AUSA SERIES LIFE ACCOUNT, 497, 1998-08-10

AUSA SERIES LIFE ACCOUNT
497, 1998-08-10

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AUSA FREEDOM WEALTH PROTECTORSM
JOINT SURVIVORSHIP FLEXIBLE
PREMIUM VARIABLE LIFE
INSURANCE POLICY

Issued by
AUSA LIFE INSURANCE COMPANY, INC.
4 Manhattanville Road
Purchase, New York 10577
1-800-322-7160

The joint survivorship flexible premium variable life insurance policy
("Policy") issued by AUSA Life Insurance Company, Inc. ("AUSA Life") and
described in this Prospectus is designed to provide lifetime insurance
protection and maximum flexibility in connection with premium payments and
death benefits. A Policyowner may, subject to certain restrictions, vary the
timing and amount of premium payments and increase or decrease the level of
life insurance benefits payable under the Policy. This flexibility allows a
Policyowner to provide for changing insurance needs under a single life
insurance policy. The minimum Specified Amount for a Policy at issue is
generally $100,000.

The Policy provides a death benefit payable upon the death of the
Surviving Insured, and a Net Surrender Value that can be obtained by completely
or partially surrendering the Policy. Net premiums are allocated according to
the Policyowner's directions among the Sub-Accounts of the AUSA Series Life
Account ("Series Account"), or to a fixed interest account ("Fixed Account") or
a combination of both. With respect to amounts allocated to Sub-Accounts of the
Series Account, the amount of the death benefit may, and the Cash Value will,
vary to reflect both the investment experience of the Sub-Accounts and the
timing and amount of additional premium payments. However, as long as the
Policy remains In Force, AUSA Life guarantees that the death benefit will never
be less than the Specified Amount of the Policy. While additional premium
payments are not required under the Policy, additional premium payments may be
necessary to prevent Lapse if there is insufficient Net Surrender Value.

The Policy provides a free-look period. The Policyowner may cancel the
Policy within 10 days after the Policyowner receives it, or 10 days after AUSA
Life mails or delivers a written notice of withdrawal right to the Policyowner,
or within 45 days after signing the application, whichever is latest.

The assets of each Sub-Account of the Series Account will be invested
solely in a corresponding Portfolio of the WRL Series Fund, Inc. (the "Fund").
The Prospectus for the Fund describes the investment objectives and the risks
of investing in the Portfolios of the Fund corresponding to the Sub-Accounts
currently available under the Policy. The Policyowner bears the entire
investment risk for all amounts allocated to the Series Account; there is no
guaranteed minimum Cash Value.

It may not be to your advantage to replace existing insurance or
supplement an existing flexible premium variable life insurance policy with a
policy described in this Prospectus.

Please read this Prospectus and the Prospectus for the Fund carefully and
retain for future reference.

The Policy is not a deposit or obligation of, or guaranteed or endorsed
by, any bank or depository institution, and the Policy is not Federally insured
by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency, and involves investment risk, including possible loss of
principal amount invested.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus does not constitute an offering in any jurisdiction in
which such offering may not lawfully be made. No dealer, salesperson or other
person is authorized to give any information or make any representations in
connection with this offering other than those contained in this Prospectus,
and, if given or made, such other information or representations must not be
relied upon.

THIS PROSPECTUS MUST BE ACCOMPANIED OR PRECEDED BY THE CURRENT PROSPECTUS
FOR THE WRL SERIES FUND, INC. CERTAIN PORTFOLIOS MAY NOT BE AVAILABLE IN ALL
STATES. ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.

Prospectus Dated July 27, 1998

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TABLE OF CONTENTS

PAGE
-----
DEFINITIONS ........................................ 1
INTRODUCTION ....................................... 3
INVESTMENT EXPERIENCE INFORMATION .................. 7
Rates of Return ................................... 7
Death Benefit, Cash Value and Net Surrender
Value Illustrations ........................... 8
Other Performance Data ............................ 13
AUSA LIFE AND THE
SERIES ACCOUNT ..................................... 14
AUSA Life Insurance Company, Inc. ................. 14
The Series Account ................................ 14
POLICY BENEFITS .................................... 14
Death Benefit ..................................... 14
When Insurance Coverage Takes Effect .............. 16
Terminal Illness Accelerated Death
Benefit Rider ................................. 17
Cash Value ........................................ 17
INVESTMENTS OF THE SERIES ACCOUNT .................. 18
WRL Series Fund, Inc. ............................. 18
Addition, Deletion, or Substitution
of Investments ................................ 21
PAYMENT AND ALLOCATION OF PREMIUMS ................. 21
Issuance of a Policy .............................. 21
Premiums .......................................... 21
Allocation of Premiums and Cash Value ............. 22
Dollar Cost Averaging ............................. 24
Asset Rebalancing Program ......................... 24
Policy Lapse and Reinstatement .................... 25
CHARGES AND DEDUCTIONS ............................. 26
Premium Expense Charge ............................ 26
Contingent Surrender Charges ...................... 26
Cash Value Charges ................................ 27
Optional Cash Value Charges ....................... 28
Charges Against the Series Account ................ 28
Expenses of the Fund .............................. 28
Group or Sponsored Policies ....................... 29
Associate Policies ................................ 29
POLICY RIGHTS ...................................... 29
Loan Privileges ................................... 29
Surrender Privileges .............................. 30
Examination of Policy Privilege ("Free-Look") ..... 31
Conversion Rights ................................. 31
Policy Split Option ............................... 31
Benefits at Maturity .............................. 32
Payment of Policy Benefits ........................ 32

PAGE
-----
GENERAL PROVISIONS ................................. 32
Postponement of Payments .......................... 32
The Contract ...................................... 32
Suicide ........................................... 33
Incontestability .................................. 33
Change of Owner or Beneficiary .................... 33
Assignment ........................................ 33
Misstatement of Age or Sex ........................ 33
Reports and Records ............................... 33
Optional Insurance Benefits ....................... 33
THE FIXED ACCOUNT .................................. 33
Fixed Account Value ............................... 34
Minimum Guaranteed and Current
Interest Rates ................................ 34
Allocations, Transfers and Withdrawals ............ 34
DISTRIBUTION OF THE POLICIES ....................... 34
FEDERAL TAX MATTERS ................................ 35
Introduction ...................................... 35
Tax Charges ....................................... 35
Tax Status of the Policy .......................... 35
Tax Treatment of Policy Benefits .................. 36
Possible Tax Law Changes .......................... 38
Employment-Related Benefit Plans .................. 38
SAFEKEEPING OF THE SERIES
ACCOUNT'S ASSETS ................................... 38
VOTING RIGHTS OF THE SERIES ACCOUNT ................ 38
STATE REGULATION OF AUSA LIFE ...................... 39
REINSURANCE ........................................ 39
EXECUTIVE OFFICERS AND DIRECTORS
OF AUSA LIFE ....................................... 39
LEGAL MATTERS ...................................... 40
LEGAL PROCEEDINGS .................................. 40
EXPERTS ............................................ 40
ADDITIONAL INFORMATION ............................. 40
YEAR 2000 MATTERS .................................. 40
INFORMATION ABOUT
AUSA LIFE'S
FINANCIAL STATEMENTS ............................... 40
APPENDIX A - ILLUSTRATION
OF BENEFITS ........................................ 41
APPENDIX B - WEALTH INDICES OF
INVESTMENTS IN THE U.S. CAPITAL
MARKETS ............................................ 44
INDEX TO FINANCIAL
STATEMENTS ......................................... 46

The Policy is available only in the State of New York.

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DEFINITIONS

ACCOUNTS -- Allocation options including the Fixed Account and Sub-Accounts
of the Series Account.

ADMINISTRATIVE OFFICE -- The administrative office of AUSA Life whose
mailing address is P. O. Box 9054, Clearwater, Florida 33758-9054.

ATTAINED AGE -- For each Joint Insured, the Issue Age plus the number of
completed Policy years.

ANNIVERSARY -- The same day and month as the Policy Date for each
succeeding year the Policy remains In Force.

BENEFICIARY -- The person or persons specified by the Owner as entitled to
receive the death benefit proceeds under the Policy.

CASH VALUE -- The sum of the values in each Sub-Account plus the Policy's
value in the Fixed Account.

FIXED ACCOUNT -- An allocation option other than the Series Account. Part
of AUSA Life's General Account.

FUND -- WRL Series Fund, Inc., a registered management investment company
in which the assets of the Series Account are invested.

GENERAL ACCOUNT -- The assets of AUSA Life other than those allocated to
the Series Account or any other separate account.

GUIDELINE PREMIUM -- The level annual premium payment necessary to provide
the benefits selected by the Policyowner under the Policy through its Maturity
Date, based on the particular facts relating to the Insureds and certain
assumptions allowed by law. The dollar amount of the Guideline Premium is shown
on the Policy's Schedule Page.

IN FORCE -- Condition under which the coverage is active and both Insureds'
lives remain insured.

INITIAL PREMIUM -- The amount which must be paid before coverage begins.

ISSUE AGE -- For each Joint Insured, issue age refers to the age on the
Insured's birthday nearest the Policy Date.

JOINT INSUREDS -- The persons whose lives are insured under the Policy.

LAPSE -- Termination of the Policy at the end of the grace period.

LOAN RESERVE -- A part of the Fixed Account to which amounts are
transferred as collateral for Policy loans.

MATURITY DATE -- The date when coverage under the Policy will terminate if
either of the Insureds is living and the Policy is In Force.

MONTHLY ANNIVERSARY OR MONTHIVERSARY -- The same date in each succeeding
month as the Policy Date. For purposes of the Series Account, whenever the
Monthly Anniversary falls on a date other than a Valuation Date, the Monthly
Anniversary will be deemed to be the next Valuation Date.

NET PREMIUM -- The portion of the premium available for allocation to
either the Fixed Account or the Sub-Accounts of the Series Account equal to the
premium paid by the Policyowner less the applicable premium expense charges.

NET SURRENDER VALUE -- The amount payable upon surrender of the Policy
equal to the Cash Value as of the date of surrender, less any surrender charge,
and less any outstanding Policy loan, plus any unearned loan interest.

NO LAPSE DATE -- Either, (1) the later of attained target premium age 65 or
five Policy years, or (2) the later of attained target premium age 75 or five
Policy years, as selected by the Policyowner at time of application for the
Policy.

NO LAPSE PERIOD -- The period of time between the Policy Date and the No
Lapse Date, during which the Policy will not Lapse if certain conditions are
met, even though Net Surrender Value is insufficient to meet the monthly
deduction.

PLANNED PERIODIC PREMIUM -- A scheduled premium of a level amount at a
fixed interval over a specified period of time.

POLICY -- The joint survivorship flexible premium variable life insurance
policy offered by AUSA Life and described in this Prospectus.

POLICY DATE -- The date set forth in the Policy when insurance coverage is
effective and monthly deductions commence under the Policy. The Policy Date is
used to determine Policy years and Policy Months. Policy Anniversaries are
measured from the Policy Date.

POLICY MONTH -- A month beginning on the Monthly Anniversary.

POLICYOWNER(S) ("OWNER(S)") -- The person(s) who owns the Policy, and who
may exercise all rights under the Policy while either or both Joint Insureds are
living. If two Owners are named, the Policy will be owned jointly and the
consent of each Owner will be required to exercise ownership rights.

PORTFOLIO -- A separate investment portfolio of the Fund.

RECORD DATE -- The date the Policy is recorded on the books of AUSA Life as
an In Force Policy.

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SERIES ACCOUNT -- AUSA Series Life Account, a separate investment account
established by AUSA Life to receive and invest Net Premiums allocated under the
Policy.

SPECIFIED AMOUNT -- The minimum death benefit payable under the Policy as
long as the Policy remains In Force. The death benefit proceeds will be reduced
by any outstanding indebtedness and any due and unpaid charges.

SUB-ACCOUNT -- A sub-division of the Series Account. Each Sub-Account
invests exclusively in the shares of a specified Portfolio of the Fund.

SURVIVING INSURED -- The Joint Insured who remains alive after the other
Joint Insured has died.

TERMINATION -- Condition when either of the Joint Insured's lives is no
longer insured under the coverage provided.

VALUATION DATE -- Each day on which the New York Stock Exchange is open for
business.

VALUATION PERIOD -- The period commencing at the end of one Valuation Date
and continuing to the end of the next succeeding Valuation Date.

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INTRODUCTION

1. WHAT IS THE DIFFERENCE BETWEEN THE POLICY AND A CONVENTIONAL
FIXED-BENEFIT POLICY PRIOR TO THE DEATH OF AN INSURED?

Like conventional fixed-benefit life insurance, as long as the Policy
remains In Force, the Policy can provide: (1) the accumulation of Cash Value;
and (2) surrender rights and Policy loan privileges.

The Policy differs from conventional fixed-benefit life insurance by
allowing Policyowners to allocate Net Premiums to one or more Sub-Accounts of
the Series Account, or to the Fixed Account, or to a combination of both. Each
Sub-Account invests in a designated Portfolio of the Fund. The amount and/or
duration of the life insurance coverage and the Cash Value of the Policy are not
guaranteed and may increase or decrease depending upon the investment experience
of the Series Account. Accordingly, the Policyowner bears the investment risk of
any depreciation in value of the underlying assets of the Series Account but
reaps the benefits of any appreciation in value. (See Allocation of Premiums and
Cash Value - Allocation of Net Premiums, p. 22.) Unlike conventional
fixed-benefit life insurance, a Policyowner also has the flexibility, subject to
certain restrictions (see Premiums - Premium Limitations, p. 22), to vary the
frequency and amount of premium payments and to decrease the Specified Amount.
Thus, unlike conventional fixed-benefit life insurance, the Policy does not
require a Policyowner to adhere to a fixed premium schedule. Moreover, the
failure to pay a scheduled premium ("Planned Periodic Premium") will not itself
cause the Policy to lapse, although additional premium payments may be necessary
to prevent lapse if Net Surrender Value is insufficient to pay certain monthly
charges, and a grace period expires without a sufficient payment. (See Policy
Lapse and Reinstatement - Lapse, p. 25.)

2. WHAT IS THE DIFFERENCE BETWEEN THE POLICY AND A CONVENTIONAL
FIXED-BENEFIT POLICY UPON THE DEATH OF AN INSURED?

Under a conventional fixed-benefit life insurance Policy, only one person
is insured. Upon the insured's death, the Policy terminates and the death
benefit is paid to the beneficiary. Under a joint survivorship Policy, two
people are insured. When one of the two insureds dies with the other insured
still living, no death benefit is paid, and the Policy continues without any
change in the Policy provisions, charges or cash value accumulation. The
Owner(s) may continue to pay premiums, as necessary or desired, and exercise all
rights as Owner(s) under the Policy.

3. WHAT DEATH BENEFIT OPTIONS ARE AVAILABLE UNDER THE POLICY?

The Policy provides the payment of benefits upon the death of the Surviving
Insured. The Policy contains two death benefit options. Under Death Benefit
Option A, the death benefit is the greater of the Specified Amount of the Policy
or a specified percentage times the Cash Value of the Policy on the date of
death of the Surviving Insured. Under Death Benefit Option B, the death benefit
is the greater of the Specified Amount of the Policy plus the Cash Value of the
Policy on the date of death of the Surviving Insured or a specified percentage
times the Cash Value of the Policy on the date of death of the Surviving
Insured. As long as the Policy remains In Force, the minimum death benefit
payable under either option will be the current Specified Amount. The amount of
death benefit will be reduced by any outstanding indebtedness and any due and
unpaid charges, and increased by any additional insurance benefits added by
rider and any unearned loan interest. Under AUSA Life's current rules, the
minimum Specified Amount for a Policy at issue is generally $100,000. The
minimum Specified Amount will be set forth in the Policyowner's Policy. (See
Policy Benefits - Death Benefit, p. 14.)

Optional insurance benefits offered under the Policy include a Joint
Insured Term Rider; an Individual Insured Rider; and a Wealth Protector Rider.
(See Optional Cash Value Charges - Optional Insurance Benefits, p. 28.) The cost
of these optional insurance benefits will be deducted from Cash Value as part of
the monthly deduction. (See Charges and Deductions - Cash Value Charges, p. 27.)

A Terminal Illness Accelerated Death Benefit Rider is automatically
included with every Policy at no additional charge. This rider makes a "Single
Sum Benefit" available prior to an Insured's death if the Insured has incurred a
condition resulting from illness which, as determined by a Physician, has
reduced the Insured's life expectancy as defined in the rider. (See Policy
Benefits - Terminal Illness Accelerated Death Benefit Rider, p. 17.)

Benefits under the Policy may be paid in a lump sum or under one of the
settlement options set forth in the Policy. (See Payment of Policy Benefits -
Settlement Options, p. 32.)

4. HOW MAY THE AMOUNT OF THE DEATH BENEFIT AND CASH VALUE VARY?

Under either death benefit option, as long as the Policy remains In Force,
the death benefit will not be less than the current Specified Amount of the
Policy. The amount of death benefit will be reduced by any outstanding policy
loan, plus any unearned loan interest, and any due and unpaid charges. The death
benefit may, however, exceed the Specified Amount under certain circumstances.
The amount by which the death benefit exceeds the Specified Amount depends upon
the option chosen and the Cash Value of the Policy. (See Policy Benefits - Death
Benefit, p. 14.)

The Policy's Cash Value in the Series Account will reflect the amount and
frequency of premium payments,

3
<PAGE>

the investment experience of the chosen Sub-Accounts of the Series Account, any
partial surrenders, and any charges imposed in connection with the Policy. The
entire investment risk for amounts allocated to the Sub-Accounts of the Series
Account is borne by the Policyowner; AUSA Life does not guarantee a minimum Cash
Value. (See Policy Benefits - Cash Value, p. 17.)

5. WHAT FLEXIBILITY DOES A POLICYOWNER HAVE TO ADJUST THE AMOUNT OF THE
DEATH BENEFIT?

The Policyowner has the flexibility to adjust the death benefit payable by
changing the Death Benefit Option type, by decreasing the Specified Amount of
the Policy or by adding riders to increase the total death benefit payable. No
such change or decrease may be requested during the first three Policy years.
The Policyowner may either change the death benefit option or decrease the
Specified Amount, but not both, only once each Policy year after the third
Policy year. (See Death Benefit - Change in Death Benefit Option, p. 15.)

6. WHAT FLEXIBILITY DOES A POLICYOWNER HAVE IN CONNECTION WITH PREMIUM
PAYMENTS?

A Policyowner has considerable flexibility concerning the amount and
frequency of premium payments. An Initial Premium at least equal to a minimum
monthly first year premium as set forth in the Policy must be paid before
insurance coverage is In Force. (See Policy Benefits - When Insurance Coverage
Takes Effect, p. 16.) Thereafter, a Policyowner may, subject to certain
restrictions, make premium payments in any amount and at any frequency. (See
Payment and Allocation of Premiums - Premiums, p. 21.) Each Policyowner will
also determine a Planned Periodic Premium schedule. The schedule will provide
Planned Periodic Premium payments of a level amount at a fixed interval over a
specified period of time. The amount and frequency of planned premium payments
will be set forth in the Policy. The amount and frequency of Planned Periodic
Premium payments may be changed upon written request. (See Premiums - Planned
Periodic Premiums, p. 22.)

7. HOW LONG WILL THE POLICY REMAIN IN FORCE?

The Policy will Lapse only when Net Surrender Value is insufficient to pay
the monthly deduction (see Charges and Deductions - Cash Value Charges, p. 27),
providing excess indebtedness does not exceed the Policy's Cash Value, and a
grace period expires without a sufficient payment by the Policyowner. (See Loan
Privileges - Indebtedness, p. 30.) However, until the No Lapse Date as provided
in the Policy, the Policy will remain In Force and no grace period will begin
provided the total premiums received (minus any withdrawals and minus any
outstanding loans) equal or exceed the minimum monthly guarantee premium shown
in the Policy times the number of months since the Policy Date, including the
current month. The Policy, therefore, differs in two important respects from a
conventional life insurance policy. First, the failure to pay a Planned Periodic
Premium will not automatically cause the Policy to Lapse. Second, after the No
Lapse Date, the Policy can Lapse even if Planned Periodic Premiums or premiums
in other amounts have been paid, if Net Surrender Value is insufficient to pay
the monthly deduction, and a grace period expires without a sufficient payment.
Such a Lapse could happen if the investment experience has been sufficiently
unfavorable to have resulted in a decrease in the Net Surrender Value, or the
Net Surrender Value has decreased because not enough premiums have been paid to
offset the monthly deduction. If either Insured is alive and the Policy is In
Force on the Maturity Date, which is the younger Insured's 100th birthday, the
Policy will then terminate and no longer be In Force. Upon request, AUSA Life
will extend the Maturity Date as long as there appears to be no unfavorable tax
consequences. The Net Surrender Value as of the Maturity Date will be paid to
the Policyowner. (See Policy Rights - Benefits at Maturity, p. 31.)

8. HOW ARE NET PREMIUMS ALLOCATED?

The portion of the premium available for allocation ("Net Premium") equals
the premium paid less the Premium Expense Charge. (See Charges and Deductions -
Premium Expense Charge, p. 26.) The Policyowner initially determines the
allocation of the Net Premium among the Sub-Accounts of the Series Account, each
of which invests in shares of a designated Portfolio of the Fund, or to the
Fixed Account, or a combination. Each Portfolio has a different investment
objective. (See Investments of the Series Account - WRL Series Fund, Inc., p.
18.) The allocation of future Net Premiums may be changed without charge at any
time by providing AUSA Life with written notification from the Policyowner, or
by calling AUSA Life's toll-free number, 1-800-322-7160.

9. IS THERE A "FREE-LOOK" PERIOD?

Yes, the Policy provides a free-look period. The Policyowner may cancel the
Policy within 10 days after the Policyowner receives it, or 10 days after AUSA
Life mails or delivers a written notice of withdrawal right to the Policyowner.
The refund will equal the sum of: (i) the difference between the premiums paid
and the amounts allocated to any Accounts under the Policy; (ii) the total
amount of monthly deductions made and any other charges imposed on amounts
allocated to the Accounts; and (iii) the value of amounts allocated to the
Accounts on the date AUSA Life or its agent receives the returned Policy. (See
Policy Rights - Examination of Policy Privilege, p. 31.)

10. MAY THE POLICY BE SURRENDERED?

Yes, the Policyowner may totally surrender the Policy at any time and
receive the Net Surrender Value of the Policy. Subject to certain limitations,
the Policyowner may also make cash withdrawals from the Policy at any time after
the first Policy year and prior to

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the Maturity Date. (See Policy Rights - Surrender Privileges, p. 30.) If Death
Benefit Option A is in effect, cash withdrawals will reduce the Policy's
Specified Amount by the amount of the cash withdrawal.

11. WHAT IS THE LOAN PRIVILEGE?

After the first Policy Anniversary, a Policyowner may obtain a Policy loan
in any amount which is not greater than 90% of the Cash Value less any surrender
charge and any already outstanding loan. AUSA Life reserves the right to permit
a Policy loan prior to the first Policy Anniversary for Policies issued pursuant
to a transfer of cash values from another life insurance policy, under Section
1035(a) of the Internal Revenue Code of 1986, as amended. It should be noted,
however, that a loan taken from, or secured by, a Policy may be treated as a
taxable distribution, and also may be subject to a Federal income tax penalty.
(See Federal Tax Matters, p. 35.)

The interest rate on a loan is 5.66% payable annually in advance. The
requested loan amount, plus interest in advance, will be transferred from the
Accounts to the Loan Reserve and credited at the end of each Policy year with
guaranteed interest at a rate of 4% per year. AUSA Life may from time to time,
and in its sole discretion, credit the Loan Reserve with additional interest at
a rate higher than 4% per year. The Loan Reserve is currently being credited
with a rate higher than 4% per year. The minimum loan amount is generally $500.
(See Policy Rights - Loan Privileges, p. 29.) Upon repayment of a loan, amounts
in the Loan Reserve in excess of the outstanding value of the loan are currently
transferred to the Accounts in the same manner as Net Premium allocations;
however, AUSA Life may in the future require these amounts to be transferred to
the Fixed Account. (See The Fixed Account, p. 34.)

There are risks involved in taking a Policy loan, including the potential
for a Policy to lapse if projected earnings, taking into account any outstanding
loans, are not achieved, as well as adverse tax consequences which occur if a
Policy lapses with loans outstanding. (See Federal Tax Matters - Tax Treatment
of Policy Benefits, p. 36.)

12. WHAT CHARGES ARE ASSESSED IN CONNECTION WITH THE POLICY?

Certain charges are deducted from each premium. A Premium Expense Charge
equal to 6.00% of the premiums paid through the end of the tenth Policy year is
deducted to compensate AUSA Life for distribution expenses incurred in
connection with the Policy and for state premium taxes. After the tenth Policy
year, the Premium Expense Charge reduces to 2.5%. (See Charges and Deductions -
Premium Expense Charge, p. 26.)

A "surrender charge" (part of which is a contingent deferred sales charge)
is deducted if the Policy is surrendered during the first 15 Policy years. The
surrender charge consists of a deferred issue charge of $5.00 per $1,000 of
Specified Amount; the surrender charge also consists of a deferred sales charge
equal to 26.5% of one Guideline Premium and not more than 4.2% of premiums above
that amount. A declining percentage of the surrender charge is assessed after
the tenth year. (See Charges and Deductions - Contingent Surrender Charges, p.
26.)

