NATIONAL VARIABLE LIFE INSURANCE ACCOUNT, 485APOS, 1999-02-26

NATIONAL VARIABLE LIFE INSURANCE ACCOUNT
485APOS, 1999-02-26

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<PAGE> 1

As filed with the Securities and Exchange Commission on February 26, 1999.
Registration No. 33-91938
File No. 811-9044
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

-----------------------
POST-EFFECTIVE AMENDMENT NO. 4 TO
FORM S-6

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2

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

NATIONAL VARIABLE LIFE INSURANCE ACCOUNT
(Exact name of trust)

NATIONAL LIFE INSURANCE COMPANY
(Name of depositor)
One National Life Drive
Montpelier, Vermont 05604
(Complete address of depositor's principal executive offices)

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

D. Russell Morgan
Counsel
National Life Insurance Company
One National Life Drive
Montpelier, Vermont 05604
(Name and complete address of agent for service)

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

Copy to:
Stephen E. Roth, Esq.
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404

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

It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
- -----------
on May 1, 1998 pursuant to paragraph (b) of Rule 485
- -----------
60 days after filing pursuant to paragraph (a) of Rule 485
- -----------
X on May 1, 1999 pursuant to paragraph (a) of Rule 485
- -----------

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

================================================================================

<PAGE> 2

VARITRAK
VARIABLE UNIVERSAL LIFE INSURANCE
P R O S P E C T U S
DATED MAY 1, 1999

NATIONAL LIFE INSURANCE COMPANY Home Office: National Life Drive,
Montpelier, Vermont 05604
NATIONAL VARIABLE LIFE INSURANCE ACCOUNT Telephone: (800) 537-7003

This prospectus describes the VariTrak policy, a variable universal
life insurance policy offered by National Life Insurance Company. This Policy
combines insurance and investment features. The policy's primary purpose is to
provide insurance protection on the life of the insured person. You can make
premium payments at various times and in various amounts. You can also allocate
premiums among a number of funds with different investment objectives, and you
can increase or decrease the death benefit payable under your policy.

We deduct certain charges from premium payments. Then these premium
payments go to the National Variable Life Insurance Account, a separate account
of National Life, or to the general account, or a combination of the two. The
general account pays interest at rates guaranteed to be at least 4%. The
separate account has twenty-six subaccounts. Each subaccount buys shares of a
specific fund portfolio. The available funds are:

<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS AMERICAN CENTURY VARIABLE GOLDMAN SACHS VARIABLE
MARKET STREET FUND, INC. FUND AND PORTFOLIOS, INC. INSURANCE TRUST
VARIABLE INSURANCE PRODUCTS
FUND II
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGGRESSIVE GROWTH PORTFOLIO* GROWTH PORTFOLIO VP INCOME & GROWTH CORE SMALL CAP EQUITY
BOND PORTFOLIO* HIGH INCOME PORTFOLIO VP VALUE GLOBAL INCOME
GROWTH PORTFOLIO* EQUITY INCOME PORTFOLIO INTERNATIONAL EQUITY
INTERNATIONAL PORTFOLIO+ OVERSEAS PORTFOLIO MID CAP EQUITY
MANAGED PORTFOLIO* INDEX 500 PORTFOLIO
MONEY MARKET PORTFOLIO* CONTRAFUND PORTFOLIO
SENTINEL GROWTH PORTFOLIO*

*Managed by Sentinel Advisors Managed by Fidelity Investments Managed by American Century Managed by Goldman Sachs
Company Investment Management, Inc. Asset Management & Goldman
+Managed by Provident Mutual Sachs Asset Management
Investment Management Company International

NEUBERGER & BERMAN ADVISERS STRONG VARIABLE INSURANCE ALGER AMERICAN FUND
J.P. MORGAN SERIES TRUST II MANAGEMENT TRUST FUNDS, INC. AND STRONG
OPPORTUNITY FUND II
- ----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES PARTNERS PORTFOLIO GROWTH FUND II SMALL CAPITALIZATION
SMALL COMPANY OPPORTUNITY FUND II GROWTH

Managed by J. P. Morgan Asset Managed by Neuberger & Berman Managed by Strong Capital Managed by Fred Alger
Management, Inc. Management, Inc. Management, Inc. Management, Inc.
</TABLE>

The value of your policy will depend upon the investment results of the funds
you select. You bear the entire investment risk for all amounts allocated to the
separate account; there is no guaranteed minimum value for any of the funds, and
the value of your policy may be more or less than premiums paid.

You must receive, with this prospectus, current prospectuses for all of the fund
options. They describe the investment objectives and the risks of the funds.

The value of your policy will also reflect our charges. These include a premium
tax charge, cost of insurance charges, a mortality and expense risk charge, an
administrative charge, and certain other charges. During the first five years
your policy will remain in force if specified premiums are paid on time, or if
the policy has enough value to pay the monthly charges as they become due. After
the fifth year, the Policy will remain in force only so long as it has enough
value to pay the monthly charges as they become due.

We recommend that you read this prospectus carefully. You should keep it to
refer to later.

Investments in these contracts are not deposits or obligations of, and are not
guaranteed or endorsed by, adviser of any of the underlying funds identified
above, the U.S. government, or any bank or bank affiliate. Investments are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other governmental agency.

<PAGE> 3

It may not be advantageous to purchase a policy as a replacement for another
type of life insurance or as a means to obtain additional insurance
protection if you already own another variable universal life insurance
policy.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
POLICY OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE> 4

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary Description of the Policy.........................................................
The Policy ......................................................................
The Separate Account.............................................................
Availability of Policy...........................................................
The Death Benefit................................................................
Flexibility to Adjust Amount of Death Benefit....................................
Accumulated Value................................................................
Allocation of Net Premiums.......................................................
Transfers........................................................................
Free-Look Privilege..............................................................
Charges Assessed in Connection with the Policy...................................
Loan Privilege...................................................................
Withdrawal of Cash Surrender Value...............................................
Surrender of the Policy..........................................................
Available Automated Fund Management Features.....................................
Tax Treatment....................................................................
Other Policies
Illustrations....................................................................
Questions
National Life Insurance Company, The Separate Account, and The Funds......................
National Life Insurance Company..................................................
The Separate Account.............................................................
The Market Street Fund...........................................................
Variable Insurance Products Fund and Variable Insurance Products Fund II.........
Alger American Fund..............................................................
American Century Variable Portfolios, Inc........................................
Goldman Sachs Variable Insurance Trust...........................................
J.P. Morgan Series Trust II......................................................
Neuberger & Berman Advisers Management Trust.....................................
Strong Variable Insurance Funds, Inc. and Strong Opportunity Fund, Inc...........
Other Information................................................................
The General Account..............................................................

Detailed Description of Policy Provisions.................................................
Death Benefit....................................................................
Ability to Adjust Face Amount....................................................
How the Duration of the Policy May Vary..........................................
Accumulated Value................................................................
Payment and Allocation of Premiums...............................................
Charges and Deductions....................................................................
Premium Tax Charge...............................................................
Surrender Charge.................................................................
Monthly Deductions...............................................................
Mortality and Expense Risk Charge................................................
Withdrawal Charge................................................................
Transfer Charge..................................................................
Projection Report Charge.........................................................
Other Charges....................................................................
</TABLE>

1
<PAGE> 5

<TABLE>
<S> <C>
Policy Rights and Privileges..............................................................
Loan Privileges..................................................................
Surrender Privilege..............................................................
Withdrawal of Cash Surrender Value...............................................
Free-Look Privilege..............................................................
Telephone Transaction Privilege..................................................
Other Transfer Rights............................................................
Available Automated Fund Management Features.....................................
Policy Rights Under Certain Plans................................................
The General Account.......................................................................
Minimum Guaranteed and Current Interest Rates....................................
Transfers from General Account...................................................
Other Policy Provisions...................................................................
Optional Benefits
Federal Income Tax Considerations.........................................................
Introduction.....................................................................
Tax Status of the Policy.........................................................
Tax Treatment of Policy Benefits.................................................
Special Rules for Employee Benefit Plans.........................................
Possible Charge for National Life's Taxes........................................
Possible Changes in Taxation.......................................................
Policies Issued in Conjunction with Employee Benefit Plans................................
Legal Developments Regarding Unisex Actuarial Tables......................................
Voting Rights.............................................................................
Changes in Applicable Law, Funding and Otherwise..........................................
Officers and Directors of National Life...................................................
Distribution of Policies..................................................................
Policy Reports ........................................................................
State Regulation
Insurance Marketplace Standards Association...............................................
Preparing for Year 2000...................................................................
Experts...................................................................................
Legal Matters.............................................................................
Financial Statements......................................................................
Glossary

Appendix A-Illustration of Death Benefits, Accumulated Values and
Cash Surrender Values............................................................ A-1

Financial Statements...................................................................... F-1
</TABLE>

THE POLICY MAY NOT BE AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT OFFER
THE POLICY IN ANY STATE IN WHICH WE MAY NOT LEGALLY OFFER THE POLICY. YOU SHOULD
RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.

THE PRIMARY PURPOSE OF THIS VARIABLE LIFE INSURANCE POLICY IS TO PROVIDE
INSURANCE PROTECTION. WE DO NOT CLAIM THAT THE POLICY IS IN ANY WAY SIMILAR OR
COMPARABLE TO AN INVESTMENT IN A MUTUAL FUND.

2
<PAGE> 6

SUMMARY DESCRIPTION OF THE POLICY

You should read this summary of the policy provisions together with the
detailed information appearing later in this Prospectus. Unless otherwise noted,
this Prospectus assumes the insured person is alive. The precise meanings of the
few capitalized terms used in this summary can be found in the Glossary, on
pages to .

THE POLICY

National Life Insurance Company issues the VariTrak variable universal
life insurance policy. This life insurance policy allows you, within limits, to
make premium payments in any amount and whenever you like. As long as the policy
remains in force, it will provide for:

(1) Life insurance coverage which will provide a death benefit on the
death of the named insured person;

(2) A cash surrender value;

(3) Surrender and withdrawal rights and policy loan privileges; and

(4) A variety of additional insurance benefits.

There is no fixed schedule for premium payments, although you may
establish a schedule of planned periodic premiums. You may also, after a year
and within limits, increase or decrease the policy's face amount, and you may
change the death benefit option. The policy's cash value and death benefit will
fluctuate based on the investment results of the chosen fund portfolios, the
crediting of interest to the general account, and the deduction of charges.

Lapse. The policy will not lapse simply because you do not pay any
particular amounts of premiums. However, the payment of premiums in any amount
or frequency will not necessarily guarantee that the policy will remain in
force. In general, the policy will lapse if it does not have enough value to pay
the monthly charges as they become due. During the first five years, the policy
will not lapse even if its value is not enough to pay the monthly charges, if at
least specified amounts of premiums have been paid (these amounts are defined in
the Glossary as the Minimum Guarantee Premium). See "How the Duration of the
Policy May Vary," page .

Optional Guaranteed Death Benefit Rider. In addition, if you buy the
optional Guaranteed Death Benefit Rider, your policy will not lapse even if its
value is not enough to pay the monthly charges, if you have paid at least the
Minimum Guarantee Premium, until 20 years from the date the policy is issued or
the insured person attains age 70. See "Optional Benefits - Guaranteed Death
Benefit Rider," page .

3
<PAGE> 7

If you already have life insurance, you should consider whether or not
changing or adding to existing coverage would be advantageous. It may not be
advisable to purchase another policy as a replacement for an existing policy.

THE SEPARATE ACCOUNT

The separate account is divided into subaccounts, 26 of which are
available under this policy. Each of these subaccounts buys shares of a
corresponding fund portfolio. See "National Life Insurance Company, the Separate
Account, and the Funds," page .

We cannot give any assurance that any portfolio will achieve its
investment objectives. You bear the entire investment risk on the value of your
policy which you allocate to the separate account.

AVAILABILITY OF POLICY

We will issue this policy for insured persons from ages 0 to 85. The
minimum face amount is generally $50,000, although exceptions to this minimum
may be made for employee benefit plans. Before issuing a policy, we will require
that the proposed insured person meet certain underwriting standards. We will
assign the insured person to one of the following types of rate classes:

- Preferred Nonsmoker
- Standard Nonsmoker
- Smoker
- Juvenile, and
- Substandard.

See "Issuance of a Policy," Page .

THE DEATH BENEFIT

As long as your policy remains in force, we will pay the death benefit
to your beneficiary, when we receive due proof of the death of the insured
person. The death benefit will reflect any dividends payable, any additional
benefits provided by a supplementary benefit rider, any outstanding policy loans
and accrued interest, and any unpaid monthly deductions.

There are two death benefit options available, which we call Option A
and Option B. You may choose which option will apply to your policy.

If you choose death benefit Option A, the death benefit will be based on
the greater of :

(a) the face amount, or

(b) the Accumulated Value multiplied by a factor specified by federal
income tax law.

If you choose death benefit Option B, the death benefit will be based
on the greater of:

(a) the face amount plus the Accumulated Value, or

(b) the Accumulated Value multiplied by the same factor that applies to
option A.

4
<PAGE> 8

See "Death Benefit Options," Page ___.

FLEXIBILITY TO ADJUST AMOUNT OF DEATH BENEFIT

After a year, you may adjust the death benefit by changing the death
benefit option or by increasing or decreasing the face amount of your policy.
(See "Change in Death Benefit Option," Page ___, and "Ability to Adjust Face
Amount," Page ___.)

Any change in death benefit option or in the face amount may affect the
charges under your policy. If you increase the face amount, your monthly charges
will increase. A decrease in face amount may decrease the monthly charges. (See
"Cost of Insurance Charge," Page ___.)

If you request a decrease in face amount which would cause the policy
not to qualify as life insurance under federal tax law, we will not allow the
decrease.

ACCUMULATED VALUE

The Accumulated Value is the total amount of value held in the policy
at any time. It equals the sum of the amounts held in the separate account and
the general account. (See "Calculation of Accumulated Value," Page .)

The Accumulated Value in the separate account will reflect:

- the investment performance of your chosen funds
- premiums paid
- transfers
- withdrawals
- policy loans
- loan repayments
- loan interest paid or credited, and
- the charges assessed in connection with the policy.

We pay interest on Accumulated Value in the general account at rates we
declare in advance for specific periods. We guarantee that these rates will be
at least 4%. (See "The General Account," Page ___.)

The Accumulated Value will likely matter in computing both the death
benefit and the cost of insurance charges.

ALLOCATION OF PREMIUMS

You will specify, in the application for your policy, the percentages
of premium to go to each subaccount of the separate account or to the general
account. You may change these percentages whenever you like. You may choose
among all 26 available subaccounts of the separate account. However, we may
limit the number of different subaccounts, other than the money market
subaccount, used in your policy over its entire life to 16.

We will allocate all premiums received during the free-look period that
are to go to the separate account to the money market subaccount. At the end of
the free look period, we will move the amount in the money market subaccount
(including investment experience) to your chosen subaccounts. For this purpose,

5
<PAGE> 9

we will assume that the free-look period ends 20 days after the date the policy
is issued. (See "Allocation of Net Premiums," Page ___.)

TRANSFERS

You may transfer the amounts in the subaccounts and the general
account. Transfers between the subaccounts or from the separate account into the
general account will be made on the day we receive the request. We limit
transfers out of the general account to the greater of $1000 and 25% of the
Accumulated Value in the general account. We also allow only one transfer out of
the general account per year. See "Transfers," page .

FREE-LOOK PRIVILEGE

The Policy provides for an initial "free-look" period, during which you
may cancel the Policy and receive a refund equal to the gross premiums you paid.
This free-look period ends on the latest of:

(a) 45 days after you sign Part A of your application for the Policy
(b) 10 days after you receive the Policy, and
(c) 10 days after we mail or personally deliver to you a Notice of
Withdrawal Right,

or, in each case, any longer period provided by state law. To cancel your
policy, you must return the Policy to us or to our agent within such time with a
written request for cancellation. (See "Free-Look Privilege," Page .)

CHARGES ASSESSED IN CONNECTION WITH THE POLICY

Summary of Policy Expenses.
<TABLE>
<CAPTION>
TRANSACTION EXPENSES
<S> <C>
Premium Tax (as a percentage of premiums paid) ............... 3.25%
Sales Load Imposed on Purchases ............................. NONE
Surrender Charge.............................................. See below
Withdrawal Charge............................................. Lesser of 2% of amounts withdrawn or $25
Transfer Charge............................................... NONE*
</TABLE>

- - We currently have no transfer charge, but we reserve the right to
charge up to $25 for each transfer in excess of five transfers in any
one year.
<TABLE>
<CAPTION>
ANNUAL AMOUNTS OF CHARGES
<S> <C>
Mortality and Expense Risk Charge (deducted daily)............ 0.90% (as a percentage of separate
account Accumulated Value)
Cost of Insurance Charge (deducted monthly)................... Varies by age, sex, Rate Class-See below
Administrative Charge (deducted monthly)...................... $90 per year
Rider Charges................................................. See "Optional Benefits" on page for
charges for optional riders you may choose
to include in your policy
</TABLE>

ANNUAL EXPENSES OF UNDERLYING FUNDS(1) (for the year ended December 31, 1998):

6
<PAGE> 10

Management Other Total
Fee, after expense Expenses, Expenses,
reimbursement after expense after expense
reimbursement reimbursement
<S> <C> <C> <C>
Market Street Fund, Inc.:
Money Market Portfolio . % . % . %
Bond Portfolio . % . % . %
Managed Portfolio . % . % . %
Aggressive Growth Portfolio . % . % . %
International Portfolio . % . % . %
Growth Portfolio . % . % . %
Sentinel Growth Portfolio . % . % . %

Alger:
Alger American Growth Portfolio .% .% .%
Alger American Small Capitalization .% .% .%

American Century Variable Portfolios, Inc.
VP Value Portfolio .% 0 .%
VP Income & Growth Portfolio .% 0 .%

Fidelity: Variable Insurance Products Fund I:
Growth Portfolio .% .% .%
High Income Portfolio .% .% .%

Fidelity: Variable Insurance Products Fund II:
Index 500 Portfolio .% .% .%
Contrafund Portfolio .% .% .%

Goldman Sachs Variable Insurance Trust
International Equity Fund . % . % .%
Global Income Fund . % . % .%
CORE Small Cap Equity Fund . % . % .%
Mid Cap Equity Fund . % . % .%

J.P. Morgan Series Trust II
International Opportunities Portfolio . % . % .%
Small Company Portfolio . % . % .%

Neuberger & Berman Advisers Management Trust
Partners Portfolio . % 0 .%

Strong Variable Insurance Funds, Inc.
Growth Fund II . % .% .%

Strong Opportunity Fund II . % .% .%
</TABLE>

7
<PAGE> 11

value, which is the share price used to calculate the unit values of the
subaccounts. The management fees and other expenses are more fully described in
the prospectuses for each individual underlying fund. The information relating
to the underlying fund expenses was provided by the underlying funds. We did not
independently verify it. In the absence of any voluntary fee waivers or expense
reimbursements, the management fees, other expenses, and total expenses of the
funds listed below would have been as follows:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL MUTUAL
FEES EXPENSES FUND EXPENSES
---------- -------- -------------
<S> <C> <C> <C>
Fidelity VIP Fund II-Index 500 Portfolio % % %
Market Street Sentinel Growth Portfolio % % %
Strong Growth Fund II % % %
J. P. Morgan International Opportunities % % %
J. P. Morgan Small Company % % %
Goldman Sachs International Equity
Goldman Sachs Global Income
Goldman Sachs CORE Small Cap Equity
Goldman Sachs Mid Cap Equity
</TABLE>

We expect these reimbursement arrangements to continue, but there are
no legal obligations to continue these arrangements for any particular period of
time; if they are terminated, the affected Portfolios' expenses may increase.

Premium Tax Charge. We deduct a premium tax charge from each premium
payment, to cover the cost of state and local premium taxes, and the federal DAC
tax. This charge is 3.25% of each premium. For qualified employee benefit plans,
the charge will be 2.00% of each premium rather than 3.25%. We may change the
amount of the charge deducted from future premiums if the applicable law
changes. (See "Premium Tax Charge," Page .)

Monthly Deductions. On the date of issue and each month thereafter, we
will take a deduction from the Accumulated Value equal to the sum of:

(a) the monthly cost of insurance charge

(b) the monthly administrative charge, and

We calculate the monthly cost of insurance charge by multiplying the
net amount at risk (that is, the unadjusted death benefit less the policy's
Accumulated Value) by the applicable cost of insurance rate(s). These rates will
depend upon the age, sex, and rate class of the insured person, the time the
coverage has been in force, the policy size band in which your policy fits, and
on our expectations of future mortality and expense experience. Our cost of
insurance rates cannot exceed the guaranteed maximum cost of insurance rates set
forth in your policy. These guaranteed maximum rates are based on the insured
person's age, sex, rate class, and the "1980 Commissioners Standard Ordinary
Smoker and Nonsmoker Mortality Table." (See "Cost of Insurance Charge," Page .)

The monthly administrative charge is $7.50. (See "Monthly
Administrative Charge," Page .) After 10 years, we currently intend to apply a
bonus under which the Monthly Deductions will be reduced by 0.50% per annum of
the Accumulated Value in the separate account. (See "Bonus," Page .) However, we
do not guarantee such a bonus, except as required by the state of issue.

Surrender Charge. We impose a surrender charge if you surrender your
policy or it lapses at any time during the first 15 years. The surrender charge

8
<PAGE> 12

consists of a deferred administrative charge and a deferred sales charge. (See
"Surrender Charge," Page .)

The deferred administrative charge is generally initially $2 per
$1,000 of initial face amount (lower for insured people under 25 years old at
issue). After the first five years, the deferred administrative charge declines
linearly by month until the end of the fifteenth year, when it becomes zero.

We calculate the deferred sales charge individually for each policy,
based on its surrender charge target premium. The surrender charge target
premium is based on the initial face amount, and the age, sex and rate class of
the insured person. It is used solely for the purpose of calculating the
deferred sales charge. Your surrender charge target premium will be shown in
your Policy.

The deferred sales charge is equal to the lesser of:

(a) 30% of the premiums received up to one surrender charge target
premium, plus 10% of all premiums paid in excess of this
amount but not greater than twice this amount, plus 9% of all
premiums paid in excess of twice this amount,

(b) an amount that during the first five years is equal to 50% of
the surrender charge target premium and that then declines
linearly by month through the end of the fifteenth year, when
it becomes zero (or, if less, the maximum permitted under the
New York nonforfeiture law).

Daily Charge Against the Separate Account (Mortality and Expense Risk
Charge). We assess a daily charge for assuming certain mortality and expense
risks incurred in connection with the policies. This charge is currently 0.90%
annually of the average daily net assets of the separate account. (See
"Mortality and Expense Risk Charge," Page .)

Withdrawal Charge. If you make a withdrawal from your policy, we assess
a withdrawal charge equal to the lesser of 2% of the amount withdrawn or $25.
(See "Withdrawal Charge," Page .)

Transfer Charge. You may transfer value among the subaccounts on any
business day, without charge. We have no current intent to impose a transfer
charge in the foreseeable future; however, we may impose in the future a charge
of $25 for each transfer in excess of five transfers in any one year. (See
"Transfer Charge," Page ___.)

9
<PAGE> 13

Projection Report Charge. If you request a projection report, we may
impose a charge. (See "Projection Report Charge," Page __.)

Other Charges. Shares of the Portfolios are purchased by the subaccounts
at net asset value, which reflects management fees and expenses deducted from
the assets of the Portfolios. These management fees and expenses are shown above
under "Annual Charges of Underlying Funds".

LOAN PRIVILEGE

After a year, you may borrow against your policy. The maximum amount of
all loans is the Cash Surrender Value less three times the next monthly
deduction. Policy loans may be taken, or repayments made, on any business day.

We charge interest on Policy loans at a fixed rate of 6% per year.
Interest is added to the loan balance at the end of each policy year. You may
repay policy loans at any time and in any amount. When the death benefit becomes
payable or the policy is surrendered, we will deduct policy loans and accrued
interest from the proceeds otherwise payable. When you take a policy loan, we
will hold Accumulated Value in the general account as collateral for the policy
loan. We credit interest on amounts held in the general account as collateral
for policy loans at rates we declare prior to each calendar year. This rate will
be at least 4%.

We currently plan to credit interest on non-loaned Accumulated Value in
the general account for policies that are more than 10 years old at rates which
are 0.50% per annum higher than those that apply to policies still in their
first ten years. This bonus is not guaranteed, however, except as required by
the state of issue. We may decide, in our sole discretion, upon prior notice to
policy owners, not to credit the bonus. We also currently plan to make preferred
loans available when the insured person is 65 years old or a policy is 20 years
old, whichever is later. These preferred loans will be limited in amount. For
these preferred policy loans, we will credit interest on the amount held in the
general account as collateral at an annual rate of 6%. However, we are not
obligated to continue to make preferred loans available, and we will make these
loans available in our sole discretion. (See "Loan Privileges," Page ___.)

Loans may cause a policy to lapse, depending on investment performance
and the amount of the loan. If a policy is not a Modified Endowment Contract,
lapse with policy loans outstanding may result in adverse tax consequences. (See
"Tax Treatment of Policy Benefits," Page ___.)

10
<PAGE> 14

WITHDRAWAL OF CASH SURRENDER VALUE

After a year, you may request a withdrawal of Cash Surrender Value.
Withdrawals must be at least $500 (except that we may permit smaller withdrawals
for employee benefit plans). Withdrawals cannot be more than the Cash Surrender
Value minus three times the next monthly deduction. We will take the withdrawal
amount from the subaccounts based on your instructions. If you do not provide
instructions, we will take the withdrawal from the subaccount in proportion to
the values in the subaccounts. If the values in the subaccounts will not allow
us to carry out your instructions, we will not process the withdrawal until you
provide further instructions. You may not allocate withdrawals to the general
account until all the value in the separate account has been exhausted. (See
"Withdrawal of Cash Surrender Value," Page ___.)

SURRENDER OF THE POLICY

You may surrender your policy at any time and receive the cash
surrender value, if any. The cash surrender value will equal the Accumulated
Value less any policy loan with accrued interest and any surrender charge. (See
"Surrender Privilege," Page ___.)

AVAILABLE AUTOMATED FUND MANAGEMENT FEATURES

We currently offer, at no charge to you, two automated fund management
programs, Dollar Cost Averaging and Portfolio Rebalancing. For a description of
these features, see "Available Automated Fund Management Features," Page ___.

TAX TREATMENT

Life insurance contracts receive tax-favored treatment under current
federal income tax law. Assuming that your policy qualifies as a life insurance
contract for federal income tax purposes, you should not be taxed on any
increase in cash surrender value while your policy remains in force. Also, your
beneficiary generally should not be taxed on death benefit proceeds. We believe
that a policy issued on a standard rate class basis generally should meet the
Section 7702 definition of a life insurance contract. For policies issued on a
substandard basis, there is insufficient guidance to determine if such a policy
would in all situations satisfy the Section 7702 definition of a life insurance
contract, particularly if you pay the full amount of premiums permitted under
the policy. (See "Tax Status of the Policy," Page ___.)

A policy may be treated as a "Modified Endowment Contract" in some
situations. If your policy is a Modified Endowment Contract, then certain
pre-death distributions, including policy loans, will be treated first as a
distribution of taxable income and then as a return of basis or investment in
the contract. In addition, prior to age 59-1/2 any such distributions generally
will be subject to a 10% penalty tax. (For further discussion on the
circumstances under which a Policy will be treated as a Modified Endowment
Contract, See "Tax Treatment of Policy Benefits," Page ___.)

11
<PAGE> 15

Contract are subject to the 10% penalty tax. (See "Distributions from Policies
Not Classified as Modified Endowment Contracts," Page ___.)

OTHER POLICIES

We offer other variable life insurance policies which also invest in the
same portfolios of the funds. These policies may have different charges that
could affect the value of the subaccounts and may offer different benefits more
suitable to your needs. To obtain more information about these policies, you may
write or call us at National Life Drive, Montpelier, Vermont 05604, (800)
537-7003.

ILLUSTRATIONS

Illustrations of how investment performance of the subaccounts may
cause the death benefit, the Accumulated Value and the cash surrender value to
vary are included in Appendix A commencing on Page A-1.

These illustrations of hypothetical values may help you understand the
long-term effects of different levels of investment performance, of charges and
deductions, and of electing one or the other death benefit option. They may also
be useful in generally comparing and contrasting this policy to other life
insurance policies. Nonetheless, the illustrations are based on hypothetical
investment rates of return. THEY ARE NOT GUARANTEED. Illustrations are not a
representation of past or future performance. Actual rates of return may be more
or less than those reflected in the illustrations and, therefore, actual values
will differ from those illustrated.

QUESTIONS

If you have questions, you may write or call us at National Life Drive,
Montpelier, Vermont 05604, (800) 537-7003.

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<PAGE> 16

NATIONAL LIFE INSURANCE COMPANY, THE SEPARATE ACCOUNT, AND THE FUNDS

NATIONAL LIFE INSURANCE COMPANY

National Life Insurance Company ("National Life", or "we") is
authorized to transact life insurance and annuity business in Vermont and in 50
other jurisdictions. National Life was originally chartered as a mutual life
insurance company in 1848 under Vermont law. It is now a stock life insurance
company. All of its outstanding stock is indirectly owned by National Life
Holding Company, a mutual insurance holding company established under Vermont
law on January 1, 1999. All policyholders of National Life, including all the
Owners of the Contracts, are voting members of National Life Holding Company.
National Life assumes all insurance risks under the Policy and its assets
support the Policy's benefits. On December 31, 1998, National Life's
consolidated assets were over $ billion. (See "Financial Statements," Page F-1.)

THE SEPARATE ACCOUNT

We established the Separate Account on February 1, 1985 under Vermont
law. It is a separate investment account to which we allocate assets to support
the benefits payable under the policies, other policies we currently issue, and
other variable life insurance policies we may issue in the future.

The Separate Account's assets are the property of National Life. The
portion of the Separate Account's assets equal to the reserves and other
liabilities under the Policies (and other policies) supported by the Separate
Account will not be exposed to liabilities arising out of any other business
that we may conduct. The portion of the Separate Account's assets equal to the
reserves and other liabilities under the Policies may, however, be exposed to
liabilities arising from other subaccounts of the Separate Account that fund
other variable life insurance policies. The Separate Account may also include
amounts derived from expenses we have charged to the Policies (and other
policies) which we currently hold in the Separate Account, and amounts held to
support other variable life insurance policies we may issue. From time to time
we may move these additional amounts to our General Account.

The Separate Account is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940 ("1940 Act") as a
unit investment trust type of investment company. Such registration does not
involve any supervision of the management or investment practices or policies of
the Separate Account by the SEC. The Separate Account meets the definition of a
"separate account" under Federal securities laws.

You may choose among the Subaccount options described below. However,
we may limit the number of different Subaccounts, other than the Money Market
Subaccount, used in any one Policy over its entire life to 16.

THE MARKET STREET FUND

The Growth, Sentinel Growth, Aggressive Growth, Bond, Managed,
International, and Money Market Subaccounts of the Separate Account invest in
shares of The Market Street Fund, Inc., a "series" type of mutual fund which is
registered with the SEC under the 1940 Act as a diversified open-end management
investment company. Each series of Market Street Fund shares represents an
interest in a separate portfolio within the Fund. They are purchased and
redeemed by the corresponding Subaccounts of the Separate Account. The Market
Street Fund sells and redeems its shares at net asset value without a sales
charge.

The investment objectives of the Market Street Fund's Portfolios you
may choose for your Policy are set forth below. The investment experience of
each of the Subaccounts of the Separate Account

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<PAGE> 17

depends on the investment performance of the corresponding Portfolio. There is
no assurance that any Portfolio will achieve its stated objective.

The Growth Portfolio. The Growth Portfolio seeks intermediate and
long-term growth of capital. A reasonable level of income is an important
secondary objective. This Portfolio pursues its objectives by investing
primarily in common stocks of companies believed to offer above-average growth
potential over both the intermediate and the long term.

The Sentinel Growth Portfolio. The Sentinel Growth Portfolio seeks
long-term growth of capital through equity participation in companies having
growth potential believed by its investment adviser to be more favorable than
the U.S. economy as a whole, with a focus on relatively well-established
companies.

The Aggressive Growth Portfolio. The Aggressive Growth Portfolio seeks
to achieve a high level of long-term capital appreciation by investing in
securities of a diverse group of smaller emerging companies.

The Bond Portfolio. The Bond Portfolio seeks to generate a high level
of current income consistent with prudent investment risk by investing in a
diversified portfolio of marketable debt securities.

The Managed Portfolio. The Managed Portfolio seeks to realize as high a
level of long-term total rate of return as is consistent with prudent investment
risk by investing in stocks, bonds, money market instruments or a combination
thereof.

The International Portfolio. The International Portfolio seeks
long-term growth of capital principally through investments in a diversified
portfolio of marketable equity securities of established non-United States
companies.

The Money Market Portfolio. The Money Market Portfolio seeks to provide
maximum current income consistent with capital preservation and liquidity by
investing in high-quality money market instruments.

Sentinel Advisors Company ("SAC") manages the Growth, Sentinel Growth,
Aggressive Growth, Bond, Managed and Money Market Portfolios. SAC is registered
as an investment adviser under the Investment Advisers Act of 1940. SAC is a
partnership whose partners are affiliates of National Life, Provident Mutual
Life Insurance Company ("Provident Mutual"), and The Penn Mutual Life Insurance
Company. National Life's affiliate is currently the managing partner of SAC and
is entitled to the majority share of SAC's profit or loss. The International
Portfolio is advised by Providentmutual Investment Management Company ("PIMC"),
which is also registered with the SEC as an investment adviser under the
Investment Advisers Act of 1940. PIMC has employed The Boston Company Asset
Management, Inc. to provide investment advisory services to the International
Portfolio.

A full description of the Market Street Fund, its investment objectives
and policies, its risks, expenses, and other aspects of its operation is
contained in the attached Prospectus for the Market Street Fund, which you
should read together with this Prospectus.

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<PAGE> 18

VARIABLE INSURANCE PRODUCTS FUND AND VARIABLE INSURANCE PRODUCTS FUND II

The Separate Account has four Subaccounts which invest exclusively in
shares of Portfolios of the Variable Insurance Products Fund (the "VIP Fund")
and two Subaccounts which invest exclusively in shares of Portfolios of the
Variable Insurance Products Fund II ("VIP Fund II"). Like the Market Street
Fund, the VIP Fund and the VIP II Fund are "series" type mutual funds registered
with the SEC as diversified open-end management investment companies issuing a
number of series or classes of shares, each of which represents an interest in a
Portfolio of the VIP Fund or VIP Fund II. Shares of these Portfolios are
purchased and redeemed by the Separate Account at net asset value without a
sales charge.

