to
certain  limitations,  to exclude  the amount of  purchase  payments  from gross
income for tax  purposes.  The Contract may be  purchased in  connection  with a
Section 403(b) annuity program.

     Section  403(b)  annuities  must  generally be provided  under a plan which
meets   certain   minimum   participation,   coverage,   and   nondiscrimination
requirements.   Section  403(b)  annuities  are  generally  subject  to  minimum
distribution  requirements  similar  to those  applicable  to  retirement  plans
qualified under Section 401 of the Code. See "Section 401" on page 27.

     A  Section  403(b)   annuity   contract  may  be  purchased  with  employer
contributions,  employee  contributions  or a combination of both. An employee's
rights  under  a  Section  403(b)  contract  must  be  nonforfeitable.  Numerous
limitations  apply to the amount of contributions  that may be made to a Section
403(b)  annuity  contract.  The applicable  limit will depend upon,  among other
things,  whether the annuity  contract is  purchased  with  employer or employee
contributions.

     Amounts used to purchase Section 403(b) annuities  generally are excludable
from the taxable income of the employee.  As a result,  all  distributions  from
such annuities are normally taxable in full as ordinary income to the employee.

     A Section  403(b)  annuity  contract  must  prohibit  the  distribution  of
employee  contributions  (including  earnings  thereon) until the employee:  (i)
attains  age 59 1/2,  (ii)  terminates  employment;  (iii)  dies;  (iv)  becomes
disabled; or (v) incurs a financial hardship (earnings may not be distributed in
the event of hardship).

     Distributions  from a Section 403(b) annuity contract may be eligible for a
tax-free  rollover to either another  Section  403(b) annuity  contract or to an
individual retirement account or annuity (IRA). See "Rollovers" on page 29.

   
     3.  Section 408

     INDIVIDUAL RETIREMENT  ANNUITIES.  Section 408 of the Code permits eligible
individuals to establish individual  retirement programs through the purchase of
Individual  Retirement  Annuities ("IRAs").  The Contract may be purchased as an
IRA.
    

     IRAs are subject to limitations on the amount that may be contributed,  the
persons who may be eligible and on the time when  distributions  must  commence.
Depending upon the circumstances of the individual,  contributions to an IRA may
be made on a deductible or  non-deductible  basis.  IRAs may not be transferred,
sold,  assigned,  discounted  or  pledged  as  collateral  for a loan  or  other
obligation.  The annual  premium  for an IRA may not be fixed and may not exceed
$2,000  (except in the case of a rollover  contribution).  Any refund of premium
must be applied to the payment of future  premiums or the purchase of additional
benefits.

     Sale  of the  Contract  for  use  with  IRAs  may  be  subject  to  special
requirements imposed by the Internal Revenue Service. Purchasers of the Contract
for such purposes will be provided with such supplementary information as may be
required by the Internal Revenue Service or other appropriate  agency,  and will
have the right to revoke the Contract under certain circumstances.

   
     In general,  IRAs are subject to minimum distribution  requirements similar
to those applicable to retirement plans qualified under Section 401 of the Code;
however,  the required  beginning  date for IRAs is generally  the date that the
Contractowner reaches age 70 1/2--the  Contractowner's  retirement date, if any,
will not affect his or her required  beginning  date.  See "Section 401" on page
27.  Distributions  from IRAs are  generally  taxed under Code Section 72. Under
these rules, a portion of each  distribution may be excludable from income.  The
amount excludable from the individual's income is the amount of the distribution
which bears the same ratio as the individual's nondeductible contributions bears
to the expected return under the IRA.
    

     Distributions  from an IRA  may be  eligible  for a  tax-free  rollover  to
another IRA. In certain cases, a distribution  from an IRA may be eligible to be
rolled  over to a  retirement  plan  qualified  under Code  Section  401(a) or a
Section 403(b) annuity contract.
See "Rollovers" below.
     The   Internal   Revenue   Service  has  not   reviewed  the  Contract  for
qualification  as  an  IRA,  and  has  not  addressed  in a  ruling  of  general
applicability  whether a death  benefit  provision  such as the provision in the
Contract comports with IRA qualification requirements.

     4.  Section 457

     Section 457 of the Code permits  employees  of state and local  governments
and units and  agencies  of state and local  governments  as well as  tax-exempt
organizations  described

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                                       28
<PAGE>

   
in  Section  501(c)(3)  of the Code to  defer a  portion  of their  compensation
without paying current taxes if those employees are  participants in an eligible
deferred  compensation  plan.  A Section  457 plan may  permit the  purchase  of
Contracts to provide benefits thereunder.

     Although a participant  under a Section 457 plan may be permitted to direct
or choose  methods of investment in the case of a tax-exempt  employer  sponsor,
all amounts  deferred under the plan, and any income thereon,  remain solely the
property of the  employer  and  subject to the claims of its general  creditors,
until paid to the participant.  The assets of a Section 457 plan maintained by a
state or local government  employer must be held in trust (or custodial  account
or an annuity contract) for the exclusive benefit of plan participants, who will
be responsible for taxes upon  distribution.  A Section 457 plan must not permit
the distribution of a participant's  benefits until the participant  attains age
70 1/2, terminates employment or incurs an "unforeseeable emergency."
    

     Section   457  plans  are   generally   subject  to  minimum   distribution
requirements  similar to those  applicable to retirement  plans  qualified under
Section 401 of the Code. See "Section 401" on page 27. Since under a Section 457
plan,  contributions  are generally  excludable  from the taxable  income of the
employee,  the full amount  received will usually be taxable as ordinary  income
when annuity payments commence or other  distributions  are made.  Distributions
from a Section 457 plan are not eligible for tax-free rollovers.

     5.  Rollovers

     A "rollover" is the tax-free  transfer of a distribution from one Qualified
Plan to another.  Distributions  which are rolled  over are not  included in the
employee's gross income until some future time.

     If any portion of the balance to the credit of an employee in a Section 401
plan or Section  403(b) plan is paid to the  employee in an  "eligible  rollover
distribution"  and the employee  transfers any portion of the amount received to
an "eligible  retirement plan," then the amount so transferred is not includable
in income. An "eligible rollover distribution"  generally means any distribution
that is not one of a  series  of  periodic  payments  made  for the  life of the
distributee  or for a specified  period of at least ten years.  In  addition,  a
required  minimum   distribution  will  not  qualify  as  an  eligible  rollover
distribution.  A rollover must be completed  within 60 days after receipt of the
distribution.

     In the case of a Section 401 plan,  an "eligible  retirement  plan" will be
another  retirement  plan  qualified  under Code  Section  401 or an  individual
retirement  account or annuity under Code Section 408. With respect to a Section
403(b) plan, an "eligible  retirement  plan" will be another Section 403(b) plan
or an individual retirement account or annuity described in Code Section 408.

     A Section  401 plan and a Section  403(b)  plan  must  generally  provide a
participant receiving an eligible rollover distribution,  the option to have the
distribution transferred directly to another eligible retirement plan.

   
     The owner of an IRA may make a tax-free rollover of any portion of the IRA.
The rollover must be completed  within 60 days of the distribution and generally
may  only  be made  to  another  IRA.  However,  an  individual  may  receive  a
distribution  from  his or her  IRA and  within  60  days  roll  it over  into a
retirement  plan qualified  under Code Section 401(a) if all of the funds in the
IRA are  attributable  to a rollover from a Section  401(a) plan.  Similarly,  a
distribution from an IRA may be rolled over to a Section 403(b) plan only if all
of the funds in the IRA are  attributable  to a rollover  from a Section  403(b)
annuity.

     6.  Tax Penalties

     PREMATURE  DISTRIBUTION TAX. Distributions from a Qualified Plan before the
participant  reaches age 59 1/2 are generally subject to an additional tax equal
to 10 percent of the taxable portion of the distribution. The 10 percent penalty
tax  does not  apply to  distributions:  (i) made on or after  the  death of the
employee;  (ii) attributable to the employee's disability;  (iii) which are part
of a series of  substantially  equal periodic  payments made (at least annually)
for the life (or life  expectancy)  of the employee or the joint lives (or joint
life expectancies) of the employee and a designated  beneficiary and which begin
after  the  employee  terminates  employment;  (iv)  made to an  employee  after
termination  of  employment  after  reaching age 55; (v) made to pay for certain
medical expenses;  (vi) that are exempt  withdrawals of an excess  contribution;
(vii) that are rolled over or transferred in accordance with Code  requirements;
or (viii)  that are  transferred  pursuant  to a decree of divorce  or  separate
maintenance or written instrument incident to such a decree.

     The exception to the 10 percent penalty tax described in item (iv) above is
not  applicable  to  IRAs.  However,  distributions  from  an IRA to  unemployed
individuals can be made without application of the 10 percent penalty tax to pay
health insurance premiums in certain cases. In addition,  the 10 percent penalty
tax is generally not applicable to distributions from a Section 457 plan.
    

     MINIMUM  DISTRIBUTION TAX. If the amount  distributed from a Qualified Plan
is less than the minimum required  distribution for the year, the participant is
subject to a 50 percent tax on the amount that was not properly distributed.

   
     EXCESS DISTRIBUTION  ACCUMULATION TAX. If the aggregate  distributions from
all Qualified Plans (other than Section 457 plans) with respect to an individual
in a calendar  year exceed the greater of (i)  $150,000,  or (ii)  $112,500,  as
indexed  for  inflation  ($160,000  for  1997),  a penalty  tax of 15 percent is
generally imposed (in addition to any ordinary income tax) on the excess portion
of the  distribution.  In  addition,  a 15 percent tax is imposed on the "excess
retirement  accumulations" of an individual whose aggregate  retirement benefits
exceed the value of a hypothetical life annuity determined as of the date of his
or her death. The 15
    

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                                       29
<PAGE>

   
percent excise tax on excess  distributions will not apply to withdrawals during
calendar years 1997, 1998 and 1999.
    

     7.  Withholding

     Periodic  distributions (e.g.,  annuities and installment  payments) from a
Qualified  Plan that will last for a period of ten or more  years are  generally
subject  to  voluntary  income tax  withholding.  The  amount  withheld  on such
periodic  distributions  is  determined  at the rate  applicable  to wages.  The
recipient of a periodic distribution may generally elect not to have withholding
apply.
   
     Nonperiodic  distributions  (e.g.,  lump sums and annuities or  installment
payments  of less than ten years)  from a  Qualified  Plan  (other than IRAs and
Section 457 plans) are  generally  subject to  mandatory  20 percent  income tax
withholding.   However,  no  withholding  is  imposed  if  the  distribution  is
transferred   directly  to  another   eligible   Qualified   Plan.   Nonperiodic
distributions  from an IRA are  subject to income tax  withholding  at a flat 10
percent  rate.  The  recipient  of such a  distribution  may  elect  not to have
withholding apply.
    
     The  above  description  of the  federal  income  tax  consequences  of the
different types of Qualified  Plans which may be funded by the Contract  offered
by this  Prospectus  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  adverse  tax
consequences.  A prospective  Contractowner  considering adoption of a Qualified
Plan and purchase of a Contract in connection  therewith  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.

                                OTHER INFORMATION

VOTING OF MUTUAL FUND SHARES

     Security  Benefit is the legal  owner of the shares of the Mutual Fund held
by the  Subaccounts  of the Separate  Account.  Security  Benefit will  exercise
voting rights  attributable to the shares of each Series of the Mutual Fund held
in the  Subaccounts at any regular and special  meetings of the  shareholders of
the Mutual Fund on matters requiring  shareholder  voting under the 1940 Act. In
accordance  with its view of presently  applicable  law,  Security  Benefit will
exercise these voting rights based on instructions  received from persons having
the voting  interest  in  corresponding  Subaccounts  of the  Separate  Account.
However, if the 1940 Act or any regulations  thereunder should be amended, or if
the present  interpretation  thereof  should  change,  and as a result  Security
Benefit determines that it is permitted to vote the shares of the Mutual Fund in
its own right, it may elect to do so.

     The person having the voting interest under a Contract is the Owner. Unless
otherwise  required  by  applicable  law,  the number of shares of a  particular
Series as to which  voting  instructions  may be given to  Security  Benefit  is
determined  by dividing a  Contractowner's  Contract  Value in a Subaccount on a
particular  date by the net asset  value per share of that Series as of the same
date.  Fractional votes will be counted.  The number of votes as to which voting
instructions  may be given will be determined as of the date coincident with the
date  established by the Mutual Fund for  determining  shareholders  eligible to
vote at the meeting of the Mutual Fund. If required by the SEC, Security Benefit
reserves  the right to  determine  in a  different  fashion  the  voting  rights
attributable to the shares of the Mutual Fund.  Voting  instructions may be cast
in person or by proxy.

     Voting  rights  attributable  to the  Contractowner's  Contract  Value in a
Subaccount for which no timely voting instructions are received will be voted by
Security  Benefit in the same  proportion  as the voting  instructions  that are
received in a timely manner for all Contracts  participating in that Subaccount.
Security  Benefit  will also  exercise  the voting  rights  from  assets in each
Subaccount that are not otherwise attributable to Contractowners, if any, in the
same proportion as the voting  instructions that are received in a timely manner
for all Contracts  participating  in that Subaccount and generally will exercise
voting  rights  attributable  to shares of the Series of the Mutual Fund held in
its General  Account,  if any, in the same proportion as votes cast with respect
to shares of the  Series of the Mutual  Fund held by the  Separate  Account  and
other separate accounts of Security Benefit, in the aggregate.

SUBSTITUTION OF INVESTMENTS

     Security Benefit reserves the right,  subject to compliance with the law as
then in effect,  to make additions to,  deletions  from,  substitutions  for, or
combinations  of the  securities  that are held by the  Separate  Account or any
Subaccount  or that the Separate  Account or any  Subaccount  may  purchase.  If
shares  of any or all of the  Series  of the  Mutual  Fund  should  no longer be
available for investment, or if, in the judgment of Security Benefit management,
further  investment  in shares of any or all of the  Series of the  Mutual  Fund
should become  inappropriate  in view of the purposes of the Contract,  Security
Benefit  may  substitute  shares of another  Series of the  Mutual  Fund or of a
different  fund for shares already  purchased,  or to be purchased in the future
under the Contract.  Security Benefit may also purchase, through the Subaccount,
other securities for other classes or contracts,  or permit a conversion between
classes of contracts on the basis of requests made by Owners.

     In connection with a substitution of any shares  attributable to an Owner's
interest in a Subaccount or the Separate Account,  Security Benefit will, to the
extent required under applicable law, provide notice, seek Owner approval,  seek
prior  approval  of the SEC,  and  comply  with the  filing or other  procedures
established by applicable state insurance regulators.

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                                       30
<PAGE>

     Security   Benefit  also   reserves  the  right  to  establish   additional
Subaccounts  of the  Separate  Account  that would invest in a new Series of the
Mutual Fund or in shares of another  investment  company,  a series thereof,  or
other suitable  investment  vehicle.  New  Subaccounts may be established in the
sole  discretion  of  Security  Benefit,  and  any new  Subaccount  will be made
available to existing  Owners on a basis to be determined  by Security  Benefit.
Security  Benefit may also eliminate or combine one or more  Subaccounts  if, in
its sole discretion, marketing, tax, or investment conditions so warrant.

     Subject to compliance with applicable  law,  Security  Benefit may transfer
assets to the General Account. Security Benefit also reserves the right, subject
to any required  regulatory  approvals,  to transfer assets of any Subaccount of
the Separate Account to another separate account or Subaccount.

     In the event of any such  substitution or change,  Security Benefit may, by
appropriate  endorsement,  make such changes in these and other contracts as may
be necessary or appropriate to reflect such substitution or change. If deemed by
Security  Benefit to be in the best  interests of persons  having  voting rights
under the  Contracts,  the  Separate  Account may be  operated  as a  management
investment company under the 1940 Act or any other form permitted by law; it may
be  deregistered  under  that Act in the event  such  registration  is no longer
required; or it may be combined with other separate accounts of Security Benefit
or an affiliate  thereof.  Subject to compliance with  applicable law,  Security
Benefit also may combine one or more  Subaccounts and may establish a committee,
board,  or other  group to manage one or more  aspects of the  operation  of the
Separate Account.

CHANGES TO COMPLY WITH LAW AND AMENDMENTS

     Security  Benefit  reserves  the right,  without the consent of Owners,  to
suspend sales of the Contract as presently offered and to make any change to the
provisions  of the  Contracts to comply with, or give Owners the benefit of, any
federal or state  statute,  rule,  or  regulation,  including but not limited to
requirements  for annuity  contracts  and  retirement  plans under the  Internal
Revenue Code and  regulations  thereunder  or any state  statute or  regulation.
Security  Benefit also  reserves the right to limit the amount and  frequency of
subsequent purchase payments.

REPORTS TO OWNERS

     A statement  will be sent  annually to each  Contractowner  setting forth a
summary of the  transactions  that occurred  during the year, and indicating the
Contract  Value as of the end of each year.  In  addition,  the  statement  will
indicate  the  allocation  of  Contract  Value  among the Fixed  Account and the
Subaccounts and any other information  required by law.  Confirmations will also
be sent out upon purchase payments,  transfers, loans, loan repayments, and full
and partial  withdrawals.  Certain  transactions may be confirmed on a quarterly
basis.  These  transactions  include  purchases  under an  Automatic  Investment
Program,  transfers  under the  Dollar  Cost  Averaging  and Asset  Reallocation
Options, systematic withdrawals and annuity payments.

     Each  Contractowner  will also  receive  an annual  and  semiannual  report
containing  financial  statements for the Mutual Fund, which will include a list
of the  portfolio  securities  of the Mutual Fund,  as required by the 1940 Act,
and/or such other reports as may be required by federal securities laws.

TELEPHONE TRANSFER PRIVILEGES

     A  Contractowner  may  request a transfer  of  Contract  Value and may make
changes to an existing  Dollar Cost  Averaging or Asset  Reallocation  option by
telephone  if  the  Telephone   Transfer   section  of  the  application  or  an
Authorization for Telephone Requests form ("Telephone  Authorization")  has been
completed, signed, and filed at Security Benefit's Home Office. Security Benefit
has  established  procedures  to  confirm  that  instructions   communicated  by
telephone are genuine and will not be liable for any losses due to fraudulent or
unauthorized  instructions  provided it complies with its  procedures.  Security
Benefit's  procedures require that any person requesting a transfer by telephone
provide the account  number and the Owner's tax  identification  number and such
instructions must be received on a recorded line.  Security Benefit reserves the
right to deny any telephone  transfer  request.  If all telephone lines are busy
(which  might  occur,  for  example,   during  periods  of  substantial   market
fluctuations),  Contractowners  might  not  be  able  to  request  transfers  by
telephone and would have to submit written requests.

     By authorizing  telephone  transfers,  a Contractowner  authorizes Security
Benefit to accept and act upon telephonic  instructions for transfers  involving
the Contractowner's  Contract, and agrees that neither Security Benefit, nor any
of its affiliates,  nor the Mutual Fund,  will be liable for any loss,  damages,
cost,  or  expense  (including  attorneys'  fees)  arising  out of any  requests
effected in accordance with the Telephone Authorization and believed by Security
Benefit to be genuine,  provided  that  Security  Benefit has complied  with its
procedures.  As a result of this policy on telephone requests, the Contractowner
may bear the  risk of loss  arising  from  the  telephone  transfer  privileges.
Security  Benefit may  discontinue,  modify,  or suspend the telephone  transfer
privilege at any time.

LEGAL PROCEEDINGS

     There are no legal  proceedings  pending to which the Separate Account is a
party, or which would materially affect the Separate Account.

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                                       31
<PAGE>

LEGAL MATTERS

     Legal  matters  in  connection  with the  issue  and sale of the  Contracts
described  in  this  Prospectus,  Security  Benefit's  authority  to  issue  the
Contracts under Kansas law, and the validity of the forms of the Contracts under
Kansas law have been passed upon by Amy J. Lee, Esq., Associate General Counsel,
Security Benefit.

                             PERFORMANCE INFORMATION

     Performance  information  for  the  Subaccounts  of the  Separate  Account,
including the yield and effective yield of the Subaccount investing in the Money
Market  Series  ("Money  Market   Subaccount"),   the  yield  of  the  remaining
Subaccounts,   and  the  total   return  of  all   Subaccounts   may  appear  in
advertisements,  reports,  and promotional  literature to current or prospective
Owners.

     Current  yield  for the  Money  Market  Subaccount  will be based on income
received by a hypothetical  investment  over a given 7-day period (less expenses
accrued during the period), and then "annualized" (i.e., assuming that the 7-day
yield would be received  for 52 weeks,  stated in terms of an annual  percentage
return on the investment).  "Effective yield" for the Money Market Subaccount is
calculated in a manner similar to that used to calculate yield, but reflects the
compounding effect of earnings.

     For the  remaining  Subaccounts,  quotations  of yield will be based on all
investment  income per  Accumulation  Unit earned during a given 30-day  period,
less expenses accrued during the period ("net investment  income"),  and will be
computed by dividing net investment  income by the value of an Accumulation Unit
on the last day of the period. Quotations of average annual total return for any
Subaccount  will be expressed in terms of the average annual  compounded rate of
return on a  hypothetical  investment in a Contract over a period of one,  five,
and ten years (or, if less, up to the life of the Subaccount),  and will reflect
the  deduction of the  administrative  charge and the mortality and expense risk
charge and may simultaneously be shown for other periods.

     Although the Contracts were not available for purchase until April 4, 1995,
the underlying  investment  vehicle of the Separate  Account,  the SBL Fund, has
been  in  existence  since  May  26,  1977.  Performance   information  for  the
Subaccounts  may also include  quotations of total return for periods  beginning
prior to the  availability of the Contracts that  incorporate the performance of
the SBL Fund.

     Performance  information  for a Subaccount may be compared,  in reports and
promotional  literature,  to: (i) the  Standard & Poor's 500 Stock  Index  ("S&P
500"),   Dow  Jones   Industrial   Average   ("DJIA"),   Donaghue  Money  Market
Institutional  Averages,  the Lehman Brothers  Government  Corporate  Index, the
Morgan Stanley  Capital  International's  EAFE Index or other indices  measuring
performance  of a pertinent  group of securities so that investors may compare a
Subaccount's  results  with those of a group of  securities  widely  regarded by
investors  as   representative   of  the   securities   markets  in  general  or
representative  of a particular  type of security:  (ii) other variable  annuity
separate  accounts or other  investment  products  tracked by Lipper  Analytical
Services,  a widely used independent  research firm which ranks mutual funds and
other investment companies by overall performance,  investment  objectives,  and
assets,  or tracked  by other  ratings  services,  companies,  publications,  or
persons  who rank  separate  accounts  or other  investment  products on overall
performance or other  criteria;  and (iii) the Consumer Price Index (measure for
inflation) to assess the real rate of return from an investment in the Contract.
Unmanaged  indices may assume the reinvestment of dividends but generally do not
reflect deductions for administrative and management costs and expenses.

     Performance information for any Subaccount reflects only the performance of
a hypothetical  Contract under which Contract Value is allocated to a Subaccount
during a particular time period on which the calculations are based. Performance
information  should be  considered  in light of the  investment  objectives  and
policies,  characteristics,  and  quality of the Series in which the  Subaccount
invests,  and the market conditions during the given time period, and should not
be considered as a representation  of what may be achieved in the future.  For a
description  of the methods  used to  determine  yield and total  return for the
Subaccounts, see the Statement of Additional Information.

     Reports and  promotional  literature  may also  contain  other  information
including  (i) the ranking of any  Subaccount  derived from rankings of variable
annuity  separate  accounts  or other  investment  products  tracked  by  Lipper
Analytical  Services or by other rating services,  companies,  publications,  or
other persons who rank separate accounts or other investment products on overall
performance or other criteria, (ii) the effect of tax-deferred  compounding on a
Subaccount's investment returns, or returns in general, which may be illustrated
by graphs, charts, or otherwise, and which may include a comparison,  at various
points in time,  of the return from an  investment  in a Contract (or returns in
general)  on a  tax-deferred  basis  (assuming  one or more tax rates)  with the
return on a taxable basis,  and (iii) Security  Benefit's  rating or a rating of
Security Benefit's  claim-paying ability as determined by firms that analyze and
rate  insurance  companies  and  by  nationally  recognized  statistical  rating
organizations.

                             ADDITIONAL INFORMATION

REGISTRATION STATEMENT

     A  Registration  Statement  under the 1933 Act has been  filed with the SEC
relating to the offering described in this Prospectus.  This Prospectus does not
include all the  information  included in the  Registration  Statement,  certain
portions of which, including the Statement of Additional Information,  have been
omitted  pursuant  to  the  rules  and  regulations  of  the  SEC.  The  omitted
information  may be

- --------------------------------------------------------------------------------
                                       32
<PAGE>

obtained at the SEC's  principal  office in Washington,  DC, upon payment of the
SEC's prescribed fees.

FINANCIAL STATEMENTS

   
     Financial  statements  of Security  Benefit at December 31, 1996,  1995 and
1994 and for each of the three years in the period ended  December 31, 1996, and
the financial statements of the Separate Account for the year ended December 31,
1996,  and the period from April 1, 1995 to December 31, 1995,  are contained in
the Statement of Additional Information.
    

                       STATEMENT OF ADDITIONAL INFORMATION

     The Statement of Additional  Information contains more specific information
and financial  statements relating to Security Benefit. The Table of Contents of
the Statement of Additional Information is set forth below:

                                TABLE OF CONTENTS

   
                                                           Page
GENERAL INFORMATION AND HISTORY...........................   1
DISTRIBUTION OF THE CONTRACT..............................   1
LIMITS ON PURCHASE PAYMENTS PAID UNDER TAX-QUALIFIED
  RETIREMENT PLANS........................................   1
EXPERTS...................................................   3
PERFORMANCE INFORMATION...................................   3
FINANCIAL STATEMENTS......................................   5
    

- --------------------------------------------------------------------------------
                                       33

<PAGE>

                          VARIFLEX LS VARIABLE ANNUITY

                       STATEMENT OF ADDITIONAL INFORMATION
   
                         Date: May 1, 1997, As It May Be
                         Supplemented From Time To Time
    
             Individual Flexible Purchase Payment Deferred Variable
                                Annuity Contract

                                    Issued by
                     Security Benefit Life Insurance Company
                             700 SW Harrison Street
                            Topeka, Kansas 66636-0001
                                 1-800-888-2461

                                Mailing Address:
                     Security Benefit Life Insurance Company
                                 P.O. Box 750497
                            Topeka, Kansas 66675-0497
                                 1-800-888-2461

   
     This Statement of Additional  Information is not a prospectus and should be
read in  conjunction  with the current  Prospectus  for the Variflex LS Variable
Annuity  dated  May 1,  1997.  A copy of the  Prospectus  may be  obtained  from
Security  Benefit  by calling  1-800-888-2461  or by writing  P.O.  Box  750497,
Topeka, Kansas 66675-0497.
    

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

GENERAL INFORMATION AND HISTORY............................................... 1

DISTRIBUTION OF THE CONTRACT.................................................. 1

LIMITS ON PURCHASE PAYMENTS PAID UNDER TAX-QUALIFIED RETIREMENT PLANS......... 1

   
EXPERTS....................................................................... 3
    

PERFORMANCE INFORMATION....................................................... 3

FINANCIAL STATEMENTS.......................................................... 5

                                       i

<PAGE>

                         GENERAL INFORMATION AND HISTORY

     For a description  of the Individual  Flexible  Purchase  Payment  Deferred
Variable  Annuity  Contract (the  "Contract"),  Security  Benefit Life Insurance
Company  ("Security  Benefit"),  and the  Variable  Annuity  Account  VIII  (the
"Separate   Account"),   see  the  Prospectus.   This  Statement  of  Additional
Information  contains  information  that  supplements  the  information  in  the
Prospectus.  Defined terms used in this Statement of Additional Information have
the same meaning as terms defined in the section  entitled  "Definitions" in the
Prospectus.

SAFEKEEPING OF ASSETS

     Security  Benefit is responsible  for the  safekeeping of the assets of the
Subaccounts.  These assets,  which consist of shares of the Series of the Mutual
Fund in  non-certificated  form,  are held separate and apart from the assets of
the Security Benefit's General Account and its other separate accounts.

                          DISTRIBUTION OF THE CONTRACT

     Security  Distributors,  Inc.  ("SDI")  is  Principal  Underwriter  of  the
Contract.  SDI is registered as a broker/dealer with the Securities and Exchange
Commission ("SEC") under the Securities  Exchange Act of 1934 and is a member of
the National Association of Securities Dealers,  Inc. ("NASD").  The offering of
the Contracts is continuous.

     Subject to  arrangements  with  Security  Benefit,  the Contract is sold by
independent  broker/dealers  who are members of the NASD and who become licensed
to sell variable annuities for SBL, and by certain financial  institutions.  SDI
acts as principal underwriter on behalf of Security Benefit for the distribution
of the Contract.  SDI is not compensated  under its Distribution  Agreement with
Security Benefit.

     The compensation  payable by SDI under these  arrangements may vary, but is
not  expected  to exceed in the  aggregate  3% of  purchase  payments  and 1% of
contract value on an annualized basis.

              LIMITS ON PURCHASE PAYMENTS PAID UNDER TAX-QUALIFIED
                                RETIREMENT PLANS

SECTION 401

     The  applicable  annual limits on purchase  payments for a Contract used in
connection  with a retirement  plan that is qualified  under  Section 401 of the
Internal Revenue Code depend upon the type of plan.  Total purchase  payments on
behalf of a  participant  to all defined  contribution  plans  maintained  by an
employer are limited  under Section  415(c) of the Internal  Revenue Code to the
lesser of (a)  $30,000,  or (b) 25% of the  participant's  annual  compensation.
Salary reduction contributions to a cash-or-deferred  arrangement under a profit
sharing plan are subject to additional annual limits. Contributions to a defined
benefit  pension  plan are  actuarially  determined  based  upon the  amount  of
benefits the  participants  will  receive  under the plan  formula.  The maximum
annual benefit any individual  may receive under an employer's  defined  benefit
plan is limited under Section  415(b) of the Internal  Revenue Code.  The limits
determined under Section 415(b) and (c) of the Internal Revenue Code are further
reduced for an individual who participates in a defined  contribution plan and a
defined benefit plan maintained by the same employer. Rollover contributions are
not subject to the annual limitations described above.

SECTION 403(B)

     Contributions  to 403(b)  annuities are excludable from an employee's gross
income  if they do not  exceed  the  smallest  of the  limits  calculated  under
Sections  402(g),  403(b)(2),  and 415 of the Code.  The  applicable  limit will
depend upon  whether  the  annuities  are  purchased  with  employer or employee
contributions. Rollover contributions are not subject to these annual limits.

                                       1
<PAGE>

     Section   402(g)   generally   limits  an   employee's   salary   reduction
contributions  to a 403(b)  annuity to $9,500 a year.  The $9,500  limit will be
reduced by salary reduction contributions to other types of retirement plans. An
employee with at least 15 years of service for a "qualified  employer" (i.e., an
educational  organization,  hospital,  home health  service  agency,  health and
welfare  service  agency,  church or  convention  or  association  of  churches)
generally  may  exceed  the  $9,500  limit by  $3,000  per year,  subject  to an
aggregate limit of $15,000 for all years.

     Section 403(b)(2) provides an overall limit on employer and employee salary
reduction contributions that may be made to a 403(b) annuity.  Section 403(b)(2)
generally  provides  that the maximum  amount of  contributions  an employee may
exclude from his or her gross income in any taxable year is equal to the excess,
if any, of:

          (i)   the amount  determined by multiplying 20% of the employee's  in-
                cludable compensation  by the  number  of  his or her  years  of
                service  with  the employer, over

         (ii)   the total amount  contributed to retirement  plans  sponsored by
                the  employer,  that were  excludable  from his gross  income in
                prior years.

     Section 415(c) also provides an overall limit on the amount of employer and
employee salary reduction contributions to a Section 403(b) annuity that will be
excludable  from an employee's  gross income in a given year. The Section 415(c)
limit  is the  lesser  of (i)  $30,000,  or (ii)  25% of the  employee's  annual
compensation.

SECTION 408

   
     Premiums (other than rollover  contributions) paid under a Contract used in
connection  with an  individual  retirement  annuity  (IRA) that is described in
Section  408  of the  Internal  Revenue  Code  are  subject  to  the  limits  on
contributions  to IRA's under Section 219(b) of the Internal Revenue Code. Under
Section 219(b) of the Code, contributions (other than rollover contributions) to
an IRA are  limited  to the  lesser of  $2,000  per year or the  Owner's  annual
compensation. Spousal IRAs allow an Owner and his or her spouse to contribute up
to $2,000 to their  respective  IRAs so long as a joint tax  return is filed and
joint income is $4,000 or more. The maximum amount the higher compensated spouse
may  contribute  for the year is the  lesser of $2,000 or 100% of that  spouse's
compensation.  The maximum the lower  compensated  spouse may  contribute is the
lesser of (i) $2,000 or (ii) 100% of that spouse's  compensation plus the amount
by which the higher  compensated  spouse's  compensation  exceeds the amount the
higher  compensated spouse contributes to his or her IRA. The extent to which an
Owner may deduct  contributions  to an IRA  depends  on the gross  income of the
Owner and his or her spouse for the year and whether  either  participate  in an
employer-sponsored retirement plan.
    

     Premiums  under a Contract  used in connection  with a simplified  employee
pension plan  described in Section 408 of the Internal  Revenue Code are subject
to limits under  Section  402(h) of the Internal  Revenue Code.  Section  402(h)
currently limits employer  contributions and salary reduction  contributions (if
permitted) under a simplified  employee pension plan to the lesser of (a) 15% of
the  compensation  of the  participant  in the  Plan,  or  (b)  $30,000.  Salary
reduction contributions, if any, are subject to additional annual limits.

SECTION 457

     Contributions  on behalf of an employee to a Section 457 plan generally are
limited to the lesser of (i) $7,500 or (ii) 33 1/3% of the employee's includable
compensation.  The current  $7,500 limit will be indexed for  inflation (in $500
increments)  for tax years  beginning  after  December 31, 1996. If the employee
participates  in more than one Section  457 plan,  the $7,500  limit  applies to
contributions to all such programs. The $7,500 limit is reduced by the amount of
any salary reduction contribution the employee makes to a 403(b) annuity, an IRA
or a retirement  plan qualified  under Section 401. The Section 457 limit may be
increased  during the last three years ending before the employee reaches his or
her normal  retirement  age.  In each of these last  three  years,  the plan may
permit a "catch-up" amount in addition to the regular amount to be deferred. The
maximum  combined  amount  which may be deferred in each of these three years is
$15,000  reduced  by any  amount  excluded  from the  employee's  income for the
taxable year as a contribution to another plan.