A cost of insurance charge and a $5.00 monthly administration charge are
deducted monthly from the Cash Value of each Policy to compensate AUSA Life for
the cost of insurance and the cost of administering the Policy. Cost of
insurance charges will vary with the Policy's Specified Amount, the death
benefit option chosen and the investment experiences of the Portfolios in which
the Policy is invested. (See Charges and Deductions - Cash Value Charges, p.
27.) A Death Benefit Guarantee Charge is deducted up until the No Lapse Date
selected by the Policyowner on the application. The amount of this charge is set
forth on the Policy Schedule Page and will be $0.04 per $1,000 of Specified
Amount for all classes of Policies. On and after the No Lapse Date selected,
this charge will be zero. (See Charges and Deductions - Cash Value Charges, p.
27.)

Optional Cash Value charges are deducted from the Policy as a result of
Policyowner changes or elections made to the Policy. Optional Cash Value charges
include charges for: optional insurance benefits, certain Cash Value transfers
and cash withdrawals. (See Charges and Deductions - Optional Cash Value Charges,
p. 28.)

AUSA Life charges the Sub-Accounts of the Series Account for the mortality
and expense risks AUSA Life assumes. The charge is made daily at an effective
annual rate of 0.90% of the average daily net assets of each Sub-Account of the
Series Account. (See Charges and Deductions - Charges Against the Series
Account, p. 28.)

Each Sub-Account invests in a corresponding Portfolio of the Fund. Each
Portfolio pays investment management fees based on a percentage of the
Portfolio's average daily net assets. The annual management fees and other Fund
expenses for the Portfolios are provided on p. 6, under the heading Fund Annual
Expenses. Effective January 1, 1997, the Fund adopted a Plan of Distribution
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"1940 Act") ("Distribution Plan") and pursuant to the Plan, entered into a
Distribution Agreement with InterSecurities, Inc. ("ISI"), principal underwriter
for the Fund.

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annualized basis of the average daily net assets. This fee is measured and
accrued daily and paid monthly. ISI has determined that it will not seek payment
by the Fund of distribution expenses with respect to any Portfolio during the
fiscal year ending December 31, 1998. Prior to ISI's seeking reimbursement,
Policyowners will be notified in advance. In addition, the Portfolios incur
certain operating expenses. (See Investments of the Series Account - WRL Series
Fund, Inc., p. 18.)

No charges are currently made from the Series Account for Federal or state
income taxes. Should AUSA Life determine that such taxes may be imposed by
Federal or state agencies, AUSA Life may make deductions from the Series Account
to pay these taxes. (See Federal Tax Matters, p. 35.)

13. ARE TRANSFERS PERMITTED AMONG THE ACCOUNTS?

Yes. Twelve Cash Value transfers are permitted among the Sub-Accounts of
the Series Account or from the Sub-Accounts to the Fixed Account without charge
in a Policy year. AUSA Life will impose a $10 charge for each subsequent
transfer. (See Payment and Allocation of Premiums - Allocation of Premiums and
Cash Value, p. 22.) Transfers may also be made from the Fixed Account to the
Sub-Accounts subject to certain restrictions. (See The Fixed Account -
Allocations, Transfers and Withdrawals, p. 34.)

14. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PURCHASING A POLICY?

Under current Federal tax law, life insurance policies receive tax-favored
treatment. The death benefit is generally excludable from the beneficiary's
gross income for Federal income tax purposes, according to Section 101(a)(1) of
the Internal Revenue Code. Owners of a life insurance policy are not taxed on
any increase in the cash value while the policy remains In Force.

If a second-to-die life insurance policy is a modified endowment contract
under Federal tax law, certain distributions made during either insured's
lifetime, such as loans and partial withdrawals from, and collateral assignments
of, the policy are includable in gross income on an income-first basis. A 10%
Federal income tax penalty may also be imposed on distributions made before the
policyowner attains age 59-1/2. Life insurance policies that are not modified
endowment contracts under Federal tax law receive preferential tax treatment
with respect to certain distributions.

For a discussion of tax issues associated with this Policy, see "Federal
Tax Matters" on p. 35.

FUND ANNUAL EXPENSES* (AS A % OF FUND AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
Aggressive Emerging
Growth Growth Growth Global
Portfolio Portfolio Portfolio Portfolio
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Management Fees .......................... 0.80% 0.80% 0.80% 0.80%
Other Expenses (after reimbursement) ..... 0.16% 0.13% 0.07% 0.20%
Total Fund Annual Expenses ............... 0.96% 0.93% 0.87% 1.00%

<CAPTION>
C.A.S.E. Third Avenue
Balanced Value Equity Growth Value
Portfolio Portfolio Portfolio Portfolio**
----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Management Fees .......................... 0.80% 0.80% 0.80% 0.80%
Other Expenses (after reimbursement) ..... 0.14% 0.09% 0.20% 0.20%
Total Fund Annual Expenses ............... 0.94% 0.89% 1.00% 1.00%
</TABLE>

<TABLE>
<CAPTION>
Strategic Growth &
Bond Total Return Income
Portfolio*** Portfolio Portfolio
-------------- -------------- -----------
<S> <C> <C> <C>
Management Fees .............................. 0.45% 0.80% 0.75%
Other Expenses (after reimbursement) ......... 0.14% 0.08% 0.21%
Total Fund Annual Expenses ................... 0.59% 0.88% 0.96%

<CAPTION>
Tactical
Money Asset International
Market Allocation Equity U.S. Equity
Portfolio Portfolio Portfolio Portfolio
----------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Management Fees .............................. 0.40% 0.80% 1.00% 0.80%
Other Expenses (after reimbursement) ......... 0.08% 0.07% 0.50% 0.50%
Total Fund Annual Expenses ................... 0.48% 0.87% 1.50% 1.30%
</TABLE>

* Effective January 1, 1997, the Fund adopted a Plan of Distribution pursuant
to Rule 12b-1 under the 1940 Act ("Distribution Plan") and pursuant to the
Plan, entered into a Distribution Agreement with ISI, principal underwriter
for the Fund. Under the Distribution Plan, the Fund, on behalf of the
Portfolios, is authorized to pay to various service providers, as direct
payment for expenses incurred in connection with the distribution of a
Portfolio's shares, amounts equal to actual expenses associated with
distributing a Portfolio's shares, up to a maximum rate of 0.15% (fifteen
one-hundredths of one percent) on an annualized basis of the average daily
net assets. This fee is measured and accrued daily and paid monthly. ISI
has determined that it will not seek payment by the Fund of distribution
expenses incurred with respect to any Portfolio during the fiscal year
ending December 31, 1998. Prior to ISI seeking reimbursement, Policyowners
will be notified in advance.

** Because the Third Avenue Value Portfolio commenced operations on January 2,
1998, the percentages set forth as "Other Expenses" and "Total Fund Annual
Expenses" reflect estimates of "Other Expenses" for the first year of
operation.

*** Effective January 1, 1998, the management fees for the Bond Portfolio were
reduced from 0.50% to 0.45% of the Portfolio's average daily net assets.

The purpose of the preceding Table is to assist the Policyowner in
understanding the various costs and expenses that a Policyowner will bear
directly and indirectly. The Table reflects charges and expenses of the Separate
Account as well as the Portfolios of the Fund for the fiscal year ended December
31, 1997, except that the "Other Expenses" and "Total Fund Annual Expenses" for
the Third Avenue Value Portfolio are estimates. Expenses of the Fund may be
higher or lower in the future. Certain states and other governmental entities
may impose a premium tax, which the Table does not include. For more information
on the charges described in this Table, see "Charges And Deductions" on page 26
and the Fund Prospectus which accompanies this Prospectus.

6
<PAGE>

WRL Investment Management, Inc. ("WRL Management") has undertaken, until at
least April 30, 1999, to pay Fund expenses on behalf of the Portfolios to the
extent normal operating expenses of a Portfolio exceed a stated percentage of
each Portfolio's average daily net assets. The expense limitation for the
Aggressive Growth, Emerging Growth, Growth, Global, Balanced, Value Equity,
C.A.S.E. Growth, Third Avenue Value, Strategic Total Return, Growth & Income and
Tactical Asset Allocation Portfolios is 1.00% of the average daily net assets;
0.70% of the average daily net assets of the Bond and Money Market Portfolios;
1.50% of the average daily net assets of the International Equity Portfolio; and
1.30% of the average daily net assets of the U.S. Equity Portfolio. In 1997, WRL
Management reimbursed the C.A.S.E. Growth Portfolio in the amount of $50,000,
the International Equity Portfolio in the amount of $179,000 and the U.S. Equity
Portfolio in the amount of $29,000. Without such reimbursement, the total annual
Fund expenses during 1997 for the C.A.S.E. Growth Portfolio, the International
Equity Portfolio and the U.S. Equity Portfolio would have been 1.13%, 3.12% and
1.49%, respectively.

INVESTMENT EXPERIENCE INFORMATION

THE INFORMATION PROVIDED IN THIS SECTION SHOWS THE HISTORICAL INVESTMENT
XPERIENCE OF THE FUND AND HYPOTHETICAL ILLUSTRATIONS OF THE POLICY BASED ON THE
HISTORICAL INVESTMENT EXPERIENCE OF THE FUND. IT DOES NOT REPRESENT OR PROJECT
FUTURE INVESTMENT PERFORMANCE.

The Policies became available for sale in 1998. The Series Account was
established on October 24, 1994 and commenced operations , 1998. The Fund
commenced operations on October 2, 1986. The rates of return shown below depict
the historic investment experience of each Portfolio of the Fund for the periods
shown and assumes that the rate of return for each Portfolio in each calendar
year was uniformly earned throughout the year. The actual performance of the
Portfolios, however, has and will vary throughout the year, and will result in
variable monthly deductions from Cash Value that could affect performance. The
illustrations of death benefits, Cash Values and Net Surrender Values shown
below depict these Policy features for a hypothetical Policy as if it had been
purchased on January 1, of the year following a Portfolio's inception, for
Insureds in the age and risk classes indicated, based on the historical
investment experience of the Portfolio indicated since January 1, 1987. The
actual rate of return for each Portfolio in each calendar year was assumed to be
uniformly earned throughout that year. The actual performance of the Portfolios,
however, has and will vary throughout the year.

RATES OF RETURN

The rates of return shown below are based on the investment performance, as
described above, after the deduction of investment management fees and direct
Fund expenses, of the Portfolios of the Fund. The rates are average annual
compounded rates of return for the periods ended on December 31, 1997. (See
Investments of the Series Account - WRL Series Fund, Inc., p. 18.)

These rates of return do not reflect the annual charge against the assets
of the Series Account of 0.90% for mortality and expense risks. These rates of
return also do not reflect the charges deducted from premiums, monthly
deductions from Cash Value, or surrender charges. (See Charges and Deductions -
Premium Expense Charge, p. 26; Contingent Surrender Charges, p. 26; and Cash
Value Charges, p. 27.) Accordingly, these rates of return do not illustrate how
actual investment performance will affect benefits under the Policies. (See,
however, Death Benefit, Cash Value and Net Surrender Value Illustrations,
below.) Moreover, these rates of return are not an estimate, projection or
guarantee of future performance.

Also shown are comparable figures for the unmanaged Standard & Poor's Index
of 500 Common Stocks, a widely used measure of stock market performance. As an
unmanaged index, the Standard & Poor's Index of 500 Common Stocks (S&P 500) does
not reflect any deductions for the expense of operating and managing an
investment portfolio. As an unmanaged index, the S&P 500 does not reflect any
deduction for the expenses of operating and managing an investment Portfolio.

AVERAGE ANNUAL COMPOUNDED RATES OF RETURN
FOR THE PERIODS ENDED ON DECEMBER 31, 1997

Fund Portfolio Inception* 10 Years 5 Years 3 Years 1 Year
- -------------- ---------- -------- ------- ------- ------
Growth 17.65% 18.66% 14.23% 26.83% 17.54%
Global 20.41% N/A 20.38% 23.13% 18.75%
Bond 7.77% 8.98% 7.24% 10.37% 9.16%
Money Market 5.00% 5.06% 4.31% 5.22% 5.24%
Emerging Growth 20.33% N/A N/A 28.45% 21.45%
Strategic Total
Return 15.07% N/A N/A 20.43% 21.85%
Aggressive Growth 17.72% N/A N/A 23.73% 24.25%
Balanced 10.44% N/A N/A 15.81% 17.10%
Growth & Income 14.17% N/A N/A 20.35% 24.65%
Tactical Asset
Allocation 17.04% N/A N/A 17.01% 16.59%
C.A.S.E. Growth 20.09% N/A N/A N/A 15.03%
Value Equity 23.14% N/A N/A N/A 25.04%
U.S. Equity 27.01% N/A N/A N/A 27.01%
International Equity 7.50% N/A N/A N/A 7.50%
S&P 500 16.95% 18.06% 20.27% 31.15% 33.36%

* The Growth, Bond and Money Market Portfolios of the Fund commenced operations
on October 2, 1986. The Global Portfolio commenced operations on December 3,
1992. The Emerging Growth and Strategic Total Return Portfolios commenced
operations on March 1, 1993. The Aggressive Growth, Balanced and Growth &
Income Portfolios commenced operations on March 1, 1994. The Tactical Asset
Allocation Portfolio commenced operations on January 3, 1995. The C.A.S.E.
Growth Portfolio commenced operations on May 1, 1995. The Value Equity
Portfolio commenced operations on May 1, 1996. The U.S. Equity and the
International Equity Portfolios commenced operations on January 2, 1997. The
Standard & Poor's Index of 500 Common Stocks returns are based on an inception
date of October 2, 1986.

Because the Third Avenue Value Portfolio had not yet commenced operations as of
December 31, 1997, the chart above does not reflect rates of return for this
Portfolio.

Additional information regarding the investment performance of the
Portfolios of the Fund appears in the attached Prospectus for the Portfolios of
the Fund.

7
<PAGE>

DEATH BENEFIT, CASH VALUE AND NET SURRENDER VALUE
ILLUSTRATIONS

In order to demonstrate how the historic investment experience of the
Portfolios could have affected the Option A death benefits, the Policy Cash
Value and Net Surrender Value, the following hypothetical illustrations are
based on the historic investment experience of each Portfolio. These
hypothetical illustrations are designed to show the performance that could have
resulted if the Policy available for purchase today had been in existence during
the period of time illustrated. The historic rate of return in each calendar
year was assumed to be uniformly earned throughout that year. The actual
performance of the Portfolios, however, has and will vary throughout the year,
and will result in variable monthly deductions from Cash Values that could
affect performance. These illustrations do not represent what may happen in the
future.

For each Portfolio, the illustrations show Option A based on the payment of
annual premiums of $4,000 at the beginning of each Policy year, and a Specified
Amount of $250,000 for a male age 55 and a female age 55. The illustrations also
assume that the Joint Insureds are placed in AUSA Life's Select underwriting
rate class. (See Cash Value Charges - Cost of Insurance, p. 27.) The
illustrations also assume that the Policy's entire Cash Value is allocated to
the Sub-Account corresponding to the Portfolio shown. The illustrated values
would be different if the Policyowner had chosen Option B death benefits.

The amounts shown for death benefits, Cash Values and Net Surrender Values
take into account all charges and deductions from the Policy, the Series Account
and the Fund (see Charges and Deductions - Premium Expense Charge, p. 26,
Charges Against the Series Account, p. 28, and Investments of the Series Account
- - WRL Series Fund, Inc., p. 18).

For each Portfolio of the Fund, one illustration is based on the guaranteed
cost of insurance rates, while the other illustration is based on the current
cost of insurance rates. These examples of Policy performance are for the
specific ages, sexes, rate class, premium payment pattern and Policy set forth
above. The amount and timing of premium payments would affect individual Policy
benefits as would any withdrawals or loans.

This Prospectus also contains illustrations based on hypothetical rates of
return. See Appendix A, pp. 41-43.

The following example shows how the hypothetical net return of the Growth
Portfolio of the Fund would have affected benefits for a Policy dated January 1,
1987. This example assumes that the Net Premiums and related Cash Values were in
the Sub-Account for the entire period and that the values were determined on the
first Valuation Date following January 1st of each year.

GROWTH PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------- ------------------------
Policy Anniversary on January 1 of Current Guaranteed Current Guaranteed
- ------------------------------------
<S> <C> <C> <C> <C>
1988 ............................... $ 3,969 $ 3,969 $ 1,659 $ 1,659
1989* .............................. 8,691 8,691 6,092 6,092
1990* .............................. 18,142 18,142 15,440 15,440
1991* .............................. 20,978 20,978 18,172 18,172
1992* .............................. 39,021 39,021 36,110 36,110
1993* .............................. 43,011 43,007 39,996 39,992
1994* .............................. 47,465 47,447 44,347 44,328
1995* .............................. 46,064 46,024 42,841 42,802
1996* .............................. 72,599 72,494 69,273 69,167
1997* .............................. 88,116 87,936 84,686 84,506
1998* .............................. 108,275 107,963 105,447 105,135
</TABLE>

* For the years shown, benefits and values reflect only premiums paid during
previous Policy years.

8
<PAGE>

The following example shows how the hypothetical net return of the Bond
Portfolio of the Fund would have affected benefits for a Policy dated January 1,
1987. This example assumes that Net Premiums and related Cash Values were in the
Sub-Account for the entire period and that the values were determined on the
first Valuation Date following January 1st of each year.

BOND PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Policy Anniversary on January 1 of Current Guaranteed Current Guaranteed
- ------------------------------------
<S> <C> <C> <C> <C>
1988 ............................... $ 3,384 $ 3,384 $ 1,074 $ 1,074
1989* .............................. 7,344 7,344 4,746 4,746
1990* .............................. 12,458 12,458 9,755 9,755
1991* .............................. 16,903 16,903 14,096 14,096
1992* .............................. 23,617 23,617 20,706 20,706
1993* .............................. 28,960 28,956 25,946 25,941
1994* .............................. 35,880 35,859 32,761 32,740
1995* .............................. 36,274 36,230 33,051 33,007
1996* .............................. 48,262 48,162 44,935 44,835
1997* .............................. 50,684 50,525 47,254 47,094
1998* .............................. 59,113 58,817 56,286 55,989
</TABLE>

* For the years shown, benefits and values reflect only premiums paid during
previous Policy years.

The following example shows how the hypothetical net return of the Money
Market Portfolio of the Fund would have affected benefits for a Policy dated
January 1, 1987. This example assumes that Net Premiums and related Cash Values
were in the Sub-Account for the entire period and that the values were
determined on the first Valuation Date following January 1st of each year.

MONEY MARKET PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

<TABLE>
<CAPTION>
Cash Value Net Surrender Value
------------------------ -----------------------
Policy Anniversary on January 1 of Current Guaranteed Current Guaranteed
- ------------------------------------
<S> <C> <C> <C> <C>
1988 ............................... 3,759 $ 3,759 $ 1,449 $ 1,449
1989* .............................. 7,693 7,693 5,095 5,095
1990* .............................. 12,012 12,012 9,310 9,310
1991* .............................. 16,491 16,491 13,685 13,685
1992* .............................. 20,787 20,787 17,876 17,876
1993* .............................. 24,714 24,710 21,700 21,695
1994* .............................. 28,472 28,452 25,354 25,333
1995* .............................. 32,576 32,529 29,354 29,307
1996* .............................. 37,389 37,296 34,063 33,970
1997* .............................. 42,186 42,023 38,756 38,593
1998* .............................. 47,481 47,186 44,653 44,358
</TABLE>

* For the years shown, benefits and values reflect only premiums paid during
previous Policy years.

9
<PAGE>

The following example shows how the hypothetical net return of the Global
Portfolio of the Fund would have affected benefits for a Policy dated January 1,
1993, and if the Global Portfolio had been offered through the Policy as of
January 1, 1993. This example assumes that Net Premiums and related Cash Values
were in the Sub-Account for the entire period and that the values were
determined on the first Valuation Date following January 1st of each year.

GLOBAL PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

* For the years shown, benefits and values reflect only premiums paid during
previous Policy years.

The following example shows how the hypothetical net return of the Emerging
Growth Portfolio of the Fund would have affected benefits for a Policy dated
January 1, 1994, if the Emerging Growth Portfolio had been offered by the Policy
as of January 1, 1994. This example assumes that Net Premiums and related Cash
Values were in the Sub-Account for the entire period and that the values were
determined on the first Valuation Date following January 1st of each year.

EMERGING GROWTH PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

* For the years shown, benefits and values reflect only premiums paid during
previous Policy years.

The following example shows how the hypothetical net return of the
Strategic Total Return Portfolio of the Fund would have affected benefits for a
Policy dated January 1, 1994, if the Strategic Total Return Portfolio had been
offered by the Policy as of January 1, 1994. This example assumes that Net
Premiums and related Cash Values were in the Sub-Account for the entire period
and that the values were determined on the first Valuation Date following
January 1st of each year.

STRATEGIC TOTAL RETURN PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

* For the years shown, benefits and values reflect only premiums paid during
previous Policy years.

10
<PAGE>

The following example shows how the hypothetical net return of the
Aggressive Growth Portfolio of the Fund would have affected benefits for a
Policy dated January 1, 1995. This example assumes that Net Premiums and related
Cash Values were in the Sub-Account for the entire period and that the values
were determined on the first Valuation Date following January 1st of each year.

AGGRESSIVE GROWTH PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.

The following example shows how the hypothetical net return of the Balanced
Portfolio of the Fund would have affected benefits for a Policy dated January 1,
1995. This example assumes that Net Premiums and related Cash Values were in the
Sub-Account for the entire period and that the values were determined on the
first Valuation Date following January 1st of each year.

BALANCED PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.

The following example shows how the hypothetical net return of the Growth &
Income Portfolio of the Fund would have affected benefits for a Policy dated
January 1, 1995. This example assumes that Net Premiums and related Cash Values
were in the Sub-Account for the entire period and that the values were
determined on the first Valuation Date following January 1st of each year.

GROWTH & INCOME PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.

11
<PAGE>

The following example shows how the hypothetical net return of the Tactical
Asset Allocation Portfolio of the Fund would have affected benefits for a Policy
dated January 1, 1995, if the Tactical Asset Allocation Portfolio had been
offered by the Policy as of January 1, 1995. This example assumes that Net
Premiums and related Cash Values were in the Sub-Account for the entire period
and that the values were determined on the first Valuation Date following
January 1st of each year.

TACTICAL ASSET ALLOCATION PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

* For the years shown, benefits and values reflect only premiums paid during
previous Policy years.

The following example shows how the hypothetical net return of the C.A.S.E.
Growth Portfolio of the Fund would have affected benefits for a Policy dated
January 1, 1996, if the C.A.S.E. Growth Portfolio had been offered by the Policy
as of January 1, 1996. This example assumes that Net Premiums and related Cash
Values were in the Sub-Account for the entire period and that the values were
determined on the first Valuation Date following January 1st of each year.

C.A.S.E. GROWTH PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

* For the years shown, benefits and values reflect only premiums paid during
previous Policy years.

The following example shows how the hypothetical net return of the Value
Equity Portfolio of the Fund would have affected benefits for a Policy dated
January 1, 1997, if the Value Equity Portfolio had been offered by the Policy as
of January 1, 1997. This example assumes that Net Premiums and related Cash
Values were in the Sub-Account for the entire period and that the values were
determined on the first Valuation Date following January 1st of each year.

VALUE EQUITY PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

12
<PAGE>

The following example shows how the hypothetical net return of the
International Equity Portfolio of the Fund would have affected benefits for a
Policy dated January 1, 1997. This example assumes that Net Premiums and related
Cash Values were in the Sub-Account for the entire period and that the values
were determined on the first Valuation Date following January 1st of each year.

INTERNATIONAL EQUITY PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

The following example shows how the hypothetical net return of the U.S.
Equity Portfolio of the Fund would have affected benefits for a Policy dated
January 1, 1997. This example assumes that Net Premiums and related Cash Values
were in the Sub-Account for the entire period and that the values were
determined on the first Valuation Date following January 1st of each year.

U.S. EQUITY PORTFOLIO
Male, Issue Age 55, Female, Issue Age 55, $4,000 Annual Premium
($250,000 Specified Amount, Select Risk)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates

Because the Third Avenue Value Portfolio had not commenced operations as of
December 31, 1997, there are no hypothetical illustrations for this Portfolio.

OTHER PERFORMANCE DATA

AUSA Life may compare the performance of each Sub-Account in advertising
and sales literature to the performance of other variable life issuers in
general, or to the performance of particular types of variable life insurance
policies investing in mutual funds, or investment series of mutual funds, with
investment objectives similar to each of the Sub-Accounts whose performance is
reported by Lipper Analytical Services, Inc. ("Lipper") and Morningstar, Inc.
("Morningstar") or reported by other services, companies, individuals or other
industry or financial publications of general interest, such as FORBES, MONEY,
THE WALL STREET JOURNAL, BUSINESS WEEK, BARRON'S, KIPLINGER'S PERSONAL FINANCE
and FORTUNE. Lipper and Morningstar are widely used independent research
services which monitor and rank the performance of variable life insurance
policies in each of the major categories of investment objectives on an
industry-wide basis.

Lipper's and Morningstar's rankings include variable annuity contracts as
well as variable life insurance policies. The performance analyses prepared by
Lipper and Morningstar rank such policies and contracts on the basis of total
return, assuming reinvestment of distributions, but do not take sales charges,
redemption fees or certain expense deductions at the separate account level into
consideration.

AUSA Life may also compare the performance of each Sub-Account in
advertising and sales literature to the S&P 500, a widely used measure of stock
market performance, or other widely recognized indices. Unmanaged indices may
assume the reinvestment of dividends, but usually do not reflect any "deduction"
for the expense of operating or managing an investment portfolio.

AUSA Life is a member of the Insurance Marketplace Standards Association
("IMSA"), and as such may include the IMSA logo and information about IMSA
membership in its advertisements. Companies that belong to IMSA subscribe to a
set of ethical standards covering the various aspects of sales and service for
individually sold life insurance and annuities.