The investment objectives of the Portfolios of the VIP Fund and the VIP
Fund II in which the Subaccounts invest are set forth below. The investment
experience of each Subaccount depends upon the investment performance of the
corresponding Portfolio. There is no assurance that any Portfolio will achieve
its stated objective.

Equity-Income Portfolio. This Portfolio seeks reasonable income by
investing primarily in income producing equity securities. In choosing these
securities, the Equity-Income Portfolio considers the potential for capital
appreciation. The Portfolio's goal is to achieve a yield which exceeds the
composite yield of the securities comprising the Standard and Poor's 500
Composite Stock Price Index.

Growth Portfolio. This Portfolio seeks to achieve capital appreciation.
The Growth Portfolio normally purchases common stocks, although its investments
are not restricted to any one type of security. Capital appreciation may also be
found in other types of securities, including bonds and preferred stocks.

High Income Portfolio. This Portfolio seeks to obtain a high level of
current income by investing primarily in high-yielding, lower-rated,
fixed-income securities, while also considering growth of capital. The risks of
investing in these high-yielding, high-risk securities is described in the
attached Prospectus for the VIP Fund, which should be read carefully before
investing.

Overseas Portfolio. This Portfolio seeks long term growth of capital
primarily through investments in foreign securities. The Overseas Portfolio
provides a means for diversification by participating in companies and economies
outside of the United States.

Index 500 Portfolio. This portfolio seeks to match the total return of
the Standard & Poors' Composite Index of 500 Stocks ("S&P 500") while keeping
expenses low. This Portfolio normally invests at least 80% of its assets in
equity securities of companies that compose the S&P 500.

Contrafund Portfolio. This Portfolio seeks capital appreciation by
investing primarily in companies that the Fund manager believes to be
undervalued due to an overly pessimistic appraisal by the public. This strategy
can lead to investments in domestic or foreign companies, small and large, many
of which may not be well known. The Fund primarily invests in common stock and
securities convertible into common stock, but it has the flexibility to invest
in any type of security that may produce capital appreciation.

The Equity-Income, Growth, High Income, and Overseas Portfolios of the
VIP Fund and the Index 500 and Contrafund Portfolios of the VIP Fund II are
managed by Fidelity Management and Research Company ("FMR"). Bankers Trust
Company currently serves as sub-advisor to the Portfolio and manages the Index
500 Portfolio. FMR has entered into sub-advisory agreements with FMR U.K., FMR
Far East, and Fidelity International Investment Advisors for the Overseas
Portfolio.

A full description of the VIP Fund and VIP Fund II, the investment
objectives and policies of the Portfolios, the risks, expenses and other aspects
of their operation is contained in the attached Prospectuses for the VIP Fund
and VIP Fund II.

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<PAGE> 19

ALGER AMERICAN FUND

The Separate Account has two Subaccounts which invest exclusively in
shares of Portfolios of the Alger American Fund. Like the Market Street Fund and
the VIP Fund, the Alger American Fund is a "series" type mutual fund registered
with the SEC as a diversified open-end management investment company issuing a
number of series or classes of shares, each of which represents an interest in a
Portfolio of the Alger American Fund. Shares of these Portfolios are purchased
and redeemed by the Separate Account at net asset value without a sales charge

The investment objectives of the Portfolios of the Alger American Fund
in which the Subaccounts invest are set forth below. The investment experience
of each Subaccount depends upon the investment performance of the corresponding
Portfolio. There is no assurance that either Portfolio will achieve its stated
objective.

Alger American Small Capitalization Portfolio. This Portfolio seeks
long-term capital appreciation by investing in a diversified, actively managed
portfolio of equity securities, primarily of companies with total market
capitalization of less than $1 billion. Income is a consideration in the
selection of investments but is not an investment objective of the Portfolio.

Alger American Growth Portfolio. This Portfolio seeks long-term capital
appreciation by investing in a diversified, actively managed portfolio of equity
securities, primarily of companies with a total market capitalization of $1
billion or greater. Income is a consideration in the selection of investments
but is not an investment objective of the Portfolio.

The Alger American Small Capitalization Portfolio and the Alger
American Growth Portfolio are managed by Fred Alger Management, Inc.

A full description of the Alger American Fund, the investment
objectives and policies of the Portfolios, the risks, expenses and other aspects
of their operation is contained in the attached Prospectus for the Alger
American Fund.

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

The Separate Account has one Subaccount which invests exclusively in
shares of the VP Value portfolio, and one Subaccount which invests exclusively
in shares of VP Income & Growth portfolio, each of which are series of American
Century Variable Portfolios, Inc. American Century Variable Portfolios, Inc. is
a "series" type mutual fund registered with the SEC as a diversified open-end
management investment company issuing a number of series or classes of shares.
Shares of these Portfolios will be purchased and redeemed by the Separate
Account at net asset value without a sales charge.

The investment objectives of the Portfolios of American Century
Variable Portfolios, Inc. in which the Subaccounts are expected to invest are
set forth below. The investment experience of each Subaccount depends upon the
investment performance of the underlying Portfolio. There is no assurance that
either Portfolio will achieve its stated objective.

VP Value. To seek long-term capital growth. Income is a secondary
objective. The Portfolio will seek to achieve its investment objective by
investing in securities that management believes to be undervalued at the time
of purchase.

VP Income & Growth. To seek dividend growth, current income and capital
appreciation. The Portfolio will seek to achieve its investment objective by
investing in common stocks.

The VP Value Portfolio and the VP Income & Growth Portfolio of the
American Century Variable Portfolios, Inc. are managed by American Century
Investment Management, Inc. A full description of these Portfolios, their
investment objectives and policies, and the risks, expenses and other aspects of
their operation is contained in the attached Prospectuses for VP Value and VP
Income & Growth.

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<PAGE> 20

GOLDMAN SACHS VARIABLE INSURANCE TRUST

The Separate Account has four Subaccounts which invest exclusively in
shares of the following four Funds of Goldman Sachs Variable Insurance Trust:

- -the International Equity Fund
- -the Global Income Fund
- -the CORE Small Cap Equity Fund, and
- -the Mid Cap Equity Fund.

Goldman Sachs Variable Insurance Trust is a "series" type mutual fund
registered with the SEC as an open-end management investment company issuing a
number of series or classes of shares, each of which represents an interest in a
Fund of Goldman Sachs Variable Insurance Trust. Shares of these Funds are
purchased and redeemed by the Separate Account at net asset value without a
sales charge.

The investment objectives of the Funds of Goldman Sachs Variable Insurance
Trust in which the Subaccounts invest are set forth below. The investment
experience of each Subaccount depends upon the investment performance of the
underlying Fund. There is no assurance that any Fund will achieve its stated
objective.

Goldman Sachs International Equity Fund. Seeks long-term capital
appreciation through investments in equity securities of companies that are
organized outside the U.S. or whose securities are principally traded outside
the U.S.

Goldman Sachs Global Income Fund. Seeks a high total return,
emphasizing current income and, to a lesser extent, providing opportunities for
capital appreciation. The Fund invests primarily in a portfolio of high quality
fixed-income securities of U.S. and foreign issuers and foreign currencies.

Goldman Sachs CORE Small Cap Equity Fund. Seeks long-term growth of
capital through a broadly diversified portfolio of equity securities of U.S.
issuers which are included in the Russell 2000 Index at the time of investment.

Goldman Sachs Mid Cap Equity Fund. Seeks long-term capital appreciation
primarily through investments in equity securities of companies with public
stock market capitalizations within the range of the market capitalization of
companies constituting the Russell Midcap Index at the time of investment
(currently between $400 million and $16 billion).

The International Equity and Global Income Funds are managed by Goldman Sachs
Asset Management International and the CORE Small Cap Equity and Mid Cap Equity
Funds are managed by Goldman Sachs Asset Management. A full description of the
International Equity Fund, the Global Income Fund, the CORE Small Cap Equity
Fund and the Mid Cap Equity Fund series of Goldman Sachs Variable Insurance
Trust, their investment objectives and policies, and the risks, expenses and
other aspects of their operation is contained in the attached Prospectus for the
Goldman Sachs Variable Insurance Trust.

J.P. MORGAN SERIES TRUST II

The Separate Account has one Subaccount which invests exclusively in
shares of the J.P. Morgan International Opportunities Portfolio, and one
Subaccount which invests exclusively in shares of J.P. Morgan Small Company
Portfolio, each of which are series of J.P. Morgan Series Trust II. J.P. Morgan
Series Fund II is a "series" type mutual fund registered with the SEC as a
diversified open-end management investment company issuing a number of series or
classes of shares. Shares of these Portfolios will be purchased and redeemed by
the Separate Account at net asset value without a sales charge.

The investment objectives of the J.P. Morgan Series Trust II Portfolios
in which the Subaccounts invest are set forth below. The investment experience
of each Subaccount depends upon the investment

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<PAGE> 21

performance of the underlying Portfolio. There is no assurance that either
Portfolio will achieve its stated objective.

J.P. Morgan International Opportunities Portfolio. Seeks to provide a
high total return from a portfolio comprised of equity securities of foreign
corporations. The Portfolio is designed for investors with a long-term
investment horizon who want to diversify their investments by adding
international equities and take advantage of investment opportunities outside
the U.S. As an international investment, the Portfolio is subject to foreign
market, political, and currency risks.

J.P. Morgan Small Company Portfolio. Seeks to provide a high total
return from a portfolio comprised of equity securities of small companies. The
Portfolio invests at least 65% of the value of its total assets in the common
stock of small U.S. companies primarily with market capitalizations of less than
$1 billion. The Portfolio is designed for investors who are willing to assume
the somewhat higher risk of investing in small companies in order to seek a
higher return over time than might be expected from a portfolio of large
companies.

The J.P. Morgan International Opportunities Portfolio and the J.P.
Morgan Small Company Portfolio of the J.P. Morgan Series Trust II are managed by
J.P. Morgan Investment Management Inc. A full description of these Portfolios,
their investment objectives and policies, and the risks, expenses and other
aspects of their operation is contained in the attached Prospectuses for the
J.P. Morgan International Opportunities Portfolio and the J.P. Morgan Small
Company Portfolio.

NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST

The Separate Account has one Subaccount which invests exclusively in
shares of the Partners Portfolio, a series of Neuberger & Berman Advisers
Management Trust. Neuberger & Berman Advisers Management Trust is a "series"
type mutual fund registered with the SEC as a diversified open-end management
investment company issuing a number of series or classes of shares, each of
which represents an interest in a Portfolio of Neuberger & Berman Advisers
Management Trust. Shares of this Portfolio will be purchased and redeemed by the
Separate Account at net asset value without a sales charge.

The investment objectives of the Partners Portfolio are set forth
below. The investment experience of each Subaccount depends upon the investment
performance of the underlying Portfolio. There is no assurance that the
Portfolio will achieve its stated objective.

Partners Portfolio. To seek capital growth. This Portfolio will seek to
achieve its objective by investing primarily in the common stock of established
companies. Its investment program seeks securities believed to be undervalued
based on fundamentals such as low price-to-earnings ratios, consistent cash
flows, and support from asset values. The objective of the Partners Portfolio is
not fundamental and can be changed by the Trustees of the Neuberger & Berman
Advisers Management Trust without shareholder approval. Shareholders will,
however, receive at least 30 days prior notice thereof.

The Partners Portfolio of Neuberger & Berman Advisers Management Trust
is managed by Neuberger & Berman Management Incorporated. A full description of
this Portfolio, its investment objectives and policies, and the risks, expenses
and other aspects of its operation is contained in the attached Prospectus for
the Partners Portfolio of Neuberger & Berman Advisers Management Trust.

STRONG VARIABLE INSURANCE FUNDS, INC. AND STRONG OPPORTUNITY FUND II, INC.

The Separate Account has one Subaccount which invests exclusively in
shares of the Growth Fund II, a series of Strong Variable Insurance Funds, Inc.,
and one Subaccount which invests exclusively in shares of Strong Opportunity
Fund II, Inc. Strong Variable Insurance Funds, Inc. is a "series" type mutual
fund registered with the SEC as a diversified open-end management investment
company issuing a number of series or classes of shares, and Strong Opportunity
Fund II is a single series mutual fund also registered with the SEC as a
diversified open-end management investment company. Shares of these Funds will
be purchased and redeemed by the Separate Account at net asset value without a
sales charge.

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<PAGE> 22

The investment objectives of the Strong Funds in which the Subaccounts
invest are set forth below. The investment experience of each Subaccount depends
upon the investment performance of the underlying Portfolio. There is no
assurance that either Portfolio will achieve its stated objective.

Growth Fund II. This Portfolio seeks capital growth. It invests
primarily in equity securities that the advisor believes have above-average
growth prospects.

Strong Opportunity Fund II, Inc. This Fund seeks capital appreciation
through investments in a diversified portfolio of equity securities.

The Growth Fund II series of Strong Variable Insurance Funds, Inc., and
Strong Opportunity Fund, Inc. are managed by Strong Capital Management, Inc.

A full description of the Growth Fund II series of Strong Variable
Insurance Funds, Inc., and Strong Opportunity Fund, Inc. their investment
objectives and policies, and the risks, expenses and other aspects of their
operation is contained in the attached Prospectuses for the Growth Fund II and
Strong Opportunity Fund II, Inc.

OTHER INFORMATION

Contractual Arrangements. We have entered into or may enter into
agreements with Funds pursuant to which the advisor or distributor pays us a fee
based upon an annual percentage of the average net asset amount we invest on
behalf of the Separate Account and our other separate accounts. These
percentages may differ, and we may be paid a greater percentage by some
investment advisors or distributors than other advisors or distributors. These
agreements reflect administrative services provided by us.

Investment Results. The investment objectives and policies of certain
Portfolios are similar to the investment objectives and policies of mutual fund
portfolios other than the Portfolios that may be managed by the investment
adviser or manager. The investment results of the Portfolios, however, may be
higher or lower than the results of such other portfolios. There can be no
assurance, and no representation is made, that the investment results of any of
the Funds will be comparable to the investment results of any other portfolio,
even if the other portfolio has the same investment adviser or manager.

Resolving Material Conflicts. The participation agreements under which
the Funds sell their shares to Subaccounts of the Separate Account contain
varying termination provisions. In general, each party may terminate at its
option with specified advance written notice, and may also terminate in the
event of specific regulatory or business developments.

Should an agreement between National Life and a Fund terminate, the
Subaccounts which invest in that Fund may not be able to purchase additional
shares of such Fund. In that event, you will no longer be able to transfer
Accumulated Values or allocate Net Premiums to Subaccounts investing in
Portfolios of such Fund.

Additionally, in certain circumstances, it is possible that a Fund or a
Portfolio of a Fund may refuse to sell its shares to a Subaccount despite the
fact that the participation agreement between the Fund and us has not been
terminated. Should a Fund or Portfolio of such Fund decide not to sell its
shares to us, we will not be able to honor your requests to allocate cash values
or net premiums to Subaccounts investing in shares of that Fund or Portfolio.

The Funds are available to registered separate accounts of insurance
companies, other than National Life, offering variable annuity and variable life
insurance policies. As a result, there is a possibility that a material conflict
may arise between the interests of Owners with Accumulated Value allocated to
the Separate Account and the owners of life insurance policies and variable
annuities issued by such other

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<PAGE> 23

companies whose values are allocated to one or more other separate accounts
investing in any one of the Funds.

In the event of a material conflict, we will take any necessary steps,
including removing the Separate Account from that Fund, to resolve the matter.
The Board of Directors or Trustees of the Funds intend to monitor events in
order to identify any material conflicts that possibly may arise and to
determine what action, if any, should be taken in response to those events or
conflicts. See the individual Fund Prospectuses for more information.

THE GENERAL ACCOUNT

For information on the General Account, see page .

DETAILED DESCRIPTION OF POLICY PROVISIONS

DEATH BENEFIT

General. As long as the Policy remains in force, we will pay the Death
Benefit of the Policy, after due proof of the Insured's death (and fulfillment
of certain other requirements), to the named Beneficiary, unless the claim is
contestable in accordance with the terms of the Policy. You may choose to have
the proceeds paid in cash or under one of the available Settlement Options. (See
"Payment of Policy Benefits," Page .) The Death Benefit payable will be the
Unadjusted Death Benefit under the Death Benefit Option that is in effect,
increased by any additional benefits and any dividend payable, and decreased by
any outstanding Policy loan and accrued interest and any unpaid Monthly
Deductions.

Death Benefit Options. The Policy provides two Death Benefit Options:
Option A and Option B. You select the Death Benefit Option in the application
and may change it as described in "Change in Death Benefit Option," Page .

Option A. The Unadjusted Death Benefit is equal to the greater of:

(a) the Face Amount of the Policy, and

(b) the Accumulated Value on the Valuation Date on or next following the
Insured's date of death multiplied by the specified percentage shown in the
table below:
<TABLE>
<CAPTION>
Attained Age Percentage Attained Age Percentage
------------ ---------- ------------ ----------
<S> <C> <C> <C>
40 and under 250% 60 130%
45 215% 65 120%
50 185% 70 115%
55 150% 75 and over 105%
</TABLE>

For Attained Ages not shown, the percentages will decrease by a ratable portion
of each full year.

Illustration of Option A -- For purposes of this illustration, assume
that the Insured is under Attained Age 40 and there is no Policy loan
outstanding.

Under Option A, a Policy with a Face Amount of $200,000 will generally
pay an Unadjusted Death Benefit of $200,000. The specified percentage for an
Insured under Attained Age 40 on the Policy Anniversary prior to the date of
death is 250%. Because the Unadjusted Death Benefit must be equal to or greater
than 2.50 times the Accumulated Value, any time the Accumulated Value exceeds
$80,000 the Unadjusted Death Benefit will exceed the Face Amount. Each
additional dollar added to the Accumulated Value will increase the Unadjusted
Death Benefit by $2.50. Thus, a 35 year old Insured with an

20
<PAGE> 24

Accumulated Value of $90,000 will have an Unadjusted Death Benefit of $225,000
(2.50 x $90,000, and an Accumulated Value of $150,000 will have an Unadjusted
Death Benefit of $375,000 (2.50 x $150,000).

Similarly, any time the Accumulated Value exceeds $80,000, each dollar
taken out of the Accumulated Value will reduce the Unadjusted Death Benefit by
$2.50. If at any time, however, the Accumulated Value multiplied by the
specified percentage is less than the Face Amount, the Unadjusted Death Benefit
will be the Face Amount of the Policy.

Option B. The Unadjusted Death Benefit is equal to the greater of:

(a) the Face Amount of the Policy plus the Accumulated Value, and

(b) the Accumulated Value on the Valuation Date on or next following the
Insured's date of death multiplied by the specified percentage shown in the
table above.

Illustration of Option B -- For purposes of this illustration, assume
that the Insured is under Attained Age 40 and there is no Policy loan
outstanding.

Under Option B, a Policy with a face amount of $200,000 will generally
pay an Unadjusted Death Benefit of $200,000 plus the Accumulated Value. Thus,
for example, a Policy with a $50,000 Accumulated Value will have an Unadjusted
Death Benefit of $250,000 ($200,000 plus $50,000). Since the specified
percentage is 250%, the Unadjusted Death Benefit will be at least 2.50 times the
Accumulated Value. As a result, if the Accumulated Value exceeds $133,333, the
Unadjusted Death Benefit will be greater than the Face Amount plus the
Accumulated Value. Each additional dollar added to the Accumulated Value above
$133,333 will increase the Unadjusted Death Benefit by $2.50. An Insured with an
Accumulated Value of $150,000 will have an Unadjusted Death Benefit of $375,000
(2.50 x $150,000), and an Accumulated Value of $200,000 will yield an Unadjusted
Death Benefit of $500,000 (2.50 x $200,000). Similarly, any time the Accumulated
Value exceeds $133,333, each dollar taken out of the Accumulated Value will
reduce the Unadjusted Death Benefit by $2.50. If at any time, however, the
Accumulated Value multiplied by the specified percentage is less than the Face
Amount plus the Accumulated Value, the Unadjusted Death Benefit will be the Face
Amount plus the Accumulated Value.

At Attained Age 99, Option B automatically becomes Option A.

Which Death Benefit Option to Choose. If you prefer to have premium
payments and favorable investment performance reflected partly in the form of an
increasing Death Benefit, you should choose Option B. If you are satisfied with
the amount of the Insured's existing insurance coverage and prefer to have
premium payments and favorable investment performance reflected to the maximum
extent in the Accumulated Value, you should choose Option A.

Change in Death Benefit Option. After the first Policy Year, you may
change the Death Benefit Option in effect by sending us a written request. There
is no charge to change the Death Benefit Option. The effective date of a change
will be the Monthly Policy Date on or next following the date we receive the
written request. Only one change in Death Benefit Option is permitted in any one
Policy Year.

If the Death Benefit Option is changed from Option A to Option B, on
the effective date of the change, the Death Benefit will not change and the Face
Amount will be decreased by the Accumulated Value on that date. You may not make
this change if it would reduce the Face Amount to less than the Minimum Face
Amount.

If the Death Benefit Option is changed from Option B to Option A, on
the effective date of the change, the Death Benefit will not change and the Face
Amount will be increased by the Accumulated Value on that date.

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<PAGE> 25

A change in the Death Benefit Option may affect the Net Amount at Risk
over time. This in turn may affect the monthly Cost of Insurance Charge (see
"Monthly Deductions," Page ). Changing from Option A to Option B will generally
result in a Net Amount at Risk that remains level. Such a change will result in
a relative increase in the Cost of Insurance Charges over time because the Net
Amount at Risk will, unless the Unadjusted Death Benefit is based on the
applicable percentage of Accumulated Value, remain level as cost of insurance
rates increase over time, rather than the Net Amount at Risk decreasing as the
Accumulated Value increases. Changing from Option B to Option A will, if the
Accumulated Value increases, decrease the Net Amount at Risk over time, thereby
potentially offsetting the effect over time of increasing cost of insurance
rates.

The effects of these Death Benefit Option changes on the Face Amount,
Unadjusted Death Benefit and Net Amount at Risk can be illustrated as follows.
Assume that your Policy under Option A has a Face Amount of $500,000 and an
Accumulated Value of $100,000 and, therefore, an Unadjusted Death Benefit of
$500,000 and a Net Amount at Risk of $400,000 ($500,000 - $100,000). If you
change the Death Benefit Option from Option A to Option B, the Face Amount will
decrease from $500,000 to $400,000 and the Unadjusted Death Benefit and Net
Amount at Risk would remain the same.

Now assume that your Policy under Option B has a Face Amount of
$500,000 and an Accumulated Value of $50,000 and, therefore, the Unadjusted
Death Benefit is $550,000 ($500,000 + $50,000) and the Net Amount at Risk is
$500,000 ($550,000 - $50,000). If the Death Benefit Option is changed from
Option B to Option A, the Face Amount will increase to $550,000, and the
Unadjusted Death Benefit and Net Amount at Risk would remain the same.

If a change in the Death Benefit Option would result in cumulative
premiums exceeding the maximum premium limitations under the Internal Revenue
Code for life insurance, we will not effect the change.

A change in the Death Benefit Option may have Federal income tax
consequences. (See "Tax Treatment of Policy Benefits," Page .)

How the Death Benefit May Vary. The amount of the Death Benefit may
vary with the Accumulated Value. The Death Benefit under Option A will vary with
the Accumulated Value whenever the specified percentage of Accumulated Value
exceeds the Face Amount of the Policy. The Death Benefit under Option B will
always vary with the Accumulated Value because the Unadjusted Death Benefit
equals the greater of (a) the Face Amount plus the Accumulated Value and (b) the
Accumulated Value multiplied by the specified percentage.

ABILITY TO ADJUST FACE AMOUNT

You may, at any time after the first Policy Year, increase or decrease
the Policy's Face Amount by submitting a written application to us. There are
some limits on your ability to effect increases or decreases, which are
discussed below. The effective date of an increase will be the Monthly Policy
Date on or next following our approval of your request. The effective date of a
decrease is the Monthly Policy Date on or next following the date that we
receive your written request. Employee benefit plan Policies may adjust the Face
Amount even in Policy Year 1. An increase in Face Amount may have federal tax
consequences. (See "Tax Treatment Of Policy Benefits," Page .) The effect of
changes in Face Amount on Policy charges, as well as other considerations, are
described below.

Increase. A request for an increase in Face Amount may not be for less
than $25,000, or such lesser amount required in a particular state (except that
the minimum for employee benefit plans is $2000). You may not increase the Face
Amount after the Insured's Attained Age 85. To obtain the increase, you must
submit an application for the increase and provide evidence satisfactory to us
of the Insured's insurability.

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<PAGE> 26

On the effective date of an increase, and taking the increase into
account, the Cash Surrender Value must be at least equal to the Monthly
Deductions then due. If the Cash Surrender Value is not sufficient, the increase
will not take effect until you pay a sufficient additional premium payment to
increase the Cash Surrender Value.

An increase in the Face Amount will generally affect the total Net
Amount at Risk. This will normally increase the monthly Cost of Insurance
Charges. In addition, the Insured may be in a different Rate Class as to the
increase in insurance coverage. An increase in premium payment or frequency may
be appropriate after an increase in Face Amount. (See "Cost of Insurance
Charge," Page .)

Decrease. The amount of the Face Amount after a decrease cannot be less
than 75% of the largest Face Amount in force at any time in the twelve months
immediately preceding our receipt of your request for the decrease. The Face
Amount after any decrease may not be less than the Minimum Face Amount, which is
generally currently $50,000. If decrease in the Face Amount would result in
cumulative premiums exceeding the maximum premium limitations applicable for
life insurance under the Internal Revenue Code, we will not allow the decrease.

A decrease in the Face Amount generally will decrease the total Net
Amount at Risk, which will decrease your monthly Cost of Insurance Charges.

For purposes of determining the Cost of Insurance Charge, any decrease
in the Face Amount will reduce the Face Amount in the following order:

(a) first, the increase in Face Amount provided by the most recent increase;

(b) then the next most recent increases, in inverse chronological order; and
finally

HOW THE DURATION OF THE POLICY MAY VARY

Your Policy will remain in force as long as the Cash Surrender Value of
the Policy is sufficient to pay the Monthly Deductions and the charges under the
Policy. When the Cash Surrender Value is insufficient to pay the charges and the
Grace Period expires without an adequate premium payment by you, the Policy will
lapse and terminate without value. However, during the first five Policy Years
the Policy will not lapse, if you have paid the Minimum Guarantee Premium. You
have certain rights to reinstate your Policy, if it should lapse. (See
"Reinstatement," Page .)

In addition, an optional Guaranteed Death Benefit Rider is available
which will guarantee that the Policy will not lapse prior to age 70, or 20 years
from the Date of Issue of the Policy, if longer, regardless of investment
performance, if you have paid the Minimum Guarantee Premium as of each Monthly
Policy Date.

ACCUMULATED VALUE

The Accumulated Value is the total amount of value held under the
Policy at any time. It is equal to the sum of the Policy's values in the
Separate Account and the General Account. The Accumulated Value minus any
applicable Surrender Charge, and minus any outstanding Policy loans and accrued
interest, is equal to the Cash Surrender Value. There is no guaranteed minimum
for the portion of the Accumulated Value in any of the Subaccounts of the
Separate Account. Because the Accumulated Value on any future date depends upon
a number of variables, it cannot be predetermined.

The Accumulated Value and Cash Surrender Value will reflect:

- the Net Premiums paid

- the investment performance of the Portfolios you have chosen

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<PAGE> 27

- the crediting of interest on non-loaned Accumulated Value in the
General Account and amounts held as Collateral in the General
Account

- any transfers

- any Withdrawals

- any loans

- any loan repayments

- any loan interest paid, and

- charges assessed on the Policy.

Determination of Number of Units for the Separate Account. Amounts
allocated, transferred or added to a Subaccount of the Separate Account under a
Policy are used to purchase units of that Subaccount; units are redeemed when
amounts are deducted, transferred or withdrawn. The number of units a Policy has
in a Subaccount equals the number of units purchased minus the number of units
redeemed up to such time. For each Subaccount, the number of units purchased or
redeemed in connection with a particular transaction is determined by dividing
the dollar amount by the unit value.

Determination of Unit Value. The unit value of a Subaccount is equal to
the unit value on the immediately preceding Valuation Day multiplied by the Net
Investment Factor for that Subaccount on that Valuation Day.

Net Investment Factor. Each Subaccount of the Separate Account has its
own Net Investment Factor. The Net Investment Factor measures the daily
investment performance of the Subaccount. The factor will increase or decrease,
as appropriate, to reflect net investment income and capital gains or losses,
realized and unrealized, for the securities of the underlying portfolio or
series.

The asset charge for mortality and expense risks will be deducted in
determining the applicable Net Investment Factor. (See "Charges and Deductions -
Mortality and Expense Risk Charge," Page .)

Calculation of Accumulated Value. The Accumulated Value is determined
first on the Date of Issue and thereafter on each Valuation Day. On the Date of
Issue, the Accumulated Value will be the Net Premiums received, plus any
earnings prior to the Date of Issue, less any Monthly Deductions due on the Date
of Issue. On each Valuation Day after the Date of Issue, the Accumulated Value
will be:

(1) The aggregate of the values attributable to the Policy in the
Separate Account, determined by multiplying the number of
units the Policy has in each Subaccount of the Separate
Account by such Subaccount's unit value on that date; plus

(2) The value attributable to the Policy in the General Account
(See "The General Account," Page .)

PAYMENT AND ALLOCATION OF PREMIUMS

Issuance of a Policy. To purchase a Policy, you must apply to us
through a licensed National Life agent who is also a registered representative
of Equity Services, Inc. ("ESI") or a broker/dealer having a Selling Agreement
with ESI. If you do not pay the Minimum Initial Premium with your written
application, it must be paid when the Policy is delivered. Prior to the Date of
Issue, we will accept amounts less than the Minimum Initial Premium as long as
they are at least equal to the Minimum Monthly Premium. If you do not pay at
least the Minimum Initial Premium by the Issue Date, then we will refund all
premiums paid, and will not issue the Policy. If the first premium is submitted
when the Policy is delivered, and the premium is less than the Minimum Initial
Premium, the balance of the Minimum Initial Premium must be received within five
days, or all premiums will be refunded.

The Minimum Face Amount of a Policy under our rules is generally
$50,000; however, exceptions may be made for employee benefit plans. We may
revise our rules from time to time to specify a different Minimum Face Amount
for subsequently issued policies. A Policy will be issued only on

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<PAGE> 28

Insureds who have an Issue Age of 85 or less and who provide us with
satisfactory evidence of insurability. Acceptance is subject to our underwriting
rules. We may reject an application for any reason permitted by law. (See
"Distribution of Policies," Page .)

From the time the application for a Policy is signed until the time the
Policy is issued, you can, subject to our underwriting rules, obtain temporary
insurance protection, pending issuance of the Policy, by answering "no" to the
Health Questions of the Receipt & Temporary Life Insurance Agreement and
submitting (a) a complete Application including any medical questionnaire
required, and (b) payment of the Minimum Initial Premium. The Minimum Initial
Premium will equal two times the Minimum Monthly Premium.

The amount of coverage under the Receipt & Temporary Life Insurance
Agreement is the lesser of the Face Amount applied for or $1,000,000 ($100,000
in the case of proposed Insureds age 70 or over). Coverage under the agreement
will end on the earliest of:

(a) the 90th day from the date of the agreement;

(b) the date that insurance takes effect under the Policy;

(d) three days from the date we mail a notice of termination of coverage;

(e) the time you first learn that we have terminated the temporary life
insurance; or

(f) the time you withdraw the application for life insurance.

We offer a one time credit on conversions of eligible National Life
term insurance policies to a VariTrak Policy. If the term policy being converted
has been in force for at least twelve months, the amount of the credit is 12% of
a target amount used to determine commission payments. If the term policy being
converted has been in force for less than twelve months, the credit will be
prorated based on the number of months the term policy has been outstanding at
the time of conversion. For GRT term policies, the credit will be 18% of the
target amount used to determine commission payments if the GRT term policy has
been in force for at least two years but not more than five years. For GRT term
policies in force for less than two years, the credit is 0.5% per month for each
month in the first year, and 1.0% per month for each month in the second year.
For GRT policies in force more than five years, the credit decreases from 18% by
0.5% for each month beyond five years, until it becomes zero at the end of year
eight.

The amount of the credit will be added to the initial premium payment,
if any, you pay and will be treated as part of the Initial Premium for the
Policy. Thus, the credit will be included in premium payments for purposes of
calculating and deducting the Premium Tax Charge. If you surrender your Policy,
we will not recapture the credit. We will not include the amount of the credit
for purposes of calculating agent compensation for the sale of the Policy.

We also offer a one time credit to Home Office employees who purchase a
VariTrak Policy, as both Owner and Insured. This one time credit is calculated
differently from the credit described above; in particular, the amount of the
credit will be 50% of the target premium used in the calculation of commissions
on the Policy. Otherwise, the credit will be treated in the same manner as the
credit described above.

Amount and Timing of Premiums. Each premium payment must be at least
$50. You have considerable flexibility in determining the amount and frequency
of premium payments, within the limits discussed below.

You will at the time of application select a Planned Periodic Premium
schedule, based on a periodic billing mode of annual, semi-annual, or quarterly
payments. You may request us to send a premium reminder notice at the specified
interval. You may change the Planned Periodic Premium frequency and amount.
Also, under a "Check-O-Matic" plan, you can select a monthly payment schedule
pursuant to which premium payments will be automatically deducted from a bank
account or other source, rather than being "billed." We may allow, in certain
situations, Check-O-Matic payments of less than $50. We may require that
Check-O-Matic be set up for at least the Minimum Monthly Premium.

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<PAGE> 29

You are not required to pay the Planned Periodic Premiums in accordance
with the specified schedule. You may pay premiums whenever you like, and in any
amount (subject to the $50 minimum and the limitations described in the next
section). Payment of the Planned Periodic Premiums will not, however, guarantee
that the Policy will remain in force. Instead, the duration of the Policy
depends upon the Policy's Cash Surrender Value. Thus, even if you pay the
Planned Periodic Premiums, the Policy will lapse whenever the Cash Surrender
Value is insufficient to pay the Monthly Deductions and any other charges under
the Policy and if a Grace Period expires without an adequate payment by you
(unless the Policy is in its first five years, or you have purchased the
Guaranteed Death Benefit Rider, in either case so long as you have paid the
Minimum Guarantee Premium).