                                       2
<PAGE>

                                     EXPERTS

   
     The consolidated  financial statements for Security Benefit at December 31,
1996,  and 1995 and for each of the three years in the period ended December 31,
1996, and for the Separate Account for the year ended December 31, 1996, and the
period from April 1, 1995 to December 31, 1995,  appearing in this  Statement of
Additional  Information  have been  audited  by Ernst & Young  LLP,  independent
auditors,  as set forth in their reports thereon appearing on page 5 herein, and
are included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
    

                             PERFORMANCE INFORMATION

   
     Performance  information  for  the  Subaccounts  of the  Separate  Account,
including  the  yield  and  total  return  of all  Subaccounts,  may  appear  in
advertisements,  reports,  and  promotional  literature  provided  to current or
prospective Owners.

     Quotations  of yield for the Money Market  Subaccount  will be based on the
change in the value, exclusive of capital changes, of a hypothetical  investment
in a Contract over a particular  seven day period,  less a  hypothetical  charge
reflecting  deductions  from the Contract  during the period (the "base period")
and stated as a  percentage  of the  investment  at the start of the base period
(the  "base  period  return").  The base  period  return is then  annualized  by
multiplying  the 365/7,  with the resulting yield figure carried to at least the
nearest one hundredth of one percent.  Any quotations of effective yield for the
Money Market  Subaccount  assume that all  dividends  received  during an annual
period have been  reinvested.  Calculation of "effective  yield" begins with the
same  "base  period  return"  used  in the  yield  calculation,  which  is  then
annualized to reflect weekly compounding pursuant to the following formula:
    

              Effective Yield = [(Base Period Return + 1)365/7] - 1

   
     For the seven-day  period ended  December 31, 1996, the yield for the Money
Market Subaccount was 5.90% and the effective yield was 6.08%.
    

     Quotations  of yield  for the  Subaccounts,  other  than the  Money  Market
Subaccount,  will be based on all investment income per Accumulation Unit earned
during a particular 30-day period, less expenses accrued during the period ("net
investment  income"),  and will be computed by dividing net investment income by
the value of the Accumulation  Unit on the last day of the period,  according to
the following formula:

         YIELD    = 2[(a-b + 1)[6] - 1]
                       ---
                       cd

         where    a =    net investment income earned  during  the period by the
                         Series  attributable to shares owned by the Subaccount,

                  b =    expenses  accrued for the period (net of any reimburse-
                         ments),

                  c =    the   average  daily   number  of  Accumulation   Units
                         outstanding  during the period  that were  entitled  to
                         receive dividends, and

                  d =    the maximum offering price per Accumulation Unit on the
                         last day of the period.

   
     For the 30-day period ended December 31, 1996, the yield for the High Grade
Income Subaccount was 9.92%.
    

     Quotations  of  average  annual  total  return for any  Subaccount  will be
expressed  in  terms  of the  average  annual  compounded  rate of  return  of a
hypothetical  investment  in a Contract over a period of one, five and ten years
(or,  if less,  up to the life of the  Subaccount),  calculated  pursuant to the
following formula:  P(1 + T)n = ERV (where P = a hypothetical initial payment of
$1,000, T = the average annual total return, n = the number of years, and

                                        3
<PAGE>

ERV = the ending  redeemable value of a hypothetical  $1,000 payment made at the
beginning of the period).  All total return figures reflect the deduction of the
mortality and expense risk charge and the administrative  charge.  Quotations of
total return may simultaneously be shown for other periods.

   
     Where the portfolio in which a Subaccount  invests was established prior to
inception of the Subaccount,  quotations of average annual and total return will
include  quotations  for periods  beginning  prior to the  Subaccount's  date of
inception.   Such   quotations  will  be  based  upon  the  performance  of  the
Subaccount's  corresponding  portfolio  adjusted  to  reflect  deduction  of the
mortality and expense risk charge and the administrative charge.

     For the 1-, 5- and 10-year  periods ended December 31, 1996,  respectively,
the average  annual  total  return was 18.94%,  13.84% and 13.18% for the Growth
Subaccount;  16.54%, 10.12% and 12.18% for the Growth-Income Subaccount; 15.85%,
9.85% and 1.57% for the Worldwide Equity Subaccount; and -2.16%, 4.33% and 5.84%
for the High  Grade  Income  Subaccount.  For the 1- and  5-year  periods  ended
December  31,  1996,  and the  period  between  May 1, 1991  (portfolio  date of
inception) and December 31, 1996, respectively,  the average annual total return
was  17.12%,  12.13% and 11.49% for the  Social  Awareness  Subaccount.  For the
1-year period ended December 31, 1996,  and the period  between  October 1, 1992
(portfolio date of inception), and December 31, 1996, respectively,  the average
annual total return was 16.40% and 12.43% for the  Emerging  Growth  Subaccount.
For the 1-year period ended  December 31, 1996,  and the period  between June 1,
1995 (portfolio  date of inception),  and December 31, 1996,  respectively,  the
average annual total return was 12.09% and 11.91% for the Global Aggressive Bond
Subaccount;  12.62% and 11.91% for the Specialized Asset Allocation  Subaccount;
11.28% and 11.21% for the Managed  Asset  Allocation  Subaccount  and 18.35% and
22.12%  for  the  Equity  Income  Subaccount.  The  performance  of  the  Global
Aggressive Bond Subaccount reflects the reimbursement of certain expenses by the
Investment Adviser. In the absence of such reimbursement, the performance figure
would be reduced.

     Quotations of total return for any Subaccount of the Separate  Account will
be based on a  hypothetical  investment in an Account over a certain  period and
will be computed by  subtracting  the initial value of the  investment  from the
ending value and dividing the remainder by the initial value of the  investment.
Such  quotations of total return will reflect the  deduction of all  application
charges to the contract and the separate account (on an annual basis).

     For the fiscal  years ended 1996  through  1986,  the total return for each
Subaccount was the following:

<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------------
                        1996    1995     1994     1993     1992     1991      1990     1989     1988    1987     1986
- ----------------------------------------------------------------------------------------------------------------------
<S>                    <C>     <C>      <C>      <C>       <C>     <C>      <C>       <C>       <C>     <C>      <C>  
Growth Series          20.96%  34.91%   (3.02%)  12.12%    9.61%   34.18%   (11.80%)  33.05%    8.58%   4.80%    4.85%
Growth-Income Series   16.59%  28.26%   (4.33%)   8.08%    4.78%   35.89%    (5.79%)  26.61%   17.66%   2.21%   17.23%
Money Market Series     3.59%   3.90%    2.28%    1.15%    1.80%    4.18%     6.35%    7.53%    5.68%   4.98%    4.89%
Worldwide              15.81%   9.34%    1.31%   29.80%   (3.98%)   2.96%[1]   ---     ---       ---     ---      ---
Equity Series
High Grade             (2.11%) 16.92%   (8.23%)  11.06%    5.95%   15.34%     5.19%   10.32%    5.70%    1.00%   8.15%
Income Series
Social Awareness       17.15%  26.02%   (5.15%)  10.33%   14.76%    4.56%[1]   ---     ---       ---     ---      ---
Series
Emerging Growth        16.38%  17.82%   (6.42%)  12.07%   24.34%[2]  ---       ---     ---       ---     ---      ---
Series
Global Aggressive
Bond Series            12.09%   6.74%[3]  ---     ---      ---       ---       ---     ---       ---     ---      ---
Specialized Asset
Allocation Series      12.63%   6.23%[3]  ---     ---      ---       ---       ---     ---       ---     ---      ---
Managed Asset
Allocation Series      11.21%   6.43%[3]  ---     ---      ---       ---       ---     ---       ---     ---      ---
Equity Income Series   18.35%  16.05%[3]  ---     ---      ---       ---       ---     ---       ---     ---      ---
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

1.  From May 1, 1991 to December 31, 1991.
2.  From October 1, 1992 to December 31, 1992.
3.  From June 1, 1995 to December 31, 1995.
    

     Performance  information  for a Subaccount may be compared,  in reports and
promotional  literature,  to: (i) the  Standard & Poor's 500 Stock  Index  ("S&P
500"),   Dow  Jones   Industrial   Average   ("DJIA"),   Donoghue  Money  Market
Institutional  Averages,  the Lehman Brothers  Government  Corporate  Index, the
Morgan Stanley Capital  International's EAFE Index or other indices that measure
performance  of a pertinent  group of securities so that investors may compare a
Subaccount's  results  with those of a group of  securities  widely  regarded by
investors as

                                       4
<PAGE>

representative  of the  securities  markets in general  or  representative  of a
particular  type of security;  (ii) other variable  annuity  separate  accounts,
insurance  products  funds,  or other  investment  products  tracked  by  Lipper
Analytical  Services, a widely used independent research firm which ranks mutual
funds  and  other  investment  companies  by  overall  performance,   investment
objectives,  and assets,  or tracked by The Variable  Annuity  Research and Data
Service  ("VARDS"),   an  independent  service  which  monitors  and  ranks  the
performance  of  variable   annuity  issues  by  investment   objectives  on  an
industry-wide  basis or tracked by other  services,  companies,  publications or
persons  who rank such  investment  companies  on overall  performance  or other
criteria;  and (iii) the Consumer  Price Index (measure for inflation) to assess
the real rate of return from an investment in the  Contract.  Unmanaged  indices
may assume the reinvestment of dividends but generally do not reflect deductions
for administrative and management costs and expenses.

     Performance information for any Subaccount reflects only the performance of
a hypothetical  Contract under which an Owner's Contract Value is allocated to a
Subaccount  during a particular time period on which the calculations are based.
Performance  information  should  be  considered  in  light  of  the  investment
objectives and policies, characteristics and quality of the Series of the Mutual
Fund in which the Subaccount invests, and the market conditions during the given
time period,  and should not be  considered as a  representation  of what may be
achieved in the future.

     Reports and  promotional  literature  may also  contain  other  information
including  (i) the ranking of any  Subaccount  derived from rankings of variable
annuity  separate  accounts,  insurance  products  funds,  or  other  investment
products  tracked by Lipper  Analytical  Services or by other  rating  services,
companies,  publications,  or other persons who rank separate  accounts or other
investment  products  on overall  performance  or other  criteria,  and (ii) the
effect of a tax-deferred  compounding on a Subaccount's  investment  returns, or
returns in general,  which may be illustrated by graphs,  charts,  or otherwise,
and which may include a  comparison,  at various  points in time,  of the return
from an investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis.

                              FINANCIAL STATEMENTS

   
     The consolidated  financial  statements of Security Benefit at December 31,
1996 and 1995 and for each of the three years in the period  ended  December 31,
1996,  along with the financial  statements of the Separate Account for the year
ended  December 31, 1996, and the period April 1, 1995 to December 31, 1995, are
set forth herein, starting on page 5.

     The  consolidated  financial  statements  of  Security  Benefit,  which are
included in this Statement of Additional Information,  should be considered only
as bearing  on the  ability of the  Company  to meet its  obligations  under the
Contracts.   They  should  not  be  considered  as  bearing  on  the  investment
performance of the assets held in the Separate Account.
    

                                       5

<PAGE>

                          VARIABLE ANNUITY ACCOUNT VIII

                                  Balance Sheet

                                December 31, 1996
                             (DOLLARS IN THOUSANDS)

ASSETS
Investments:

  SBL Fund:

    Series A (Growth Series) - 1,304,751 shares at net asset value
      of $24.31 per share (cost, $30,692)............................  $ 31,719

    Series B (Growth-Income Series) - 580,561 shares at net asset
      value of $35.40 per share (cost, $20,771)......................    20,552

    Series C (Money Market Series) - 1,297,710 shares at net asset
      value of $12.56 per share (cost, $16,204)......................    16,299

    Series D (Worldwide Equity Series) - 2,545,572 shares at net
      asset value of $6.14 per share (cost, $15,488).................    15,630

    Series E (High Grade Income Series) - 1,538,241 shares at net
      asset value of $12.00 per share (cost, $18,684)................    18,459

    Series J (Emerging Growth Series) - 585,572 shares at net
      asset value of $18.25 per share (cost, $10,498)................    10,687

    Series K (Global Aggressive Bond Series) - 366,144 shares at
      net asset value of $10.72 per share (cost, $4,032).............     3,925

    Series M (Specialized Asset Allocation Series) - 1,351,411
      shares at net asset value of $12.05 per share (cost, $15,180)..    16,285

    Series N (Managed Asset Allocation Series) - 704,076 shares at
      net asset value of $12.02 per share (cost, $7,861).............     8,463

    Series O (Equity Income Series) - 1,728,336 shares at net
      asset value of $14.01 per share (cost, $21,854)................    24,214

    Series S (Social Awareness Series) - 169,763 shares at net
      asset value of $19.08 per share (cost, $3,169).................     3,239
                                                                       --------
Total assets.........................................................  $169,472
                                                                       =========

                                       6
<PAGE>

NET ASSETS
Net assets are represented by (NOTE 3):

                                                 NUMBER      UNIT
                                                OF UNITS     VALUE     AMOUNT
                                               -------------------------------
   Growth Series:
     Accumulation units......................  1,987,463     $15.96   $31,719

   Growth-Income Series:
     Accumulation units......................  1,388,519      14.80    20,552

   Money Market Series:
     Accumulation units......................  1,520,180      10.72    16,299

   Worldwide Equity Series:
     Accumulation units......................  1,183,160      13.21    15,630

   High Grade Income Series:
     Accumulation units......................  1,631,708      11.31    18,459

   Emerging Growth Series:
     Accumulation units......................    772,390      13.84    10,687

   Global Aggressive Bond Series:
     Accumulation units......................    328,077      11.96     3,925

   Specialized Asset Allocation Series:
     Accumulation units......................  1,361,078      11.96    16,285

   Managed Asset Allocation Series:
     Accumulation units......................    715,033      11.84     8,463

   Equity Income Series:
     Accumulation units......................  1,764,015      13.73    24,214

   Social Awareness Series:
     Accumulation units......................    220,549      14.69     3,239
                                                                     ----------
Total net assets.............................                        $169,472
                                                                     ==========

SEE ACCOMPANYING NOTES.

                                       7
<PAGE>


                          VARIABLE ANNUITY ACCOUNT VIII

                STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS

                          YEAR ENDED DECEMBER 31, 1996
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                                   HIGH
                                                                GROWTH-    MONEY      WORLDWIDE    GRADE     EMERGING
                                                      GROWTH    INCOME     MARKET       EQUITY     INCOME     GROWTH
                                                      SERIES    SERIES     SERIES       SERIES     SERIES     SERIES
                                                   ----------------------------------------------------------------
<S>                                                  <C>       <C>        <C>        <C>        <C>       <C>
Dividend distributions..........................        $167      $299       $619       $328       $651       $13  
Expenses (Note 2):
   Mortality and expense risk fee...............        (202)     (144)      (198)      (100)      (110)      (76) 
   Administrative fee...........................         (24)      (17)       (23)       (12)       (13)       (9) 
                                                   ----------------------------------------------------------------
Net investment income (loss)....................         (59)      138        398        216        528       (72) 

Capital gains distributions.....................       1,038     1,447          -        309          -       297  
Realized gain (loss) on investments.............         861       338         62        270       (215)      138  
Unrealized appreciation (depreciation) on
   investments..................................         899      (325)       117        105       (298)      182  
                                                   ----------------------------------------------------------------
Net realized and unrealized gain (loss) on
   investments..................................       2,798     1,460        179        684       (513)      617  
                                                   ----------------------------------------------------------------
Net increase in net assets resulting from
   operations...................................       2,739     1,598        577        900         15       545  

Net assets at beginning of year.................       3,825     3,162      2,991      1,441      2,777     1,589  
Variable annuity deposits (Notes 2 and 3).......      36,931    19,038     52,927     16,001     20,763    13,962  
Terminations and withdrawals (Notes 2 and 3)....     (11,776)   (3,246)   (40,196)    (2,712)    (5,096)   (5,409) 
                                                   ----------------------------------------------------------------
Net assets at end of year.......................     $31,719   $20,552    $16,299    $15,630    $18,459   $10,687  
                                                   ================================================================
</TABLE>

SEE ACCOMPANYING NOTES.

<TABLE>
<CAPTION>
                                                               SPECIALIZED    MANAGED
                                                     GLOBAL       ASSET         ASSET      EQUITY    SOCIAL
                                                   AGGRESSIVE   ALLOCATION   ALLOCATION    INCOME   AWARENESS
                                                   OND SERIES     SERIES       SERIES      SERIES    SERIES
                                                   ----------------------------------------------------------
<S>                                                  <C>         <C>          <C>        <C>         <C>
Dividend distributions..........................       $260         $144         $39         $42        $8
Expenses (Note 2):
   Mortality and expense risk fee...............        (30)        (145)        (72)       (189)      (20)
   Administrative fee...........................         (4)         (18)         (8)        (22)       (3)
                                                   ----------------------------------------------------------
Net investment income (loss)....................        226          (19)        (41)       (169)      (15)

Capital gains distributions.....................         44           67           8           3        41
Realized gain (loss) on investments.............        156          285         155         622        78
Unrealized appreciation (depreciation) on
   investments..................................       (114)         998         536       2,141        53
                                                   ----------------------------------------------------------
Net realized and unrealized gain (loss) on
   investments..................................         86        1,350         699       2,766       172
                                                   ----------------------------------------------------------
Net increase in net assets resulting from
   operations...................................        312        1,331         658       2,597       157

Net assets at beginning of year.................        923        5,004       2,468       3,102       467
Variable annuity deposits (Notes 2 and 3).......      4,266       12,169       6,890      21,963     3,033
Terminations and withdrawals (Notes 2 and 3)....     (1,576)      (2,219)     (1,553)     (3,448)     (418)
                                                   ----------------------------------------------------------
Net assets at end of year.......................     $3,925      $16,285      $8,463     $24,214    $3,239
                                                   ==========================================================
</TABLE>
SEE ACCOMPANYING NOTES.

                                       8
<PAGE>

                          VARIABLE ANNUITY ACCOUNT VIII

                STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS

           PERIOD FROM APRIL 1, 1995 (INCEPTION) TO DECEMBER 31, 1995
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                                  HIGH
                                                                GROWTH-    MONEY     WORLDWIDE    GRADE    EMERGING
                                                      GROWTH    INCOME     MARKET      EQUITY     INCOME    GROWTH
                                                      SERIES    SERIES     SERIES      SERIES     SERIES    SERIES
                                                   ----------------------------------------------------------------
<S>                                                  <C>        <C>       <C>       <C>         <C>       <C>
Dividend distributions..........................         $8        $18       $55         -         $35        $-    
Expenses (Note 2):
   Mortality and expense risk fee...............        (10)       (10)      (10)       (4)         (7)       (5)   
   Administrative fee...........................         (1)        (1)       (1)       (1)         (1)       (1)   
                                                   -----------------------------------------------------------------
Net investment income (loss)....................         (3)         7        44        (5)         27        (6)   

Capital gains distributions.....................         34          -         -         6           -         -    
Realized gain (loss) on investments.............         49         55       (33)       15          (4)       35    
Unrealized appreciation (depreciation) on
   investments..................................        128        106       (22)       37          73         7    
                                                   -----------------------------------------------------------------
Net realized and unrealized gain (loss) on
   investments..................................        211        161       (55)       58          69        42    
                                                   -----------------------------------------------------------------
Net increase (decrease) in net assets resulting
   from operations..............................        208        168       (11)       53          96        36    

Net assets at beginning of period...............          -          -         -         -           -         -    
Variable annuity deposits (Notes 2 and 3).......      3,949      3,079     5,045     1,419       2,894     1,769    
Terminations and withdrawals (Notes 2 and 3)....       (332)       (85)   (2,043)      (31)       (213)     (216)   
                                                   -----------------------------------------------------------------
Net assets at end of period.....................     $3,825     $3,162    $2,991    $1,441      $2,777    $1,589    
                                                   =================================================================
</TABLE>

SEE ACCOMPANYING NOTES.

<TABLE>
<CAPTION>
                                                               SPECIALIZED    MANAGED
                                                     GLOBAL       ASSET        ASSET       EQUITY    SOCIAL
                                                   AGGRESSIVE   ALLOCATION   ALLOCATION    INCOME   AWARENESS
                                                   OND SERIES     SERIES       SERIES      SERIES    SERIES
                                                   ----------------------------------------------------------
<S>                                                  <C>        <C>         <C>          <C>        <C>
Dividend distributions..........................      $42           $-          $-           $-       $1
Expenses (Note 2):
   Mortality and expense risk fee...............       (4)         (20)         (7)         (11)      (2)
   Administrative fee...........................       (1)          (2)         (1)          (1)       -
                                                   ---------------------------------------------------------
Net investment income (loss)....................       37          (22)         (8)         (12)      (1)

Capital gains distributions.....................        4            -           -            -        -
Realized gain (loss) on investments.............        1           92          14           48       16
Unrealized appreciation (depreciation) on
   investments..................................        7          107          66          219       17
                                                   ---------------------------------------------------------
Net realized and unrealized gain (loss) on
   investments..................................       12          199          80          267       33
                                                   ---------------------------------------------------------
Net increase (decrease) in net assets resulting
   from operations..............................       49          177          72          255       32

Net assets at beginning of period...............        -            -           -            -        -
Variable annuity deposits (Notes 2 and 3).......      887        5,116       2,556        2,966      436
Terminations and withdrawals (Notes 2 and 3)....      (13)        (289)       (160)        (119)      (1)
                                                   ---------------------------------------------------------
Net assets at end of period.....................     $923       $5,004      $2,468       $3,102     $467
                                                   =========================================================
</TABLE>

SEE ACCOMPANYING NOTES.

                                       9

<PAGE>

                          VARIABLE ANNUITY ACCOUNT VIII

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 1996 AND 1995


1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Variable  Annuity  Account VIII (the Account) is a separate  account of Security
Benefit  Life  Insurance  Company  (SBL).  The Account is  registered  as a unit
investment trust under the Investment Company Act of 1940, as amended.  Deposits
received  by the  Account  are  invested  in the SBL  Fund,  a  mutual  fund not
otherwise available to the public. As directed by the owners,  amounts deposited
may be  invested  in shares of Series A (Growth  Series -  emphasis  on  capital
appreciation),  Series B (Growth-Income  Series emphasis on capital appreciation
with secondary emphasis on income),  Series C (Money Market Series - emphasis on
capital  preservation  while generating  interest  income),  Series D (Worldwide
Equity  Series - emphasis on long-term  capital  growth  through  investment  in
foreign and domestic common stocks and equivalents), Series E (High Grade Income
Series - emphasis  on current  income  with  security  of  principal),  Series J
(Emerging  Growth Series - emphasis on capital  appreciation),  Series K (Global
Aggressive Bond Series - emphasis on high current income with secondary emphasis
on  capital  appreciation),  Series M  (Specialized  Asset  Allocation  Series -
emphasis on high total return  consisting  of capital  appreciation  and current
income),  Series N (Managed Asset Allocation  Series - emphasis on high level of
total return), Series O (Equity Income Series - emphasis on substantial dividend
income  and  capital  appreciation)  and  Series S  (Social  Awareness  Series -
emphasis on high total return).

Under the terms of the investment advisory contracts,  portfolio  investments of
the underlying mutual fund are made by Security Management  Company,  LLC (SMC),
which is owned 50% by SBL and 50% by  Security  Benefit  Group,  Inc.  (SBG),  a
wholly-owned subsidiary of SBL. SMC has engaged Lexington Management Corporation
to provide  sub-advisory  services for the  Worldwide  Equity  Series and Global
Aggressive Bond Series and has engaged T. Rowe Price Associates, Inc. to provide
sub-advisory  services for the Managed  Asset  Allocation  Series and the Equity
Income Series. SMC has also entered into agreements with Templeton  Quantitative
Advisors, Inc. and Meridian Investment Management Corporation to provide certain
quantitative  research services with respect to the Specialized Asset Allocation
Series.

INVESTMENT VALUATION

Investments  in mutual fund  shares are  carried in the balance  sheet at market
value (net asset value of the underlying  mutual fund). The first-in,  first-out
cost method is used to determine  gains and losses.  Security  transactions  are
accounted for on the trade date.

                                       10
<PAGE>

                          VARIABLE ANNUITY ACCOUNT VIII

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The cost of  investments  purchased and proceeds from  investments  sold were as
follows:

<TABLE>
<CAPTION>
                                                                                           PERIOD FROM
                                                                                          APRIL 1, 1995
                                                          YEAR ENDED                      (INCEPTION) TO
                                                       DECEMBER 31, 1996                DECEMBER 31, 1995
                                               --------------------------------------------------------------------
                                                     COST OF        PROCEEDS         COST OF          PROCEEDS
                                                    PURCHASES      FROM SALES       PURCHASES        FROM SALES
                                               --------------------------------------------------------------------
                                                                         (IN THOUSANDS)

<S>                                                  <C>             <C>              <C>              <C>   
Growth Series..................................      $40,767         $14,633          $4,914           $1,266
Growth-Income Series...........................       22,294           4,917           3,964              963
Money Market Series............................       57,357          44,228           5,704            2,658
Worldwide Equity Series........................       17,845           4,031           1,854              465
High Grade Income Series.......................       23,119           6,924           3,733            1,025
Emerging Growth Series.........................       15,884           7,106           2,237              690
Global Aggressive Bond Series..................        5,138           2,178             936               21
Specialized Asset Allocation Series............       13,727           3,729           8,733            3,928
Managed Asset Allocation Series................        7,768           2,464           2,963              575
Equity Income Series...........................       23,567           5,218           3,264              429
Social Awareness Series........................        3,333             692             549              115
</TABLE>

SBG's  investment in the subaccounts  represented the following  number of units
and contract value of Variable  Annuity Account VIII contracts owned at December
31, 1996 (DOLLARS IN THOUSANDS):

                                                    NUMBER     CONTRACT
                                                   OF UNITS     VALUE
                                             ----------------------------

Global Aggressive Bond Series................       50,000       $598
Managed Asset Allocation Series..............       40,000        474

ANNUITY RESERVES

As of December 31, 1996,  annuity  reserves  have not been  established  because
there are no  contracts  that have  matured  and are in the payout  stage.  Such
reserves  would be computed on the basis of  published  mortality  tables  using
assumed interest rates that will provide reserves as prescribed by law. In cases
where  the  payout  option  selected  is  life   contingent,   SBL  periodically
recalculates  the required  annuity  reserves,  and any resulting  adjustment is
either charged or credited to SBL and not to the Account.

                                       11
<PAGE>

                          VARIABLE ANNUITY ACCOUNT VIII

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REINVESTMENT OF DIVIDENDS

Dividend and capital gains  distributions paid by the mutual fund to the Account
are reinvested in additional shares of each respective  Series.  Dividend income
and capital gains distributions are recorded as income on the ex-dividend date.

FEDERAL INCOME TAXES

Under  current  law, no federal  income  taxes are payable  with  respect to the
Account.

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.

2.  VARIABLE ANNUITY CONTRACT CHARGES

SBL deducts an  administrative  fee equivalent to an annual rate of 0.15% of the
average  daily net asset value of each  account.  Mortality  and  expense  risks
assumed by SBL are  compensated  for by a fee  equivalent  to an annual  rate of
1.25%  of the  asset  value of each  contract,  of  which  0.7% is for  assuming
mortality risks and the remainder is for assuming expense risks.

When  applicable,  an amount for state  premium taxes is deducted as provided by
pertinent  state  law,  either  from the  purchase  payments  or from the amount
applied to effect an annuity at the time annuity payments commence.

                                       12
<PAGE>

                          VARIABLE ANNUITY ACCOUNT VIII

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                           December 31, 1996 and 1995


3.  SUMMARY OF UNIT TRANSACTIONS

                                                           UNITS
                                            ------------------------------------
                                                                  PERIOD FROM
                                                                 APRIL 1, 1995
                                               YEAR ENDED       (INCEPTION) TO
                                            DECEMBER 31, 1996  DECEMBER 31, 1995
                                            ------------------------------------
                                                         (IN THOUSANDS)
Growth Series:
   Variable annuity deposits..................    2,499               316
   Terminations and withdrawals...............      802                26
Growth-Income Series:
   Variable annuity deposits..................    1,372               256
   Terminations and withdrawals...............      232                 7
Money Market Series:
   Variable annuity deposits..................    5,023               491
   Terminations and withdrawals...............    3,792               202
Worldwide Equity Series:
   Variable annuity deposits..................    1,273               129
   Terminations and withdrawals...............      216                 3
High Grade Income Series:
   Variable annuity deposits..................    1,846               259
   Terminations and withdrawals...............      454                19
Emerging Growth Series:
   Variable annuity deposits..................    1,048               151
   Terminations and withdrawals...............      410                18
Global Aggressive Bond Series:
   Variable annuity deposits..................      380                88
   Terminations and withdrawals...............      138                 1
Specialized Asset Allocation Series:
   Variable annuity deposits..................    1,089               782
   Terminations and withdrawals...............      199               310
Managed Asset Allocation Series:
   Variable annuity deposits..................      625               247
   Terminations and withdrawals...............      142                16
Equity Income Series:
   Variable annuity deposits..................    1,772               278
   Terminations and withdrawals...............      275                11
Social Awareness Series:
   Variable annuity deposits..................      215                37
   Terminations and withdrawals...............       32                 -

                                       13
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                                    CONTENTS

Report of Independent Auditors...........................................   17

Audited Consolidated Financial Statements
     Consolidated Balance Sheets.........................................   18
     Consolidated Statements of Income...................................   20
     Consolidated Statements of Changes in Equity........................   21
     Consolidated Statements of Cash Flows...............................   22
     Notes to Consolidated Financial Statements..........................   24

                                       14
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Security Benefit Life Insurance Company

We have audited the accompanying consolidated balance sheets of Security Benefit
Life Insurance  Company and  Subsidiaries  (the Company) as of December 31, 1996
and 1995, and the related consolidated  statements of income,  changes in equity
and cash flows for each of the three  years in the  period  ended  December  31,
1996.  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  in  accordance  with  generally   accepted  auditing
standards.  Those standards 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.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Security Benefit
Life Insurance  Company and  Subsidiaries  at December 31, 1996 and 1995 and the
consolidated  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.

As discussed in NOTE 1 to the consolidated  financial  statements,  in 1996, the
Company adopted certain  accounting  changes to conform with generally  accepted
accounting  principles for mutual life insurance  enterprises and  retroactively
restated  the  1994 and 1995  financial  statements  for the  change.  Also,  as
discussed  in  NOTE 1 to the  consolidated  financial  statements,  the  Company
changed its method of accounting for debt securities as of January 1, 1994.