In addition, AUSA Life may, as appropriate, compare each Sub-Account's
performance to that of other types of investments such as certificates of
deposit, savings accounts and U.S. Treasuries, or to certain interest rate and
inflation indices, such as the Consumer Price Index, which is published by the
U.S. Department of Labor and measures the average change in prices over time of
a fixed "market basket" of certain specified goods and services. Similar
comparisons of Sub-Account performance may also be made with appropriate indices
measuring the performance of a defined

13
<PAGE>

group of securities widely recognized by investors as representing a particular
segment of the securities markets. For example, Sub-Account performance may be
compared with Donoghue Money Market Institutional Average (money market rates),
Lehman Brothers Corporate Bond Index (corporate bond interest rates) or Lehman
Brothers Government Bond Index (long-term U.S. Government obligation interest
rates).

AUSA LIFE AND THE SERIES ACCOUNT

AUSA LIFE INSURANCE COMPANY, INC.

AUSA Life is incorporated under the laws of New York. AUSA Life is a stock
life insurance company engaged in the business of writing life insurance
policies and annuity contracts. AUSA Life is admitted to do business in 39
states and the District of Columbia. AUSA Life's principal business office is
located in Purchase, New York; however, the Administrative Office and mailing
address for all Policy transactions is P.O. Box 9054, Clearwater, FL 33758-9054.
AUSA Life is a wholly-owned subsidiary of First AUSA Life Insurance Company
("First AUSA"), a stock life insurance company which is wholly-owned by AEGON
USA, Inc. ("AEGON USA"). AEGON USA is a financial services holding company whose
primary emphasis is on life and health insurance and annuity and investment
products. AEGON USA is a wholly-owned indirect subsidiary of AEGON nv, a
Netherlands corporation, which is a publicly traded international insurance
group.

PUBLISHED RATINGS OF AUSA LIFE. AUSA Life may from time to time publish in
advertisements, sales literature and reports to Policyowners, the ratings and
other information assigned to it by one or more independent rating organizations
such as A.M. Best Company ("A.M. Best"), Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Insurance Rating Services ("Standard & Poor's"),
and Duff & Phelps Credit Rating Co. ("Duff & Phelps"). A.M. Best's and Moody's
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. Standard & Poor's and Duff & Phelps provide
ratings which measure the claims-paying ability of insurance companies. These
ratings are opinions of an operating insurance company's financial capacity to
meet the obligations of its insurance policies in accordance with their terms.
Claims-paying ability ratings do not refer to an insurer's ability to meet
non-policy obligations (i.e., debt/commercial paper). These ratings do not apply
to the Series Account, its Sub-Accounts, the Fund, its Portfolios, or to their
performance.

THE SERIES ACCOUNT

The Series Account was established by AUSA Life as a separate account on
October 24, 1994. The Series Account meets the definition of a "separate
account" under the Federal securities laws. The Series Account will receive and
invest the Net Premiums paid under this Policy and other flexible premium
variable life insurance policies issued by AUSA Life.

Although the assets of the Series Account are the property of AUSA Life,
the New York Code, under which the Series Account was established, provides
that the assets in the Series Account attributable to the Policies are not
chargeable with liabilities arising out of any other business which AUSA Life
may conduct. The assets of the Series Account shall, however, be available to
cover the liabilities of the General Account of AUSA Life to the extent that
the Series Account's assets exceed its liabilities arising under the Policies
supported by it.

The Series Account is currently divided into fifteen Sub-Accounts. Each
Sub-Account invests exclusively in shares of a single Portfolio of the Fund.
Income and both realized and unrealized gains or losses from the assets of each
Sub-Account of the Series Account are credited to or charged against that
Sub-Account without regard to income, gains or losses from any other Sub-Account
of the Series Account or arising out of any other business AUSA Life may
conduct.

POLICY BENEFITS

DEATH BENEFIT

Policyowners designate in the initial application one of two death benefit
options offered under the Policy: Death Benefit Option A ("Option A") or Death
Benefit Option B ("Option B"). As long as the Policy remains In Force, (see
Policy Lapse and Reinstatement - Lapse, p. 25), AUSA Life will, upon receiving
due proof of the Surviving Insured's death, pay the death benefit proceeds of a
Policy to the named Beneficiary in accordance with the designated death benefit
option. The amount of the death benefit proceeds payable will be determined at
the end of the Valuation Period during which the Surviving Insured dies. The
proceeds may be paid in a lump sum or under one or more of the settlement
options set forth in the Policy. (See Payments of Policy Benefits - Settlement
Options, p. 32.) AUSA Life guarantees that as long as the Policy remains In
Force (see Policy Lapse and Reinstatement - Lapse, p. 25), the death benefit
proceeds under either option will never be less than the Specified Amount of the
Policy, but the proceeds will be reduced by any outstanding indebtedness and any
due and unpaid charges. These proceeds will be increased by any additional
insurance In Force provided by rider and any unearned loan interest.

OPTION A. The death benefit is the greater of (i) the Specified Amount of
the Policy or (ii) a specified percentage (the "limitation percentage") times
the Cash Value of the Policy on the date of death of the Surviving Insured. The
limitation percentage is a percentage based on the Attained Age of the younger
Joint Insured and is 250% for a younger Joint Insured age 40 or below on the
Policy Anniversary prior to the date of death. For a younger Joint Insured with
an Attained Age over 40 on a Policy Anniversary, the percentage declines as
shown in the following Limitation Percentage Table. Accordingly, under Option A
the death benefit will remain level unless the limitation percentage times the
Cash

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Value exceeds the Specified Amount, in which case the amount of the death
benefit will vary as the Cash Value varies.

ILLUSTRATION OF OPTION A. For purposes of this illustration, assume that
the younger Joint Insured's Attained Age is under 40 and that there is no
outstanding indebtedness. Under Option A, a Policy with a $250,000 Specified
Amount will generally pay $250,000 in death benefits. However, because the death
benefit must be equal to or be greater than 250% of Cash Value, any time the
Cash Value of the Policy exceeds $100,000, the death benefit will exceed the
$250,000 Specified Amount. Each additional dollar added to Cash Value above
$100,000 will increase the death benefit by $2.50.

Similarly, so long as Cash Value exceeds $100,000, each dollar taken out of
Cash Value will reduce the death benefit by $2.50. If at any time, however, the
Cash Value multiplied by the limitation percentage is less than the Specified
Amount, the death benefit will equal the Specified Amount of the Policy.

LIMITATION PERCENTAGE TABLE

ATTAINED AGE
OF YOUNGER PER YEAR
JOINT INSURED LESS OVER AGE
------------- ---- --------
40 and under ......... 250%
41 - 45 .............. 250% 7% 40
46 - 50 .............. 215% 6% 45
51 - 55 .............. 185% 7% 50
56 - 60 .............. 150% 4% 55
61 - 65 .............. 130% 2% 60
66 - 70 .............. 120% 1% 65
71 - 75 .............. 115% 2% 70
76 - 90 .............. 105% 0% 75
91 - 95 .............. 105% 1% 90
96 and older ......... 100% 0% 95

OPTION B. The death benefit is equal to (i) the greater of the Specified
Amount plus the Cash Value of the Policy on the date of death of the Surviving
Insured or (ii) the limitation percentage times the Cash Value of the Policy on
or prior to the date of death of the Surviving Insured. The applicable
percentage is 250% for the younger Joint Insured age 40 or below on the Policy
Anniversary prior to the date of death of the Surviving Insured. For the younger
Joint Insured with an Attained Age over 40 on a Policy Anniversary, the
percentage declines as shown in the Limitation Percentage Table above.
Accordingly, under Option B the amount of the death benefit will always vary as
the Cash Value varies.

ILLUSTRATION OF OPTION B. For purposes of this illustration, assume that
the younger Joint Insured is under the age of 40 and that there is no
outstanding indebtedness. Under Option B, a Policy with a Specified Amount of
$250,000 will generally pay a death benefit of $250,000 plus Cash Value. Thus,
for example, a Policy with a Cash Value of $50,000 will have a death benefit of
$300,000 ($250,000 + $50,000). The death benefit, however, must be at least 250%
of Cash Value. As a result, if the Cash Value of the Policy exceeds $166,666,
the death benefit will be greater than the Specified Amount plus Cash Value.
Each additional dollar of Cash Value above $166,666 will increase the death
benefit by $2.50.

Similarly, any time Cash Value exceeds $166,666, each dollar taken out of
Cash Value will reduce the death benefit by $2.50. If at any time, however, Cash
Value multiplied by the limitation percentage is less than the Specified Amount
plus the Cash Value, then the death benefit will be the Specified Amount plus
the Cash Value of the Policy.

CHOOSING DEATH BENEFIT OPTION A OR OPTION B. Assuming the death benefit is
not determined by reference to the limitation percentage, Option A will provide
a Specified Amount of death benefit which does not vary with changes in Cash
Value. Thus, under Option A, as Cash Value increases, AUSA Life's net amount at
risk and therefore the pure insurance protection under the Policy will decline.
In contrast, Option B involves a constant net amount at risk, assuming that the
death benefit is not determined by reference to the limitation percentage.
Assuming positive investment experience, the deduction for cost of insurance
under a Policy with an Option A death benefit will be less than under a
corresponding Policy with an Option B death benefit. Because of this, if
investment performance is positive, Cash Value under Option A will increase
faster than under Option B but the total death benefit under Option B will
generally be greater. Thus, Option A could be considered more suitable for
Policyowners whose goal is increasing Cash Value based upon positive investment
experience while Option B could be considered more suitable for Policyowners
whose goal is increasing total death benefit.

CHANGE IN DEATH BENEFIT OPTION. Generally, the death benefit option in
effect may be changed by the Policyowner once each Policy year after the third
Policy year, provided that no decrease in Specified Amount is made that year. A
change in death benefit option may be made by sending AUSA Life a written
request for a change. A change in death benefit option may have Federal income
tax consequences. (See Federal Tax Matters, p. 35.) The Policyowner may either
change the death benefit option or decrease the Specified Amount, but not both,
only once each Policy year after the third Policy year.

Under AUSA Life's current rules, no change may be made if it would result
in a Specified Amount less than the minimum Specified Amount set forth in the
Policy. The effective date of any change will be the Monthly Anniversary on or
following receipt of the request. No charges will be imposed for making a change
in death benefit option.

If the death benefit option is changed from Option B to Option A, the
Specified Amount will be increased by an amount equal to the Policy's Cash Value
on the effective date of change. If the death benefit option is changed from
Option A to Option B, the Specified Amount will be

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<PAGE>

decreased by an amount equal to the Cash Value on the effective date of the
change.

CORRIDOR PERCENTAGE. If pursuant to requirements of the Internal Revenue
Code of 1986, as amended, the death benefit under a Policy is determined by
reference to the limitation percentages discussed above, the Policy is described
as "in the corridor," and an increase in the Cash Value of the Policy will
increase the net amount at risk assumed by AUSA Life and consequently increase
the cost of insurance deducted from the Cash Value of the Policy. (See Cash
Value Charges - Cost of Insurance, p. 27.)

INSURANCE PROTECTION. A Policyowner may increase or decrease the pure
insurance protection provided by a Policy (I.E., the difference between the
death benefit and the Cash Value) in one of several ways as insurance needs
change. These ways include decreasing the Specified Amount of insurance,
changing the level of premium payments, and, to a lesser extent, making a cash
withdrawal from the Policy. Although the consequences of each of these methods
will depend upon the individual circumstances, they may be generally summarized
as follows:

(a) A decrease in the Specified Amount will, subject to the limitation
percentage (see Policy Benefits - Death Benefit, p. 14), in general
decrease the insurance protection and the charges under the Policy
without reducing the Cash Value.

(b) If Option A is elected, an increased level of premium payments will
reduce the pure insurance protection, until the limitation percentage
times the Cash Value exceeds the Specified Amount. Increased premiums
should increase the amount of Net Surrender Value available to keep the
Policy In Force.

(c) A cash withdrawal will reduce the death benefit. (See Surrender
Privileges - Cash Withdrawals, p. 30.) It has no effect on the amount
of pure insurance protection and charges under the Policy, unless the
death benefit payable is governed by the limitation percentages. It
results in a reduced amount of Net Surrender Value available to pay the
monthly deduction, thereby increasing the possibility that the Policy
will lapse.

(d) A reduced level of premium payments generally increases the amount of
pure insurance protection if Option A is elected, or maintains the same
amount of pure insurance protection if Option B is elected, again
depending on the limitation percentage. It results in a reduced amount
of Cash Value and increases the possibility that the Policy will lapse.

HOW DEATH BENEFITS MAY VARY IN AMOUNT. As long as the Policy remains In
Force, AUSA Life guarantees that the death benefit will never be less than the
Specified Amount of the Policy. These proceeds will be reduced by any
outstanding indebtedness and any due and unpaid charges. The death benefit may,
however, vary with the Policy's Cash Value. Under Option A, the death benefit
will only vary when the Cash Value multiplied by the limitation percentage
exceeds the Specified Amount of the Policy. The death benefit under Option B
will always vary with the Cash Value because the death benefit equals either the
Specified Amount plus the Cash Value or the limitation percentage times the Cash
Value.

DECREASE IN SPECIFIED AMOUNT. Subject to certain limitations, a Policyowner
may decrease the Specified Amount of a Policy. A decrease in Specified Amount
may affect the net amount at risk, which may affect a Policyowner's cost of
insurance charge. (See Cash Value Charges - Cost of Insurance, p. 27.) A
decrease in Specified Amount could also have Federal income tax consequences.
(See Federal Tax Matters, p. 35.) The Policyowner may either change the death
benefit option or decrease the Specified Amount, but not both, only once each
Policy year after the third Policy year.

No requested decrease in the Specified Amount will be permitted during the
first three Policy years. Thereafter, any decrease in the Specified Amount will
become effective on the Monthly Anniversary date on or following receipt of a
written request from the Policyowner by AUSA Life. The Specified Amount
remaining In Force after any requested decrease may not be less than the minimum
Specified Amount set forth in the Policy. AUSA Life reserves the right to limit
any decrease to no more than 20% of the Specified Amount immediately prior to
the decrease. If, following the decrease in Specified Amount, the Policy would
not comply with the maximum premium limitations required by Federal tax law (see
Premiums - Premium Limitations, p. 22), the decrease may be limited to the
extent necessary to meet these requirements.

WHEN INSURANCE COVERAGE TAKES EFFECT

No life insurance coverage shall take effect unless the proposed Joint
Insureds are alive and in the same condition of health as described in the
application when the Policy is delivered to the Policyowner and the full Initial
Premium is paid. However, if the full Initial Premium is paid as set forth in
the conditional receipt attached to the application, and the conditional receipt
is delivered to the Policyowner, the terms of the conditional receipt shall
apply.

CONDITIONAL INSURANCE COVERAGE. The proposed Joint Insureds must be
insurable and acceptable to AUSA Life under its underwriting rules for the
amount, Policy and risk classification applied for on the later of: (a) the date
of application, or (b) the date of completion of all medical tests and
examinations required by AUSA Life. Any check given for payment must be honored
on first presentation. The conditional receipt and all coverages applied for on
the application are void if a check or draft received for payment of the Initial
Premium is not honored when first presented for payment.

AMOUNT OF CONDITIONAL LIFE INSURANCE COVERAGE. If conditional insurance
coverage becomes effective under the terms of the conditional receipt, then the
amount of conditional life insurance coverage on any person proposed for

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<PAGE>

insurance is the lesser of: (a) the amount of life insurance applied for on such
person, or (b) $300,000 reduced by the amounts payable under all other life
insurance or accidental death benefits then in force or pending with AUSA Life.

WHEN CONDITIONAL LIFE INSURANCE COVERAGE BEGINS. If the conditions listed
above are fulfilled, then the amount of conditional insurance coverage specified
above shall take effect on the later of: (a) the date of the application, or (b)
the date of the completion of all medical tests and examinations required by
AUSA Life. All conditional coverages for the proposed Joint Insureds will be
deemed void if the application contains material misrepresentation or is
fraudulently completed. Benefits under the conditional receipt coverage will be
denied if any proposed Joint Insured commits suicide.

WHEN CONDITIONAL LIFE INSURANCE COVERAGE ENDS. Conditional life insurance
coverage shall terminate automatically, without notice, on the earliest of the
following dates: (a) the date AUSA Life approves the Policy as applied for, or
(b) 10 days following any counteroffer by AUSA Life to offer insurance to any
person proposed for insurance under a different policy or at an increased
premium or on a different rate class or (c) at the end of the fraction of a year
which the payment bears to the premium required to provide one month of
insurance coverage in the amount as described above, or (d) at the beginning of
the 60th day following the date of the conditional receipt.

TERMINAL ILLNESS ACCELERATED DEATH BENEFIT RIDER

In states where this rider has been approved by that state's department of
insurance, upon receipt of proof satisfactory to AUSA Life that the Surviving
Insured has incurred a condition resulting from illness which, as determined by
a Physician, has reduced life expectancy to not more than 12 months from the
date of the Physician's Statement (a "Terminal Condition"), AUSA Life will pay
to the Policyowner a "Single Sum Benefit", equal to:

(a) the Death Benefit in effect on the date the Single Sum Benefit is paid;
multiplied by

(b) the Election Percentage; divided by

(c) 1 + i, where i equals the greater of (A) and (B) on the date the Single
Sum Benefit is paid. (A) equals the interest rate determined under
Internal Revenue Code section 846(c)(2), as it may be amended from time
to time; and (B) equals the Policy Loan Interest Rate; minus

(d) indebtedness, if any, at the time the Single Sum Benefit is paid,
multiplied by the Election Percentage.

"Death Benefit" under the Rider means the amount payable at death of the
Surviving Insured under the Policy, plus the benefit payable under any In Force
Joint Insured Term Rider or Wealth Protector Rider. (See Optional Insurance
Benefits, p. 33.) "Election Percentage" means a percentage, selected by the
Policyowner, not to exceed 100% of the Policy's Death Benefit, as defined under
the Rider; however, in no event will the Election Percentage result in a Single
Sum Benefit greater than $500,000. A "Physician" may be a Doctor of Medicine or
a Doctor of Osteopathy, licensed to practice medicine and treat injury or
illness in the state in which treatment is received and who is acting within the
scope of that license, and must be someone other than the Surviving Insured, the
Policyowner, a person who lives with the Surviving Insured or Policyowner, or a
person who is part of the Surviving Insured's or Policyowner's "Immediate
Family" (spouse, child, brother, sister, parent, grandparent or grandchild of
the Surviving Insured). The "Physician's Statement" must be a written statement
signed by a Physician which provides the Physician's diagnosis of the Surviving
Insured's non-correctable medical condition. It must state with reasonable
medical certainty that the non-correctable medical condition will result in the
death of the Surviving Insured within 12 months of the Physician's Statement,
taking into consideration the ordinary and reasonable medical care, advice and
treatment available in the same or similar communities.

The Rider will not pay benefits for a Terminal Condition resulting from
self-inflicted bodily injuries occurring within the same period specified in the
Policy's suicide provision. The Rider terminates at the earliest of (a) the date
the Policy terminates, (b) the effective date of a settlement option elected
under the Policy, (c) the date the Single Sum Benefit is paid, or (d) the date
the Policyowner elects to terminate the Rider.

Pursuant to the recently enacted Health Insurance Portability and
Accountability Act of 1996, Western Reserve believes that for Federal income tax
purposes a Single Sum Benefit payment made under the Terminal Illness
Accelerated Death Benefit Rider should be fully excludable from the gross income
of the Beneficiary, as long as the Beneficiary is the Insured under the Policy.
However, a Policyowner should consult a qualified tax advisor about the
consequences of adding this Rider to a Policy or requesting a Single Sum Benefit
payment under this Rider. There is no additional charge for this benefit. As
stated above, this Rider may not be available in all states, or, if available,
the terms of the Rider may vary in accordance with each state's insurance laws.

CASH VALUE

At the end of any Valuation Period, the Cash Value of the Policy is equal
to the sum of the Policy's value in each Sub-Account of the Series Account plus
the Fixed Account Value. There is no guaranteed minimum Cash Value.

NET SURRENDER VALUE. A Policyowner may at any time surrender the Policy and
receive the Policy's Net Surrender Value. (See Policy Rights - Surrender
Privileges, p. 30.) The Net Surrender Value as of any date is equal to:

(1) the Cash Value as of such date; minus
(2) any surrender charge as of such date (as described on p. 30); minus
(3) any outstanding Policy loan; plus (4) any unearned loan interest.

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<PAGE>

DETERMINATION OF VALUES IN THE SERIES ACCOUNT. On the Record Date, the
Policy's value in a Sub-Account of the Series Account will equal the portion of
any Net Premium allocated to the Sub-Account, reduced by the portion of the
first monthly deduction allocated to that Sub-Account. (See Payment and
Allocation of Premiums - Allocation of Premiums and Cash Value, p. 22.)
Thereafter, on each Valuation Date, the Policy's value in a Sub-Account of the
Series Account will equal the number of units in the Sub-Account, multiplied by
the unit value of that Sub-Account.

The number of units that the Policy has in each Sub-Account is equal to:

(1) The initial units purchased on the Policy Date; plus

(2) Units purchased at the time additional Net Premiums are allocated to
the Sub-Account; plus

(3) Units purchased through transfers from another Sub-Account or the
Fixed Account; minus

(4) Units that are redeemed to pay for monthly deductions as they are due;
minus

(5) Units that are redeemed to pay for any cash withdrawals; minus

(6) Units that are redeemed as part of any transfer to another Sub-Account
or the Fixed Account.

The Policy's total value in the Series Account equals the sum of the
Policy's value in each Sub-Account. (For a description of how the values of the
Fixed Account are calculated, see The Fixed Account - Fixed Account Value, p.
34.) Because the Cash Value is dependent upon a number of variables, including
the investment experience of the chosen Sub-Accounts of the Series Account, the
frequency and amount of premium payments, transfers and surrenders, and charges
assessed in connection with the Policy, a Policy's Cash Value cannot be
predetermined.

UNIT VALUE. The unit value of each Sub-Account was originally established
at $10 per unit. The unit value may increase or decrease from one Valuation
Period to the next. Unit values also will vary between Sub-Accounts. The unit
value of any Sub-Account at the end of a Valuation Period is the result of:

(1) The total value of the assets held in the Sub-Account, determined by
multiplying the number of shares of the designated Portfolio owned by
the Sub-Account times the Portfolio's net asset value per share; minus

(2) A deduction for the charge for mortality and expense risks. This charge
is used to compensate AUSA Life for its assumption of certain mortality
and expense risks. The daily amount of this charge is equal to the net
assets of the Sub-Account times the daily pro rata portion of the
annual Mortality and Expense Risk Charge rate. This annual rate is
equal to ninety one-hundredths of one per cent (0.90%) and is
multiplied times the net assets of the Sub-Account; minus

(3) The accrued amount of reserve for any taxes or other economic burden
resulting from the application of tax laws that are determined by AUSA
Life to be properly attributable to the Sub-Account; and the result
divided by

(4) The number of outstanding units in the Sub-Account.

VALUATION DATE AND VALUATION PERIOD. The net asset value per share of shares
of the Fund is determined, once daily, as of the close of the regular session of
business on the New York Stock Exchange ("Exchange") (usually 4:00 p.m., Eastern
time), on each day the Exchange is open.

INVESTMENTS OF THE SERIES ACCOUNT

WRL SERIES FUND, INC.

The Series Account invests in shares of the Fund, a series mutual fund which
is registered with the Securities and Exchange Commission ("Commission") as an
open-end diversified management investment company. Such registration does not
involve supervision of the management or investment practices or policies of the
Fund by the Commission.

Currently, the Portfolios of the Fund corresponding to the Sub-Accounts of
the Series Account are: Aggressive Growth Portfolio, Emerging Growth Portfolio,
Growth Portfolio, Global Portfolio, Balanced Portfolio, Strategic Total Return
Portfolio, Bond Portfolio, Growth & Income Portfolio, Money Market Portfolio,
Tactical Asset Allocation Portfolio, C.A.S.E. Growth Portfolio, Value Equity
Portfolio, U.S. Equity Portfolio, International Equity Portfolio and Third
Avenue Value Portfolio. The assets of each Portfolio are held separate from the
assets of the other Portfolios, and each Portfolio has an investment objective
and policies which are different from those of the other Portfolios. Thus, each
Portfolio operates as a separate investment fund, and the income or losses of
one Portfolio generally have no effect on the investment performance of any
other Portfolio. Pending any prior approval by a state insurance regulatory
authority, certain Sub-Accounts and corresponding Portfolios may not be
available to residents of some states.

The investment objective and policies of each Portfolio are summarized
below. THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE ITS STATED
OBJECTIVE. More detailed information, including a description of risks, can be
found in the Prospectus for the Fund which should be read carefully.

AGGRESSIVE GROWTH PORTFOLIO: This Portfolio seeks long-term capital
appreciation by investing in a diversified, actively managed portfolio of equity
securities.

EMERGING GROWTH PORTFOLIO: This Portfolio seeks capital appreciation by
investing primarily in common stocks of small and medium sized companies.

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GROWTH PORTFOLIO: This Portfolio seeks growth of capital, by investing
primarily in common stocks listed on a national securities exchange or traded on
NASDAQ.

GLOBAL PORTFOLIO: This Portfolio seeks long-term growth of capital in a
manner consistent with preservation of capital, primarily through investments in
common stocks of foreign and domestic issuers.

THIRD AVENUE VALUE PORTFOLIO: This Portfolio seeks long-term capital
appreciation by investing primarily in a portfolio of equity securities of
well-financed companies believed to be priced below their private market values
and debt securities providing strong protective covenants and high, effective
rates.