Any payments you make while there is an outstanding Policy loan will be
applied as premium payments rather than loan repayments, unless you notify us in
writing that the amount is to be applied as a loan repayment. You may not make
premium payments after the Insured reaches Attained Age 99. However, we permit
loan repayments after Attained Age 99.

Higher premium payments under Death Benefit Option A, until the
applicable percentage of Accumulated Value exceeds the Face Amount, will
generally result in a lower Net Amount at Risk. This will produce lower Cost of
Insurance Charges against the Policy. Conversely, lower premium payments in this
situation will result in a higher Net Amount at Risk, which will result in
higher Cost of Insurance Charges under the Policy.

Under Death Benefit Option B, until the applicable percentage of
Accumulated Value exceeds the Face Amount plus the Accumulated Value, the level
of premium payments will not affect the Net Amount at Risk. However, both the
Accumulated Value and Death Benefit will be higher if premium payments are
higher, and lower if premium payments are lower.

Under either Death Benefit Option, if the Unadjusted Death Benefit is
the applicable percentage of Accumulated Value, then higher premium payments
will result in a higher Net Amount at Risk, and higher Cost of Insurance
Charges. Lower premium payments will result in a lower Net Amount at Risk, and
lower Cost of Insurance Charges.

Premium Limitations. The Internal Revenue Code of 1986 (the "Code")
provides for exclusion of the Unadjusted Death Benefit from gross income if
total premium payments do not exceed certain stated limits. In no event can the
total of all premiums paid under a Policy exceed these limits. If at any time
you pay a premium which would result in total premiums exceeding the limits, we
will only accept that portion of the premium which would make total premiums
equal the maximum amount which may be paid under the Policy. We will promptly
refund the excess to you. In cases of premiums paid by check, we will wait until
your check has cleared. If you have an outstanding loan, we may instead apply
the payment as a loan repayment. Even if total premiums were to exceed the
maximum premium limitations established by the Code, the excess of (a) a
Policy's Unadjusted Death Benefit over (b) the Policy's Cash Surrender Value
plus outstanding Policy loans and accrued interest, would still be excludable
from gross income under the Code.

The maximum premium limitations set forth in the Code depend in part
upon the amount of the Unadjusted Death Benefit at any time. As a result, any
Policy changes which affect the amount of the Unadjusted Death Benefit may
affect whether cumulative premiums paid under the Policy exceed the maximum
premium limitations. To the extent that any such change would result in
cumulative premiums exceeding the maximum premium limitations, we will not
effect the change. (See "Federal Income Tax Considerations," Page .)

Unless the Insured provides satisfactory evidence of insurability, we
may limit the amount of any premium payment if it increases the Unadjusted Death
Benefit more than it increases the Accumulated Value.

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<PAGE> 30

Allocation of Net Premiums. The Net Premium equals the premium paid
less the Premium Tax Charge. In your application for the Policy, you will
indicate how Net Premiums should be allocated among the Subaccounts of the
Separate Account and/or the General Account. You may change these allocations at
any time by giving us written notice at our Home Office, or if you have elected
the telephone transaction privilege, by telephone instructions (See "Telephone
Transaction Privilege," Page .) You must make allocations in whole number
percentages of at least 5%, and the sum of the allocation percentages must be
100%. We will allocate Net Premiums as of the Valuation Date we receive the
premium at our Home Office, based on the allocation percentages then in effect,
except during the free look period.

We will allocate any portion of the Initial Premium and any subsequent
premiums we receive before the end of the free look period which are to be
allocated to the Separate Account, to the Money Market Subaccount. For this
purpose, we will assume that the free look period will end 20 days after the
date the Policy is issued. On the first Valuation Date following 20 days after
issue of the Policy, we will allocate the amount in the Money Market Subaccount
to each of the Subaccounts selected in the application based on your
instructions.

For example, assume a Policy was issued with Net Premiums to be
allocated 25% to the Managed Subaccount, 25% to the Bond Subaccount and 50% to
the General Account. During the period stated above, 50% (25% + 25%) of the Net
Premiums will be allocated to the Money Market Subaccount. At the end of such
period, 50% (25% / 50%) of the amount in the Money Market Subaccount will be
transferred to the Managed Subaccount and 50% to the Bond Subaccount.

The values of the Subaccounts will vary with their investment
experience. You bear the entire investment risk. You should periodically review
your allocation percentages in light of market conditions and your overall
financial objectives.

Transfers. You may transfer the Accumulated Value between and among the
Subaccounts of the Separate Account and the General Account by sending us a
written transfer request, or if you have elected the telephone transaction
privilege, by telephone instructions to us. (See "Telephone Transaction
Privilege," Page .) Transfers between and among the Subaccounts of the Separate
Account and the General Account are made as of the Valuation Day that the
request for transfer is received at the Home Office. You may, at any time,
transfer all or part of the amount in one of the Subaccounts of the Separate
Account to another Subaccount and/or to the General Account. For transfers from
the General Account to the Separate Account, see "Transfers from General
Account," Page .

Currently an unlimited number of transfers are permitted without
charge. We have no current intent to impose a transfer charge in the foreseeable
future. However, we may, after giving you prior notice, change this policy so as
to deduct a $25 transfer charge from each transfer in excess of the fifth
transfer during any one Policy Year. All transfers requested during one
Valuation Period are treated as one transfer transaction. If a transfer charge
is adopted in the future, these types of transfers would not be subject to a
transfer charge and would not count against the five free transfers in any
Policy Year:

- transfers resulting from Policy loans

- transfers resulting from the operation of the dollar cost
averaging or portfolio rebalancing features

- transfers resulting from the exercise of the transfer rights
described on page____ (see "Policy Rights - Other Transfer
Rights," Page ), and

- the reallocation from the Money Market Subaccount following the
free look period.

Under present law, transfers are not taxable transactions.

Policy Lapse. The failure to make a premium payment will not itself
cause a Policy to lapse. A Policy will lapse only when the Cash Surrender Value
is insufficient to cover the Monthly Deductions and other charges under the
Policy and the Grace Period expires without a sufficient payment. During the
first five Policy Years, the Policy will not lapse so long as you pay the
Minimum Guarantee Premium.

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<PAGE> 31

In addition, if you purchase the Guaranteed Death Benefit Rider, and
pay the Minimum Guarantee Premium as of each Monthly Policy Date, your Policy
will not lapse prior to the Insured's Attained Age 70, or 20 years from the Date
of Issue of the Policy if longer, regardless of whether the Cash Surrender Value
is sufficient to cover the Monthly Deductions. (See "Optional Benefits -
Guaranteed Death Benefit," Page .)

The Policy provides for a 61-day Grace Period that is measured from the
date we send a lapse notice. The Policy does not lapse, and the insurance
coverage continues, until the expiration of this Grace Period. To prevent lapse,
you must during the Grace Period pay a premium equal to the sum of any amount by
which the past Monthly Deductions have been in excess of Cash Surrender Value,
plus three times the Monthly Deduction due the date the Grace Period began. Our
notice will specify the payment required to keep the Policy in force. Failure to
make a payment at least equal to the required amount within the Grace Period
will result in lapse of the Policy without value.

Reinstatement. A Policy that lapses without value may be reinstated at
any time within five years (or longer period required in a particular state)
after the beginning of the Grace Period. To do so, you must submit evidence of
the Insured's insurability satisfactory to us and pay an amount sufficient to
provide for two times the Monthly Deduction due on the date the Grace Period
began plus three times the Monthly Deduction due on the effective date of
reinstatement. The effective date of reinstatement, unless otherwise required by
state law, will be the Monthly Policy Date on or next following the date your
reinstatement application is approved. Upon reinstatement, the Accumulated Value
will be based upon the premium paid to reinstate the Policy. The Policy will be
reinstated with the same Date of Issue as it had prior to the lapse. Neither the
five year no lapse guarantee nor the Death Benefit Guarantee Rider may be
reinstated.

Specialized Uses of the Policy. Because the Policy provides for an
accumulation of cash value as well as a death benefit, the Policy can be used
for various individual and business financial planning purposes. Purchasing the
Policy in part for such purposes entails certain risks. For example, if the
investment performance of the chosen Subaccounts is poorer than expected or if
sufficient premiums are not paid, the Policy may lapse or may not accumulate
sufficient Accumulated Value or Cash Surrender Value to fund the purpose for
which the Policy was purchased. Withdrawals and Policy loans may significantly
affect current and future Accumulated Value, Cash Surrender Value, or Death
Benefit proceeds. Depending upon Subaccount investment performance and the
amount of a Policy loan, the loan may cause a Policy to lapse. Because the
Policy is designed to provide benefits on a long-term basis, before purchasing a
Policy for a specialized purpose you should consider whether the long-term
nature of the Policy is consistent with your purpose. Using a Policy for a
specialized purpose may have tax consequences. (See "Federal Income Tax
Considerations," Page .)

For Policies that are intended to be used in STEP plans, you should be
aware that there is a risk that the intended tax consequences of such a plan may
not be realized. In two audits, the Internal Revenue Service has proposed tax
treatment less advantageous than intended, and those matters are currently in
litigation. The plans under audit may have considerable differences from those
you may be considering, and the litigation regarding such plans may or may not
be controlling with respect to STEP plans you may implement. We do not guarantee
any particular tax consequences of any use of the Policies, including but not
limited to use in STEP plans. We recommend that you seek independent tax advice
with respect to applications in which you seek particular tax consequences.

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<PAGE> 32

CHARGES AND DEDUCTIONS

Charges will be deducted in connection with the Policy to compensate us
for:

(a) providing the insurance and other benefits set forth in the Policy;

(b) administering the Policy;

(d) incurring expenses in distributing the Policy including costs
associated with printing prospectuses and sales literature and
sales compensation.

We may realize a profit from any charges. We may use any profit for any
purpose, including payment of distribution expenses.

PREMIUM TAX CHARGE

We will deduct 3.25% from each premium payment prior to allocation of
Net Premiums, to cover state premium taxes and the federal DAC Tax. For
qualified employee benefit plans, we will deduct 2.0% of each premium rather
than 3.25%.

The federal DAC Tax is a tax attributable to certain "policy
acquisition expenses" under Internal Revenue Code Section 848. Section 848 in
effect accelerates the realization of income we receive from the Policies, and
therefore the payment of federal income taxes on that income. The economic
consequence of Section 848 is, therefore, an increase in the tax burden borne by
us that is attributable to the Policies.

SURRENDER CHARGE

We impose a Surrender Charge, which consists of a Deferred
Administrative Charge and a Deferred Sales Charge, if the Policy is surrendered
or lapses at any time before the end of the fifteenth Policy Year.

Deferred Administrative Charge. The Deferred Administrative Charge
varies by Issue Age, and is based on the Initial Face Amount. After the first
five Policy Years, it declines linearly by Policy Month until the end of Policy
Year 15, when it becomes zero. Charges per $1,000 of Face Amount for sample
Issue Ages are shown below:
<TABLE>
<CAPTION>
Sample Charge per $1000
Issue Age of Initial Face Amount
--------- ----------------------
<S> <C>
0-5 None
10 $0.50
15 $1.00
20 $1.50
25-85 $2.00
</TABLE>

For Issue Ages not shown, the charge will increase by a ratable portion
for each full year. The Deferred Administrative Charge has been designed to
cover actual expenses for the issue and underwriting of Policies, and is not
intended to produce a profit.

Deferred Sales Charge. The Deferred Sales Charge will not exceed the
Maximum Deferred Sales Charge specified in the Policy. During Policy Years 1
through 5, this maximum equals 50% of the Surrender Charge target premium (which
is an amount, based on the Initial Face Amount, Issue Age, sex and Rate Class of
the Insured, used solely for the purpose of calculating the Deferred Sales
Charge) for the Face Amount. After Policy Year 5, the 50% declines linearly by
month through the 180th month,

29
<PAGE> 33

after which it is zero. The Maximum Deferred Sales Charge will also be subject
to the maximum imposed by New York State law.

The actual Deferred Sales Charge will equal the lesser of:

(a) the maximum discussed in the previous paragraph, and

(b) an amount equal to the sum of:

(i) 30% of the premiums actually received up to one Surrender
Charge target premium, plus

(ii) 10% of all premiums paid in excess of this amount but not
greater than twice this amount, plus

(iii) 9% of all premiums paid in excess of twice this amount.

To illustrate the calculation of a Policy's Surrender Charge, assume
that the Policy is issued to a male nonsmoker, Issue Age 45, with a
Face Amount of $100,000. Assume that the Surrender Charge target
premium ("SCTP") is $1,652, the initial Maximum Deferred Sales Charge
is $826 (50% of $1,652) and the Insured pays annual premiums of $1,500
at the beginning of each Policy Year. This example will illustrate
surrenders in the first five Policy Years and in the first month of the
eighth Policy Year.

Deferred Administrative Charge. The Deferred Administrative Charge for
the first five Policy Years is $200. This is calculated by applying the
charge of $2.00 per $1,000 of Face Amount for Issue Age 45 from the
schedule above to the Face Amount of $100,000 ($2.00 x
(100,000/1,000)). The Deferred Administrative Charge reduces linearly
by Policy Month in Policy Years 6 through 15. Linear reduction is
equivalent to a reduction each month of 1/121st of the initial charge.
For example, the Deferred Administrative Charge in the first month of
the eighth Policy Year (the 25th month after the end of the 5th Policy
Year) will be $158.68 ($200 - ($200 x (25/121)). After completion of
the 15th Policy Year, the Deferred Administrative Charge is zero. The
schedule of Deferred Administrative Charges in effect for the first
fifteen Policy Years is shown in the Policy.

Deferred Sales Charge. The Deferred Sales Charge is the lesser of the
Maximum Deferred Sales Charge and an amount calculated based on the
Insured's actual premium payments. The Maximum Deferred Sales Charge in
effect for the first five Policy Years is $826. The Maximum Deferred
Sales Charge reduces linearly by month in Policy Years 6 through 15.
Linear reduction is equivalent to a reduction each month of 1/121st of
the initial charge. For example, the Maximum Deferred Sales Charge in
the first month of the 8th Policy Year (the 25th month after the end of
the 5th Policy Year) will be $655.34 ($826 - ($826 x (25/121))). After
the completion of the 15th Policy Year, the Maximum Deferred Sales
Charge is $0. The schedule of Maximum Deferred Sales Charges in effect
for the first fifteen Policy Years is shown in the Policy.

The Maximum Deferred Sales Charge is compared to an amount calculated
as a function of premiums actually paid and the SCTP. The amount is
calculated as the sum of 30% of premiums paid up to the first SCTP
($1,652), 10% of premiums paid in excess of the first SCTP but not more
than two SCTP's (from $1,653 to $3,304), and 9% of premiums paid in
excess of two SCTP's (above $3,304). As an example, the calculated
amounts in Policy Years 1 through 5 and Policy Year 8 would be as
follows:
<TABLE>
<CAPTION>
Amount at 10%
Policy Cumulative Amount at 30% (From $1,653 Amount at 9%
Year Premiums (Below $1,652) to $3,304) (Above $3,304) Total
- ---- -------- -------------- ---------- -------------- -----
<S> <C> <C> <C> <C> <C>
1 $ 1,500 $1,500x.30=$450.00 - - $ 450.00
2 $ 3,000 $1,652x.30=$495.60 $1,348x.10=$134.80 - $ 630.40
3 $ 4,500 $1,652x.30=$495.60 $1,652x.10=$165.20 $1,196x.09=$107.64 $ 768.44
4 $ 6,000 $1,652x.30=$495.60 $1,652x.10=$165.20 $2,696x.09=$242.64 $ 903.44
5 $ 7,500 $1,652x.30=$495.60 $1,652x.10=$165.20 $4,196x.09=$377.64 $1,038.44
8 $12,000 $1,652x.30=$495.60 $1,652x.10=$165.20 $8,696x.09=$782.64 $1,443.44
</TABLE>

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<PAGE> 34

The total calculated amount would then be compared to the Maximum
Deferred Sales Charge to determine the Deferred Sales Charge actually
imposed. For example, the Deferred Sales Charge in the first five years
would be the following:
<TABLE>
<CAPTION>

(A) (B)
Maximum Deferred Deferred Sales Charge
Policy Year Calculated Amount Sales Charge (Lesser of (A) and (B)
----------- ----------------- ------------ ----------------------
<S> <C> <C> <C>
1 $ 450.00 $826.00 $450.00
2 $ 630.40 $826.00 $630.40
3 $ 768.44 $826.00 $768.44
4 $ 903.44 $826.00 $826.00
5 $1,038.44 $826.00 $826.00
</TABLE>

In this example, the charge based on SCTP is less than the Maximum
Deferred Sales Charge until the fourth Policy Year. Thereafter, the
Maximum Deferred Sales Charge is less than the charge based on SCTP.
For example, the Deferred Sales Charge in the first month of the eighth
Policy Year will be the Maximum Deferred Sales Charge of $655.34
(calculated above) since this is less than $1,443.44 (the calculated
amount based on premiums paid).

MONTHLY DEDUCTIONS

We will deduct charges from the Accumulated Value on the Date of Issue
and on each Monthly Policy Date. The Monthly Deduction consists of three
components:

(a) the Cost of Insurance Charge

(b) the Monthly Administrative Charge, and

The Monthly Deduction may vary in amount from Policy Month to Policy
Month. We will take the Monthly Deduction on a pro rata basis from the
Subaccounts of the Separate Account and the General Account, unless you have
requested at the time of application, or later request in writing, that we take
the Monthly Deductions from the Money Market Subaccount. If we cannot take a
Monthly Deduction from the Money Market Subaccount, where you have so asked, we
will take the amount of the deduction in excess of the Accumulated Value
available in the Money Market Subaccount on a pro rata basis from Accumulated
Value in the Subaccounts of the Separate Account and the General Account.

Cost of Insurance Charge. We calculate the monthly Cost of Insurance
Charge by multiplying the applicable cost of insurance rate or rates by the Net
Amount at Risk for each Policy Month. Because both the Net Amount at Risk and
the variables that determine the cost of insurance rate, such as the age of the
Insured and the Duration of the Policy, may vary, the Cost of Insurance Charge
will likely be different from month to month.

Net Amount at Risk. The Net Amount at Risk on any Monthly
Policy Date is approximately the amount by which the Unadjusted Death
Benefit on that Monthly Policy Date exceeds the Accumulated Value. It
measures the amount National Life would have to pay in excess of the
Policy's Value if the Insured died. The actual calculation uses the
Unadjusted Death Benefit divided by 1.00327234, to take into account
assumed monthly earnings at an annual rate of 4%. We calculate the Net
Amount at Risk separately for the Initial Face Amount and any increases
in Face Amount. In determining the Net Amount at Risk for each
increment of Face Amount, we first consider the Accumulated Value part
of the Initial Face Amount. If the Accumulated Value exceeds the
Initial Face Amount, we consider it as part of any increases in Face
Amount in the order such increases took effect.

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<PAGE> 35

Any change in the Net Amount at Risk will affect the total Cost of
Insurance Charges paid by the Owner.

Guaranteed Maximum Cost of Insurance Rates. The guaranteed maximum cost
of insurance rates will be set forth in your Policy, and will depend on:

- the Insured's Attained Age

- the Insured's sex

- the Insured's Rate Class, and

- the 1980 Commissioners Standard Ordinary Smoker/Nonsmoker
Mortality Table.

For Policies issued in states which require "unisex" policies or in
conjunction with employee benefit plans, the guaranteed maximum cost of
insurance rate will use the 1980 Commissioners Standard Ordinary Mortality
Tables NB and SB.

Current Cost of Insurance Rates and How They are Determined. The actual
cost of insurance rates used ("current rates") will depend on:

- the Insured's Issue Age

- the Insured's sex

- the Insured's Rate Class

- the Policy's Duration, and

- the Policy's size.

Generally, the current cost of insurance rate for a given Attained Age
will be less than for an Insured whose Policy was issued more than 10 years ago,
than for an Insured whose Policy was issued less than 10 years ago, other
factors being equal. We periodically review the adequacy of our current cost of
insurance rates and may adjust their level. However, the current rates will
never exceed guaranteed maximum cost of insurance rates. Any change in the
current cost of insurance rates will apply to all persons of the same Issue Age,
sex, and Rate Class, and with Policies of the same Duration and size.

We use separate cost of insurance rates for the Initial Face Amount and
any increases in Face Amount. For the Initial Face Amount we use the rate for
the Insured's Rate Class on the Date of Issue. For each increase in Face Amount,
we use the rate for the Insured's Rate Class at the time of the increase. If the
Unadjusted Death Benefit is calculated as the Accumulated Value times the
specified percentage, we use the rate for the Rate Class for the Initial Face
Amount for the amount of the Unadjusted Death Benefit in excess of the total
Face Amount.

We may also issue Policies on a guaranteed issue basis, where no
medical underwriting is required prior to issuance of a Policy. Current cost of
insurance rates for Policies issued on a guaranteed issue basis may be higher
than current cost of insurance rates for healthy Insureds who undergo medical
underwriting.

Rate Class. The Rate Class of the Insured will affect both the
guaranteed and current cost of insurance rates. We currently place Insureds into
the following rate classes:

- preferred nonsmoker

- standard nonsmoker

- smoker

- juvenile, and

- substandard.

Smoker, juvenile, and substandard classes reflect higher mortality
risks. In an otherwise identical Policy, an Insured in a preferred or standard
class will have a lower Cost of Insurance Charge than an Insured in a
substandard class with higher mortality risks. Nonsmoking Insureds will
generally incur lower cost of insurance rates than Insureds who are classified
as smokers.

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<PAGE> 36

The nonsmoker designation is not available for Insureds under Attained
Age 20. Shortly before an Insured attains age 20, we will notify the Insured
about possible classification as a nonsmoker and direct the Insured to his or
her agent to initiate a change in Rate Class. If the Insured either does not
initiate a change in Rate Class or does not qualify as a nonsmoker, guaranteed
cost of insurance rates will remain as shown in the Policy. However, if the
Insured qualifies as a nonsmoker, we will change the guaranteed and current cost
of insurance rates to reflect the nonsmoker classification.

Current cost of insurance rates will also vary by Policy size, in the
following bands:

- those with Unadjusted Death Benefits less than $250,000

- those with Unadjusted Death Benefits between $250,000 and
$999,999, inclusive; and

- those with Unadjusted Death Benefits of $1,000,000 and over.

Cost of insurance rates will be lower as the Policy size band is
larger.

Monthly Administrative Charge. We deduct a Monthly Administrative
Charge of $7.50 from the Accumulated Value on the Date of Issue and each Monthly
Policy Date as part of the Monthly Deduction to help defray the expenses
incurred in administering the Policy. In Texas, the Monthly Administrative
Charge may be increased, but is guaranteed never to exceed $7.50 plus $0.07 per
$1,000 of Face Amount.

Optional Benefit Charges. The Monthly Deduction will include charges
for any additional benefits added to the Policy. The monthly charges will be
specified in the applicable Rider. The available Riders are listed under
"Optional Benefits", on Page below.

Bonus. We currently intend to reduce the Monthly Deductions starting in
the eleventh Policy Year by an amount equal to 0.50% per annum of the
Accumulated Value in the Separate Account. This bonus is not guaranteed (except
as required by the state of issue), however. It will only be continued if our
mortality and expense experience with the Policies justifies it. We may notify
you before the commencement of the eleventh Policy Year that we intend to
discontinue the bonus.

The bonus is calculated on each Monthly Policy Date as .041572% (the
monthly equivalent of 0.50% per annum) of the Accumulated Value in the Separate
Account on the just prior Monthly Policy Date. For example, if the Accumulated
Value in the Separate Account on the just prior Monthly Policy Date is $10,000,
then the bonus calculated for the current Monthly Policy Date will be $4.16
($10,000 X .00041572). To calculate the Monthly Deduction for the current
Monthly Policy Date, we net the $4.16 bonus against the Monthly Deductions for
Cost of Insurance, the Monthly Administrative Charge, and charges for any
Optional Benefits.

MORTALITY AND EXPENSE RISK CHARGE

We deduct a daily charge from the Separate Account at an annual rate of
0.90% (or a daily rate of .0024548%) of the average daily net assets of each
Subaccount of the Separate Account. This charge compensates us for the mortality
and expense risks assumed in connection with the Policy. The mortality risk we
assume is that insured persons may live for a shorter time than projected. This
means we would pay greater death benefits than expected in relation to the
amount of premiums received. The expense risk we assume is that expenses
incurred in issuing and administering the Policies will exceed the
administrative charges deducted from the Policy. We may make a profit from
deducting this charge. Any profit may be used to finance distribution expenses.

33
<PAGE> 37

WITHDRAWAL CHARGE

We will assess on each Withdrawal a charge equal to the lesser of 2% of
the Withdrawal amount and $25. We will deduct this Withdrawal Charge from the
Withdrawal amount.

TRANSFER CHARGE

Currently, unlimited transfers are permitted among the Subaccounts, or
from the Separate Account to the General Account. Transfers from the General
Account to the Separate Account are permitted within the limits described on
Page . Currently there is no charge for any transfers. We have no present
intention to impose a transfer charge in the foreseeable future. However, we may
impose in the future a transfer charge of $25 on each transfer in excess of five
transfers in any Policy Year. The Transfer Charge would be imposed to compensate
us for the costs of processing such transfers, and would not be designed to
produce a profit.

If we impose a transfer charge in the future, we will deduct it from
the amount being transferred. We would treat all transfers requested on the same
Valuation Date as one transfer transaction. Any future transfer charge will not
apply to transfers resulting from:

- Policy loans

- the exercise of the transfer rights described on page ____

- the initial reallocation of account values from the Money Market
Subaccount to other Subaccounts, and

- any transfers made pursuant to the Dollar Cost Averaging and
Portfolio Rebalancing features.

The transfers listed above also will not count against the five free transfers
in any Policy Year.

PROJECTION REPORT CHARGE

We may impose a charge for each projection report you request. This
report will project future values and future Death Benefits for the Policy. We
will notify you in advance of the amount of the charge. You may elect to pay the
charge in advance. If not paid in advance, we will deduct this charge from the
Subaccounts of the Separate Account and/or the General Account in proportion to
their Accumulated Values on the date of the deduction.

OTHER CHARGES

The Separate Account purchases shares of the Funds at net asset value.
The net asset value of those shares reflect management fees and expenses already
deducted from the assets of the Funds' Portfolios. Historical expense ratio
information for the Funds is presented in the "Summary of Policy Expenses"
section on page above. More detailed information is contained in the Funds'
Prospectuses which accompany this Prospectus.

POLICY RIGHTS AND PRIVILEGES

LOAN PRIVILEGES

General. You may at any time after the first year (and during the first
year where required by law) borrow money from us using the Policy as the only
security for the loan. The maximum amount you may borrow is the Policy's Cash
Surrender Value on the date we receive your loan request, minus three times the
Monthly Deduction for the most recent Monthly Policy Date. You may repay all or
a portion of a loan and accrued interest at any time, if the Insured is alive.
To take a loan, you should send us a written at our Home Office. If you have
elected the telephone transaction privilege, you may also request a loan over
the telephone. We limit the amount of a Policy loan you can take by telephone to
$25,000. (See "Telephone

34
<PAGE> 38

Transaction Privilege," Page .) We will normally pay loan proceeds within seven
days of a valid loan request.

Interest Rate Charged. We charge interest on Policy loans at the fixed
rate of 6% per year. We charge interest from the date of the loan and add it to
the loan balance at the end of the Policy Year. When this interest is added to
the loan balance, it bears interest at the same rate..

Allocation of Loans and Collateral. When you take a Policy loan, we
hold Accumulated Value in the General Account as Collateral for the Policy loan.
You may specify how you would like the Accumulated Value to be taken from the
Subaccounts of the Separate Account to serve as Collateral. If you do not so
specify, we will allocate the Policy loan to the Subaccounts in proportion to
the Accumulated Value in the Subaccounts. If the Accumulated Value in one or
more of the Subaccounts is insufficient to carry out your instructions, we will
not process the loan until we receive further instructions from you. Non-loaned
Accumulated Value in the General Account will become Collateral for a loan only
to the extent that the Accumulated Value in the Separate Account is
insufficient. Loan interest will be allocated among and transferred first from
the Subaccounts of the Separate Account in proportion to the Accumulated Values
held in the Subaccounts, and then from the non-loaned portion of the General
Account.

The Collateral for a Policy loan will initially be the loan amount.
Loan interest will be added to the Policy loan. We will take additional
Collateral for the loan interest pro rata from the Subaccounts of the Separate
Account, and then, if the amounts in the Separate Account are insufficient, from
the non-loaned portion of the General Account. At any time, the amount of the
outstanding loan under a Policy equals the sum of all loans (including due and
unpaid interest added to the loan balance) minus any loan repayments.

Interest Credited to Amounts Held as Collateral. As long as the Policy
is in force, we will credit the amount held in the General Account as Collateral
with interest at effective annual rates we declare, but not less than 4% or such
higher minimum rate required under state law. The rate will apply to the
calendar year which follows the date of determination.

Bonus. In Policy Years 11 and thereafter, we currently intend to credit
interest on amounts held in the General Account as Collateral at a rate 0.50%
per annum higher than for similar amounts for Policies still in their first ten
Policy Years. This bonus is not guaranteed, however. Upon prior notice to Owners
we may, in our sole discretion, decide not to credit the bonus.

Preferred Policy Loans. We also currently intend to make preferred
Policy loans available on the later of the Insured's Attained Age 65 and the
beginning of Policy Year 21. The maximum amounts of these preferred loans will
be 5% of Accumulated Value per year, with a cumulative maximum of 50% of
Accumulated Value. For these preferred Policy loans, the amounts held as
Collateral in the General Account will be credited with interest at an annual
rate of 6%. If both preferred and non-preferred loans exist at the same time, we
will first apply any loan repayment to the non-preferred loan. We are not
obligated to make preferred loans available, and will make such loans available
in our sole discretion. Preferred loans may not be treated as indebtedness for
federal income tax purposes.

Effect of Policy Loan. Policy loans, whether or not repaid, will have a
permanent effect on the Accumulated Value and the Cash Surrender Value, and may
permanently affect the Death Benefit of your Policy. The effect on the
Accumulated Value and Death Benefit could be favorable or unfavorable. It will
depend on whether the investment performance of the Subaccounts, and the
interest credited to the non-Collateral Accumulated Value in the General
Account, is less than or greater than the interest being credited on the amounts
held as Collateral in the General Account. Compared to a Policy under which no
loan is made, values under a Policy will be lower when the credited interest
rate on Collateral is less than the investment experience of assets held in the
Separate Account and interest credited to the non-Collateral Accumulated Value
in the General Account. The longer a loan is outstanding, the greater the effect
a Policy loan is likely to have. The Death Benefit will be reduced by the amount
of any outstanding Policy loan.

35
<PAGE> 39

Loan Repayments. We will assume that any payments you make while there
is an outstanding Policy loan are premium payments, rather than loan repayments,
unless you specify in writing that a payment is a loan repayment. In the event
of a loan repayment, the amount held as Collateral in the General Account will
be reduced by an amount equal to the repayment, and such amount will be
transferred to the Subaccounts of the Separate Account and to the non-loaned
portion of the General Account based on the Net Premium allocations in effect at
the time of the repayment.

Lapse With Loans Outstanding. The amount of an outstanding loan under a
Policy plus any accrued interest on outstanding loans is not part of Cash
Surrender Value. Therefore, the larger the amount of an outstanding loan, the
more likely it is that the Policy could lapse. (See "How the Duration of the
Policy May Vary," Page and "Policy Lapse," Page .) In addition, if the Policy is
not a Modified Endowment Policy, lapse of the Policy with outstanding loans may
result in adverse federal income tax consequences. (See "Tax Treatment of Policy
Benefits," Page .)

Tax Considerations. Any loans taken from a "Modified Endowment
Contract" will be treated as a taxable distribution. In addition, with certain
exceptions, a 10% additional income tax penalty will be imposed on the portion
of any loan that is included in income. (See "Distributions from Policies
Classified as Modified Endowment Contracts," Page .)

SURRENDER PRIVILEGE

You may surrender your Policy for its Cash Surrender Value at any time
before the death of the Insured. The Cash Surrender Value is the Accumulated
Value minus any Policy loan and accrued interest and less any Surrender Charge.
We will calculate the Cash Surrender Value on the Valuation Day we receive, at
our Home Office, your signed written surrender request, and the Policy. You may
not request a surrender over the telephone. Coverage under the Policy will end
on the day you mail or otherwise send your written surrender request and the
Policy to us. We will ordinarily mail surrender proceeds to you within seven
days of when we receive your request. (See "Other Policy Provisions - Payment of
Policy Benefits", Page .)

A surrender may have Federal income tax consequences. (See "Tax
Treatment of Policy Benefits," Page ).

WITHDRAWAL OF CASH SURRENDER VALUE

You may withdraw a portion of your Policy's Cash Surrender Value at any
time before the death of the Insured and, except for employee benefit plans,
after the first Policy Anniversary. The minimum amount which you may withdraw is
$500, except for employee benefit plans, where the minimum is $100. The maximum
Withdrawal is the Cash Surrender Value on the date of receipt of the Withdrawal
request, minus three times the Monthly Deduction for the most recent Monthly
Policy Date. A Withdrawal Charge will be deducted from the amount of the
Withdrawal. For a discussion of the Withdrawal Charge, see "Charges and
Deductions Withdrawal Charge" on Page .

You may specify how you would like us to take a Withdrawal from the
Subaccounts of the Separate Account. If you do not so specify, we will take the
Withdrawal from the Subaccounts in proportion to the Accumulated Value in each
Subaccount. If the Accumulated Value in one or more Subaccounts is insufficient
to carry out your instructions, we will not process the Withdrawal until we
receive further instructions from you. You may take Withdrawals from the General
Account only after the Accumulated Value in the Separate Account has been
exhausted.

The effect of a Withdrawal on the Death Benefit and Face Amount will
vary depending upon the Death Benefit Option in effect and whether the
Unadjusted Death Benefit is based on the applicable percentage of Accumulated
Value. (See "Death Benefit Options," Page .)

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<PAGE> 40

Option A. The effect of a Withdrawal on the Face Amount and Unadjusted
Death Benefit under Option A can be described as follows:

If the Face Amount divided by the applicable percentage of
Accumulated Value exceeds the Accumulated Value just after the
Withdrawal, a Withdrawal will reduce the Face Amount and the Unadjusted
Death Benefit by the lesser of such excess and the amount of the
Withdrawal.