                                                             Ernst & Young LLP

February 7, 1997

                                       15
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                                             DECEMBER 31
                                                        1996             1995*
                                                    ----------------------------
                                                            (IN THOUSANDS)
ASSETS
Investments:
   Securities available-for-sale, at
   fair value (NOTES 2 AND 9):
     Fixed maturities..............................   $1,805,066    $1,778,370
     Equity securities ............................       89,188        21,880
   Fixed maturities held-to-maturity, at
   amortized cost (NOTE 2).........................      528,045       536,137
   Mortgage loans..................................       66,611        74,342
   Real estate.....................................        4,000         5,864
   Policy loans....................................      106,822       100,452
   Short-term investments..........................            -           992
   Cash and cash equivalents.......................        8,310        16,788
   Other invested assets...........................       40,531        37,769
                                                    ---------------------------
Total investments..................................    2,648,573     2,572,594

Premiums deferred and uncollected..................          149           574
Accrued investment income..........................       32,161        30,623
Accounts receivable................................        4,256         3,064
Reinsurance recoverable (NOTE 4)...................       92,197        78,877
Notes receivable...................................          110           147
Property and equipment, net........................       18,592        18,884
Deferred policy acquisition costs (NOTE 1).........      216,918       186,940
Other assets.......................................       24,680        36,221
Separate account assets (NOTE 10)..................    2,802,927     2,065,306
                                                    ---------------------------
                                                      $5,840,563    $4,993,230
                                                    ===========================

                                       16
<PAGE>

                                                             DECEMBER 31
                                                          1996          1995*
                                                       -------------------------
                                                            (IN THOUSANDS)
LIABILITIES AND EQUITY
Liabilities:
   Policy reserves and annuity account values........  $2,497,998    $2,495,113
   Policy and contract claims........................      10,607        10,571
   Other policyholder funds..........................      24,073        21,305
   Accounts payable and accrued expenses.............      18,003        13,609
   Income taxes payable (NOTE 5):
     Current.........................................       6,686        10,371
     Deferred........................................      54,847        53,659
   Long-term debt (NOTE 8)...........................      65,000             -
   Other liabilities.................................      11,990        11,619
   Separate account liabilities......................   2,793,911     2,051,292
                                                       -------------------------
Total liabilities....................................   5,483,115     4,667,539



Equity:
   Retained earnings.................................     357,927       314,084
   Unrealized appreciation (depreciation)
     of securities available-for-sale, net...........        (479)       11,607
                                                     ---------------------------
Total equity.........................................     357,448       325,691
                                                     ---------------------------
                                                       $5,840,563    $4,993,230
                                                     ===========================

*As restated

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       17
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31
                                                                     1996              1995*             1994*
                                                              ------------------------------------------------------
                                                                                 (IN THOUSANDS)
<S>                                                                  <C>               <C>              <C>
Revenues:
   Insurance premiums and other considerations...........            $28,848           $49,608          $55,148
   Net investment income.................................            192,636           179,940          166,857
   Asset based fees......................................             55,977            40,652           33,809
   Other product charges.................................             10,470            10,412            7,335
   Realized gains (losses) on investments................               (244)            3,876              134
   Other revenues........................................             20,033            22,164           27,241
                                                              ------------------------------------------------------
Total revenues...........................................            307,720           306,652          290,524

Benefits and expenses:
   Annuity and interest sensitive life benefits:
     Interest credited to account balances...............            108,705           113,700          103,087
     Benefit claims in excess of account balances........              7,541             6,808            7,145
   Traditional life insurance benefits...................              6,474             7,460            6,203
   Supplementary contract payments.......................             11,121            11,508           11,286
   Increase in traditional life reserves.................              8,580            13,212           12,977
   Dividends to policyholders............................              2,374             2,499            2,669
   Other benefits........................................             20,790            22,379           29,924
                                                              ------------------------------------------------------
Total benefits...........................................            165,585           177,566          173,291

Commissions and other operating expenses.................             45,539            46,233           39,998
Amortization of deferred policy acquisition costs........             25,930            26,628           24,674
Other expenses...........................................              1,667             1,099              785
Interest expense.........................................              4,285                 7              630
                                                              ------------------------------------------------------
Total benefits and expenses..............................            243,006           251,533          239,378
                                                              ------------------------------------------------------

Income before income taxes...............................             64,714            55,119           51,146
Income taxes (NOTE 5)....................................             20,871            17,927           17,129
                                                              ------------------------------------------------------
Net income...............................................            $43,843           $37,192          $34,017
                                                              ======================================================
</TABLE>

*As restated

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       18
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31
                                                                     1996              1995*             1994*
                                                              ------------------------------------------------------
                                                                                 (IN THOUSANDS)
<S>                                                                 <C>               <C>              <C>
Retained earnings:
   Beginning of year, as previously reported.............           $207,669          $150,726         $128,785
   Cumulative effect of change in accounting principle...            106,415           126,166          114,090
                                                              ------------------------------------------------------
   Beginning of year, as restated........................            314,084           276,892          242,875
   Net income............................................             43,843            37,192           34,017
                                                              ------------------------------------------------------
   End of year...........................................            357,927           314,084          276,892

Unrealized appreciation (depreciation)
  of securities available-for-sale, net:
     Beginning of year...................................             11,607           (48,466)         (10,034)
     Cumulative effect of change in accounting principle
       (NOTE 1)..........................................                  -                 -           10,733
     Change in unrealized appreciation (depreciation) of
       securities available-for-sale, net................            (12,086)           60,073          (49,165)
                                                              ------------------------------------------------------
     End of year.........................................               (479)           11,607          (48,466)
                                                              ------------------------------------------------------
Total equity.............................................           $357,448          $325,691         $228,426
                                                              ======================================================
</TABLE>

*As restated

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       19
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31
                                                                     1996               1995*             1994*
                                                              ------------------------------------------------------
                                                                                 (IN THOUSANDS)
<S>                                                                 <C>                <C>             <C>
OPERATING ACTIVITIES
Net income...............................................              $43,843          $37,192           $34,017
Adjustments to reconcile net income to net cash provided
   by operating activities:
     Annuity and interest sensitive life products:
       Interest credited to account balances.............              108,705          113,700           103,087
       Charges for mortality and administration..........              (13,115)         (16,585)          (17,000)
     Decrease (increase) in traditional life policy
       reserves..........................................               10,697            2,142            (5,950)
     Increase in accrued investment income...............               (1,538)          (4,573)             (567)
     Policy acquisition costs deferred...................              (36,865)         (33,021)          (38,737)
     Policy acquisition costs amortized..................               25,930           26,628            24,674
     Accrual of discounts on investments.................               (3,905)          (3,421)           (3,588)
     Amortization of premiums on investments.............               11,284            9,782            15,726
     Provision for depreciation and amortization.........                3,748            3,750             3,201
     Other...............................................               (3,379)          (4,225)            2,511
                                                              ------------------------------------------------------
Net cash provided by operating activities................              145,405          131,369           117,374

INVESTING ACTIVITIES
Sale, maturity or repayment of investments:
   Fixed maturities available-for-sale...................              870,240          517,480           318,252
   Fixed maturities held-to-maturity.....................               58,874           59,873           147,043
   Equity securities available-for-sale..................                8,857           10,242             3,830
   Mortgage loans........................................               12,545           23,248            21,096
   Real estate...........................................                2,935            3,173             2,782
   Short-term investments................................               20,069          229,871           834,082
   Other invested assets.................................                6,224           22,839             6,748
                                                              ------------------------------------------------------
                                                                       979,744          866,726         1,333,833
Acquisition of investments:
   Fixed maturities available-for-sale...................             (936,376)        (591,121)         (552,433)
   Fixed maturities held-to-maturity.....................              (52,422)        (125,276)          (56,398)
   Equity securities available-for-sale..................              (68,222)         (19,500)           (4,627)
   Mortgage loans........................................               (4,538)          (4,179)          (34,260)
   Real estate...........................................               (2,637)          (1,511)             (554)
   Short-term investments................................              (19,070)        (180,259)         (854,833)
   Other invested assets.................................               (3,712)         (31,861)          (18,581)
                                                              ------------------------------------------------------
                                                                    (1,086,977)        (953,707)       (1,521,686)
</TABLE>

                                       20

<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31
                                                                     1996              1995*              1994*
                                                              ------------------------------------------------------
                                                                                 (IN THOUSANDS)
<S>                                                                   <C>              <C>               <C>
INVESTING ACTIVITIES (CONTINUED)
Other investing activities:
   Purchase of property and equipment....................              $(1,879)         $(2,036)          $(2,932)
   Net increase in policy loans..........................               (6,370)          (8,058)           (5,569)
   Net cash transferred per coinsurance agreement........                    -          (16,295)                -
                                                              ------------------------------------------------------
Net cash used in investing activities....................             (115,482)        (113,370)         (196,354)

FINANCING ACTIVITIES
Issuance of long-term debt...............................               65,000                -                 -
Annuity and interest sensitive life products:
   Deposits credited to account balances.................              705,118          509,183           553,542
   Withdrawals from account balances.....................             (808,519)        (526,509)         (466,760)
                                                              ------------------------------------------------------
Net cash provided by (used in) financing activities......              (38,401)         (17,326)           86,782
                                                              ------------------------------------------------------
Increase (decrease) in cash and cash equivalents.........               (8,478)             673             7,802
Cash and cash equivalents at beginning of year...........               16,788           16,115             8,313
                                                              ------------------------------------------------------
Cash and cash equivalents at end of year.................               $8,310          $16,788           $16,115
                                                              ======================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
   Interest..............................................               $2,966             $120              $157
                                                              ======================================================
   Income taxes..........................................              $16,213          $11,551           $14,634
                                                              ======================================================
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
   FINANCING ACTIVITIES
Conversion of mortgage loans to real estate owned........                 $844               $-            $2,350
                                                              ======================================================
</TABLE>
*As restated

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       21

<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996

1.  SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Security   Benefit   Life   Insurance   Company   (SBL  or  the  Company)  is  a
Kansas-domiciled  mutual life insurance  company whose insurance  operations are
licensed  to  sell  insurance  products  in 50  states.  The  Company  offers  a
diversified  portfolio of  individual  and group  annuities,  ordinary  life and
mutual fund products through multiple  distribution  channels.  In recent years,
the Company's new business activities have increasingly been concentrated in the
individual flexible premium variable annuity markets.

BASIS OF PRESENTATION

The  accompanying  consolidated  financial  statements have been prepared on the
basis of generally accepted  accounting  principles  (GAAP).  Prior to 1996, the
Company  prepared  its  financial   statements  in  conformity  with  accounting
practices  prescribed  or permitted by the Kansas  Insurance  Department,  which
practices were  considered  GAAP for mutual life  insurance  companies and their
stock life insurance  subsidiaries.  Financial Accounting Standards Board (FASB)
Interpretation  No.  40,   "Applicability  of  Generally   Accepted   Accounting
Principles to Mutual Life Insurance and Other Enterprises," as amended, which is
effective for 1996 annual financial statements and thereafter, no longer permits
statutory-basis  financial  statements  to be  described  as being  prepared  in
conformity  with GAAP.  Accordingly,  the Company has  adopted  GAAP,  including
Statement of Financial  Accounting  Standards  (SFAS) No. 120,  "Accounting  and
Reporting by Mutual Life Insurance  Enterprises and by Insurance Enterprises for
Certain Long-Duration  Participating Contracts," and Statement of Position 95-1,
"Accounting   for  Certain   Insurance   Activities  of  Mutual  Life  Insurance
Enterprises,"  which address the accounting for long-duration and short-duration
insurance and reinsurance contracts, including all participating business.

Pursuant to the requirements of FASB Interpretation No. 40 and SFAS No. 120, the
effect of the changes in  accounting  have been applied  retroactively,  and the
previously issued 1995 and 1994 financial  statements have been restated for the
change.  The effect of the changes  applicable to years prior to January 1, 1994
has been  presented as a restatement  of retained  earnings as of that date. The
adoption  had the effect of  increasing  net  income for 1996,  1995 and 1994 by
approximately $5,897,000, $8,436,000 and $6,663,000, respectively.

The  consolidated  financial  statements  include the operations and accounts of
Security  Benefit  Life  Insurance   Company  and  the  following   wholly-owned
subsidiaries:   Security  Benefit  Group,  Inc.,  First  Security  Benefit  Life
Insurance and Annuity Company of New York,  Security  Management

                                       22
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Company, LLC, Security Distributors, Inc., Security Benefit Academy, Inc., First
Advantage  Insurance Agency,  Inc. and Creative  Impressions,  Inc.  Significant
intercompany transactions have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial  statements  requires  management to make estimates
and  assumptions  that affect amounts  reported in the financial  statements and
accompanying notes. Actual results could differ from those estimates.

ACCOUNTING CHANGE

Prior to January 1, 1994, fixed  maturities were reported at cost,  adjusted for
amortization  of premiums and accrual of discounts.  Effective  January 1, 1994,
the Company adopted SFAS No. 115,  "Accounting  for Certain  Investments in Debt
and Equity  Securities."  SFAS No. 115 requires that fixed  maturities are to be
classified as either  held-to-maturity,  trading or  available-for-sale.  Equity
securities  are to be classified as either  available-for-sale  or trading.  The
adoption  had no effect on net income and  resulted  in an increase in equity at
January 1, 1994 of  $10,733,000,  net of the related  effect of deferred  policy
acquisition costs and deferred income taxes.

INVESTMENTS

Fixed   maturities   have  been   classified  as  either   held-to-maturity   or
available-for-sale. Fixed maturities are classified as held-to-maturity when the
Company has the positive  intent and ability to hold the securities to maturity.
Held-to-maturity   securities  are  stated  at  amortized  cost,   adjusted  for
amortization of premiums and accrual of discounts. Such amortization and accrual
on these  securities  are included in investment  income.  Fixed  maturities not
classified   as   held-to-maturity   are   classified   as   available-for-sale.
Available-for-sale fixed maturities are stated at fair value with the unrealized
appreciation or depreciation,  net of adjustment of deferred policy  acquisition
costs and deferred income taxes, reported in a separate component of equity and,
accordingly,  have no effect on net income.  The DPAC offsets to the  unrealized
appreciation or depreciation  represent valuation adjustments or restatements of
DPAC that would have been required as a charge or credit to operations  had such
unrealized  amounts  been  realized.  The  amortized  cost of  fixed  maturities
classified as  available-for-sale  is adjusted for  amortization of premiums and
accrual of discounts.  Premiums and discounts are recognized  over the estimated
lives of the assets adjusted for prepayment activity.

Equity  securities  consisting of common stocks,  mutual funds and nonredeemable
preferred  stock are carried at fair value and are reported in  accordance  with
SFAS No. 115.  Mortgage loans and short-term  investments  are reported at cost,
adjusted  for  amortization  of premiums and accrual of

                                       23
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

discounts.  Real estate investments are carried at the lower of depreciated cost
or estimated  realizable  value.  Policy loans are reported at unpaid principal.
Investments  accounted  for by the equity  method  include  investments  in, and
advances to, various joint ventures and partnerships.  Realized gains and losses
on  sales  of   investments   are   recognized   in  revenues  on  the  specific
identification method.

The carrying amounts of all the Company's investments are reviewed on an ongoing
basis. If this review  indicates a decline in value that is other than temporary
for any investment,  the amortized cost of the investment is reduced to its fair
value.  Such  reductions in carrying amount are recognized as realized losses in
the determination of net income.

The Company's principal objective in holding derivatives for purposes other than
trading is asset-liability management. The operations of the Company are subject
to risk of interest rate  fluctuations  to the extent that there is a difference
between the amount of the Company's interest-earning assets and interest-bearing
liabilities that reprice or mature in specified periods. The principal objective
of the Company's  asset-liability  management  activities is to provide  maximum
levels of net interest income while  maintaining  acceptable  levels of interest
rate and liquidity risk and  facilitating  the funding needs of the Company.  To
achieve that  objective,  the Company uses  financial  futures  instruments  and
interest rate exchange  agreements.  Financial futures contracts are commitments
to either purchase or sell a financial  instrument at a specific future date for
a  specified  price  and  may be  settled  in cash or  through  delivery  of the
financial  instrument.  Interest rate exchange agreements  generally involve the
exchange of fixed and floating rate interest payments without an exchange of the
underlying principal.

Interest  rate  exchange  agreements  are  used to  convert  the  interest  rate
characteristics (fixed or variable) of certain investments to match those of the
related  insurance  liabilities  that the investments  are  supporting.  The net
interest  effect of such swap  transactions  is  reported  as an  adjustment  of
interest income as incurred.

Gains and losses on those instruments are included in the carrying amount of the
underlying hedged investments,  or anticipated investment transactions,  and are
amortized over the remaining  lives of the hedged  investments as adjustments to
investment  income.  Any  unamortized  gains or losses are  recognized  when the
underlying investments are sold.

DEFERRED POLICY ACQUISITION COSTS

To the  extent  recoverable  from  future  policy  revenues  and gross  profits,
commissions and other policy-issue, underwriting and marketing costs incurred to
acquire  or  renew  traditional  life  insurance,  interest  sensitive  life and
deferred  annuity  business  that vary  with and are  primarily  related  to the
production of new and renewal business have been deferred.

                                       24
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Traditional life insurance deferred policy acquisition costs are being amortized
in proportion to premium revenues over the premium-paying  period of the related
policies  using  assumptions  consistent  with  those used in  computing  policy
benefit reserves.

For interest  sensitive  life and deferred  annuity  business,  deferred  policy
acquisition  costs are amortized in proportion to the present value  (discounted
at the crediting rate) of expected gross profits from investment,  mortality and
expense margins. That amortization is adjusted retrospectively when estimates of
current or future  gross  profits to be realized  from a group of  products  are
revised.

CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers  certificates
of deposits with original maturities of 90 days or less to be cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment,  including real estate, furniture and fixtures, and data
processing hardware and related systems,  are recorded at cost, less accumulated
depreciation.  The  provision  for  depreciation  of property  and  equipment is
computed using the straight-line  method over the estimated lives of the related
assets.

SEPARATE ACCOUNTS

The separate account assets and liabilities reported in the accompanying balance
sheets  represent  funds that are  separately  administered  for the  benefit of
contractholders  who bear the investment  risk. The separate  account assets and
liabilities are carried at fair value. Revenues and expenses related to separate
account  assets and  liabilities,  to the extent of benefits paid or provided to
the separate account contractholders,  are excluded from the amounts reported in
the  consolidated  statements of income.  Investment  income and gains or losses
arising from separate accounts accrue directly to the  contractholders  and are,
therefore, not included in investment earnings in the accompanying statements of
income.  Revenues to the Company from separate  accounts consist  principally of
contract  maintenance  charges,  administrative  fees, and mortality and expense
risk charges.

POLICY RESERVES AND ANNUITY ACCOUNT VALUES

The liabilities for future policy benefits for traditional  life and reinsurance
products are computed using a net level premium method, including assumptions as
to  investment  yields,  mortality,  withdrawals,  and  other  assumptions  that
approximate expected experience.

                                       25
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Liabilities for future policy benefits for interest  sensitive life and deferred
annuity products  represent  accumulated  contract values without  reduction for
potential  surrender  charges and deferred  front-end  contract charges that are
amortized over the life of the policy.  Interest on accumulated  contract values
is credited to  contracts as earned.  Crediting  rates ranged from 3.5% to 7.25%
during 1996, 4.0% to 7.75% during 1995, and 4.5% to 7.75% during 1994.

INCOME TAXES

Income taxes have been provided  using the liability  method in accordance  with
SFAS No. 109,  "Accounting  for Income  Taxes." Under that method,  deferred tax
assets and liabilities are determined based on differences between the financial
reporting and income tax bases of assets and  liabilities and are measured using
the  enacted  tax  rates and laws.  Deferred  income  tax  expenses  or  credits
reflected  in the  Company's  statements  of income are based on the  changes in
deferred tax assets or liabilities from period to period (excluding the SFAS No.
115 adjustment, which is charged or credited directly to equity).

RECOGNITION OF REVENUES

Traditional  life insurance  products  include whole life  insurance,  term life
insurance and certain  annuities.  Premiums for these  traditional  products are
recognized as revenues when due. Revenues from interest sensitive life insurance
products  and  deferred  annuities  consist  of policy  charges  for the cost of
insurance,  policy administration charges and surrender charges assessed against
contractholder account balances during the period.

FAIR VALUES OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

     Cash,  certificates  of deposits and short-term  investments:  The carrying
     amounts  reported in the balance  sheet for these  instruments  approximate
     their fair values.

     Investment securities: Fair values for fixed maturities are based on quoted
     market prices,  where available.  For fixed maturities not actively traded,
     fair values are estimated  using values obtained from  independent  pricing
     services or estimated  by  discounting  expected  future cash flows using a
     current market rate applicable to the yield, credit quality and maturity of
     the investments.  The fair values for equity securities are based on quoted
     market prices.

     Mortgage loans and policy loans:  Fair values for mortgage loans and policy
     loans are estimated  using  discounted cash flow analyses based on interest
     rates  currently  being offered

                                       26
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     for similar  loans to borrowers  with similar  credit  ratings.  Loans with
     similar characteristics are aggregated for purposes of the calculations.

     Investment-type  contracts: Fair values for the Company's liabilities under
     investment-type  insurance  contracts  are estimated  using the  assumption
     reinsurance  method,  whereby the amount of  statutory  profit the assuming
     company  would realize from the business is  calculated.  Those amounts are
     then  discounted at a rate of return  commensurate  with the rate presently
     offered by the Company on similar contracts.

     Long-term  debt:  Fair  values  for  long-term  debt  are  estimated  using
     discounted  cash flow analyses based on current  borrowing  rates available
     for similar types of borrowing arrangements.

2.  INVESTMENTS

Information as to the amortized cost,  gross  unrealized  gains and losses,  and
fair values of the Company's portfolio of fixed maturities and equity securities
at December 31, 1996 and 1995 is as follows:

<TABLE>
<CAPTION>
                                                                            DECEMBER 31, 1996
                                                   -----------------------------------------------------------------
                                                                        GROSS           GROSS
                                                        AMORTIZED    UNREALIZED       UNREALIZED
                                                          COST          GAINS           LOSSES        FAIR VALUE
                                                   -----------------------------------------------------------------
                                                                            (IN THOUSANDS)

<S>                                                    <C>               <C>            <C>            <C>
AVAILABLE-FOR-SALE
U.S. Treasury securities and obligations of U.S.
   government corporations and agencies..........        $173,884           $414         $1,431          $172,867
Obligations of states and political subdivisions.          23,244            361            705            22,900
Special revenue and assessment...................             330              -              -               330
Corporate securities.............................         863,124         13,758         18,651           858,231
Mortgage-backed securities.......................         627,875          9,091          9,308           627,658
Asset-backed securities..........................         122,523            832            275           123,080
                                                   -----------------------------------------------------------------
Total fixed maturities...........................      $1,810,980        $24,456        $30,370        $1,805,066
                                                   =================================================================
Equity securities................................         $86,991         $2,422           $225           $89,188
                                                   =================================================================
</TABLE>

                                       27
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


2.  INVESTMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                                            DECEMBER 31, 1996
                                                   -----------------------------------------------------------------
                                                                        GROSS           GROSS
                                                        AMORTIZED    UNREALIZED       UNREALIZED
                                                          COST          GAINS           LOSSES        FAIR VALUE
                                                   -----------------------------------------------------------------
                                                                            (IN THOUSANDS)

<S>                                                      <C>              <C>            <C>             <C>
HELD-TO-MATURITY
Obligations of states and political subdivisions.         $81,791           $463         $1,036           $81,218
Special revenue and assessment...................             420              -              -               420
Corporate securities.............................         128,487          2,003          1,830           128,660
Mortgage-backed securities.......................         264,155          2,121          1,347           264,929
Asset-backed securities..........................          53,192            382             97            53,477
                                                   -----------------------------------------------------------------
Total fixed maturities...........................        $528,045         $4,969         $4,310          $528,704
                                                   =================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                            DECEMBER 31, 1995
                                                   -----------------------------------------------------------------
                                                                        GROSS           GROSS
                                                        AMORTIZED    UNREALIZED       UNREALIZED
                                                          COST          GAINS           LOSSES        FAIR VALUE
                                                   -----------------------------------------------------------------
                                                                            (IN THOUSANDS)

<S>                                                    <C>               <C>            <C>            <C>
AVAILABLE-FOR-SALE
U.S. Treasury securities and obligations of U.S.
   government corporations and agencies..........          $5,746           $522             $-            $6,268
Obligations of states and political subdivisions.          23,304            510            139            23,675
Special revenue and assessment...................             330              2              -               332
Corporate securities.............................         857,926         29,671         13,146           874,451
Mortgage-backed securities.......................         857,685         17,838          1,879           873,644
                                                   -----------------------------------------------------------------
Total fixed securities...........................      $1,744,991        $48,543        $15,164        $1,778,370
                                                   =================================================================
Equity securities................................         $21,278           $687            $85           $21,880
                                                   =================================================================

HELD-TO-MATURITY
Obligations of states and political subdivisions.         $67,160         $1,221             $-           $68,381
Special revenue and assessment...................             870              -              -               870
Corporate securities.............................         163,032          6,426             43           169,415
Mortgage-backed securities.......................         305,075          5,539              4           310,610
                                                   -----------------------------------------------------------------
Totals...........................................        $536,137        $13,186            $47          $549,276
                                                   =================================================================
</TABLE>

The change in the  Company's  unrealized  appreciation  (depreciation)  on fixed
maturities was $(51,773,000),  $220,048,000 and $(219,496,000) during 1996, 1995
and 1994, respectively; the

                                       28
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


2.  INVESTMENTS (CONTINUED)

corresponding  amounts for equity  securities  were  $1,595,000,  $1,034,000 and
$(1,702,000) during 1996, 1995 and 1994, respectively.

The amortized  cost and fair value of fixed  maturities at December 31, 1996, by
contractual  maturity,  are shown below.  Expected  maturities  will differ from
contractual  maturities  because  borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                                           AVAILABLE-FOR-SALE                HELD-TO-MATURITY
                                                 -------------------------------------------------------------------
                                                        AMORTIZED                       AMORTIZED
                                                          COST           FAIR VALUE       COST         FAIR VALUE
                                                 -------------------------------------------------------------------
                                                                                (IN THOUSANDS)

<S>                                                   <C>              <C>              <C>             <C>     
Due in one year or less........................          $17,711          $17,764           $320            $320
Due after one year through five years..........          197,414          197,267         12,184          12,240
Due after five years through 10 years..........          469,394          471,099         47,804          48,193
Due after 10 years.............................          376,063          368,198        150,390         149,545
Mortgage-backed securities.....................          627,875          627,658        264,155         264,929
Asset-backed securities........................          122,523          123,080         53,192          53,477
                                                 -------------------------------------------------------------------
                                                      $1,810,980       $1,805,066       $528,045        $528,704
                                                 ===================================================================
</TABLE>

Late in 1995, the FASB issued a special report,  "A Guide to  Implementation  of
Statement  115  on  Accounting  for  Certain  Investments  in  Debt  and  Equity
Securities."  This report provided  companies with an opportunity for a one-time
reassessment and  reclassification of securities as of a single measurement date
without  tainting  the  held-to-maturity  debt  securities  classification.   On
December 8, 1995, the Company reclassified  securities with an amortized cost of
$202,417,000 from held-to-maturity to available-for-sale.  The transfer resulted
in an increase to unrealized gains on securities of approximately $2,162,000 net
of related adjustments for deferred policy acquisition costs and deferred income
taxes.

The Company  did not hold any  investments  that  individually  exceeded  10% of
equity at  December  31,  1996  except  for  securities  guaranteed  by the U.S.
government or an agency of the U.S. government.

                                       29
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


2.  INVESTMENTS (CONTINUED)

Major categories of net investment income are summarized as follows:

                                            1996        1995         1994
                                          --------------------------------
                                                   (IN THOUSANDS)

Interest on fixed maturities.............  $174,592   $165,684    $154,739
Dividends on equity securities...........     5,817      1,309         712
Interest on mortgage loans...............     6,680      7,876       7,746
Real estate income.......................       781      1,287       1,326
Interest on policy loans.................     6,372      5,927       5,462
Interest on short-term investments.......     1,487      2,625       2,272
Other....................................     3,418      1,453         525
                                          --------------------------------
Total investment income..................   199,147    186,161     172,782
Investment expenses......................     6,511      6,221       5,925
                                          --------------------------------
Net investment income....................  $192,636   $179,940    $166,857
                                          ================================

Proceeds  from sales of fixed  maturities  and  equity  securities  and  related
realized gains and losses, including valuation adjustments, are as follows:

                                        1996            1995           1994
                                     -------------------------------------------
                                                   (IN THOUSANDS)

Proceeds from sales...............    $393,189        $310,590      $128,533
Gross realized gains..............       9,407           5,901         5,814
Gross realized losses.............       9,723           3,361         4,889

The composition of the Company's portfolio of fixed maturities by quality rating
at December 31, 1996 is as follows:

    QUALITY RATING                CARRYING AMOUNT                  %
- -------------------------    -------------------------    --------------------
                                  (IN THOUSANDS)

AAA......................           $1,199,762                    51.4%
AA.......................              158,785                     6.8
A........................              361,008                    15.5
BBB......................              416,589                    17.9
Noninvestment grade......              196,967                     8.4
                                    ----------                   ------       
                                    $2,333,111                   100.0%
                                    ==========                   ======

The Company has a diversified  portfolio of commercial and residential  mortgage
loans  outstanding  in  14  states.   The  loans  are  somewhat   geographically
concentrated in the midwestern 

                                       30
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


2.  INVESTMENTS (CONTINUED)

and southwestern United States with the largest outstanding balances at December
31, 1996 being in the states of Kansas (34%), Iowa (15%) and Texas (14%).

Net realized gains (losses) consist of the following:

                                            1996          1995         1994
                                        --------------------------------------
                                                    (IN THOUSANDS)

Fixed maturities......................    $(1,329)       $1,805        $397
Equity securities.....................      1,013           735         528
Other.................................         72         1,336        (791)
                                        --------------------------------------
Total realized gains (losses).........      $(244)       $3,876        $134
                                        ======================================

Deferred  losses totaling $2.2 million and $3.9 million at December 31, 1996 and
1995, respectively,  resulting from terminated and expired futures contracts are
included in fixed  maturities  and will be  amortized  as an  adjustment  to net
investment  income.  The  notional  amount  of  outstanding  agreements  to sell
securities  was $79  million at December  31,  1995.  There were no  outstanding
agreements at December 31, 1996.

For interest rate exchange agreements,  one agreement was terminated during 1996
resulting  in a  deferred  gain of $1.1  million.  The  notional  amount  of the
remaining outstanding  agreements was $30 million at December 31, 1996. Also, as
of December 31, 1996, these  agreements have maturities  ranging from March 1997
to May 2005. Under these  agreements,  the Company receives variable rates based
on the one- and  three-month  LIBOR and pays fixed rates  ranging from 6.875% to
7.215%.

3.  EMPLOYEE BENEFIT PLANS

Substantially all Company employees are covered by a qualified,  noncontributory
defined  benefit  pension  plan  sponsored  by the  Company  and  certain of its
affiliates.  Benefits  are based on years of service and an  employee's  highest
average  compensation over a period of five consecutive years during the last 10
years of service.  The Company's policy has been to contribute funds to the plan
in amounts  required to maintain  sufficient  plan assets to provide for accrued
benefits.  In applying this general policy, the Company  considers,  among other
factors,  the  recommendations  of its  independent  consulting  actuaries,  the
requirements of federal pension law and the limitations on deductibility imposed
by federal income tax law. The Company  records  pension cost in accordance with
the provisions of SFAS No. 87, "Employers' Accounting for Pensions."

                                       31
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3.  EMPLOYEE BENEFIT PLANS (CONTINUED)

Pension cost for the plan for 1996, 1995 and 1994 is summarized as follows:

                                                  1996       1995         1994
                                              ----------------------------------
                                                        (IN THOUSANDS)

Service cost................................      $670        $528       $679
Interest cost...............................       587         508        535
Actual return on plan assets................    (1,064)     (1,568)       310
Net amortization and deferral...............       284         900       (949)
                                              ----------------------------------
Net pension cost............................      $477        $368       $575
                                              ==================================

The funded status of the plan as of December 31, 1996 and 1995 was as follows:

                                                              DECEMBER 31
                                                           1996        1995
                                                      -------------------------
                                                            (IN THOUSANDS)
Actuarial present value of benefit obligations:
   Vested benefit obligation.........................   $(6,059)     $(5,243)
   Non-vested benefit obligation.....................      (202)        (165)
                                                      -------------------------
   Accumulated benefit obligation....................    (6,261)      (5,408)
   Excess of projected benefit obligation over
     accumulated benefit obligation..................    (2,961)      (2,865)
                                                      -------------------------
   Projected benefit obligation......................    (9,222)      (8,273)
Plan assets, at fair market value....................    10,085        8,342
                                                      -------------------------
Plan assets greater than projected
   benefit obligation................................       863           69

Unrecognized net loss................................     1,007        1,560
Unrecognized prior service cost......................       700          758

Unrecognized net asset established
  at the date of initial application.................    (1,841)      (2,025)
                                                      -------------------------
Net prepaid pension cost.............................      $729         $362
                                                      =========================

Assumptions were as follows:

                                                       1996     1995     1994
                                                     -------------------------
Weighted average discount rate...................       7.75%    7.5%    8.5%
Weighted average rate of increase in compensation
  for participants age 45 and older..............       4.5      4.5     4.5
Weighted average expected long-term
  return on plan assets..........................       9.0      9.0     9.0

                                       32
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3.  EMPLOYEE BENEFIT PLANS (CONTINUED)

Compensation  rates that vary by age for participants  under age 45 were used in
determining the actuarial present value of the projected  benefit  obligation in
1996. Plan assets are invested in a diversified  portfolio of affiliated  mutual
funds that invest in equity and debt securities.

In addition to the Company's  defined benefit pension plan, the Company provides
certain  medical and life  insurance  benefits to full-time  employees  who have
retired  after  the  age  of  55  with  five  years  of  service.  The  plan  is
contributory,  with retiree  contributions  adjusted annually and contains other
cost-sharing  features such as deductibles and coinsurance.  Contributions  vary
based on the  employee's  years of service  earned  after age 40. The  Company's
portion of the costs is frozen after 1996 with all future cost increases  passed
on to the retirees.  Retirees in the plan prior to July 1, 1993 are covered 100%
by the Company.

Retiree  medical care and life insurance cost for the total plan for 1996,  1995
and 1994 is summarized as follows:

                                         1996       1995        1994
                                      --------------------------------
                                               (IN THOUSANDS)

Service cost........................     $157       $151        $116
Interest cost.......................      280        305         275
                                      --------------------------------
                                         $437       $456        $391
                                      ================================

The funded status of the plan as of December 31, 1996 and 1995 was as follows:

                                                              DECEMBER 31
                                                           1996         1995
                                                        ----------------------
                                                            (IN THOUSANDS)
Accumulated postretirement benefit obligation:
   Retirees..........................................     $(2,498)    $(2,514)
Active participants:
   Retirement eligible...............................        (568)       (632)
   Others............................................      (1,023)     (1,035)
                                                        ----------------------
                                                           (4,089)     (4,181)
Unrecognized net (gain) loss.........................        (348)         67
                                                        ----------------------
Accrued postretirement benefit cost..................     $(4,437)    $(4,114)
                                                        ======================

The annual  assumed rate of increase in the per capita cost of covered  benefits
is 10% for 1996 and is assumed to decrease  gradually  to 5% for 2001 and remain
at that  level  thereafter.  The health  care cost trend rate has a  significant
effect on the amount reported.  For example,  increasing the assumed health care
cost  trend  rates  by  one  percentage  point  each  year  would  increase  the
accumulated  postretirement  benefit  obligation  as of  December  31,  1996  by
$191,000

                                       33
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3.  EMPLOYEE BENEFIT PLANS (CONTINUED)

and the  aggregate of the service and interest  cost  components of net periodic
postretirement benefit cost for 1996 by $54,000.

The discount rate used in determining  the  accumulated  postretirement  benefit
obligation  was  7.75%,  7.5% and 8.5% at  December  31,  1996,  1995 and  1994,
respectively.

The Company has a profit-sharing  and savings plan for which  substantially  all
employees  are  eligible  after  one  year  of  employment   with  the  Company.
Contributions for profit sharing are based on a formula established by the Board
of Directors with pro rata allocation  among  employees  based on salaries.  The
savings plan is a tax-deferred, 401(k) retirement plan. Employees may contribute
up to 10% of their eligible  compensation.  The Company matches 50% of the first
6% of the employee  contributions.  Employee contributions are fully vested, and
Company contributions are vested over a five-year period.  Company contributions
to the  profit-sharing  and savings plan charged to operations were  $1,783,000,
$1,567,000 and $1,075,000 for 1996, 1995 and 1994, respectively.

4.  REINSURANCE

The Company  assumes and cedes  reinsurance  with other companies to provide for
greater  diversification  of business,  allow  management to control exposure to
potential losses arising from large risks, and provide  additional  capacity for
growth. The Company's maximum retention on any one life is $500,000. The Company
does not use financial or surplus  relief  reinsurance.  Life insurance in force
ceded at December 31, 1996 and 1995 was $4.0 and $3.9 billion, respectively.

Principal reinsurance transactions are summarized as follows:

                                          1996        1995          1994
                                        -----------------------------------
                                                  (IN THOUSANDS)
Reinsurance ceded:
   Premiums paid......................    $25,442       $5,305      $3,980
                                        ===================================
   Commissions received...............     $4,669         $230      $1,443
                                        ===================================
   Claim recoveries...................     $5,235       $3,089      $2,485
                                        ===================================

In  the  accompanying  financial  statements,   premiums,  benefits,  settlement
expenses and deferred policy  acquisition  costs are reported net of reinsurance
ceded;  policy liabilities and accruals are reported gross of reinsurance ceded.
The Company remains liable to policyholders if the reinsurers are unable to meet
their contractual  obligations under the applicable reinsurance  agreements.  To
minimize its exposure to significant losses from reinsurance  insolvencies,  the
Company  evaluates  the  financial  condition  of its  reinsurers  and  monitors
concentrations  of  credit

                                       34
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


4.  REINSURANCE (CONTINUED)

risk  arising  from  similar   geographic   regions,   activities   or  economic
characteristics  of  reinsurers.  At December 31, 1996 and 1995, the Company had
established  a  receivable  totaling  $92,197,000  and  $78,877,000  for reserve
credits,  reinsurance  claims and other  receivables  from its  reinsurers.  The
amount of reinsurance assumed is not significant.

In 1995, the Company transferred,  through a 100% coinsurance  agreement,  $66.9
million in policy  reserves and claim  liabilities.  The agreement  related to a
block of whole life and decreasing term life insurance business.

In prior  years,  the Company  was  involved  in  litigation  arising out of its
participation from 1986 to 1990 in a reinsurance pool. The litigation related to
the pool manager and a reinsurance  intermediary  placing major medical business
in the pool without  authorization.  During 1993, the Company  settled the major
medical portion of the pool's activity with no  significantly  adverse effect on
the Company.  The nonmajor  medical  business placed in the pool has experienced
significant  losses.  At  December  31,  1996,  the  Company  believes  adequate
provision has been made for such losses.

5.  INCOME TAXES

The Company files a life/nonlife  consolidated  federal  income tax return.  The
provision  for income  taxes  includes  current  federal  income tax  expense or
benefit and deferred income tax expense or benefit due to temporary  differences
between the financial  reporting and income tax bases of assets and liabilities.
Such  differences  relate  principally to liabilities for future policy benefits
and  accumulated  contract  values,   deferred  compensation,   deferred  policy
acquisition  costs,   postretirement  benefits,  deferred  selling  commissions,
depreciation  expense and unrealized  appreciation  (depreciation) on securities
available-for-sale.