BALANCED PORTFOLIO: This Portfolio seeks preservation of capital, reduced
volatility, and superior long-term risk adjusted returns by investing primarily
in common stock, convertible securities and fixed-income securities.

STRATEGIC TOTAL RETURN PORTFOLIO: This Portfolio seeks to provide current
income, long-term growth of income and capital appreciation by investing
primarily in a blend of equity and fixed-income securities, including common
stocks, income producing securities convertible into common stock, and
fixed-income securities.

BOND PORTFOLIO: This Portfolio seeks the highest possible current income
within the confines of the primary goal of insuring the protection of capital by
investing at least 65%, and usually a higher percentage, of its assets in debt
securities issued by the U.S. Government and its agencies and instrumentalities
and in other medium to high-quality debt securities.

GROWTH & INCOME PORTFOLIO: This Portfolio seeks total return by investing in
securities that have defensive characteristics. The Portfolio will invest
primarily in a diversified portfolio of equity and debt securities with an
emphasis on sector investing.

MONEY MARKET PORTFOLIO: This Portfolio seeks to obtain maximum current
income consistent with preservation of principal and maintenance of liquidity.
The Portfolio maintains a dollar-weighted average portfolio maturity of not more
than 90 days by investing in U.S. dollar-denominated securities which have
effective maturities of not more than 13 months and present minimal credit
risks.

TACTICAL ASSET ALLOCATION PORTFOLIO: This Portfolio seeks preservation of
capital and competitive investment returns by investing primarily in stocks,
United States Treasury bonds, notes and bills, and money market funds.

C.A.S.E. GROWTH PORTFOLIO: This Portfolio seeks annual growth of capital
through investment in companies whose management, financial resources and
fundamentals appear attractive on a scale measured against each company's
present value.

VALUE EQUITY PORTFOLIO: This Portfolio seeks to achieve maximum, consistent
total return with minimum risk to principal by investing primarily in common
stocks with above-average statistical value which, in the Sub-Adviser's opinion,
are in fundamentally attractive industries and are undervalued at the time of
purchase.

INTERNATIONAL EQUITY PORTFOLIO: This Portfolio seeks long-term growth of
capital by investing primarily in the common stock of foreign issuers traded on
overseas exchanges and in foreign over-the-counter markets.

U.S. EQUITY PORTFOLIO: This Portfolio seeks long-term growth of capital by
investing primarily in equity securities of U.S. companies.

WRL Management, an affiliate of AUSA Life, located at 201 Highland
Avenue, Largo, FL 33770, a wholly-owned subsidiary of Western Reserve Life
Assurance Co. of Ohio ("Western Reserve"), serves as investment adviser to the
Fund and manages the Fund in accordance with policies and guidelines
established by the Board of Directors of the Fund. AUSA Life, WRL Management
and Western Reserve are affiliates.

Each Sub-Adviser is a registered investment adviser under the Investment
Advisers Act of 1940, as amended.

Janus Capital Corporation ("Janus") is as sub-adviser to the Growth and
Global Portfolios of the Fund. WRL Management and Janus will divide equally
monthly compensation at the current annual rate of 0.80% of the aggregate
average daily net assets each of the Growth Portfolio and the Global Portfolio.

AEGON USA Investment Management, Inc. ("AIMI") is sub-adviser to the
Balanced Portfolio and the Bond Portfolio of the Fund. AIMI is a wholly-owned
subsidiary of AEGON USA and thus is an affiliate of AUSA Life. WRL Management
and AIMI will divide equally monthly compensation at the current annual rate of
0.80% of the aggregate average daily net assets of the Balanced Portfolio. WRL
Management will receive monthly compensation at a current annual rate of 0.45%
and AIMI will receive 0.20% of the aggregate average daily net assets of the
Bond Portfolio. AIMI's compensation will be reduced by 50% of the amount paid by
WRL Management on behalf of the Balanced and Bond Portfolios pursuant to any
expense limitation or other reimbursement.

Van Kampen American Capital Asset Management, Inc. ("Van Kampen American
Capital") is sub-adviser to the Emerging Growth Portfolio of the Fund. Van
Kampen American Capital is an indirect wholly-owned subsidiary of VK/AC Holding,
Inc., ("VK/AC Holding"). VK/AC Holding is a wholly-owned subsidiary of MSAM
Holdings II, Inc., which, in turn, is a wholly-owned subsidiary of Morgan
Stanley Group, Inc. WRL Management and Van Kampen American Capital will divide
equally monthly compensation at the current annual rate of 0.80% of the
aggregate average daily net assets of the Emerging Growth Portfolio. Van Kampen
American Capital's compensation will be reduced by 50% of the

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<PAGE>

amount paid by WRL Management on behalf of the Emerging Growth Portfolio
pursuant to any expense limitation or other reimbursement.

Luther King Capital Management Corporation ("Luther King") is sub-adviser to
the Strategic Total Return Portfolio of the Fund. Ultimate control of Luther
King is exercised by J. Luther King, Jr. WRL Management and Luther King will
divide equally monthly compensation at the current annual rate of 0.80% of the
aggregate average daily net assets of the Strategic Total Return Portfolio.

Federated Investment Counseling ("Federated") is sub-adviser to the Growth &
Income Portfolio of the Fund. Federated is a wholly-owned subsidiary of
Federated Investors. WRL Management will receive monthly compensation at the
current annual rate of 0.75% of the aggregate average daily net assets of the
Growth & Income Portfolio. From this amount, as compensation of its services,
Federated will receive payments of fees equal to 0.50% of the first $30 million
of average daily net assets, 0.35% of the next $20 million of average daily net
assets, and 0.25% of average daily net assets in excess of $50 million of the
Growth & Income Portfolio.

Fred Alger Management, Inc. ("Fred Alger") is sub-adviser to the Aggressive
Growth Portfolio of the Fund. Fred Alger is a wholly-owned subsidiary of Fred
Alger & Company, Incorporated, which in turn is a wholly-owned subsidiary of
Alger Associates, Inc., a financial services holding company controlled by Fred
M. Alger. WRL Management and Fred Alger will divide equally monthly compensation
at the current annual rate of 0.80% of the aggregate average daily net assets of
the Aggressive Growth Portfolio.

Dean Investment Associates, a Division of C.H. Dean and Associates, Inc.
("Dean") is sub-adviser to the Tactical Asset Allocation Portfolio of the Fund.
Dean is wholly-owned by C.H. Dean and Associates, Inc. WRL Management and Dean
will divide equally monthly compensation at the current annual rate of 0.80% of
the aggregate average daily net assets of the Tactical Asset Allocation
Portfolio. Dean's compensation will be reduced by 50% of the amount paid by WRL
Management on behalf of the Tactical Asset Allocation Portfolio pursuant to any
expense limitation or other reimbursement.

J.P. Morgan Investment Management Inc. ("J.P. Morgan" is sub-adviser to the
Money Market Portfolio of the Fund. J.P. Morgan is a wholly-owned subsidiary of
J.P. Morgan & Co. Incorporated. WRL Management will receive monthly compensation
at the current annual rate of 0.40% of the aggregate average daily net assets of
the Money Market Portfolio. From this amount, as compensation for its services,
J.P. Morgan will receive 0.15% of the average daily net assets of the Money
Market Portfolio.

C.A.S.E. Management, Inc. ("C.A.S.E.") is sub-adviser to the C.A.S.E. Growth
Portfolio of the Fund. C.A.S.E. is a wholly-owned subsidiary of C.A.S.E. Inc.
C.A.S.E. Inc. is indirectly controlled by William Edward Lange, president and
chief executive officer of C.A.S.E. WRL Management and C.A.S.E. will divide
equally monthly compensation at the current annual rate of 0.80% of the
aggregate average daily net assets of the C.A.S.E. Growth Portfolio.

NWQ Investment Management Company, Inc. ("NWQ Investment") is sub-adviser to
the Value Equity Portfolio of the Fund. NWQ Investment was founded in 1982 and
is a wholly-owned subsidiary of United Asset Management Corporation. WRL
Management and NWQ Investment will divide equally monthly compensation at the
current annual rate of 0.80% of the aggregate average daily net assets of the
Value Equity Portfolio. NWQ Investment's compensation will be reduced by 50% of
the amount paid by AUSA Life on behalf of the Value Equity Portfolio pursuant to
any expense limitation or other reimbursement.

Scottish Equitable Investment Management Limited ("Scottish Equitable") is a
co-sub-adviser to the International Equity Portfolio. Scottish Equitable is a
wholly-owned subsidiary of Scottish Equitable plc, successor to Scottish
Equitable Life Assurance Society, which was founded in Edinburgh in 1831.
Scottish Equitable is also an indirect wholly-owned subsidiary of AEGON nv. WRL
Management receives monthly compensation at the annual rate of 1.00% of the
aggregate average daily net assets of the International Equity Portfolio. From
this amount, Scottish Equitable receives 0.50% of average daily net assets of
the Portfolio managed by Scottish Equitable.

GE Investment Management Incorporated ("GEIM") also is a co-sub-adviser to
the International Equity Portfolio and is sub-adviser to the U.S. Equity
Portfolio. GEIM is a wholly-owned subsidiary of General Electric Company ("GE").
GEIM's principal officers and directors serve in similar capacities with respect
to General Electric Investment Corporation ("GEIC," and, together with GEIM and
their predecessors, collectively referred to as "GE Investments"), which like
GEIM is a wholly-owned subsidiary of GE. WRL Management receives monthly
compensation at the annual rate of 1.00% of the aggregate average daily net
assets of the International Equity Portfolio. From this amount, GEIM, receives
0.50% of average daily net assets of the Portfolio managed by GEIM.

With respect to the U.S. Equity Portfolio, WRL Management and GEIM will
divide equally monthly compensation at the current annual rate of 0.80% of the
aggregate average daily net assets of the U.S. Equity Portfolio.

EQSF Advisers, Inc. ("EQSF") is sub-adviser to the Third Avenue Value
Portfolio. EQSF is a New York corporation organized in 1988 and is controlled by
Martin J. Whitman. WRL Management and EQSF will divide equally monthly
compensation at the current annual rate of 0.80% of the aggregate average daily
net assets of the Third Avenue Value Portfolio. EQSF's compensation will be
reduced by 50% of the amount paid by WRL Management on behalf of

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the Third Avenue Value Portfolio pursuant to any expense limitation or other
reimbursement.

In addition to the Series Account, shares of the Fund are also sold to the
WRL Series Life Account and WRL Series Annuity Account, separate accounts
established by Western Reserve for its variable life insurance policies and
variable annuity contracts, the PFL Endeavor Variable Annuity Account, PFL
Endeavor Platinum Variable Annuity Account, and PFL Variable Annuity Account A,
separate accounts of PFL Life Insurance Company, and the AUSA Endeavor Variable
Annuity Account, a separate account of AUSA Life Insurance Company, Inc., all
affiliates of AUSA Life. Shares of the Fund may in the future be sold to other
separate accounts, including separate accounts established for variable life
insurance policies or variable annuity contracts issued by AUSA Life or its
affiliates. It is conceivable that, in the future, it may become disadvantageous
for variable life insurance separate accounts and variable annuity separate
accounts to invest in the Fund simultaneously. Although neither AUSA Life nor
the Fund currently foresees any such disadvantages, either to variable life
insurance policyowners or to variable annuity contract owners, the Fund's Board
of Directors intends to monitor events in order to identify any material
conflicts between the interests of such variable life insurance policyowners and
variable annuity contract owners and to determine what action, if any, it should
take. Such action could include the sale of Fund shares by one or more of the
separate accounts, which could have adverse consequences. Material conflicts
could result from, for example, (1) changes in state insurance laws, (2) changes
in Federal income tax laws, or (3) differences in voting instructions between
those given by variable life insurance policyowners and those given by variable
annuity contract owners. If the Board of Directors were to conclude that
separate funds should be established for variable life and variable annuity
separate accounts, AUSA Life will bear the attendant expenses, but variable life
insurance policyowners and variable annuity contract owners would no longer have
the economies of scale resulting from a larger combined fund.

ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS

AUSA Life reserves the right to transfer assets of the Series Account to
another separate account which AUSA Life determines to be associated with the
class of contracts to which the Policy belongs. AUSA Life also reserves the
right, subject to compliance with applicable law, to make additions to,
deletions from, or substitutions for the investments that are held by any
Sub-Account or that any Sub-Account may purchase. Any such addition, deletion or
substitution by AUSA Life of shares of another Portfolio of the Fund or of
another open-end, registered investment company, will only be taken if the
shares of a Portfolio are no longer available for investment, or if in AUSA
Life's judgment further investment in any Portfolio should become inappropriate
in view of the purposes of the Series Account. AUSA Life will not add, delete or
substitute any shares attributable to a Policyowner's interest in a Sub-Account
of the Series Account without notice to and prior approval of the Commission, to
the extent required by the 1940 Act or other applicable law. Nothing contained
herein shall prevent the Series Account from purchasing other securities for
other Portfolios or classes of policies, or from permitting a conversion between
Portfolios or classes of policies on the basis of requests made by Policyowners.

AUSA Life also reserves the right to establish additional Sub-Accounts of
the Series Account, each of which would invest in a new Portfolio of the Fund,
or in shares of another investment company, with a specified investment
objective. New Sub-Accounts may be established when, in the sole discretion of
AUSA Life, marketing, tax or investment conditions warrant, and any new
Sub-Accounts will be made available to existing Policyowners on a basis to be
determined by AUSA Life. AUSA Life may also eliminate one or more Sub-Accounts
if, in its sole discretion, marketing, tax, or investment conditions warrant.

In the event of any such substitution or change, AUSA Life may by
appropriate endorsement make such changes in this and other policies as may be
necessary or appropriate to reflect such substitution or change. If deemed by
AUSA Life to be in the best interests of persons having voting rights under the
Policies, and when permitted by law, the Series Account may be (1) operated as a
management company under the 1940 Act, (2) deregistered under the 1940 Act in
the event such registration is no longer required, (3) managed under the
direction of a committee, or (4) combined with one or more other separate
accounts, or sub-accounts.

PAYMENT AND ALLOCATION OF PREMIUMS

ISSUANCE OF A POLICY

Individuals wishing to purchase a Policy must send a completed application
to AUSA Life, P.O. Box 9054, Clearwater, Florida 33758-9054. Under AUSA Life's
current rules, the minimum Specified Amount of a Policy is generally $100,000.
Policies will generally be issued only to Joint Insureds ages 1 to 85 who supply
satisfactory evidence of insurability sufficient to AUSA Life.

The younger Joint Insured must be no older than age 80. Further, the sum of
the ages of the Joint Insureds cannot exceed the total of 160 years (see Policy
Lapse and Reinstatement - Lapse, p. 25). AUSA Life may, however, at its sole
discretion, issue a Policy with a younger Joint Insured above the age of 80.
Acceptance is subject to AUSA Life's underwriting rules and Western Reserve
reserves the right to reject an application for any reason permitted by law.

PREMIUMS

Subject to certain limitations, a Policyowner has flexibility in determining
the frequency and amount of premiums.

PREMIUM FLEXIBILITY. Unlike conventional insurance policies, this Policy
frees the Policyowner from the requirement that premiums be paid in accordance
with a rigid and inflexible premium schedule. AUSA Life may require the
Policyowner to pay an Initial Premium at least equal to a

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minimum monthly guarantee premium set forth in the Policy before issuing the
Policy. (See Charges and Deductions - Premium Expense Charge, p. 26.)
Thereafter, subject to the minimum and maximum premium limitations described
below, a Policyowner may make unscheduled premium payments at any time in any
amount.

PLANNED PERIODIC PREMIUMS. Each Policyowner will determine a Planned
Periodic Premium schedule that provides for the payment of a level premium at a
fixed interval over a specified period of time. The Policyowner is not required
to pay premiums in accordance with this schedule. Furthermore, the Policyowner
has considerable flexibility to alter the amount, frequency, and the time period
over which Planned Periodic Premiums are paid.

The payment of a Planned Periodic Premium will not guarantee that the Policy
remains In Force. Instead, the duration of the Policy depends upon the Policy's
Net Surrender Value. Thus, even if Planned Periodic Premiums are paid by the
Policyowner, the Policy will nonetheless lapse any time Net Surrender Value is
insufficient to pay certain monthly charges, and a grace period expires without
a sufficient payment. However, until the No Lapse Date as provided in the
Policy, the Policy will remain In Force and no grace period will begin provided
there has been no addition of any riders and the total of the premiums received
(minus any withdrawals and any outstanding loans) is equal to or exceeds the
minimum monthly guarantee premium set forth in the Policy times the number of
months since the Policy Date, including the current month. (See Policy Lapse and
Reinstatement - Lapse, p. 25.)

PREMIUM LIMITATIONS. In no event may the total of all premiums paid, both
scheduled and unscheduled, exceed the current maximum premium limitations which
qualify the Policy as life insurance according to Federal tax laws. If at any
time a premium is paid which would result in total premiums exceeding the
current maximum premium limitation, AUSA Life will only accept that portion of
the premium which will make total premiums equal the maximum. Any part of the
premium in excess of that amount will be returned and no further premiums will
be accepted until allowed by the current maximum premium limitations set forth
in the Policy. Every premium payment, whether scheduled or unscheduled, must be
at least the minimum payment amount required. Under AUSA Life's current rules,
the minimum payment amount is $100. Premium payments less than this minimum
amount may be returned to the Policyowner.

PAYMENT OF PREMIUMS. Payments made by the Policyowner will be treated as a
premium payment unless clearly marked as loan repayments. Certain charges will
be deducted from each premium payment. (See Charges and Deductions - Premium
Expense Charge, p. 26.)

As an accommodation to Policyowners, AUSA Life will accept transmittal of
Initial and subsequent Premiums of at least $1,000 by wire transfer. For an
Initial Premium, the wire transfer must be accompanied by a simultaneous
telephone facsimile transmission ("FAX") of a completed application. An Initial
Premium of $2,000 or more accepted via wire transfer with FAX will be allocated
in accordance with current procedures explained in the next section entitled
"Allocation of Premiums and Cash Value - Allocations of Net Premiums," below. An
Initial Premium made by wire transfer not accompanied by a simultaneous FAX, or
accompanied by a FAX of an incomplete application, will be retained for a period
up to five business days while AUSA Life attempts to obtain the FAX or complete
the essential information required to establish the Policy and allocate the
Initial Premium at the unit value next determined after receipt of the FAX or
information necessary to complete the application. If AUSA Life cannot obtain
the FAX or essential information within five business days, AUSA Life will
return the Initial Premium to the applicant, unless the applicant consents to
allow AUSA Life to retain the Initial Premium until the required FAX or
essential information is received.

In the event the application with original signature is received and the
allocation instructions in that application, for any reason, are inconsistent
with those previously designated on the FAX, the Initial Premium will be
reallocated on the first Valuation Date on or following the Record Date in
accordance with the allocation instructions in the application with original
signature.

Policyowners wishing to make payments via bank wire should instruct their
banks to wire Federal Funds as follows:

Barnett Bank of Pinellas County
ABA #
For credit to: AUSA Life
Account #: 1263627596
Policyowner's Name:
Policy Number:
Attention: General Accounting
Fax Number: (813) 588-1620

ALLOCATION OF PREMIUMS AND CASH VALUE

NET PREMIUMS. The Net Premium equals the premium paid less the premium
expense charges. (See Charges and Deductions - Premium Expense Charge, p. 26.)
When an Initial Premium accompanies the application, monthly deductions from the
Cash Value of the Policy commence on the Policy Date.

ALLOCATION OF NET PREMIUMS. In the application for a Policy, the Policyowner
will allocate Net Premiums to one or more of the Sub-Accounts of the Series
Account, to the Fixed Account, or to a combination of both. Notwithstanding the
allocation in the application, the Initial Premium, less charges, will first be
allocated, on the first Valuation Date on or following the Policy Date, to the
Sub-Account of the Series Account that invests exclusively in shares of the
Money Market Portfolio, and will be reallocated in accordance with the
Policyowner's directions in the application on the first Valuation Date on or
following the Record Date. The Record Date of the Policy will be the date on
which the

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Policy is recorded on AUSA Life's books as an In Force Policy. (See Payment and
Allocation of Premiums beginning on p. 21, and Policy Benefits - When
Conditional Life Insurance Coverage Begins p. 17.)

Net Premiums paid after the Record Date will be allocated in accordance with
the Policyowner's instructions in the application. AUSA Life does not currently
require that allocation of Net Premiums to an Account meet a minimum percentage.
AUSA Life does reserve the right to limit allocation of Net Premiums to any
Account to no less than 10% of each Net Premium payment. No fractional
percentages are permitted. The allocation of future Net Premiums may be changed
without charge at any time by providing AUSA Life with written notification from
the Policyowner, or by telephone by calling AUSA Life's toll-free number,
1-800-322-7160. AUSA Life will employ the same procedures to confirm that such
telephone instructions are genuine as it employs regarding transfers among
Sub-Accounts and the Fixed Account by telephone. Upon instructions from the
Policyowner, the registered representative/agent of record may also change the
allocation of future Net Premiums. AUSA Life reserves the right to limit the
number of changes of the allocation of Net Premiums to one per year. Investment
returns from the amounts allocated to Sub-Accounts of the Series Account will
vary with the investment experience of these Sub-Accounts and the Policyowner
bears the entire investment risk.

TRANSFERS. Cash Value may be transferred among the Sub-Accounts of the
Series Account or from the Sub-Accounts to the Fixed Account. Transfers may also
be made from the Fixed Account to the Sub-Accounts, subject to certain
restrictions. (See The Fixed Account - Allocations, Transfers and Withdrawals,
p. 34.) The amount of Cash Value available for transfer from any Sub-Account, or
the Fixed Account, is determined at the end of the Valuation Period during which
the transfer request is received at AUSA Life's Administrative Office. The net
asset value for each share of the corresponding Portfolio of any Sub-Account is
determined, once daily, as of the close of the regular business session of the
New York Stock Exchange ("Exchange") (usually 4:00 p.m. Eastern time), which
coincides with the end of each Valuation Period. (See Policy Benefits - Cash
Value - Valuation Date and Valuation Period, p. 18.) Therefore, any transfer
request received after the close of the regular business session of the
Exchange, on any day the Exchange is open, will be processed on the next day the
Exchange is open for business, utilizing the net asset value for each share of
the applicable Portfolio determined as of the close of the regular business
session of the Exchange. Cash Value available for transfer from the Fixed
Account will be determined in the same manner.

Policyowners may make transfer requests in writing, or by telephone. Written
requests must be in a form acceptable to AUSA Life. The registered
representative/agent of record for the Policy may, upon instruction from the
Policyowner for each transfer, make telephone transfers upon request without the
necessity for the Policyowner to have previously authorized telephone transfers
in writing. If, for any reason, a Policyowner does not want the ability to make
transfers by telephone, the Policyowner should provide written notice to AUSA
Life at its Administrative Office. All telephone transfers should be made by
calling AUSA Life at the toll-free number: 1-800-322-7160. AUSA Life will not be
liable for complying with telephone instructions it reasonably believes to be
authentic, nor for any loss, damage, cost or expense in acting on such telephone
instructions, and Policyowners will bear the risk of any such loss. AUSA Life
will employ reasonable procedures to confirm that telephone instructions are
genuine. If AUSA Life does not employ such procedures, it may be liable for
losses due to unauthorized or fraudulent instructions. Such procedures may
include, among others, requiring forms of personal identification prior to
acting upon such telephone instructions, providing written confirmation of such
transactions to Policyowners and/or tape recording of telephone transfer request
instructions received from Policyowners. AUSA Life may, at any time, revoke or
modify the transfer privilege. Under AUSA Life's current procedures, it will
effect transfers and determine all values in connection with transfers at the
end of the Valuation Period during which the transfer request is received at
AUSA Life's Administrative Office.

Twelve Cash Value transfers are permitted without charge during any one
Policy year. AUSA Life will impose a charge of $10 for each subsequent transfer.
The transfer charge will not be increased. (See Optional Cash Value Charges -
Cash Value Transfers, p. 28.) All transfers made in any one day will be
considered a single transfer and any transfer charges will be deducted in an
equal amount from each Sub-Account from which a transfer was made. Transfers
resulting from policy loans, the exercise of conversion rights, and the
reallocation of Cash Value immediately after the Record Date, will not be
treated as a transfer for the purpose of this charge. No transfer charge will
apply to transfers from the Fixed Account to a Sub-Account or to the exercise of
the conversion rights. (See Policy Rights - Conversion Rights, p. 31.)

AUSA Life or an affiliate may provide administrative or other support
services to independent third parties authorized by Policyowners to conduct
transfers on a Policyowner's behalf, or who provide recommendations as to how
Sub-Account values should be allocated. This includes, but is not limited to,
transferring Sub-Account values among Sub-Accounts in accordance with various
investment allocation strategies such third party may employ. Such independent
third parties may or may not be appointed AUSA Life agents for the sale of
Policies. However, AUSA LIFE DOES NOT ENGAGE ANY THIRD PARTIES TO OFFER
INVESTMENT ALLOCATION SERVICES OF ANY TYPE, SO THAT PERSONS OR FIRMS OFFERING
SUCH SERVICES DO SO INDEPENDENT FROM ANY AGENCY RELATIONSHIP THEY MAY HAVE WITH
AUSA LIFE FOR THE SALE OF POLICIES. AUSA LIFE THEREFORE TAKES NO RESPONSIBILITY
FOR THE INVESTMENT ALLOCATIONS AND TRANSFERS TRANSACTED ON A

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<PAGE>

POLICYOWNER'S BEHALF BY SUCH THIRD PARTIES OR ANY INVESTMENT ALLOCATION
RECOMMENDATIONS MADE BY SUCH PARTIES. AUSA Life does not currently charge a
Policyowner any additional fees for providing these support services.