For the purposes of this illustration (and the following
illustrations of Withdrawals), assume that the Attained Age of the
Insured is under 40 and there is no indebtedness. The applicable
percentage is 250% for an Insured with an Attained Age under 40.

Under Option A, a Policy with a Face Amount of $300,000 and an
Accumulated Value of $30,000 will have an Unadjusted Death Benefit of
$300,000. Assume that you take a Withdrawal of $10,000. The Withdrawal
Charge will be $25 and the amount we pay you will be $9,975. The
Withdrawal will reduce the Accumulated Value to $20,000 ($30,000 -
$10,000) after the Withdrawal. The Face Amount divided by the
applicable percentage is $120,000 ($300,000 / 2.50), which exceeds the
Accumulated Value after the Withdrawal by $100,000 ($120,000 -
$20,000). The lesser of this excess and the amount of the Withdrawal is
$10,000, the amount of the Withdrawal. Therefore, the Unadjusted Death
Benefit and Face Amount will be reduced by $10,000 to $290,000.

If the Face Amount divided by the applicable percentage of
Accumulated Value does not exceed the Accumulated Value just after the
Withdrawal, then the Face Amount is not reduced. The Unadjusted Death
Benefit will be reduced by an amount equal to the reduction in
Accumulated Value times the applicable percentage (or equivalently, the
Unadjusted Death Benefit is equal to the new Accumulated Value times
the applicable percentage).

Under Option A, a policy with a Face Amount of $300,000 and an
Accumulated Value of $150,000 will have an Unadjusted Death Benefit of
$375,000 ($150,000 x 2.50). Assume that you take a Withdrawal of
$10,000. The Withdrawal Charge will be $25 and the amount we pay to you
will be $9,975. The Withdrawal will reduce the Accumulated Value to
$140,000 ($150,000 - $10,000). The Face Amount divided by the
applicable percentage is $120,000, which does not exceed the
Accumulated Value after the withdrawal. Therefore, the Face Amount
stays at $300,000 and the Unadjusted Death Benefit is $350,000
($140,000 x 2.50).

Option B. The Face Amount will never be decreased by a Withdrawal. A
Withdrawal will, however, always decrease the Death Benefit.

If the Unadjusted Death Benefit equals the Face Amount plus
the Accumulated Value, a Withdrawal will reduce the Accumulated Value
by the amount of the Withdrawal and thus the Unadjusted Death Benefit
will also be reduced by the amount of the Withdrawal.

Under Option B, a Policy with a Face Amount of $300,000 and an
Accumulated Value of $90,000 will have an Unadjusted Death Benefit of
$390,000 ($300,000 + $90,000). Assume you take a Withdrawal of $20,000.
The Withdrawal Charge will be $25 and the amount we pay to you will be
$19,975. The Withdrawal will reduce the Accumulated Value to $70,000
($90,000 - $20,000) and the Unadjusted Death Benefit to $370,000
($300,000 + $70,000). The Face Amount is unchanged.

If the Unadjusted Death Benefit immediately prior to the
Withdrawal is based on the applicable percentage of Accumulated Value,
the Unadjusted Death Benefit will be reduced to equal the greater of
(a) the Face Amount plus the Accumulated Value after deducting the
amount of the Withdrawal and Withdrawal Charge and (b) the applicable
percentage of Accumulated Value after deducting the amount of the
Withdrawal.

37
<PAGE> 41

Under Option B, a Policy with a Face Amount of $300,000 and an
Accumulated Value of $210,000 will have an Unadjusted Death Benefit of
$525,000 ($210,000 X 2.5). Assume you take a Withdrawal of $60,000. The
Withdrawal Charge will be $25 and the amount we pay to you will be
$59,975. The Withdrawal will reduce the Accumulated Value to $150,000
($210,000 - $60,000), and the Unadjusted Death Benefit to the greater
of (a) the Face Amount plus the Accumulated Value, or $450,000
($300,000 + $150,000) and (b) the Unadjusted Death Benefit based on the
applicable percentage of the Accumulated Value, or $375,000 ($150,000 X
2.50). Therefore, the Unadjusted Death Benefit will be $450,000. The
Face Amount is unchanged.

Any decrease in Face Amount due to a Withdrawal will first reduce the
most recent increase in Face Amount, then the most recent increases,
successively, and lastly, the Initial Face Amount.

Because a Withdrawal can affect the Face Amount and the Unadjusted
Death Benefit as described above, a Withdrawal may also affect the Net Amount at
Risk which is used to calculate the Cost of Insurance Charge under the Policy.
(See "Cost of Insurance Charge," Page .) Since a Withdrawal reduces the
Accumulated Value, the Cash Surrender Value of the Policy is reduced, thereby
increasing the likelihood that the Policy will lapse. (See "Policy Lapse," Page
.) A request for Withdrawal may not be allowed if such Withdrawal would reduce
the Face Amount below the Minimum Face Amount for the Policy. Also, if a
Withdrawal would result in cumulative premiums exceeding the maximum premium
limitations applicable under the Code for life insurance, we will not allow the
Withdrawal.

You may request a Withdrawal only by sending a signed written request to
us at our Home Office. You may not request a Withdrawal over the telephone. We
will ordinarily pay a Withdrawal within seven days of receiving at our Home
Office a valid Withdrawal request.

A Withdrawal of Cash Surrender Value may have Federal income tax
consequences. (See "Tax Treatment of Policy Benefits," Page .)

FREE-LOOK PRIVILEGE

The Policy provides for a "free-look" period, during which you may
cancel the Policy and receive a refund equal to the gross premiums paid on the
Policy. This free-look period ends on the latest of:

(a) 45 days after Part A of the application for the Policy is signed

(b) 10 days after you receive the Policy

(d) any longer period provided by state law.

To cancel your Policy, you must return it to us or to our agent within the free
look period with a written request for cancellation.

TELEPHONE TRANSACTION PRIVILEGE

If you elect the telephone transaction privilege, either on the
application for the Policy or thereafter by written authorization, you may
effect changes in premium allocation, transfers, and loans of up to $25,000 by
providing instructions to us at our Home Office over the telephone. We may
suspend telephone transaction privileges at any time, for any reason, if we deem
such suspension to be in the best interests of Policy Owners.

We will employ reasonable procedures to confirm that instructions we
receive by telephone are genuine. If we follow these procedures, we will not be
liable for any losses due to unauthorized or fraudulent instructions. We may be
liable for any such losses if we do not follow these reasonable procedures. The
procedures to be followed for telephone transfers will include one or more of
the following:

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<PAGE> 42

- requiring some form of personal identification prior to acting on
instructions received by telephone

- providing written confirmation of the transaction, and

- making a tape recording of the instructions given by telephone.

OTHER TRANSFER RIGHTS

Transfer Right for Policy. During the first two years following Policy
issue, you may, on one occasion, transfer the entire Accumulated Value in the
Separate Account to the General Account, without regard to any limits on
transfers or free transfers.

Transfer Right for Change in Investment Policy. If the investment
policy of a Subaccount of the Separate Account is materially changed, you may
transfer the portion of the Accumulated Value in that Subaccount to another
Subaccount or to the General Account, without regard to any limits on transfers
or free transfers.

Exchange Right for Connecticut Residents. For eighteen months after the
Date of Issue, Connecticut residents may exchange the Policy for any flexible
premium adjustable benefit life insurance policy offered for sale by us, the
benefits of which policy do not vary with the investment performance of a
separate account. Evidence of insurability will not be required to effect this
exchange.

AVAILABLE AUTOMATED FUND MANAGEMENT FEATURES

We currently offer, at no charge to you, two automated fund management
features. Only one of these features may be active for any single Policy at any
time. We are not legally obligated to continue to offer these features. Although
we have no current intention to do so, we may cease offering one or both these
features at any time, after providing 60 days prior written notice to all Owners
who are then utilizing the features being discontinued

Dollar Cost Averaging. This feature permits you to automatically
transfer funds from the Money Market Subaccount to any other Subaccounts on a
monthly basis. You may elect Dollar Cost Averaging at issue by marking the
appropriate box on the initial application, and completing the appropriate
instructions. You may also begin a Dollar Cost Averaging program after issue by
filling out similar information on a change request form and sending it to us at
our Home Office.

If you elect this feature, we will take the amount to be transferred
from the Money Market Subaccount and transfer it to the Subaccount or
Subaccounts designated to receive the funds, each month on the Monthly Policy
Date. If you elect Dollar Cost Averaging on your application for the Policy, it
will start with the Monthly Policy Date after the date that the reallocation of
the Accumulated Value out of the Money Market Subaccount and into the other
Subaccounts occurs. If you begin a Dollar Cost Averaging program after the free
look period is over, it will start on the next Monthly Policy Date. Dollar Cost
Averaging will continue until the amount in the Money Market Subaccount is
depleted. The minimum monthly transfer by Dollar Cost Averaging is $100, except
for the transfer which reduces the amount in the Money Market Subaccount to
zero. You may discontinue Dollar Cost Averaging at any time by sending an
appropriate change request form to the Home Office. You may not use the dollar
cost averaging feature to transfer Accumulated Value to the General Account.

Dollar Cost Averaging allows you to move funds into the various
investment types on a more gradual and systematic basis than the frequency on
which you pay premiums. The periodic investment of the same amount will result
in higher numbers of units being purchased when unit prices are lower, and lower
numbers of units being purchased when unit prices are higher. This will result,
over time, in a lower cost per unit than the average of the unit costs on the
days on which the automated purchases are made. This technique will not,
however, assure a profit or protect against a loss in declining markets.
Moreover, for the dollar cost averaging technique to be effective, amounts
should be available for allocation from the Money Market Subaccount through
periods of low price levels as well as higher price levels.

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Portfolio Rebalancing. This feature permits you to automatically
rebalance the value in the Subaccounts on a semi-annual basis, based on your
premium allocation percentages in effect at the time of the rebalancing. You may
elect it at issue by marking the appropriate box on the application, or, after
issue, by completing a change request form and sending it to our Home Office.

In Policies utilizing Portfolio Rebalancing from the Date of Issue, an
automatic transfer will take place which causes the percentages of the current
values in each Subaccount to match the current premium allocation percentages,
starting with the Monthly Policy Date six months after the Date of Issue, and
then on each Monthly Policy Date six months thereafter. Policies electing
Portfolio Rebalancing after issue will have the first automated transfer occur
as of the Monthly Policy Date on or next following the date we receive the
election at our Home Office, and subsequent rebalancing transfers will occur
every six months from that date. You may discontinue Portfolio Rebalancing at
any time by submitting an appropriate change request form to us at our Home
Office.

If you change your Policy's premium allocation percentages, Portfolio
Rebalancing will automatically be discontinued unless you specifically direct
otherwise.

Portfolio Rebalancing will result in periodic transfers out of
Subaccounts that have had relatively favorable investment performance in
relation to the other Subaccounts to which a Policy allocates premiums, and into
Subaccounts which have had relatively unfavorable investment performance in
relation to the other Subaccounts to which the Policy allocates premiums.

POLICY RIGHTS UNDER CERTAIN PLANS

Policies may be purchased in connection with a plan sponsored by an
employer. In such cases, all rights under the Policy rest with the Policy Owner,
which may be the employer or other obligor under the plan, and benefits
available to participants under the plan will be governed solely by the
provisions of the plan. Accordingly, some of the options and elections under the
Policy may not be available to participants under the provisions of the plan. In
such cases, participants should contact their employers for information
regarding the specifics of the plan.

THE GENERAL ACCOUNT

You may allocate some or all of your Net Premiums, and transfer some or
all of the Accumulated Value of your Policy to our General Account. We credit
interest on Net Premiums and Accumulated Value allocated to the General Account
at rates we declare. These rates will not be less than 4%. The principal, after
deductions, is also guaranteed. The General Account supports National Life 's
insurance and annuity obligations. All assets in the General Account are subject
to National Life's general liabilities from business operations.

The General Account has not, and is not required to be, registered with
the SEC under the Securities Act of 1933. The General Account has not been
registered as an investment company under the Investment Company Act of 1940.
Therefore, the General Account and the interests therein are generally not
subject to regulation under the 1933 Act or the 1940 Act. The disclosures
relating to this account which are included in this Prospectus are for your
information and have not been reviewed by the SEC. However, such disclosures may
be subject to certain generally applicable provisions of the Federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.

MINIMUM GUARANTEED AND CURRENT INTEREST RATES

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The Accumulated Value not held as Collateral in the General Account is
guaranteed to accumulate at a minimum effective annual interest rate of 4%. We
may credit the non-loaned Accumulated Value in the General Account with current
rates in excess of the minimum guarantee, but we are not obligated to do so. We
have no specific formula for determining current interest rates. Since we
anticipate changing the current interest rate from time to time, in our sole
discretion, allocations to the General Account made at different times are
likely to be credited with different current interest rates. We will declare An
interest rate each month to apply to amounts allocated or transferred to the
General Account in that month. The rate declared on such amounts will remain in
effect for twelve months. At the end of the 12-month period, we may declare a
new current interest rate on such amounts and accrued interest thereon (which
may be a different current interest rate than the current interest rate on new
allocations to the General Account on that date). We will determine any interest
credited on the amounts in the General Account in excess of the minimum
guaranteed rate of 4% per year in our sole discretion. You assume the risk that
interest credited may not exceed the guaranteed minimum rate. Amounts allocated
to the General Account will not share in the investment performance of our
General Account.

Amounts deducted from the non-loaned Accumulated Value in the General
Account for Withdrawals, Policy loans, transfers to the Separate Account,
Monthly Deductions or other charges are currently, for the purpose of crediting
interest, accounted for on a last in, first out ("LIFO") method.

We may change the method of crediting interest from time to time,
provided that such changes do not have the effect of reducing the guaranteed
rate of interest below 4% per annum or shortening the period for which the
interest rate applies to less than 12 months.

Bonus Interest. We currently intend to credit interest on non-loaned
Accumulated Value in the General Account for Policies in Policy Year 11 and
thereafter at rates which are 0.50% per annum higher than those that apply to
Policies still in their first ten Policy Years. This bonus is not guaranteed,
however, except as required by the state of issue. We may in our sole
discretion, upon prior notice to Owners, decide not to credit the bonus.

Calculation of Non-loaned Accumulated Value in the General Account. The
non-loaned Accumulated Value in the General Account at any time is equal to
amounts allocated and transferred to it plus interest credited to it, minus
amounts deducted, transferred or withdrawn from it.

TRANSFERS FROM GENERAL ACCOUNT

We allow only one transfer in each Policy Year from the amount of
non-loaned Accumulated Value in the General Account to any or all of the
Subaccounts of the Separate Account. The amount you transfer from the General
Account may not exceed the greater of 25% of the value of the non-loaned
Accumulated Value in such account at the time of transfer, or $1000. We will
make the transfer as of the Valuation Day we receive your written or telephone
request at our Home Office.

OTHER POLICY PROVISIONS

Indefinite Policy Duration. The Policy can remain in force indefinitely
(in Texas and Maryland, however, the Policy matures at Attained Age 99 at which
time we will pay the Cash Surrender Value to you in one sum unless you have
chosen a Payment Option, and the Policy will terminate). However, for a Policy
to remain in force after the Insured reaches Attained Age 99, if the Face Amount
is greater than the Accumulated Value, the Face Amount will automatically be
decreased to the current Accumulated Value. Also, at Attained Age 99 Option B
automatically becomes Option A. No premium payments are allowed after Attained
Age 99, although loan repayments are allowed. The tax treatment of a Policy's
Accumulated Value after Age 100 is unclear, and you may wish to discuss this
treatment with a tax advisor.

Payment of Policy Benefits. You may decide the form in which we pay
Death Benefit proceeds. During the Insured's lifetime, you may arrange for the
Death Benefit to be paid in a lump sum or under a

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Settlement Option. These choices are also available upon surrender of the Policy
for its Cash Surrender Value. If you do not make an election, payment will be
made in a lump sum. The Beneficiary may also arrange for payment of the Death
Benefit in a lump sum or under a Settlement Option. If paid in a lump sum, we
will ordinarily pay the Death Benefit to the Beneficiary within seven days after
we receive proof of the Insured's death at our Home Office, and all other
requirements are satisfied. If paid under a Settlement Option, we will apply the
Death Benefit to the Settlement Option within seven days after we receive proof
of the Insured's death at our Home Office, and all other requirements are
satisfied.

We will pay interest on the Death Benefit from the date of death until
payment is made. The interest rate will be the highest of (a) 4% per annum, (b)
any higher rate we declare, or (c) any higher rate required by law.

We will normally pay proceeds of a surrender, Withdrawal, or Policy
loan within seven days of when we receive your written request at our Home
Office in a form satisfactory to us.

We will generally determine the amount of a payment on the Valuation
Day we receive all required documents. However, we may defer the determination
or payment of such amounts if the date for determining such amounts falls within
any period during which:

(1) the disposal or valuation of a Subaccount's assets is not
reasonably practicable because the New York Stock Exchange is
closed or conditions are such that, under the SEC's rules and
regulations, trading is restricted or an emergency is deemed to
exist; or

(2) the SEC by order permits postponement of such actions for the
protection of our policyholders.

We also may defer the determination or payment of amounts from the
General Account for up to six months.

Transactions will not be processed on the following days: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, the day after Thanksgiving and Christmas Day. In addition, Premium
Payments will not be allocated and transactions will not be effected to the
Money Market Subaccount on Columbus Day and Veterans Day.

We may postpone any payment under the Policy derived from an amount
paid by check or draft until we are satisfied that the check or draft has been
paid by the bank upon which it was drawn.

The Contract. The Policy and the application are the entire contract.
Only statements made in the application can be used to void the Policy or deny a
claim. The statements are considered representations and not warranties. Only
one of National Life's duly authorized officers or registrars can agree to
change or waive any provisions of the Policy, and only in writing. As a result
of differences in applicable state laws, certain provisions of the Policy may
vary from state to state.

Ownership. The Owner is the Insured unless a different Owner is named
in the application or thereafter changed. While the Insured is living, the Owner
is entitled to exercise any of the rights stated in the Policy or otherwise
granted by us. If the Insured and Owner are not the same, and the Owner dies
before the Insured, these rights will vest in the estate of the Owner, unless
otherwise provided.

Beneficiary. You designate the Beneficiary in the application for the
Policy. You may change the Beneficiary during the Insured's lifetime by sending
us a written notice. The interest of any Beneficiary who dies before the Insured
shall vest in you unless you otherwise provide.

Change of Owner and Beneficiary. As long as the Policy is in force, you
may change the Owner or Beneficiary by sending us an acceptable written request.
The change will take effect as of the date the request is signed, whether or not
the Insured is living when we receive the request. We will not be responsible
for any payment made or action taken before we receive the written request.

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Split Dollar Arrangements. You may enter into a Split Dollar
Arrangement among the Owners or other persons under which the payment of
premiums and the right to receive the benefits under the Policy (i.e., Cash
Surrender Value or Death Benefit) are split between the parties. There are
different ways of allocating such rights.

For example, an employer and employee might agree that under a Policy
on the life of the employee, the employer will pay the premiums and will have
the right to receive the Cash Surrender Value. The employee may designate the
Beneficiary to receive any Death Benefit in excess of the Cash Surrender Value.
If the employee dies while such an arrangement is in effect, the employer would
receive from the Death Benefit the amount which the employer would have been
entitled to receive upon surrender of the Policy and the employee's Beneficiary
would receive the balance of the proceeds.

No transfer of Policy rights pursuant to a Split Dollar Arrangement
will be binding on us unless it is in writing and received by us. We do not
assess any specific charge for Split Dollar Arrangements.

The parties who elect to enter into a Split Dollar Arrangement should
consult their own tax advisers regarding the tax consequences of such an
arrangement.

Assignments. You may assign any and all your rights under the Policy.
We are not bound by an assignment unless it is in writing and we receive it at
our Home Office. We assume no responsibility for determining whether an
assignment is valid, or the extent of the assignee's interest. All assignments
will be subject to any Policy loan. The interest of any Beneficiary or other
person will be subordinate to any assignment. A payee who is not also the Owner
may not assign or encumber Policy benefits, and to the extent permitted by
applicable law, such benefits are not subject to any legal process for the
payment of any claim against the payee.

Misstatement of Age and Sex. If the age or sex of the Insured at the
Date of Issue has been misstated in the application, we will adjust the
Accumulated Value of the Policy to be the amount that it would have been had the
Cost of Insurance Charges deducted been based on the correct age and sex, or as
otherwise required by state law. The adjustment will take place on the Monthly
Policy Date on or after the date on which we have proof to our satisfaction of
the misstatement. If the Insured has died, we will adjust the Accumulated Value
as of the last Monthly Policy Date prior to the Insured's death; however, if the
Accumulated Value is insufficient for that adjustment, the amount of the
Unadjusted Death Benefit will also be adjusted.

Suicide. If the Insured dies by suicide, while sane or insane, within
two years from the Date of Issue of the Policy (except where state law requires
a shorter period), or within two years of the effective date of a reinstatement
(unless otherwise required by state law), our liability is limited to the
payment to the Beneficiary of a sum equal to the premiums paid less any Policy
loan and accrued interest and any Withdrawals (since the date of reinstatement,
in the case of a suicide within two years of the effective date of a
reinstatement), or other reduced amount provided by state law.

If the Insured commits suicide within two years (or shorter period
required by state law) from the effective date of any Policy change which
increases the Unadjusted Death Benefit and for which an application is required,
the amount which we will pay with respect to the increase will be the Cost of
Insurance Charges previously made for such increase (unless otherwise required
by state law).

Incontestability. The Policy will be incontestable after it has been in
force during the Insured's lifetime for two years from the Date of Issue (or
such other date as required by state law). Similar incontestability will apply
to an increase in Face Amount or reinstatement after it has been in force during
the Insured's lifetime for two years from its effective date.

Before such times, however, we may contest the validity of the Policy
(or changes) based on material misstatements in the initial or any subsequent
application.

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Arbitration. Except where otherwise required by state law, the Policy
provides that any controversy under the Policy shall be settled by arbitration
in the state of residence of the Owner, in accordance with the rules of the
American Arbitration Association or any similar rules to which the parties
agree. Any award rendered through arbitration will be final on all parties, and
the award may be enforced in court.

The purpose of the arbitration is to provide an alternative dispute
resolution mechanism for investors that may be more efficient and less costly
than court litigation. You should be aware, however, that arbitration is, as
noted above, final and binding on all parties, and that the right to seek
remedies in court is waived, including the right to jury trial. Pre-arbitration
discovery is generally more limited than and different from court discovery
procedures, and the arbitrator's award is not required to include factual
findings or legal reasoning. Any party's right to appeal or to seek modification
of rulings by the arbitrators is strictly limited.

Dividends. The Policy is participating; however, no dividends are
expected to be paid on the Policy. If dividends are ever declared, they will be
paid in cash.

Correspondence. All correspondence to you is deemed to have been sent
to you if mailed to you at your last address known to us.

Settlement Options. In lieu of a single sum payment on death or
surrender, you may elect to apply the Death Benefit under any one of the
fixed-benefit Settlement Options provided in the Policy. The options are
described below.

Payment of Interest Only. We will pay interest at a rate of 3.5% per
year on the amount of the proceeds retained by us. Upon the earlier of the
payee's death or the end of a chosen period, the proceeds retained will be paid.

Payments for a Stated Time. We will make equal monthly payments, based
on an interest rate of 3.5% per annum, for the number of years you select.

Payments for Life. We will make equal monthly payments, based on an
interest rate of 3.5% per annum, for a guaranteed period and thereafter during
the life of a chosen person. You may elect guaranteed payment periods for 0, 10,
15, or 20 years, or for a refund period, at the end of which the total payments
will equal the proceeds placed under the option.

Payments of a Stated Amount. We will make equal monthly payments until
the proceeds, with interest at 3.5% per year on the unpaid balance, have been
paid in full. The total payments in any year must be at least $10 per month for
each thousand dollars of proceeds placed under this option.

Life Annuity. We will make equal monthly payments in the same manner as
in the above Payments for Life option except that the amount of each payment
will be the monthly income provided by our then current settlement rates on the
date the proceeds become payable. No additional interest will be paid.

Joint and Two Thirds Annuity. We will make equal monthly payments,
based on an interest rate of 3.5% per year, while two chosen persons are both
living. Upon the death of either, two-thirds of the amount of those payments
will continue to be made during the life of the survivor. We may require proof
of the ages of the chosen persons.

50% Survivor Annuity. We will make equal monthly payments, based on an
interest rate of 3.5% per year, during the lifetime of the chosen primary
person. Upon the death of the chosen primary person, 50% of the amount of those
payments will continue to be made during the lifetime of the secondary chosen
person. We may require proof of the ages of the chosen persons.

We may pay interest in excess of the stated amounts under the first
four options listed above, but not the last three. A right to change options or
to withdraw all or part of the remaining proceeds may be included in the first
two, and the fourth, options above. For additional information concerning the
payment options, see the Policy.

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OPTIONAL BENEFITS

You may include the following benefits, which are subject to the
restrictions and limitations set forth in the applicable Policy Riders, in your
Policy at your option. Election of any of these optional benefits involves an
additional cost.

Waiver of Monthly Deductions. If you elect the Waiver of Monthly
Deductions Rider, we will waive Monthly Deductions against the Policy if the
Insured becomes totally disabled, before age 65 and for at least 120 days. If
total disability occurs after age 60 and before age 65, then we will waive
Monthly Deductions only until the Insured reaches Attained Age 65, or for a
period of two years, if longer. The monthly cost of this Rider is based on
sex-distinct rates (except for Policies issued in states which require "unisex"
policies or in conjunction with employee benefit plans, where the cost of this
Rider will not vary by sex) multiplied by the Monthly Deduction on the Policy.
We will add this cost to the Monthly Deduction on the Policy.

Accidental Death Benefit. The Accidental Death Rider provides for an
increased Death Benefit in the event that the Insured dies in an accident. If
you elect this Rider, we will add the monthly cost of this Rider to the Monthly
Deduction on the Policy.

Guaranteed Insurability Option. This Rider permits you to increase the
Face Amount of the Policy, within certain limits, without being required to
submit satisfactory proof of insurability at the time of the request for the
increase. Again, if you elect this Rider, we will add the monthly cost of this
Rider to the Monthly Deduction on the Policy.

Guaranteed Death Benefit. If you choose this Rider, we will guarantee
that the Policy will not lapse prior to the Insured's Attained Age 70, or 20
years from the Date of Issue of the Policy, if longer, regardless of the
Policy's investment performance. To keep this Rider in force, you must pay
cumulative premiums greater than the Minimum Guarantee Premium from the Date of
Issue. We will test the Policy monthly for this qualification, and if not met,
we will send you a notice, and you will have 61 days from the date we mailed the
notice to pay a premium sufficient to keep the Rider in force. The premium
required will be the Minimum Guarantee Premium from the Date of Issue, plus two
times the Minimum Monthly Premium, minus premiums previously paid. The Rider
will be cancelled if a sufficient premium is not paid during that 61-day period.

The cost of the Guaranteed Death Benefit Rider is $0.01 per thousand of
Face Amount per month. This Rider is available only at issue, and only for Issue
Ages 0-65.

If while the Guaranteed Death Benefit Rider is in force, the
Accumulated Value of the Policy is not sufficient to cover the Monthly
Deductions, Monthly Deductions will be made until the Accumulated Value of the
Policy is exhausted, and will thereafter be deferred, and collected at such time
as the Policy has positive Accumulated Value.

If you increase the Face Amount of a Policy subject to the Guaranteed
Death Benefit Rider, the Rider's guarantee will extend to the increased Face
Amount. This will result in increased Minimum Guarantee Premiums.

If you have elected both the Waiver of Monthly Deductions Rider and the
Guaranteed Death Benefit Rider, and Monthly Deductions are waived because of
total disability, then we will also waive the Minimum Guarantee Premiums
required to keep the Guaranteed Death Benefit Rider in force during the period
that Monthly Deductions are being waived.

If you wish to keep this Rider in force, you must limit Withdrawals and
Policy loans to the excess of premiums paid over the Minimum Guarantee Premium.
If you take a Policy loan or Withdrawal for an

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amount greater than such excess, the Guaranteed Death Benefit Rider will enter a
61-day lapse-pending notification period, and will be cancelled if you do not
pay a sufficient premium.

THE GUARANTEED DEATH BENEFIT RIDER IS NOT AVAILABLE IN TEXAS OR MASSACHUSETTS.

FEDERAL INCOME TAX CONSIDERATIONS

INTRODUCTION

The following summary provides a general description of the Federal
income tax considerations associated with the Policy and does not purport to be
complete or to cover all tax situations. This discussion is not intended as tax
advice. Counsel or other competent tax advisors should be consulted for more
complete information. This discussion is based upon understanding of the present
Federal income tax laws. No representation is made as to the likelihood of
continuation of the present Federal income tax laws or as to how they may be
interpreted by the Internal Revenue Service.

TAX STATUS OF THE POLICY

In order to qualify as a life insurance contract for Federal income tax
purposes and to receive the tax treatment normally accorded life insurance
contracts under Federal tax law, a life insurance policy must satisfy certain
requirements which are set forth in the Internal Revenue Code. Guidance as to
how these requirements are to be applied is limited. Nevertheless, National Life
believes that a Policy issued on the basis of a standard rate class should
satisfy the applicable requirements. There is less guidance, however, with
respect to a policy issued on a substandard basis (i.e., a rate class involving
higher than standard mortality risk) and it is not clear whether such a policy
will in all cases satisfy the applicable requirements, particularly if the Owner
pays the full amount of premiums permitted under the Policy. Nevertheless,
National Life believes it reasonable to conclude that such a Policy should be
treated as a life insurance contract for Federal income tax purposes. If it is
subsequently determined that a Policy does not satisfy the applicable
requirements, National Life may take appropriate steps to bring the policy into
compliance with such requirements and National Life reserves the right to modify
the policy as necessary in order to do so.

In certain circumstances, owners of variable life insurance policies
have been considered for Federal income tax purposes to be the owners of the
assets of separate accounts supporting their contracts due to their ability to
exercise investment control over those assets. Where this is the case, the
policyowners have been currently taxed on income and gains attributable to
separate account assets. There is little guidance in this area, and some
features of the policy, such as the flexibility of Policy Owners to allocate
premium payments and Accumulated Values, have not been explicitly addressed in
published rulings. While National Life believes that the policy does not give
Policy Owners investment control over Separate Account assets, we reserve the
right to modify the policy as necessary to prevent the Policy Owner from being
treated as the owner of the Separate Account assets supporting the Policy.

In addition, the Code requires that the investments of the Separate
Account be "adequately diversified" in order for the policy to be treated as a
life insurance contract for Federal income tax purposes. It is intended that the
Separate Account, through the Funds, will satisfy these diversification
requirements.

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

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TAX TREATMENT OF POLICY BENEFITS

In General. National Life believes that the death benefit under a
Policy should be excludible from the gross income of the beneficiary. Federal,
state and local estate, inheritance, transfer, and other tax consequences of
ownership or receipt of Policy proceeds depend on the circumstances of each
Policy Owner or beneficiary. A tax advisor should be consulted on these
consequences.

Generally, a Policy Owner will not be deemed to be in constructive
receipt of the Accumulated Value until there is a distribution. When
distributions from a Policy occur, or when loans are taken out from or secured
by a Policy, the tax consequences depend on whether the Policy is classified as
a "Modified Endowment Contract."

Modified Endowment Contracts. Under the Internal Revenue Code, certain
life insurance contracts are classified as "Modified Endowment Contracts," with
less favorable tax treatment than other life insurance contracts. Due to the
flexibility of the Policy as to premium payments and benefits, the individual
circumstances of each Policy will determine whether it is classified as a
Modified Endowment Contract. The rules are too complex to be summarized here,
but generally depend on the amount of premium payments made during the first
seven policy years. Certain changes in a policy after it is issued could also
cause it to be classified as a Modified Endowment Contract. A current or
prospective Policy Owner should consult with a competent advisor to determine
whether a policy transaction will cause the Policy to be classified as a
Modified Endowment Contract.

Distributions Other Than Death Benefits from Modified Endowment
Contracts. Policies classified as Modified Endowment Contracts are subject to
the following tax rules:

(1) All distributions other than death benefits from a Modified
Endowment Contract, including distributions upon surrender and
withdrawals, will be treated first as distributions of gain
taxable as ordinary income and as tax-free recovery of the
Policy Owner's investment in the Policy only after all gain
has been distributed.

(2) Loans taken from or secured by a Policy classified as a
Modified Endowment Contract are treated as distributions and
taxed accordingly.

(3) A 10 percent additional income tax is imposed on the amount
subject to tax except where the distribution or loan is made
when the Policy Owner has attained age 59-1/2 or is disabled,
or where the distribution is part of a series of substantially
equal periodic payments for the life (or life expectancy) of
the Policy Owner or the joint lives (or joint life
expectancies) of the Policy Owner and the Policy Owner's
beneficiary or designated beneficiary.

Distributions Other Than Death Benefits from Policies that are not
Modified Endowment Contracts. Distributions other than death benefits from a
Policy that is not classified as a Modified Endowment Contract are generally
treated first as a recovery of the Policy Owner's investment in the policy and
only after the recovery of all investment in the policy as taxable income.
However, certain distributions which must be made in order to enable the Policy
to continue to qualify as a life insurance contract for Federal income tax
purposes if policy benefits are reduced during the first 15 policy years may be
treated in whole or in part as ordinary income subject to tax.

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Loans from or secured by a Policy that is not classified as a Modified
Endowment Contract are generally not treated as distributions. However, the tax
consequences associated with preferred Policy loans is less clear and a tax
adviser should be consulted about such loans.

Finally, neither distributions from nor loans from or secured by a
Policy that is not a Modified Endowment Contract are subject to the 10 percent
additional income tax.

Investment in the Policy. Your investment in the Policy is generally
your aggregate premium payments. When a distribution is taken from the Policy,
your investment in the Policy is reduced by the amount of the distribution that
is tax-free.

Policy Loan Interest. In general, interest paid on any loan under a
Policy will not be deductible.

Multiple Policies. All Modified Endowment Contracts that are issued by
National Life (or its affiliates) to the same Policy Owner during any calendar
year are treated as one Modified Endowment Contract for purposes of determining
the amount includible in the Policy Owner's income when a taxable distribution
occurs.