Income tax expense consists of the following for 1996, 1995 and 1994:

                                            1996         1995          1994
                                  ----------------------------------------------
                                                   (IN THOUSANDS)

Current.........................         $12,528       $15,200      $11,361
Deferred........................           8,343         2,727        5,768
                                  ----------------------------------------------
                                         $20,871       $17,927      $17,129
                                  ==============================================

The provision for income taxes differs from the amount computed at the statutory
federal income tax rate due primarily to dividends  received  deductions and tax
credits.

Income taxes paid by the Company were $16,213,000,  $11,551,000, and $14,634,000
during 1996, 1995, and 1994, respectively.

                                       35
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


5.  INCOME TAXES (CONTINUED)

Net deferred tax assets or liabilities consist of the following:

                                                          1996          1995
                                                      -------------------------
                                                            (IN THOUSANDS)

Deferred tax assets:
   Future policy benefits..........................      $20,487      $17,780
   Net unrealized depreciation on
     securities available-for-sale.................        1,409            -
   Guaranty fund assessments.......................        1,400        1,260
   Employee benefits...............................        4,852        3,836
   Other...........................................        4,620        3,662
                                                      -------------------------
Total deferred tax assets..........................       32,768       26,538

Deferred tax liabilities:
   Deferred policy acquisition costs...............       69,647       50,580
   Net unrealized appreciation on
     securities available-for-sale.................            -       12,539
   Deferred gain on investments....................       10,446        8,681
   Depreciation....................................        2,061          988
   Other...........................................        5,461        7,409
                                                      -------------------------
Tax deferred tax liabilities.......................       87,615       80,197
                                                      -------------------------
Net deferred tax liabilities.......................      $54,847      $53,659
                                                      =========================

6.  CONDENSED FAIR VALUE INFORMATION

SFAS No. 107, "Disclosures about Fair Value of Financial  Instruments," requires
disclosures  of fair value  information  about  financial  instruments,  whether
recognized  or not  recognized  in a company's  balance  sheet,  for which it is
practicable  to estimate  that value.  The methods and  assumptions  used by the
Company  to  estimate  the  following  fair  value   disclosures  for  financial
instruments are set forth in NOTE 1.

SFAS No. 107  excludes  certain  insurance  liabilities  and other  nonfinancial
instruments from its disclosure requirements. However, the liabilities under all
insurance  contracts  are taken  into  consideration  in the  Company's  overall
management of interest rate risk that  minimizes  exposure to changing  interest
rates  through the  matching of  investment  maturities  with  amounts due under
insurance  contracts.  The fair value amounts presented herein do not include an
amount  for the value  associated  with  customer  or agent  relationships,  the
expected interest margin (interest  earnings in excess of interest  credited) to
be earned in the future on  investment-type  products or other intangible items.
Accordingly,   the  aggregate  fair  value  amounts   presented  herein  do  not
necessarily represent the underlying value of the Company; likewise, care should
be exercised in deriving  conclusions about the Company's  business or financial
condition based on the fair value information presented herein.

                                       36
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


6.  CONDENSED FAIR VALUE INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
                                                        DECEMBER 31, 1996                  DECEMBER 31, 1995
                                               ---------------------------------   ---------------------------------
                                                     CARRYING                            CARRYING
                                                      AMOUNT        FAIR VALUE            AMOUNT        FAIR VALUE
                                               ---------------------------------   -------------------------------
                                                                          (IN THOUSANDS)
<S>                       <C>                       <C>             <C>                 <C>             <C>       
Investments:
   Fixed maturities (NOTE 2).................       $2,333,111      $2,333,770          $2,314,507      $2,327,646
   Equity securities (NOTE 2)................           89,188          89,188              21,880          21,880
   Mortgage loans............................           66,611          69,004              74,342          80,175
   Policy loans..............................          106,822         108,685             100,452         104,077
   Short-term investments....................                -               -                 992             992
   Cash and cash equivalents.................            8,310           8,310              16,788          16,788
   Accrued investment income.................           32,161          32,161              30,623          30,623
   Futures contracts.........................                -               -                   -            (737)
   Interest rate exchange agreements ........                -            (282)                  -          (2,291)

Liabilities:
   Supplementary contracts without life
     contingencies...........................           33,225          33,803              34,363          35,387
   Individual and group annuities............        1,942,697       1,767,692           1,922,901       1,774,642
   Long-term debt............................           65,000          67,683                   -               -
</TABLE>

7.  COMMITMENTS AND CONTINGENCIES

The Company leases various  equipment under several  operating lease agreements.
Total expense for all operating  leases  amounted to $1,904,000,  $1,302,000 and
$1,450,000  for 1996,  1995 and 1994,  respectively.  The Company has  aggregate
future lease  commitments at December 31, 1996 of $4,337,000  for  noncancelable
operating leases consisting of $992,000 in 1997,  $941,000 in 1998,  $829,000 in
1999, $818,000 in 2000 and $757,000 in 2001 and thereafter.

In addition, in 2001, under the terms of an operating lease for an airplane, the
Company has the option to renew the lease for another  five years,  purchase the
airplane for  approximately  $4.7 million,  or return the airplane to the lessor
and pay a termination  charge of  approximately  $3.7 million.  If the option to
renew the lease for five years is selected,  at the end of the five-year  period
(2006),  the Company has the option to purchase the  airplane for  approximately
$3.4 million or return the airplane to the lessor and pay a  termination  charge
of approximately $2.7 million.

The economy and other factors have caused an increase in the number of insurance
companies that have required regulatory  supervision.  Guaranty fund assessments
are  levied on the  Company  by life and health  guaranty  associations  in most
states in which it is licensed to cover losses of  policyholders of insolvent or
rehabilitated insurers. In some states, these assessments can be

                                       37

<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


7.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

partially  recovered  through a reduction in future premium  taxes.  The Company
cannot predict whether and to what extent legislative initiatives may affect the
right to offset. Based on information from the National Organization of Life and
Health  Guaranty  Association  and  information  from the various state guaranty
associations,  the Company believes that it is probable that these  insolvencies
will result in future  assessments.  The Company regularly evaluates its reserve
for  these   insolvencies  and  updates  its  reserve  based  on  the  Company's
interpretation  of information  recently  received.  The associated  costs for a
particular  insurance company can vary significantly based on its premium volume
by line of  business in a  particular  state and its  potential  for premium tax
offset.  The Company accrued and charged to expense  $1,574,000,  $2,302,000 and
$237,000  for 1996,  1995 and 1994,  respectively.  At December  31,  1996,  the
Company  has  reserved   $4,000,000  to  cover  current  and  estimated   future
assessments net of related premium tax credits.

8.  LONG-TERM DEBT

The Company has a $75.5  million line of credit  facility  from the Federal Home
Loan Bank of Topeka.  Any  borrowings  in  connection  with this  facility  bear
interest at .1% over the Federal  Funds rate.  No amounts  were  outstanding  at
December 31, 1996.

In February 1996, the Company negotiated three separate $5,000,000 advances with
the Federal  Home Loan Bank of Topeka.  The  advances are due February 27, 1998,
February 26, 1999 and February 28, 2001 and carry interest rates of 5.59%, 5.76%
and 6.04%, respectively.

In May 1996,  the Company  issued $50 million of 8.75% surplus notes maturing on
May 15,  2016.  The surplus  notes were  issued  pursuant to Rule 144A under the
Securities  Act of  1933.  The  surplus  notes  have  repayment  conditions  and
restrictions  whereby  each  payment of interest on or  principal of the surplus
notes  may be  made  only  with  the  prior  approval  of the  Kansas  Insurance
Commissioner   and  only  out  of  surplus  funds  that  the  Kansas   Insurance
Commissioner  determines  to be  available  for such  payment  under the  Kansas
Insurance Code.

9.  RELATED-PARTY TRANSACTIONS

The Company owns shares of mutual funds managed by Security  Management Company,
LLC with a net asset value totaling  $60,559,000  and $5,364,000 at December 31,
1996 and 1995, respectively.

                                       38
<PAGE>

            SECURITY BENEFIT LIFE INSURANCE COMPANY AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


10.  ASSETS HELD IN SEPARATE ACCOUNTS

Separate account assets were as follows:

                                                       1996           1995
                                                    --------------------------
                                                          (IN THOUSANDS)
Premium and annuity considerations for the
  variable annuity products and variable
  universal life product for which the
  contractholder, rather than the Company,
  bears the investment risk......................    $2,793,911    $2,051,292
Assets of the separate accounts owned by
  the Company, at fair value.....................         9,016        14,014
                                                    --------------------------
                                                     $2,802,927    $2,065,306
                                                    ==========================

11.  STATUTORY INFORMATION

The Company  and its  insurance  subsidiary  prepare  statutory-basis  financial
statements in accordance  with accounting  practices  prescribed or permitted by
the  Kansas  and  New  York  Insurance  regulatory  authorities,   respectively.
Accounting  practices used to prepare  statutory-basis  financial statements for
regulatory filings of life insurance  companies differ in certain instances from
GAAP.   Prescribed   statutory   accounting   practices  include  a  variety  of
publications of the National Association of Insurance  Commissioners  (NAIC), as
well as state laws,  regulations  and general  administrative  rules.  Permitted
statutory  accounting  practices  encompass  all  accounting  practices  not  so
prescribed;  such  practices  may differ  from state to state,  may differ  from
company  to  company  within a state  and may  change in the  future.  Statutory
capital  and  surplus  of  the  insurance   operations  are   $286,689,000   and
$207,669,000 at December 31, 1996 and 1995, respectively.

                                       39

<PAGE>
                                     PART C

                                OTHER INFORMATION

ITEM 24.          FINANCIAL STATEMENTS AND EXHIBITS
- -------           ---------------------------------

                  (a)    Financial Statements

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

                  (b)    Exhibits

                          (1)   Certified  Resolution  of the Board of Directors
                                of   Security  Benefit  Life  Insurance  Company
                                ("SBL") authorizing  establishment of the Separ-
                                ate Account(a)

                          (2)   Not Applicable

                          (3)   Not Applicable

                          (4)   Sample Contract

                          (5)   Sample Application

                          (6)   (a)Composite of Articles of Incorporation of SBL

                                (b)Bylaws of SBL(a)

                          (7)   Not Applicable

                          (8)   Not Applicable

                          (9)   Opinion of Counsel(a)

                         (10)   Consent of Independent Auditors

                         (11)   Not Applicable

                         (12)   Not Applicable

                         (13)   Schedules of Computation of Performance

                         (14)   Financial Data Schedules

                         (15)   Powers of  Attorneys of  Howard R.  Fricke,  
                                Thomas R.  Clevenger,  Sister  Loretto  Marie
                                Colwell,  John C.  Dicus,  Melanie S.   Fannin,
                                William W.  Hanna,  John E. Hayes, Jr., Laird G.
                                Noller, Frank C. Sabatini and Robert C. Wheeler

(a)  Incorporated   herein  by  reference   to  the  Exhibits   filed  with  the
     Registrant's  Post-Effective  Amendment No. 1 under the  Securities  Act of
     1933  and  Amendment  No. 2 under  the  Investment  Company  Act of 1940 to
     Registration Statement No. 33-85592 (April 28, 1995).

<PAGE>

ITEM 25.        DIRECTORS AND OFFICERS OF THE DEPOSITOR
- --------        ---------------------------------------

NAME AND PRINCIPAL BUSINESS ADDRESS         POSITIONS AND OFFICES WITH DEPOSITOR
- -----------------------------------         ------------------------------------

Howard R. Fricke*                           Chairman of the Board, President, 
                                            Chief Executive Officer and
                                            Director

Thomas R. Clevenger                         Director
P.O. Box 8514
Wichita, Kansas 67208

Sister Loretto Marie Colwell                Director
1700 SW 7th Street
Topeka, Kansas 66044

John C. Dicus                               Director
700 Kansas Avenue
Topeka, Kansas 66603

Melanie S. Fannin                           Director
220 SE 6th Street
Topeka, KS 66603

William W. Hanna                            Director
P.O. Box 2256
Wichita, Kansas 67201

John E. Hayes, Jr.                          Director
818 Kansas Avenue
Topeka, Kansas 66612

Laird G. Noller                             Director
2245 Topeka Avenue
Topeka, Kansas 66611

Frank C. Sabatini                           Director
120 SW 6th Street
Topeka, Kansas 66603

Robert C. Wheeler                           Director
P.O. Box 148
Topeka, Kansas 66601

<PAGE>

NAME AND PRINCIPAL BUSINESS ADDRESS         POSITIONS AND OFFICES WITH DEPOSITOR
- -----------------------------------         ------------------------------------

Donald J. Schepker*                         Senior Vice President, Chief
                                            Financial Officer and Treasurer

James L. Woods*                             Senior Vice President

Jeffrey B. Pantages*                        Senior Vice President

Roger K. Viola*                             Senior Vice President, General
                                            Counsel, and Secretary

T. Gerald Lee*                              Senior Vice President -
                                            Administration

Malcolm E. Robinson*                        Senior Vice President and Assistant
                                            to the President

Donald E. Caum*                             Senior Vice President and Chief
                                            Marketing Officer

Richard K Ryan*                             Senior Vice President

Amy J. Lee*                                 Associate General Counsel, Vice
                                            President and Assistant Secretary

James R. Schmank*                           Vice President and Interim Chief
                                            Investment Officer

Kathleen R. Blum*                           Vice President - Administration

*Located at 700 Harrison Street, Topeka, Kansas 66636.


              PERSONS CONTROLLED BY OR UNDER COMMON
ITEM 26.      CONTROL WITH THE DEPOSITOR OR REGISTRANT
- --------      ----------------------------------------  

         The Depositor,  Security  Benefit Life Insurance  Company  ("SBL"),  is
owned by its policy owners. No one person holds more than approximately  0.0004%
of the voting power of SBL. The Registrant is a segregated asset account of SBL.

<PAGE>

         The following chart indicates the persons controlled by or under common
control with Variflex LS or SBL:

                                                                 PERCENT OF
                                        JURISDICTION OF      VOTING SECURITIES
                  NAME                   INCORPORATION          OWNED BY SBL
                 ------                 ---------------      ------------------
Security Benefit Life Insurance Company     Kansas                 -----
(Mutual Life Insurance Company)

Security Benefit Group, Inc. (Holding       Kansas                  100%
Company)

Security Management Company, LLC            Kansas                  100%
(Investment Adviser)

Security Distributors, Inc.                 Kansas                  100%
(Broker/Dealer, Principal Underwriter
of Mutual Funds)

Security Benefit Academy, Inc. (Daycare     Kansas                  100%
Company)

Creative Impressions, Inc.                  Kansas                  100%
(Advertising Agency)

Security Benefit Clinic and Hospital        Kansas                  100%
(Nonprofit provider of hospital
benevolences for fraternal certificate
holders)

First Advantage Insurance Agency, Inc.      Kansas                  100%
(Insurance Agency)

First Security Benefit Life Insurance      New York                 100%
and Annuity Company of New York

<PAGE>

         SBL is also the  depositor  of the  following  separate  accounts:  SBL
Variable Annuity Accounts I, III, IV, and Variflex,  SBL Variable Life Insurance
Account Varilife, Security Varilife Separate Account, Parkstone Variable Annuity
Account and T. Rowe Price Variable Annuity Account.

         Through the above-referenced  separate accounts, SBL might be deemed to
control  the  open-end  management   investment   companies  listed  below.  The
approximate percentage of ownership by the separate accounts for each company is
as follows:

Security Equity Fund            15.9%     Security Income Fund              7.6%
                                          Corporate Bond Series

Security Growth and Income Fund 40.1%     SBL Fund                          100%


ITEM 27.        NUMBER OF CONTRACT OWNERS
- -------         -------------------------

         As of March 1, 1997, there were 2,743 owners of Variflex LS Contracts.

ITEM 28.        INDEMNIFICATION
- --------        ---------------

         The bylaws of Security Benefit Life Insurance  Company provide that the
Company  shall,  to the  extent  authorized  by the laws of the State of Kansas,
indemnify officers and directors for certain liabilities  threatened or incurred
in connection with such person's capacity as director or officer.

         The Articles of Incorporation include the following provision:

         A Director shall not be personally  liable to the Corporation or to its
         policyholders  for monetary  damages for breach of fiduciary  duty as a
         director, provided that this sentence shall not eliminate nor limit the
         liability of a director

                  A.   for any breach of his or her duty of loyalty to the Corp-
                       oration or its policyholders;

                  B.   for acts or  omissions  not in good  faith  or which  in-
                       volve  intentional  misconduct  or a knowing violation of
                       law;

                  C.   under  the  provisions  of  K.S.A. 17-6424 and amendments
                       thereto; or

<PAGE>

                  D.    for any transaction from which the director derived an
                        improper personal benefit.

     This  Article  Eighth  shall  not  eliminate  or limit the  liability  of a
director for any act or omission occurring prior to the date this Article Eighth
becomes effective.

     Insofar as indemnification for a liability arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Depositor has
been advised that in the opinion of the Securities and Exchange  Commission such
indemnification  is  against  public  policy  as  expressed  in the  Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such  liabilities  (other  than the  payment of  expenses  incurred or paid by a
director,  officer or  controlling  person of the  Registrant in the  successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling  person in connection with the Securities being  registered,  the
Depositor will, unless in the opinion of its counsel the matter has been settled
by a controlling  precedent,  submit to a court of appropriate  jurisdiction the
question  of whether  such  indemnification  by it is against  public  policy as
expressed  in the Act and will be  governed  by the final  adjudication  of such
issue.

ITEM 29.        PRINCIPAL UNDERWRITER
- --------        ---------------------

(a)    Security  Distributors,  Inc.  ("SDI") ,   a subsidiary  of SBL,  acts as
distributor of the Variflex LS contracts.  SDI receives no compensation  for its
distribution   function  in  excess  of  the  commissions  it  pays  to  selling
broker/dealers. SDI performs similar functions for SBL Variable Annuity Accounts
I, III and IV, Variflex, SBL Variable Life Insurance Account Varilife,  Security
Varilife Separate Account, and Parkstone Variable Annuity Account. SDI also acts
as principal  underwriter for the following management  investment companies for
which Security Management Company,  LLC, an affiliate of SBL, acts as investment
adviser:  Security Equity Fund, Security Income Fund, Security Growth and Income
Fund,  Security  Tax-Exempt  Fund,  Security Ultra Fund, and Parkstone  Variable
Annuity.

<PAGE>

(b)
          NAME AND PRINCIPAL                  POSITION AND OFFICES
          BUSINESS ADDRESS*                     WITH UNDERWRITER
          ----------------                     ------------------

          Richard K Ryan                      President and Director
          John D. Cleland                     Vice President and Director
          James W. Lammers                    Senior Vice President and Director
          James R. Schmank                    Vice President and Director
          Louis R. Jicha                      Vice President and Director
          Mark E. Young                       Vice President
          Amy J. Lee                          Secretary
          Brenda M. Harwood                   Treasurer
          Daniel J. McNichol                  Vice President
          Robert L. Kirchner                  Regional Vice President
          Ronald V. Vermillion                Regional Vice President
          Jennifer A. Zaat                    Regional Vice President
          Carla D. Griffin                    Regional Vice President
          Anthony Hammock                     Regional Vice President
          William G. Mancuso                  Regional Vice President
          Clark A. Anderson                   Regional Vice President
          Paul Richardson                     Regional Vice President
          Marek E. Lakotko                    Regional Vice President
          Susan L. Tully                      Regional Vice President
          Eric M. Aanes                       Regional Vice President

*700 Harrison, Topeka, Kansas 66636-0001

(c)      Not applicable.

ITEM 30.        LOCATION OF ACCOUNTS AND RECORDS
- --------        --------------------------------

All accounts and records  required to be maintained by Section 31(a) of the 1940
Act  and  the  rules  under  it are  maintained  by  SBL  at its  administrative
offices--700 Harrison Street, Topeka, Kansas 66636-0001.

<PAGE>

ITEM 31.        MANAGEMENT SERVICES
- -------         -------------------

All management contracts are discussed in Part A or Part B.

ITEM 32.          UNDERTAKINGS
- -------           ------------

(a)   Registrant  undertakes  that  it  will  file a post-effective amendment to
this  Registration  Statement  as  frequently  as  necessary  to ensure that the
audited financial  statements in the Registration  Statement are never more than
sixteen  (16)  months old for so long as  payments  under the  Variable  Annuity
contracts may be accepted.

(b)   Registrant  undertakes  that  it  will  include as part of the Variflex LS
contract  application a space that an applicant can check to request a Statement
of Additional Information.

(c)   Registrant   undertakes   to   deliver   any   Statement   of   Additional
Information  and any financial  statements  required to be made available  under
this Form  promptly  upon written or oral request to SBL at the address or phone
number listed in the prospectus.

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

(e)   SBL,   sponsor  of  the  unit   investment   trust,  Variflex  LS,  hereby
represents  that it is relying upon the  Securities  and  Exchange  Commission's
No-Action Letter Ref. No. IP-6-88,  American Council of Life Insurance, and that
it has complied  with the  provisions of  paragraphs  (1)-(4) of such  no-action
letter which are incorporated herein by reference.

(f)   Registrant  represents  that  the  fees  and  charges   deducted under the
contract, in the aggregate, are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by the Registrant.

<PAGE>

                                   SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant  certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of this Registration  Statement and
has caused this  Registration  Statement to be signed on its behalf, in the City
of Topeka, and State of Kansas on this 23rd day of April, 1997.

SIGNATURES AND TITLES
- ---------------------


Howard R. Fricke                       SECURITY BENEFIT LIFE INSURANCE COMPANY
Director, Chairman of the Board,       (The Depositor)
President and Chief Executive Officer
                                         By:          ROGER K. VIOLA
                                            ----------------------------------

Thomas R. Clevenger                         Roger  K.  Viola, Senior Vice Presi-
Director                                    dent, General  Counsel and Secretary
                                            as  Attorney-In-Fact  for  the Offi-
                                            cers  and Directors  Whose Names Ap-
                                            pear Opposite
Sister Loretto Marie Colwell
Director
                                       VARIFLEX LS
John C. Dicus                          (The Registrant)
Director
                                         By:   SECURITY BENEFIT LIFE INSURANCE
                                               COMPANY
Melanie S. Fannin                              (The Depositor)
Director

William W. Hanna                         By:          HOWARD R. FRICKE
Director                                    ----------------------------------
                                            Howard  R.  Fricke,  Chairman of the
                                            Board,    President     and    Chief
                                            Executive Officer
John E. Hayes, Jr.
Director
                                           By:        DONALD J. SCHEPKER
                                              ----------------------------------
Laird G. Noller                               Donald  J.  Schepker,  Senior Vice
Director                                      President,     Chief     Financial
                                              Officer and Treasurer

                                         (ATTEST):     ROGER K. VIOLA
Frank C. Sabatini                                 ------------------------------
Director                                            Roger  K. Viola, Senior Vice
                                                    President,  General  Counsel
                                                    and Secretary
Robert C. Wheeler
Director
                                           Date:  April 23, 1997

<PAGE>

                                  EXHIBIT INDEX


   (1)   None

   (2)   None

   (3)   None

   (4)   Sample Contract

   (5)   Sample Application

   (6)   (a) Articles of Incorporation
         (b) None

   (7)   None

   (8)   None

   (9)   None

  (10)   Consent of Independent Auditors

  (11)   None

  (12)   None

  (13)   Schedules of Computation of Performance

  (14)   Financial Data Schedules

  (15)   Powers of Attorney



<PAGE>

                     SECURITY BENEFIT LIFE INSURANCE COMPANY

                   A MUTUAL COMPANY/FOUNDED IN 1892/TOPEKA, KS



               FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT

THE COMPANY'S PROMISE

In  consideration  for  the  Purchase  Payments  and the  attached  application,
Security Benefit Life Insurance Company (the "Company") will pay the benefits of
this Contract according to its provisions.

LEGAL CONTRACT

PLEASE READ YOUR CONTRACT  CAREFULLY.  It is a legal Contract  between the Owner
and the Company. The Contract's table of contents is on page 2.

FREE LOOK PERIOD-RIGHT TO CANCEL

IF FOR ANY REASON THE OWNER IS NOT SATISFIED WITH THIS  CONTRACT,  HE OR SHE MAY
RETURN IT TO THE  COMPANY  WITHIN 10 DAYS  FROM THE DATE OF  RECEIPT.  IT MAY BE
RETURNED BY DELIVERING OR MAILING IT TO THE COMPANY. IF RETURNED,  THIS CONTRACT
SHALL BE DEEMED  VOID FROM THE  CONTRACT  DATE.  THE  COMPANY  WILL  REFUND  ANY
PURCHASE  PAYMENTS  MADE AND  ALLOCATED  TO THE FIXED  ACCOUNT  AND WILL  REFUND
SEPARATE  ACCOUNT  CONTRACT VALUE AS OF THE DATE THE RETURNED POLICY IS RECEIVED
BY THE COMPANY.

Signed for Security Benefit Life Insurance Company on the Contract Date.

       ROGER K. VIOLA                                  HOWARD R. FRICKE
          Secretary                                        President

                      A BRIEF DESCRIPTION OF THIS CONTRACT

This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.

* Purchase  Payments may be made until the earlier of the Annuity  Start Date or
  termination of the Contract.

* A Death Benefit may be paid prior to the Annuity  Start Date  according to the
  Contract  provisions.

* Annuity Payments begin on the Annuity Start Date using the method specified in
  this Contract.

* This Contract is Participating.

ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT,  WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT.  THERE ARE NO
GUARANTEED  MINIMUM  PAYMENTS OR CASH VALUES.  (SEE "CONTRACT  VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)

                                   [SBL LOGO]
                     SECURITY BENEFIT LIFE INSURANCE COMPANY
               A Member of The Security Benefit Group of Companies
                     P.O. Box 750497, Topeka, KS 66675-0497
                  700 SW Harrison Street, Topeka, KS 66636-0001
                                 1-800-888-2461


Form V6022 (10-94)

<PAGE>


- --------------------------------------------------------------------------------
                                TABLE OF CONTENTS
- --------------------------------------------------------------------------------

                                                                           Page

CONTRACT SPECIFICATIONS................................................      3
DEFINITIONS............................................................    4-6
GENERAL PROVISIONS.....................................................    7,8
     The Contract......................................................      7
     Compliance........................................................      7
     Misstatement of Age and Sex.......................................      7
     Evidence of Survival..............................................      7
     Incontestability..................................................      7
     Assignment........................................................      7
     Transfers...................... ..................................      8
     Claims of Creditors...............................................      8
     Nonforfeiture Values..............................................      8
     Participation.....................................................      8
     Statements........................................................      8

OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS........................      9

     Ownership.........................................................      9
     Joint Ownership...................................................      9
     Annuitant.........................................................      9
     Primary and Secondary Beneficiaries...............................      9
     Ownership and Beneficiary Changes.................................      9

PURCHASE PAYMENT PROVISIONS............................................     10

     Flexible Purchase Payments........................................     10
     Purchase Payment Limitations......................................     10
     Purchase Payment Allocation.......................................     10
     Place of Payment..................................................     10

CONTRACT VALUE AND EXPENSE PROVISIONS..................................  10-12
     Contract Value....................................................     10
     Fixed Account Contract Value......................................     10
     Fixed Account Interest Crediting..................................     11
     Separate Account Contract Value...................................     11
     Accumulation Unit Value...........................................     11
     Determining Accumulation Units....................................     11
     Mortality and Expense Risk Charge.................................     12
     Premium Tax Expense...............................................     12
     Administrative Charge.............................................     12
     Mutual Fund Expenses..............................................     12

WITHDRAWAL PROVISIONS..................................................  12,13
     Withdrawals.......................................................  12,13
     Withdrawal Value..................................................     13
     Systematic Withdrawals............................................     13
     Date of Request...................................................     13
     Payment of Withdrawal Benefits....................................     13

DEATH BENEFIT PROVISIONS...............................................  14,15

     Death Benefit.....................................................     14
     Proof of Death....................................................     14
     Distribution Rules................................................  14,15

ANNUITY PAYMENT PROVISIONS

     Annuity Start Date................................................     15
     Change of Annuity Start Date......................................     15
     Annuity Start Amount..............................................     15
     Annuity Tables....................................................     16
     Annuity Payments..................................................     16
     Change of Annuity Option..........................................     16
     Fixed Annuity Payments............................................     16
     Variable Annuity Payments.........................................     16
     Annuity Units.....................................................  16,17
     Net Investment Factor.............................................     17
     Alternate Annuity Option Rates....................................     17
     Annuity Options...................................................     18

ANNUITY TABLES.........................................................     19

AMENDMENTS OR ENDORSEMENTS, if any

                                      -2-

<PAGE>


- --------------------------------------------------------------------------------
              VARIFLEX LS VARIABLE ANNUITY CONTRACT SPECIFICATIONS
- --------------------------------------------------------------------------------

OWNER NAME:  John A. Doe                CONTRACT NUMBER:  Specimen

OWNER DATE OF BIRTH:  10-30-1953        CONTRACT DATE:  6-30-1993

JOINT OWNER NAME:  Mary K. Doe          ISSUE DATE:  6-30-1993

JOINT OWNER DATE OF BIRTH:  7-18-1981   ANNUITY START DATE:  7-1-2025*

ANNUITANT NAME:  Betty M. Doe           PLAN:  Non-Qualified

ANNUITANT DATE OF BIRTH:  5-13-1987     ASSIGNMENT: This policy may be assigned.
                                        See Assignment Provision of your Policy.

ANNUITANT'S SEX:  Female

PRIMARY BENEFICIARY NAME:

Linda L. Doe

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

INITIAL PURCHASE PAYMENT...............  $25,000

MINIMUM SUBSEQUENT PURCHASE PAYMENTS...  $1,000

MINIMUM SYSTEMATIC WITHDRAWAL..........  $100

MORTALITY AND EXPENSE RISK CHARGE......  1.25% Annually

ADMINISTRATION CHARGE..................  .15% Annually

GUARANTEED FIXED ACCOUNT RATE..........  3%

ANNUITY OPTION.........................  Life with 10-Year Fixed Period Option*

SUBACCOUNTS:
   Money Market Subaccount
   High Grade Income Subaccount
   Global Aggressive Subaccount
   Growth-Income Subaccount
   Equity Income Subaccount
   Managed Asset Allocation Subaccount
   Specialized Asset Allocation Subaccount
   Growth Subaccount
   Worldwide Equity Subaccount
   Social Awareness Subaccount
   Emerging Growth Subaccount

METHOD FOR DEDUCTIONS:

   Deductions  for  Premium  Taxes,  and any  unallocated  partial  withdrawals,
   including Systematic Withdrawals, will be made sequentially from the Contract
   Value in descending order of the Subaccounts  listed above. The value of each
   account will be depleted before the next is charged. The Fixed Account is the
   last Account charged.

*  The Owner may select the Annuity Start Date and the Annuity  Option.  If no
   Annuity Start Date or Annuity  Option is selected by the Owner,  they will be
   assigned automatically.

                                      -3-

V6022 A (R5-95)
<PAGE>


- --------------------------------------------------------------------------------
DEFINITIONS
- --------------------------------------------------------------------------------

ACCOUNT
     An Account is one of the Subaccounts or the Fixed Account.

ACCUMULATION UNIT
     The  Accumulation  Unit is a unit of  measure.  It is used to  compute  the
     Separate Account Contract Value prior to the Annuity Start Date. It is also
     used to compute the Variable Annuity Payments for Annuity Options 5 and 6.

ANNUITANT
     The  Annuitant  is the person  named by the Owner on whose life the Annuity
     Payments  depend for Annuity  Options 1 through 4. The  Annuitant  receives
     Annuity Payments under this Contract.  Please see "Annuitant" provisions on
     page 9.

ANNUITY OPTION
     An  Annuity  Option is a set of  provisions  that form the basis for making
     Annuity  Payments.  The Annuity  Option is set prior to the  Annuity  Start
     Date. Please see "Annuity Options" on page 18.

ANNUITY START DATE
     The Annuity Start Date is the date on which Annuity  Payments are scheduled
     to begin.  This date may be changed by the Owner. The Annuity Start Date is
     shown on Page 3. Please see "Annuity Start Date" on page 15.

ANNUITY UNIT
     The  Annuity  Unit is a unit of measure  used to compute  Variable  Annuity
     Payments for Annuity Options 1 through 4.

AUTOMATIC TRANSFERS
     Automatic  Transfers  are  Transfers  among the  Subaccounts  and the Fixed
     Account.  Such transfers are made  automatically on a periodic basis by the
     Company at the written request of the Owner. The Company reserves the right
     to discontinue, modify or suspend Automatic Transfers.

COMPANY
     The Company is Security  Benefit Life Insurance  Company,  P.O. Box 750497,
     Topeka, Kansas 66675-0497.

CONTRACT ANNIVERSARY
     A Contract Anniversary is a 12-month anniversary of the Contract Date.

CONTRACT DATE
     The Contract  Date is the date the Contract  begins.  The Contract  Date is
     shown on page 3.

CONTRACT YEAR
     Contract Years are measured from the Contract Date.

CURRENT INTEREST
     The Company may in its discretion pay Current Interest on the Fixed Account
     at a rate that  exceeds  the  Guaranteed  Rate shown on page 3. The Company
     will declare the rate of Current interest, if any, from time to time.

DESIGNATED BENEFICIARY

     Upon the death of the Owner or Joint Owner, the Designated Beneficiary will
     be the  first  person  on the  following  list  who is alive on the date of
     death:

     1.   Owner;

     2.   Joint Owner;

     3.   Primary Beneficiary;

     4.   Secondary Beneficiary;

     5.   Annuitant; and

     6.   the Owner's estate if no one listed above is alive.

                                      -4-

V6022 B (10-94)
<PAGE>


- --------------------------------------------------------------------------------
DEFINITIONS (Continued)
- --------------------------------------------------------------------------------

DESIGNATED  BENEFICIARY  (Continued)
     The Designated  Beneficiary  receives a death benefit upon the death of the
     Owner prior to the Annuity Start Date.  Please see  "Ownership,  Annuitant,
     and  Beneficiary  Provisions" on page 9 and "Death  Benefit  Provisions" on
     pages 14 and 15.

FIXED ACCOUNT
     The Fixed Account is part of the  Company's  general  account.  The Company
     manages the general  account and guarantees that it will credit interest on
     Fixed  Account  Contract  Value at an  annual  rate at  least  equal to the
     Guaranteed Rate. This Rate is shown on page 3.