DOLLAR COST AVERAGING

The Policyowner may direct AUSA Life to automatically transfer specified
amounts from the Money Market Sub-Account, the Bond Sub-Account, the Fixed
Account or any combination of these Accounts on a monthly basis to a Sub-
Account. This service is intended to allow the Owner to utilize "Dollar Cost
Averaging," a long-term investment strategy which provides for regular, level
investments over time. AUSA Life makes no guarantees that Dollar Cost Averaging
will result in a profit or protect against loss. To qualify for Dollar Cost
Averaging a minimum of $10,000 must be in each Account from which transfers will
be made and at least $1,000, in the aggregate, must be transferred each month,
unless AUSA Life consents to a smaller amount.

To further qualify for Dollar Cost Averaging from the Fixed Account, no more
than one-tenth (1/10) of the amount in the Fixed Account at the commencement of
Dollar Cost Averaging can be transferred each month. Other types of transfers
from the Fixed Account may also be subject to certain other restrictions. (See
The Fixed Account -- Allocations, Transfers and Withdrawals on p. 34.)

A written election of this service, on a form provided by AUSA Life, must be
completed by the Policyowner in order to begin transfers. The first transfer
will occur during the month which follows receipt of the form, providing the
form is received by the 25th day of the month. Once elected, transfers from the
Money Market or Bond Sub-Accounts or the Fixed Account will be processed monthly
until the entire value of each Account from which transfers are made is
completely depleted or the Policyowner instructs AUSA Life in writing to cancel
the monthly transfers. For example, if $15,000 was allocated to the Money Market
Sub-Account and $10,000 was allocated to the Bond Sub-Account and transfers of
$500 are made each month from each of these Sub-Accounts to the Growth
Sub-Account, transfers of $500 per month would continue to be made from the
Money Market Sub-Account even though transfers from the Bond Sub-Account had
ceased as a result of depletion of value.

There is no charge for Dollar Cost Averaging. However, each transfer which
occurs under the Dollar Cost Averaging service will be counted towards the
twelve free transfers allowed during each Policy year. (See Allocation of
Premiums and Cash Value - Transfers on p. 23.) AUSA Life may discontinue,
modify, or suspend Dollar Cost Averaging at any time, following prior written
notice to Policyowners. Dollar Cost Averaging is not available if the Owner has
elected the Asset Rebalancing Program, or has elected an asset allocation
service provided by a third party.

ASSET REBALANCING PROGRAM

AUSA Life will offer a program under which the Policyowner may authorize
AUSA Life to transfer automatically Cash Value periodically to maintain a
particular percentage allocation among the Sub-Accounts. The Cash Value
allocated to each Sub-Account will grow or decline in value at different rates.
The Asset Rebalancing Program automatically reallocates the Cash Value in the
Sub-Accounts at the end of each period to match the Contract's currently
effective Net Premium allocation schedule. The Asset Rebalancing Program is
intended to transfer Cash Value from those Sub-Accounts that have increased in
value to those Sub-Accounts that have declined in value. Over time, this method
of investing may help an Owner buy low and sell high. This investment method
does not guarantee gains, nor does it assure that any Sub-Account will not have
losses.

To qualify for Asset Rebalancing, a minimum Cash Value of $10,000 for an
existing Policy, or a minimum Initial Premium of $10,000 for a new Policy, is
required. To participate in the Asset Rebalancing Program, a properly completed
Asset Rebalancing Request Form must be received by AUSA Life at its
Administrative Office. An Asset Rebalancing Form is available upon request.

Owners may elect rebalancing to occur on each quarterly, semi-annual or
annual anniversary of the Policy Date. Following receipt of the Asset
Rebalancing Request Form, AUSA Life will effect the initial rebalancing of Cash
Value on the next such anniversary, in accordance with the Policy's current Net
Premium allocation schedule. The amounts transferred will be credited at the
unit value next determined on the dates the transfers are made. If a day on
which rebalancing would ordinarily occur falls on a day on which the New York
Stock Exchange is closed, rebalancing will occur on the next day the New York
Stock Exchange is open. The Asset Rebalancing Program is available only before
the Maturity Date, and is not available if the Policyowner has elected Dollar
Cost Averaging, or has elected an asset allocation service provided by a third
party. There is no charge for the Asset Rebalancing Program. However, each
reallocation which occurs under the Asset Rebalancing Program will be counted
towards the twelve free transfers allowed during each Policy year. (See
Allocation of Premiums and Cash Value - Transfers on p. 23.)

The Policyowner may terminate participation at any time in the Asset
Rebalancing Program by oral or written request to AUSA Life. Participation in
the Asset Rebalancing Program will terminate automatically if any transfer is
made to, or from, any Sub-Account, other than on account of a scheduled
rebalancing. If the Policyowner wishes to resume the Asset Rebalancing Program
after it has been canceled, a new Asset Rebalancing Request Form must be
completed and sent to AUSA Life. The Policyowner may start and stop
participation in the Asset Rebalancing Program at any time; however, AUSA Life
reserves the right to restrict entry into the Asset Rebalancing Program to once
per Policy year. Cash Value

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<PAGE>

allocated to the Fixed Account may not be included in the Asset Rebalancing
Program.

AUSA Life may discontinue, modify, or suspend, the Asset Rebalancing Program
at any time following prior written notice to Policyowners.

POLICY LAPSE AND REINSTATEMENT

LAPSE. Unlike conventional life insurance policies, the failure to make a
Planned Periodic Premium payment will not itself cause the Policy to lapse.
Conversely, paying all Planned Periodic Premium payments will not necessarily
guarantee that the Policy will not lapse. For instance, if the conditions
explained below are not met, the Policy may lapse prior to the No Lapse Date.
Lapse will only occur where Net Surrender Value is insufficient on any Monthly
Anniversary to cover the monthly deductions, and a grace period expires without
a sufficient payment by the Policyowner. If the Net Surrender Value on any
Monthly Anniversary is not sufficient to cover the monthly deductions on such
day, AUSA Life will mail a notice to the last known address of the
Policyowner(s) and any assignee of record. A grace period of 61 days after the
mailing date of the notice will be allowed for the payment of premiums. The
notice will specify the minimum payment and the final date on which such payment
must be received by AUSA Life to keep the Policy In Force. (See Charges and
Deductions, p. 26.)

However, until the No Lapse Date as provided in the Policy, the Policy will
not lapse and no grace period will begin, provided: (1) no riders have been
added since the Policy Date, and (2) the total of the premiums received (minus
any withdrawals and any outstanding loans) equal or exceed the minimum monthly
guarantee premium shown in the Policy times the number of months since the
Policy Date, including the current month and, (3) the excess indebtedness (total
of all Policy loans less any unearned loan interest on Policy loans) does not
exceed the Cash Value (see Policy Rights - Loan Privileges, p. 29). Should the
Policyowner(s) request the addition of any rider after the Policy Date but prior
to the No Lapse Date, the Policyowner(s) will be notified as to the effect on
grace period processing prior to the date the rider is effective.

Essentially, the Policy will not lapse during the period from the Policy
Date until the No Lapse Date (the "No Lapse Period"), as long as the conditions
in (1), (2) and (3) immediately above have been met, and even though Net
Surrender Value at any point during the No Lapse Period is insufficient to cover
a monthly deduction and the grace period has expired without a payment
sufficient to cover the monthly deduction. Such a Lapse could happen if the
investment experience has been sufficiently unfavorable to have resulted in a
decrease in the Net Surrender Value, or the Net Surrender Value has decreased
because not enough premiums have been paid to offset the monthly charges.

When the conditions in (1), (2) and (3) above have not been met, or they
have been met, but the Policy is beyond the No Lapse Date, and Net Surrender
Value is insufficient to cover the monthly deduction, AUSA Life will notify the
Policyowner and any assignee of record of the minimum payment needed to keep the
Policy In Force. The Policyowner will then have a grace period of 61 days,
measured from the date notice is mailed to the Policyowner, for AUSA Life to
receive sufficient payments. If AUSA Life does not receive a sufficient payment
within the grace period, Lapse of the Policy will result. If a sufficient
payment is received during the grace period, any resulting Net Premium will be
allocated among the Accounts, and any monthly deductions due will be charged to
such Accounts, in accordance with the Policyowner's then current instructions.
(See Allocation of Premiums and Cash Value - Allocation of Net Premiums, p. 22,
and Charges and Deductions - Cash Value Charges, p. 27.) If the Surviving
Insured dies during the grace period, the death benefit proceeds will equal the
amount of the death benefit proceeds immediately prior to the commencement of
the grace period, reduced by any due and unpaid charges.

The duration of the period of time between the Policy Date and the No Lapse
Date is selected by the Policyowner at time of application for the Policy, and
may be either, (1) the later of attained target premium age 65 or five Policy
years, or (2) the later of attained target premium age 75 or five Policy years.
The amount of the minimum monthly guarantee premium will vary according to
whether (1) or (2) is chosen. Neither (1) nor (2) may exceed target premium age
85. The target premium age equals the average of the ages of the Joint Insureds
at time of Policy issue, rounded down to the closer age, not to exceed the
younger Joint Insured's age, plus ten years. For example, if the ages of the
Joint Insureds at time of Policy issue are 46 and 48, the target premium age is
47. If the ages at time of Policy issue are 45 and 48, the target premium age is
46. If the ages at time of Policy issue are 50 and 80, the target premium age is
60. The target premium attained age equals the target premium age plus the
number of completed Policy years.

REINSTATEMENT. A lapsed Policy may be reinstated any time within five years
after the date of lapse and before the Maturity Date by submitting the following
items to Western Reserve:

1. A written application for reinstatement from the Policyowner;

2. Evidence of insurability from each Joint Insured satisfactory to AUSA
Life; and

3. A premium that, after the deduction of premium expense charges, is large
enough to cover:

(a) one monthly deduction at the time of termination;

(b) the next two monthly deductions which will become due after the time
of reinstatement; and

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<PAGE>

AUSA Life reserves the right to decline a reinstatement request. Any
indebtedness on the date of Lapse will not be reinstated. The Cash Value of the
Loan Reserve on the date of reinstatement will be zero. The amount of Net
Surrender Value on the date of reinstatement will be equal to the Net Premiums
paid at reinstatement, less the amounts paid in accordance with (a) and (c)
above.

Upon approval of the application for reinstatement, the effective date of
reinstatement will be the first Monthly Anniversary on or next following the
date AUSA Life approves the application for reinstatement.

CHARGES AND DEDUCTIONS

Charges will be deducted in connection with the Policy to compensate AUSA
Life for: (1) providing the insurance benefits set forth in the Policy and any
optional insurance benefits added by rider; (2) administering the Policy; (3)
assuming certain risks in connection with the Policy; and (4) incurring expenses
in distributing the Policy. The nature and amount of these charges are described
more fully below.

PREMIUM EXPENSE CHARGE

Prior to allocation of Net Premiums among the Accounts, premiums paid
through the end of the tenth Policy year will be reduced by a Premium Expense
Charge equal to 6.00% of premiums to compensate AUSA Life for distribution
expenses and premium taxes incurred in connection with the Policy. After the
tenth Policy year, the Premium Expense Charge reduces to 2.5%.

CONTINGENT SURRENDER CHARGES

If the Policy is totally surrendered (or the Net Surrender Value is applied
under a settlement option) prior to the end of the fifteenth (15th) Policy year,
a surrender charge for the initial Specified Amount will be deducted from the
Policy's Cash Value. The surrender charge consists of the sum of:

(a) an administrative component (DEFERRED ISSUE CHARGE), and

(b) a sales component (DEFERRED SALES CHARGE).

The sum of (a) and (b) are multiplied by (c), the applicable SURRENDER
CHARGE PERCENTAGE.

(a) DEFERRED ISSUE CHARGE. The deferred issue charge is a level charge of
$5.00 per thousand of initial Specified Amount. This charge is to assist
AUSA Life in recovering the underwriting, processing and start-up
expenses incurred in connection with the Policy and the Series Account.
These expenses include the cost of processing applications, conducting
medical examinations, determining insurability and the Joint Insured's
rate class, and establishing Policy records.

(b) DEFERRED SALES CHARGE. The deferred sales charge is (1) 26.5% of the sum
of all premiums paid up to the Guideline Premium shown in the Policy
and, (2) for the sum of all premiums paid in excess of the first
Guideline Premium ("excess premium charge"), a percentage which varies
by the Issue Age of the younger Joint Insured as follows:

Excess Premium Issue Age Range
Charge (Younger Joint Insured)
- ---------------- ------------------------
2.6% 20-55
2.2% 56-63
1.9% 64-68
1.5% 69-73
1.0% 74-76
0.5% 77-80

The deferred sales charge is designed to assist AUSA Life in recovering
distribution expenses incurred in connection with the Policy, including agent
sales commissions, the cost of printing prospectuses and sales literature, and
any advertising costs. The proceeds of the charge may not be sufficient to cover
these expenses. To the extent they are not, AUSA Life will cover the shortfall
from its General Account assets, which may include profits from the mortality
and expense risk charge under the Policy.

(c) SURRENDER CHARGE PERCENTAGE. As stated above, the percentage is applied
to the sum of the deferred issue charge and deferred sales charge due upon any
surrender of a Policy during the first fifteen Policy years. In Policy years
1-10 this percentage is 100% for Joint Insureds when the age of the younger of
the Joint Insureds is between Ages 0-74, and then declines at the rate of 20%
per year until reaching zero at the end of the fifteenth (15th) Policy year as
shown below. For Joint Insureds when the age of the younger of the Joint
Insureds is between Issue Ages 75-80, this percentage is 100% until the end of
the sixth (6th) Policy year, and declines to 0% at the end of the fifteenth
(15th) Policy year. Therefore, application of the percentage to the deferred
issue charge and deferred sales charge in the event of any surrender during the
eleventh through fifteenth Policy year will result in reduced surrender charges.
If a surrender occurs after the fifteenth (15th) Policy year, there are no
deferred issue or deferred sales charges due. See Example (2) on p. 27.

SURRENDER CHARGE PERCENTAGES

Younger Age
------------------
Less 75 or
End of Policy Year* Than 75 Above
- ------------------- ------- ------
At Issue 100% 100%
1-6 100% 100%
7 100% 97%
8 100% 88%
9 100% 80%
10 100% 73%
11 80% 66%
12 60% 60%
13 40% 40%
14 20% 20%
15+ 0% 0%

* THE CHARGE ON ANY DATE OTHER THAN AN ANNIVERSARY WILL BE INTERPOLATED BETWEEN
THE TWO END OF YEAR CHARGES.

(d) EXAMPLE (1) Assume a male non-tobacco user age 35 and a female
non-tobacco user age 35 purchase a Policy

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<PAGE>

for $100,000 of Specified Amount, paying the Guideline Premium of $806.11, and
an additional premium amount of $193.89 in excess of the Guideline Premium, for
a total premium of $1,000 per year for four years ($4,000 total for four years),
and then surrenders the Policy. The surrender charge would be calculated as
follows:

(a) DEFERRED ISSUE CHARGE - [100 x $5.00]
($5.00/$1,000 of Initial Specified Amount) = $ 500.00

(b) DEFERRED SALES CHARGE:
(1) 26.5% of Guideline
Premium paid
[26.5% x $806.11], and = $ 213.62

(2) 2.6% of premiums paid in excess
of Guideline Premium
[2.6% x ((4 x 1,000) - $806.11)] = $ 83.04

(c) APPLICABLE SURRENDER CHARGE = 100%
[(a)$500.00 + (b)($213.62 + $83.04)]
x 100%
SURRENDER CHARGE = 796.66 x 100% = $ 796.66
========

EXAMPLE (2) - Assume the same facts as in Example (1), EXCEPT the Owner
surrenders the Policy on the 14th Policy Anniversary:

(a) DEFERRED ISSUE CHARGE - [100 x $5.00] = $ 500.00
(b) DEFERRED SALES CHARGE:
(1) [26.5% x $806.11], and = $ 213.62
(2) [2.6% x ( (14 x 1,000) - $806.11)] = $ 343.04
(c) APPLICABLE SURRENDER CHARGE = 20%
[(a)$500.00 + (b)($213.62 + $343.04)]
x 20%
SURRENDER CHARGE = $1,056.66 x 20% = $ 211.33
========

If the Owner waits until the 15th Policy Anniversary or after, there will be
no surrender charge.

CASH VALUE CHARGES

Charges will be deducted monthly from the Cash Value of each Policy
("monthly deduction") to compensate AUSA Life for certain administrative costs,
the cost of insurance, the monthly death benefit guarantee charge, and optional
benefits added by rider. The monthly deduction will be deducted on each Monthly
Anniversary, and will be allocated among the Accounts on the same basis as Net
Premiums are allocated. If the value of any Account is insufficient to pay its
part of the monthly deduction, the monthly deduction will be taken on a pro rata
basis from all Accounts. Because portions of the monthly deduction, such as the
cost of insurance, can vary from month-to-month, the monthly deduction itself
will vary in amount from month-to-month.

COST OF INSURANCE. AUSA Life will determine the monthly cost of insurance
charge by multiplying the applicable cost of insurance rates by the net amount
at risk for each Policy Month. The net amount at risk for a Policy Month is (a)
the death benefit at the beginning of the Policy Month divided by 1.0032737
(which reduces the net amount at risk, solely for purposes of computing the cost
of insurance, by taking into account assumed monthly earnings at an annual rate
of 4%), less (b) the Cash Value at the beginning of the Policy Month.

Cost of insurance rates will be based on the sex, Attained Age and rate
class of the Joint Insureds, and the length of time a Policy has been In Force.
The actual monthly cost of insurance rates will be based on AUSA Life's
expectations as to future experience. They will not, however, be greater than
the guaranteed cost of insurance rates set forth in the Policy. These guaranteed
rates are based on the 1980 Commissioners Standard Ordinary ("1980 C.S.O."), age
nearest birthday, Mortality Tables and the sex, Attained Age and rate class of
each Joint Insured. The rate class of each Joint Insured is either Select
(non-tobacco user), or Standard (tobacco user) or a class which reflects some
substandard classification. There is no rate discount for a preferred class. For
standard rate classes, I.E., either tobacco user or non-tobacco user classes not
rated, these rates will not exceed rates contained in the 1980 C.S.O. Tables.
AUSA Life also may guarantee that actual cost of insurance rates will not be
changed for a specified period of time (E.G., one year). Any change in the cost
of insurance rates will apply to all Joint Insureds of the same age, sex, and
rate class whose Policies have been In Force for the same length of time.

The Policies offered by this Prospectus are based on mortality tables that
distinguish between men and women. As a result, the Policy pays different
benefits to Joint Insureds who are either both men or women of the same age.

The rate class of each Joint Insured will affect the cost of insurance rate.
For this Policy, AUSA Life currently places Joint Insureds into the following
three nonsub-standard rate classes: combination of two non-tobacco users,
combination of two tobacco users and the combination of a tobacco user and a
non-tobacco user; as well as various other sub-standard rate classes involving a
higher mortality risk. In an otherwise identical Policy, the cost of insurance
rate is generally higher for tobacco use than for non-tobacco use.

AUSA Life may also issue certain Policies on a "simplified" or expedited
basis to certain categories of individuals (for example, Policies issued at a
predetermined Specified Amount or underwritten on a group basis). Policies
issued on this basis will have guaranteed cost of insurance rates no higher than
the guaranteed rates for Select or Standard categories (as appropriate);
however, due to the special underwriting criteria established for these issues,
actual rates may be higher or lower than the current cost of insurance rates
charged under otherwise identical Policies that are underwritten using standard
underwriting criteria.

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<PAGE>

MONTHLY DEATH BENEFIT GUARANTEE CHARGE. AUSA Life will deduct a monthly
death benefit guarantee charge from each Policy to compensate AUSA Life for the
risk of guaranteeing the death benefit for the period chosen by the Owner on the
application provided a minimum level of premiums are received. The amount of
this charge is set forth on the Policy Schedule Page and will be $0.04 per
$1,000 of initial Specified Amount for all classes of Policies. This charge will
only be levied during the period between the Policy Date and the No Lapse Date.
(See Policy Lapse and Reinstatement - Lapse, p. 25.)

MONTHLY POLICY CHARGE. AUSA Life has primary responsibility for the
administration of the Policy and the Series Account. Annual administrative
expenses include recordkeeping, processing death benefit claims, Policy changes,
reporting and overhead costs. As reimbursement for administrative expenses
related to the maintenance of each Policy and the Series Account, AUSA Life
assesses a monthly administration charge from each Policy. This charge is
currently $5.00 per Policy Month. AUSA Life reserves the right to increase this
charge, but it is guaranteed not to exceed $10.00 per Policy Month. AUSA Life
reserves the right to waive the Monthly Policy Charge on additional policies
issued to existing Policyowners at the time the second policy is issued.

OPTIONAL CASH VALUE CHARGES

The following optional Cash Value charges will be deducted from the Policy
as the result of changes or elections made to the Policy and initiated by the
Policyowner.

OPTIONAL INSURANCE BENEFITS. The monthly deduction will include charges for
any optional insurance benefits added to the Policy by rider.

CASH VALUE TRANSFERS. After twelve (12) free transfers per year, AUSA Life
will impose and deduct from each amount transferred a transfer charge of $10 to
compensate AUSA Life for the costs in effectuating the transfer. The transfer
charge will not be increased in the future.

CASH WITHDRAWALS. A processing fee equal to the lesser of $25 or 2% of the
amount withdrawn will be deducted from amounts withdrawn from the Policy and the
balance will then be paid to the Policyowner. This fee will not be increased.

CHARGES AGAINST THE SERIES ACCOUNT

Certain expenses will be deducted as a percentage of the value of the net
assets of the Series Account to compensate AUSA Life for certain risks assumed
in connection with the Policy.

MORTALITY AND EXPENSE RISK CHARGE. AUSA Life will deduct a daily charge from
the Series Account at an annual rate of 0.90% of the average daily net assets of
the Series Account. Under AUSA Life's current procedures, these amounts are paid
to the General Account monthly.

The mortality risk assumed by AUSA Life is that the Surviving Insured may
live for a shorter time than projected. The expense risk assumed is that
expenses incurred in issuing and administering the Policies will exceed the
limits on administrative charges set in the Policies. AUSA Life also assumes
risks with respect to other contingencies including the incidence of Policy
loans, which may cause AUSA Life to incur greater costs than anticipated when
designing the Policies.

TAXES. Currently no charge is made to the Series Account for Federal income
taxes that may be attributable to the Series Account. AUSA Life may, however,
make such a charge in the future. Charges for other taxes, if any, attributable
to the Series Account may also be made. (See Federal Tax Matters, p. 35.)

EXPENSES OF THE FUND

Because the Series Account purchases shares of the Portfolios of the Fund,
the net assets of the Series Account will reflect the investment management fee
and other expenses incurred by the Fund. (See p. 6 for a table of the Fund
Annual Expenses and pp. 19-21 for a discussion of the investment management fees
of each Portfolio.)

Effective January 1, 1997, the Fund adopted a Plan of Distribution pursuant
to Rule 12b-1 under the 1940 Act ("Distribution Plan") and pursuant to the Plan,
entered into a Distribution Agreement with ISI, principal underwriter for the
Fund.

Under the Distribution Plan, the Fund, on behalf of the Portfolios, is
authorized to pay to various service providers, as direct payment for expenses
incurred in connection with the distribution of a Portfolio's shares, amounts
equal to actual expenses associated with distributing a Portfolio's shares, up
to a maximum rate of 0.15% (fifteen one-hundredths of one percent) on an
annualized basis of the average daily net assets. This fee is measured and
accrued daily and paid monthly. ISI has determined that it will not seek payment
by the Fund of distribution expenses with respect to any Portfolio during the
fiscal year ending December 31, 1998. Prior to ISI's seeking reimbursement,
Policyowners will be notified in advance.

GROUP OR SPONSORED POLICIES

A different form of the Policy may be purchased under group or sponsored
arrangements ("Group/Sponsored Policies"). Under Group/Sponsored Policies, a
trustee, employer or similar entity purchases individual policies covering a
group of individuals on a group basis. Examples of such arrangements are
employer-sponsored benefit plans which are qualified under Section 401 of the
Internal Revenue Code and deferred compensation plans. A "sponsored arrangement"
includes a program under which an employer permits group solicitation of its
employees or an association permits group solicitation of its members for the
purchase of Policies on an individual basis.

For Group/Sponsored Policies the premium expense charges, contingent
surrender charges, minimum premium

28
<PAGE>

and minimum Specified Amount described in "Charges and Deductions" and "Payment
and Allocation of Premiums", respectively, may be reduced. AUSA Life will issue
Group/ Sponsored Policies in accordance with its rules in effect as of the date
an application for a Policy is approved. To qualify for Group/Sponsored
Policies, a group or sponsored arrangement must satisfy certain criteria as to,
for example, size and number of years in existence. Generally, the sales
contacts and effort, administrative costs and mortality cost for Group/
Sponsored Policies take into account such factors as the size of the group or
sponsored arrangement, its stability as indicated by its term of existence, the
purposes for which Group/ Sponsored Policies are purchased and certain
characteristics of its members. The Group/Sponsored Policy's amount of reduction
and the criteria for qualification will reflect the reduced sales effort
resulting from sales to qualifying groups and sponsored arrangements.
Group/Sponsored Policies may not be available in certain states.

AUSA Life may modify from time to time on a uniform basis the criteria for
qualification for Group/Sponsored Policies. In no event, however, will group or
sponsored arrangements established for the sole purpose of purchasing Group/
Sponsored Policies, or which have been in existence for less than six months,
qualify for such Policies. Group/Sponsored Policies will not be unfairly
discriminatory against any person, including the affected Policyowners and all
other Policyowners of other forms of Policies funded by the Series Account.