Business Uses of the Policy. Businesses can use the Policy in various
arrangements, including nonqualified deferred compensation or salary continuance
plans, split dollar insurance plans, executive bonus plans, tax exempt and
nonexempt welfare benefit plans, retiree medical benefit plans and others. The
tax consequences of such plans may vary depending on the particular facts and
circumstances. If you are purchasing the Policy for any arrangement the value of
which depends in part on its tax consequences, you should consult a qualified
tax adviser. In recent years, moreover, 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 adviser.

Continuation Beyond Age 100. The tax consequences of continuing the
Policy beyond the insured's 100th year are unclear. You should consult a tax
adviser if you intend to keep the Policy in force beyond the insured's 100th
year.

SPECIAL RULES FOR EMPLOYEE BENEFIT PLANS

If a trustee under a pension or profit-sharing plan, or similar
deferred compensation arrangement, owns a Policy, the Federal and state income
and estate tax consequences could differ. A tax adviser should be consulted with
respect to such consequences. Policies owned under these types of plans may also
be subject to restrictions under the Employee Retirement Income Security Act of
1974 ("ERISA"). You should consult a qualified adviser regarding ERISA.

The amounts of life insurance that may be purchased on behalf of a
participant in a pension or profit-sharing plan are limited.

The current cost of insurance for the net amount at risk is treated as
a "current fringe benefit" and must be included annually in the plan
participant's gross income. We report this cost (generally referred to as the
"P.S. 58" cost) to the participant annually.

If the plan participant dies while covered by the plan and the Policy
proceeds are paid to the participant's beneficiary, then the excess of the death
benefit over the Accumulated Value is not taxable. However, the Accumulated
Value will generally be taxable to the extent it exceeds the participant's cost
basis in the Policy.

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<PAGE> 52

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. Consult a tax adviser with respect to legislative
developments and their effect on the Policy.

POSSIBLE CHARGES FOR NATIONAL LIFE'S TAXES

At the present time, National Life makes no charge for any Federal,
state or local taxes (other than the charge for state premium taxes) that may be
attributable to the Subaccounts or to the policies. National Life reserves the
right to charge the Subaccounts for any future taxes or economic burden National
Life may incur.

POLICIES ISSUED IN CONJUNCTION WITH EMPLOYEE BENEFIT PLANS

Policies may be acquired in conjunction with employee benefit plans,
including the funding of qualified pension plans meeting the requirements of
Section 401 of the Code.

For employee benefit plan Policies, the maximum cost of insurance rates
used to determine the monthly Cost of Insurance Charge are based on the
Commissioners' 1980 Standard Ordinary Mortality Tables NB and SB. Under these
Tables, mortality rates are the same for male and female Insureds of a
particular Attained Age and Rate Class. (See "Cost of Insurance Charge," Page .)

Illustrations reflecting the premiums and charges for employee benefit
plan Policies will be provided upon request to purchasers of such Policies.

There is no provision for misstatement of sex in the employee benefit
plan Policies. (See "Misstatement of Age and Sex," Page .) Also, the rates used
to determine the amount payable under a particular Settlement Option will be the
same for male and female Insureds. (See "Settlement Options," Page .)

LEGAL DEVELOPMENTS REGARDING UNISEX ACTUARIAL TABLES

In 1983, the United States Supreme Court held in Arizona Governing
Committee v. Norris that optional annuity benefits provided under an employee'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. In that case, the Court
applied its decision only to benefits derived from contributions made on or
after August 1, 1983. Subsequent decisions of lower federal courts indicate that
in other factual circumstances the Title VII prohibition of sex-distinct
benefits may apply at an earlier date. In addition, legislative, regulatory, or
decisional authority of some states may prohibit use of sex-distinct mortality
tables under certain circumstances. The Policies offered by this Prospectus,
other than Policies issued in states which require "unisex" policies (currently
Montana) and employee benefit plan Policies (see "Policies Issued in Conjunction
with Employee Benefit Plans," Page ) are based upon actuarial tables which
distinguish between men and women and, thus, the Policy provides different
benefits to men and women of the same age. Accordingly, employers and employee
organizations should consider, in consultation with legal counsel, the impact of
these authorities on any employment-related insurance or benefits program before
purchasing the Policy and in determining whether an employee benefit plan Policy
is appropriate.

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<PAGE> 53

VOTING RIGHTS

We will invest all of the assets held in the Subaccounts of the
Separate Account in shares of corresponding Portfolios of the Funds. The Funds
do not hold routine annual shareholders' meetings. Shareholders' meetings will
be called whenever each Fund believes that it is necessary to vote to elect the
Board of Directors of the Fund and to vote upon certain other matters that are
required to be approved or ratified by the shareholders of a mutual fund.

We are the legal owner of Fund shares and as such have the right to
vote upon any matter that may be voted upon at a shareholders' meeting. However,
in accordance with the SEC's view of present applicable law, we will vote the
shares of the Funds at meetings of the shareholders of the appropriate Fund or
Portfolio in accordance with instructions of Policy Owners. We will vote Fund
shares held in each Subaccount of the Separate Account for which Owners do not
send timely instructions in the same proportion as those shares in that
Subaccount for which instructions are received.

If you have a voting interest, we will send you proxy material and a
form for giving voting instructions. You may vote, by proxy or in person, only
as to the Portfolios that correspond to the Subaccounts in which your Policy
values are allocated. We will determine the number of shares held in each
Subaccount attributable to a Policy for which you may provide voting
instructions by dividing the Policy's Accumulated Value in that account by the
net asset value of one share of the corresponding Portfolio as of the record
date for the shareholder meeting. We will count fractional shares. For each
share of a Portfolio for which Owners have no interest, we will cast votes, for
or against any matter, in the same proportion as Owners provide voting
instructions.

If required by state insurance officials, we may disregard voting
instructions if they would require shares to be voted so as to cause a change in
the investment objectives or policies of one or more of the Portfolios, or to
approve or disapprove an investment policy or investment adviser of one or more
of the Portfolios. In addition, we may disregard voting instructions in favor of
certain changes initiated by an Owner or the Fund's Board of Directors if our
disapproval of the change is reasonable and is based on a good faith
determination that the change would be contrary to state law or otherwise
inappropriate, considering the portfolio's objectives and purposes, and the
effect the change would have on us. If we disregard voting instructions, we will
advise you of that action and our reasons in the next semi-annual report to
Owners.

Shares of the Funds are currently being offered to variable life
insurance and variable annuity separate accounts of life insurance companies
other than National Life that are not affiliated with National Life. National
Life understands that shares of these Funds also will be voted by such other
life insurance companies in accordance with instructions from their
policyholders invested in such separate accounts. This will dilute the effect of
your voting instructions.

CHANGES IN APPLICABLE LAW, FUNDING AND OTHERWISE

The voting rights described in this Prospectus are created under
applicable Federal securities laws. If changes in these laws or regulations
eliminate the necessity to solicit your voting instructions or restrict such
voting rights, we may proceed in accordance with these laws or regulations.

We may also take the steps listed below, if we feel such an action is
reasonably necessary. In doing so we would comply with all applicable laws,
including approval of Owners, if so required:

(1) to make changes in the form of the Separate Account, if in our
judgment such changes would serve the interests of Owners or would be
appropriate in carrying out the purposes of the Policies, for example:

(i) operating the Separate Account as a management company
under the 1940 Act

50
<PAGE> 54

(ii) deregistering the Separate Account under the 1940 Act if
registration is no longer required

(iii) combining or substituting separate accounts

(iv) transferring the assets of the Separate Account to
another separate account or to the General Account

(v) making changes necessary to comply with, obtain or
continue any exemptions from the 1940 Act; or

(vi) making other technical changes in the Policy to conform
with any action described herein;

(2) if in our judgment a Portfolio no longer suits the investment goals
of the Policy, or if tax or marketing conditions so warrant, to
substitute shares of another investment portfolio for shares of
such Portfolio;

(3) to eliminate, combine, or substitute Subaccounts and establish new
Subaccounts, if in its judgment marketing needs, tax
considerations, or investment conditions so warrant;

(4) to transfer assets from a Subaccount to another Subaccount or
separate account if the transfer in our judgment would best serve
interests of Policy Owners or would be appropriate in carrying out
the purposes of the Policies; and

(5) to modify the provisions of the Policies to comply with applicable
laws.

We have reserved all rights in respect of our corporate name and any
part thereof, including without limitation the right to withdraw its use and to
grant its use to one or more other separate accounts and other entities.

If your Policy has Accumulated Value in a Subaccount that is
eliminated, we will give you at least 30 days notice before the elimination, and
will request that you name the Subaccount or Subaccounts (or the General
Account) to which the Accumulated Value in that Subaccount should be
transferred. If you do not name a new Subaccount, then we will use the Money
Market Subaccount. In any case, if in the future we impose a transfer charge or
establish limits on the number of transfers or free transfers, no charge will be
made for this transfer, and it will not count toward any limit on transfers or
free transfers.

OFFICERS AND DIRECTORS OF NATIONAL LIFE

The officers and directors of National Life, as well as their principal
occupations during the past five years, are listed below.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND POSITION DURING THE PAST FIVE YEARS
- ----------------- --------------------------
<S> <C>
Patrick E. Welch 1997 to present - Chairman of the Board
Chairman of the Board, and Chief Executive Officer; 1992 to 1997 -
Chief Executive Officer Chairman of the Board, Chief Executive
Officer and President of GNA Corporation.

Thomas H. MacLeay 1996 to Present - President and Chief
President, Chief Operating Officer; 1993 to 1996 -
Operating Officer, Executive Vice President & Chief
and Director Financial Officer; 1991 to 1993 -
Senior Vice President & Chief Financial Officer.

Robert E. Boardman 1994 to present - Chairman of Hickok &
Director Boardman Financial Network
1967 to present - President
of Hickok & Boardman Realty, Inc.
</TABLE>

51
<PAGE> 55

<TABLE>
<S> <C>
Earle H. Harbison, Jr. 1993 to present: Chairman of
Director Harbison Walker, Inc.; 1986 to
1992 - President and Chief
Operating Officer of Monsanto Company.

A. Gary Shilling 1978 to present - President of A.
Director Gary Shilling & Company, Inc.

James A. Mallon 1998 to present: Executive Vice President
Executive Vice President & Chief Marketing Officer; 1996 to 1998:
Chief Marketing Officer President & Chief Executive Officer - Integon
Life Insurance Corporation; 1993 to 1996: Senior
Vice President & Chief Marketing Officer - Commercial
Union Life Insurance Company of America.

William A. Smith 1998 to present: Executive Vice President & Chief
Executive Vice President & Financial Officer; 1994 to 1998 - Vice President and
Chief Financial Officer Controller, American Express Financial Advisors; 1991 to
1994 - Vice President and Chief Financial Officer of ACUMA, Ltd.

Rodney A. Buck 1996 to present - Senior Vice
Senior Vice President & President and Chief Investment
Chief Investment Officer Officer; 1993 to 1995 - Senior Vice President -
Investments; 1996 to present - Chairman
& Chief Executive Officer, National
Life Investment Management
Company, Inc. ("NLIMC"); 1991 to 1995 - President
and Chief Operating Officer, NLIMC; 1998 to
present - Chief Executive Officer; 1987 to 1997
Senior Vice President - Sentinel Advisors Company.

Gregory H. Doremus 1998 to present: Senior Vice President -
Senior Vice President - New New Business & Customer Services; 1994 to 1998 -
Business & Customer Services Vice President - Customer Services; 1990 to 1994 - Second Vice President -
Client Services

Michele S. Gatto 1999 to present: Senior Vice President & General
Senior Vice President & Counsel; 1997 to 1999 - Vice President, General Counsel
General Counsel and Secretary, Massachusetts Casualty Insurance Company; 1986 to 1997 - Vice
President, Assistant General Counsel, Assistant Secretary/Treasurer, and other
legal positions, The Paul Revere Corporation

Charles C. Kittredge 1997 to present: Senior Vice President - Sales
Senior Vice President - Sales and Distribution; 1993 to 1997: - Vice President -
and Distribution Agency Financial Planning & Services

Michael A. Tahan 1998 to present: Senior Vice President & Chief
Senior Vice President & Information Officer; 1991 to 1998 - First Vice President
Chief Information Officer & Chief Information Officer - Merrill Lynch Asset Management
</TABLE>

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<PAGE> 56

DISTRIBUTION OF POLICIES

We sell Policies through agents who are licensed by state insurance
authorities to sell our variable life insurance policies, and who are also
registered representatives of Equity Services, Inc. ("ESI") or registered
representatives of broker/dealers who have Selling Agreements with ESI. ESI,
whose address is National Life Drive, Montpelier, Vermont 05604, is a registered
broker/dealer under the Securities Exchange Act of 1934 (the "1934 Act") and a
member of the National Association of Securities Dealers, Inc. (the "NASD"). ESI
is an indirect wholly-owned subsidiary of National Life, formed on October 7,
1968. ESI acts as the principal underwriter, as defined in the 1940 Act, of the
Policies, and for the Separate Account pursuant to an Underwriting Agreement to
which the Separate Account, ESI and National Life are parties.

National Life has sought approval to sell the Policies in all states
and the District of Columbia. However, all approvals may not be obtained. The
Policies are offered and sold only in those states where their sale is lawful.

The directors of ESI are Patrick E. Welch, Thomas H. MacLeay, Rodney A.
Buck, all of whose principal occupations are disclosed under "Directors and
Officers of National Life" above, and Joseph M. Rob, the Chairman, Chief
Executive Officer and President of ESI. ESI's other officers are:
<TABLE>
<S> <C>
John M. Grab, Jr. Senior Vice President & Chief Financial Officer
Stephen A. Englese Vice President - Financial Products
Gregory D. Teese Vice President - Compliance
Budd A. Shedaker Assistant Vice President - Communications
D. Russell Morgan Counsel
Sharon E. Bernard Treasurer & Controller
Lisa A. Pettrey Secretary
JoAnn K. Morissette Assistant Secretary
</TABLE>

The principal business address of all these individuals is National
Life Drive, Montpelier, Vermont 05604.

We do the insurance underwriting , determine a proposed Insured's Rate
Class, and determine whether to accept or reject an application for a Policy. We
will refund any premiums paid if a Policy ultimately is not issued or will
refund the applicable amount if the Policy is returned under the free look
provision.

Dealers are compensated for sales of the Policies by dealer
concessions. During the first Policy Year, the gross dealer concession will not
be more than 85% of the premiums paid up to a target amount (used only to
determine commission payments) and 4% of the premiums paid in excess of that
amount. For Policy Years 2 through 10, the gross dealer concession will not be
more than 4% of the premiums paid. For Policy Year 11 and thereafter, the gross
dealer concession will be 1.5% of all premiums paid. For premiums received in
the year following an increase in Face Amount and attributable to the increase,
the gross dealer concession will not be more than 50% up to the target amount
for the increase.

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<PAGE> 57

POLICY REPORTS

Once each Policy Year, we will send you a statement describing the status
of the Policy, including setting forth:

- the Face Amount

- the current Unadjusted Death Benefit

- any Policy loans and accrued interest

- the current Accumulated Value

- the non-loaned Accumulated Value in the General Account

- the amount held as Collateral in the General Account

- the value in each Subaccount of the Separate Account

- premiums paid since the last report

- charges deducted since the last report

- any Withdrawals since the last report, and

- the current Cash Surrender Value.

In addition, we will send you a statement showing the status of the
Policy following the transfer of amounts from one Subaccount of a Separate
Account to another, the taking out of a loan, a repayment of a loan, a
Withdrawal and the payment of any premiums (excluding those paid by bank draft
or otherwise under the Automatic Payment Plan).

We will send you a semi-annual report containing the financial
statements of each Fund in which your Policy has Accumulated Value, as required
by the 1940 Act.

STATE REGULATION

We are subject to regulation and supervision by the Department of
Banking, Insurance, Securities and Health Care Administration of the State of
Vermont, which periodically examines our affairs. We are also subject to the
insurance laws and regulations of all jurisdictions where we are authorized to
do business. We have filed a copy of the Policy form with, and where required
obtained an approval by, insurance officials in each jurisdiction where the
Policies are sold. We are required to submit annual statements of our
operations, including financial statements, to the insurance departments of the
various jurisdictions in which we do business for the purposes of determining
solvency and compliance with local insurance laws and regulations.

INSURANCE MARKETPLACE STANDARDS ASSOCIATION

National Life Insurance Company 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.

PREPARING FOR YEAR 2000

54
<PAGE> 58

Many computer systems were designed using only two digits to designate
years. These systems may not be able to distinguish the year 2000 from the year
1900. Like all financial services providers, we utilize computer systems that
may be effected by Year 2000 transition issues. We also rely on service
providers, including the Funds, that also may be affected. We have developed,
and are in the process of implementing, a Year 2000 transition plan, and are
confirming that our service providers are also so engaged. The resources that
are being devoted to this effort are substantial. It is difficult to predict
with precision whether the amount of resources ultimately devoted, or the
outcome of these efforts, will have any negative impact on us. However, as of
the date of this prospectus, it is not anticipated that you will experience
negative effects on your investment, or on the services provided in connection
with your Policy, as a result of Year 2000 transition implementation. We
currently anticipate that our computer systems will be Year 2000 compliant on or
about June 30, 1999, but there can be no assurance that we will be successful,
or that interaction with other service providers will not impair our services at
that time.

EXPERTS

The Financial Statements listed on Page F-1 have been included in this
Prospectus, in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.

Actuarial matters included in the Prospectus have been examined by
Elizabeth H. MacGowan, F.S.A. MAAA, Associate Actuary Product Development of
National Life.

LEGAL MATTERS

Sutherland, Asbill & Brennan LLP of Washington, D.C. has provided
advice on legal matters relating to certain aspects of Federal securities law
applicable to the issue and sale of the Policies. Matters of Vermont law
pertaining to the Policies, including National Life's right to issue the
Policies and its qualification to do so under applicable laws and regulations
issued thereunder, have been passed upon by Michele S. Gatto, Senior Vice
President and General Counsel of National Life.

The Separate Account is not a party to any litigation. There are no
material legal proceedings involving National Life which are likely to have a
material adverse effect upon the Separate Account or upon the ability of
National Life to meet its obligations under the Policies. ESI is not engaged in
any litigation of any material nature.

In recent years life insurance companies have been named as defendants
in class action lawsuits relating to life insurance pricing and sales practices.
During 1998, National Life settled a group of class action lawsuits of this
nature. While the ultimate cost of the settlement is not yet known, National
Life set aside a reserve during 1998 of approximately $40.6 million to account
for the cost of the settlement of these cases.

National Life is also party to ordinary routine litigation incidental
to the business, none of which is expected to have a material adverse effect
upon its ability to meet its obligations under the Policies.

FINANCIAL STATEMENTS

The financial statements of National Life and of the relevant
Subaccounts of the Separate Account appear on the following pages. The financial
statements of National Life should be distinguished from the financial
statements of the Separate Account and should be considered only as bearing upon
National Life's ability to meet its obligations under the Policies.

55
<PAGE> 59

GLOSSARY

ACCUMULATED VALUE The sum of the Policy's values in the Separate
Account and the General Account.

ATTAINED AGE The Issue Age of the Insured plus the number
of full Policy Years which have passed since
the Date of Issue.

BENEFICIARY The person(s) or entity(ies) designated to
receive all or some of the Death Benefit
when the Insured dies. The Beneficiary is
designated in the application or if
subsequently changed, as shown in the latest
change filed with National Life. The
interest of any Beneficiary who dies before
the Insured shall vest in the Owner unless
otherwise stated.

CASH SURRENDER VALUE The Accumulated Value minus any applicable
Surrender Charge, and minus any outstanding
Policy loans and accrued interest on such
loans.

COLLATERAL The portion of the Accumulated Value in the
General Account which secures the amount of
any Policy loan.

DAC TAX A tax attributable to Specified Policy
Acquisition Expenses under Internal Revenue
Code Section 848.

DATE OF ISSUE The date on which the Policy is issued,
which is set forth in the Policy. It is used
to determine Policy Years, Policy Months and
Monthly Policy Dates, as well as to measure
suicide and contestable periods.

DEATH BENEFIT The Policy's Unadjusted Death Benefit, plus
any dividends payable, plus any relevant
additional benefits provided by a
supplementary benefit Rider, less any
outstanding Policy loan and accrued interest,
and less any unpaid Monthly Deductions.

DURATION The number of full years the insurance has
been in force; for the Initial Face Amount,
measured from the Date of Issue; for any
increase in Face Amount, measured from the
effective date of such increase.

FACE AMOUNT The Initial Face Amount plus any increases in
Face Amount and minus any decreases in Face
Amount.

GENERAL ACCOUNT The account which holds the assets of National
Life which are available to support its
insurance and annuity obligations.

GRACE PERIOD A 61-day period measured from the date on
which notice of pending lapse is sent by
National Life, during which the Policy will
not lapse and insurance coverage continues. To
prevent lapse, the Owner must during the Grace
Period make a premium payment equal to the sum
of any amount by which the past Monthly
Deductions have been in excess of Cash
Surrender Value, plus three times the Monthly
Deduction due the date the Grace Period began.

56
<PAGE> 60

GUARANTEED DEATH BENEFIT RIDER An optional Rider that will guarantee that the
Policy will not lapse prior to Attained Age
70, or 20 years from the Policy's Date of
Issue, if longer, regardless of investment
performance, if the Minimum Guarantee Premium
has been paid as of each Monthly Policy Date.

HOME OFFICE National Life's Home Office at National Life
Drive, Montpelier, Vermont 05604.

INITIAL FACE AMOUNT The Face Amount of the Policy on the Date of
Issue. The Face Amount may be increased or
decreased after the first Policy Year.

INSURED The person upon whose life the Policy is
issued.

ISSUE AGE The age of the Insured at his or her birthday
nearest the Date of Issue. The Issue Age is
stated in the Policy.

MINIMUM FACE AMOUNT The Minimum Face Amount is generally $50,000.
However, exceptions may be made in employee
benefit plan cases.

MINIMUM GUARANTEE PREMIUM The sum of the Minimum Monthly Premiums in
effect on each Monthly Policy Date since the
Date of Issue (including the current month),
plus all Withdrawals and outstanding Policy
loans and accrued interest.

MINIMUM INITIAL PREMIUM The minimum premium required to issue a
Policy. It is equal to two times the Minimum
Monthly Premium.

MINIMUM MONTHLY PREMIUM The monthly amount used to determine the
Minimum Guarantee Premium. This amount, which
includes any substandard charges and any
applicable Rider charges, is determined
separately for each Policy, based on the
requested Initial Face Amount, and the Issue
Age, sex and Rate Class of the Insured, and
the Death Benefit Option and any optional
benefits selected. It is stated in each
Policy.

MONTHLY ADMINISTRATIVE CHARGE A charge of $7.50 per month included in the
Monthly Deduction, which is intended to
reimburse National Life for ordinary
administrative expenses.

MONTHLY DEDUCTION The amount deducted from the Accumulated Value
on each Monthly Policy Date. It includes the
Monthly Administrative Charge, the Cost of
Insurance Charge, and the monthly cost of any
benefits provided by Riders.

MONTHLY POLICY DATE The day in each calendar month which is the
same day of the month as the Date of Issue, or
the last day of any month having no such date,
except that whenever the Monthly Policy Date
would otherwise fall on a date other than a
Valuation Day, the Monthly Policy Date will be
deemed to be the next Valuation Day.

NET AMOUNT AT RISK The amount by which the Unadjusted Death
Benefit exceeds the Accumulated Value.

57
<PAGE> 61

NET PREMIUM The remainder of a premium after the deduction
of the Premium Tax Charge.

OWNER The person(s) or entity(ies) entitled to
exercise the rights granted in the Policy.

PLANNED PERIODIC PREMIUM The premium amount which the Owner plans to
pay at the frequency selected. The Owner may
request a reminder notice and may change the
amount of the Planned Periodic Premium. The
Owner is not required to pay the designated
amount.

POLICY ANNIVERSARY The same day and month as the Date of Issue in
each later year.

POLICY YEAR A year that starts on the Date of Issue or on
a Policy Anniversary.

PREMIUM TAX CHARGE A charge deducted from each premium payment to
cover the cost of state and local premium
taxes, and the federal DAC Tax.

RATE CLASS The classification of the Insured for cost of
insurance purposes. The Rate Classes are:
preferred nonsmoker; standard nonsmoker;
smoker; juvenile; and substandard.

RIDERS Optional benefits that an Owner may elect to
add to the Policy at an additional cost.

SURRENDER CHARGE The amount deducted from the Accumulated Value
of the Policy upon lapse or surrender during
the first 15 Policy Years. The Maximum
Surrender Charge is shown in the Policy.

UNADJUSTED DEATH BENEFIT Under Option A, the greater of the Face Amount
or the applicable percentage of the
Accumulated Value on the date of death; under
Option B, the greater of the Face Amount plus
the Accumulated Value on the date of death, or
the applicable percentage of the Accumulated
Value on the date of death. The Death Benefit
Option is selected at time of application but
may be later changed.

VALUATION DAY Each day that the New York Stock Exchange is
open for business other than the day after
Thanksgiving and any day on which trading is
restricted by directive of the Securities and
Exchange Commission. Unless otherwise
indicated, whenever under a Policy an event
occurs or a transaction is to be effected on a
day that is not a Valuation Date, it will be
deemed to have occurred on the next Valuation
Date.

VALUATION PERIOD The time between two successive Valuation
Days. Each Valuation Period includes a
Valuation Day and any non-Valuation Day or
consecutive non-Valuation Days immediately
preceding it.

WITHDRAWAL A payment made at the request of the Owner
pursuant to the right in the Policy to
withdraw a portion of the Cash Surrender Value
of the Policy. The Withdrawal Charge will be
deducted from the Withdrawal Amount.

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<PAGE> 62

APPENDIX A

ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND CASH SURRENDER VALUES

The following tables illustrate how the Death Benefits, Accumulated
Values and Cash Surrender Values of a Policy may change with the investment
experience of the Separate Account. The tables show how the Death Benefits,
Accumulated Values and Cash Surrender Values of a Policy issued to an Insured of
a given age, sex and Rate Class would vary over time if the investment return on
the assets held in each Portfolio of each of the Funds were a uniform, gross,
annual rate of 0%, 6% and 12%.

The tables on Pages A-2 to A-7 illustrate a Policy issued to a male
Insured, Age 40 in the Preferred Nonsmoker Rate Class with a Face Amount of
$250,000 and Planned Periodic Premiums of $3,000 for Death Benefit Option A, and
$4,000 for Death Benefit Option B, in each case paid at the beginning of each
Policy Year. The Death Benefits, Accumulated Values and Cash Surrender Values
would be lower if the Insured was in a standard nonsmoker, smoker or substandard
class since the cost of insurance charges are higher for these classes. Also,
the values would be different from those shown if the gross annual investment
returns averaged 0%, 6% and 12% over a period of years, but fluctuated above and
below those averages for individual Policy Years.

The second column of the tables show the amount to which the premiums
would accumulate if an amount equal to those premiums were invested to earn
interest, after taxes, at 5% compounded annually. The columns shown under the
heading "Guaranteed" assume that throughout the life of the policy, the monthly
charge for cost of insurance is based on the maximum level permitted under the
Policy (based on the 1980 CSO Smoker/Nonsmoker Table); the columns under the
heading "Current" assume that throughout the life of the Policy, the monthly
charge for cost of insurance is based on the current cost of insurance rate, and
for Policy Years after year 10, a bonus under which the Monthly Deductions are
reduced by 0.50% per annum.

The amounts shown in all tables reflect an averaging of certain other
asset charges described below that may be assessed under the Policy, depending
upon how premiums are allocated. The total of the asset charges reflected in the
Current and Guaranteed illustrations, including the Mortality and Expense Risk
Charge of 0.90%, is %. This total charge is based on an assumption that an Owner
allocates the Policy values equally among the Subaccounts of the Separate
Account.

These asset charges reflect an investment advisory fee of %, which
represents an average of the fees incurred by the Portfolios during 1998 and
expenses of % which is based on an average of the actual expenses incurred by
the Portfolios during 1998, adjusted, as appropriate, to take into account
expense reimbursement arrangements expected to be in place for 1999. In the
absence of the reimbursement arrangements for some of the Portfolios, the other
asset charges would have totalled an average of %. If the reimbursement
arrangements were discontinued, the Accumulated Values and Cash Surrender Values
of a Policy which allocates Policy values equally among the Subaccounts would be
lower than those shown in the following tables. For information on Fund
expenses, see the prospectuses for the Funds accompanying this prospectus.

The tables also reflect the fact that no charges for Federal or state
income taxes are currently made against the Separate Accounts. If such a charge
is made in the future, it would take a higher gross annual rate of return to
produce the same Policy values.

The tables illustrate the Policy values that would result based upon
the hypothetical investment rates of return if premiums are paid and allocated
as indicated, no amounts are allocated to the General Account, and no Policy
loans are made. The tables are also based on the assumption that the Owner has
not requested an increase or decrease in the Face Amount, that no Withdrawals
have been made and no transfers have been made in any Policy Year.

Upon request, National Life will provide a comparable illustration
based upon the proposed Insured's Age and Rate Class, the Death Benefit Option,
Face Amount, Planned Periodic Premiums and Riders requested.

A-1
<PAGE> 63

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION A ANNUAL PREMIUM $3000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 0%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)
<TABLE>
<CAPTION>
Premiums Guaranteed Current
-------------------------------------------- ---------------------------------------------
End of Accumulated Accum- Cash Accum- Cash
Policy at 5% Int. ulated Surrender Death ulated Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
- ---- -------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 3,150
2 6,458
3 9,930
4 13,577
5 17,406

6 21,426
7 25,647
8 30,080
9 34,734
10 39,620

11 44,751
12 50,139
13 55,796
14 61,736
15 67,972

16 74,521
17 81,397
18 88,617
19 96,198
20 104,158
25 150,340
30 209,282
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RESULTS ARE ILLUSTRATIVE ONLY
AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT RESULTS.
ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. THE DEATH
BENEFIT, ACCUMULATED VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD BE
DIFFERENT FROM THOSE SHOWN IF ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO
THE POLICY AVERAGED 0%, 6% OR 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCUMULATED VALUE AND CASH SURRENDER VALUE WOULD ALSO BE DIFFERENT FROM THOSE
SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SUBACCOUNTS OF THE
SEPARATE ACCOUNT AND THE DIFFERENT RATES OF RETURN OF THE SUBACCOUNTS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 6%, OR
12%, BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR PARTICULAR SUBACCOUNTS. NO
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

A-2
<PAGE> 64

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION A ANNUAL PREMIUM $3000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 6%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)
<TABLE>
<CAPTION>
Premiums Guaranteed Current
-------------------------------------------- ---------------------------------------------
End of Accumulated Accum- Cash Accum- Cash
Policy at 5% Int. ulated Surrender Death ulated Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
- ---- -------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 3,150
2 6,458
3 9,930
4 13,577
5 17,406

6 21,426
8 30,080
9 34,734
10 39,620

11 44,751
12 50,139
13 55,796
14 61,736
15 67,972

16 74,521
17 81,397
18 88,617
19 96,198
20 104,158
25 150,340
30 209,282
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-3
<PAGE> 65

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION A ANNUAL PREMIUM $3000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 6%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)
<TABLE>
<CAPTION>

Premiums Guaranteed Current
-------------------------------------------- ---------------------------------------------
End of Accumulated Accum- Cash Accum- Cash
Policy at 5% Int. ulated Surrender Death ulated Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
- ---- -------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 3,150
2 6,458
3 9,930
4 13,577
5 17,406

6 21,426
8 30,080
9 34,734
10 39,620

11 44,751
12 50,139
13 55,796
14 61,736
15 67,972

16 74,521
17 81,397
18 88,617
19 96,198
20 104,158
25 150,340
30 209,282
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-4
<PAGE> 66

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION B ANNUAL PREMIUM $4000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 0%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)
<TABLE>
<CAPTION>

6 28,568
7 34,196
8 40,106
9 46,312
10 52,827

11 59,669
12 66,852
13 74,395
14 82,314
15 90,630

16 99,361
17 108,530
18 118,156
19 128,264
20 138,877
25 200,454
30 279,043
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-5
<PAGE> 67

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION B ANNUAL PREMIUM $4000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 0%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)
<TABLE>
<CAPTION>

6 28,568
7 34,196
8 40,106
9 46,312
10 52,827

11 59,669
12 66,852
13 74,395
14 82,314
15 90,630

16 99,361
17 108,530
18 118,156
19 128,264
20 138,877
25 200,454
30 279,043
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-6
<PAGE> 68

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION B ANNUAL PREMIUM $4000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 0%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)
<TABLE>
<CAPTION>

6 28,568
7 34,196
8 40,106
9 46,312
10 52,827

11 59,669
12 66,852
13 74,395
14 82,314
15 90,630

16 99,361
17 108,530
18 118,156
19 128,264
20 138,877
25 200,454
30 279,043
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-7
<PAGE> 69

VARITRAK
VARIABLE UNIVERSAL LIFE INSURANCE

P R O S P E C T U S

DATED MAY 1, 1999
<TABLE>
<S> <C>
NATIONAL LIFE INSURANCE COMPANY Home Office: National Life Drive, Montpelier, Vermont 05604
NATIONAL VARIABLE LIFE INSURANCE ACCOUNT Telephone: (800) 537-7003
</TABLE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VARIABLE INSURANCE PRODUCTS AMERICAN CENTURY VARIABLE GOLDMAN SACHS VARIABLE
MARKET STREET FUND, INC. FUND AND PORTFOLIOS, INC. INSURANCE TRUST
VARIABLE INSURANCE PRODUCTS
FUND II
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AGGRESSIVE GROWTH PORTFOLIO* GROWTH PORTFOLIO VP INCOME & GROWTH CORE SMALL CAP EQUITY
BOND PORTFOLIO* HIGH INCOME PORTFOLIO VP VALUE GLOBAL INCOME
GROWTH PORTFOLIO* EQUITY INCOME PORTFOLIO INTERNATIONAL EQUITY
INTERNATIONAL PORTFOLIO+ OVERSEAS PORTFOLIO MID CAP EQUITY
MANAGED PORTFOLIO* INDEX 500 PORTFOLIO
MONEY MARKET PORTFOLIO* CONTRAFUND PORTFOLIO
SENTINEL GROWTH PORTFOLIO*

- ------------------------------------------------------------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS STRONG VARIABLE INSURANCE ALGER AMERICAN FUND
J.P. MORGAN SERIES TRUST II MANAGEMENT TRUST FUNDS, INC. AND STRONG
OPPORTUNITY FUND II
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES PARTNERS PORTFOLIO GROWTH FUND II SMALL CAPITALIZATION
SMALL COMPANY OPPORTUNITY FUND II GROWTH

Managed by J. P. Morgan Asset Managed by Neuberger & Berman Managed by Strong Capital Managed by Fred Alger
Management, Inc. Management, Inc. Management, Inc. Management, Inc.

- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

You must receive, with this prospectus, current prospectuses for all of the fund
options. They describe the investment objectives and the risks of the funds.

We recommend that you read this prospectus carefully. You should keep it to
refer to later.

<PAGE> 70

federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other governmental agency.

It may not be advantageous to purchase a policy as a replacement for another
type of life insurance or as a means to obtain additional insurance protection
if you already own another variable universal life insurance policy.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
POLICY OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE> 71

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary Description of the Policy.........................................................................
The Policy ......................................................................................
The Separate Account.............................................................................
Availability of Policy...........................................................................
The Death Benefit................................................................................
Flexibility to Adjust Amount of Death Benefit....................................................
Accumulated Value................................................................................
Allocation of Net Premiums.......................................................................
Transfers........................................................................................
Free-Look Privilege..............................................................................
Charges Assessed in Connection with the Policy...................................................
Loan Privilege...................................................................................
Withdrawal of Cash Surrender Value...............................................................
Surrender of the Policy..........................................................................
Available Automated Fund Management Features.....................................................
Tax Treatment....................................................................................
Other Policies
Illustrations....................................................................................
Questions

National Life Insurance Company, The Separate Account, and The Funds......................................
National Life Insurance Company..................................................................
The Separate Account.............................................................................
The Market Street Fund...........................................................................
Variable Insurance Products Fund and Variable Insurance Products Fund II.........................
Alger American Fund..............................................................................
American Century Variable Portfolios, Inc........................................................
Goldman Sachs Variable Insurance Trust...........................................................
J.P. Morgan Series Trust II......................................................................
Neuberger & Berman Advisers Management Trust.....................................................
Strong Variable Insurance Funds, Inc. and Strong Opportunity Fund, Inc...........................
Other Information................................................................................
The General Account..............................................................................

Detailed Description of Policy Provisions.................................................................
Death Benefit....................................................................................
Ability to Adjust Face Amount....................................................................
How the Duration of the Policy May Vary..........................................................
Accumulated Value................................................................................
Payment and Allocation of Premiums...............................................................

Charges and Deductions....................................................................................
Premium Tax Charge...............................................................................
Surrender Charge.................................................................................
Monthly Deductions...............................................................................
Mortality and Expense Risk Charge................................................................
Withdrawal Charge................................................................................
Transfer Charge..................................................................................
Projection Report Charge.........................................................................
Other Charges....................................................................................
</TABLE>

1
<PAGE> 72

<TABLE>
<S> <C>
Policy Rights and Privileges..............................................................................
Loan Privileges..................................................................................
Surrender Privilege..............................................................................
Withdrawal of Cash Surrender Value...............................................................
Free-Look Privilege..............................................................................
Telephone Transaction Privilege..................................................................
Other Transfer Rights............................................................................
Available Automated Fund Management Features.....................................................
Policy Rights Under Certain Plans................................................................

The General Account.......................................................................................
Minimum Guaranteed and Current Interest Rates....................................................
Transfers from General Account...................................................................

Other Policy Provisions...................................................................................
Optional Benefits.........................................................................................
Federal Income Tax Considerations.........................................................................

Introduction.....................................................................................
Tax Status of the Policy.........................................................................
Tax Treatment of Policy Benefits.................................................................
Special Rules for Employee Benefit Plans.........................................................
Possible Charge for National Life's Taxes........................................................
Possible Changes in Taxation.....................................................................

Policies Issued in Conjunction with Employee Benefit Plans................................................
Legal Developments Regarding Unisex Actuarial Tables......................................................
Voting Rights.............................................................................................
Changes in Applicable Law, Funding and Otherwise..........................................................
Officers and Directors of National Life...................................................................
Distribution of Policies..................................................................................
Policy Reports ........................................................................................
State Regulation..........................................................................................
Insurance Marketplace Standards Association...............................................................
Preparing for Year 2000...................................................................................
Experts...................................................................................................
Legal Matters.............................................................................................
Financial Statements......................................................................................
Glossary

Appendix A-Illustration of Death Benefits, Accumulated Values and
Cash Surrender Values............................................................................ A-1

Financial Statements...................................................................................... F-1
</TABLE>

THE PRIMARY PURPOSE OF THIS VARIABLE LIFE INSURANCE POLICY IS TO PROVIDE
INSURANCE PROTECTION. WE DO NOT CLAIM THAT THE POLICY IS IN ANY WAY SIMILAR OR
COMPARABLE TO AN INVESTMENT IN A MUTUAL FUND.

2
<PAGE> 73

SUMMARY DESCRIPTION OF THE POLICY

THE POLICY

(1) Life insurance coverage which will provide a death benefit on
the death of the named insured person;

(2) A cash surrender value;

(3) Surrender and withdrawal rights and policy loan privileges;
and

(4) A variety of additional insurance benefits.

This policy is designed to help lessen the economic loss resulting from
the death of the insured person. You should consider your need for insurance
coverage and the policy's investment potential on a long-term basis. The policy
matures, resulting in payment of cash surrender value, when the insured reaches
age 99.

3
<PAGE> 74

THE SEPARATE ACCOUNT

We cannot give any assurance that any portfolio will achieve its
investment objectives. You bear the entire investment risk on the value of your
policy which you allocate to the separate account.

AVAILABILITY OF POLICY

- Preferred Nonsmoker

- Standard Nonsmoker

- Smoker

- Juvenile, and

- Substandard.

See "Issuance of a Policy," Page .

THE DEATH BENEFIT

There are two death benefit options available, which we call Option A
and Option B. You may choose which option will apply to your policy.

If you choose death benefit Option A, the death benefit will be based on
the greater of :

(a) the face amount, or

(b) the Accumulated Value multiplied by a factor specified by
federal income tax law.

If you choose death benefit Option B, the death benefit will be based
on the greater of:

(a) the face amount plus the Accumulated Value, or

4
<PAGE> 75

(b) the Accumulated Value multiplied by the same factor that applies to
option A.

See "Death Benefit Options," Page ___.

FLEXIBILITY TO ADJUST AMOUNT OF DEATH BENEFIT

If you request a decrease in face amount which would cause the policy
not to qualify as life insurance under federal tax law, we will not allow the
decrease.

ACCUMULATED VALUE

The Accumulated Value in the separate account will reflect:

- the investment performance of your chosen funds

- premiums paid

- transfers

- withdrawals

- policy loans

- loan repayments

- loan interest paid or credited, and

- the charges assessed in connection with the policy.

The Accumulated Value will likely matter in computing both the death
benefit and the cost of insurance charges.

ALLOCATION OF PREMIUMS

5
<PAGE> 76

(including investment experience) to your chosen subaccounts. For this purpose,
we will assume that the free-look period ends 20 days after the date the policy
is issued. (See "Allocation of Net Premiums," Page ___.)

TRANSFERS

FREE-LOOK PRIVILEGE

The Policy provides for an initial "free-look" period, during which you
may cancel the Policy and receive a refund equal to the gross premiums you paid.
This free-look period ends on the latest of:

(a) 45 days after you sign Part A of your application for the Policy

(b) 10 days after you receive the Policy, and

CHARGES ASSESSED IN CONNECTION WITH THE POLICY

Summary of Policy Expenses.

<TABLE>
<S> <C>
TRANSACTION EXPENSES
Premium Tax (as a percentage of premiums paid)............. 3.25%
Sales Load Imposed on Purchases............................ NONE
Surrender Charge........................................... See below
Withdrawal Charge.......................................... Lesser of 2% of amounts withdrawn or $25
Transfer Charge............................................ NONE*
</TABLE>

- - We currently have no transfer charge, but we reserve the right to
charge up to $25 for each transfer in excess of twelve transfers in any
one year.

<TABLE>
<S> <C>
ANNUAL AMOUNTS OF CHARGES
Mortality and Expense Risk Charge (deducted daily)......... 0.90% (as a percentage of separate account
Accumulated Value)
Cost of Insurance Charge (deducted monthly)................ Varies by age, sex, Rate Class-See below
Administrative Charge (deducted monthly)................... $90 per year
Rider Charges.............................................. See "Optional Benefits" on page for charges for
optional riders you may choose to include in your
policy
</TABLE>

ANNUAL EXPENSES OF UNDERLYING FUNDS(1) (for the year ended December 31, 1998):

6
<PAGE> 77

<TABLE>
<CAPTION>
Management Other Total
Fee, after expense Expenses, Expenses,
reimbursement after expense after expense
reimbursement reimbursement
<S> <C> <C> <C>
Market Street Fund, Inc.:
Money Market Portfolio . % . % . %
Bond Portfolio . % . % . %
Managed Portfolio . % . % . %
Aggressive Growth Portfolio . % . % . %
International Portfolio . % . % . %
Growth Portfolio . % . % . %
Sentinel Growth Portfolio . % . % . %

Alger:
Alger American Growth Portfolio . % . % . %
Alger American Small Capitalization . % . % . %

American Century Variable Portfolios, Inc.
VP Value Portfolio . % 0 . %
VP Income & Growth Portfolio . % 0 . %

Fidelity: Variable Insurance Products Fund I:
Growth Portfolio . % . % . %
High Income Portfolio . % . % . %

Fidelity: Variable Insurance Products Fund II:
Index 500 Portfolio . % . % . %
Contrafund Portfolio . % . % . %

Goldman Sachs Variable Insurance Trust
International Equity Fund . % . % . %
Global Income Fund . % . % . %
CORE Small Cap Equity Fund . % . % . %
Mid Cap Equity Fund . % . % . %

J.P. Morgan Series Trust II
International Opportunities Portfolio . % . % . %
Small Company Portfolio . % . % . %

Neuberger & Berman Advisers Management Trust
Partners Portfolio . % 0 . %

Strong Variable Insurance Funds, Inc.
Growth Fund II . % . % . %

Strong Opportunity Fund II . % . % . %
</TABLE>

7
<PAGE> 78

(1) The fund expenses shown above are assessed at the underlying fund
level and are not direct charges against the subaccounts. These underlying fund
expenses are taken into consideration in computing each underlying fund's net
asset value, which is the share price used to calculate the unit values of the
subaccounts. The management fees and other expenses are more fully described in
the prospectuses for each individual underlying fund. The information relating
to the underlying fund expenses was provided by the underlying funds. We did not
independently verify it. In the absence of any voluntary fee waivers or expense
reimbursements, the management fees, other expenses, and total expenses of the
funds listed below would have been as follows:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
MANAGEMENT OTHER TOTAL MUTUAL
FEES EXPENSES FUND EXPENSES
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fidelity VIP Fund II-Index 500 Portfolio % % %
- ---------------------------------------------------------------------------------------------------------------
Market Street Sentinel Growth Portfolio % % %
- ---------------------------------------------------------------------------------------------------------------
Strong Growth Fund II % % %
- ---------------------------------------------------------------------------------------------------------------
J. P. Morgan International Opportunities % % %
- ---------------------------------------------------------------------------------------------------------------
J. P. Morgan Small Company % % %
- ---------------------------------------------------------------------------------------------------------------
Goldman Sachs International Equity
- ---------------------------------------------------------------------------------------------------------------
Goldman Sachs Global Income
- ---------------------------------------------------------------------------------------------------------------
Goldman Sachs CORE Small Cap Equity
- ---------------------------------------------------------------------------------------------------------------
Goldman Sachs Mid Cap Equity
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

Monthly Deductions. On the date of issue and each month thereafter, we
will take a deduction from the Accumulated Value equal to the sum of:

(a) the monthly cost of insurance charge

(b) the monthly administrative charge, and

The monthly administrative charge is currently $7.50. (See "Monthly
Administrative Charge," Page .) After 10 years, we will credit a separate
account enhancement under which the Monthly Deductions are reduced by 0.50% per
annum of the Accumulated Value in the separate account. (See "Separate Account
Enhancement," Page .) The separate account enhancement is guaranteed.

8
<PAGE> 79

Surrender Charge. We impose a surrender charge if you surrender your
policy or it lapses at any time during the first 15 years. The surrender charge
consists of a deferred administrative charge and a deferred sales charge. (See
"Surrender Charge," Page .)

The deferred administrative charge is generally initially $2 per $1,000
of initial fare amount (lower for insured people under 25 years old at issue).
After the first five years, the deferred administrative charge declines
linearly by month until the end of the fifteenth year, when it becomes zero.

The deferred sales charge is equal to the lesser of:

Withdrawal Charge. If you make a withdrawal from your policy, we assess
a withdrawal charge equal to the lesser of 2% of the amount withdrawn or $25.
(See "Withdrawal Charge," Page .)

<PAGE> 80

$25 for each transfer in excess of twelve transfers in any one year. (See
"Transfer Charge," Page ___.)

Projection Report Charge. If you request a projection report, we may
impose a charge, not to exceed $25. (See "Projection Report Charge," Page __.)

LOAN PRIVILEGE

We will credit interest on non-loaned Accumulated Value in the general
account for policies that are more than 10 years old at rates which are 0.50%
per annum higher than those that apply to policies still in their first ten
years. We also currently plan to make preferred loans available when the insured
person is 65 years old or a policy is 20 years old, whichever is later. These
preferred loans will be limited in amount. For these preferred policy loans, we
will credit interest on the amount held in the general account as collateral at
an annual rate of 6%. However, we are not obligated to continue to make
preferred loans available, and we will make these loans available in our sole
discretion. (See "Loan Privileges," Page ___.)

10
<PAGE> 81

WITHDRAWAL OF CASH SURRENDER VALUE

SURRENDER OF THE POLICY

AVAILABLE AUTOMATED FUND MANAGEMENT FEATURES

TAX TREATMENT

If your policy is not a Modified Endowment Contract, distributions
generally will be treated first as a return of basis or investment in the
contract, and then as disbursing taxable income. Loans will not be treated as
distributions. Neither distributions nor loans from a policy that is not a
Modified Endowment Contract are subject to the 10% penalty tax. (See
"Distributions from Policies Not Classified as Modified Endowment Contracts,"
Page ___.)

<PAGE> 82

OTHER POLICIES

ILLUSTRATIONS

QUESTIONS

If you have questions, you may write or call us at National Life Drive,
Montpelier, Vermont 05604, (800) 537-7003.

<PAGE> 83

NATIONAL LIFE INSURANCE COMPANY, THE SEPARATE ACCOUNT, AND THE FUNDS

NATIONAL LIFE INSURANCE COMPANY

THE SEPARATE ACCOUNT

THE MARKET STREET FUND

The investment objectives of the Market Street Fund's Portfolios you
may choose for your Policy are set forth below. The investment experience of
each of the Subaccounts of the Separate Account

<PAGE> 84

depends on the investment performance of the corresponding Portfolio. There is
no assurance that any Portfolio will achieve its stated objective.

The Bond Portfolio. The Bond Portfolio seeks to generate a high level
of current income consistent with prudent investment risk by investing in a
diversified portfolio of marketable debt securities.

<PAGE> 85

VARIABLE INSURANCE PRODUCTS FUND AND VARIABLE INSURANCE PRODUCTS FUND II

Index 500 Portfolio. This portfolio seeks to match the total return of the
Standard & Poors' Composite Index of 500 Stocks ("S&P 500") while keeping
expenses low. This Portfolio normally invests at least 80% of its assets in
equity securities of companies that compose the S&P 500.

The Equity-Income, Growth, High Income, and Overseas Portfolios of the VIP
Fund and the Index 500 and Contrafund Portfolios of the VIP Fund II are managed
by Fidelity Management and Research Company ("FMR"). Bankers Trust Company
currently serves as sub-advisor to the Portfolio and manages the Index 500
Portfolio. FMR has entered into sub-advisory agreements with FMR U.K., FMR Far
East, and Fidelity International Investment Advisors for the Overseas Portfolio.

15
<PAGE> 86

ALGER AMERICAN FUND

The investment objectives of the Portfolios of the Alger American Fund in
which the Subaccounts invest are set forth below. The investment experience of
each Subaccount depends upon the investment performance of the corresponding
Portfolio. There is no assurance that either Portfolio will achieve its stated
objective.

The Alger American Small Capitalization Portfolio and the Alger American
Growth Portfolio are managed by Fred Alger Management, Inc.

A full description of the Alger American Fund, the investment objectives
and policies of the Portfolios, the risks, expenses and other aspects of their
operation is contained in the attached Prospectus for the Alger American Fund.

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

The investment objectives of the Portfolios of American Century Variable
Portfolios, Inc. in which the Subaccounts are expected to invest are set forth
below. The investment experience of each Subaccount depends upon the investment
performance of the underlying Portfolio. There is no assurance that either
Portfolio will achieve its stated objective.

VP Income & Growth. To seek dividend growth, current income and capital
appreciation. The Portfolio will seek to achieve its investment objective by
investing in common stocks.

<PAGE> 87

GOLDMAN SACHS VARIABLE INSURANCE TRUST

The Separate Account has four Subaccounts which invest exclusively in
shares of the following four Funds of Goldman Sachs Variable Insurance Trust:

- - the International Equity Fund
- - the Global Income Fund
- - the CORE Small Cap Equity Fund, and
- - the Mid Cap Equity Fund.

Goldman Sachs Global Income Fund. Seeks a high total return, emphasizing
current income and, to a lesser extent, providing opportunities for capital
appreciation. The Fund invests primarily in a portfolio of high quality
fixed-income securities of U.S. and foreign issuers and foreign currencies.

J.P. MORGAN SERIES TRUST II

The investment objectives of the J.P. Morgan Series Trust II Portfolios in
which the Subaccounts invest are set forth below. The investment experience of
each Subaccount depends upon the investment

<PAGE> 88

performance of the underlying Portfolio. There is no assurance that either
Portfolio will achieve its stated objective.

J.P. Morgan International Opportunities Portfolio. Seeks to provide a high
total return from a portfolio comprised of equity securities of foreign
corporations. The Portfolio is designed for investors with a long-term
investment horizon who want to diversify their investments by adding
international equities and take advantage of investment opportunities outside
the U.S. As an international investment, the Portfolio is subject to foreign
market, political, and currency risks.

J.P. Morgan Small Company Portfolio. Seeks to provide a high total return
from a portfolio comprised of equity securities of small companies. The
Portfolio invests at least 65% of the value of its total assets in the common
stock of small U.S. companies primarily with market capitalizations of less than
$1 billion. The Portfolio is designed for investors who are willing to assume
the somewhat higher risk of investing in small companies in order to seek a
higher return over time than might be expected from a portfolio of large
companies.

NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST

The investment objectives of the Partners Portfolio are set forth below.
The investment experience of each Subaccount depends upon the investment
performance of the underlying Portfolio. There is no assurance that the
Portfolio will achieve its stated objective.

STRONG VARIABLE INSURANCE FUNDS, INC. AND STRONG OPPORTUNITY FUND II, INC.

<PAGE> 89

Growth Fund II. This Portfolio seeks capital growth. It invests primarily
in equity securities that the advisor believes have above-average growth
prospects.

Strong Opportunity Fund II, Inc. This Fund seeks capital appreciation
through investments in a diversified portfolio of equity securities.

The Growth Fund II series of Strong Variable Insurance Funds, Inc., and
Strong Opportunity Fund, Inc. are managed by Strong Capital Management, Inc.

OTHER INFORMATION

Resolving Material Conflicts. The participation agreements under which the
Funds sell their shares to Subaccounts of the Separate Account contain varying
termination provisions. In general, each party may terminate at its option with
specified advance written notice, and may also terminate in the event of
specific regulatory or business developments.

Should an agreement between National Life and a Fund terminate, the
Subaccounts which invest in that Fund may not be able to purchase
additional shares of such Fund. In that event, you will no longer be able
to transfer Accumulated Values or allocate Net Premiums to Subaccounts
investing in Portfolios of such Fund.

Additionally, in certain circumstances, it is possible that a Fund
or a Portfolio of a Fund may refuse to sell its shares to a Subaccount
despite the fact that the participation agreement between the Fund and us
has not been terminated. Should a Fund or Portfolio of such Fund decide
not to sell its shares to us, we will not be able to honor your requests
to allocate cash values or net premiums to Subaccounts investing in shares
of that Fund or Portfolio.

The Funds are available to registered separate accounts of insurance
companies, other than National Life, offering variable annuity and
variable life insurance policies. As a result, there is a possibility that
a material conflict may arise between the interests of Owners with
Accumulated Value allocated to the Separate Account and the owners of life
insurance policies and variable annuities issued by such other

19
<PAGE> 90

companies whose values are allocated to one or more other separate
accounts investing in any one of the Funds.

In the event of a material conflict, we will take any necessary
steps, including removing the Separate Account from that Fund, to resolve
the matter. The Board of Directors or Trustees of the Funds intend to
monitor events in order to identify any material conflicts that possibly
may arise and to determine what action, if any, should be taken in
response to those events or conflicts. See the individual Fund
Prospectuses for more information.

THE GENERAL ACCOUNT

For information on the General Account, see page .

DETAILED DESCRIPTION OF POLICY PROVISIONS

DEATH BENEFIT

General. As long as the Policy remains in force, we will pay the
Death Benefit of the Policy, after due proof of the Insured's death (and
fulfillment of certain other requirements), to the named Beneficiary,
unless the claim is contestable in accordance with the terms of the
Policy. You may choose to have the proceeds paid in cash or under one of
the available Settlement Options. (See "Payment of Policy Benefits,"
Page .) The Death Benefit payable will be the Unadjusted Death Benefit
under the Death Benefit Option that is in effect, increased by any
additional benefits and any dividend payable, and decreased by any
outstanding Policy loan and accrued interest and any unpaid Monthly
Deductions.

Death Benefit Options. The Policy provides two Death Benefit
Options: Option A and Option B. You select the Death Benefit Option in the
application and may change it as described in "Change in Death Benefit
Option," Page .

Option A. The Unadjusted Death Benefit is equal to the greater of:

(a) the Face Amount of the Policy, and

(b) the Accumulated Value on the Valuation Date on or next following the
Insured's date of death multiplied by the specified percentage shown in the
table below:

<TABLE>
<CAPTION>
Attained Age Percentage Attained Age Percentage
------------ ---------- ------------ ----------
<S> <C> <C> <C>
40 and under 250% 60 130%
45 215% 65 120%
50 185% 70 115%
55 150% 75 and over 105%
</TABLE>

For Attained Ages not shown, the percentages will decrease by a ratable portion
of each full year.

Illustration of Option A -- For purposes of this illustration, assume that
the Insured is under Attained Age 40 and there is no Policy loan outstanding.

Under Option A, a Policy with a Face Amount of $200,000 will generally pay
an Unadjusted Death Benefit of $200,000. The specified percentage for an Insured
under Attained Age 40 on the Policy Anniversary prior to the date of death is
250%. Because the Unadjusted Death Benefit must be equal to or greater than 2.50
times the Accumulated Value, any time the Accumulated Value exceeds $80,000 the
Unadjusted Death Benefit will exceed the Face Amount. Each additional dollar
added to the Accumulated Value will increase the Unadjusted Death Benefit by
$2.50. Thus, a 35 year old Insured with an

20
<PAGE> 91

Option B. The Unadjusted Death Benefit is equal to the greater of:

(a) the Face Amount of the Policy plus the Accumulated Value, and

(b) the Accumulated Value on the Valuation Date on or next following the
Insured's date of death multiplied by the specified percentage shown in the
table above.

Illustration of Option B -- For purposes of this illustration, assume that
the Insured is under Attained Age 40 and there is no Policy loan outstanding.

Under Option B, a Policy with a face amount of $200,000 will generally pay
an Unadjusted Death Benefit of $200,000 plus the Accumulated Value. Thus, for
example, a Policy with a $50,000 Accumulated Value will have an Unadjusted Death
Benefit of $250,000 ($200,000 plus $50,000). Since the specified percentage is
250%, the Unadjusted Death Benefit will be at least 2.50 times the Accumulated
Value. As a result, if the Accumulated Value exceeds $133,333, the Unadjusted
Death Benefit will be greater than the Face Amount plus the Accumulated Value.
Each additional dollar added to the Accumulated Value above $133,333 will
increase the Unadjusted Death Benefit by $2.50. An Insured with an Accumulated
Value of $150,000 will have an Unadjusted Death Benefit of $375,000 (2.50 x
$150,000), and an Accumulated Value of $200,000 will yield an Unadjusted Death
Benefit of $500,000 (2.50 x $200,000). Similarly, any time the Accumulated Value
exceeds $133,333, each dollar taken out of the Accumulated Value will reduce the
Unadjusted Death Benefit by $2.50. If at any time, however, the Accumulated
Value multiplied by the specified percentage is less than the Face Amount plus
the Accumulated Value, the Unadjusted Death Benefit will be the Face Amount plus
the Accumulated Value.

If the Death Benefit Option is changed from Option A to Option B, on the
effective date of the change, the Death Benefit will not change and the Face
Amount will be decreased by the Accumulated Value on that date. You may not make
this change if it would reduce the Face Amount to less than the Minimum Face
Amount.

If the Death Benefit Option is changed from Option B to Option A, on the
effective date of the change, the Death Benefit will not change and the Face
Amount will be increased by the Accumulated Value on that date.

21
<PAGE> 92

in a relative increase in the Cost of Insurance Charges over time because the
Net Amount at Risk will, unless the Unadjusted Death Benefit is based on the
applicable percentage of Accumulated Value, remain level as cost of insurance
rates increase over time, rather than the Net Amount at Risk decreasing as the
Accumulated Value increases. Changing from Option B to Option A will, if the
Accumulated Value increases, decrease the Net Amount at Risk over time, thereby
potentially offsetting the effect over time of increasing cost of insurance
rates.

Now assume that your Policy under Option B has a Face Amount of $500,000
and an Accumulated Value of $50,000 and, therefore, the Unadjusted Death Benefit
is $550,000 ($500,000 + $50,000) and the Net Amount at Risk is $500,000
($550,000 - $50,000). If the Death Benefit Option is changed from Option B to
Option A, the Face Amount will increase to $550,000, and the Unadjusted Death
Benefit and Net Amount at Risk would remain the same.

A change in the Death Benefit Option may have Federal income tax
consequences. (See "Tax Treatment of Policy Benefits," Page .)

How the Death Benefit May Vary. The amount of the Death Benefit may vary
with the Accumulated Value. The Death Benefit under Option A will vary with the
Accumulated Value whenever the specified percentage of Accumulated Value exceeds
the Face Amount of the Policy. The Death Benefit under Option B will always vary
with the Accumulated Value because the Unadjusted Death Benefit equals the
greater of (a) the Face Amount plus the Accumulated Value and (b) the
Accumulated Value multiplied by the specified percentage.

ABILITY TO ADJUST FACE AMOUNT

Increase. A request for an increase in Face Amount may not be for less
than $25,000, or such lesser amount required in a particular state (except
that the minimum for employee benefit plans is $2000). You may not increase
the Face Amount after the Insured's Attained Age 85. To obtain the increase,
you must submit an application for the increase and provide evidence
satisfactory to us of the Insured's insurability.

22
<PAGE> 93

the increase will not take effect until you pay a sufficient additional
premium payment to increase the Cash Surrender Value.

An increase in the Face Amount will generally affect the total Net
Amount at Risk. This will normally increase the monthly Cost of Insurance
Charges. In addition, the Insured may be in a different Rate Class as to the
increase in insurance coverage. An increase in premium payment or frequency
may be appropriate after an increase in Face Amount. (See "Cost of Insurance
Charge," Page .)

Decrease. The amount of the Face Amount after a decrease cannot be less
than 75% of the largest Face Amount in force at any time in the twelve months
immediately preceding our receipt of your request for the decrease. The Face
Amount after any decrease may not be less than the Minimum Face Amount, which
is generally currently $50,000. If decrease in the Face Amount would result in
cumulative premiums exceeding the maximum premium limitations applicable for
life insurance under the Internal Revenue Code, we will not allow the
decrease.

A decrease in the Face Amount generally will decrease the total Net
Amount at Risk, which will decrease your monthly Cost of Insurance Charges.

For purposes of determining the Cost of Insurance Charge, any decrease
in the Face Amount will reduce the Face Amount in the following order:

(a) first, the increase in Face Amount provided by the most recent
increase;

(b) then the next most recent increases, in inverse chronological
order; and finally

HOW THE DURATION OF THE POLICY MAY VARY

ACCUMULATED VALUE

The Accumulated Value and Cash Surrender Value will reflect:

- the Net Premiums paid

- the investment performance of the Portfolios you have chosen

- the crediting of interest on non-loaned Accumulated Value in the
General Account and amounts held as Collateral in the General Account

23
<PAGE> 94

- any transfers

- any Withdrawals

- any loans

- any loan repayments

- any loan interest paid, and

- charges assessed on the Policy.

The asset charge for mortality and expense risks will be deducted in
determining the applicable Net Investment Factor. (See "Charges and Deductions -
Mortality and Expense Risk Charge," Page .)

(1) The aggregate of the values attributable to the Policy in the
Separate Account, determined by multiplying the number of units
the Policy has in each Subaccount of the Separate Account by such
Subaccount's unit value on that date; plus

(2) The value attributable to the Policy in the General Account
(See "The General Account," Page.)

PAYMENT AND ALLOCATION OF PREMIUMS

Issuance of a Policy. To purchase a Policy, you must apply to us
through a licensed National Life agent who is also a registered representative
of Equity Services, Inc. ("ESI") or a broker/dealer having a Selling Agreement
with ESI. If you do not pay the Minimum Initial Premium with your written
application, it must be paid when the Policy is delivered. Prior to the Date
of Issue, we will accept amounts less than the Minimum Initial Premium as long
as they are at least equal to the Minimum Monthly Premium. If you do not pay
at least the Minimum Initial Premium by the Issue Date, then we will refund
all premiums paid, and will not issue the Policy. If the first premium is
submitted when the Policy is delivered, and the premium is less than the
Minimum Initial Premium, the balance of the Minimum Initial Premium must be
received within five days, or all premiums will be refunded.

24
<PAGE> 95

insurability. Acceptance is subject to our underwriting rules. We may
reject an application for any reason permitted by law. (See "Distribution of
Policies," Page .)

(a) the 90th day from the date of the agreement;
(b) the date that insurance takes effect under the Policy;
(c) the date a policy, other than as applied for, is offered to you;
(d) five days from the date we mail a notice of termination of coverage;
(e) the time you first learn that we have terminated the temporary life
insurance; or
(f) the time you withdraw the application for life insurance.

You will at the time of application select a Planned Periodic Premium
schedule, based on a periodic billing mode of annual, semi-annual, or
quarterly payments. You may request us to send a premium reminder notice at
the specified interval. You may change the Planned Periodic Premium frequency
and amount. Also, under a "Check-O-Matic" plan, you can select a monthly
payment schedule pursuant to which premium payments will be automatically
deducted from a bank account or other source, rather than being "billed." We
may allow, in certain situations, Check-O-Matic payments of less than $50. We
may require that Check-O-Matic be set up for at least the Minimum Monthly
Premium.

25
<PAGE> 96

You are not required to pay the Planned Periodic Premiums in accordance
with the specified schedule. You may pay premiums whenever you like, and in
any amount (subject to the $50 minimum and the limitations described in the
next section). Payment of the Planned Periodic Premiums will not, however,
guarantee that the Policy will remain in force. Instead, the duration of the
Policy depends upon the Policy's Cash Surrender Value. Thus, even if you pay
the Planned Periodic Premiums, the Policy will lapse whenever the Cash
Surrender Value is insufficient to pay the Monthly Deductions and any other
charges under the Policy and if a Grace Period expires without an adequate
payment by you (unless the Policy is in its first five years, or you have
purchased the Guaranteed Death Benefit Rider, in either case so long as you
have paid the Minimum Guarantee Premium).

Premium Limitations. The Internal Revenue Code of 1986 (the "Code")
provides for exclusion of the Unadjusted Death Benefit from gross income if
total premium payments do not exceed certain stated limits. In no event can
the total of all premiums paid under a Policy exceed these limits. If at any
time you pay a premium which would result in total premiums exceeding the
limits, we will only accept that portion of the premium which would make total
premiums equal the maximum amount which may be paid under the Policy. We will
promptly refund the excess to you. In cases of premiums paid by check, we will
wait until your check has cleared. If you have an outstanding loan, we may
instead apply the payment as a loan repayment. Even if total premiums were to
exceed the maximum premium limitations established by the Code, the excess of
(a) a Policy's Unadjusted Death Benefit over (b) the Policy's Cash Surrender
Value plus outstanding Policy loans and accrued interest, would still be
excludable from gross income under the Code.

Unless the Insured provides satisfactory evidence of insurability, we
may limit the amount of any premium payment if it increases the Unadjusted
Death Benefit more than it increases the Accumulated Value.

26
<PAGE> 97

allocations at any time by giving us written notice at our Home Office, or
if you have elected the telephone transaction privilege, by telephone
instructions (See "Telephone Transaction Privilege," Page .) You must make
allocations in whole number percentages of at least 5%, and the sum of the
allocation percentages must be 100%. We will allocate Net Premiums as of
the Valuation Date we receive the premium at our Home Office, based on the
allocation percentages then in effect, except during the free look period.

We will allocate any portion of the Initial Premium and any subsequent
premiums we receive before the end of the free look period which are to be
allocated to the Separate Account, to the Money Market Subaccount. For this
purpose, we will assume that the free look period will end 20 days after the
date the Policy is issued. On the first Valuation Date following 20 days after
issue of the Policy, we will allocate the amount in the Money Market
Subaccount to each of the Subaccounts selected in the application based on
your instructions.

For example, assume a Policy was issued with Net Premiums to be
allocated 25% to the Managed Subaccount, 25% to the Bond Subaccount and 50% to
the General Account. During the period stated above, 50% (25% + 25%) of the
Net Premiums will be allocated to the Money Market Subaccount. At the end of
such period, 50% (25% / 50%) of the amount in the Money Market Subaccount will
be transferred to the Managed Subaccount and 50% to the Bond Subaccount.

The values of the Subaccounts will vary with their investment
experience. You bear the entire investment risk. You should periodically
review your allocation percentages in light of market conditions and your
overall financial objectives.