GUARANTEE PERIOD
     Current interest,  if declared, is fixed for rolling periods of one or more
     years,  referred to as Guarantee  Periods.  The Company may offer Guarantee
     Periods of different  durations.  The Guarantee  Period that applies to any
     Fixed  Account  Contract  Value:  (1) starts on the date that such Contract
     Value is allocated to the Fixed Account pursuant to: (a) a Purchase Payment
     Received by the Company;  or (b) a Transfer to the Fixed  Account;  and (2)
     ends on the last day of the same  month in the year in which the  Guarantee
     Period expires.  When any Guarantee Period expires,  a new Guarantee Period
     shall  start  for  such  Contract  Value  on the  date  that  follows  such
     expiration date. Such period shall end on the immediately preceding date in
     the year in which the Guarantee  Period  expires.  For example,  assuming a
     one-year Guarantee Period,  Contract Value transferred to the Fixed Account
     on June 1 would have a Guarantee Period starting on that date and ending on
     June 30 of the  following  year. A new  Guarantee  Period for such Contract
     Value  would  start  on  July 1 of  that  year  and  end on  June 30 of the
     following year.

HOME OFFICE
     The address of the Company's Home Office is Security Benefit Life Insurance
     Company, P.O. Box 750497, Topeka, Kansas 66675-0497.

ISSUE DATE
     The  Issue  Date is the date the  Company  uses to  determine  the date the
     Contract becomes  incontestable.  The Issue Date is shown on Page 3. Please
     see "Incontestability" on page 7.

JOINT OWNER
     The  Joint  Owner,  if any,  shares an  undivided  interest  in the  entire
     Contract  with the  Owner.  The Joint  Owner,  if any,  is named on page 3.
     Please see "Joint Ownership" provisions on page 9.

NONNATURAL PERSON
     Any  group  or  entity  that is not a  living  person,  such as a trust  or
     corporation.

OWNER
     The Owner is the person who possesses  all rights under the  Contract.  The
     Owner is named on page 3. Please see "Ownership" provisions on page 9.

PREMIUM TAX
     Any Premium  Taxes levied by a state or other  governmental  entity will be
     charged  against  this  Contract.  When  Premium Tax is assessed  after the
     Purchase Payment is applied, it will be deducted as described on page 3.

PURCHASE PAYMENT
     A Purchase  Payment is money  Received  by the  Company  and applied to the
     Contract.

RECEIVED BY THE COMPANY
     The phrase  "Received by the Company"  means receipt by the Company in good
     order at its Home Office, P.O. Box 750497, Topeka, Kansas 66675-0497.

                                      -5-

<PAGE>


- --------------------------------------------------------------------------------
DEFINITIONS (Continued)
- --------------------------------------------------------------------------------

SEPARATE ACCOUNT
     Variable  Annuity  Account  VIII (the  "Separate  Account")  is a  separate
     account  established  and  maintained  by the Company under Kansas law. The
     Separate Account is registered with the Securities and Exchange  Commission
     under the Investment Company Act of 1940 as a Unit Investment Trust. It was
     established  by the  Company to support  variable  annuity  contracts.  The
     Company owns the assets of the Separate  Account and  maintains  them apart
     from the assets of its general account and its other separate accounts. The
     assets  held in the  Separate  Account  equal  to the  reserves  and  other
     Contract  liabilities  with  respect  to the  Separate  Account  may not be
     charged with  liabilities  arising from any other  business the Company may
     conduct.

     Income and  realized  and  unrealized  gains and losses  from assets in the
     Separate Account are credited to, or charged against,  the Separate Account
     without  regard to the income,  gains or losses from the Company's  general
     account or its other  separate  accounts.  The Separate  Account is divided
     into Subaccounts  shown on page 3. Income and realized and unrealized gains
     and losses  from  assets in each  Subaccount  are  credited  to, or charged
     against,  the Subaccount  without regard to income,  gains or losses in the
     other  Subaccounts.  The  Company  has the right to transfer to its general
     account  any  assets  of the  Separate  Account  that are in  excess of the
     reserves  and other  Contract  liabilities  with  respect  to the  Separate
     Account.  The value of the assets in the Separate Account on each Valuation
     Date are determined at the end of each Valuation Date.

SUBACCOUNT NET ASSET VALUE
     The  Subaccount Net Asset Value is equal to: (1) the net asset value of all
     shares of the underlying  mutual fund held by the Subaccount;  plus (2) any
     cash or other assets; less (3) all liabilities of the Subaccount.

SUBACCOUNTS
     The Separate Account is divided into Subaccounts  which invest in shares of
     mutual funds.  Each Subaccount may invest its assets in a separate class or
     series of a designated  mutual fund or funds.  The Subaccounts are shown on
     page 3. Subject to the regulatory  requirements  then in force, the Company
     reserves the right to:

     1.   change or add designated mutual funds or other investment vehicles;

     2.   add, remove or combine Subaccounts;

     3.   add,  delete or make  substitutions  for  securities  that are held or
          purchased by the Separate Account or any Subaccount;

     4.   operate the Separate Account as a management investment company;

     5.   combine  the  assets  of the  Separate  Account  with  other  Separate
          Accounts of the Company or an affiliate thereof;

     6.   restrict or eliminate  any voting  rights of the Owner with respect to
          the Separate Account or other persons who have voting rights as to the
          Separate Account; and

     7.   terminate and liquidate any Subaccount.

     If any of these changes result in a material change to the Separate Account
     or a  Subaccount,  the Company  will  notify the Owner of the  change.  The
     Company  will not change the  investment  policy of any  Subaccount  in any
     material respect without  complying with the filing and other procedures of
     the insurance regulators of the state of issue.

VALUATION DATE
     A Valuation  Date is each day the New York Stock Exchange and the Company's
     Home Office are open for business.

VALUATION PERIOD
     A Valuation  Period is the interval of time from one Valuation  Date to the
     next Valuation Date.

                                      -6-

V6022 C (10-94)
<PAGE>


- --------------------------------------------------------------------------------
GENERAL PROVISIONS
- --------------------------------------------------------------------------------

THE CONTRACT
     The entire  Contract  between  the Owner and the  Company  consists of this
     Contract,  the attached  Application,  and any Amendments,  Endorsements or
     Riders to the Contract. All statements made in the Application will, in the
     absence of fraud,  as ruled by the a court of  competent  jurisdiction,  be
     deemed  representations  and  not  warranties.  The  Company  will  use  no
     statement  made by or on behalf of the Owner or the  Annuitant to void this
     Contract  unless  it is  in the  written  Application.  Any  change  in the
     Contract can be made only with the written consent of the President, a Vice
     President, or the Secretary of the Company.

     The Purchase  Payment(s)  and the  Application  must be  acceptable  to the
     Company  under its  rules and  practices.  If they are not,  the  Company's
     liability shall be limited to a return of the Purchase Payment(s).

COMPLIANCE
     The Company reserves the right to make any change to the provisions of this
     Contract  to comply  with or give the Owner the  benefit of any  federal or
     state statute,  rule or regulation.  This includes,  but is not limited to,
     requirements  for annuity  contracts under the Internal Revenue Code or the
     laws of any state.  The Company  will  provide the Owner with a copy of any
     such change and will also file such a change with the insurance  regulatory
     officials of the state in which the Contract is delivered.

MISSTATEMENT OF AGE AND SEX
     If the age or sex of the Annuitant has been  misstated,  payments  shall be
     adjusted, when allowed by law, to the amount which would have been provided
     for  the  correct  age or sex.  Proof  of the  age of an  Annuitant  may be
     required at any time, in a form  suitable to the Company.  If payments have
     already commenced and the misstatement has caused an underpayment, the full
     amount  due  will  be  paid  with  the  next  scheduled  payment.   If  the
     misstatement  has caused an  overpayment,  the amount due will be  deducted
     from one or more future payments.

EVIDENCE OF SURVIVAL
     When any payments under this Contract  depend on the payee being alive on a
     given date,  proof that the payee is living may be required by the Company.
     Such proof must be in a form  accepted by the Company,  and may be required
     prior to making the payments.

INCONTESTABILITY
     This  Contract  will not be  contested  after it has been in force  for two
     years from the Issue Date during the life of the Owner.

ASSIGNMENT
     Please refer to page 3 to see if the Contract may be assigned. If it may be
     assigned,  no Assignment  under this Contract is binding unless Received by
     the  Company in  writing.  The Company  assumes no  responsibility  for the
     validity, legality, or tax status of any Assignment. The Assignment will be
     subject to any payment made or other action taken by the Company before the
     Assignment is Received by the Company. Once filed, the rights of the Owner,
     Annuitant  and  Beneficiary  are  subject to the  Assignment.  Any claim is
     subject to proof of interest of the assignee.

                                      -7-

<PAGE>


- --------------------------------------------------------------------------------
GENERAL PROVISIONS (Continued)
- --------------------------------------------------------------------------------

TRANSFERS
     The  Owner  may  Transfer  Contract  Value  among  the  Fixed  Account  and
     Subaccounts subject to the following.

     Transfers are not allowed  within 30 days of the Annuity Start Date.  After
     the  Annuity  Start Date,  for  Annuity  Options 1 through 4, the Owner may
     Transfer Contract Value only among Subaccounts.

     The Company reserves the right to: (1) limit the amount that may be subject
     to Transfer to $1,000,000 per Transfer  without Home Office  approval;  (2)
     limit the number of  Transfers  allowed each  Contract  Year to 14; and (3)
     suspend  Transfers.  Transfers must be at least  $1,000.00 or, if less; (i)
     the remaining balance in a Subaccount,  or (ii) the amount of Fixed Account
     Contract Value the Guarantee  Period of which expires in the calendar month
     in which the Transfer is effected.

     Contract Value may be  transferred  from the Fixed Account only: (1) during
     the calendar month in which the applicable  Guarantee  Period expires;  (2)
     pursuant to an  Automatic  Transfer.  Transfers of Fixed  Account  Contract
     Value shall be made: (1) first from Fixed Account  Contract Value for which
     the  Guarantee  Period  expires  during  the  calendar  month in which  the
     Transfer is effected;  (2) then in the order that starts with Fixed Account
     Contract  Value which has the longest  amount of time before its  Guarantee
     Period  expires;  and (3) ends with that which has the least amount of time
     before its Guarantee Period expires.

     The Company will effect a Transfer to or from a Subaccount  on the basis of
     Accumulation  Unit Value (or Annuity Unit Value)  determined  at the end of
     the Valuation  Period in which the Transfer is effected.  The Company will
     effect a  Transfer  from the Fixed  Account  on the basis of Fixed  Account
     Contract Value at the end of the Valuation  Period in which the Transfer is
     effected.

     The Company  reserves the right to delay  Transfers  from the Fixed Account
     for up to 6 months as required by most states.  The Company will notify you
     if there will be a delay.

CLAIMS OF CREDITORS
     The Contract  Value and other  benefits under this Contract are exempt from
     the claims of creditors of the Owner to the extent allowed by law.

NONFORFEITURE VALUES
     The Death  Benefits,  Withdrawal  Values and Annuity  Payout Values will at
     least equal the minimum required by law.

PARTICIPATION
     The  Company  is a  mutual  life  insurance  company.  Therefore,  it  pays
     dividends on some of its  contracts.  However,  the Company does not expect
     dividends to become payable on this  Contract.  At the end of each Contract
     Year the Company will determine the Contract's dividend,  if any. The Owner
     may  choose to have it:  (1) added to the  Contract  Value;  or (2) paid in
     cash.  If no choice is made,  any  dividend  will be added to the  Contract
     Value.

STATEMENTS
     At least  once  each  Contract  Year the  Owner  shall be sent a  statement
     including the current Contract Value and any other information  required by
     law.  The  Owner  may  send a  written  request  for a  statement  at other
     intervals. The Company may charge a reasonable fee for such statements.

                                      -8-

V6022 D (R6-96)
<PAGE>


- --------------------------------------------------------------------------------
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS
- --------------------------------------------------------------------------------

OWNERSHIP
     During the Owner's  lifetime,  all rights and privileges under the Contract
     may be exercised  only by the Owner.  If the purchaser  names someone other
     than  himself  or  herself  as Owner,  the  purchaser  has no rights in the
     Contract. No Owner may be older than age 90 on the Contract Date.

JOINT OWNERSHIP
     If a Joint  Owner is named in the  application,  then the  Owner  and Joint
     Owner share an undivided  interest in the entire  Contract as joint tenants
     with rights of survivorship. When an Owner and Joint Owner have been named,
     the Company will honor only  requests for changes and the exercise of other
     Ownership rights made by both the Owner and Joint Owner. When a Joint Owner
     is named,  all  references to "Owner"  throughout  this Contract  should be
     construed  to  mean  both  the  Owner  and  Joint  Owner,  except  for  the
     "Statements"  provision  on page 8 and the "Death  Benefit  Provisions"  on
     pages 14 and 15.

ANNUITANT
     The Annuitant is named on page 3. The Owner may change the Annuitant  prior
     to the  Annuity  Start  Date.  The  request for this change must be made in
     writing  and  Received by the Company at least 30 days prior to the Annuity
     Start Date.  No annuitant may be named who is more than 90 years old on the
     Contract Date. When the Annuitant dies prior to the Annuity Start Date, the
     Owner  must  name a new  Annuitant  within 30 days or,  if  sooner,  by the
     Annuity Start Date, except where the Owner is a Nonnatural Person. If a new
     Annuitant is not named, the Owner becomes the Annuitant.

PRIMARY AND SECONDARY BENEFICIARIES
     The  Primary  Beneficiary  is named on page 3. The  Owner  may  change  any
     Beneficiary as described in "Ownership and  Beneficiary  Changes" below. If
     the Primary Beneficiary dies prior to the Owner, the Secondary  Beneficiary
     becomes the Primary Beneficiary.  Unless the Owner directs otherwise,  when
     there  are two or more  Primary  Beneficiaries,  they  will  receive  equal
     shares.

OWNERSHIP AND BENEFICIARY CHANGES
     Subject to the terms of any existing  Assignment,  the Owner may name a new
     Owner, a new Primary  Beneficiary or a new Secondary  Beneficiary.  Any new
     choice of Owner,  Primary Beneficiary or Secondary  Beneficiary will revoke
     any prior  choice.  Any change must be made in writing and  recorded at the
     Home  Office.  The change will become  effective as of the date the written
     request  is  signed,  whether  or not the  Owner is  living at the time the
     change is  recorded.  A new  choice of  Primary  Beneficiary  or  Secondary
     Beneficiary  will not  apply to any  payment  made or  action  taken by the
     Company  prior to the time it was  recorded.  The  Company  may require the
     Contract be returned so these changes may be made.

                                      -9-

<PAGE>


- --------------------------------------------------------------------------------
PURCHASE PAYMENT PROVISIONS
- --------------------------------------------------------------------------------

FLEXIBLE PURCHASE PAYMENTS
     The Contract becomes in force when the initial Purchase Payment is applied.
     The Owner is not  required to continue  Purchase  Payments in the amount or
     frequency  originally planned.  The Owner may: (1) increase or decrease the
     amount of Purchase Payments,  subject to any Contract limits; or (2) change
     the  frequency  of Purchase  Payments.  A change in  frequency or amount of
     Purchase Payments does not require a written request.

PURCHASE PAYMENT LIMITATIONS
     Purchase Payments  exceeding  $1,000,000 will not be accepted without prior
     approval by the Company.  The Minimum Subsequent Purchase Payment amount is
     shown on page 3.

PURCHASE PAYMENT ALLOCATION
     Purchase  Payments  may be  allocated  among  the  Fixed  Account  and  the
     Subaccounts.  Purchase Payments will be allocated  according to the Owner's
     instructions in the Application or more recent  instructions,  if any. Each
     allocation to the Fixed Account and the Subaccounts  must be at least 1% of
     the Purchase Payment.  The allocations must be whole percentage amounts and
     must total 100%. The Owner may change the  allocations by written notice to
     the Company.

PLACE OF PAYMENT
     All Purchase  Payments under this Contract are to be paid to the Company at
     its Home Office.  Purchase  Payments after the initial Purchase Payment are
     applied  as of the  end of the  Valuation  Period  during  which  they  are
     Received by the Company.

- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS
- --------------------------------------------------------------------------------

CONTRACT VALUE
     On any Valuation  Date,  the Contract Value is the sum of: (1) the Separate
     Account  Contract Value;  and (2) the Fixed Account  Contract Value. At any
     time after the first  Contract Year and before the Annuity Start Date,  the
     Company reserves the right to pay to the Owner the Contract Value as a lump
     sum if it is below $5,000.

FIXED ACCOUNT CONTRACT VALUE
     On any Valuation  Date,  the Fixed Account  Contract  Value is equal to the
     first Purchase Payment allocated under the Contract to the Fixed Account:

     PLUS:

     1.   any other Purchase Payments  allocated under the Contract to the Fixed
          Account;

     2.   any Transfers from the Separate Account to the Fixed Account; and

     3.   any interest credited to the Fixed Account.

     LESS:

     1.   any Withdrawals deducted from the Fixed Account;

     2.   any Transfers from the Fixed Account to the Separate Account;

     3.   any applicable Premium Taxes;

     4.   any Fixed  Account  Contract  Value which is applied to any of Annuity
          Options 1 through 4; and

     5.   any Annuity Payments made under Annuity Options 5 and 6.

                                      -10-

V6022 E (10-94)
<PAGE>


- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
- --------------------------------------------------------------------------------

FIXED ACCOUNT INTEREST CREDITING
     The Company  shall credit  interest on Fixed Account  Contract  Value at an
     annual  rate at least equal to the  Guaranteed  Rate shown on page 3. Also,
     the Company may in its sole judgment  credit Current  Interest at a rate in
     excess of the Guaranteed Rate. The rate of Current  Interest,  if declared,
     shall be fixed during the Guarantee  Period.  Fixed Account  Contract Value
     shall earn Current  Interest  during each Guarantee  Period at the rate, if
     any, declared by the Company on the first day of the Guarantee Period.

     The  Company  may  credit  Current  Interest  on  Contract  Value  that was
     allocated  or  transferred  to the Fixed  Account  during  one  period at a
     different  rate than amounts  allocated or transferred to the fixed Account
     in another period.  Also, the Company may credit Current  Interest on Fixed
     Account  Contract  Value at  different  rates  based upon the length of the
     Guarantee  Period.  Therefore,  at any  time,  portions  of  Fixed  Account
     Contract  Value may be earning  Current  Interest at different  rates based
     upon the period during which such portions were allocated or transferred to
     the Fixed Account and the length of the Guarantee Period.

SEPARATE ACCOUNT CONTRACT VALUE
     On any Valuation  Date, the Separate  Account  Contract Value is the sum of
     the  then  current  value  of the  Accumulation  Units  allocated  to  each
     Subaccount for this Contract.

ACCUMULATION UNIT VALUE
     The initial  Accumulation  Unit Value for each  Subaccount  was set at $10.
     Other Accumulation Unit Values are found on each Valuation Date by dividing
     (1) by (2) where:

     1.   is the equal to:

          a.   the  Subaccount  Net  Asset  Value  determined  at the end of the
               current Valuation Period;  plus

          b.   any dividends declared by the Subaccount's underlying mutual fund
               that are not part of the  Subaccount  Net Asset  Value;  less the
               accrued Mortality and Expense Risk Charge; and

          c.   the accrued Mortality and Expense Risk Charge; and

          d.   the accrued Administration Charge; and

          e.   any taxes for which the  Company has  reserved  which the Company
               deems to have resulted from the operation of the Subaccount.

     2.   is the  number of  Accumulation  Units at the  start of the  Valuation
          Period.

     The  Accumulation  Unit Value may increase or decrease  from one  Valuation
     Period to the next.

DETERMINING ACCUMULATION UNITS
     The number of  Accumulation  Units  allocated  to a  Subaccount  under this
     Contract is found by dividing:  (1) the amount allocated to the Subaccount;
     by (2) the  Accumulation  Unit Value for the  Subaccount  at the end of the
     Valuation Period during which the amount is applied under the Contract. The
     number of Accumulation  Units allocated to a Subaccount  under the Contract
     will not change as a result of  investment  experience.  Events that change
     the number of Accumulation Units are:

     1.   Purchase Payments that are applied to the Subaccount;

     2.   Contract Value that is Transferred into or out of the Subaccount;

     3.   Withdrawals that are deducted from the Subaccount; and

     4.   Premium Taxes that are deducted from the Subaccount.

                                      -11-

<PAGE>


- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
- --------------------------------------------------------------------------------

MORTALITY AND EXPENSE RISK CHARGE
     The Company will deduct the Mortality and Expense Risk Charge shown on page
     3. This charge will be computed and deducted  from each  Subaccount on each
     Valuation  Date.  This charge is factored  into the  Accumulation  Unit and
     Annuity Unit Values on each Valuation Date.

PREMIUM TAX EXPENSE
     The Company  reserves the right to deduct  Premium Tax when due or any time
     thereafter.  Any applicable Premium Taxes will be allocated as described on
     page 3.

ADMINISTRATION CHARGE
     The Company  will deduct the  Administration  Charge  shown on page 3. This
     charge will be computed and deducted from each Subaccount on each Valuation
     Date.  This charge is  factored  into the  Accumulation  Unit Value on each
     Valuation Date.

MUTUAL FUND EXPENSES
     Each Subaccount invests in shares of a mutual fund. The net asset value per
     share of each  underlying  fund  reflects the  deduction of any  investment
     advisory and administration fees and other expenses of the fund. These fees
     and expenses are not deducted from the assets of a Subaccount, but are paid
     by the underlying  funds.  The Owner  indirectly  bears a pro rata share of
     such fees and  expenses.  An  underlying  fund's fees and  expenses are not
     specified or fixed under the terms of this Contract.

- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------

WITHDRAWALS
     A full  Withdrawal of the Contract Value or partial  Withdrawal of Separate
     Account Contract Value is allowed at any time. Partial Withdrawals of Fixed
     Account Contract Value are,  however,  restricted as described below.  This
     provision is subject to any federal or state Withdrawal restrictions.

     A partial  Withdrawal of Fixed Account Contract Value may be made only: (1)
     pursuant to Systematic Withdrawals over a period of at least 36 months; (2)
     during the calendar month in which the applicable Guarantee Period expires;
     and (3) once per Contract  Year in an amount up to the greater of $5,000 or
     10% of the Contract  Value in the Fixed  Account at the time of the partial
     Withdrawal.

     Upon the Owner's  request for a full  Withdrawal,  the Company will pay the
     Withdrawal Value in a lump sum.

     All Withdrawals must meet the following conditions.

     1.   The request for Withdrawal  must be Received by the Company in writing
          or under other methods allowed by the Company.

     2.   The Owner must apply:  (a) while this  Contract  is in force;  and (b)
          prior to the Annuity Start Date of Options 1-4.

     3.   The  amount  Withdrawn  must  be at  least  $1,000.00,  except  that a
          Withdrawal  of less than  $1,000.00  is  allowed:  (i) for  Systematic
          Withdrawals,  as discussed on page 13, (ii) for Fixed Account Contract
          Value the Guarantee  Period of which expires during the calendar month
          of the Withdrawal, or (iii) when terminating the Contract.

                                      -12-

V6022 F (10-94)
<PAGE>


- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS (Continued)
- --------------------------------------------------------------------------------

WITHDRAWALS (Continued)
     A partial  Withdrawal  request must state the allocations for deducting the
     Withdrawal  from each Account.  If no allocation is specified,  the partial
     Withdrawal  will be deducted  from the  Accounts in the order  described on
     page 3, "Method for  Deductions."  Withdrawals  of Fixed  Account  Contract
     Value shall be made: (1) first from Fixed Account  Contract Value for which
     the  Guarantee  Period  expires  during  the  calendar  month in which  the
     Withdrawal  is  effected;  (2) then in the order  that  starts  with  Fixed
     Account  Contract  Value  which has the  longest  amount of time before its
     Guarantee Period expires; and (3) ends with that which has the least amount
     of time before its Guarantee Period expires.

WITHDRAWAL VALUE
     The Withdrawal Value at any time will be: (1) the Contract Value;  less (2)
     any Premium Taxes due or paid by the Company.

SYSTEMATIC WITHDRAWALS
     Systematic  Withdrawals  are  automatic  periodic  distributions  from  the
     Contract in substantially equal amounts prior to the Annuity Start Date. In
     order to start Systematic  Withdrawals,  the Owner must make the request in
     writing.  The Minimum  Systematic  Withdrawal is shown on page 3. The Owner
     must  choose  the  type  of  payment  and  its  frequency.  The  Systematic
     Withdrawal request must state the allocations for deducting the Withdrawals
     from each Account.  If no allocation is specified,  the Withdrawals will be
     deducted  from the  Accounts in the order  described on page 3, "Method for
     Deductions."  The payment type may be: (1) a percentage of Contract  Value;
     (2) a specified dollar amount; (3) all earnings in the Contract; (4) over a
     fixed period of time; or (5) based upon the life expectancy of the Owner or
     the Owner and a Beneficiary. The payment frequency may be: (1) monthly; (2)
     quarterly;  (3) semiannually;  or (4) annually.  Systematic  Withdrawals of
     Fixed Account Contract Value must provide for payments over a period of not
     less than 36  months.  Systematic  Withdrawals  may be stopped by the Owner
     upon  proper  written  request  Received by the Company at least 30 days in
     advance. The Company reserves the right to stop, modify,  suspend or charge
     a fee for Systematic Withdrawals at any time.

DATE OF REQUEST
     The Company will effect a Withdrawal of Separate  Account Contract Value on
     the basis of Accumulation Unit Value determined at the end of the Valuation
     Period in which all the required information is Received by the Company.

PAYMENT OF WITHDRAWAL BENEFITS
     The Company  reserves the right to suspend a Transfer or delay payment of a
     Withdrawal from the Separate Account for any period:

     1.   when the New York Stock Exchange is closed; or

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

     3.   when an  emergency  exists  as a result  of  which:  (a)  disposal  of
          securities held in the Separate Account is not reasonably practicable;
          or (b) it is not reasonably practicable to fairly value the net assets
          of the Separate Account; or

     4.   during any other period when the Securities  and Exchange  Commission,
          by order, so permits to protect owners of securities.

     Rules and regulations of the Securities and Exchange Commission will govern
     as to whether the conditions set forth above exist.

     The Company  further  reserves  the right to delay  payment of a Withdrawal
     from the Fixed Account for up to six months as required by most states. The
     Company will notify you if there will be a delay.

                                      -13-

<PAGE>


- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS
- --------------------------------------------------------------------------------

DEATH BENEFIT
     If any Owner dies prior to the Annuity  Start Date, a Death Benefit will be
     paid to the Designated Beneficiary when due Proof of Death and instructions
     regarding payment are Received by the Company.  If an Owner is a Nonnatural
     Person,  then the Death  Benefit  will be paid in the event of the death of
     the  Annuitant  or any joint  Owner that is a natural  person  prior to the
     Annuity Start Date. Further, if an Owner is a Nonnatural Person, the amount
     of the  death  benefit  is based on the age of the  Annuitant  or any joint
     Owner that is a natural person on the Issue Date.

     If the age of each  Owner was 75 or younger  on the Issue  Date,  the Death
     Benefit will be the greatest of: (1) the sum of all Purchase Payments, less
     any  Premium  Taxes  due or paid by the  Company  and  less  the sum of all
     partial Withdrawals;  (2) the Contract Value on the date due Proof of Death
     and instructions  regarding  payment are Received by the Company,  less any
     Premium  Taxes  due or paid by the  Company;  or (3) the  Stepped-Up  Death
     Benefit described below.

     The Stepped-Up Death Benefit is:

     1.   the largest Death Benefit on any Contract  Anniversary that is both an
          exact  multiple of five and occurs prior to the oldest Owner  reaching
          age 76; plus

     2.   any Purchase  Payments  received since the  applicable  fifth Contract
          Anniversary;  less

     3.   any  reductions  caused  by  Withdrawals  since the  applicable  fifth
          Contract Anniversary; less

     4.   any Premium Taxes due or paid by the Company.

     If the age of any Owner on the Issue Date was 76 or older,  or if due proof
     of  death  (regardless  of the age of any  Owner  on the  Issue  Date)  and
     instructions  regarding  payment are not Received by the Company within six
     months of the date of the Owner's death, the Death Benefit will be: (1) the
     Contract  Value on the date due Proof of Death and  instructions  regarding
     payment are Received by the Company; less (2) any Premium Taxes due or paid
     by the Company.

     If a lump sum payment is requested,  the payment will be made in accordance
     with any laws and regulations that govern the payment of Death Benefits.

PROOF OF DEATH
     Any of the following will serve as Proof of Death:

     1.   certified copy of the death certificate;

     2.   certified  decree  of a  court  of  competent  jurisdiction  as to the
          finding of death;

     3.   written statement by a medical doctor who attended the deceased Owner;
          or

     4.   any proof accepted by the Company.

DISTRIBUTION RULES
     The entire Death  Benefit  with any  interest  shall be paid within 5 years
     after the death of any Owner,  except as provided  below. In the event that
     the Designated Beneficiary elects an Annuity Option, the length of time for
     the  payment  period  may be  longer  than 5 years if:  (1) the  Designated
     Beneficiary  is a natural  person;  (2) the Death Benefit is paid out under
     Annuity  Options 1 through 6; (3) payments are made over a period that does
     not exceed the life or life expectancy of the Designated  Beneficiary;  and
     (4) Annuity  Payments  begin within one year of the death of the Owner.  If
     the deceased Owner's spouse is the sole Designated Beneficiary,  the spouse
     shall  become the sole Owner of the  Contract.  He or she may elect to: (1)
     keep the  Contract in force until the sooner of the  spouse's  death or the
     Annuity Start Date; or (2) receive the Death Benefit.

                                      -14-

V6022 G (R6-96)
<PAGE>


- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS (Continued)
- --------------------------------------------------------------------------------

DISTRIBUTION RULES (Continued)
     If any Owner dies after the Annuity  Start  Date,  Annuity  Payments  shall
     continue  to be paid at least as  rapidly  as under the  method of  payment
     being used as of the date of the Owner's death.

     If the Owner is a Nonnatural Person, the distribution rules set forth above
     apply in the event of the death of, or a change  in,  the  Annuitant.  This
     Contract is deemed to  incorporate  any  provision of Section  72(s) of the
     Internal  Revenue Code of 1986, as amended (the  "Code"),  or any successor
     provision.  This Contract is also deemed to incorporate any other provision
     of the Code deemed  necessary  by the  Company,  in its sole  judgment,  to
     qualify this Contract as an annuity.  The  application of the  distribution
     rules will be made in accordance  with Code section 72(s), or any successor
     provision, as interpreted by the Company in its sole judgment.

     The foregoing  distribution  rules do not apply to a Contract which is: (1)
     provided  under a plan described in Code Section  401(a);  (2) described in
     Code section 403(b); (3) an individual retirement annuity or provided under
     an individual  retirement account or annuity;  or (4) otherwise exempt from
     the Code section 72(s) distribution rules.

- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS
- --------------------------------------------------------------------------------

ANNUITY START DATE
     The Owner may choose the Annuity Start Date at the time of application.  If
     no Annuity Start Date is chosen, the Company will use the later of: (1) the
     oldest  Annuitant's   seventieth  birthday;   or  (2)  the  tenth  Contract
     Anniversary. The Annuity Start Date must be prior to the oldest Annuitant's
     ninety-fifth birthday.

     The Annuity  Start Date is the date the first  payment  will be made to the
     Annuitant under any of the Annuity Options.

CHANGE OF ANNUITY START DATE
     The Owner may change the Annuity  Start Date. A request for the change must
     be made in writing.  The written request must be Received by the Company at
     least 30 days prior to the new Annuity  Start Date as well as 30 days prior
     to the previous Annuity Start Date.

ANNUITY START AMOUNT
     The Annuity  Start Amount is applied to one or more of the Annuity  Options
     listed on page 18. The Annuity  Start Amount is: (1) the Contract  Value on
     the  Annuity  Start  Date;  less (2) any  Premium  Taxes due or paid by the
     Company.  Unless  otherwise  directed by the Owner,  Annuity  Start  Amount
     derived  from Fixed  Account  Contract  Value will be applied to purchase a
     Fixed Annuity  Option;  that derived from Separate  Account  Contract Value
     will be applied to purchase a Variable Annuity Option.

                                      -15-

<PAGE>


- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------

ANNUITY TABLES
     Annuity  Tables A and B show  the  guaranteed  minimum  amount  of  monthly
     Annuity  Payment per $1,000 of Annuity  Start Amount for annuity  options 1
     through 4 that applies to the first  Variable  Annuity  Payment and to each
     payment for Fixed Annuity Payments.  The amount of each Annuity Payment for
     Annuity  Options 1 through 4 will depend on the  Annuitant's sex and age on
     the Annuity Start Date.

     Tables A and B assume  1900 as the year of birth of the  annuitant.  To use
     Table A and B for an Annuitant  born after 1900,  the actual age is reduced
     by 0.1  (one-tenth) of a year for each year the year of birth exceeds 1900.
     For an  annuitant  with a birth  year  prior to  1900,  the  actual  age is
     increased in a like manner. The actual age (in completed months) reduced or
     increased  becomes the  "adjusted  age of the  Annuitant".  The  guaranteed
     payout rate is then found by  interpolating  the  Annuitant's  adjusted age
     between  the ages shown in Tables A and B.  Tables A and B are based on the
     1983 Table "A"  mortality  table and an interest  rate of 3.5% per year. On
     request the Company will furnish the amount of monthly  Annuity Payment per
     $1,000 applied for any ages not shown.

     For  Annuity  Options 5 and 6,  annuity  rates based on age and sex are not
     used to calculate annuity payments.  Annuity Payments for these options are
     computed without reference to the Annuity Tables.

ANNUITY PAYMENTS
     The  Annuity  Option is shown on page 3. The Owner may  choose  any form of
     Annuity  Option  that is  allowed by the  Company.  The Owner may choose an
     Annuity  Option by written  request.  This  request must be Received by the
     Company at least 30 days prior to the Annuity Start Date.  Several  Annuity
     Options  are listed on page 18. No  Annuity  Option  can be  selected  that
     requires the Company to make periodic payments of less than $100.00.  If no
     Annuity  Option is chosen prior to the Annuity Start Date, the Company will
     use Life with 10-Year Fixed Period  Option.  Each Annuity Option allows for
     making Annuity Payments annually, semiannually, quarterly or monthly.

CHANGE OF ANNUITY OPTION
     Prior to the Annuity  Start Date,  the Owner may change the Annuity  Option
     chosen. The Owner must request the change in writing.  This request must be
     Received by the Company at least 30 days prior to the Annuity Start Date.

FIXED ANNUITY PAYMENTS
     With respect to Fixed Annuity Payments, the amounts shown on the Tables are
     the  guaranteed  minimum for each  Annuity  Payment  for Annuity  Options 1
     through 4.

VARIABLE ANNUITY PAYMENTS
     With respect to Variable Annuity  Payments,  the amount shown on the Tables
     is the  guaranteed  minimum  first  Annuity  Payment,  based on the assumed
     interest  rate of 3.5% for Annuity  Options 1 through 4. The amount of each
     Annuity  Payment  after the first for these options is computed by means of
     Annuity Units.