In 1983 the United States Supreme Court held that certain insurance
policies, the benefits under which vary based on sex, may not be used to fund
certain employer-sponsored benefit plans and fringe benefit programs. AUSA Life
recommends that any employer proposing to offer the Group/ Sponsored Policies to
employees under a group or sponsored arrangement consult his or her attorney
before doing so. (See Federal Tax Matters - Employment-Related Benefit Plans, p.
38.)

ASSOCIATE POLICIES

Certain employees, field associates, directors and their relatives may
purchase a different form of the Policy ("Associate Policy") under which AUSA
Life, in addition to waiving or reducing the premium expense charges, contingent
surrender charges, minimum premium and minimum Specified Amount, may waive or
reduce the Monthly Policy Charge and the Surrender Charge. The Associate Policy
is available to (a) current and retired directors, officers, full-time employees
and agents of AUSA Life and its affiliates; (b) current and retired directors,
officers, full-time employees and registered representatives of ISI and any
broker-dealer which has a sales agreement with ISI; (c) any Trust, pension,
profit-sharing or other employee benefit plan of any of the foregoing persons or
entities; (d) current and retired directors, officers and full-time employees of
WRL Series Fund, Inc. and the IDEX Series Fund, and any investment adviser or
investment sub-adviser thereto; and (e) any member of a family of any of the
foregoing (e.g., spouse, child, sibling, parent-in-law). AUSA Life reserves the
right to modify or terminate this arrangement at any time. The Associate Policy
may not be available in certain states.

POLICY RIGHTS

LOAN PRIVILEGES

POLICY LOAN. After the first Policy year and so long as the Policy remains
In Force, the Policyowner may borrow money from AUSA Life using the Policy as
the only security for the loan. AUSA Life reserves the right to permit a Policy
loan prior to the first Policy Anniversary for Policies issued pursuant to a
transfer of cash values from another life insurance policy under Section 1035(a)
of the Internal Revenue Code of 1986, as amended. The maximum amount that may be
borrowed is 90% of the Cash Value, less any surrender charge and any already
outstanding Policy loan. AUSA Life reserves the right to limit the amount of any
Policy loan to no less than $500. Outstanding loans have priority over the
claims of any assignee or other person. The loan may be repaid totally or in
part before the Maturity Date of the Policy and while the Policy is In Force. A
loan which is taken from, or secured by, a Policy may have Federal income tax
consequences. (See Federal Tax Matters, p. 35.)

An amount equal to the loan plus interest in advance until the next Policy
Anniversary will be withdrawn from the Account or Accounts specified and
transferred to the Loan Reserve until the loan is repaid. The Loan Reserve is a
portion of the Fixed Account used as Collateral for a Policy loan. The
Sub-Accounts of the Series Account may be specified. If no Account is specified,
the loan amount will be withdrawn from each Account in the same manner as the
current allocation instructions.

The amount of the loan will normally be paid within seven days after receipt
of a proper request in a manner permitted by AUSA Life. Postponement of loans
may take place under certain conditions. (See General Provisions - Postponement
of Payments, p. 32.) Under AUSA Life's current procedures, at each Anniversary,
AUSA Life will compare the amount of the outstanding loan (including loan
interest in advance until the next Policy Anniversary, if not paid) to the
amount in the Loan Reserve (including interest credited to the Loan Reserve
during the previous Policy year). AUSA Life will also make this comparison any
time the Policyowner repays all or part of the loan or makes a request to borrow
an additional amount. At each such time, if the amount of the outstanding loan
exceeds the amount in the Loan Reserve, AUSA Life will withdraw the difference
from the Accounts and transfer it to the Loan Reserve in the same manner as when
a loan is made. If the amount in the Loan Reserve exceeds the amount of the
outstanding loan, AUSA Life will withdraw the difference from the Loan Reserve
and transfer it to the Accounts in accordance with the Policyowner's current
allocation instructions. AUSA Life reserves the right to require the transfer of
such amounts to the Fixed Account, if such loans were originally transferred
from the Fixed

29
<PAGE>

Account. (See The Fixed Account, p. 34.) No charge will be imposed for these
transfers.

INTEREST RATE CHARGED. The interest rate charged on Policy loans will be at
the rate of 5.66% payable annually in advance. If unpaid when due, interest will
be added to the amount of the loan and will become part of the loan and bear
interest at the same rate. Interest paid on a Policy loan is generally not tax
deductible.

LOAN RESERVE INTEREST RATE CREDITED. The amount transferred to the Loan
Reserve will accrue interest at a minimum effective annual rate not less than
4%. AUSA Life may credit a higher rate, but is not obligated to do so.
Currently, AUSA Life is crediting an effective annual interest rate of 4.75% on
all amounts borrowed during the first ten Policy years. On amounts borrowed,
after the tenth Policy year, that are part of the Cash Value in excess of the
cost basis (premiums less withdrawals) of the Policy the interest rate credited
is currently equal to the interest rate being charged on the total loan while
the remaining portion, if any, of the loan is credited the current rate of
4.75%.

EFFECT OF POLICY LOANS. A Policy loan affects the Policy because the death
benefit and Net Surrender Value under the Policy are reduced by the amount of
the loan. Repayment of the loan causes the death benefit and Net Surrender Value
to increase by the amount of the repayment.

As long as a loan is outstanding, an amount equal to the loan plus interest
in advance until the next Policy Anniversary is held in the Loan Reserve. This
amount will not be affected by the Series Account's investment performance.
Amounts transferred from the Series Account to the Loan Reserve will affect the
Series Account value because such amounts will be credited with an interest rate
declared by AUSA Life rather than a rate of return reflecting the investment
performance of the Series Account. (See The Fixed Account - Minimum Guaranteed
and Current Interest Rates, p. 34.)

There are risks involved in taking a Policy loan, a few of which include the
potential for a Policy to lapse if projected earnings, taking into account
outstanding loans, are not achieved, as well as adverse tax consequences which
occur if a Policy lapses with loans outstanding. (See Federal Tax Matters - Tax
Treatment of Policy Benefits, p. 36.)

INDEBTEDNESS. Indebtedness equals the total of all Policy loans less any
unearned loan interest on the loans. If indebtedness exceeds the Cash Value less
the then applicable surrender charge, AUSA Life will notify the Policyowner and
any assignee of record. If a sufficient payment equal to excess indebtedness is
not received by AUSA Life within 61 days from the date notice is sent, the
Policy will lapse and terminate without value. The Policy, however, may later be
reinstated. (See Policy Lapse and Reinstatement, p. 25.)

REPAYMENT OF INDEBTEDNESS. Indebtedness may be repaid any time before the
Maturity Date of the Policy and while the Policy is In Force. Payments made by
the Policyowner while there is indebtedness will be treated as premium payments
unless the Policyowner indicates that the payment should be treated as a loan
repayment. (See Policy Rights - Benefits at Maturity, p. 31.) If not repaid,
AUSA Life may deduct indebtedness from any amount payable under the Policy. As
indebtedness is repaid, the Policy's value in the Loan Reserve securing the
indebtedness repaid will be transferred from the Loan Reserve to the Accounts in
the same manner as Net Premiums are allocated. However, AUSA Life reserves the
right to require the transfer to the Fixed Account. AUSA Life will allocate the
repayment of indebtedness at the end of the Valuation Period during which the
repayment is received.

SURRENDER PRIVILEGES

At any time before the earlier of the death of the Surviving Insured or the
Maturity Date, the Policyowner may totally surrender the Policy by sending a
written request to AUSA Life. The amount available for surrender is the Net
Surrender Value at the end of the Valuation Period during which the surrender
request is received at AUSA Life's Administrative Office. The Net Surrender
Value is equal to the Cash Value as of the date of surrender, less any surrender
charge, and less any outstanding Policy loan, plus any unearned loan interest. A
Surrender Charge may apply. (See Charges and Deductions - Contingent Surrender
Charges, p. 26.) Surrenders from the Series Account will generally be paid
within seven days of receipt of the written request. Postponement of payments
may, however, occur in certain circumstances. (See General Provisions -
Postponement of Payments, p. 32.) Additional restrictions may be applied to
surrenders from the Fixed Account. (See The Fixed Account - Allocations,
Transfers and Withdrawals, p. 34.) For the protection of Policyowners, all
requests for cash withdrawals or total surrenders of more than $100,000, or
where the withdrawal or surrender proceeds are to be sent to an address other
than the address of record will require a signature guarantee. All required
guarantees of signatures must be made by a national or state bank, a member firm
of a national stock exchange or any other institution which is an eligible
guarantor institution as defined by rules and regulations of the Commission. If
the Policyowner is a corporation, partnership, trust or fiduciary, evidence of
the authority of the person seeking redemption is required before the request
for withdrawal is accepted, including withdrawals under $100,000. For additional
information, Policyowners may call AUSA Life at 1-800-322-7160. A cash
withdrawal or total surrender may have Federal income tax consequences. (See
Federal Tax Matters, p. 35.)

TOTAL SURRENDERS. When the Policy is being totally surrendered, the Policy
itself must be returned to AUSA Life along with the request. A Policyowner may
elect to have the amount paid in a lump sum or under a settlement option. (See
Payment of Policy Benefits - Settlement Options, p. 32.)

CASH WITHDRAWALS. Cash withdrawals are available after the first Policy
year. Cash withdrawals are allowed only once each Policy year. For a cash
withdrawal, the amount available may be limited to no less than $500 and to no
more

30
<PAGE>

than 10% of the Net Surrender Value. The amount paid plus a processing fee equal
to the lesser of $25 or 2% of the amount withdrawn will be deducted from the
Policy's Cash Value at the end of the Valuation Period during which the request
is received. The amount will be deducted from the Accounts in the same manner as
the current allocation instructions unless the Policyowner directs otherwise.

Cash withdrawals will affect both the Policy's Cash Value and the death
benefit payable under the Policy. The Policy's Cash Value will be reduced by the
amount of the cash withdrawal. Moreover, the death benefit proceeds payable
under a Policy will generally be reduced by at least the amount of the cash
withdrawal.

In addition, when death benefit Option A is in effect, the Specified Amount
will be reduced by the cash withdrawal. No cash withdrawal will be permitted
which would result in a Specified Amount lower than the minimum Specified Amount
set forth in the Policy or would deny the Policy status as life insurance under
the Internal Revenue Code and applicable regulations. (See Cash Value Charges -
Cost of Insurance, p. 27; Death Benefit - Insurance Protection, p. 16; and
Federal Tax Matters - Tax Treatment of Policy Benefits, p. 36.)

EXAMINATION OF POLICY PRIVILEGE ("FREE-LOOK")

The Policyowner may cancel the Policy within 10 days after the Policyowner
receives it, or 10 days after AUSA Life mails or delivers a written notice of
withdrawal right to the Policyowner or within 45 days after signing the
application, whichever is latest. The Policyowner should mail or deliver the
Policy to either AUSA Life or the agent who sold it. If the Policy is cancelled
in a timely fashion, a refund will be made to the Policyowner. The refund will
equal the sum of: (i) the difference between the premiums paid and the amounts
allocated to any Accounts under the Policy; (ii) the total amount of monthly
deductions made and any other charges imposed on amounts allocated to the
Accounts; and (iii) the value of amounts allocated to the Accounts on the date
AUSA Life or its agent receives the returned Policy.

CONVERSION RIGHTS

At any time upon written request within 24 months of the Policy Date, the
Policyowner may elect to transfer all Sub-Account values to the Fixed Account.
No transfer charge will be assessed.

POLICY SPLIT OPTION

Subject to AUSA Life's evidence of insurability requirements, the
Policyowner may request to split the Policy, not including any riders, and
purchase two permanent individual Fixed Account life insurance policies offered
at the time of the request; one on the life of each Joint Insured. The Owner may
request this Split Option by notifying AUSA Life at its Administrative Office in
writing within 90 days following either:

1. The later of the enactment or the effective date of a change in the Federal
estate tax laws that would reduce or eliminate the unlimited marital
deduction; or

2. The date of entry of a final decree of divorce with respect to the Joint
Insureds; or

3. Written confirmation of a dissolution of a business partnership of which the
partners are the Joint Insureds.

The conditions listed above do not apply to Policies issued in the state of
Pennsylvania.

If more than one person owns this Policy, each Owner must agree to the
split. The initial specified amount for each new policy cannot be greater than
50% of the Policy's Specified Amount, not including the face amount of any
riders. The new policies will be subject to AUSA Life's minimum and maximum
specified amounts and issue ages for the plan of insurance selected. If one of
the Joint Insureds is older that the new policy's maximum issue age at the time
the Policy Split Option is requested, AUSA Life's approval must be obtained to
exercise the Policy Split Option.

Cash Value and indebtedness under the Policy will be allocated equally to
each of the new policies. If one Joint Insured does not meet AUSA Life's
insurability requirements, AUSA Life will pay the Policyowner one half of the
Policy's Net Surrender Value and issue only the policy covering that Joint
Insured who meets AUSA Life's insurability requirements; or the Policyowner may
elect to keep the Policy In Force on both Joint Insureds and no new policies
will be issued.

The premiums for the new policies will be based on each Joint Insured's
Attained Age and premium rate class as determined by current evidence of
insurability. Premiums will be payable as of the policy dates for each new
policy. The policy date for each new policy will be the Monthiversary following
notification to AUSA Life to execute the Policy Split Option. The owner and
beneficiary for the new policies will be those named in this Policy, unless
otherwise specified. Any applicable surrender charge will be deducted from the
Policy's Cash Value prior to allocation of the Cash Value to the new policies.
Premium expense charges, if any, under the new policies will not be deducted
from the Cash Value allocated to the new policies. Any new premium paid to the
new policies will be subject to the normal charges, if any, of the new policies
at the time the premium is paid.

BENEFITS AT MATURITY

If either Joint Insured is living and the Policy is In Force, AUSA Life will
pay the Net Surrender Value of the Policy on the Maturity Date. (See Cash Value
- - Net Surrender Value, p. 17.) The Policy will mature on the Anniversary nearest
the younger Joint Insured's 100th birthday, if either Joint Insured is living
and the Policy is In Force. AUSA Life is willing to extend the Maturity Date
provided the Policy is still In Force on the Maturity Date and there are no
unfavorable tax consequences. A tax advisor should be consulted about the tax
consequences associated with any Maturity Date extension. Extension of the
Maturity Date will be made upon mutual agreement between AUSA Life and the
Policyowner provided the Policyowner submits a written request to AUSA

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Life between 90 and 180 days prior to the Maturity Date, and provided the Policy
may be extended with no unfavorable tax consequences to the Policyowner.

PAYMENT OF POLICY BENEFITS

Death benefits under the Policy will ordinarily be paid within seven days
after AUSA Life receives due proof of death of the Surviving Insured, and AUSA
Life receives proof that both Joint Insureds died while the Policy was In Force,
and verifies the validity of the claim. Other benefits will ordinarily be paid
within seven days of receipt of proper written request (including an election as
to tax withholding). Payments may be postponed in certain circumstances. (See
General Provisions - Postponement of Payments, below and The Fixed Account -
Allocations, Transfers and Withdrawals, p. 34.) The Policyowner may decide the
form in which the benefits will be paid. During the lifetime of either Joint
Insured, the Policyowner may arrange for the death benefits to be paid in a lump
sum or under one or more of the settlement options described below. These
choices are also available if the Policy is surrendered or matures. If no
election is made, AUSA Life will pay the benefits in a lump sum.

When death benefits are payable in a lump sum, the Beneficiary may select
one or more of the settlement options. If death benefits become payable under a
settlement option and the Beneficiary has the right to withdraw the entire
amount, the Beneficiary may name and change contingent Beneficiaries.

SETTLEMENT OPTIONS. Policyowners and Beneficiaries, subject to a prior
election of the Policyowner, may elect to have benefits paid in a lump sum or in
accordance with a variety of settlement options offered under the Policy. Once a
settlement option is in effect, there will no longer be value in the Series
Account or the Fixed Account. AUSA Life may make other settlement options
available on the Fixed Account in the future. The effective date of a settlement
provision will be either the date of surrender or the date of death of the
Surviving Insured. For additional information concerning these options, see the
Policy itself.

OPTION A - PAYMENTS FOR A FIXED PERIOD. The proceeds plus interest will be
paid in equal monthly installments for the period chosen until paid in full. The
period chosen may not exceed 20 years.

OPTION B - LIFE INCOME. The proceeds will be paid in equal installments for
the guaranteed payment period elected and continue for the life of the person on
whose life the option is based. Such installments will be payable: (a) during
the lifetime of the payee or (b) during a fixed period certain and for the
remaining lifetime of the payee or (c) until the sum of installments paid equals
the proceeds applied and for the remaining life of the payee. Guaranteed payment
periods may be elected for 10 years, or the period in which the total payments
will equal the amount retained.

OPTION C - JOINT AND SURVIVOR LIFE INCOME. The proceeds will be paid during
the joint lifetime of two persons and continue upon the death of the first payee
for the remaining lifetime of the survivor.

GENERAL PROVISIONS

POSTPONEMENT OF PAYMENTS

GENERAL. Payment of any amount from the Series Account upon complete
surrender, cash withdrawal, Policy loan, or benefits payable at death or
maturity may be postponed whenever: (i) the New York Stock Exchange is closed
other than customary weekend and holiday closing, or trading on the New York
Stock Exchange is restricted as determined by the Commission; (ii) the
Commission by order permits postponement for the protection of Policyowners; or
(iii) an emergency exists, as determined by the Commission, as a result of which
disposal of securities is not reasonably practicable or it is not reasonably
practicable to determine the value of the Series Account's net assets. Transfers
may also be postponed under these circumstances. For restrictions applicable to
payments from the Fixed Account, see The Fixed Account - Allocations, Transfers
and Withdrawals, p. 34.

PAYMENT BY CHECK. Payments under the Policy of any amounts derived from
premiums paid by check or bank draft may be delayed until such time as the check
or bank draft has cleared the Policyowner's bank.

THE CONTRACT

The Policy and attached copy of the application and any supplemental
applications are the entire contract. Only statements in the application and any
supplemental applications can be used to void the Policy or defend a claim. The
statements are considered representations and not warranties. No Policy
provision can be waived or changed except by endorsement. Only the President or
Secretary of AUSA Life can agree to change or waive any provisions of the
Policy.

SUICIDE

If either Joint Insured, while sane or insane, commits suicide within two
years from the Policy Date or two years from the effective date of any
reinstatement of a Policy, the Policy will terminate, and AUSA Life's total
liability, including all riders attached to the Policy, will be limited to the
total premiums paid within such two year period, less any loan and any prior
withdrawals during such period. In that event, such proceeds will be payable to
the Policyowner, if surviving, otherwise to the Policyowner's estate. No other
death benefit will be payable.

INCONTESTABILITY

AUSA Life cannot contest the Policy as to the initial Specified Amount after
it has been In Force while both Joint Insureds are still alive, for two years
from the Policy Date. At the end of the second Policy year, AUSA Life will send
the Policyowner a notice requesting to know whether either Joint Insured has
died. Failure to notify AUSA Life that a Joint Insured has died will not avoid a
contest, if AUSA Life has a basis to contest, even if the Policy is still In
Force. If a lapsed

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Policy is reinstated, a new two year contestability period (apart from any
remaining contestability period) will apply from the date of the application for
reinstatement and will apply only to statements made in the application for
reinstatement.

CHANGE OF OWNER OR BENEFICIARY

The Beneficiary, as named in the Policy application or subsequently changed,
will receive the Policy benefits at the Surviving Insured's death. If the named
Beneficiary dies before the Surviving Insured, the contingent Beneficiary, if
named, becomes the Beneficiary. If no Beneficiary survives the Surviving
Insured, the benefits payable at the Surviving Insured's death will be paid to
the Policyowner or the Policyowner's estate. As long as the Policy is In Force,
the Policyowner or Beneficiary may be changed by written request from the
Policyowner in a form acceptable to AUSA Life. The Policy need not be returned
unless requested by AUSA Life. The change will take effect as of the date the
request is signed, regardless of whether either or both Joint Insureds are
living when the request is received by AUSA Life. AUSA Life will not, however,
be liable for any payment made or action taken before receipt of the request.

ASSIGNMENT

The Policy may be assigned by the Policyowner. AUSA Life will not be bound
by the assignment until a written copy has been received at its Office and will
not be liable with respect to any payment made prior to receipt. AUSA Life
assumes no responsibility for determining whether an assignment is valid or the
extent of the assignee's interest.

MISSTATEMENT OF AGE OR SEX

If the age or sex of either Joint Insured has been misstated, the death
benefit will be adjusted based on what the cost of insurance charge for the most
recent monthly deduction would have purchased based on the correct age and sex.

REPORTS AND RECORDS

AUSA Life will maintain all records relating to the Series Account and the
Fixed Account. AUSA Life will mail to each Policyowner, at the last known
address of record, reports required by applicable laws and or regulations.

AUSA Life will send Policyowners written confirmation within seven days of
the following transactions: unplanned and certain planned premium payments, Cash
Value transfers, change in death benefit option or Specified Amount, total
surrender or cash withdrawals, and Policy loans or repayments. AUSA Life will
also send each Policyowner an annual statement at the end of the Policy year
showing for the year, among other things, the month and amount of each: premium
payment made, monthly deduction, transfer, cash withdrawal and Policy loan or
repayment. The annual statement will also show Policy year-end Net Surrender
Value, death benefit and Policy loan value, as well as other Policy activity
during the year.

OPTIONAL INSURANCE BENEFITS

Subject to certain requirements, one or more of the following optional
insurance benefits may be added to a Policy by rider. The cost of any optional
insurance benefits, including any applicable charge to provide a death benefit
guarantee, if any, for the optional insurance benefit until the No Lapse Date,
will be deducted as part of the monthly deduction. (See Charges and Deductions -
Optional Cash Value Charges, p. 28.)

JOINT INSURED TERM RIDER: Provides the payment of the face amount of the
rider to the Beneficiary for the rider upon receipt of due proof that both Joint
Insureds died while the rider was In Force. The cost of insurance rates for this
rider increase each year. This rider terminates at the younger Joint Insured's
age 95.

INDIVIDUAL INSURED RIDER: Provides additional life insurance on the life of
either Joint Insured, and for the payment of the face amount of the rider to the
Beneficiary for the rider upon receipt by AUSA Life of written notice that the
Insured's death occurred while the rider was In Force. On any Monthiversary
while the rider is In Force, the Policyowner may exchange the rider without
evidence of insurability for a new policy on the Insured's life. Such new policy
will be issued upon written request subject to the following: (a) the rider has
not reached the Anniversary nearest the Insured's 70th birthday; (b) the new
policy is on any permanent plan of insurance then offered by AUSA Life; (c) the
amount of insurance upon conversion will equal the face amount then In Force
under the rider; and (d) the payment of the premium based on the Insured's rate
class under the rider. This rider terminates at the Insured's age 95.

WEALTH PROTECTOR RIDER: Provides the payment of the face amount of the rider
to the Beneficiary for the rider upon receipt of due proof that both Joint
Insureds died while the rider was In Force. The rider has no conversion or
exchange privilege. The rider terminates at the earlier of (a) the date the
Policy terminates, (b) the fourth Anniversary of the Policy, or (c) the
Monthiversary on which the rider is terminated by written notice from the
Policyowner to AUSA Life. The cost of insurance rates for this rider do not
increase while the rider is In Force.

THE FIXED ACCOUNT

A Policyowner may allocate Net Premiums and transfer Cash Value to the Fixed
Account, which is part of AUSA Life's General Account. Because of exemptive and
exclusionary provisions, interests in the Fixed Account have not been registered
under the Securities Act of 1933, and neither the Fixed Account nor the General
Account has been registered as an investment company under the 1940 Act.
Accordingly, neither the Fixed Account, the General Account nor any interests
therein are generally subject to the provisions of these acts and AUSA Life has
been advised that the staff of the Commission has not reviewed the disclosures
in this Prospectus relating to the Fixed Account. Disclosures regarding the

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Fixed Account may, however, be subject to certain generally applicable
provisions of the Federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.

The portion of the Cash Value allocated to the Fixed Account (the "Fixed
Account Value") will be credited with rates of interest, as described below.
Because the Fixed Account Value becomes part of AUSA Life's General Account,
AUSA Life assumes the risk of investment gain or loss on this amount. All assets
in the General Account are subject to AUSA Life's general liabilities from
business operations.

FIXED ACCOUNT VALUE

At the end of any Valuation Period, the Fixed Account Value is equal to:

1. The sum of all Net Premium payments allocated to the Fixed Account; plus
2. Any amounts transferred from a Sub-Account to the Fixed Account; plus
3. Total interest credited to the Fixed Account; minus
4. Any amounts charged to pay for monthly deductions as they are due; minus
5. Any cash withdrawals or surrenders from the Fixed Account; minus
6. Any amounts transferred to a Sub-Account from the Fixed Account.

MINIMUM GUARANTEED AND CURRENT INTEREST RATES

The Fixed Account Value, including the Loan Reserve, is guaranteed to
accumulate at a minimum effective annual interest rate of 4%. AUSA Life
presently credits the Fixed Account Value with current rates in excess of the
minimum guarantee but it is not obligated to do so. AUSA Life has no specific
formula for determining current interest rates. Some of the factors that AUSA
Life may consider, in its sole discretion, in determining whether to credit
interest in excess of the 4% guaranteed rate are: general economic trends, rates
of return currently available and anticipated on the company's investments,
regulatory and tax requirements, and competitive factors. The Fixed Account
Value will not share in the investment performance of the company's general
account or any portion thereof. Because AUSA Life, at its sole discretion,
anticipates changing the current interest rate from time to time, different
allocations to and from the Fixed Account Value will be credited different
current interest rates.