Currently an unlimited number of transfers are permitted without
charge. We have no current intent to impose a transfer charge in the foreseeable
future. However, we may, after giving you prior notice, change this policy so as
to deduct a $25 transfer charge from each transfer in excess of the twelfth
transfer during any one Policy Year. All transfers requested during one
Valuation Period are treated as one transfer transaction. If a transfer charge
is adopted in the future, these types of transfers would not be subject to a
transfer charge and would not count against the twelve free transfers in any
Policy Year:

- transfers resulting from Policy loans

- transfers resulting from the operation of the dollar cost averaging or
portfolio rebalancing features

- transfers resulting from the exercise of the transfer rights
described on page____ (see "Policy Rights - Other Transfer Rights,"
Page ), and

- the reallocation from the Money Market Subaccount following the free
look period.

Under present law, transfers are not taxable transactions.

In addition, if you purchase the Guaranteed Death Benefit Rider, and pay
the Minimum Guarantee Premium as of each Monthly Policy Date, your Policy will
not lapse prior to the Insured's Attained Age

27
<PAGE> 98

70, or 20 years from the Date of Issue of the Policy if longer, regardless of
whether the Cash Surrender Value is sufficient to cover the Monthly Deductions.
(See "Optional Benefits - Guaranteed Death Benefit," Page .)

28
<PAGE> 99

CHARGES AND DEDUCTIONS

Charges will be deducted in connection with the Policy to compensate us
for:

(a) providing the insurance and other benefits set forth in the Policy;

(b) administering the Policy;

(d) incurring expenses in distributing the Policy including costs
associated with printing prospectuses and sales literature and sales
compensation.

We may realize a profit from any charges. We may use any profit for any
purpose, including payment of distribution expenses.

PREMIUM TAX CHARGE

We will deduct 3.25% from each premium payment prior to allocation of Net
Premiums, to cover state premium taxes and the federal DAC Tax. For qualified
employee benefit plans, we will deduct 2.0% of each premium rather than 3.25%.

The federal DAC Tax is a tax attributable to certain "policy acquisition
expenses" under Internal Revenue Code Section 848. Section 848 in effect
accelerates the realization of income we receive from the Policies, and
therefore the payment of federal income taxes on that income. The economic
consequence of Section 848 is, therefore, an increase in the tax burden borne by
us that is attributable to the Policies.

SURRENDER CHARGE

We impose a Surrender Charge, which consists of a Deferred Administrative
Charge and a Deferred Sales Charge, if the Policy is surrendered or lapses at
any time before the end of the fifteenth Policy Year.

<TABLE>
<CAPTION>
Sample Charge per $1000
Issue Age of Initial Face Amount
--------- ----------------------
<S> <C>
0-5 None
10 $0.50
15 $1.00
20 $1.50
25-85 $2.00
</TABLE>

Deferred Sales Charge. The Deferred Sales Charge will not exceed the
Maximum Deferred Sales Charge specified in the Policy. During Policy Years 1
through 5, this maximum equals 50% of the Surrender Charge target premium
(which is an amount, based on the Initial Face Amount, Issue Age, sex and Rate
Class of the Insured, used solely for the purpose of calculating the Deferred
Sales Charge) for the Face Amount. After Policy Year 5, the 50% declines
linearly by month through the 180th month,

29
<PAGE> 100

after which it is zero. The Maximum Deferred Sales Charge will also be
subject to the maximum imposed by New York State law.

The actual Deferred Sales Charge will equal the lesser of:

(a) the maximum discussed in the previous paragraph, and

(b) an amount equal to the sum of:

(i) 30% of the premiums actually received up to one Surrender
Charge target premium, plus

(ii) 10% of all premiums paid in excess of this amount but not
greater than twice this amount, plus

(iii) 9% of all premiums paid in excess of twice this amount.

To illustrate the calculation of a Policy's Surrender Charge, assume
that the Policy is issued to a male nonsmoker, Issue Age 45, with a
Face Amount of $100,000. Assume that the Surrender Charge target
premium ("SCTP") is $1,652, the initial Maximum Deferred Sales
Charge is $826 (50% of $1,652) and the Insured pays annual premiums
of $1,500 at the beginning of each Policy Year. This example will
illustrate surrenders in the first five Policy Years and in the
first month of the eighth Policy Year.

Deferred Administrative Charge. The Deferred Administrative Charge
for the first five Policy Years is $200. This is calculated by
applying the charge of $2.00 per $1,000 of Face Amount for Issue Age
45 from the schedule above to the Face Amount of $100,000 ($2.00 x
(100,000/1,000)). The Deferred Administrative Charge reduces
linearly by Policy Month in Policy Years 6 through 15. Linear
reduction is equivalent to a reduction each month of 1/121st of the
initial charge. For example, the Deferred Administrative Charge in
the first month of the eighth Policy Year (the 25th month after the
end of the 5th Policy Year) will be $158.68 ($200 - ($200 x
(25/121)). After completion of the 15th Policy Year, the Deferred
Administrative Charge is zero. The schedule of Deferred
Administrative Charges in effect for the first fifteen Policy Years
is shown in the Policy.

Deferred Sales Charge. The Deferred Sales Charge is the lesser of
the Maximum Deferred Sales Charge and an amount calculated based on
the Insured's actual premium payments. The Maximum Deferred Sales
Charge in effect for the first five Policy Years is $826. The
Maximum Deferred Sales Charge reduces linearly by month in Policy
Years 6 through 15. Linear reduction is equivalent to a reduction
each month of 1/121st of the initial charge. For example, the
Maximum Deferred Sales Charge in the first month of the 8th Policy
Year (the 25th month after the end of the 5th Policy Year) will be
$655.34 ($826 - ($826 x (25/121))). After the completion of the 15th
Policy Year, the Maximum Deferred Sales Charge is $0. The schedule
of Maximum Deferred Sales Charges in effect for the first fifteen
Policy Years is shown in the Policy.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Amount at 10%
Policy Cumulative Amount at 30% (From $1,653 Amount at 9%
Year Premiums (Below $1,652) to $3,304) (Above $3,304) Total
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 1,500 $1,500x.30=$450.00 - - $ 450.00
2 $ 3,000 $1,652x.30=$495.60 $1,348x.10=$134.80 - $ 630.40
3 $ 4,500 $1,652x.30=$495.60 $1,652x.10=$165.20 $1,196x.09=$107.64 $ 768.44
4 $ 6,000 $1,652x.30=$495.60 $1,652x.10=$165.20 $2,696x.09=$242.64 $ 903.44
5 $ 7,500 $1,652x.30=$495.60 $1,652x.10=$165.20 $4,196x.09=$377.64 $1,038.44
8 $12,000 $1,652x.30=$495.60 $1,652x.10=$165.20 $8,696x.09=$782.64 $1,443.44
</TABLE>

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<PAGE> 101

The total calculated amount would then be compared to the Maximum
Deferred Sales Charge to determine the Deferred Sales Charge
actually imposed. For example, the Deferred Sales Charge in the
first five years would be the following:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
(A) (B)
Maximum Deferred Deferred Sales Charge
Policy Year Calculated Amount Sales Charge (Lesser of (A) and (B)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 $ 450.00 $826.00 $450.00
2 $ 630.40 $826.00 $630.40
3 $ 768.44 $826.00 $768.44
4 $ 903.44 $826.00 $826.00
5 $1,038.44 $826.00 $826.00
</TABLE>

In this example, the charge based on SCTP is less than the Maximum
Deferred Sales Charge until the fourth Policy Year. Thereafter, the
Maximum Deferred Sales Charge is less than the charge based on SCTP.
For example, the Deferred Sales Charge in the first month of the
eighth Policy Year will be the Maximum Deferred Sales Charge of
$655.34 (calculated above) since this is less than $1,443.44 (the
calculated amount based on premiums paid).

MONTHLY DEDUCTIONS

We will deduct charges from the Accumulated Value on the Date of Issue and
on each Monthly Policy Date. The Monthly Deduction consists of three components:

(a) the Cost of Insurance Charge

(b) the Monthly Administrative Charge, and

Net Amount at Risk. The Net Amount at Risk on any Monthly Policy
Date is approximately the amount by which the Unadjusted Death Benefit on
that Monthly Policy Date exceeds the Accumulated Value. It measures the
amount National Life would have to pay in excess of the Policy's Value if
the Insured died. The actual calculation uses the Unadjusted Death Benefit
divided by 1.00327234, to take into account assumed monthly earnings at an
annual rate of 4%. We calculate the Net Amount at Risk separately for the
Initial Face Amount and any increases in Face Amount. In determining the
Net Amount at Risk for each increment of Face Amount, we first consider
the Accumulated Value part of the Initial Face Amount. If the Accumulated
Value exceeds the Initial Face Amount, we consider it as part of any
increases in Face Amount in the order such increases took effect.

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<PAGE> 102

Any change in the Net Amount at Risk will affect the total Cost of
Insurance Charges paid by the Owner.

Guaranteed Maximum Cost of Insurance Rates. The guaranteed maximum
cost of insurance rates will be set forth in your Policy, and will depend
on:

- the Insured's Attained Age

- the Insured's sex

- the Insured's Rate Class, and

- the 1980 Commissioners Standard Ordinary Smoker/Nonsmoker Mortality
Table.

For Policies issued in conjunction with employee benefit plans, the
guaranteed maximum cost of insurance rate will use the 1980 Commissioners
Standard Ordinary Mortality Tables NB and SB.

Current Cost of Insurance Rates and How They are Determined. The
actual cost of insurance rates used ("current rates") will depend on:

- the Insured's Issue Age

- the Insured's sex

- the Insured's Rate Class

- the Policy's Duration, and

- the Policy's size.

Generally, the current cost of insurance rate for a given Attained
Age will be less than for an Insured whose Policy was issued more than 10
years ago, than for an Insured whose Policy was issued less than 10 years
ago, other factors being equal. We periodically review the adequacy of our
current cost of insurance rates and may adjust their level. However, the
current rates will never exceed guaranteed maximum cost of insurance
rates. Any change in the current cost of insurance rates will apply to all
persons of the same Issue Age, sex, and Rate Class, and with Policies of
the same Duration and size.

We use separate cost of insurance rates for the Initial Face Amount
and any increases in Face Amount. For the Initial Face Amount we use the
rate for the Insured's Rate Class on the Date of Issue. For each increase
in Face Amount, we use the rate for the Insured's Rate Class at the time
of the increase. If the Unadjusted Death Benefit is calculated as the
Accumulated Value times the specified percentage, we use the rate for the
Rate Class for the Initial Face Amount for the amount of the Unadjusted
Death Benefit in excess of the total Face Amount.

We may also issue Policies on a guaranteed issue basis, where no
medical underwriting is required prior to issuance of a Policy. Current
cost of insurance rates for Policies issued on a guaranteed issue basis
may be higher than current cost of insurance rates for healthy Insureds
who undergo medical underwriting.

Rate Class. The Rate Class of the Insured will affect both the
guaranteed and current cost of insurance rates. We currently place
Insureds into the following rate classes:

- preferred nonsmoker

- standard nonsmoker

- smoker

- juvenile, and

- substandard.

Smoker, juvenile, and substandard classes reflect higher mortality
risks. In an otherwise identical Policy, an Insured in a preferred or
standard class will have a lower Cost of Insurance Charge than an Insured
in a substandard class with higher mortality risks. Nonsmoking Insureds
will generally incur lower cost of insurance rates than Insureds who are
classified as smokers.

The nonsmoker designation is not available for Insureds under
Attained Age 20. Shortly before an Insured attains age 20, we will notify
the Insured about possible classification as a nonsmoker and

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direct the Insured to his or her agent to initiate a change in Rate Class.
If the Insured either does not initiate a change in Rate Class or does not
qualify as a nonsmoker, guaranteed cost of insurance rates will remain as
shown in the Policy. However, if the Insured qualifies as a nonsmoker, we
will change the guaranteed and current cost of insurance rates to reflect
the nonsmoker classification.

Current cost of insurance rates will also vary by Policy size, in
the following bands:

- those with Unadjusted Death Benefits less than $250,000

- those with Unadjusted Death Benefits between $250,000 and $999,999,
inclusive; and

- those with Unadjusted Death Benefits of $1,000,000 and over.

Cost of insurance rates will be lower as the Policy size band is
larger.

Monthly Administrative Charge. We deduct a Monthly Administrative Charge
from the Accumulated Value on the Date of Issue and each Monthly Policy Date as
part of the Monthly Deduction to help defray the expenses incurred in
administering the Policy.

Optional Benefit Charges. The Monthly Deduction will include charges for
any additional benefits added to the Policy. The monthly charges will be
specified in the applicable Rider. The available Riders are listed under
"Optional Benefits", on Page below.

Separate Account Enhancement. We will reduce the Monthly Deductions
starting in the eleventh Policy Year by an amount equal to 0.50% per annum of
the Accumulated Value in the Separate Account.

The separate account enhancement is calculated on each Monthly Policy Date
as .041572% (the monthly equivalent of 0.50% per annum) of the Accumulated Value
in the Separate Account on the just prior Monthly Policy Date. For example, if
the Accumulated Value in the Separate Account on the just prior Monthly Policy
Date is $10,000, then the separate account enhancement calculated for the
current Monthly Policy Date will be $4.16 ($10,000 X .00041572). To calculate
the Monthly Deduction for the current Monthly Policy Date, we net the $4.16
separate account enhancement against the Monthly Deductions for Cost of
Insurance, the Monthly Administrative Charge, and charges for any Optional
Benefits.

MORTALITY AND EXPENSE RISK CHARGE

WITHDRAWAL CHARGE

We will assess on each Withdrawal a charge equal to the lesser of 2% of
the Withdrawal amount and $25. We will deduct this Withdrawal Charge from the
Withdrawal amount.

TRANSFER CHARGE

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<PAGE> 104

transfer charge of $25 on each transfer in excess of twelve transfers in any
Policy Year. The Transfer Charge would be imposed to compensate us for the costs
of processing such transfers, and would not be designed to produce a profit.

If we impose a transfer charge in the future, we will deduct it from the
amount being transferred. We would treat all transfers requested on the same
Valuation Date as one transfer transaction. Any future transfer charge will not
apply to transfers resulting from:

- Policy loans

- the exercise of the transfer rights described on page___

- the initial reallocation of account values from the Money Market
Subaccount to other Subaccounts, and

- any transfers made pursuant to the Dollar Cost Averaging and
Portfolio Rebalancing features.

The transfers listed above also will not count against the twelve free transfers
in any Policy Year.

PROJECTION REPORT CHARGE

We may impose a charge, not to exceed $25, for each projection report you
request. This report will project future values and future Death Benefits for
the Policy. We will notify you in advance of the amount of the charge. You may
elect to pay the charge in advance. If not paid in advance, we will deduct this
charge from the Subaccounts of the Separate Account and/or the General Account
in proportion to their Accumulated Values on the date of the deduction.

OTHER CHARGES

The Separate Account purchases shares of the Funds at net asset value. The
net asset value of those shares reflect management fees and expenses already
deducted from the assets of the Funds' Portfolios. Historical expense ratio
information for the Funds is presented in the "Summary of Policy Expenses"
section on page above. More detailed information is contained in the Funds'
Prospectuses which accompany this Prospectus.

POLICY RIGHTS AND PRIVILEGES

LOAN PRIVILEGES

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<PAGE> 105

Accumulated Value in the Subaccounts. If the Accumulated Value in one or more of
the Subaccounts is insufficient to carry out your instructions, we will not
process the loan until we receive further instructions from you. Non-loaned
Accumulated Value in the General Account will become Collateral for a loan only
to the extent that the Accumulated Value in the Separate Account is
insufficient. Loan interest will be allocated among and transferred first from
the Subaccounts of the Separate Account in proportion to the Accumulated Values
held in the Subaccounts, and then from the non-loaned portion of the General
Account.

The Collateral for a Policy loan will initially be the loan amount. Loan
interest will be added to the Policy loan. We will take additional Collateral
for the loan interest pro rata from the Subaccounts of the Separate Account, and
then, if the amounts in the Separate Account are insufficient, from the
non-loaned portion of the General Account. At any time, the amount of the
outstanding loan under a Policy equals the sum of all loans (including due and
unpaid interest added to the loan balance) minus any loan repayments.

Interest Credited to Amounts Held as Collateral. As long as the Policy is
in force, we will credit the amount held in the General Account as Collateral
with interest at effective annual rates we declare, but not less than 4% or such
higher minimum rate required under state law. The rate will apply to the
calendar year which follows the date of determination.

In Policy Years 11 and thereafter, we will credit interest on amounts held
in the General Account as Collateral at a rate 0.50% per annum higher than for
similar amounts for Policies still in their first ten Policy Years.

Preferred Policy Loans. We also currently intend to make preferred Policy
loans available on the later of the Insured's Attained Age 65 and the beginning
of Policy Year 21. The maximum amounts of these preferred loans will be 5% of
Accumulated Value per year, with a cumulative maximum of 50% of Accumulated
Value. For these preferred Policy loans, the amounts held as Collateral in the
General Account will be credited with interest at an annual rate of 6%. If both
preferred and non-preferred loans exist at the same time, we will first apply
any loan repayment to the non-preferred loan. We are not obligated to make
preferred loans available, and will make such loans available in our sole
discretion. Preferred loans may not be treated as indebtedness for federal
income tax purposes.

Loan Repayments. We will assume that any payments you make while there is
an outstanding Policy loan are premium payments, rather than loan repayments,
unless you specify in writing that a payment is a loan repayment. In the event
of a loan repayment, the amount held as Collateral in the General Account will
be reduced by an amount equal to the repayment, and such amount will be
transferred to the Subaccounts of the Separate Account and to the non-loaned
portion of the General Account based on the Net Premium allocations in effect at
the time of the repayment.

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<PAGE> 106

Endowment Policy, lapse of the Policy with outstanding loans may result in
adverse federal income tax consequences. (See "Tax Treatment of Policy
Benefits," Page .)

Tax Considerations. Any loans taken from a "Modified Endowment Contract"
will be treated as a taxable distribution. In addition, with certain exceptions,
a 10% additional income tax penalty will be imposed on the portion of any loan
that is included in income. (See "Distributions from Policies Classified as
Modified Endowment Contracts," Page .)

SURRENDER PRIVILEGE

A surrender may have Federal income tax consequences. (See "Tax Treatment
of Policy Benefits," Page ).

WITHDRAWAL OF CASH SURRENDER VALUE

The effect of a Withdrawal on the Death Benefit and Face Amount will vary
depending upon the Death Benefit Option in effect and whether the Unadjusted
Death Benefit is based on the applicable percentage of Accumulated Value. (See
"Death Benefit Options," Page .)

Option A. The effect of a Withdrawal on the Face Amount and Unadjusted
Death Benefit under Option A can be described as follows:

If the Face Amount divided by the applicable percentage of
Accumulated Value exceeds the Accumulated Value just after the Withdrawal,
a Withdrawal will reduce the Face Amount and the Unadjusted Death Benefit
by the lesser of such excess and the amount of the Withdrawal.

For the purposes of this illustration (and the following
illustrations of Withdrawals), assume that the Attained Age of the Insured
is under 40 and there is no indebtedness. The applicable percentage is
250% for an Insured with an Attained Age under 40.

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<PAGE> 107

Under Option A, a Policy with a Face Amount of $300,000 and an
Accumulated Value of $30,000 will have an Unadjusted Death Benefit of
$300,000. Assume that you take a Withdrawal of $10,000. The Withdrawal
Charge will be $25 and the amount we pay you will be $9,975. The
Withdrawal will reduce the Accumulated Value to $20,000 ($30,000 -
$10,000) after the Withdrawal. The Face Amount divided by the applicable
percentage is $120,000 ($300,000 / 2.50), which exceeds the Accumulated
Value after the Withdrawal by $100,000 ($120,000 - $20,000). The lesser of
this excess and the amount of the Withdrawal is $10,000, the amount of the
Withdrawal. Therefore, the Unadjusted Death Benefit and Face Amount will
be reduced by $10,000 to $290,000.

If the Face Amount divided by the applicable percentage of
Accumulated Value does not exceed the Accumulated Value just after the
Withdrawal, then the Face Amount is not reduced. The Unadjusted Death
Benefit will be reduced by an amount equal to the reduction in Accumulated
Value times the applicable percentage (or equivalently, the Unadjusted
Death Benefit is equal to the new Accumulated Value times the applicable
percentage).

Under Option A, a policy with a Face Amount of $300,000 and an
Accumulated Value of $150,000 will have an Unadjusted Death Benefit of
$375,000 ($150,000 x 2.50). Assume that you take a Withdrawal of $10,000.
The Withdrawal Charge will be $25 and the amount we pay to you will be
$9,975. The Withdrawal will reduce the Accumulated Value to $140,000
($150,000 - $10,000). The Face Amount divided by the applicable percentage
is $120,000, which does not exceed the Accumulated Value after the
withdrawal. Therefore, the Face Amount stays at $300,000 and the
Unadjusted Death Benefit is $350,000 ($140,000 x 2.50).

Option B. The Face Amount will never be decreased by a Withdrawal. A
Withdrawal will, however, always decrease the Death Benefit.

If the Unadjusted Death Benefit equals the Face Amount plus the
Accumulated Value, a Withdrawal will reduce the Accumulated Value by the
amount of the Withdrawal and thus the Unadjusted Death Benefit will also
be reduced by the amount of the Withdrawal.

Under Option B, a Policy with a Face Amount of $300,000 and an
Accumulated Value of $90,000 will have an Unadjusted Death Benefit of
$390,000 ($300,000 + $90,000). Assume you take a Withdrawal of $20,000.
The Withdrawal Charge will be $25 and the amount we pay to you will be
$19,975. The Withdrawal will reduce the Accumulated Value to $70,000
($90,000 - $20,000) and the Unadjusted Death Benefit to $370,000 ($300,000
+ $70,000). The Face Amount is unchanged.

If the Unadjusted Death Benefit immediately prior to the Withdrawal
is based on the applicable percentage of Accumulated Value, the Unadjusted
Death Benefit will be reduced to equal the greater of (a) the Face Amount
plus the Accumulated Value after deducting the amount of the Withdrawal
and Withdrawal Charge and (b) the applicable percentage of Accumulated
Value after deducting the amount of the Withdrawal.

Under Option B, a Policy with a Face Amount of $300,000 and an
Accumulated Value of $210,000 will have an Unadjusted Death Benefit of
$525,000 ($210,000 X 2.5). Assume you take a Withdrawal of $60,000. The
Withdrawal Charge will be $25 and the amount we pay to you will be
$59,975. The Withdrawal will reduce the Accumulated Value to $150,000
($210,000 - $60,000), and the Unadjusted Death Benefit to the greater of
(a) the Face Amount plus the Accumulated Value, or $450,000 ($300,000 +
$150,000) and (b) the Unadjusted Death Benefit based on the applicable
percentage of the Accumulated Value, or $375,000 ($150,000 X 2.50).
Therefore, the Unadjusted Death Benefit will be $450,000. The Face Amount
is unchanged.

Any decrease in Face Amount due to a Withdrawal will first reduce the most
recent increase in Face Amount, then the most recent increases, successively,
and lastly, the Initial Face Amount.

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<PAGE> 108

Because a Withdrawal can affect the Face Amount and the Unadjusted Death
Benefit as described above, a Withdrawal may also affect the Net Amount at Risk
which is used to calculate the Cost of Insurance Charge under the Policy. (See
"Cost of Insurance Charge," Page .) Since a Withdrawal reduces the Accumulated
Value, the Cash Surrender Value of the Policy is reduced, thereby increasing the
likelihood that the Policy will lapse. (See "Policy Lapse," Page .) A request
for Withdrawal may not be allowed if such Withdrawal would reduce the Face
Amount below the Minimum Face Amount for the Policy. Also, if a Withdrawal would
result in cumulative premiums exceeding the maximum premium limitations
applicable under the Code for life insurance, we will not allow the Withdrawal.

A Withdrawal of Cash Surrender Value may have Federal income tax
consequences. (See "Tax Treatment of Policy Benefits," Page .)

FREE-LOOK PRIVILEGE

The Policy provides for a "free-look" period, during which you may cancel
the Policy and receive a refund equal to the gross premiums paid on the Policy.
This free-look period ends on the latest of:

(a) 45 days after Part A of the application for the Policy is signed

(b) 10 days after you receive the Policy

(d) any longer period provided by state law.

To cancel your Policy, you must return it to us or to our agent within the free
look period with a written request for cancellation.

TELEPHONE TRANSACTION PRIVILEGE

If you elect the telephone transaction privilege by written authorization,
you may effect changes in premium allocation, transfers, and loans of up to
$25,000 by providing instructions to us at our Home Office over the telephone.
We may suspend telephone transaction privileges at any time, for any reason, if
we deem such suspension to be in the best interests of Policy Owners.

- requiring some form of personal identification prior to acting on
instructions received by telephone

- providing written confirmation of the transaction, and

- making a tape recording of the instructions given by telephone.

OTHER TRANSFER RIGHTS

Transfer Right for Change in Investment Policy. If the investment policy
of a Subaccount of the Separate Account is materially changed, you may transfer
the portion of the Accumulated Value in that

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<PAGE> 109

Subaccount to another Subaccount or to the General Account, without regard to
any limits on transfers or free transfers.

AVAILABLE AUTOMATED FUND MANAGEMENT FEATURES

Dollar Cost Averaging. This feature permits you to automatically transfer
funds from the Money Market Subaccount to any other Subaccounts on a monthly
basis. You may elect Dollar Cost Averaging at issue by marking the appropriate
box on the initial application, and completing the appropriate instructions. You
may also begin a Dollar Cost Averaging program after issue by filling out
similar information on a change request form and sending it to us at our Home
Office.

If you elect this feature, we will take the amount to be transferred from
the Money Market Subaccount and transfer it to the Subaccount or Subaccounts
designated to receive the funds, each month on the Monthly Policy Date. If you
elect Dollar Cost Averaging on your application for the Policy, it will start
with the Monthly Policy Date after the date that the reallocation of the
Accumulated Value out of the Money Market Subaccount and into the other
Subaccounts occurs. If you begin a Dollar Cost Averaging program after the free
look period is over, it will start on the next Monthly Policy Date. Dollar Cost
Averaging will continue until the amount in the Money Market Subaccount is
depleted. The minimum monthly transfer by Dollar Cost Averaging is $100, except
for the transfer which reduces the amount in the Money Market Subaccount to
zero. You may discontinue Dollar Cost Averaging at any time by sending an
appropriate change request form to the Home Office. You may not use the dollar
cost averaging feature to transfer Accumulated Value to the General Account.

Dollar Cost Averaging allows you to move funds into the various investment
types on a more gradual and systematic basis than the frequency on which you pay
premiums. The periodic investment of the same amount will result in higher
numbers of units being purchased when unit prices are lower, and lower numbers
of units being purchased when unit prices are higher. This will result, over
time, in a lower cost per unit than the average of the unit costs on the days on
which the automated purchases are made. This technique will not, however, assure
a profit or protect against a loss in declining markets. Moreover, for the
dollar cost averaging technique to be effective, amounts should be available for
allocation from the Money Market Subaccount through periods of low price levels
as well as higher price levels.

Portfolio Rebalancing. This feature permits you to automatically rebalance
the value in the Subaccounts on a semi-annual basis, based on your premium
allocation percentages in effect at the time of the rebalancing. You may elect
it at issue by marking the appropriate box on the application, or, after issue,
by completing a change request form and sending it to our Home Office.

If you change your Policy's premium allocation percentages, Portfolio
Rebalancing will automatically be discontinued unless you specifically direct
otherwise.

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POLICY RIGHTS UNDER CERTAIN PLANS

THE GENERAL ACCOUNT

MINIMUM GUARANTEED AND CURRENT INTEREST RATES

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We will credit interest on non-loaned Accumulated Value in the General
Account for Policies in Policy Year 11 and thereafter at rates which are 0.50%
per annum higher than those that apply to Policies still in their first ten
Policy Years.

TRANSFERS FROM GENERAL ACCOUNT

OTHER POLICY PROVISIONS

Maturity at 99. If the Policy is in force on the Policy Anniversary at
which the Insured is Attained Age 99, we will pay the Cash Surrender Value to
you in one sum unless you have chosen a Payment Option, and the Policy will
terminate.

Reduced Paid - Up Benefit. Prior to maturity, you may elect to continue
the Policy in force as paid-up General Account life insurance coverage. All or a
portion of the Cash Surrender Value of the Policy will be applied to paid-up
life insurance coverage. We will pay in one lump sum any amount of the Cash
Surrender Value which you do not apply toward paid-up life insurance coverage.
You may thereafter surrender any paid-up General Account life insurance at any
time for its value.

Payment of Policy Benefits. You may decide the form in which we pay Death
Benefit proceeds. During the Insured's lifetime, you may arrange for the Death
Benefit to be paid in a lump sum or under a Settlement Option. These choices are
also available upon surrender of the Policy for its Cash Surrender Value. If you
do not make an election, payment will be made in a lump sum. The Beneficiary may
also arrange for payment of the Death Benefit in a lump sum or under a
Settlement Option. If paid in a lump sum, we will ordinarily pay the Death
Benefit to the Beneficiary within seven days after we receive proof of the
Insured's death at our Home Office, and all other requirements are satisfied. If
paid under a Settlement Option, we will apply the Death Benefit to the
Settlement Option within seven days after we receive proof of the Insured's
death at our Home Office, and all other requirements are satisfied.

We will normally pay proceeds of a surrender, Withdrawal, or Policy loan
within seven days of when we receive your written request at our Home Office in
a form satisfactory to us.

We will generally determine the amount of a payment on the Valuation Day
we receive all required documents. However, we may defer the determination or
payment of such amounts if the date for determining such amounts falls within
any period during which:

(1) the New York Stock Exchange is closed (except for normal holiday
closing); or

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<PAGE> 112

(2) an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which it is not reasonably practicable to
dispose of securities or to determine the value of the net assets of the
Separate Account.

Transactions will not be processed on the following days: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, the day after Thanksgiving and Christmas Day. In addition, Premium
Payments will not be allocated and transactions will not be effected to the
Money Market Subaccount on Columbus Day and Veterans Day.

We may postpone any payment under the Policy derived from an amount paid
by check or draft until we are satisfied that the check or draft has been paid
by the bank upon which it was drawn.

The Policy provides that we may delay payment of any amounts which are
payable as result of a surrender, Withdrawal, or Policy loan and which are
allocated to the General Account for up to six months after receipt of your
request. If we do not mail or deliver the amounts owed to you within ten days of
when we receive your request for payment, we will pay interest on the amount at
the rate then in effect under Payment Option 1 - Payment of Interest Only, from
the date of our receipt of your request for payment to the date we actually make
the payment.

Ownership. The Owner is the Insured unless a different Owner is named in
the application or thereafter changed. While the Insured is living, the Owner is
entitled to exercise any of the rights stated in the Policy or otherwise granted
by us. If the Insured and Owner are not the same, and the Owner dies before the
Insured, these rights will vest in the estate of the Owner, unless otherwise
provided.

Split Dollar Arrangements. You may enter into a Split Dollar Arrangement
among the Owners or other persons under which the payment of premiums and the
right to receive the benefits under the Policy (i.e., Cash Surrender Value or
Death Benefit) are split between the parties. There are different ways of
allocating such rights.

For example, an employer and employee might agree that under a Policy on
the life of the employee, the employer will pay the premiums and will have the
right to receive the Cash Surrender Value. The employee may designate the
Beneficiary to receive any Death Benefit in excess of the Cash Surrender Value.
If the employee dies while such an arrangement is in effect, the employer would
receive from the Death Benefit the amount which the employer would have been
entitled to receive upon surrender of the Policy and the employee's Beneficiary
would receive the balance of the proceeds.

No transfer of Policy rights pursuant to a Split Dollar Arrangement will
be binding on us unless it is in writing and received by us. We do not assess
any specific charge for Split Dollar Arrangements.

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<PAGE> 113

The parties who elect to enter into a Split Dollar Arrangement should
consult their own tax advisers regarding the tax consequences of such an
arrangement.

Assignments. You may assign any and all your rights under the Policy. We
are not bound by an assignment unless it is in writing and we receive it at our
Home Office. We assume no responsibility for determining whether an assignment
is valid, or the extent of the assignee's interest. All assignments will be
subject to any Policy loan. The interest of any Beneficiary or other person will
be subordinate to any assignment. A payee who is not also the Owner may not
assign or encumber Policy benefits, and to the extent permitted by applicable
law, such benefits are not subject to any legal process for the payment of any
claim against the payee.

Misstatement of Age and Sex. If the age or sex of the Insured at the Date
of Issue has been misstated in the application, we will adjust the Accumulated
Value of the Policy to be the amount that it would have been had the Cost of
Insurance Charges deducted been based on the correct age and sex, or as
otherwise required by state law. The adjustment will take place on the Monthly
Policy Date on or after the date on which we have proof to our satisfaction of
the misstatement. If the Insured has died, we will adjust the Accumulated Value
as of the last Monthly Policy Date prior to the Insured's death; however, if the
Accumulated Value is insufficient for that adjustment, the amount of the
Unadjusted Death Benefit will also be adjusted.

Suicide. If the Insured dies by suicide within two years from the Date of
Issue of the Policy, our liability is limited to the payment to the Beneficiary
of a sum equal to the premiums paid less any Policy loan and accrued interest
and any Withdrawals, or other reduced amount provided by state law.

If the Insured commits suicide within two years from the effective date
of any Policy change which increases the Unadjusted Death Benefit and for which
an application is required, the amount which we will pay with respect to the
increase will be the Cost of Insurance Charges previously made for such
increase.

Incontestability. The Policy will be incontestable after it has been in
force during the Insured's lifetime for two years from the Date of Issue.
Similar incontestability will apply to an increase in Face Amount or
reinstatement after it has been in force during the Insured's lifetime for two
years from its effective date.

Before such times, however, we may contest the validity of the Policy (or
changes) based on material misstatements in the initial or any subsequent
application.

Dividends. The Policy is participating; however, no dividends are
expected to be paid on the Policy. If dividends are ever declared, they will be
used to purchase dividend additions or, at your direction, they may be paid in
cash or left with us to accumulate at interest.

Correspondence. All correspondence to you is deemed to have been sent to
you if mailed to you at your last address known to us.

Payment of Interest Only. We will pay interest at a rate of 3.5% per year
on the amount of the proceeds retained by us. Upon the earlier of the payee's
death or the end of a chosen period, the proceeds retained will be paid.

Payments for a Stated Time. We will make equal monthly payments, based on
an interest rate of 3.5% per annum, for the number of years you select.