ANNUITY UNITS
     The number of Annuity Units is found by dividing the first Annuity  Payment
     by the Annuity Unit Value for the selected  Subaccount on the Annuity Start
     Date. The number of Annuity Units for the Subaccount then remains constant,
     unless a  Transfer  of  Annuity  Units is made.  After  the  first  Annuity
     Payment,  the dollar amount of each subsequent  Annuity Payment is equal to
     the number of Annuity Units times the Annuity Unit Value for the Subaccount
     on the due date of the Annuity Payment.

                                      -16-

V6022 H (10-94)
<PAGE>


- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------

ANNUITY UNITS (Continued)
     The  Annuity  Unit Value for each  Subaccount  was first set at $1.00.  The
     Annuity Unit Value for any subsequent  Valuation Date is equal to (a) times
     (b) times (c), where:

     (a)  is the Annuity Unit Value on the immediately preceding Valuation Date;

     (b)  is the Net Investment Factor for the day;

     (c)  is a factor  used to adjust for an assumed  interest  rate of 3.5% per
          year used to  determine  the  Annuity  Payment  amounts.  The  assumed
          interest rate is reflected in the Annuity Tables.

NET INVESTMENT FACTOR
     The Net  Investment  Factor for any  Subaccount at the end of any Valuation
     Period is  determined by dividing (1) by (2) and  subtracting  (3) from the
     result, where:

     1.   is equal to:

          a.   the net  asset  value per  share of the  mutual  fund held in the
               Subaccount,  found at the end of the  current  Valuation  Period;
               plus

          b.   the  per  share   amount  of  any   dividend   or  capital   gain
               distributions  paid by the  Subaccount's  underlying  mutual fund
               that is not  included in the net asset  value per share;  plus or
               minus

          c.   a per share charge or credit for any taxes  reserved  for,  which
               the Company  deems to have  resulted  from the  operation  of the
               Subaccount.

     2.   is the net asset value per share of the Subaccount's underlying mutual
          fund as found at the end of the prior Valuation Period.

     3.   is a factor  representing  the Mortality and Expense Risk Charge which
          is deducted from the Separate Account.

     Underlying mutual funds may declare dividends on a daily basis and pay such
     dividends once a month.  The Net  Investment  Factor allows for the monthly
     reinvestment of these daily  dividends.  As described  above, the gains and
     losses from each  Subaccount are credited or charged against the Subaccount
     without regard to the gains or losses in the Company or other Subaccounts.

ALTERNATE ANNUITY OPTION RATES
     The Company may, at the time of election of an Annuity  Option,  offer more
     favorable  rates  in lieu of the  guaranteed  rates  shown  in the  Annuity
     Tables.

                                      -17-

<PAGE>


- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------

ANNUITY OPTIONS

     OPTION 1
          LIFE  OPTION:  This  option  provides  payments  for  the  life of the
          Annuitant. Table A shows some of the guaranteed rates for this option.

     OPTION 2
          LIFE WITH FIXED PERIOD OPTION:  This option provides  payments for the
          life of the Annuitant.  A fixed period of 5, 10, 15 or 20 years may be
          chosen.  Payments  will be made to the end of this  period even if the
          Annuitant  dies prior to the end of the period.  If the Annuitant dies
          before  receiving  all the payments  during the fixed  period.  If the
          Annuitant  dies before  receiving  all the  payments  during the fixed
          period,  the  remaining  payments  will  be  made  to  the  Designated
          Beneficiary.  Table A shows  some of the  guaranteed  rates  for  this
          option.

     OPTION 3
          LIFE WITH  INSTALLMENT  OR UNIT REFUND  OPTION:  This option  provides
          payments  for  the  life  of  the  Annuitant,  with a  period  certain
          determined  by dividing the Annuity  Start Amount by the amount of the
          first  payment.  A fixed  number of payments  will be made even if the
          Annuitant  dies.  If the  Annuitant  dies before  receiving  the fixed
          number  of  payments,  any  remaining  payments  will  be  made to the
          Designated Beneficiary. Table A shows some of the guaranteed rates for
          this option.

     OPTION 4
          JOINT AND LAST SURVIVOR OPTION:  This option provides payments for the
          life of the  Annuitant and Joint  Annuitant.  Payments will be made as
          long as either is living.  Table B shows some of the guaranteed  rates
          for this option.

     OPTION 5
          FIXED PERIOD OPTION:  This option provides payments for a fixed number
          of years between 5 and 20. If the Contract  Value is held in the Fixed
          Account,  then the amount of the payments will vary as a result of the
          interest  rate  (as  adjusted  periodically)  credited  on  the  Fixed
          Account.  This rate is  guaranteed  to be no less than the  Guaranteed
          Rate shown on page 3. If the  Contract  Value is held in the  Separate
          Account,  then the amount of the payments will vary as a result of the
          investment   performance  of  the  Subaccounts   chosen.  If  all  the
          Annuitants  die before  receiving  the fixed number of  payments,  any
          remaining payments will be made to the Designated Beneficiary.

     OPTION 6
          FIXED PAYMENT  OPTION:  This option  provides a fixed payment  amount.
          This amount is paid until the amount applied, including daily interest
          adjustments,  is paid.  If the  Contract  Value  is held in the  Fixed
          Account,  then the  number  of  payments  will vary as a result of the
          interest  rate  (as  adjusted  periodically)  credited  on  the  Fixed
          Account.  This rate is  guaranteed  to be no less than the  Guaranteed
          Rate shown on page 3. If the  Contract  Value is held in the  Separate
          Account,  then the  number  of  payments  will vary as a result of the
          investment   performance  of  the  Subaccounts   chosen.  If  all  the
          Annuitants  die  before  receiving  all the  payments,  any  remaining
          payments will be made to the Designated Beneficiary.

                                      -18-

V6022 I (10-94)
<PAGE>


                                 ANNUITY TABLES
- --------------------------------------------------------------------------------
                                    TABLE A
                     SETTLEMENT OPTIONS ONE, TWO, AND THREE
       MINIMUM INITIAL MONTHLY INSTALLMENTS PER $1,000 OF AMOUNT APPLIED

                                     Option Two
  Adjusted      Option One      Year Fixed Period Ends          Option Three
    Age            Life        5       10      15      20           Unit
of Annuitant       Only      Years   Years   Years   Years         Refund
- --------------------------------------------------------------------------------
   MALE
    55             4.99       4.97    4.91    4.80    4.66          4.73
    56             5.09       5.07    5.00    4.88    4.72          4.81
    57             5.20       5.17    5.10    4.97    4.78          4.90
    58             5.32       5.29    5.20    5.05    4.85          4.99
    59             5.44       5.41    5.31    5.14    4.91          5.08

    60             5.57       5.53    5.42    5.23    4.97          5.18
    61             5.71       5.67    5.54    5.33    5.04          5.29
    62             5.86       5.81    5.67    5.42    5.10          5.40
    63             6.02       5.97    5.80    5.52    5.16          5.51
    64             6.20       6.13    5.94    5.62    5.22          5.63

    65             6.38       6.31    6.08    5.72    5.28          5.76
    66             6.58       6.49    6.23    5.82    5.33          5.90
    67             6.79       6.69    6.38    5.92    5.38          6.04
    68             7.02       6.90    6.54    6.02    5.43          6.19
    69             7.26       7.12    6.71    6.12    5.48          6.35

    70             7.52       7.35    6.87    6.21    5.52          6.52
    71             7.80       7.60    7.05    6.30    5.55          6.69
    72             8.09       7.86    7.22    6.39    5.59          6.88
    73             8.41       8.13    7.40    6.47    5.62          7.07
    74             8.75       8.42    7.57    6.55    5.64          7.27

    75             9.12       8.72    7.75    6.62    5.66          7.49

  FEMALE
    55             4.54       4.53    4.51    4.46    4.38          4.40
    56             4.62       4.61    4.58    4.53    4.44          4.47
    57             4.71       4.70    4.66    4.60    4.51          4.54
    58             4.80       4.79    4.75    4.68    4.57          4.62
    59             4.90       4.88    4.84    4.76    4.64          4.70

    60             5.00       4.99    4.93    4.84    4.70          4.78
    61             5.11       5.09    5.03    4.93    4.77          4.87
    62             5.23       5.21    5.14    5.02    4.84          4.96
    63             5.36       5.33    5.25    5.12    4.91          5.06
    64             5.49       5.46    5.37    5.21    4.98          5.17

    65             5.64       5.60    5.50    5.31    5.05          5.28
    66             5.79       5.75    5.63    5.42    5.12          5.39
    67             5.95       5.91    5.77    5.53    5.19          5.52
    68             6.13       6.08    5.91    5.63    5.25          5.65
    69             6.32       6.26    6.07    5.74    5.32          5.79

    70             6.53       6.46    6.23    5.86    5.37          5.94
    71             6.75       6.67    6.40    5.97    5.43          6.09
    72             6.99       6.89    6.58    6.08    5.48          6.26
    73             7.26       7.13    6.76    6.18    5.52          6.44
    74             7.54       7.39    6.95    6.29    5.57          6.63

    75             7.85       7.67    7.14    6.39    5.60          6.83

Values  not  shown  will be  provided  upon  request.  Annual,  semiannual,  or
quarterly installments can be determined by multiplying the monthly installments
by 11.812853, 5.9572227, and 2.9914196 respectively.
- --------------------------------------------------------------------------------
                                    TABLE B
                             SETTLEMENT OPTION FOUR
        MINIMUM INITIAL MONTHLY INSTALLMENT PER $1,000 OF AMOUNT APPLIED

   Adjusted Age of                  Adjusted Age of Male Annuitant       
  Female Annuitant        55        60        62        65        70       75
- --------------------------------------------------------------------------------
        55               4.16      4.27      4.30      4.35      4.42     4.47
        60               4.34      4.51      4.57      4.66      4.78     4.86
        62               4.41      4.61      4.68      4.79      4.94     5.04
        65               4.51      4.76      4.85      4.99      5.20     5.35
        70               4.66      4.99      5.13      5.34      5.67     5.95
        75               4.78      5.19      5.37      5.66      6.16     6.63

Values  not  shown  will be  provided  upon  request.  Annual,  semiannual,  or
quarterly installments can be determined by multiplying the monthly installments
by 11.812853, 5.9572227, and 2.9914196 respectively.

                                      -19-

<PAGE>






                      A BRIEF DESCRIPTION OF THIS CONTRACT

This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.

*    Purchase  Payments may be made until the earlier of the Annuity  Start Date
     or termination of the Contract.

*    A Death  Benefit may be paid prior to the Annuity  Start Date  according to
     the Contract provisions.

*    Annuity  Payments  begin on the  Annuity  Start  Date  using the  method as
     specified in this Contract.

*    This Contract is Participating.





ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT,  WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT.  THERE ARE NO
GUARANTEED  MINIMUM  PAYMENTS OR CASH VALUES.  (SEE "CONTRACT  VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)




                                   [SBL LOGO]
                     SECURITY BENEFIT LIFE INSURANCE COMPANY
               A Member of The Security Benefit Group of Companies
                     P.O. Box 750497, Topeka, KS 66675-0497
                  700 SW Harrison Street, Topeka, KS 66636-0001
                                 1-800-888-2461


<PAGE>

                                  ENDORSEMENT

- --------------------------------------------------------------------------------
ANNUITY LOAN PROVISIONS
- --------------------------------------------------------------------------------

LOAN ENDORSEMENT

         This  endorsement  is attached to and made part of your  Contract as of
         its Issue Date or, if later, the date shown below.  Notwithstanding any
         other  provision  of  the  Contract  to  the  contrary,  the  following
         provisions shall apply.

GENERAL PROVISIONS

         Prior to the start of retirement  annuity  installments  (the "maturity
         date"),  the  Company  shall  lend an amount  applied  for to the Owner
         subject to the limitations,  interest rates,  and repayment  procedures
         set forth  herein and in the loan  agreement  between the Owner and the
         Company. Any loan applied for must be for a minimum of $1,000. Only two
         loans shall be permitted per contract year. All loans must be repaid as
         specified  herein  before  the  maturity  date.  Except  for loans that
         qualify under the Code for a longer repayment  period, as determined by
         the  Company,  all loans must be repaid  within five years of approval.
         All loan  repayments  must be scheduled to be paid in equal  amounts on
         the same day of each month or quarter. For monthly repayments the first
         scheduled  repayment  may not be later  than 30 days  after the date of
         approval  of  the  loan  application  by  the  Company.  For  quarterly
         repayments the first scheduled  repayment may not be later than 90 days
         after the date of  approval  of the loan  application  by the  Company.
         Before a loan is permitted a written  application and loan agreement on
         a form  acceptable to the Company must be Received by the Company.  The
         Company may postpone  final approval or disapproval of a loan for up to
         six months after the application for a loan is received.

TAX CONSEQUENCES

         The  Company  makes  no  representations  or  guarantees  as to the tax
         consequences  of a loan to the Owner.  The Owner should  consult his or
         her tax counsel for specific advice.

MAXIMUM LOAN AMOUNT

         The maximum loan amount for all contracts combined,  is generally equal
         to the lesser of: (1) $50,000 reduced by the excess of: (a) the highest
         outstanding loan balance within the preceding 12-month period ending on
         the day before the date the loan is made; over (b) the outstanding loan
         balance on the date the loan is made;  or (2) 50% of your account value
         or $10,000,  whichever is greater.  However,  in no case can you borrow
         more than your account value.

LOAN ACCOUNT, AND INTEREST EARNED ON LOAN ACCOUNT

         When your loan is  approved,  the Company  will  transfer to an account
         within the Fixed  Amount,  referred to as the Loan  Account,  an amount
         equal to the loan  amount.  Amounts  allocated to the Loan Account earn
         the Minimum Guaranteed Interest Rate specified in the Contract.

LOAN INTEREST RATE 

         The Owner must pay interest on the outstanding  loan balance.  Interest
         shall accrue on the loan balance from the  effective  date of any loan.
         The loan  interest rate shall be the Minimum  guaranteed  Interest Rate
         plus 2.5%

LOAN PAYMENTS

         Each loan  payment  must be labeled as such.  If not  labeled as a loan
         payment,  amounts  received by the Company  will be treated as Purchase
         Payments.  Each loan payment will reduce the Loan Account by the amount
         the payment reduces the outstanding loan balance.  Amounts which are no
         longer  needed in the Loan  Account  will be  transferred  to the Fixed
         Account and/or the  Subaccounts in accordance  with current  allocation
         instructions for purchase  payments.  The loan may be repaid in full at
         any time, in which event, the Loan Account shall be reduced to $0.

V 6846 (R1-97)                                                        NON-ERISA

<PAGE>

- --------------------------------------------------------------------------------
ANNUITY LOAN PROVISIONS (Continued)
- --------------------------------------------------------------------------------

FAILURE TO MAKE PAYMENTS

         If any  required  loan  payment is not paid,  within 30 days of the due
         date for loans with a monthly  repayment  schedule or within 90 days of
         the due date for loans with a quarterly repayment  schedule,  the TOTAL
         OUTSTANDING  LOAN BALANCE  will be deemed to be in default.  The entire
         loan  balance,  with any  accrued  interest,  will be  reported  to the
         Internal  Revenue  Service  ("IRS")  on Form  1099-R  for the  year the
         default  occurred.  Once  a  loan  has  gone  into  default,  regularly
         scheduled  payments will not be accepted.  However,  the principal plus
         accrued interest may be paid in full at any time.  Notwithstanding  any
         other  provision of the Contract or this  endorsement to the contrary,
         no new loans will be allowed when there is a loan in default.

         Interest  will  continue  to accrue on a loan in  default.  You may pay
         accrued  interest  each year when  notified by SBL. If such interest is
         not  paid by  December  31st  of each  year,  it will be  added  to the
         outstanding balance of the loan and will be reported to the IRS on Form
         1099-R.  Account value equal to the amount of the accrued interest will
         be  transferred  to the  Loan  Account.  If a loan  continues  to be in
         default when you attain age 59 1/2, the total outstanding  balance will
         be deducted from your account value. The Contract will be automatically
         terminated if the outstanding  loan balance on a loan in default equals
         or exceeds the amount for which the  Contract may be  surrendered.  The
         proceeds from the Contract will be used to repay the debt.

WITHDRAWAL VALUE, ANNUITY PAYOUT AMOUNT, AND DEATH BENEFIT

         If the Contract is surrendered,  or if a death benefit becomes payable,
         the amount  otherwise  receivable  will be reduced by the amount of the
         outstanding  loan, plus any accrued interest.  In addition,  no partial
         withdrawal  request  will  be  processed  which  would  result  in  the
         withdrawal of account value from the Loan Account.


                                        SECURITY BENEFIT LIFE INSURANCE COMPANY

                                                   ROGER K. VIOLA

                                                      Secretary


- ----------------------------
Endorsement Effective Date
(If Other Than Issue Date)


<PAGE>

                                   ENDORSEMENT

- --------------------------------------------------------------------------------
ANNUITY LOAN PROVISIONS
- --------------------------------------------------------------------------------

LOAN ENDORSEMENT
     This  endorsement  is attached to and made part of your  Contract as of its
     Issue Date or, if later,  the date shown below.  Notwithstanding  any other
     provision of the Contract to the contrary,  the following  provisions shall
     apply.

GENERAL PROVISIONS
     Prior to the Annuity Start Date,  the Company shall lend an amount  applied
     for to the Owner subject to the limitations,  interest rates, and repayment
     procedures set forth herein and in the loan agreement between the Owner and
     the Company. Any loan applied for must be for a minimum of $1,000. Only two
     loans shall be  permitted  per Contract  Year.  All loans must be repaid as
     specified  herein before the Annuity Start Date. The Annuity Start Date may
     not be  changed  so  that  it  would  occur  prior  to the  time  that  any
     outstanding  loan  balance is  scheduled  to be repaid in full.  Except for
     loans  that  qualify  under  the  Code for a longer  repayment  period,  as
     determined  by the Company,  all loans must be repaid  within five years of
     approval. All loan repayments must be scheduled to be paid in equal amounts
     on the same day of each month or quarter.  For monthly repayments the first
     scheduled  repayment  may  not be  later  than 30 days  after  the  date of
     approval of the loan application by the Company.  For quarterly  repayments
     the first  scheduled  repayment may not be later than 90 days after date of
     approval of the loan application by the Company. Before a loan is permitted
     a  written  application  and loan  agreement  on a form  acceptable  to the
     Company  must be Received by the Company.  The Company may  postpone  final
     approval  or  disapproval  of a  loan  for  up  to  six  months  after  the
     application for a loan is received.

TAX CONSEQUENCES
     The  Company  makes  no   representations  or  guarantees  as  to  the  tax
     consequences  of a loan to the Owner.  The Owner should  consult his or her
     tax counsel for specific advice.

MAXIMUM LOAN AMOUNT
     For Contracts with Contract Value of $20,000 or less, the maximum loan that
     may be taken is the amount that produces a loan balance  immediately  after
     the loan that is the lesser of $10,000 or 75% of the  Contract  Value.  For
     Contracts  with  Contract  Value over  $20,000 the maximum loan that may be
     taken is the amount that produces a loan balance immediately after the loan
     that is the lesser of: (1) $50,000 reduced by the excess of (a) the highest
     outstanding loan balance during the preceding 12 month period ending on the
     day before the date the loan is made over (b) the outstanding  loan balance
     on the  date  the  loan is  made;  or (2) 50% of the  Contract  Value.  The
     aggregate of all loans may not exceed the limitations set forth above.

LOAN ACCOUNT, AND INTEREST EARNED ON LOAN ACCOUNT
     When your loan is approved,  the Company will transfer  Contract Value from
     the  Subaccounts  or allocate  Fixed Account  Contract  Value to an account
     called the Loan  Account in an amount  equal to the loan  amount.  Any such
     transfer shall be allocated  proportionately  to the Owner's Contract Value
     in the Subaccounts and the Fixed Account,  unless otherwise directed by the
     Owner. The Loan Account is part of the Fixed Account and amounts  allocated
     to the Loan Account earn the Minimum Guaranteed  Interest Rate specified in
     the Contract.

LOAN INTEREST RATE
     The Owner must pay interest on the outstanding loan balance. Interest shall
     accrue on the loan balance from the  effective  date of any loan.  The loan
     interest rate shall be the Minimum Guaranteed Interest Rate plus 2.5%.

V6846 (10-94)

<PAGE>


- --------------------------------------------------------------------------------
ANNUITY LOAN PROVISIONS (Continued)
- --------------------------------------------------------------------------------

LOAN PAYMENTS
     Each  loan  payment  must be  labeled  as such.  If not  labeled  as a loan
     payment,  amounts  received  by the  Company  will be treated  as  Purchase
     Payments.  Loan payments will be applied first to accrued interest and then
     to the principal amount of the outstanding loan balance.  Upon receipt of a
     loan payment,  we will transfer Contract Value from the Loan Account to the
     Fixed  Account  and/or the  Subaccounts  according  to the Owner's  current
     allocation  instructions with respect to Purchase  Payments.  The amount of
     Contract  Value  transferred  from the Loan  Account  shall be equal to the
     amount by which the payment reduces the outstanding principal loan balance,
     plus the amount of accrued  interest  credited  on the Loan  Account at the
     Minimum  Guaranteed  Interest Rate as of the date of the payment.  The loan
     may be repaid in full at any time,  in which event,  the Loan Account shall
     be reduced to $0.

FAILURE TO MAKE PAYMENTS
     If a loan  payment is not made when due, the loan payment may be treated as
     a  taxable  distribution  and may be  subject  to a tax  penalty  for early
     withdrawal. If a loan payment is not made as specified and scheduled herein
     and in the loan  agreement,  the  Company  shall  withdraw  the  amount  of
     Contract Value necessary to make the payment,  including  interest  accrued
     thereon.  The  amount  withdrawn  will  be  treated  as a loan  payment  as
     described above. Any such withdrawal shall be deducted from the Accounts in
     the order  described on page 3, "Method for  Deductions." In the event that
     the amount of a loan repayment equals or exceeds the Owner's Contract Value
     less the  amount in the Loan  Account at any time,  the full  amount of the
     outstanding loan balance,  including accrued interest, shall become due and
     payable on the next scheduled repayment date.

WITHDRAWAL VALUE, ANNUITY PAYOUT AMOUNT, AND DEATH BENEFIT
     Before  calculating the Withdrawal  Value,  the Annuity Start Amount or the
     Death Benefit under the Contract, the Company shall withdraw that amount of
     Contract Value necessary to reduce the outstanding loan balance to $0. As a
     result,  the  Contract  Value  shall  be  reduced  by  the  amount  of  the
     withdrawal. The Contract Value remaining after the withdrawal shall be used
     to calculate the Withdrawal Value, Annuity Start Amount or Death Benefit as
     set forth in the Contract.  In addition, no partial withdrawal request will
     be processed  which would result in the  withdrawal of Contract  Value from
     the Loan Account.

                                     SECURITY BENEFIT LIFE INSURANCE COMPANY

                                                ROGER K. VIOLA
                                                  Secretary



- -------------------------------
Endorsement Effective Date
(If Other Than Issue Date)


<PAGE>


                                   ENDORSEMENT

- --------------------------------------------------------------------------------
INDIVIDUAL RETIREMENT ANNUITY PROVISIONS
- --------------------------------------------------------------------------------

INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
     This Contract is established as an Individual Retirement Annuity ("IRA") as
     defined in Section 408 of the  Internal  Revenue  Code of 1986,  as amended
     (the "Code") or any successor  provision pursuant to the Owner's request in
     the Application. Accordingly, this endorsement is attached to and made part
     of the  Contract as of its Issue Date or, if later,  the date shown  below.
     Notwithstanding  any other provisions of the Contract to the contrary,  the
     following provisions shall apply.

RESTRICTIONS ON INDIVIDUAL RETIREMENT ANNUITY
     To  ensure  treatment  as an IRA,  this  Contract  will be  subject  to the
     requirements of Code Section 408, which are briefly summarized below:

     1.   The Contract is established for the exclusive  benefit of the Owner or
          his or her beneficiaries. The Owner shall be the Annuitant.

     2.   The Contract shall be  nontransferable  and the entire interest of the
          Owner in the Contract is nonforfeitable.

     3.   Notwithstanding  any  provision of the Contract to the  contrary,  the
          distribution of the Owner's  interest shall be made in accordance with
          the minimum  distribution  requirements  of Section  401(a)(9)  of the
          Internal  Revenue Code and the regulations  thereunder,  including the
          incidental  death benefit  provisions of Section  1.401(a)(9)-2 of the
          proposed  regulations,   all  of  which  are  herein  incorporated  by
          reference.

          The Owner's entire  interest in the Contract must be  distributed,  or
          begin to be distributed, by the Owner's required beginning date, which
          is the April 1 following  the calendar year in which the Owner reaches
          age 70 1/2. For each succeeding  year, a distribution  must be made on
          or before  December 31. By the required  beginning date, the Owner may
          elect to have the  balance in the  account  distributed  in one of the
          following forms:

             1)   A single lump sum payment;

             2)   Equal or  substantially  equal monthly,  quarterly,  or annual
                  payments over the life of the Owner or over the joint and last
                  survivor  lives  of  the  Owner  and  his  or  her  Designated
                  Beneficiary; or

             3)   Equal or substantially  equal annual payments over a specified
                  period that may not be longer than the Owner's life expectancy
                  or the joint and last  survivor  life  expectancy of the Owner
                  and his or her Designated Beneficiary.

          An Annuity  Option may not be elected  with a Fixed  Period  that will
          guarantee Annuity Payments beyond the life expectancy of the Annuitant
          and  Beneficiary  and Annuity  Payments must be made at least annually
          and in equal amounts.

     4.   If the Owner dies before his or her entire  interest  is  distributed,
          the entire remaining interest will be distributed as follows:

          a.   If the Owner  dies on or after  distributions  have  begun  under
               Section 3, the entire  remaining  interest must be distributed at
               least as rapidly as provided under Section 3.


V6849A (1-97)
<PAGE>


- --------------------------------------------------------------------------------
INDIVIDUAL RETIREMENT ANNUITY PROVISIONS (Continued)
- --------------------------------------------------------------------------------

RESTRICTIONS ON INDIVIDUAL RETIREMENT ANNUITY (continued)
          b.   If the Owner dies before distributions have begun under Section 3
               the entire  remaining  interest must be distributed as elected by
               the Owner or, if the Owner has not so elected,  as elected by the
               Designated Beneficiary or Beneficiaries as follows:

                1)   by December 31 of the year containing the fifth anniversary
                     of the Owner's death; or

                2)   in equal or  substantially  equal payments over the life or
                     life   expectancy   of  the   Designated   Beneficiary   or
                     Beneficiaries starting by December 31 of the year following
                     the year of the Owner's death. If, however,  the Designated
                     Beneficiary  is the  Owner's  surviving  spouse,  then this
                     Distribution  is not required to begin until December 31 of
                     the later of: (1) the calendar year  immediately  following
                     the  calendar  year in which  the  Owner  died;  or (2) the
                     calendar year in which the Owner would have attained age 70
                     1/2.

     5.   An individual may satisfy the minimum distribution  requirements under
          Section 401(a)(9) of the Code by receiving a distribution from one IRA
          that  is  equal  to  the  amount   required  to  satisfy  the  minimum
          distribution  requirements for two or more IRAs. For this purpose, the
          Owner of two or more IRAs may use the "alternative  method"  described
          in Notice 88-38, 1988-1 C.B. 524, to satisfy the minimum  distribution
          requirements described above.

     6.   Any  refund of  premiums  (other  than  those  attributable  to excess
          contributions)  will be applied  before the close of the calendar year
          following the year of the refund toward the payment of future premiums
          or the purchase of additional benefits.

     7.   The  annual  premium  shall  not  exceed  the  lesser of $2,000 or 100
          percent of  compensation  ($4,000 or 100 percent of  compensation  for
          Spousal IRAs however, no more than $2,000 can be contributed to either
          spouse's IRA), except for plans defined in Section 408(k) of the Code,
          for which annual premiums shall not exceed $30,000.

     8.   Rollover  contributions  from other  qualified  plans permitted by the
          Internal  Revenue Code  Sections  402(c),  403(a)(4),  403(b)(8),  and
          408(d)(3), are excluded from the limit set forth in Section 8.

     9.   Notwithstanding any Contract provisions to the contrary, no amount may
          be borrowed  under the Contract and no portion may be used as security
          for a loan.

     10.  Annuity Payments may not begin before the Annuitant attains the age of
          59 1/2  without  incurring  a penalty  tax  except  in the  situations
          described in Section 72(t) of the Code.

                                       SECURITY BENEFIT LIFE INSURANCE COMPANY

                                                    ROGER K. VIOLA
                                                       Secretary



- ------------------------------
 Endorsement Effective Date
 (If Other Than Issue Date)

<PAGE>


<PAGE>

                                  ENDORSEMENT

- --------------------------------------------------------------------------------
                SIMPLE INDIVIDUAL RETIREMENT ANNUITY PROVISIONS
- --------------------------------------------------------------------------------

SIMPLE INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT

         This  Contract is  established  as a Savings  Incentive  Match Plan for
         Employees of Small Employers  Individual  Retirement  Annuity  ("SIMPLE
         IRA") as defined in Section 408 of the  Internal  Revenue Code of 1986,
         as amended  (the  "Code") or any  successor  provision  pursuant to the
         Owner's request in the  Application.  Accordingly,  this endorsement is
         attached  to and made part of the  Contract as of its Issue Date or, if
         later,  the date shown below.  Notwithstanding  any other provisions of
         the Contract to the contrary, the following provisions shall apply.

RESTRICTIONS ON SIMPLE INDIVIDUAL RETIREMENT ANNUITY

         To ensure  treatment as a SIMPLE IRA,  this Contract will be subject to
         the  applicable  requirements  of Code Section  408,  which are briefly
         summarized below:

         1.   The Contract is established for the exclusive benefit of the Owner
              or his or her beneficiaries. The Owner shall be the Annuitant.

         2.   The Contract shall be nontransferable  and the entire  interest of
              the Owner in the Contract is nonforfeitable.

         3.   Notwithstanding any provision of the Contract to the contrary, the
              distribution  of the Owner's  interest shall be made in accordance
              with the minimum distribution requirements of Section 401(a)(9) of
              the  Internal   Revenue  Code  and  the  regulations   thereunder,
              including  the  incidental  death  benefit  provisions  of Section
              1.401(a)(9)-2 of the proposed regulations, all of which are herein
              incorporated by reference.

              The Owner's entire  interest in the Contract must be  distributed,
              or begin to be  distributed,  by  the Owner's  required  beginning
              date,  which is the April 1 following  the calendar  year in which
              the  Owner  reaches  age 70  1/2.  For  each  succeeding  year,  a
              distribution  must  be  made  on or  before  December  31.  By the
              required  beginning  date, the Owner may elect to have the balance
              in the account distributed in one of the following forms:

              1)   A single lump sum payment;

              2)   Equal or substantially  equal monthly,  quarterly,  or annual
                   payments  over the life of the  Owner or over the  joint  and
                   last  survivor  lives of the Owner and his or her  Designated
                   Beneficiary; or

              3)   Equal or substantially equal annual payments over a specified
                   period  that  may  not  be  longer  than  the  Owner's   life
                   expectancy or the joint and last survivor life  expectancy of
                   the Owner and his or her Designated Beneficiary.

              An Annuity Option may not be elected with a Fixed Period that will
              guarantee  Annuity  Payments  beyond  the life  expectancy  of the
              Annuitant  and  Beneficiary  and Annuity  Payments must be made at
              least annually and in equal amounts.

         4.   If  the  Owner  dies   before  his  or  her  entire   interest  is
              distributed,  the entire remaining interest will be distributed as
              follows:

              a.   If the Owner dies on or after  distributions have begun under
                   Section 3, the entire remaining  interest must be distributed
                   at least as rapidly as provided under Section 3.


4453C-5S (2-97)

<PAGE>

- --------------------------------------------------------------------------------
           SIMPLE INDIVIDUAL RETIREMENT ANNUITY PROVISIONS (Continued)
- --------------------------------------------------------------------------------

RESTRICTIONS ON SIMPLE INDIVIDUAL RETIREMENT ANNUITY (continued)

              b.   If the Owner  dies  before  distributions  have  begun  under
                   Section 3, the entire remaining  interest must be distributed
                   as elected by the Owner or, if the Owner has not so  elected,
                   as elected by the Designated  Beneficiary or Beneficiaries as
                   follows:

                   1)   By  December  31  of  the  year   containing  the  fifth
                        anniversary of the Owner's death; or

                   2)   In equal or  substantially  equal payments over the life
                        or life  expectancy  of the  Designated  Beneficiary  or
                        Beneficiaries  starting  by  December  31  of  the  year
                        following the year of the Owner's  death.  If,  however,
                        the  Designated  Beneficiary  is the  Owner's  surviving
                        spouse,  then this Distribution is not required to begin
                        until  December 31 of the later of (1) the calendar year
                        immediately  following  the  calendar  year in which the
                        Owner died;  or (2) the calendar year in which the Owner
                        would have attained age 70 1/2.

         5.   An individual  may satisfy the minimum  distribution  requirements
              under  Section  401(a)(9) of the Code by receiving a  distribution
              from one IRA that is equal to the amount  required  to satisfy the
              minimum  distribution  requirements for two or more IRAs. For this
              purpose,  the Owner of two or more  IRAs may use the  "alternative
              method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
              minimum distribution requirements described above.

         6.   Any refund of premiums  (other than those  attributable  to excess
              contributions)  will be applied  before the close of the  calendar
              year following the year of the refund toward the payment of future
              premiums or the purchase of additional benefits.

         7.   The annual  premium shall not exceed amounts  allowable  under the
              terms of the SIMPLE plan  described in Section  408(p) of the Code
              or any successor provision in which the Owner is a participant.

         8.   Transfers and  rollovers  from other SIMPLE IRAs are permitted and
              are excluded from the limit set forth in Section 7.

         9.   Notwithstanding any Contract provisions to the contrary, no amount
              may be borrowed  under the  Contract and no portion may be used as
              security for a loan.

         10.  Annuity  Payments may not begin before the  Annuitant  attains the
              age of 59 1/2  without  incurring  a  penalty  tax  except  in the
              situations described in Section 72(t) of the Code.


                                        SECURITY BENEFIT LIFE INSURANCE COMPANY

                                                   ROGER K. VIOLA

                                                      Secretary


- ----------------------------
Endorsement Effective Date
(If Other Than Issue Date)

<PAGE>

                              TAX-SHELTERED ANNUITY
                                   ENDORSEMENT

TAX-SHELTERED ANNUITY ENDORSEMENT

         This Contract is established as a  Tax-Sheltered  Annuity ("TSA") under
         Section  403(b) of the Internal  Revenue Code of 1986,  as amended (the
         "Code") or any successor provision,  pursuant to the Owner's request in
         the application.  Accordingly, this Endorsement is attached to and made
         part of the Contract as of its issue date or, if later,  the date shown
         below.  If this is a group  contract,  references to the "Owner" and to
         the  "Contract"   shall,   respectively,   be  deemed  to  include  the
         Participant and the Participant's Certificate where appropriate.