AUSA Life further guarantees that when a higher current interest rate is
declared on an allocation to the Fixed Account, that interest rate will be
guaranteed on such allocation for at least a one year period (the "Guarantee
Period"), unless the Cash Value associated with an allocation has been
transferred to the Loan Reserve. AUSA Life reserves the right to apply a
different current interest rate to that part of the Cash Value equal to the Loan
Reserve. At the end of the Guarantee Period, AUSA Life reserves the right to
declare a new current interest rate on such allocation and accrued interest
thereon (which may be a different current interest rate than the current
interest rate on new allocations to the Fixed Account on that date). The rate
declared on such allocation and accrued interest thereon at the end of each
Guarantee Period will be guaranteed again for another Guarantee Period. At the
end of any Guarantee Period, any interest credited on the Policy's Cash Value in
the Fixed Account in excess of the minimum guaranteed rate of 4% per year will
be determined in the sole discretion of AUSA Life. The Policyowner assumes the
risk that interest credited may not exceed the guaranteed minimum rate.

Allocations from the Fixed Account Value to provide: a) cash withdrawal
amounts, b) transfers to the Series Account, or c) monthly deduction charges are
currently, for the purpose of crediting interest, accounted for on a last in,
first out ("LIFO") method.

AUSA Life reserves the right to change the method of crediting interest from
time to time, provided that such changes will not have the effect of reducing
the guaranteed rate of interest below 4% per annum or shorten the Guarantee
Period to less than one year.

ALLOCATIONS, TRANSFERS AND WITHDRAWALS

Net Premium payments and transfers to the Fixed Account will be allocated to
the Fixed Account on the first Valuation Date on or following the date AUSA Life
receives the payment or transfer request at its Office, except that any
allocation of Net Premium received prior to the Policy Date will take place on
the Policy Date (or the Record Date, if later).

For transfers from the Fixed Account to a Sub-Account, AUSA Life reserves
the right to require that transfer requests be in writing and received at AUSA
Life's Office within 30 days of a Policy Anniversary. Under the Policy, the
maximum amount that may be transferred is limited to the greater of (a) 25% of
the amount in the Fixed Account, or (b) the amount transferred in the prior
Policy year from the Fixed Account, unless AUSA Life consents otherwise.
Currently, AUSA Life allows 100% of the amount in the Fixed Account to be
transferred within 30 days after each Anniversary. The transfer will take place
on the day AUSA Life receives the request. No transfer charge will apply to
transfers from the Fixed Account to a Sub-Account. Amounts may be withdrawn from
the Fixed Account for Cash Withdrawals and Surrenders only upon written request
of the Policyowner and are subject to any applicable requirement for a signature
guarantee. (See Policy Rights - Surrender Privileges, p. 30.) AUSA Life further
reserves the right to defer payment of transfers, Cash Withdrawals, or
Surrenders from the Fixed Account for up to six months. In addition, Policy
provisions relating to transfers, Cash Withdrawals or Surrenders from the Series
Account will also apply to Fixed Account transactions.

DISTRIBUTION OF THE POLICIES

The Policy will be sold by individuals who, in addition to being licensed as
life insurance agents for AUSA Life, are

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also registered representatives of ISI, an affiliate of AUSA Life and the
principal underwriter of the Policies, or of broker-dealers who have entered
into written sales agreements with the principal underwriter for promotion and
sales of the Policies. ISI is registered with the Commission under the
Securities Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. No amounts have been retained
by ISI for acting as principal underwriter for the Policies. The compensation
payable to registered representatives who are appointed agents of AUSA Life for
sales of the Policies may vary with the Sales Agreement, but it is not expected
to exceed 60% of all premiums paid during the first Policy year, and 3% of all
premium payments in years 2 through 10. An additional sales commission of up to
0.10% (ten one-hundredths of one percent) of the Policy's Cash Value is payable
on the fifth Policy Anniversary, and on each Anniversary thereafter, provided
the Policy's Cash Value at such times, minus any amounts attributable to Policy
loans, is at least $10,000. In addition, certain production, persistency and
managerial bonuses may also be paid.

FEDERAL TAX MATTERS

INTRODUCTION

The ultimate effect of Federal income taxes on the Cash Value of a Policy
and on the economic benefit to the Policyowner or Beneficiary depends on AUSA
Life's tax status and upon the tax status of the individual concerned. The
discussion contained herein is general in nature and is not intended as tax
advice. For complete information on Federal and state tax considerations, a
qualified tax adviser should be consulted. No attempt is made to consider any
applicable state or other tax laws. Because the discussion herein is based upon
AUSA Life's understanding of Federal income tax laws as they are currently
interpreted, AUSA Life cannot guarantee the tax status of any Policy. AUSA Life
makes no representations regarding the likelihood of continuation of the current
Federal income tax laws, Treasury Regulations, or of the current interpretations
by the Internal Revenue Service ("IRS"). AUSA Life reserves the right to make
changes to the Policy in order to assure that it will continue to qualify as
life insurance for tax purposes.

TAX CHARGES

At the present time, AUSA Life makes no charge for any Federal, state or
local taxes (other than premium taxes) that the Company incurs that may be
attributable to such Account or to the Policies. AUSA Life, however, reserves
the right in the future to make a charge for any such tax or other economic
burden resulting from the application of the tax laws that it determines to be
properly attributable to the Series Account or to the Policies.

TAX STATUS OF THE POLICY

In order to qualify as a life insurance contract for Federal tax purposes, a
Policy must meet the definition of a life insurance contract which is set forth
in Section 7702 of the Internal Revenue Code of 1986, as amended (the "Code").
The manner in which Section 7702 should be applied to certain features of the
Policy is not directly addressed by Section 7702. Nevertheless, AUSA Life
believes it is reasonable to conclude that the Policy will meet the Section 7702
definition of a life insurance contract. In the absence of final regulations or
other pertinent interpretations of Section 7702, however, there is necessarily
some uncertainty as to whether a Policy will meet the statutory life insurance
contract definition, particularly if it insures substandard risks. If a Policy
were determined not to be a life insurance contract for purposes of Section
7702, such Policy would not provide most of the tax advantages normally provided
by a life insurance contract.

If it is subsequently determined that a Policy does not satisfy Section
7702, AUSA Life will take whatever steps are appropriate and reasonable to
attempt to cause such a Policy to comply with Section 7702, including possibly
refunding any premiums paid that exceed the limitation allowable under Section
7702 (together with interest or other earnings on any such premiums refunded as
required by law). For these reasons, AUSA Life reserves the right to modify the
Policy as necessary to attempt to qualify it as a life insurance contract under
Section 7702.

Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Series Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for Federal tax purposes. The Series Account, through the
Fund, intends to comply with the diversification requirements prescribed by the
Treasury in Reg. sec. 1.817-5, which affect how the Fund's assets may be
invested. AUSA Life believes that the Fund will be operated in compliance with
the requirements prescribed by the Treasury.

In certain circumstances, owners of variable life insurance policies may be
considered the owners, for Federal income tax purposes, of the assets of the
separate account used to support their policies. In those circumstances, income
and gains from the separate account assets would be includible in the owner's
gross income. The IRS has stated in published rulings that the owner of a
variable life insurance policy will be considered the owner of separate account
assets if the owner 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 investment 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."

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<PAGE>

The ownership rights under the Policy 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 Policyowner has additional flexibility in allocating premium
payments and Policy values. These differences could result in a Policyowner
being treated as the owner of a pro rata portion of the assets of the Series
Account. In addition, AUSA Life 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. AUSA Life therefore reserves the right to modify the Policy
as necessary to attempt to prevent a Policyowner from being considered the owner
of a pro rata share of the asset of the Series Account.

The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.

TAX TREATMENT OF POLICY BENEFITS

1. IN GENERAL. AUSA Life believes that the proceeds and Cash Value increases
of a Policy should be treated in a manner consistent with a fixed-benefit life
insurance policy for Federal income tax purposes. Thus, the death benefit under
the Policy should be excludable from the gross income of the Beneficiary under
Section 101(a)(1) of the Code.

A change in a Policy's Specified Amount, the payment of an unscheduled
premium, the taking of a Policy loan, a cash withdrawal, a total surrender, a
change of insured, a Policy Lapse with an outstanding indebtedness, a change in
death benefit options, the exchange of a Policy, or the assignment of a Policy
may have tax consequences depending upon the circumstances. In addition, Federal
estate and state and local estate, inheritance, and other tax consequences of
ownership or receipt of Policy proceeds depend upon the circumstances of each
Policyowner or Beneficiary. A competent tax adviser should be consulted for
further information.

The Policy may also be used in various arrangements, including nonqualified
deferred compensation or salary continuance plans, split dollar insurance plans,
executive bonus plans, retiree medical benefit plans and others. The tax
consequences of such plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if a Policyowner is
contemplating the use of a Policy in any arrangement the value of which depends
in part on its tax consequences, that Policyowner should be sure to consult a
qualified tax adviser regarding the tax attributes of the particular
arrangement.

Generally, the Policyowner will not be deemed to be in constructive receipt
of the Cash Value, including increments thereof, under the Policy until there is
a distribution. The tax consequences of distributions from, and loans taken
from, or secured by, a Policy depend on whether the Policy is classified as a
"modified endowment contract" under Section 7702A. Section 7702A generally
applies to Policies entered into or materially changed after June 20, 1988.

2. MODIFIED ENDOWMENT CONTRACTS. A Policy may be treated as a modified
endowment contract depending upon the amount of premiums paid in relation to the
death benefit provided under such Policy. The premium limitation rules for
determining whether such a Policy is a modified endowment contract are extremely
complex. In general, however, a Policy will be a modified endowment contract if
the accumulated premiums paid at any time during the first seven Policy years
exceed the sum of the net level premiums which would have been paid on or before
such time if the Policy provided for paid-up future benefits after the payment
of seven level annual premiums. In addition, if a Policy is "materially
changed," it may cause such Policy to be treated as a modified endowment
contract. The material change rules for determining whether a Policy is a
modified endowment contract are also extremely complex. In general, however, the
determination whether a Policy will be a modified endowment contract after a
material change depends upon the relationship of the death benefit at the time
of change to the Cash Value at the time of such change and the additional
premiums paid in the seven Policy years starting with the date on which the
material change occurs.

The manner in which the premium limitation and material change rules should
be applied to certain features of the Policy and its riders is unclear.
Nonetheless, under AUSA Life's current procedures, the Policyowner will be
notified at the time a Policy is issued whether, according to AUSA Life's
calculations, the Policy is or is not classified as a modified endowment
contract based on the premium then received. The Policyowner will also be
notified of the amount of the maximum annual premium which, according to, AUSA
Life's calculations, can be paid without causing a Policy to be classified as a
modified endowment contract.

Due to the Policy's flexibility, classification of a Policy as a modified
endowment contract will depend upon the circumstances of each Policy.
Accordingly, a prospective Policyowner should contact a competent tax adviser
before purchasing a Policy to determine the circumstances under which the Policy
would be a modified endowment contract. In addition, a Policyowner should
contact a competent tax adviser before making any change to, including an
exchange of, a Policy to determine whether such change would cause the Policy
(or the new policy in the case of an exchange) to be treated as a modified
endowment contract.

If a Policy becomes a modified endowment contract, distributions that occur
during the Policy year it becomes a modified endowment contract and any
subsequent Policy year will be taxed as distributions from a modified endowment
contract. In addition, distributions from a Policy within two years before it
becomes a modified endowment contract will be taxed in this manner. This means
that a distribution made from a Policy that is not a modified endowment contract
could later become taxable as a distribution from a modified endowment contract.

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3. DISTRIBUTIONS FROM POLICIES CLASSIFIED AS MODIFIED ENDOWMENT CONTRACTS.
Policies classified as modified endowment contracts are subject to the following
tax rules: First, all pre-death distributions from such a Policy (including
distributions upon surrender, distributions made in anticipation of the Policy
becoming a modified endowment contract, and benefits paid at maturity) are
treated as ordinary income subject to tax up to the amount equal to the excess
(if any) of the Cash Value immediately before the distribution over the
investment in the Policy (described below) at such time. Second, loans taken
from, or secured by, such a Policy are treated as distributions from such a
Policy and taxed accordingly. (Unpaid Policy loan interest will be treated as a
loan for these purposes.) Third, a 10% Federal income tax penalty is imposed on
the portion of any distribution from, or loan taken from, or secured by, such a
Policy that is included in income except where the distribution or loan is made
on or after the Policyowner attains age 59-1/2, is attributable to the
Policyowner's becoming disabled, or is part of a series of substantially equal
periodic payments for the life (or life expectancy) of the Policyowner or the
joint lives (or joint life expectancies) of the Policyowner and the
Policyowner's Beneficiary.

4. DISTRIBUTIONS FROM POLICIES NOT CLASSIFIED AS MODIFIED ENDOWMENT
CONTRACTS. Distributions from a Policy that is not classified as a modified
endowment contract are generally treated as first recovering the investment in
the Policy (described below) and then, only after the return of all such
investment in the Policy, as distributing taxable income. An exception to this
general rule occurs in the case of a cash withdrawal, a decrease in the Policy's
death benefit, or any other change that reduces benefits under the Policy in the
first 15 years after the Policy is issued and results in a cash distribution to
the Policyowner in order for the Policy to continue complying with the Section
7702 definitional limits. In that case, such distribution will be taxed in whole
or in part as ordinary income (to the extent of any gain in the Policy) under
rules prescribed in Section 7702.

Loans from, or secured by, a Policy that is not a modified endowment
contract are generally not treated as distributions. Instead, such loans are
treated as indebtedness of the Policyowner. However, the tax treatment of a loan
from a Policy that is not a modified endowment contract is uncertain to the
extent that the interest rate credited is equal to the interest rate charged on
the amount borrowed. A tax advisor should be consulted.

Finally, distributions (including distributions upon surrender or lapse) or
loans from, or secured by, a Policy that is not a modified endowment contract
are not subject to the 10% Federal income tax penalty.

5. POLICY LOAN INTEREST. Interest paid on a Policy loan generally is not tax
deductible. Therefore, a Policyowner should consult a competent tax advisor
before deducting any Policy loan interest.

6. INVESTMENT IN THE POLICY. Investment in the Policy means (i) the
aggregate amount of any premiums or other consideration paid for a Policy, minus
(ii) the aggregate amount received under the Policy which is excluded from the
gross income of the Policyowner (except that the amount of any loan from, or
secured by, a Policy that is a modified endowment contract, to the extent such
amount is excluded from gross income, will be disregarded), plus (iii) the
amount of any loan from, or secured by, a Policy that is a modified endowment
contract to the extent that such amount is included in the gross income of the
Policyowner.

7. MULTIPLE POLICIES. All modified endowment contracts that are issued by
AUSA Life (or its affiliates) to the same Policyowner during any calendar year
are treated as one modified endowment contract for purposes of determining the
amount includable in gross income under Section 72(e) of the Code.

8. TAX TREATMENT OF POLICY SPLIT. The Policy Split Option permits a Policy
to be split into two other individual life insurance contracts upon the
occurrence of a divorce of the Joint Insureds, certain changes in Federal estate
tax law, or a dissolution of a business partnership of which the partners are
Joint Insureds. (See Policy Rights - Policy Split Option, p. 31.) A policy split
could have adverse tax consequences. For example, it is not clear whether a
policy split will be treated as a nontaxable exchange under Sections 1031
through 1043 of the Code. If a policy split is not treated as a nontaxable
exchange, a split could result in the recognition of taxable income in an amount
up to any gain in the Policy at the time of the split. In addition, it is not
clear whether the individual policies that result from a policy split would in
all circumstances be treated as life insurance contracts for Federal income tax
purposes and, if so treated, whether the individual policies would be classified
as modified endowment contracts. Before a Policyowner exercises rights provided
by the Policy Split Option, it is important that he or she consult with a
competent tax advisor regarding the possible consequences of a policy split.

9. TERMINAL ILLNESS ACCELERATED DEATH BENEFIT RIDER. Pursuant to the
recently enacted Health Insurance Portability and Accountability Act of 1996,
AUSA Life believes that for Federal income tax purposes a Single Sum Benefit
payment made under the Terminal Illness Accelerated Death Benefit Rider should
be fully excludable from the gross income of the beneficiary, as long as the
beneficiary is the Insured under the Policy. However, a Policyowner should
consult a qualified tax advisor about the consequences of adding this Rider to a
Policy or requesting a Single Sum Benefit payment under this Rider.

10. OTHER TAX CONSIDERATIONS. The transfer of the Policy or the definition
of a beneficiary may have Federal, state and/or local transfer and inheritance
tax consequences, including the imposition of gift, estate and
generation-skipping transfer taxes. For example, the transfer of the Policy to,
the designation as beneficiary of, or the payment of

37
<PAGE>

proceeds to, a person who is assigned to a generation which is two or more
generations below the generation assignment of the Policyowner, may have
generation skipping transfer tax considerations under Section 2601 of the Code.

11. BUSINESS-OWNED LIFE INSURANCE. In recent years, Congress has adopted new
rules relating to life insurance owned by businesses. Any business contemplating
the purchase of a new Policy or a change in an existing Policy should consult a
tax advisor.

The individual situation of each Policyowner or beneficiary will determine
the extent, if any, to which Federal, state and local transfer taxes may be
imposed. Consult with your tax adviser for specific information in connection
with these taxes.

POSSIBLE TAX LAW CHANGES

Although the likelihood of legislative changes is uncertain, there is always
the possibility that the tax treatment of the Policy could change by legislation
or otherwise. For instance, the President's 1999 Budget Proposal recommended
legislation that, if enacted, would adversely modify the Federal taxation of
this Policy. It is possible that any legislative change could be retroactive
(that is, effective prior to the date of the change.) A tax advisor should be
consulted with respect to legislative developments and their effect on the
Policy.

EMPLOYMENT-RELATED BENEFIT PLANS

On July 6, 1983, the Supreme Court held in ARIZONA GOVERNING COMMITTEE V.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women on the basis of sex. The Policy described in this
Prospectus contains guaranteed cost of insurance rates and guaranteed purchase
rates for certain payment options that distinguish between men and women.
Accordingly, employers and employee organizations should consider, in
consultation with legal counsel, the impact of NORRIS, and Title VII generally,
on any employment-related insurance or benefit program for which a Policy may be
purchased.

SAFEKEEPING OF THE
SERIES ACCOUNT'S ASSETS

AUSA Life holds the assets of the Series Account. The assets are kept
physically segregated and held separate and apart from the General Account.
AUSA Life maintains records of all purchases and redemptions of Fund shares by
each of the Sub-Accounts. Additional protection for the assets of the Series
Account is provided by a blanket bond issued to AEGON U.S. Holding Corporation
("AEGON U.S.") in the amount of $5 million (subject to a $1 million
deductible), covering all of the employees of AEGON U.S. and its affiliates,
including AUSA Life. A Stockbrokers Blanket Bond, issued to AEGON U.S.A.
Securities, Inc. provides additional fidelity coverage to a limit of $12
million, subject to a $50,000 deductible.

VOTING RIGHTS OF THE SERIES ACCOUNT

To the extent required by law, AUSA Life will vote the Fund shares held
in the Series Account at shareholder meetings of the Fund in accordance with
instructions received from persons having voting interests in the corresponding
Sub-Accounts of the Series Account. Except as required by the 1940 Act, the
Fund does not hold regular or special shareholder meetings. If the 1940 Act or
any regulation thereunder should be amended or if the present interpretation
thereof should change, and as a result AUSA Life determines that it is
permitted to vote the Fund shares in its own right, it may elect to do so.

The number of votes which a Policyowner has the right to instruct will be
calculated separately for each Sub-Account. The number of votes which each
Policyowner has the right to instruct will be determined by dividing a Policy's
Cash Value in that Sub-Account by $100. Fractional shares will be counted. The
number of votes of the Portfolio which the Policyowner has the right to
instruct will be determined as of the date coincident with the date established
by that Portfolio for determining shareholders eligible to vote at the meeting
of the Fund. Voting instructions will be solicited by written communications
prior to such meeting in accordance with procedures established by the Fund.

AUSA Life will vote Fund shares as to which no timely instructions are
received and Fund shares which are not attributable to Policyowners in
proportion to the voting instructions which are received with respect to all
Policies participating in that Portfolio. Voting instructions to abstain on any
item to be voted upon will reduce the votes eligible to be cast by AUSA Life.

Each person having a voting interest in a Sub-Account will receive proxy
materials, reports and other materials relating to the appropriate Portfolio.

DISREGARD OF VOTING INSTRUCTIONS. AUSA Life may, when required by state
insurance regulatory authorities, disregard voting instructions if the
instructions require that the shares be voted so as to cause a change in the
sub-classification or investment objective of the Fund or one or more of its
Portfolios or to approve or disapprove an investment advisory contract for a
Portfolio of the Fund. In addition, AUSA Life itself may disregard voting
instructions in favor of changes initiated by a Policyowner in the investment
policy or the investment adviser of a Portfolio of the Fund if AUSA Life
reasonably disapproves of such changes. A change would be disapproved only if
the proposed change is contrary to state law or prohibited by state regulatory
authorities or AUSA Life determined that the change would have an adverse
effect on its General Account in that the proposed investment policy for a
Portfolio may result in overly speculative or unsound investments. In the event
AUSA Life does disregard voting instructions, a summary of that action and the
reasons for such action will be included in the next annual report to
Policyowners.

38
<PAGE>

STATE REGULATION OF AUSA LIFE

As a life insurance company organized and operated under New York law,
AUSA Life is subject to provisions governing such companies and to regulation
by the New York Superintendant of Insurance.

AUSA Life's books and Accounts are subject to review and examination by
the New York Insurance Department at all times and a full examination of its
operations is conducted by the National Association of Insurance Commissioners
at least once every three years.

REINSURANCE

AUSA Life intends to reinsure a portion of the risks assumed under the
Policies.

EXECUTIVE OFFICERS AND DIRECTORS
OF AUSA LIFE

LARRY G. BROWN, CHAIRMAN OF THE BOARD, Senior Vice President, Group General
Counsel (Asset Accumulation Group) (January 1995 - present), Western Reserve
Life Assurance Co. of Ohio, 201 Highland Avenue, Largo, Florida 33770.
Senior Vice President, General Counsel and Secretary (January, 1989 -
January, 1995), AEGON USA, Inc., 1111 North Charles Street, Baltimore,
Maryland 21201.

WILLIAM BROWN, JR., DIRECTOR, Management Consultant (1992 - present), Brownstone
Management Consultants, Inc., 14 Windward Avenue, White Plains, NY 10605;
Vice President (1987 - 1992), Mututal of New York, Purchase, New York.

WILLIAM L. BUSLER, DIRECTOR, President, Annuity Division (1980 - present), AEGON
USA, Inc., 4333 Edgewood Rd., N.E., Cedar Rapids, Iowa 52499.

JACK R. DYKHOUSE, DIRECTOR, Executive Vice President (April, 1996 - present),
AEGON Insurance Group, Suite 302, Brown Trail, Bedford, TX 76021; Senior
Vice President (1976 - April, 1996), AEGON USA, INC., 9151 Grapevine
Highway, North Richland Hills, TX 76180.

STEVEN E. FRUSHTICK, DIRECTOR, Partner (1961 - present) Wiener, Frushtick &
Straub, 500 Fifth Avenue New York, NY 10110.

VICE ADMIRAL CARL T. HANSON, DIRECTOR, Retired (Ocotber, 1993 - present),
Director (November, 1982 - present), President and Chief Executive Officer
(November, 1982 - October, 1993), National Multiple Sclerosis Society, 900
Birdseye Road, P. O. Box 112 Orient, NY 11957-0112.

B. LARRY JENKINS, DIRECTOR, Chairman and President (September, 1982 - present),
Monumental Life Insurance Company, 2 East Chase Street, Baltimore, Maryland
21202.

VERA F. MIHAIC, DIRECTOR AND VICE PRESIDENT, Vice President and Director (July
1, 1996 - present), AUSA Life Insurance Company, Inc., 666 Fifth Avenue, New
York, NY 10103-0001, Vice President and Director (1987 - June 30, 1996)
International Life Investors Insurance Company, New York, New York.

PETER P. POST, DIRECTOR, Owner and President (December, 1992 - present),
Emmerling Post, Inc., 415 Madison Avenue, New York, New York 10017;
President and Director (January, 1989 - December, 1992), Lintas: Marketing
Communications, New York, New York.

TOM A. SCHLOSSBERG, DIRECTOR AND PRESIDENT, President (September, 1993 -
present), Diversified Investment Advisors, Inc., 4 Manhattanville Road,
Purchase, NY 10577; Executive Vice President (1983 - September 1993), Mutual
of New York, Purchase, New York.

COLETTE F. VARGAS, DIRECTOR AND CHIEF ACTUARY, Actuary (September, 1993 -
present), Diversified Investment Advisors, 4 Manhattanville Road, Purchase,
New York 10577; Actuary (1982 - September, 1993) Mutual of New York,
Purchase, New York.

COR H. VERHAGEN, DIRECTOR, President and Director (1990 - present), CORPA
Reinsurance Co. of America, 51 JFK Parkway, Short Hills, New Jersey 07078;
President (November 1990 - June 30, 1996), International Life Investors
Insurance Company, New York, New York; Vice President (November, 1993 -
present), AEGON USA, Inc., Baltimore, Maryland; Vice President (July, 1985 -
present), AEGON US Holding Company, Short Hills, New Jersey.

E. KIRBY WARREN, DIRECTOR, Professor (January, 1961 - present), Columbia
University School of Business, 725 Uris Hall, 116th Street and Broadway, New
York, New York 10025.

PATRICK S. BAIRD, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, Senior Vice
President and Chief Financial Officer (May, 1992 - present), Vice President
and Chief Tax Officer (November, 1980 - May, 1992), AEGON USA, Inc., 4333
Edgewood Road N.E., Cedar Rapids, Iowa 52499.