TAX-SHELTERED ANNUITY PROVISIONS

         To ensure  treatment  as a TSA,  this  Contract  will be subject to the
         requirements  of Code  Section  403(b),  which are  briefly  summarized
         below:

         (a)      Purchase  Payments  made on behalf of the Owner  pursuant to a
                  salary reduction  agreement when added to "elective  deferral"
                  contributions under all other plans, contracts or arrangements
                  in which the Owner  participates,  may not  exceed  the annual
                  limitation on such  contributions  as provided in Code Section
                  401(a)(30).

         (b)      Purchase  Payments  applied to the  Contract  on behalf of the
                  Owner  which  exceed  the  applicable   "exclusion  allowance"
                  (within  the  meaning  of  Code  Section   403(b)(2))  or  the
                  limitations  contained  in  Code  Section  415  shall  not  be
                  excludable from gross income.

         (c)      Purchase Payments that exceed any of the foregoing limitations
                  may be returned,  distributed or otherwise corrected using any
                  method permissible under the Code.

NONDISCRIMINATION REQUIREMENTS

         (a)      Except if this Contract is purchased by a "church" (within the
                  meaning of Code  Section  3121(w)),  the Plan must satisfy the
                  nondiscrimination requirements of Code Section 403(b)(12).

         (b)      Purchase  Payments  not made  pursuant  to a salary  reduction
                  agreement will satisfy the  nondiscrimination  requirements of
                  Code Section 403(b)(12) provided they satisfy the requirements
                  of    Code    Section    401(a)(4)    (nondiscrimination    in
                  contributions),  Code Section 401(a)(5) (permitted disparity),
                  Code Section 401(a)(17)  (annual limit on compensation),  Code
                  Section 401(m) (average contribution percentage test) and Code
                  Section 410(b) (coverage).

         (c)      Purchase   Payments  made  pursuant  to  a  salary   reduction
                  agreement will satisfy the  nondiscrimination  requirements of
                  Code Section  403(b)(12)  provided that every  employee of the
                  Employer  sponsoring  the  Plan,  may  elect to make  Purchase
                  Payments  of more than  $200  pursuant  to a salary  reduction
                  agreement.

6832 A (R9-96)                          -1-


<PAGE>


DISTRIBUTION RESTRICTIONS AND REQUIREMENTS

         (a)      Distributions  attributable to Purchase Payments made pursuant
                  to a salary  reduction  agreement  may be made  only  when the
                  Owner  attains  age 59  1/2,  separates  from  service,  dies,
                  becomes   "disabled"  (within  the  meaning  of  Code  Section
                  403(b)(11)) or incurs a hardship. A distribution made due to a
                  hardship may not include income  attributable to such Purchase
                  Payments.

         (b)      Distributions  from this Contract must comply with the minimum
                  distribution and incidental death benefit requirements of Code
                  Section  403(b)(10).  Accordingly,  an Owner's entire interest
                  under the Contract  generally must be distributed (or begin to
                  be  distributed) by April 1 of the calendar year following the
                  later of (i) the calendar  year in which the Owner attains age
                  70 1/2, or (ii) the calendar  year in which the Owner  retires
                  (the "Required Beginning Date").

                  Distributions commencing not later than the Required Beginning
                  Date may be made  over the life of the Owner or over the lives
                  of the Owner and his or her Designated  Beneficiary (or over a
                  period not extending  beyond the life  expectancy of the Owner
                  or the life  expectancy of the Owner and his or her Designated
                  Beneficiary).

         (c)      If the Owner dies before  distribution  of his or her interest
                  in the Contract has begun in  accordance  with  paragraph  (b)
                  above, the Owner's entire interest must be distributed  within
                  five years,  unless:  (i) such  interest is  distributed  to a
                  Designated  Beneficiary over his or her life (or over a period
                  not  extending  beyond  such  Designated   Beneficiary's  life
                  expectancy);  and (ii) such distribution begins not later than
                  one  year  after  the  Owner's   death.   If  the   Designated
                  Beneficiary is the Owner's surviving spouse, the date on which
                  the  distributions  are required to begin shall not be earlier
                  than the date on which the Owner  would have  attained  age 70
                  1/2.

         (d)      If the Owner dies after distribution of his or her interest in
                  this Contract has begun in accordance with paragraph (b) above
                  but before his or her entire  interest  has been  distributed,
                  the remaining interest must be distributed at least as rapidly
                  as under the  method of  distribution  being used prior to the
                  Owner's death.

         (e)      All distributions  must  comply  with a method of distribution
                  offered by the Company under this Contract.

         (f)      If the Owner receives a  distribution  from this Contract that
                  qualifies as an "eligible rollover  distribution"  (within the
                  meaning of Code Section  402(f)(2)(A)) and elects to have such
                  distribution  paid directly to an "eligible  retirement  plan"
                  (within the meaning of Code Section 402(c)), such distribution
                  shall be made in the form of a direct transfer to the eligible
                  retirement   plan.   The  Company  may  establish   reasonable
                  administrative rules applicable to such direct transfers.

NONFORFEITABILITY

         (a)      The Owner's rights under this Contract shall be nonforfeitable
                  except for failure to pay future Premiums.

         (b)      This  Contract  may  not be  transferred,  sold,  assigned  or
                  pledged  as  collateral  for a loan  or as  security  for  the
                  performance  of an obligation or for any other purposes to any
                  person other than the Company.


<PAGE>


MULTIPLE CONTRACTS

         (a)      If for any taxable  year an Owner is covered by this  Contract
                  and any other TSA,  all such  contracts  shall be treated as a
                  single contract.

PLAN PROVISIONS

         The Plan,  including  certain Plan provisions  required by the Employee
         Retirement  Income  Security Act of 1974 or other  applicable  law, may
         limit the Owner's rights under this Contract. The Plan provisions may:

         (a)      Limit the Owner's right to make Purchase Payments;

         (b)      Restrict the time when the Owner may elect to receive payments
                  under this Contract;

         (c)      Require the consent of the Owner's spouse before the Owner may
                  elect to receive payments under this Contract;

         (d)      Require that all  distributions be made in the form of a joint
                  and  survivor  annuity  for the Owner and the  Owner's  spouse
                  unless both consent to a different form of distribution;

         (e)      Require that the Owner's spouse be the Designated Beneficiary;

         (f)      Require  that  the  Owner  remain  employed  by  the  Employer
                  sponsoring the Plan for a specified  period of time before the
                  Owner's rights under this Contract become fully vested; or

         (g)      Otherwise  restrict  the Owner's  exercise of rights under the
                  Contract or give the Employer  sponsoring  the Plan (or a Plan
                  representative)  the right to exercise  certain  rights on the
                  Owner's behalf.

         No such  Plan  provision  shall  limit an  Owner's  rights  under  this
         Contract,  unless the  Employer  sponsoring  the Plan has  provided the
         Company with written notification of such provision.  In no event shall
         any such Plan provision  enlarge the Company's  obligations  under this
         Contract.

TAX CONSEQUENCES

         (a)      The Company will not incur any liability or be responsible for
                  the  timing,  purpose  or  propriety  of any  contribution  or
                  distribution;  any tax or  penalty  imposed  on account of any
                  such  contribution or distribution;  or any other failure,  in
                  whole or in part,  by the Owner or the Employer to comply with
                  the provisions set forth in the Code or any other law.

ADMINISTRATION

         The Company does not act as the Administrator of the Plan. Accordingly,
         the  Company  will  not  incur  any  liability  or be  responsible  for
         interpreting the Plan or deciding any question arising thereunder.

                                        SECURITY BENEFIT LIFE INSURANCE COMPANY

                                                   ROGER K. VIOLA

                                                      Secretary


- ----------------------------
Endorsement Effective Date
(If Other Than Issue Date)



<PAGE>

SBG LOGO

SECURITY BENEFIT LIFE
INSURANCE COMPANY ("SBL")
- --------------------------------------------------------------------------------
A Member of the Security Benefit Group of Companies    700 SW Harrison St.
                                                       Topeka, Kansas 66636-0001

                             VARIFLEX LS APPLICATION
- --------------------------------------------------------------------------------
1.  OWNER (APPLICANT)
    Name _____________________________________________
    Address __________________________________________
    __________________________________________________
    Sex M [ ]  F [ ]  Date of Birth___________________
    Tax ID or SSN ____________________________________
    Annuity Start Date _______________________________
- --------------------------------------------------------------------------------
2.  JOINT OWNER
    Name _____________________________________________
    Address __________________________________________
    __________________________________________________
    Date of Birth ____________________________________
    Tax ID or SSN ____________________________________
    Relationship to Owner ____________________________
- --------------------------------------------------------------------------------
3.  INITIAL PURCHASE PAYMENTS
    (min. $25,000) ___________________________________
- --------------------------------------------------------------------------------
4.  ALLOCATION OF PURCHASE PAYMENTS
    Emerging Growth Series*               ____________%
    Growth Series*                        ____________%
    Worldwide Equity Series*              ____________%
    Social Awareness Series*              ____________%
    Specialized Asset Allocation Series*  ____________%
    Managed Asset Allocation Series*      ____________%
    Equity Income Series*                 ____________%
    Growth-Income Series*                 ____________%
    Global Aggressive Bond Series*        ____________%
    High Grade Income Series*             ____________%
    Money Market Series*                  ____________%
    Fixed Account                         ____________%
                                              100%
- --------------------------------------------------------------------------------
5.  ANNUITANT (IF DIFFERENT FROM OWNER)
    Name _____________________________________________
    Address __________________________________________
    __________________________________________________
    Sex M [ ]  F [ ] Date of Birth ___________________
    Tax ID or SSN ____________________________________
- --------------------------------------------------------------------------------
6.  PRIMARY BENEFICIARY
    Name _____________________________________________
    Address __________________________________________
    __________________________________________________
    Relationship to Owner ____________________________
    Date of Birth ____________________________________
    SSN ______________________________________________

    (UPON THE DEATH OF ANY OWNER, THE PRIMARY BENEFICIARY WILL RECEIVE ANY DEATH
    BENEFIT  WHICH IS PAYABLE,  ONLY IF THERE IS NO SURVIVING  JOINT OWNER.  SEE
    PROSPECTUS FOR DETAILS.)
- --------------------------------------------------------------------------------
7.  SECONDARY BENEFICIARY
    Name _____________________________________________
    Address __________________________________________
    __________________________________________________
    Relationship to Owner ____________________________
    Date of Birth ____________________________________
    SSN ______________________________________________
- --------------------------------------------------------------------------------
8.  TYPE OF ANNUITY CONTRACT
    [ ] Non Qualified       [ ] 401(a) (Qual. Pension/Profit Sharing)
    [ ] 403(b) (TSA)        [ ] 401(k) (Qual. Savings Plan)
    [ ] 408 (IRA)           Type of Plan:
    [ ] 408(k) - (SEP)      _________________________________________
    [ ] 408 (Simple)        _________________________________________
    [ ] 457 (Def. Comp.)
- --------------------------------------------------------------------------------
9.  Will this annuity replace or change any other insurance or Annuity?  Yes [ ]
    [ ] No
    If yes, state company(ies) and contract number(s) __________________________
    Type of contract ___________________________________________________________
    If 1035 exchange or other transfer of assets,  attach:  (1) exchange form(s)
    or letter(s); and (2) replacement form(s) if applicable.
- --------------------------------------------------------------------------------
10. SPECIAL INSTRUCTIONS _______________________________________________________
    ____________________________________________________________________________
    ____________________________________________________________________________
- --------------------------------------------------------------------------------
11. PLEASE CHECK THE FOLLOWING SERVICES THAT YOU WISH TO ELECT:
    Telephone Transfer Privilege

    [ ] I (We)  authorize SBL to make  transfers  from  subaccount to subaccount
    and/or  change  the  allocation  of  future  purchases  based  on  telephone
    instructions.  SBL has  procedures  to confirm  that such  instructions  are
    genuine  and  will  not be  liable  for  any  losses  due to  fraudulent  or
    unauthorized  instructions  provided it complies with its procedures.  SBL's
    procedures  require  that any  person  requesting  a transfer  by  telephone
    provide the account  number and the  Owner's tax  identification  number and
    such  instructions must be received on a recorded line. I (we) agree to hold
    harmless and indemnify  SBL, its  affiliates  and employees and this account
    for: (1) any claim, loss,  liability or expense arising out of any telephone
    transfer  effected;  or (2) any failure or overload to the telephone  system
    provided  that SBL  complies  with its  procedures.  The  policy  concerning
    telephone transfers may require an Owner who authorizes  telephone transfers
    to bear the risk of loss from a fraudulent or unauthorized request.


V6845 (R6-96)

<PAGE>


12. [ ] AUTOMATIC DOLLAR COST AVERAGING
    Please establish an automatic transfer from ________________________________
                                                 (Subaccount or Fixed Account)
    (1) _______________________________
         (Subaccount or Fixed Account)
    (Please  indicate  the  dollar or  percentage  split if going to one or more
    Subaccounts) (2) _______________________________
                      (Subaccount or Fixed Account)

    Please establish the transfer under the following option:

    Check only one:
    A. [ ] $___________________________ per transfer over _________months/years
    B. [ ] Fixed Period _____________ months/years
    C. [ ] Only Interest/Earnings over ___________ months/years.  (Earnings will
           accrue for one time period - i.e. monthly, quarterly, etc. - from the
           effective date before the first transfer occurs.)

    Please make transfers:  [ ] Monthly      [ ] Quarterly

    I understand  that  automatic  transfers are subject to: (1) the terms of my
    contract;  (2) the current  prospectus  of  Variflex  LS; and (3) such other
    rules as SBL shall enact. I also understand that any automatic transfer from
    the Fixed  Account may not exceed an amount which would exhaust that account
    within 12 months;  and that Dollar Cost  Averaging  transfers may not exceed
    one each 30 days.
- --------------------------------------------------------------------------------
13. [ ] ASSET REALLOCATION REQUEST
    Emerging Growth Series*               ____________%
    Growth Series*                        ____________%
    Worldwide Equity Series*              ____________%
    Social Awareness Series*              ____________%
    Specialized Asset Allocation Series*  ____________%
    Managed Asset Allocation Series*      ____________%
    Equity Income Series*                 ____________%
    Growth-Income Series*                 ____________%
    Global Aggressive Bond Series*        ____________%
    High Grade Income Series*             ____________%
    Money Market Series*                  ____________%
    Fixed Account                         ____________%

Please establish the Asset Reallocation option as follows:

Please make my first transaction on ________________________ and every 3 months
                                    Month      Day     Year
thereafter.

If no date is selected  the first  transaction  will be made 3 months  after the
date of  purchase.  I understand  that any  transfer in my account  which is not
scheduled will cancel the asset reallocation  option. To reinstate this service,
I must complete an Asset Reallocation form and send it to SBL. The Fixed Account
may not be used if the reallocation would violate the transfer provisions of the
Fixed Account as stated in the  prospectus.  INITIAL  PURCHASE  PAYMENT WILL BE
ALLOCATED  BASED ON  INSTRUCTIONS  IN SECTION  4,  UNLESS  OTHERWISE  INDICATED.
- --------------------------------------------------------------------------------
I have been  given an  effective  Variflex  LS  prospectus  that  describes  the
contract for which I am applying. I have been given an effective prospectus from
the fund underlying each series above.  If my annuity  contract  qualifies under
Section 403(b),  I declare that I know: (1) the limits on redemption  imposed by
Section  403(b)(11) of the IRS Code;  and (2) the investment  choices  available
under my employer's  Section 403(b) arrangement to which I may elect to transfer
my account balance. *I KNOW THAT ANNUITY PAYMENTS AND WITHDRAWAL VALUES, IF ANY,
WHEN  BASED  ON THE  INVESTMENT  EXPERIENCE  OF A  SEPARATE  ACCOUNT  OF SBL ARE
VARIABLE  AND DOLLAR  AMOUNTS  ARE NOT  GUARANTEED.  I must give proof of my age
before any annuity payments start. I must give proof to SBL that I am alive when
each payment is due. The proof must be  satisfactory to SBL. The amount paid and
the application must be acceptable to SBL under its rules and practices. If they
are,  the  Variflex LS contract  applied for will be  effective  on its Contract
Date.  If they are not,  SBL's  liability  will be limited to a return of amount
paid.

REPRESENTATIVE'S  STATEMENT - To the best of my knowledge,  this  application is
not  involved in  replacement  of life  insurance  or  annuities,  as defined in
applicable  Insurance  Department  Regulations,  except as stated in  question 9
above. I have complied with the requirements for disclosure and/or replacement.

__________________________________________________
Representative Signature and Number

__________________________________________________
Print Representative's Full Name and Phone Number

__________________________________________________
Broker/Dealer Name and Number

- --------------------------------------------------------------------------------
                   TAX IDENTIFICATION NUMBER CERTIFICATION**
UNDER PENALTIES OF PERJURY I CERTIFY THAT:

1.   The number shown on this form is my correct taxpayer  identification number
     (or I am waiting for a number to be issued to me); and
2.   I am not subject to backup withholding because: (a) I am exempt from backup
     withholding,  or (b) I have  not  been  notified  by the  Internal  Revenue
     Service  (IRS)  that I am subject  to backup  withholding  as a result of a
     failure to report all interest or dividends, or (c) the IRS has notified me
     that I am no longer subject to backup withholding.
THE INTERNAL  REVENUE  SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS  DOCUMENT   OTHER  THAN  THE   CERTIFICATIONS   REQUIRED  TO  AVOID  BACKUP
WITHHOLDING.
- --------------------------------------------------------------------------------
Dated at ________________________________________
this _______ day  of ______________________ 19___
_________________________________________________
                Owner Signature
_________________________________________________
            Joint Owner/Signature
- --------------------------------------------------------------------------------
**CERTIFICATION  INSTRUCTIONS  - You must  cross  out item (2) above if you have
been  notified  by IRS that you are  currently  subject  to  backup  withholding
because  of  underreporting  interest  or  dividends  on your  tax  return.  For
contributions  to an  individual  retirement  arrangement  (IRA),  and generally
payments  other than  interest and  dividends,  you are not required to sign the
Certification, but you must provide your correct TIN.
- --------------------------------------------------------------------------------
[ ] Check this box if you would like a Statement of Additional Information.


<PAGE>

                       RESTATED ARTICLES OF INCORPORATION

                                       OF

                     SECURITY BENEFIT LIFE INSURANCE COMPANY

          (The Corporation was originally  incorporated under the name
          of "The  National  Council  of The  Knights  and  Ladies  of
          Security"  which was later changed to "The Security  Benefit
          Association."  Its original  Articles of Incorporation  were
          filed with the Kansas  Secretary  of State on  February  22,
          1892.)

                                     FIRST.

The name of this Corporation shall be SECURITY BENEFIT LIFE INSURANCE COMPANY.

                                     SECOND.

The Company is organized not for profit and is formed to make insurance upon the
lives  of  persons  and  every  insurance   appertaining  thereto  or  connected
therewith,  and to grant, purchase or dispose of annuities; to make insurance on
the health of individuals,  against accidental  personal injury,  disablement or
death, and against loss, liability or expense on account thereof; and to provide
benefits for its policy holders in the case of illness or injury.

                                     THIRD.

The location of its registered  office in the State of Kansas is at 700 Harrison
Street in the City of Topeka,  State of Kansas;  and the name and address of its
resident agent is Security Benefit Life Insurance Company,  700 Harrison Street,
Topeka, Shawnee County, Kansas 66636.

                                     FOURTH.

The term for which the Company is to exist is perpetual.

                                     FIFTH.

The Board of Directors shall consist of ten persons.

                                     SIXTH.

The Company shall operate on the mutual plan and shall have no capital stock.


<PAGE>


                                    SEVENTH.

The  conditions  of  membership  in the  company  shall be fixed by the Board of
Directors.

                                     EIGHTH.

A  Director  shall  not  be  personally  liable  to  the  Corporation  or to its
policyholders  for monetary  damages for breach of fiduciary duty as a director,
provided  that this  sentence  shall not  eliminate nor limit the liability of a
director.

     A.   for any breach of his or her duty of loyalty to the Corporation or its
          policyholders;

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

     C.   under the provisions of K.S.A. 17-6424 and amendments thereto; or

     D.   for any  transaction  from  which the  director  derived  an  improper
          personal benefit.

         This  Article  Eighth shall not  eliminate or limit the  liability of a
director for any act or omission occurring prior to the date this Article Eighth
becomes effective.

         IT  IS  HEREBY  CERTIFIED  that  the  foregoing  Restated  Articles  of
Incorporation only restate and integrate and do not further amend the provisions
of the  Corporation's  articles  of  incorporation  as  theretofore  amended  or
supplemented,  and that there is no discrepancy between those provisions and the
provisions of the restated articles.

         IT IS FURTHER  CERTIFIED  that the Restated  Articles of  Incorporation
were duly set forth, proposed,  approved, and declared advisable by a resolution
duly adopted by the Board of Directors of the  Corporation at a regular  meeting
held on September  23/24,  1996,  in  accordance  with the  provisions of K.S.A.
17-6605 and amendments thereto, and the General Corporation Code of the State of
Kansas, and that these Restated Articles of Incorporation  constitute all of the
Articles  of  Incorporation  of the  Corporation  and do  hereby  supersede  the
Corporation's   Articles   of   Incorporation   originally   filed  as  formerly
supplemented or amended.


<PAGE>


         IN  WITNESS  WHEREOF,  I have  hereunto  subscribed  my name at Topeka,
Kansas, on this 31st day of October, 1996.

                                       HOWARD R. FRICKE
                                       -----------------------------------------
                                       Howard R. Fricke, President

ATTEST:

ROGER K. VIOLA
- ---------------------------------
Roger K. Viola, Secretary


STATE OF KANSAS   )
                  ) ss.
COUNTY OF SHAWNEE )

         The foregoing  instrument was  acknowledged  before me this 31st day of
October,  1996, by Howard R. Fricke and Roger K. Viola, president and secretary,
respectively,  of Security Benefit Life Insurance Company, a Kansas corporation,
on behalf of said corporation.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal at Topeka, Kansas, on this 31st day of October, 1996.

                                       L. CHARMAINE LUCAS
                                       -------------------------------------
                                       Notary Public

My Appointment Expires:  04/01/98

Approved for filing.

KATHLEEN SEBELIUS
- -----------------------------
Kathleen Sebelius
Commissioner of Insurance

Date:          11-12-96
      -------------------------



<PAGE>

                        Consent of Independent Auditors

We  consent  to the  reference  to our  firm  under  the  captions  "Independent
Auditors" and to the use of our reports dated February 7, 1997, to the financial
statements  of  Security  Benefit  Life  Insurance  Company  and  the  financial
statements  of  Variable  Annuity  Account  VIII  included  in the  Registration
Statement  on Form  N-4 and the  related  Statement  of  Additional  Information
accompanying the Prospectus of Variflex LS Variable Annuity.



                                                               Ernst & Young LLP

Kansas City, Missouri
April 24, 1997



<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)




                                  GROWTH SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


1 Year
                 1000           (1+T)[1]             =           1209.09
                                (1+T)[1]             =           1.20909
                                 1+T                 =           1.20909
                                  T                  =            .2091

5 Year
                 1000           (1+T)[5]             =           1943.97
                               ((1+T)[5)1/5]         =          (1.94397)[1/5]
                                 1+T                 =           1.1421888
                                  T                  =            .1422

10 Year
                 1000           (1+T)[10]            =           3507.69
                               ((1+T)[10)1/10]       =          (3.50769)[1/10]
                                 1+T                 =           1.13371
                                  T                  =            .1337

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)


                              GROWTH-INCOME SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


1 Year
                  1000          (1+T)[1]            =           1165.35
                                (1+T)[1]            =           1.16535
                                 1+T                =           1.16535
                                  T                 =            .1654

5 Year
                  1000          (1+T)[5]            =           1619.26
                               ((1+T)[5)1/5]        =          (1.61926)[1/5]
                                 1+T                =           1.1011927
                                  T                 =            .1012

10 Year
                  1000          (1+T)[10]           =           3155.65
                               ((1+T)[10)1/10]      =          (3.15565)[1/10]
                                 1+T                =           1.121783
                                  T                 =            .1218

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)


                               MONEY MARKET YIELD

             Money Market Series (Series C) as of December 30, 1996


NO ADMINISTRATION FEE


CALCULATION OF CHANGE IN UNIT VALUE:


(Unrounded  Unrounded    )
(  Price     Price       )
(12-29-96 - 12-22-96     )   =  10.72448510064  -  10.71235817659 = .00113204990
 -------------------------      ---------------------------------
(    Unrounded Price     )               10.71235817659
(       12-22-96         )


ANNUALIZED YIELD:

365/7 (.00113204990)  =  5.90%


EFFECTIVE YIELD:

(1 + .00113204990)[365/7] - 1 = 6.08%

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)



                             WORLDWIDE EQUITY SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


1 Year
                  1000          (1+T)[1]            =           1158.49
                                (1+T)[1]            =           1.15849
                                 1+T                =           1.15849
                                  T                 =            .1585

5 Year
                  1000          (1+T)[5]            =           1599.76
                               ((1+T)[5)1/5]        =          (1.59976)[1/5]
                                 1+T                =           1.0985276
                                  T                 =            .0985

5.67 Years  
(From May 1,1991) 1000         (1+T)[5.67]          =           1647.57
                               ((1+T)[5.67)1/5.67]  =          (1.64757)[1/5.67]
                                 1+T                =           1.092054
                                  T                 =            .0921

10 Year
                  1000           (1+T)[10]            =          1168.73
                               ((1+T)[10)1/10]       =         (1.16873)[1/10]
                                 1+T                 =          1.015714
                                  T                  =           .0157

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)



                            HIGH GRADE INCOME SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


1 Year
                  1000          (1+T)[1]            =            978.37
                                (1+T)[1]            =            .97837
                                 1+T                =            .97837
                                  T                 =           -.0216

5 Year
                  1000          (1+T)[5]            =           1236.07
                               ((1+T)[5)1/5]        =          (1.23607)[1/5]
                                 1+T                =           1.0432986
                                  T                 =            .0433

10 Year
                  1000          (1+T)[10]           =           1764.43
                               ((1+T)[10)1/10]      =          (1.76443)[1/10]
                                 1+T                =           1.058426
                                  T                 =            .0584

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)



                             SOCIAL AWARENESS SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


1 Year
                  1000          (1+T)[1]            =           1171.18
                                (1+T)[1]            =           1.17118
                                 1+T                =           1.17118
                                  T                 =            .1712

5 Year
                  1000          (1+10[5]            =           1772.29
                               ((1+T)[5)1/5]        =          (1.77229)[1/5]
                                 1+T                =           1.1212616
                                  T                 =            .1213

5.67 Years (From date of inception May 1, 1991) 
                  1000          (1+10)[5.67]        =           1852.64
                               ((1+T)[5.67)1/5.67]  =          (1.85264)[1/5.67]
                                 1+T                =           1.114883
                                  T                 =            .1149

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13



                             EMERGING GROWTH SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


1 Year
                  1000          (1+T)[1]            =           1164.00
                                (1+T)[1]            =           1.164
                                 1+T                =           1.164
                                  T                 =            .164

4.25 Years (From date of inception October 1, 1992)
                  1000          (1+T)[4.25]         =           1788.11
                               ((1+T)[4.25)1/4.25]  =          (1.78811)[1/4.25]
                                 1+T                =           1.146534
                                  T                 =            .1465

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)



                          GLOBAL AGGRESSIVE BOND SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


1 Year
                  1000          (1+T)[1]            =           1120.90
                                (1+T)[1]            =           1.1209
                                 1+T                =           1.1209
                                  T                 =            .1209

1.59 Years (From date of inception June 1, 1995)
                  1000          (1+T)[1.59]         =           1196.00
                               ((1+T)[1.59)1/1.59]  =          (1.196)[1/1.59]
                                 1+T                =           1.119148
                                  T                 =            .1191

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)


                       SPECIALIZED ASSET ALLOCATION SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


1 Year
                  1000          (1+T)[1]            =           1126.18
                                (1+T)[1]            =           1.12618
                                 1+T                =           1.12618
                                  T                 =            .1262

1.59 Years (from date of inception June 1, 1995)
                  1000          (1+T)[1.59]         =           1196.00
                               ((1+T)[1.59)1/1.59]  =          (1.19600)[1/1.59]
                                 1+T                =           1.119148
                                  T                 =            .1191

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)


                         MANAGED ASSET ALLOCATION SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


1 Year
                  1000          (1+T)[1]            =           1112.78
                                (1+T)[1]            =           1.11278
                                 1+T                =           1.11278
                                  T                 =            .1128

1.59 Years (from date of inception June 1, 1995)
                  1000          (1+T)[1.59]         =           1184.00
                               ((1+T)[1.59)1/1.59]  =          (1.18400)[1/1.59]
                                 1+T                =           1.112073
                                  T                 =            .1121

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)



                              EQUITY INCOME SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


1 Year
                  1000          (1+T)[1]            =           1183.46
                                (1+T)[1]            =           1.18346
                                 1+T                =           1.18346
                                  T                 =            .1835

1.59 Years (from date of inception June 1, 1995)
                  1000          (1+T)[1.59]         =           1374.00
                               ((1+T)[1.59)1/1.59]  =          (1.37400)[1/1.59]
                                 1+T                =           1.221192
                                  T                 =            .2212

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)



                                HIGH YIELD SERIES
               AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1996


 .40 Year (from date of inception August 5, 1996)
                  1000          (1+T)[.40]          =           1060.00
                               ((1+T)[.40)1/.40]    =          (1.06000)[1/.40]
                                 1+T                =           1.156817
                                  T                 =            .1568

<PAGE>

VARIFLEX LS                                               Item 24.b Exhibit (13)



                            HIGH GRADE INCOME SERIES


Yield Calculation As Of December 31, 1996 = 9.92%
                                            ----



  [ [    (121,406.22 - 0.00)      ]6]
2 [ [  ----------------------- +1 ] ] -1
  [ [ (1,323,876.0458) (11.31)    ] ]




  [ ((   121,406.22    )   )6]
2 [ (( --------------- )+1 ) ] -1
  [ ((  14,973,038.07  )   ) ]



  [ ((                 )6)    ]
2 [ (( .0081083224 + 1 ) ) -1 ]
  [ ((                 ) )    ]



  [ (              )6    ]
2 [ ( 1.0081083224 )  -1 ]
  [ (              )     ]



  [ (            ) ]
2 [ ( 1.0496 - 1 ) ]
  [ (            ) ]



  (       )
2 ( .0496 )
  (       )



            =     .0992
                  -----

<PAGE>

                                                          Item 24.b Exhibit (13)



                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES A (GROWTH)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000

                                    INCREASE
         ENDING          INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)

1996   $1,209.59    -    $1,000     $209.59    /    $1,000       =     20.96%

1995    1,349.07    -     1,000      349.07    /     1,000       =     34.91%

1994      969.85    -     1,000      (30.15)   /     1,000       =     (3.02%)

1993    1,121.23    -     1,000      121.23    /     1,000       =     12.12%

1992    1,096.07    -     1,000       96.07    /     1,000       =      9.61%

1991    1,341.83    -     1,000      341.83    /     1,000       =     34.18%

1990      889.18    -     1,000     (110.82)   /     1,000       =    (11.08%)
 
1989    1,330.47    -     1,000      330.47    /     1,000       =     33.05%

1988    1,085.80    -     1,000       85.80    /     1,000       =      8.58%

1987    1,047.99    -     1,000       47.99    /     1,000       =      4.80%

1986    1,048.54    -     1,000       48.54    /     1,000       =      4.85%

<PAGE>

                                                          Item 24.b Exhibit (13)



                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES B (GROWTH-INCOME)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000

                                    INCREASE
        ENDING           INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)
       
1996   $1,165.88    -    $1,000     $165.88    /    $1,000      =      16.59%

1995    1,282.59    -     1,000      282.59    /     1,000      =      28.26%

1994      956.66    -     1,000      (43.34)   /     1,000      =      (4.33%)

1993    1,080.79    -     1,000       80.79    /     1,000      =       8.08%

1992    1,047.75    -     1,000       47.75    /     1,000      =       4.78%

1991    1,358.86    -     1,000      358.86    /     1,000      =      35.89%

1990      942.10    -     1,000      (57.90)   /     1,000      =      (5.79%)

1989    1,266.10    -     1,000      266.10    /     1,000      =      26.61%

1988    1,176.57    -     1,000      176.57    /     1,000      =      17.66%

1987    1,022.13    -     1,000       22.13    /     1,000      =       2.21%

1986    1,172.31    -     1,000      172.31    /     1,000      =      17.23%

<PAGE>

                                                          Item 24.b Exhibit (13)



                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES C (MONEY MARKET)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000

                                    INCREASE
        ENDING           INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)
                                           
1996   $1,035.93    -    $1,000      $35.93    /    $1,000      =       3.59%

1995    1,039.03    -     1,000       39.03    /     1,000      =       3.90%

1994    1,022.81    -     1,000       22.81    /     1,000      =       2.28%

1993    1,011.48    -     1,000       11.48    /     1,000      =       1.15%

1992    1,018.01    -     1,000       18.01    /     1,000      =       1.80%

1991    1,041.77    -     1,000       41.77    /     1,000      =       4.18%

1990    1,063.45    -     1,000       63.45    /     1,000      =       6.35%

1989    1,075.28    -     1,000       75.28    /     1,000      =       7.53%

1988    1,056.78    -     1,000       56.78    /     1,000      =       5.68%

1987    1,049.81    -     1,000       49.81    /     1,000      =       4.98%

1986    1,048.94    -     1,000       48.94    /     1,000      =       4.89%

<PAGE>

                                                          Item 24.b Exhibit (13)



                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES D (WORLD WIDE EQUITY)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000

                                    INCREASE
         ENDING          INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)
                                                    
1996   $1,158.13    -    $1,000     $158.13    /    $1,000      =      15.81%

1995    1,093.41    -     1,000       93.41    /     1,000      =       9.34%

1994    1,013.06    -     1,000       13.06    /     1,000      =       1.31%

1993    1,298.00    -     1,000      298.00    /     1,000      =      29.80%

1992      960.22    -     1,000      (39.78)   /     1,000      =      (3.98%)

1991*   1,029.57    -     1,000       29.57    /     1,000      =       2.96%

*From May 1, 1991 to December 31, 1991.

<PAGE>

                                                          Item 24.b Exhibit (13)



                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES E (HIGH GRADE INCOME)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000

                                    INCREASE
        ENDING           INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)
      
1996   $  978.86    -    $1,000     $(21.14)   /   $1,000       =      (2.11%)

1995    1,169.24    -     1,000      169.24    /    1,000       =      16.92%

1994      917.72    -     1,000      (82.28)   /    1,000       =      (8.23%)

1993    1,110.56    -     1,000      110.56    /    1,000       =      11.06%

1992    1,059.46    -     1,000       59.46    /    1,000       =       5.95%

1991    1,153.38    -     1,000      153.38    /    1,000       =      15.34%

1990    1,051.87    -     1,000       51.87    /    1,000       =       5.19%

1989    1,103.21    -     1,000      103.21    /    1,000       =      10.32%

1988    1,056.97    -     1,000       56.97    /    1,000       =       5.70%

1987    1,009.58    -     1,000        9.58    /    1,000       =       1.00%

1986    1,081.53    -     1,000       81.53    /    1,000       =       8.15%

<PAGE>

                                                          Item 24.b Exhibit (13)
                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES S (SOCIAL AWARENESS)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000

                                    INCREASE
        ENDING           INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)
                                                          

1996   $1,171.50    -    $1,000     $171.50    /    $1,000      =      17.15%

1995    1,260.22    -     1,000      260.22    /     1,000      =      26.02%

1994      948.48    -     1,000      (51.52)   /     1,000      =      (5.15%)

1993    1,103.26    -     1,000      103.26    /     1,000      =      10.33%

1992    1,147.64    -     1,000      147.64    /     1,000      =      14.76%

1991*   1,045.58    -     1,000       45.58    /     1,000      =       4.56%

*From May 1, 1991 to December 31, 1991.

<PAGE>

                                                          Item 24.b Exhibit (13)



                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES J (EMERGING GROWTH)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000
                                    INCREASE
        ENDING           INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)


1996   $1,163.82    -    $1,000     $163.82    /    $1,000      =      16.38%

1995    1,178.23    -     1,000      178.23    /     1,000      =      17.82%

1994      935.81    -     1,000      (64.19)   /     1,000      =      (6.42%)

1993    1,120.74    -     1,000      120.74    /     1,000      =      12.07%

1992*   1,243.40    -     1,000      243.40    /     1,000      =      24.34%

*From October 1, 1992 to December 31, 1992.

<PAGE>

                                                          Item 24.b Exhibit (13)



                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES K (GLOBAL AGGRESSIVE BOND)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000
                                    INCREASE
        ENDING           INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)


1996   $1,120.89    -    $1,000     $120.89    /    $1,000      =      12.09%

1995*   1,067.40    -     1,000       67.40    /     1,000      =       6.74%

*From June 1, 1995 to December 31, 1995.

<PAGE>

                                                          Item 24.b Exhibit (13)



                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES M (SPECIALIZED ASSET ALLOCATION)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000

                                    INCREASE
        ENDING           INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)

1996   $1,126.29    -    $1,000     $126.29    /    $1,000      =      12.63%

1995*   1,062.32    -     1,000       62.32    /     1,000      =       6.23%

*From June 1, 1995 to December 31, 1995.

<PAGE>

                                                          Item 24.b Exhibit (13)



                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES N (MANAGED ASSET ALLOCATION)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000

                                    INCREASE
        ENDING           INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)

1996   $1,112.10    -    $1,000     $112.10    /    $1,000      =      11.21%

1995*   1,064.28    -     1,000       64.28    /     1,000      =       6.43%

*From June 1, 1995 to December 31, 1995.

<PAGE>

                                                          Item 24.b Exhibit (13)



                                   VARIFLEX LS
                          NON-STANDARDIZED TOTAL RETURN


SERIES O (EQUITY INCOME)

Quotation  of Total  Return for the period of  January 1, 1986 to  December  31,
1996.

                           Initial Investment = $1,000

                                    INCREASE
        ENDING           INITIAL   (DECREASE)       INITIAL          %INCREASE
         VALUE            VALUE     IN VALUE         VALUE           (DECREASE)

1996   $1,183.50    -    $1,000     $183.50    /    $1,000      =      18.35%

1995*   1,160.55    -     1,000      160.55    /     1,000      =      16.05%

*From June 1, 1995 to December 31, 1995.


<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              001
        <NAME>                                SERIES A
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                      30,692
<INVESTMENTS-AT-VALUE>                                     31,719
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                             31,719
<PAYABLE-FOR-SECURITIES>                                   31,719
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                        31,719
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                       1,987
<SHARES-COMMON-PRIOR>                                         290
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                      899
<NET-ASSETS>                                               31,719
<DIVIDEND-INCOME>                                             167
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                226
<NET-INVESTMENT-INCOME>                                      (59)
<REALIZED-GAINS-CURRENT>                                    1,899
<APPREC-INCREASE-CURRENT>                                     899
<NET-CHANGE-FROM-OPS>                                       2,739
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                     2,499
<NUMBER-OF-SHARES-REDEEMED>                                   802
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                      1,697
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                               226
<AVERAGE-NET-ASSETS>                                       17,772
<PER-SHARE-NAV-BEGIN>                                       13.20
<PER-SHARE-NII>                                             (.05)
<PER-SHARE-GAIN-APPREC>                                      2.81
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         15.96
<EXPENSE-RATIO>                                              1.27
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              002
        <NAME>                                SERIES B
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                      20,771
<INVESTMENTS-AT-VALUE>                                     20,552
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                             20,552
<PAYABLE-FOR-SECURITIES>                                   20,552
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                        20,552
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                       1,389
<SHARES-COMMON-PRIOR>                                         249
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                    (325)
<NET-ASSETS>                                               20,552
<DIVIDEND-INCOME>                                             299
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                161
<NET-INVESTMENT-INCOME>                                       138
<REALIZED-GAINS-CURRENT>                                    1,785
<APPREC-INCREASE-CURRENT>                                   (325)
<NET-CHANGE-FROM-OPS>                                       1,598
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                     1,372
<NUMBER-OF-SHARES-REDEEMED>                                   232
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                      1,140
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                               161
<AVERAGE-NET-ASSETS>                                       11,857
<PER-SHARE-NAV-BEGIN>                                       12.70
<PER-SHARE-NII>                                               .17
<PER-SHARE-GAIN-APPREC>                                      1.93
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         14.80
<EXPENSE-RATIO>                                              1.36
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              003
        <NAME>                                SERIES C
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                      16,204
<INVESTMENTS-AT-VALUE>                                     16,299
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                             16,299
<PAYABLE-FOR-SECURITIES>                                   16,299
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                        16,299
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                       1,520
<SHARES-COMMON-PRIOR>                                         289
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                      117
<NET-ASSETS>                                               16,299
<DIVIDEND-INCOME>                                             619
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                221
<NET-INVESTMENT-INCOME>                                       398
<REALIZED-GAINS-CURRENT>                                       62
<APPREC-INCREASE-CURRENT>                                     117
<NET-CHANGE-FROM-OPS>                                         577
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                     5,023
<NUMBER-OF-SHARES-REDEEMED>                                 3,792
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                      1,231
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                               221
<AVERAGE-NET-ASSETS>                                        9,645
<PER-SHARE-NAV-BEGIN>                                       10.35
<PER-SHARE-NII>                                               .44
<PER-SHARE-GAIN-APPREC>                                     (.07)
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         10.72
<EXPENSE-RATIO>                                              2.29
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              004
        <NAME>                                SERIES D
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                      15,488
<INVESTMENTS-AT-VALUE>                                     15,630
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                             15,630
<PAYABLE-FOR-SECURITIES>                                   15,630
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                        15,630
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                       1,183
<SHARES-COMMON-PRIOR>                                         126
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                      105
<NET-ASSETS>                                               15,630
<DIVIDEND-INCOME>                                             328
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                112
<NET-INVESTMENT-INCOME>                                       216
<REALIZED-GAINS-CURRENT>                                      579
<APPREC-INCREASE-CURRENT>                                     105
<NET-CHANGE-FROM-OPS>                                         900
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                     1,273
<NUMBER-OF-SHARES-REDEEMED>                                   216
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                      1,057
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                               112
<AVERAGE-NET-ASSETS>                                        8,536
<PER-SHARE-NAV-BEGIN>                                       11.42
<PER-SHARE-NII>                                               .33
<PER-SHARE-GAIN-APPREC>                                      1.46
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         13.21
<EXPENSE-RATIO>                                              1.31
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              005
        <NAME>                                SERIES E
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                      18,684
<INVESTMENTS-AT-VALUE>                                     18,459
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                             18,459
<PAYABLE-FOR-SECURITIES>                                   18,459
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                        18,459
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                       1,632
<SHARES-COMMON-PRIOR>                                         240
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                    (298)
<NET-ASSETS>                                               18,459
<DIVIDEND-INCOME>                                             651
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                123
<NET-INVESTMENT-INCOME>                                       528
<REALIZED-GAINS-CURRENT>                                    (215)
<APPREC-INCREASE-CURRENT>                                   (298)
<NET-CHANGE-FROM-OPS>                                          15
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                     1,846
<NUMBER-OF-SHARES-REDEEMED>                                   454
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                      1,392
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                               123
<AVERAGE-NET-ASSETS>                                       10,618
<PER-SHARE-NAV-BEGIN>                                       11.56
<PER-SHARE-NII>                                               .56
<PER-SHARE-GAIN-APPREC>                                     (.81)
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         11.31
<EXPENSE-RATIO>                                              1.16
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              006
        <NAME>                                SERIES S
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                       3,169
<INVESTMENTS-AT-VALUE>                                      3,239
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                              3,239
<PAYABLE-FOR-SECURITIES>                                    3,239
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                         3,239
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                         221
<SHARES-COMMON-PRIOR>                                          37
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                       53
<NET-ASSETS>                                                3,239
<DIVIDEND-INCOME>                                               8
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                 23
<NET-INVESTMENT-INCOME>                                      (15)
<REALIZED-GAINS-CURRENT>                                      119
<APPREC-INCREASE-CURRENT>                                      53
<NET-CHANGE-FROM-OPS>                                         157
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                       216
<NUMBER-OF-SHARES-REDEEMED>                                    32
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                        184
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                                23
<AVERAGE-NET-ASSETS>                                        1,853
<PER-SHARE-NAV-BEGIN>                                       12.56
<PER-SHARE-NII>                                             (.12)
<PER-SHARE-GAIN-APPREC>                                      2.25
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         14.69
<EXPENSE-RATIO>                                              1.24
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              007
        <NAME>                                SERIES J
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                      10,498
<INVESTMENTS-AT-VALUE>                                     10,687
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                             10,687
<PAYABLE-FOR-SECURITIES>                                   10,687
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                        10,687
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                         772
<SHARES-COMMON-PRIOR>                                         134
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                      182
<NET-ASSETS>                                               10,687
<DIVIDEND-INCOME>                                              13
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                 85
<NET-INVESTMENT-INCOME>                                      (72)
<REALIZED-GAINS-CURRENT>                                      435
<APPREC-INCREASE-CURRENT>                                     182
<NET-CHANGE-FROM-OPS>                                         545
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                     1,048
<NUMBER-OF-SHARES-REDEEMED>                                   410
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                        638
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                                85
<AVERAGE-NET-ASSETS>                                        6,138
<PER-SHARE-NAV-BEGIN>                                       11.89
<PER-SHARE-NII>                                             (.16)
<PER-SHARE-GAIN-APPREC>                                      2.11
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         13.84
<EXPENSE-RATIO>                                              1.38
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              008
        <NAME>                                SERIES K
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                       4,032
<INVESTMENTS-AT-VALUE>                                      3,925
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                              3,925
<PAYABLE-FOR-SECURITIES>                                    3,925
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                         3,925
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                         328
<SHARES-COMMON-PRIOR>                                          86
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                    (114)
<NET-ASSETS>                                                3,925
<DIVIDEND-INCOME>                                             260
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                 34
<NET-INVESTMENT-INCOME>                                       226
<REALIZED-GAINS-CURRENT>                                      200
<APPREC-INCREASE-CURRENT>                                   (114)
<NET-CHANGE-FROM-OPS>                                         312
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                       380
<NUMBER-OF-SHARES-REDEEMED>                                   138
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                        242
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                                34
<AVERAGE-NET-ASSETS>                                        2,424
<PER-SHARE-NAV-BEGIN>                                       10.67
<PER-SHARE-NII>                                              1.09
<PER-SHARE-GAIN-APPREC>                                       .20
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         11.96
<EXPENSE-RATIO>                                              1.40
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              009
        <NAME>                                SERIES M
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                      15,180
<INVESTMENTS-AT-VALUE>                                     16,285
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                             16,285
<PAYABLE-FOR-SECURITIES>                                   16,285
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                        16,285
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                       1,361
<SHARES-COMMON-PRIOR>                                         471
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                      998
<NET-ASSETS>                                               16,285
<DIVIDEND-INCOME>                                             144
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                163
<NET-INVESTMENT-INCOME>                                      (19)
<REALIZED-GAINS-CURRENT>                                      352
<APPREC-INCREASE-CURRENT>                                     998
<NET-CHANGE-FROM-OPS>                                       1,331
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                     1,089
<NUMBER-OF-SHARES-REDEEMED>                                   199
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                        890
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                               163
<AVERAGE-NET-ASSETS>                                       10,645
<PER-SHARE-NAV-BEGIN>                                       10.62
<PER-SHARE-NII>                                             (.02)
<PER-SHARE-GAIN-APPREC>                                      1.36
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         11.96
<EXPENSE-RATIO>                                              1.53
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              010
        <NAME>                                SERIES N
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                       7,861
<INVESTMENTS-AT-VALUE>                                      8,463
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                              8,463
<PAYABLE-FOR-SECURITIES>                                    8,463
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                         8,463
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                         715
<SHARES-COMMON-PRIOR>                                         232
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                      536
<NET-ASSETS>                                                8,463
<DIVIDEND-INCOME>                                              39
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                 80
<NET-INVESTMENT-INCOME>                                      (41)
<REALIZED-GAINS-CURRENT>                                      163
<APPREC-INCREASE-CURRENT>                                     536
<NET-CHANGE-FROM-OPS>                                         658
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                       625
<NUMBER-OF-SHARES-REDEEMED>                                   192
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                        483
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                                80
<AVERAGE-NET-ASSETS>                                        5,466
<PER-SHARE-NAV-BEGIN>                                       10.64
<PER-SHARE-NII>                                             (.09)
<PER-SHARE-GAIN-APPREC>                                      1.29
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         11.84
<EXPENSE-RATIO>                                              1.46
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              011
        <NAME>                                SERIES O
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                      21,854
<INVESTMENTS-AT-VALUE>                                     24,214
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                             24,214
<PAYABLE-FOR-SECURITIES>                                   24,214
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                        24,214
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                       1,764
<SHARES-COMMON-PRIOR>                                         267
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                    2,141
<NET-ASSETS>                                               24,214
<DIVIDEND-INCOME>                                              42
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                211
<NET-INVESTMENT-INCOME>                                     (169)
<REALIZED-GAINS-CURRENT>                                      625
<APPREC-INCREASE-CURRENT>                                   2,141
<NET-CHANGE-FROM-OPS>                                       2,597
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                     1,772
<NUMBER-OF-SHARES-REDEEMED>                                   275
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                      1,497
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                               211
<AVERAGE-NET-ASSETS>                                       13,658
<PER-SHARE-NAV-BEGIN>                                       11.61
<PER-SHARE-NII>                                             (.17)
<PER-SHARE-GAIN-APPREC>                                      2.29
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         13.73
<EXPENSE-RATIO>                                              1.54
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>

<TABLE> <S> <C>


<ARTICLE>                                     6
<CIK>                                         0000932020
<NAME>                                        VARIFLEX LS
<SERIES>
        <NUMBER>                              012
        <NAME>                                SERIES P
<MULTIPLIER>                                  1,000
<CURRENCY>                                    U.S. DOLLARS
       
<S>                                           <C>
<PERIOD-TYPE>                                 YEAR
<FISCAL-YEAR-END>                                     DEC-31-1996
<PERIOD-START>                                        JAN-01-1996
<PERIOD-END>                                          DEC-31-1996
<EXCHANGE-RATE>                                                 1
<INVESTMENTS-AT-COST>                                           0
<INVESTMENTS-AT-VALUE>                                          0
<RECEIVABLES>                                                   0
<ASSETS-OTHER>                                                  0
<OTHER-ITEMS-ASSETS>                                            0
<TOTAL-ASSETS>                                                  0
<PAYABLE-FOR-SECURITIES>                                        0
<SENIOR-LONG-TERM-DEBT>                                         0
<OTHER-ITEMS-LIABILITIES>                                       0
<TOTAL-LIABILITIES>                                             0
<SENIOR-EQUITY>                                                 0
<PAID-IN-CAPITAL-COMMON>                                        0
<SHARES-COMMON-STOCK>                                           0
<SHARES-COMMON-PRIOR>                                           0
<ACCUMULATED-NII-CURRENT>                                       0
<OVERDISTRIBUTION-NII>                                          0
<ACCUMULATED-NET-GAINS>                                         0
<OVERDISTRIBUTION-GAINS>                                        0
<ACCUM-APPREC-OR-DEPREC>                                        0
<NET-ASSETS>                                                    0
<DIVIDEND-INCOME>                                               0
<INTEREST-INCOME>                                               0
<OTHER-INCOME>                                                  0
<EXPENSES-NET>                                                  0
<NET-INVESTMENT-INCOME>                                         0
<REALIZED-GAINS-CURRENT>                                        0
<APPREC-INCREASE-CURRENT>                                       0
<NET-CHANGE-FROM-OPS>                                           0
<EQUALIZATION>                                                  0
<DISTRIBUTIONS-OF-INCOME>                                       0
<DISTRIBUTIONS-OF-GAINS>                                        0
<DISTRIBUTIONS-OTHER>                                           0
<NUMBER-OF-SHARES-SOLD>                                         0
<NUMBER-OF-SHARES-REDEEMED>                                     0
<SHARES-REINVESTED>                                             0
<NET-CHANGE-IN-ASSETS>                                          0
<ACCUMULATED-NII-PRIOR>                                         0
<ACCUMULATED-GAINS-PRIOR>                                       0
<OVERDISTRIB-NII-PRIOR>                                         0
<OVERDIST-NET-GAINS-PRIOR>                                      0
<GROSS-ADVISORY-FEES>                                           0
<INTEREST-EXPENSE>                                              0
<GROSS-EXPENSE>                                                 0
<AVERAGE-NET-ASSETS>                                            0
<PER-SHARE-NAV-BEGIN>                                           0
<PER-SHARE-NII>                                                 0
<PER-SHARE-GAIN-APPREC>                                         0
<PER-SHARE-DIVIDEND>                                            0
<PER-SHARE-DISTRIBUTIONS>                                       0
<RETURNS-OF-CAPITAL>                                            0
<PER-SHARE-NAV-END>                                         10.60
<EXPENSE-RATIO>                                                 0
<AVG-DEBT-OUTSTANDING>                                          0
<AVG-DEBT-PER-SHARE>                                            0
        


</TABLE>


<PAGE>

                                POWER OF ATTORNEY

STATE OF KANSAS                  )
                                 ) ss.
COUNTY OF SHAWNEE                )

KNOW ALL MEN BY THESE PRESENTS:

THAT I, Thomas R. Clevenger, being a Director of SECURITY BENEFIT LIFE INSURANCE
COMPANY,  by these  presents do make,  constitute  and appoint Howard R. Fricke,
James R.  Schmank  and  Roger K.  Viola,  and each of them,  my true and  lawful
attorneys,  each with full power and  authority for me and in my name and behalf
to sign Registration Statements, any amendments thereto and any applications for
exemptive  relief filed  pursuant to the  Investment  Company Act of 1940 or the
Securities Act of 1933, as amended, and any instrument or document filed as part
thereof, or in connection therewith or in any way related thereto, in connection
with Variable Annuity Contracts offered, issued or sold by SECURITY BENEFIT LIFE
INSURANCE  COMPANY and any SECURITY  VARIABLE ANNUITY ACCOUNT VIII (Variflex LS)
with like effect as though said Registration  Statements and other documents had
been signed and filed  personally by me in the capacity  aforesaid.  Each of the
aforesaid  attorneys  acting  alone  shall  have all the  powers  of all of said
attorneys.  I hereby ratify and confirm all that the said  attorneys,  or any of
them, may do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1997.

                                                     THOMAS R. CLEVENGER
                                                     --------------------------
                                                     Thomas R. Clevenger

SUBSCRIBED AND SWORN to before me this 4th day of March, 1997.

                                                     L. CHARMAINE LUCAS
                                                     --------------------------
                                                     Notary Public

My Commission Expires:

_____4/1/98__________


<PAGE>


                                POWER OF ATTORNEY

STATE OF KANSAS                  )
                                 ) ss.
COUNTY OF SHAWNEE                )

KNOW ALL MEN BY THESE PRESENTS:

THAT I, Sister Loretto Marie Colwell,  being a Director of SECURITY BENEFIT LIFE
INSURANCE COMPANY,  by these presents do make,  constitute and appoint Howard R.
Fricke,  James R.  Schmank  and Roger K.  Viola,  and each of them,  my true and
lawful  attorneys,  each with full power and authority for me and in my name and
behalf  to  sign  Registration  Statements,   any  amendments  thereto  and  any
applications for exemptive  relief filed pursuant to the Investment  Company Act
of 1940 or the  Securities  Act of  1933,  as  amended,  and any  instrument  or
document filed as part thereof, or in connection therewith or in any way related
thereto,  in connection with Variable Annuity Contracts offered,  issued or sold
by SECURITY  BENEFIT LIFE INSURANCE  COMPANY and any SECURITY  VARIABLE  ANNUITY
ACCOUNT  VIII  (Variflex  LS) with  like  effect  as  though  said  Registration
Statements and other documents had been signed and filed personally by me in the
capacity aforesaid.  Each of the aforesaid attorneys acting alone shall have all
the powers of all of said  attorneys.  I hereby  ratify and confirm all that the
said attorneys, or any of them, may do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1997.

                                              SISTER LORETTO MARIE COLWELL
                                              --------------------------
                                              Sister Loretto Marie Colwell

SUBSCRIBED AND SWORN to before me this 4th day of March, 1997.

                                              L. CHARMAINE LUCAS
                                              --------------------------
                                              Notary Public

My Commission Expires:

_____4/1/98__________


<PAGE>


                                POWER OF ATTORNEY

STATE OF KANSAS                  )
                                 ) ss.
COUNTY OF SHAWNEE                )

KNOW ALL MEN BY THESE PRESENTS:

THAT I, John C.  Dicus,  being a Director  of SECURITY  BENEFIT  LIFE  INSURANCE
COMPANY,  by these  presents do make,  constitute  and appoint Howard R. Fricke,
James R.  Schmank  and  Roger K.  Viola,  and each of them,  my true and  lawful
attorneys,  each with full power and  authority for me and in my name and behalf
to sign Registration Statements, any amendments thereto and any applications for
exemptive  relief filed  pursuant to the  Investment  Company Act of 1940 or the
Securities Act of 1933, as amended, and any instrument or document filed as part
thereof, or in connection therewith or in any way related thereto, in connection
with Variable Annuity Contracts offered, issued or sold by SECURITY BENEFIT LIFE
INSURANCE  COMPANY and any SECURITY  VARIABLE ANNUITY ACCOUNT VIII (Variflex LS)
with like effect as though said Registration  Statements and other documents had
been signed and filed  personally by me in the capacity  aforesaid.  Each of the
aforesaid  attorneys  acting  alone  shall  have all the  powers  of all of said
attorneys.  I hereby ratify and confirm all that the said  attorneys,  or any of
them, may do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1997.

                                                     JOHN C. DICUS
                                                     --------------------------
                                                     John C. Dicus

SUBSCRIBED AND SWORN to before me this 4th day of March, 1997.

                                                     L. CHARMAINE LUCAS
                                                     --------------------------
                                                     Notary Public

My Commission Expires:

_____4/1/98__________


<PAGE>


                                POWER OF ATTORNEY

STATE OF KANSAS                  )
                                 ) ss.
COUNTY OF SHAWNEE                )

KNOW ALL MEN BY THESE PRESENTS:

THAT I, Melanie S. Fannin,  being a Director of SECURITY  BENEFIT LIFE INSURANCE
COMPANY,  by these  presents do make,  constitute  and appoint Howard R. Fricke,
James R.  Schmank  and  Roger K.  Viola,  and each of them,  my true and  lawful
attorneys,  each with full power and  authority for me and in my name and behalf
to sign Registration Statements, any amendments thereto and any applications for
exemptive  relief filed  pursuant to the  Investment  Company Act of 1940 or the
Securities Act of 1933, as amended, and any instrument or document filed as part
thereof, or in connection therewith or in any way related thereto, in connection
with Variable Annuity Contracts offered, issued or sold by SECURITY BENEFIT LIFE
INSURANCE  COMPANY and any SECURITY  VARIABLE ANNUITY ACCOUNT VIII (Variflex LS)
with like effect as though said Registration  Statements and other documents had
been signed and filed  personally by me in the capacity  aforesaid.  Each of the
aforesaid  attorneys  acting  alone  shall  have all the  powers  of all of said
attorneys.  I hereby ratify and confirm all that the said  attorneys,  or any of
them, may do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1997.

                                                     MELANIE S. FANNIN
                                                     --------------------------
                                                     Melanie S. Fannin

SUBSCRIBED AND SWORN to before me this 4th day of March, 1997.

                                                     L. CHARMAINE LUCAS
                                                     --------------------------
                                                     Notary Public

My Commission Expires:

_____4/1/98__________


<PAGE>


                                POWER OF ATTORNEY

STATE OF KANSAS                  )
                                 ) ss.
COUNTY OF SHAWNEE                )

KNOW ALL MEN BY THESE PRESENTS:

THAT I, Howard R. Fricke,  being a Director of SECURITY  BENEFIT LIFE  INSURANCE
COMPANY, by these presents do make,  constitute and appoint James R. Schmank and
Roger K. Viola, and each of them, my true and lawful  attorneys,  each with full
power  and  authority  for me and in my name  and  behalf  to sign  Registration
Statements,  any amendments  thereto and any  applications  for exemptive relief
filed  pursuant to the  Investment  Company Act of 1940 or the Securities Act of
1933, as amended,  and any instrument or document  filed as part thereof,  or in
connection  therewith or in any way related thereto, in connection with Variable
Annuity  Contracts  offered,  issued or sold by SECURITY  BENEFIT LIFE INSURANCE
COMPANY and any SECURITY  VARIABLE  ANNUITY ACCOUNT VIII (Variflex LS) with like
effect as though  said  Registration  Statements  and other  documents  had been
signed  and  filed  personally  by me in the  capacity  aforesaid.  Each  of the
aforesaid  attorneys  acting  alone  shall  have all the  powers  of all of said
attorneys.  I hereby ratify and confirm all that the said  attorneys,  or any of
them, may do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1997.

                                                     HOWARD R. FRICKE
                                                     --------------------------
                                                     Howard R. Fricke

SUBSCRIBED AND SWORN to before me this 4th day of March, 1997.

                                                     L. CHARMAINE LUCAS
                                                     --------------------------
                                                     Notary Public

My Commission Expires:

_____4/1/98__________


<PAGE>


                                POWER OF ATTORNEY

STATE OF KANSAS                  )
                                 ) ss.
COUNTY OF SHAWNEE                )

KNOW ALL MEN BY THESE PRESENTS:

THAT I, W. W.  Hanna,  being a  Director  of  SECURITY  BENEFIT  LIFE  INSURANCE
COMPANY,  by these  presents do make,  constitute  and appoint Howard R. Fricke,
James R.  Schmank  and  Roger K.  Viola,  and each of them,  my true and  lawful
attorneys,  each with full power and  authority for me and in my name and behalf
to sign Registration Statements, any amendments thereto and any applications for
exemptive  relief filed  pursuant to the  Investment  Company Act of 1940 or the
Securities Act of 1933, as amended, and any instrument or document filed as part
thereof, or in connection therewith or in any way related thereto, in connection
with Variable Annuity Contracts offered, issued or sold by SECURITY BENEFIT LIFE
INSURANCE  COMPANY and any SECURITY  VARIABLE ANNUITY ACCOUNT VIII (Variflex LS)
with like effect as though said Registration  Statements and other documents had
been signed and filed  personally by me in the capacity  aforesaid.  Each of the
aforesaid  attorneys  acting  alone  shall  have all the  powers  of all of said
attorneys.  I hereby ratify and confirm all that the said  attorneys,  or any of
them, may do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1997.

                                                     W. W. HANNA
                                                     --------------------------
                                                     W. W. Hanna

SUBSCRIBED AND SWORN to before me this 4th day of March, 1997.

                                                     L. CHARMAINE LUCAS
                                                     --------------------------
                                                     Notary Public

My Commission Expires:

_____4/1/98__________


<PAGE>


                                POWER OF ATTORNEY

STATE OF KANSAS                  )
                                 ) ss.
COUNTY OF SHAWNEE                )

KNOW ALL MEN BY THESE PRESENTS:

THAT I, John E. Hayes,  Jr., being a Director of SECURITY BENEFIT LIFE INSURANCE
COMPANY,  by these  presents do make,  constitute  and appoint Howard R. Fricke,
James R.  Schmank  and  Roger K.  Viola,  and each of them,  my true and  lawful
attorneys,  each with full power and  authority for me and in my name and behalf
to sign Registration Statements, any amendments thereto and any applications for
exemptive  relief filed  pursuant to the  Investment  Company Act of 1940 or the
Securities Act of 1933, as amended, and any instrument or document filed as part
thereof, or in connection therewith or in any way related thereto, in connection
with Variable Annuity Contracts offered, issued or sold by SECURITY BENEFIT LIFE
INSURANCE  COMPANY and any SECURITY  VARIABLE ANNUITY ACCOUNT VIII (Variflex LS)
with like effect as though said Registration  Statements and other documents had
been signed and filed  personally by me in the capacity  aforesaid.  Each of the
aforesaid  attorneys  acting  alone  shall  have all the  powers  of all of said
attorneys.  I hereby ratify and confirm all that the said  attorneys,  or any of
them, may do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1997.

                                                     JOHN E. HAYES, JR.
                                                     --------------------------
                                                     John E. Hayes, Jr.

SUBSCRIBED AND SWORN to before me this 4th day of March, 1997.

                                                     L. CHARMAINE LUCAS
                                                     --------------------------
                                                     Notary Public

My Commission Expires:

_____4/1/98__________


<PAGE>


                                POWER OF ATTORNEY

STATE OF KANSAS                  )
                                 ) ss.
COUNTY OF SHAWNEE                )

KNOW ALL MEN BY THESE PRESENTS:

THAT I, Laird G. Noller,  being a Director of SECURITY  BENEFIT  LIFE  INSURANCE
COMPANY,  by these  presents do make,  constitute  and appoint Howard R. Fricke,
James R.  Schmank  and  Roger K.  Viola,  and each of them,  my true and  lawful
attorneys,  each with full power and  authority for me and in my name and behalf
to sign Registration Statements, any amendments thereto and any applications for
exemptive  relief filed  pursuant to the  Investment  Company Act of 1940 or the
Securities Act of 1933, as amended, and any instrument or document filed as part
thereof, or in connection therewith or in any way related thereto, in connection
with Variable Annuity Contracts offered, issued or sold by SECURITY BENEFIT LIFE
INSURANCE  COMPANY and any SECURITY  VARIABLE ANNUITY ACCOUNT VIII (Variflex LS)
with like effect as though said Registration  Statements and other documents had
been signed and filed  personally by me in the capacity  aforesaid.  Each of the
aforesaid  attorneys  acting  alone  shall  have all the  powers  of all of said
attorneys.  I hereby ratify and confirm all that the said  attorneys,  or any of
them, may do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1997.

                                                     LAIRD G. NOLLER
                                                     --------------------------
                                                     Laird G. Noller

SUBSCRIBED AND SWORN to before me this 4th day of March, 1997.

                                                     L. CHARMAINE LUCAS
                                                     --------------------------
                                                     Notary Public

My Commission Expires:

_____4/1/98__________


<PAGE>


                                POWER OF ATTORNEY

STATE OF KANSAS                  )
                                 ) ss.
COUNTY OF SHAWNEE                )

KNOW ALL MEN BY THESE PRESENTS:

THAT I, Frank C. Sabatini,  being a Director of SECURITY  BENEFIT LIFE INSURANCE
COMPANY,  by these  presents do make,  constitute  and appoint Howard R. Fricke,
James R.  Schmank  and  Roger K.  Viola,  and each of them,  my true and  lawful
attorneys,  each with full power and  authority for me and in my name and behalf
to sign Registration Statements, any amendments thereto and any applications for
exemptive  relief filed  pursuant to the  Investment  Company Act of 1940 or the
Securities Act of 1933, as amended, and any instrument or document filed as part
thereof, or in connection therewith or in any way related thereto, in connection
with Variable Annuity Contracts offered, issued or sold by SECURITY BENEFIT LIFE
INSURANCE  COMPANY and any SECURITY  VARIABLE ANNUITY ACCOUNT VIII (Variflex LS)
with like effect as though said Registration  Statements and other documents had
been signed and filed  personally by me in the capacity  aforesaid.  Each of the
aforesaid  attorneys  acting  alone  shall  have all the  powers  of all of said
attorneys.  I hereby ratify and confirm all that the said  attorneys,  or any of
them, may do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1997.

                                                     FRANK C. SABATINI
                                                     --------------------------
                                                     Frank C. Sabatini

SUBSCRIBED AND SWORN to before me this 4th day of March, 1997.

                                                     L. CHARMAINE LUCAS
                                                     --------------------------
                                                     Notary Public

My Commission Expires:

_____4/1/98__________


<PAGE>


                                POWER OF ATTORNEY

STATE OF KANSAS                  )
                                 ) ss.
COUNTY OF SHAWNEE                )

KNOW ALL MEN BY THESE PRESENTS:

THAT I, Robert C. Wheeler,  being a Director of SECURITY  BENEFIT LIFE INSURANCE
COMPANY,  by these  presents do make,  constitute  and appoint Howard R. Fricke,
James R.  Schmank  and  Roger K.  Viola,  and each of them,  my true and  lawful
attorneys,  each with full power and  authority for me and in my name and behalf
to sign Registration Statements, any amendments thereto and any applications for
exemptive  relief filed  pursuant to the  Investment  Company Act of 1940 or the
Securities Act of 1933, as amended, and any instrument or document filed as part
thereof, or in connection therewith or in any way related thereto, in connection
with Variable Annuity Contracts offered, issued or sold by SECURITY BENEFIT LIFE
INSURANCE  COMPANY and any SECURITY  VARIABLE ANNUITY ACCOUNT VIII (Variflex LS)
with like effect as though said Registration  Statements and other documents had
been signed and filed  personally by me in the capacity  aforesaid.  Each of the
aforesaid  attorneys  acting  alone  shall  have all the  powers  of all of said
attorneys.  I hereby ratify and confirm all that the said  attorneys,  or any of
them, may do or cause to be done by virtue thereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1997.

                                                     ROBERT C. WHEELER
                                                     --------------------------
                                                     Robert C. Wheeler

SUBSCRIBED AND SWORN to before me this 4th day of March, 1997.

                                                     L. CHARMAINE LUCAS
                                                     --------------------------
                                                     Notary Public

My Commission Expires:

_____4/1/98__________




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