BRENDA CLANCY, TREASURER, Senior Vice President and Treasurer (August, 1997 -
present), AEGON USA, Inc., 4333 Edgewood Road NE, Cedar Rapids, Iowa 52499;
Vice President and Controller (April, 1992 - August, 1997), AEGON USA, Inc.,
Cedar Rapids, Iowa.

PATRICK E. FALCONIO, SENIOR VICE PRESIDENT AND CHIEF INVESTMENT OFFICER, Senior
Vice President and Chief Investment Officer (February, 1989 - present),
AEGON USA, Inc. 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499.

CHRISTOPHER GARRETT, ACTUARY, Associate Actuary (1983 - present), AEGON USA,
Inc., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499.

39
<PAGE>

ROBERT J. KONTZ, CONTROLLER, Vice President and Controller (1990 - present),
AEGON USA, Inc., 4333 Edgewood Road N.E., Cedar Rapids, Iowa 52499; Vice
President - Corporate Accounting (1982 - 1989), Life Investors, Inc., Cedar
Rapids, Iowa.

CRAIG D. VERMIE, SECRETARY, Vice President and General Counsel (September, 1986
- present), AEGON USA, Inc., 4333 Edgewood Road NE, Cedar Rapids, Iowa
52499.

LEGAL MATTERS

Sutherland, Asbill & Brennan LLP, Washington, D.C., has provided advice on
certain legal matters concerning Federal securities laws in connection with the
Policies. All matters of New York law pertaining to the Policy, including the
validity of the Policy and AUSA Life's right to issue the Policy under New York
Insurance Law, have been passed upon by Robert F. Colby, Esq., Vice President
and Assistant Secretary of AUSA Life.

LEGAL PROCEEDINGS

AUSA Life, like other life insurance companies, is involved in lawsuits.
AUSA Life is not aware of any class action lawsuits naming it as a Defendant or
involving the Series Account. In some lawsuits involving other insurers,
substantial damages have been sought and/or material settlement payments have
been made. Although the outcome of any litigation cannot be predicted with
certainty, AUSA Life believes that at the present time there are no pending or
threatened lawsuits that are reasonably likely to have a material adverse impact
on the Series Account or AUSA Life.

EXPERTS

There are no financial statements of AUSA Series Life Account because the
Series Account has not yet commenced operations as of the date of this
Prospectus.

The financial statements of AUSA Life Life Insurance Company, Inc. at
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997, appearing in this Prospectus have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein. The financial statements referred to above are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

Actuarial matters included in this Prospectus and Registration Statement
have been examined by Alan Yaeger as stated in the opinion filed as an exhibit
to the registration statement.

ADDITIONAL INFORMATION

A registration statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933, as amended, with respect to the
Policy offered hereby. This Prospectus does not contain all the information set
forth in the registration statement and the amendments and exhibits to the
registration statement, to all of which reference is made for further
information concerning the Series Account, AUSA Life and the Policy offered
hereby. Statements contained in this Prospectus as to the contents of the
Policy and other legal instruments are summaries. For a complete statement of
the terms thereof reference is made to such instruments as filed.

YEAR 2000 MATTERS

In October 1996, AUSA Life adopted and presently has in place a Year 2000
Assessment and Planning Project (the "Plan") to review and analyze existing
hardware and software systems, as well as voice and data communications systems,
to determine if they are Year 2000 compatible. AUSA Life has also engaged the
services of a third-party provider that is specialized in Year 2000 issues to
work on the Plan.

As of the date of this Prospectus, AUSA Life has identified and made
available what it believes are the appropriate resources of hardware, people,
and dollars, including the engagement of outside third parties, to ensure that
the Plan will be completed.

The Year 2000 computer problem, and its resolution, is complex and
multifaceted, and success of a response plan cannot be conclusively known until
the Year 2000 is reached (or an earlier date to the extent that the systems or
equipment addresses Year 2000 data prior to the Year 2000). Even with the
appropriate and diligent pursuit of a well-conceived response plan, including
testing procedures, there is no certainty that any company will achieve complete
success. Further, notwithstanding its efforts or results, AUSA Life's ability to
function unaffected to and through the Year 2000 may be adversely affected by
actions (or failure to act) of third parties beyond our knowledge or control.
See the Fund's prospectus for information on the Fund's preparation for Year
2000.

INFORMATION ABOUT AUSA LIFE'S
FINANCIAL STATEMENTS

The financial statements of AUSA Life which are included in this Prospectus
(see p. 47) should be considered only as bearing on the ability of AUSA Life to
meet its obligations under the Policies. They should not be considered as
bearing on the investment performance of the assets held in the Series Account.

Financial statements for AUSA Life for the years ended December 31, 1997,
1996 and 1995, have been prepared on the basis of statutory accounting
principles, rather than generally accepted accounting principles ("GAAP").

40
<PAGE>

APPENDIX A

ILLUSTRATION OF BENEFITS

The tables in Appendix A illustrate the way in which a Policy operates. They
show how the death benefit, Cash Value and Net Surrender Value of a Policy
issued to Joint Insureds of given ages and a given premium could vary over an
extended period of time assuming hypothetical gross rates of return equivalent
to constant after tax annual rates of 0%, 6% and 12%. The tables illustrate the
Policy values that would result based on the assumptions that the premium is
paid as indicated, that the Policyowner has not requested a decrease in the
Specified Amount of the Policy, that no cash withdrawals or Policy loans have
been made, and that less than twelve transfers per year have been made.

The death benefits, Cash Values and Net Surrender Values under a Policy
would be different from those shown if the actual rate of return averages 0%, 6%
or 12% over a period of years, but fluctuated above and below those averages for
individual Policy years. They would also differ if any Policy loans were made
during the period of time illustrated.

The illustration on p. 42 is based on a Policy for Joint Insureds who are a
55 year old male and a 55 year old female, both in the Select rate class, annual
premiums of $4,000, a $250,000 Specified Amount and death benefit Option B. The
illustrations on that page also assume cost of insurance charges based on AUSA
Life's CURRENT cost of insurance rates.

The illustration on p. 43 is based on the same factors as those on p. 42,
except that cost of insurance charges are based on the GUARANTEED cost of
insurance rates (based on the 1980 Commissioners Standard Ordinary Mortality
Table).

The amounts shown for the death benefits, Cash Values and Net Surrender
Values take into account (1) the daily charge for assuming mortality and expense
risks assessed against each Sub-Account which is equivalent to an annual charge
of 0.90% of the average net assets of the Sub-Accounts; (2) estimated daily
expenses equivalent to an effective average annual expense level of 0.95% of the
average daily net assets of the Portfolios of the Fund; and (3) all applicable
premium expense charges and Cash Value charges. The 0.95% average Portfolio
expense level assumes an equal allocation of amounts among the fifteen
Sub-Accounts and is based on an average 0.76% investment advisory fee and
estimated 1997 average normal operating expenses of 0.19% for each of the
Portfolios in operation during 1997. Calculation of the average annual expense
level utilized annualized actual audited expenses incurred during 1997 for the
Money Market (0.48%), Bond (0.64%), Growth (0.87%), Strategic Total Return
(0.88%), Global (1.00%), Emerging Growth (0.93%), Aggressive Growth (0.96%),
Balanced (0.94%), Growth & Income (0.96%), C.A.S.E. Growth (1.00%), and Tactical
Asset Allocation (0.87%), Value Equity (0.89%), U.S. Equity (1.30%), and
International Equity (1.50%). In addition, because the Third Avenue Value
Portfolio had not commenced operations as of December 31, 1997, the estimated
average annual Portfolio expense level reflects estimated expenses for this
Portfolio at 1.00%, for 1998. WRL Management has undertaken until April 30, 1999
to pay expenses to the extent normal operating expenses of a Portfolio exceed a
stated percentage of the Portfolio's average daily net assets. Taking into
account the assumed charges of 1.85%, the gross annual investment return rates
of 0%, 6% and 12% are equivalent to net annual investment return rates of
- -1.85%, 4.15%, and 10.15%.

The hypothetical returns shown in the tables are without any tax charges
that may be attributable to the Series Account because AUSA Life is not
currently making such charges. In order to produce after tax returns of 0%, 6%
or 12% if such charges are made in the future, the Series Account would have to
earn a sufficient amount in excess of 0%, 6% or 12% to cover any tax charges.
(See Charges Against the Series Account - Taxes, p. 28.)

The "Premium Accumulated at 5%" column of each table shows the amount which
would accumulate if an amount equal to the premium were invested to earn
interest at 5% per year, compounded annually.

AUSA Life will furnish, upon request, a comparable illustration reflecting
each proposed Joint Insured's age, sex, risk classification and desired plan
features.

41
<PAGE>

AUSA LIFE LIFE INSURANCE COMPANY, INC.
MALE AND FEMALE BOTH ISSUE AGE 55
$4,000 ANNUAL PREMIUM FOR NON-SMOKER SELECT RATE CLASS
$250,000 SPECIFIED AMOUNT
OPTION A - LEVEL DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT COST OF INSURANCE RATES.

<TABLE>
<CAPTION>
PREMIUMS NET
ACCUMULATED DEATH BENEFIT SURRENDER VALUE CASH VALUE
END OF AT 5% ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
POLICY INTEREST GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
YEAR PER YEAR RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
- -------- ------------- -------------------------------- -------------------------------- --------------------------------
0% 6% 12% 0% 6% 12% 0% 6% 12%
--------- --------- ------------ -------- ---------- ------------ -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,200 250,000 250,000 250,000 1,191 1,410 1,629 3,501 3,720 3,939
2 8,610 250,000 250,000 250,000 4,310 4,967 5,651 6,910 7,567 8,251
3 13,241 250,000 250,000 250,000 7,520 8,837 10,262 10,224 11,541 12,966
4 18,103 250,000 250,000 250,000 10,631 12,833 15,312 13,439 15,641 18,120
5 23,208 250,000 250,000 250,000 13,638 16,955 20,841 16,550 19,867 23,753
6 28,568 250,000 250,000 250,000 16,542 21,205 26,896 19,558 24,221 29,912
7 34,196 250,000 250,000 250,000 19,335 25,583 33,525 22,455 28,703 36,645
8 40,106 250,000 250,000 250,000 22,009 30,084 40,778 25,233 33,308 44,002
9 46,312 250,000 250,000 250,000 24,553 34,701 48,710 27,881 38,029 52,038
10 52,827 250,000 250,000 250,000 26,953 39,424 57,379 30,385 42,856 60,811
15 90,630 250,000 250,000 250,000 42,384 70,658 121,079 42,384 70,658 121,079
20 138,877 250,000 250,000 250,000 51,918 103,816 219,549 51,918 103,816 219,549
25 200,454 250,000 250,000 400,088 57,258 142,946 381,036 57,258 142,946 381,036
30 279,043 250,000 250,000 673,095 54,556 189,261 641,042 54,556 189,261 641,042
35 379,345 250,000 260,933 1,109,994 37,741 248,507 1,057,137 37,741 248,507 1,057,137
40 507,359 * 327,208 1,744,782 * 323,968 1,727,507 * 323,968 1,727,507
45 670,741 * 418,741 2,827,106 * 418,741 2,827,106 * 418,741 2,827,106

<CAPTION>
INTERNAL RATE OF
INTERNAL RATE OF RETURN ON NET INTERNAL RATE OF
RETURN ON CASH SURRENDER VALUE RETURN ON
VALUE ASSUMING ASSUMING DEATH BENEFIT
END OF HYPOTHETICAL HYPOTHETICAL ASSUMING HYPOTHETICAL
POLICY GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
YEAR RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
- -------- --------------------------------- ----------------------------------- -----------------------------------------
0% 6% 12% 0% 6% 12% 0% 6% 12%
----------- ---------- ---------- ----------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 -12.47 -7.00 -1.53 -70.23 -64.75 -59.27 6,150.00 6,150.00 6,150.00
2 -9.38 -3.65 2.08 -34.78 -27.86 -21.05 642.15 642.15 642.15
3 -7.80 -1.94 3.92 -21.61 -14.54 -7.62 258.47 258.47 258.47
4 -6.86 -0.91 5.04 -15.70 -8.63 -1.75 148.92 148.92 148.92
5 -6.25 -0.22 5.79 -12.50 -5.46 1.38 100.39 100.39 100.39
6 -5.82 0.26 6.33 -10.55 -3.53 3.26 73.77 73.77 73.77
7 -5.52 0.62 6.73 -9.27 -2.26 4.50 57.22 57.22 57.22
8 -5.31 0.89 7.05 -8.39 -1.37 5.37 46.06 46.06 46.06
9 -5.16 1.09 7.29 -7.77 -0.74 5.99 38.07 38.07 38.07
10 -5.07 1.25 7.49 -7.33 -0.26 6.47 32.11 32.11 32.11
15 -4.49 2.02 8.36 -4.49 2.02 8.36 16.46 16.46 16.46
20 -4.33 2.42 8.87 -4.33 2.42 8.87 9.93 9.93 9.93
25 -4.62 2.65 9.20 -4.62 2.65 9.20 6.48 6.48 9.51
30 -5.74 2.80 9.39 -5.74 2.80 9.39 4.39 4.39 9.63
35 -9.30 2.99 9.49 -9.30 2.99 9.49 3.02 3.23 9.70
40 * 3.18 9.57 * 3.18 9.57 * 3.22 9.61
45 * 3.34 9.65 * 3.34 9.65 * 3.34 9.65
</TABLE>

* In the absence of an additional payment, the Policy would lapse.

The Hypothetical Investment Rates of Return Shown Above and Elsewhere in this
Prospectus Are Illustrative Only and Should Not Be Deemed A Representation of
Past or Future Investment Rates of Return.

Actual Investment Rates of Return May be More or Less Than Those Shown And Will
Depend on a Number of Factors, Including the Investment Allocations By An Owner
and Different Investment Rates of Return For the Fund. The Death Benefit, Cash
Value and Net Surrender Value for a Policy Would be Different From Those Shown
if the Actual Investment Rates of Return Averaged 0%, 6%, and 12% Over a Period
of Years, But Fluctuated Above or Below that Average for Individual Policy
Years. No Representation Can Be Made by AUSA Life or the Fund that These
Hypothetical Investment Rates of Return Can Be Achieved For Any One Year or
Sustained Over Any Period of Time. This Illustration Must Be Preceded or
Accompanied By A Current Prospectus.

42
<PAGE>

AUSA LIFE INSURANCE COMPANY, INC.
MALE AND FEMALE BOTH ISSUE AGE 55
$4,000 ANNUAL PREMIUM FOR NON-SMOKER SELECT RATE CLASS
$250,000 SPECIFIED AMOUNT
OPTION A - LEVEL DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED COST OF INSURANCE RATES.

<TABLE>
<CAPTION>
PREMIUMS NET
ACCUMULATED DEATH BENEFIT SURRENDER VALUE CASH VALUE
END OF AT 5% ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
POLICY INTEREST GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
YEAR PER YEAR RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
- -------- ------------- -------------------------------- -------------------------------- --------------------------------
0% 6% 12% 0% 6% 12% 0% 6% 12%
--------- --------- ------------ -------- ---------- ------------ -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 4,200 250,000 250,000 250,000 1,191 1,410 1,629 3,501 3,720 3,939
2 8,610 250,000 250,000 250,000 4,310 4,967 5,651 6,910 7,567 8,251
3 13,241 250,000 250,000 250,000 7,520 8,837 10,262 10,224 11,541 12,966
4 18,103 250,000 250,000 250,000 10,631 12,833 15,312 13,439 15,641 18,120
5 23,208 250,000 250,000 250,000 13,638 16,955 20,841 16,550 19,867 23,753
6 28,568 250,000 250,000 250,000 16,535 21,199 26,890 19,551 24,215 29,906
7 34,196 250,000 250,000 250,000 19,313 25,561 33,503 22,433 28,681 36,623
8 40,106 250,000 250,000 250,000 21,961 30,033 40,726 25,185 33,257 43,950
9 46,312 250,000 250,000 250,000 24,461 34,604 48,610 27,789 37,932 51,938
10 52,827 250,000 250,000 250,000 26,795 39,257 57,206 30,227 42,689 60,638
15 90,630 250,000 250,000 250,000 40,392 68,608 119,128 40,392 68,608 119,128
20 138,877 250,000 250,000 250,000 41,430 93,459 212,017 41,430 93,459 212,017
25 200,454 250,000 250,000 384,530 21,137 109,679 366,219 21,137 109,679 366,219
30 279,043 * 250,000 639,306 * 101,176 608,863 * 101,176 608,863
35 379,345 * 250,000 1,028,128 * 5,481 979,169 * 5,481 979,169
40 507,359 * * 1,578,852 * * 1,563,220 * * 1,563,220
45 670,741 * * 2,560,711 * * 2,560,711 * * 2,560,711

<CAPTION>
INTERNAL RATE OF
INTERNAL RATE OF RETURN ON NET INTERNAL RATE OF
RETURN ON CASH SURRENDER VALUE RETURN ON
VALUE ASSUMING ASSUMING DEATH BENEFIT
END OF HYPOTHETICAL HYPOTHETICAL ASSUMING HYPOTHETICAL
POLICY GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
YEAR RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
- -------- --------------------------------- ----------------------------------- -----------------------------------------
0% 6% 12% 0% 6% 12% 0% 6% 12%
----------- ---------- ---------- ----------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 -12.47 -7.00 -1.53 -70.23 -64.75 -59.27 6,150.00 6,150.00 6,150.00
2 -9.38 -3.65 2.08 -34.78 -27.86 -21.05 642.15 642.15 642.15
3 -7.80 -1.94 3.92 -21.61 -14.54 -7.62 258.47 258.47 258.47
4 -6.86 -0.91 5.04 -15.70 -8.63 -1.75 148.92 148.92 148.92
5 -6.25 -0.22 5.79 -12.50 -5.46 1.38 100.39 100.39 100.39
6 -5.83 0.25 6.32 -10.56 -3.54 3.26 73.77 73.77 73.77
7 -5.54 0.60 6.72 -9.30 -2.28 4.49 57.22 57.22 57.22
8 -5.35 0.86 7.02 -8.44 -1.41 5.34 46.06 46.06 46.06
9 -5.23 1.04 7.26 -7.85 -0.79 5.95 38.07 38.07 38.07
10 -5.17 1.18 7.44 -7.44 -0.34 6.41 32.11 32.11 32.11
15 -5.13 1.66 8.18 -5.13 1.66 8.18 16.46 16.46 16.46
20 -6.80 1.46 8.58 -6.80 1.46 8.58 9.93 9.93 9.93
25 -15.73 0.70 8.95 -15.73 0.70 8.95 6.48 6.48 9.26
30 * -1.13 9.12 * -1.13 9.12 * 4.39 9.37
35 * -42.19 9.17 * -42.19 9.17 * 3.02 9.38
40 * 0.00 9.21 * 0.00 9.21 * 0.00 9.25
45 * 0.00 9.34 * 0.00 9.34 * 0.00 9.34
</TABLE>

* In the absence of an additional payment, the Policy would lapse.

The Hypothetical Investment Rates of Return Shown Above and Elsewhere in this
Prospectus Are Illustrative Only and Should Not Be Deemed A Representation of
Past or Future Investment Rates of Return.

43
<PAGE>

APPENDIX B

WEALTH INDICES OF INVESTMENTS IN THE U.S. CAPITAL MARKETS

The information below graphically depicts the growth of $1.00 invested in
large company stocks, small company stocks, long-term government bonds, Treasury
bills, and hypothetical asset returning the inflation rate over the period from
the end of 1925 to the end of 1997. All results assume reinvestment of dividends
on stocks or coupons on bonds and no taxes. Transaction costs are not included,
except in the small stock index starting in 1982.

Each of the cumulative index values is initialized at $1.00 at year-end
1925. The graph illustrates that large company stocks and small company stocks
have the best performance over the entire 72-year period: investments of $1.00
in these assets would have grown to $1,828.33 and $5,519.97, respectively, by
year-end 1997. This higher growth was earned by investments involving
substantial risk. In contrast, long-term government bonds (with an approximate
20-year maturity), which exposed the holder to much less risk, grew to only
$39.07.

The lowest-risk strategy over the past 72 years (for those with short-term
time horizons) was to buy U.S. Treasury bills. Since Treasury bills tended to
track inflation, the resulting real (inflation-adjusted) returns were near zero
for the entire 1926 - 1997 period.

[GRAPHIC OMITTED]

COMPOUND
ANNUAL
RETURN
- Small Company Stocks 12.7%
Dimensional Fund Advices
Small Company Fund
- Large Company Stocks 11.0%
S&P 500
- Long-Term Government Bonds 5.2%
20-year U.S. Government Bonds
- Treasury Bills 3.8%
30-day U.S. T-Bills
- Inflation 3.1%
Consumer Price Index

44
<PAGE>

COMPOUND ANNUAL RATES OF RETURN BY DECADE

<TABLE>
<CAPTION>
1920s* 1930s 1940s 1950s 1960s 1970s 1980s 1990s** 1987-96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Large Company ............. 19.2% -0.1% 9.2% 19.4% 7.8% 5.9% 17.5% 16.6% 18.0%
Small Company ............. -4.5 1.4 2.07 16.9 15.5 11.5 15.8 16.5 16.5
Long-Term Corp. ........... 5.2 6.9 2.7 1.0 1.7 6.2 13.0 10.2 10.8
Long-Term Govt. ........... 5.0 4.9 3.2 -0.1 1.4 5.5 12.6 10.7 11.3
Inter-Term Govt. .......... 4.2 4.6 1.8 1.3 3.5 7.0 11.9 8.0 8.3
Treasury Bills ............ 3.7 0.6 0.4 1.9 3.9 6.3 8.9 5.0 5.4
Inflation ................. -1.1 -2.0 5.4 2.2 2.5 7.4 5.1 3.1 3.4
</TABLE>

------------------------------
* Based on the period 1926-1929.

** Based on the period 1990-1997.

THE AUSA FREEDOM WEALTH PROTECTORSM
AND THE "DOLLAR COST AVERAGING" INVESTMENT STRATEGY

As the Long Term Market Trends graph indicates, the investment performance
of many common stocks has generally been positive over certain relatively long
periods. Common stocks have, however, also been subject to market declines,
often dramatic ones, and general volatility of prices over shorter time periods.
The price fluctuations of common stocks has historically been greater than that
of high grade debt securities.

The relative volatility of common stock prices as compared with prices of
high grade debt instruments offers both advantages and disadvantages to
investors. Unfortunately, many investors who otherwise might be interested in
common stocks see only the disadvantages and not the advantages of stock price
fluctuation. The primary disadvantage, of course, is that price declines can be
prolonged and substantial, and when this occurs, investors cannot liquidate
their investments without realizing losses. Price declines, however, also offer
investors important opportunities.

Opportunity arises from the fact that investors can purchase more common
stock for the same amount of money than they would before prices declined.
Investors may take advantage of this if they remain willing to continue
investing in both rising and falling markets. The dollar cost averaging strategy
of investing demonstrates this.

In this method of investing:

/bullet/ Relatively constant dollar amounts are invested at regular
intervals (monthly, quarterly, or annually),

/bullet/ Stock Market fluctuations, especially the savings on purchases from
price declines, are exploited for the investor's benefit.

HOW DOLLAR COST AVERAGING WORKS

Investments at Common Stock Shares
Regular Intervals Market Price Purchased
- ----------------- ------------ ---------
$150 $20 7.5
150 15 10.0
150 10 15.0
150 5 30.0
150 10 15.0
150 15 10.0
---- ----
$900 87.5

Total Value of 87.5 shares @ $15/share $1,312.50
Less Investment made (900.00)
---------
Gain/Profit $ 412.50

Though the market price has not returned to the initial high of $20 per
share, dollar cost averaging has permitted the investor to purchase more shares
at a savings and thus realize a significant gain. Obviously, the dollar cost
averaging method ONLY works if the investor continues to invest relatively
constant amounts over a long period of time.

This plan of investing does not assure a profit or protect against a loss in
declining markets; it does allow investors to take advantage of market
fluctuations. Since the success of this strategy is dependent on systematic
investing, purchasers should consider their ability to sustain their payments
through all periods of market fluctuations.

How does the dollar cost averaging method relate to the AUSA Freedom Wealth
Protector/SM/? A Policyowner may invest his or her Net Premium in a Sub-Account,
and although a Policy's value in a Sub-Account or Sub-Accounts is affected by
several factors other than investment experience (E.G., Cash Value charges and
charges against the Series Account), the dollar cost averaging method can be
generally applied to the Policy to the extent that the Policyowner pays a
Planned Periodic Premium on a regular basis and he or she

45
<PAGE>

allocates Net Premium resulting from those Planned Periodic Premiums to the
Sub-Accounts in relatively constant amounts.

INDEX TO FINANCIAL STATEMENTS

There are no financial statements for the Series Account as of the date of this
Prospectus.

AUSA Life Insurance Company, Inc.:

Statutory-basis balance sheet as of March 31, 1998 (unaudited)

Statutory-basis statement of operations as of March 31, 1998 (unaudited)

Statutory-basis statement of cash flows as of March 31, 1998 (unaudited)

Note to Statutory-basis financial statements (unaudited)

Report of Independent Auditors dated February 27, 1998

Statutory-basis balance sheets at December 31, 1997 and 1996

Statutory-basis statements of operations for the years ended December 31,
1997, 1996 and 1995

Statutory-basis statements of changes in capital and surplus for the years
ended December 31, 1997, 1996 and 1995

Statutory-basis statements of cash flows for the years ended December 31,
1997, 1996 and 1995

Notes to Statutory-basis financial statements

Statutory-basis financial statement schedules

WRL00003-07/98