Payments for Life. We will make equal monthly payments, based on an
interest rate of 3.5% per annum, for a guaranteed period and thereafter during
the life of a chosen person. You may elect

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<PAGE> 114

guaranteed payment periods for 0, 10, 15, or 20 years, or for a refund period,
at the end of which the total payments will equal the proceeds placed under the
option.

Joint and Two Thirds Annuity. We will make equal monthly payments, based
on an interest rate of 3.5% per year, while two chosen persons are both living.
Upon the death of either, two-thirds of the amount of those payments will
continue to be made during the life of the survivor. We may require proof of the
ages of the chosen persons.

We may pay interest in excess of the stated amounts under the first four
options listed above, but not the last three. A right to change options or to
withdraw all or part of the remaining proceeds may be included in the first two,
and the fourth, options above. For additional information concerning the payment
options, see the Policy.

OPTIONAL BENEFITS

Waiver of Monthly Deductions. If you elect the Waiver of Monthly
Deductions Rider, we will waive Monthly Deductions against the Policy if the
Insured becomes totally disabled, before age 65 and for at least 120 days. If
total disability occurs after age 60 and before age 65, then we will waive
Monthly Deductions only until the Insured reaches Attained Age 65, or for a
period of two years, if longer. The monthly cost of this Rider is based on
sex-distinct rates (except for Policies issued in conjunction with employee
benefit plans, where the cost of this Rider will not vary by sex) multiplied by
the Monthly Deduction on the Policy. We will add this cost to the Monthly
Deduction on the Policy.

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<PAGE> 115

required will be the Minimum Guarantee Premium from the Date of Issue, plus two
times the Minimum Monthly Premium, minus premiums previously paid. The Rider
will be cancelled if a sufficient premium is not paid during that 61-day period.

The cost of the Guaranteed Death Benefit Rider is $0.01 per thousand of
Face Amount per month. This Rider is available only at issue, and only for Issue
Ages 0-65.

If while the Guaranteed Death Benefit Rider is in force, the Accumulated
Value of the Policy is not sufficient to cover the Monthly Deductions, Monthly
Deductions will be made until the Accumulated Value of the Policy is exhausted,
and will thereafter be deferred, and collected at such time as the Policy has
positive Accumulated Value.

If you wish to keep this Rider in force, you must limit Withdrawals and
Policy loans to the excess of premiums paid over the Minimum Guarantee Premium.
If you take a Policy loan or Withdrawal for an amount greater than such excess,
the Guaranteed Death Benefit Rider will enter a 61-day lapse-pending
notification period, and will be cancelled if you do not pay a sufficient
premium.

FEDERAL INCOME TAX CONSIDERATIONS

INTRODUCTION

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<PAGE> 116

TAX STATUS OF THE POLICY

In certain circumstances, owners of variable life insurance policies have
been considered for Federal income tax purposes to be the owners of the assets
of separate accounts supporting their contracts due to their ability to exercise
investment control over those assets. Where this is the case, the policyowners
have been currently taxed on income and gains attributable to separate account
assets. There is little guidance in this area, and some features of the policy,
such as the flexibility of Policy Owners to allocate premium payments and
Accumulated Values, have not been explicitly addressed in published rulings.
While National Life believes that the policy does not give Policy Owners
investment control over Separate Account assets, we reserve the right to modify
the policy as necessary to prevent the Policy Owner from being treated as the
owner of the Separate Account assets supporting the Policy.

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

TAX TREATMENT OF POLICY BENEFITS

46
<PAGE> 117

Contract. The rules are too complex to be summarized here, but generally depend
on the amount of premium payments made during the first seven policy years.
Certain changes in a policy after it is issued could also cause it to be
classified as a Modified Endowment Contract. A current or prospective Policy
Owner should consult with a competent advisor to determine whether a policy
transaction will cause the Policy to be classified as a Modified Endowment
Contract.

Distributions Other Than Death Benefits from Modified Endowment
Contracts. Policies classified as Modified Endowment Contracts are subject to
the following tax rules:

(1) All distributions other than death benefits from a Modified
Endowment Contract, including distributions upon surrender and
withdrawals, will be treated first as distributions of gain
taxable as ordinary income and as tax-free recovery of the Policy
Owner's investment in the Policy only after all gain has been
distributed.

(2) Loans taken from or secured by a Policy classified as a Modified
Endowment Contract are treated as distributions and taxed
accordingly.

(3) A 10 percent additional income tax is imposed on the amount
subject to tax except where the distribution or loan is made when
the Policy Owner has attained age 59-1/2 or is disabled, or where
the distribution is part of a series of substantially equal
periodic payments for the life (or life expectancy) of the Policy
Owner or the joint lives (or joint life expectancies) of the
Policy Owner and the Policy Owner's beneficiary or designated
beneficiary.

Finally, neither distributions from nor loans from or secured by a Policy
that is not a Modified Endowment Contract are subject to the 10 percent
additional income tax.

Investment in the Policy. Your investment in the Policy is generally your
aggregate premium payments. When a distribution is taken from the Policy, your
investment in the Policy is reduced by the amount of the distribution that is
tax-free.

Policy Loan Interest. In general, interest paid on any loan under a
Policy will not be deductible.

47
<PAGE> 118

Continuation Beyond Age 100. The tax consequences of continuing the
Policy beyond the Insured's 100th year are unclear. You should consult a tax
adviser if you intend to keep the Policy in force beyond the Insured's 100th
year.

SPECIAL RULES FOR EMPLOYEE BENEFIT PLANS

If a trustee under a pension or profit-sharing plan, or similar deferred
compensation arrangement, owns a Policy, the Federal and state income and estate
tax consequences could differ. A tax adviser should be consulted with respect to
such consequences. Policies owned under these types of plans may also be subject
to restrictions under the Employee Retirement Income Security Act of 1974
("ERISA"). You should consult a qualified adviser regarding ERISA.

The amounts of life insurance that may be purchased on behalf of a
participant in a pension or profit-sharing plan are limited.

The current cost of insurance for the net amount at risk is treated as a
"current fringe benefit" and must be included annually in the plan participant's
gross income. We report this cost (generally referred to as the "P.S. 58" cost)
to the participant annually.

POSSIBLE TAX LAW CHANGES

POSSIBLE CHARGES FOR NATIONAL LIFE'S TAXES

At the present time, National Life makes no charge for any Federal, state
or local taxes (other than the charge for state premium taxes) that may be
attributable to the Subaccounts or to the policies. National Life reserves the
right to charge the Subaccounts for any future taxes or economic burden National
Life may incur.

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<PAGE> 119

POLICIES ISSUED IN CONJUNCTION WITH EMPLOYEE BENEFIT PLANS

Policies may be acquired in conjunction with employee benefit plans,
including the funding of qualified pension plans meeting the requirements of
Section 401 of the Code.

Illustrations reflecting the premiums and charges for employee benefit
plan Policies will be provided upon request to purchasers of such Policies.

LEGAL DEVELOPMENTS REGARDING UNISEX ACTUARIAL TABLES

In 1983, the United States Supreme Court held in Arizona Governing
Committee v. Norris that optional annuity benefits provided under an employee'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. In that case, the Court
applied its decision only to benefits derived from contributions made on or
after August 1, 1983. Subsequent decisions of lower federal courts indicate that
in other factual circumstances the Title VII prohibition of sex-distinct
benefits may apply at an earlier date. In addition, legislative, regulatory, or
decisional authority of some states may prohibit use of sex-distinct mortality
tables under certain circumstances. The Policies offered by this Prospectus,
other than employee benefit plan Policies (see "Policies Issued in Conjunction
with Employee Benefit Plans," Page ) are based upon actuarial tables which
distinguish between men and women and, thus, the Policy provides different
benefits to men and women of the same age. Accordingly, employers and employee
organizations should consider, in consultation with legal counsel, the impact of
these authorities on any employment-related insurance or benefits program before
purchasing the Policy and in determining whether an employee benefit plan Policy
is appropriate.

VOTING RIGHTS

We will invest all of the assets held in the Subaccounts of the Separate
Account in shares of corresponding Portfolios of the Funds. The Funds do not
hold routine annual shareholders' meetings. Shareholders' meetings will be
called whenever each Fund believes that it is necessary to vote to elect the
Board of Directors of the Fund and to vote upon certain other matters that are
required to be approved or ratified by the shareholders of a mutual fund.

We are the legal owner of Fund shares and as such have the right to vote
upon any matter that may be voted upon at a shareholders' meeting. However, in
accordance with the SEC's view of present applicable law, we will vote the
shares of the Funds at meetings of the shareholders of the appropriate Fund or
Portfolio in accordance with instructions of Policy Owners. We will vote Fund
shares held in each Subaccount of the Separate Account for which Owners do not
send timely instructions in the same proportion as those shares in that
Subaccount for which instructions are received.

If you have a voting interest, we will send you proxy material and a form
for giving voting instructions. You may vote, by proxy or in person, only as to
the Portfolios that correspond to the

49
<PAGE> 120

Subaccounts in which your Policy values are allocated. We will determine the
number of shares held in each Subaccount attributable to a Policy for which you
may provide voting instructions by dividing the Policy's Accumulated Value in
that account by the net asset value of one share of the corresponding Portfolio
as of the record date for the shareholder meeting. We will count fractional
shares. For each share of a Portfolio for which Owners have no interest, we will
cast votes, for or against any matter, in the same proportion as Owners provide
voting instructions.

CHANGES IN APPLICABLE LAW, FUNDING AND OTHERWISE

We may also take the steps listed below, if we feel such an action is
reasonably necessary. In doing so we would comply with all applicable laws,
including approval of Owners, if so required:

(i) operating the Separate Account as a management company
under the 1940 Act

(ii) deregistering the Separate Account under the 1940 Act if
registration is no longer required

(iii) combining or substituting separate accounts

(iv) transferring the assets of the Separate Account to another
separate account or to the General Account

(v) making changes necessary to comply with, obtain or continue
any exemptions from the 1940 Act; or

(vi) making other technical changes in the Policy to conform
with any action described herein;

(3) to eliminate, combine, or substitute Subaccounts and establish new
Subaccounts, if in its judgment marketing needs, tax considerations, or
investment conditions so warrant;

(5) to modify the provisions of the Policies to comply with applicable
laws.

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<PAGE> 121

We have reserved all rights in respect of our corporate name and any part
thereof, including without limitation the right to withdraw its use and to grant
its use to one or more other separate accounts and other entities.

If your Policy has Accumulated Value in a Subaccount that is eliminated,
we will give you at least 30 days notice before the elimination, and will
request that you name the Subaccount or Subaccounts (or the General Account) to
which the Accumulated Value in that Subaccount should be transferred. If you do
not name a new Subaccount, then we will use the Money Market Subaccount. In any
case, if in the future we impose a transfer charge or establish limits on the
number of transfers or free transfers, no charge will be made for this transfer,
and it will not count toward any limit on transfers or free transfers.

OFFICERS AND DIRECTORS OF NATIONAL LIFE

The officers and directors of National Life, as well as their principal
occupations during the past five years, are listed below.

PRINCIPAL OCCUPATION

<TABLE>
<CAPTION>
NAME AND POSITION DURING THE PAST FIVE YEARS
- ----------------- --------------------------
<S> <C>
Patrick E. Welch 1997 to present - Chairman of the Board
Chairman of the Board, and Chief Executive Officer; 1992 to 1997 -
Chief Executive Officer Chairman of the Board, Chief Executive
Officer and President of
GNA Corporation.

Robert E. Boardman 1994 to present - Chairman of Hickok &
Director Boardman Financial Network
1967 to present - President
of Hickok & Boardman Realty, Inc.

Earle H. Harbison, Jr. 1993 to present: Chairman of
Director Harbison Walker, Inc.; 1986 to
1992 - President and Chief
Operating Officer of Monsanto Company.

A. Gary Shilling 1978 to present - President of A.
Director Gary Shilling & Company, Inc.

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<PAGE> 122

<TABLE>
<S> <C>
1994 - Vice President and Chief Financial Officer of
ACUMA, Ltd.

Rodney A. Buck 1996 to present - Senior Vice
Senior Vice President & President and Chief Investment
Chief Investment Officer Officer; 1993 to 1995 - Senior Vice President -
Investments; 1996 to present - Chairman
& Chief Executive Officer, National
Life Investment Management
Company, Inc. ("NLIMC");
1991 to 1995 - President
and Chief Operating
Officer, NLIMC; 1998 to
present - Chief Executive
Officer; 1987 to 1997
Senior Vice President -
Sentinel Advisors Company.

Michele S. Gatto 1999 to present: Senior Vice President & General
Senior Vice President & Counsel; 1997 to 1999 - Vice President, General Counsel
General Counsel and Secretary, Massachusetts Casualty Insurance Company;
1986 to 1997 - Vice President, Assistant General Counsel,
Assistant Secretary/Treasurer, and other
legal positions, The Paul Revere Corporation

DISTRIBUTION OF POLICIES

National Life has sought approval to sell the Policies in all states and
the District of Columbia. However, all approvals may not be obtained. The
Policies are offered and sold only in those states where their sale is lawful.

The directors of ESI are Patrick E. Welch, Thomas H. MacLeay, Rodney A.
Buck, all of whose principal occupations are disclosed under "Directors and
Officers of National

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<PAGE> 123

Life" above, and Joseph M. Rob, the Chairman, Chief Executive Officer and
President of ESI. ESI's other officers are:

John M. Grab, Jr. Senior Vice President & Chief Financial Officer
Stephen A. Englese Vice President - Financial Products
Gregory D. Teese Vice President - Compliance
Budd A. Shedaker Assistant Vice President - Communications
D. Russell Morgan Counsel
Sharon E. Bernard Treasurer & Controller
Lisa A. Pettrey Secretary
JoAnn K. Morissette Assistant Secretary

The principal business address of all these individuals is National Life
Drive, Montpelier, Vermont 05604.

We do the insurance underwriting, determine a proposed Insured's Rate
Class, and determine whether to accept or reject an application for a Policy. We
will refund any premiums paid if a Policy ultimately is not issued or will
refund the applicable amount if the Policy is returned under the free look
provision.

Dealers are compensated for sales of the Policies by dealer concessions.
During the first Policy Year, the gross dealer concession will not be more than
85% of the premiums paid up to a target amount (used only to determine
commission payments) and 4% of the premiums paid in excess of that amount. For
Policy Years 2 through 10, the gross dealer concession will not be more than 4%
of the premiums paid. For Policy Year 11 and thereafter, the gross dealer
concession will be 1.5% of all premiums paid. For premiums received in the year
following an increase in Face Amount and attributable to the increase, the gross
dealer concession will not be more than 50% up to the target amount for the
increase.

POLICY REPORTS

Once each Policy Year, we will send you a statement describing the status
of the Policy, including setting forth:

- the Face Amount
- the current Unadjusted Death Benefit
- any Policy loans and accrued interest
- the current Accumulated Value
- the non-loaned Accumulated Value in the General Account
- the amount held as Collateral in the General Account
- the value in each Subaccount of the Separate Account
- premiums paid since the last report
- charges deducted since the last report
- any Withdrawals since the last report, and
- the current Cash Surrender Value.

We will send you a semi-annual report containing the financial statements
of each Fund in which your Policy has Accumulated Value, as required by the 1940
Act.

STATE REGULATION

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<PAGE> 124

INSURANCE MARKETPLACE STANDARDS ASSOCIATION

PREPARING FOR YEAR 2000

EXPERTS

Actuarial matters included in the Prospectus have been examined by
Elizabeth H. MacGowan, F.S.A. MAAA, Associate Actuary-Product Development of
National Life.

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<PAGE> 125

LEGAL MATTERS

Sutherland, Asbill & Brennan LLP of Washington, D.C. has provided advice
on legal matters relating to certain aspects of Federal securities law
applicable to the issue and sale of the Policies. Matters of Vermont law
pertaining to the Policies, including National Life's right to issue the
Policies and its qualification to do so under applicable laws and regulations
issued thereunder, have been passed upon by Michele S. Gatto, Senior Vice
President and General Counsel of National Life.

In recent years life insurance companies have been named as defendants in
class action lawsuits relating to life insurance pricing and sales practices.
During 1998, National Life settled a group of class action lawsuits of this
nature. While the ultimate cost of the settlement is not yet known, National
Life set aside a reserve during 1998 of approximately $40.6 million to account
for the cost of the settlement of these cases.

National Life is also party to ordinary routine litigation incidental to
the business, none of which is expected to have a material adverse effect upon
its ability to meet its obligations under the Policies.

FINANCIAL STATEMENTS

The financial statements of National Life and of the relevant Subaccounts
of the Separate Account appear on the following pages. The financial statements
of National Life should be distinguished from the financial statements of the
Separate Account and should be considered only as bearing upon National Life's
ability to meet its obligations under the Policies.

55
<PAGE> 126

GLOSSARY

ACCUMULATED VALUE The sum of the Policy's values in the Separate
Account and the General Account.

ATTAINED AGE The Issue Age of the Insured plus the number of
full Policy Years which have passed since the Date
of Issue.

BENEFICIARY The person(s) or entity(ies) designated to receive
all or some of the Death Benefit when the Insured
dies. The Beneficiary is designated in the
application or if subsequently changed, as shown in
the latest change filed with National Life. The
interest of any Beneficiary who dies before the
Insured shall vest in the Owner unless otherwise
stated.

CASH SURRENDER VALUE The Accumulated Value minus any applicable
Surrender Charge, and minus any outstanding Policy
loans and accrued interest on such loans.

COLLATERAL The portion of the Accumulated Value in the General
Account which secures the amount of any Policy
loan.

DAC TAX A tax attributable to Specified Policy Acquisition
Expenses under Internal Revenue Code Section 848.

DATE OF ISSUE The date on which the Policy is issued, which is
set forth in the Policy. It is used to determine
Policy Years, Policy Months and Monthly Policy
Dates, as well as to measure suicide and
contestable periods.

DEATH BENEFIT The Policy's Unadjusted Death Benefit, plus any
dividends payable, plus any relevant additional
benefits provided by a supplementary benefit Rider,
less any outstanding Policy loan and accrued
interest, and less any unpaid Monthly Deductions.

DURATION The number of full years the insurance has been in
force; for the Initial Face Amount, measured from
the Date of Issue; for any increase in Face Amount,
measured from the effective date of such increase.

FACE AMOUNT The Initial Face Amount plus any increases in Face
Amount and minus any decreases in Face Amount.

GENERAL ACCOUNT The account which holds the assets of National Life
which are available to support its insurance and
annuity obligations.

GRACE PERIOD A 61-day period measured from the date on which
notice of pending lapse is sent by National Life,
during which the Policy will not lapse and
insurance coverage continues. To prevent lapse, the
Owner must during the Grace Period make a premium
payment equal to the sum of any amount by which the
past Monthly Deductions have been in excess of Cash
Surrender Value, plus three times the Monthly
Deduction due the date the Grace Period began.

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<PAGE> 127

GUARANTEED DEATH BENEFIT RIDER An optional Rider that will guarantee that
the Policy will not lapse prior to Attained
Age 70, or 20 years from the Policy's Date of
Issue, if longer, regardless of investment
performance, if the Minimum Guarantee Premium
has been paid as of each Monthly Policy Date.

HOME OFFICE National Life's Home Office at National Life
Drive, Montpelier, Vermont 05604.

INITIAL FACE AMOUNT The Face Amount of the Policy on the Date of
Issue. The Face Amount may be increased or
decreased after the first Policy Year.

INSURED The person upon whose life the Policy is
issued.

ISSUE AGE The age of the Insured at his or her birthday
nearest the Date of Issue. The Issue Age is
stated in the Policy.

MINIMUM FACE AMOUNT The Minimum Face Amount is generally $50,000.
However, exceptions may be made in employee
benefit plan cases.

MINIMUM INITIAL PREMIUM The minimum premium required to issue a
Policy. It is equal to two times the Minimum
Monthly Premium.

MONTHLY ADMINISTRATIVE CHARGE A current charge of $7.50 per month included
in the Monthly Deduction, which is intended
to reimburse National Life for ordinary
administrative expenses. On a guaranteed
basis, this charge may not exceed $7.50 per
Policy plus $0.07 per thousand of Face Amount
per month.

MONTHLY DEDUCTION The amount deducted from the Accumulated
Value on each Monthly Policy Date. It
includes the Monthly Administrative Charge,
the Cost of Insurance Charge, and the monthly
cost of any benefits provided by Riders.

MONTHLY POLICY DATE The day in each calendar month which is the
same day of the month as the Date of Issue,
or the last day of any month having no such
date, except that whenever the Monthly Policy
Date would otherwise fall on a date other
than a Valuation Day, the Monthly Policy Date
will be deemed to be the next Valuation Day.

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<PAGE> 128

NET AMOUNT AT RISK The amount by which the Unadjusted Death
Benefit exceeds the Accumulated Value.

NET PREMIUM The remainder of a premium after the
deduction of the Premium Tax Charge.

OWNER The person(s) or entity(ies) entitled to
exercise the rights granted in the Policy.

POLICY ANNIVERSARY The same day and month as the Date of Issue
in each later year.

POLICY YEAR A year that starts on the Date of Issue or on
a Policy Anniversary.

PREMIUM TAX CHARGE A charge deducted from each premium payment
to cover the cost of state and local premium
taxes, and the federal DAC Tax.

RATE CLASS The classification of the Insured for cost of
insurance purposes. The Rate Classes are:
preferred nonsmoker; standard nonsmoker;
smoker; juvenile; and substandard.

RIDERS Optional benefits that an Owner may elect to
add to the Policy at an additional cost.

SURRENDER CHARGE The amount deducted from the Accumulated
Value of the Policy upon lapse or surrender
during the first 15 Policy Years. The Maximum
Surrender Charge is shown in the Policy.

UNADJUSTED DEATH BENEFIT Under Option A, the greater of the Face
Amount or the applicable percentage of the
Accumulated Value on the date of death; under
Option B, the greater of the Face Amount plus
the Accumulated Value on the date of death,
or the applicable percentage of the
Accumulated Value on the date of death. The
Death Benefit Option is selected at time of
application but may be later changed.

VALUATION DAY Each day that the New York Stock Exchange is
open for business other than the day after
Thanksgiving and any day on which trading is
restricted by directive of the Securities and
Exchange Commission. Unless otherwise
indicated, whenever under a Policy an event
occurs or a transaction is to be effected on
a day that is not a Valuation Date, it will
be deemed to have occurred on the next
Valuation Date.

VALUATION PERIOD The time between two successive Valuation
Days. Each Valuation Period includes a
Valuation Day and any non-Valuation Day or
consecutive non-Valuation Days immediately
preceding it.

WITHDRAWAL A payment made at the request of the Owner
pursuant to the right in the Policy to
withdraw a portion of the Cash Surrender
Value of the Policy. The Withdrawal Charge
will be deducted from the Withdrawal Amount.

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<PAGE> 129

APPENDIX A

ILLUSTRATION OF DEATH BENEFITS, ACCUMULATED VALUES AND CASH SURRENDER VALUES

The second column of the tables show the amount to which the premiums
would accumulate if an amount equal to those premiums were invested to earn
interest, after taxes, at 5% compounded annually. The columns shown under the
heading "Guaranteed" assume that throughout the life of the Policy, the monthly
charge for cost of insurance is based on the maximum level permitted under the
Policy (based on the 1980 CSO Smoker/Nonsmoker Table), the guaranteed maximum
Monthly Administrative Charge of $7.50 per Policy plus $0.07 per thousand of
Face Amount applies, and Monthly Deductions are reduced by 0.50% per annum for
Policy Years after 10; the columns under the heading "Current" assume that
throughout the life of the Policy, the monthly charge for cost of insurance is
based on the current cost of insurance rate, and the Monthly Administrative
Charge is set at its current level of $7.50 per Policy.

These asset charges reflect an investment advisory fee of %, which
represents an average of the fees incurred by the Portfolios during 1998 and
expenses of % which is based on an average of the actual expenses incurred by
the Portfolios during 1998, adjusted, as appropriate, to take into account
expense reimbursement arrangements expected to be in place for 1999. In the
absence of the reimbursement arrangements for some of the Portfolios, the other
asset charges would have totaled an average of %. If the reimbursement
arrangements were discontinued, the Accumulated Values and Cash Surrender Values
of a Policy which allocates Policy values equally among the Subaccounts would be
lower than those shown in the following tables. For information on Fund
expenses, see the prospectuses for the Funds accompanying this prospectus.

The tables illustrate the Policy values that would result based upon the
hypothetical investment rates of return if premiums are paid and allocated as
indicated, no amounts are allocated to the General Account, and no Policy loans
are made. The tables are also based on the assumption that the Owner has not
requested an increase or decrease in the Face Amount, that no Withdrawals have
been made and no transfers have been made in any Policy Year.

Upon request, National Life will provide a comparable illustration based
upon the proposed Insured's Age and Rate Class, the Death Benefit Option, Face
Amount, Planned Periodic Premiums and Riders requested.

A-1
<PAGE> 130

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION A ANNUAL PREMIUM $3000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 0%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)

<TABLE>
<CAPTION>
Guaranteed Current
Premiums ------------------------------- ----------------------------
End of Accumulated Accum- Cash Accum- Cash
Policy at 5% Int. ulated Surrender Death ulated Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
- ---- -------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 3,150
2 6,458
3 9,930
4 13,577
5 17,406

6 21,426
7 25,647
8 30,080
9 34,734
10 39,620

11 44,751
12 50,139
13 55,796
14 61,736
15 67,972

16 74,521
17 81,397
18 88,617
19 96,198
20 104,158
25 150,340
30 209,282
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-2
<PAGE> 131

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION A ANNUAL PREMIUM $3000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 6%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)

<TABLE>
<CAPTION>
Guaranteed Current
Premiums -------------------------------- -------------------------------
End of Accumulated Accum- Cash Accum- Cash
Policy at 5% Int. ulated Surrender Death ulated Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
- ---- ----------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 3,150
2 6,458
3 9,930
4 13,577
5 17,406

6 21,426
8 30,080
9 34,734
10 39,620

11 44,751
12 50,139
13 55,796
14 61,736
15 67,972

16 74,521
17 81,397
18 88,617
19 96,198
20 104,158
25 150,340
30 209,282
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-3
<PAGE> 132

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION A ANNUAL PREMIUM $3000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 12%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)

<TABLE>
<CAPTION>
Guaranteed Current
Premiums ------------------------------- --------------------------------
End of Accumulated Accum- Cash Accum- Cash
Policy at 5% Int. ulated Surrender Death ulated Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
- ---- -------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 3,150
2 6,458
3 9,930
4 13,577
5 17,406

6 21,426
8 30,080
9 34,734
10 39,620

11 44,751
12 50,139
13 55,796
14 61,736
15 67,972

16 74,521
17 81,397
18 88,617
19 96,198
20 104,158
25 150,340
30 209,282
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-4
<PAGE> 133

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION B ANNUAL PREMIUM $4000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 0%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)

<TABLE>
<CAPTION>
Guaranteed Current
Premiums --------------------------------- -------------------------------
End of Accumulated Accum- Cash Accum- Cash
Policy at 5% Int. ulated Surrender Death ulated Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
- ---- -------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200
2 8,610
3 13,241
4 18,103
5 23,208

6 28,568
7 34,196
8 40,106
9 46,312
10 52,827

11 59,669
12 66,852
13 74,395
14 82,314
15 90,630

16 99,361
17 108,530
18 118,156
19 128,264
20 138,877
25 200,454
30 279,043
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-5
<PAGE> 134

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION B ANNUAL PREMIUM $4000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 6%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)

<TABLE>
<CAPTION>
Guaranteed Current
Premiums -------------------------------- ------------------------------
End of Accumulated Accum- Cash Accum- Cash
Policy at 5% Int. ulated Surrender Death ulated Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
- ---- -------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200
2 8,610
3 13,241
4 18,103
5 23,208

6 28,568
7 34,196
8 40,106
9 46,312
10 52,827

11 59,669
12 66,852
13 74,395
14 82,314
15 90,630

16 99,361
17 108,530
18 118,156
19 128,264
20 138,877
25 200,454
30 279,043
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-6
<PAGE> 135

NATIONAL LIFE
VARITRAK FLEXIBLE PREMIUM ADJUSTABLE VARIABLE LIFE INSURANCE

$250,000 FACE AMOUNT MALE INSURED ISSUE AGE 40 PREFERRED
DEATH BENEFIT OPTION B ANNUAL PREMIUM $4000 NONSMOKER

ASSUMING HYPOTHETICAL GROSS ANNUAL RATE OF RETURN 12%
(NET ANNUAL RATE OF RETURN OF % FOR GUARANTEED CHARGES,
NET ANNUAL RATE OF RETURN OF % FOR CURRENT CHARGES)

<TABLE>
<CAPTION>
Guaranteed Current
Premiums -------------------------------- --------------------------------
End of Accumulated Accum- Cash Accum- Cash
Policy at 5% Int. ulated Surrender Death ulated Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
- ---- -------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,200
2 8,610
3 13,241
4 18,103
5 23,208

6 28,568
7 34,196
8 40,106
9 46,312
10 52,827

11 59,669
12 66,852
13 74,395
14 82,314
15 90,630

16 99,361
17 108,530
18 118,156
19 128,264
20 138,877
25 200,454
30 279,043
</TABLE>

The Death Benefit may, and the Accumulated Values and Cash Surrender Values
will, differ if premiums are paid in different amounts or frequencies.

A-7
<PAGE> 136
Part II
<PAGE> 137

UNDERTAKING TO FILE REPORTS

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

RULE 484 UNDERTAKING

Article V, Section 7.1 of the Bylaws of National Life Insurance Company
("National Life" or the "Company") provides that, in accordance with the
provisions of the Section, the Company shall indemnify directors, officers and
employees of the Company or any other corporation served at the request of the
Company, and their heirs, executors and administrators, shall be indemnified to
the maximum extent permitted by law against all costs and expenses, including
judgments paid, settlement costs, and counsel fees, reasonably incurred in the
defense of any claim in which such person is involved by virtue of his or her
being or having been such a director, officer, or employee.

The Bylaws are filed as Exhibit 1.A.6(b) to the Registration Statement.

Vermont law authorizes Vermont corporations to provide indemnification
to directors, officers and other persons.

National Life owns a directors and officers liability insurance policy
covering liabilities that directors and officers of National Life and its
subsidiaries and affiliates may incur in acting as directors and officers.

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

REPRESENTATION RELATING TO FEES AND CHARGES

National Life Insurance Company ("the Company") hereby represents that
the fees and charges deducted under the variable life insurance policies
described in the prospectuses contained in this registration statement are, in
the aggregate, reasonable in relationship to the services rendered, the
expenses expected to be incurred, and the risks assumed by the Company.

<PAGE> 138

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and documents.

The facing sheet.

The prospectuses.
Undertaking to file reports.
Rule 484 undertaking.
Representation relating to fees and charges.
The signatures.
Written consents of the following persons:

(a) Michele S. Gatto
(b) Elizabeth H. MacGowan(7)

The following exhibits, corresponding to those required by paragraph A
of the instructions as to exhibits in Form N-8B-2:

1.
A.
(1) Resolutions of the Board of Directors of National
Life Insurance Company establishing the National
Variable Life Insurance Account.(1)
(2) Not Applicable.
(3) (a) Form of Distribution Agreement between
National Life Insurance Company and Equity
Services, Inc.(3)
(b)(1) Form of Equity Services, Inc. Branch Office
Supervisor Contract.(1)
(b)(2) Form of Equity Services, Inc. Registered
Representative Contract.(1)

(4) Not Applicable.
(5) (a) Specimen VariTrak Policy Form.
(b) Rider for Guaranteed Insurability Options.
(c) Rider for Waiver of Monthly Deductions.
(d) Rider for Accidental Death Benefit.
(e) Rider for Guaranteed Death Benefit.

(f) Specimen VariTrak (New York) Policy Form.(4)

(g) Specimen VariTrak (New York-Unisex) Policy
Form.(4)

(h) New York Rider for Guaranteed Insurability
Options.(4)

(i) New York Rider for Waiver of Monthly
Deductions.(4)

(j) New York Rider for Accidental Death
Benefit.(4)

(6) (a) Charter documents of National Life Insurance
Company.(1)
(b) Bylaws of National Life Insurance Company.(1)
(7) Not Applicable.
(8) (a) Form of Participation Agreement by and among
Market Street Fund, Inc., National Life
Insurance Company and Equity Services,
Inc.(3)
(b) Form of Amendment No. 1 to Participation
Agreement Among Variable Insurance Products
Fund, Fidelity Distributors Corporation and
National Life Insurance Company.(3)
(b)(2) Participation Agreement among Variable
Insurance Products Fund, Fidelity
Distributors Corporation and Vermont Life
Insurance Company (now National Life
Insurance Company) dated August 1, 1989.(2)
(c) Form of Participation Agreement by and among
The Alger American Fund, National Life
Insurance Company and Fred Alger and
Company.(3)

(d) Form of Participation Agreement Among
Variable Insurance Products Fund II,
Fidelity Distributors Corporation and
Vermont Life Insurance Company (now National
Life Insurance Company) dated April 1,
1990(2)

(d)(2) Form of Amendment No 1. to Participation
Agreement Among Variable Insurance Products
Fund II, Fidelity Distributors Corporation,
and National Life Insurance Company (as
successor to Vermont Life Insurance
Company)(4)

(e) Form of Shareholder Service Agreement
between NationalLife Insurance Company and
American Century Investment Management,
Inc. (5)

(f) Form of Participation Agreement between
National Life Insurance Company and
Neuberger & Berman Advisers Managers
Trust(5)

(g) Form of Participation Agreement between
National Life Insurance Company and J.
P. Morgan Series Trust II. (5)

(h) Form of Participation Agreement between
National Life Insurance Company and
Goldman Sachs Variable Insurance Trust.
(5)

(i) Form of Participation Agreement between
National Life Insurance Company, Strong
Variable Insurance Funds, Inc. and Strong
Opportunity Fund II.(6)

<PAGE> 139

(9) Not Applicable.
(10)(a) VariTrak Application Form.

(b) VariTrak (New York) Application Form.(4)

(11) Memorandum describing issuance, transfer and
redemption procedures.(4)

2. Opinion and Consent of Michele S. Gatto, Senior Vice President
and General Counsel., as to the legality of the securities
being offered.

3. Not Applicable.
4. Not Applicable.
5. Not Applicable.

6. Opinion and Consent of Elizabeth H. MacGowan, F.S.A.,
M.A.A.A., as to actuarial matters pertaining to the
securities being registered.(7)

7. (a) Consent of PricewaterhouseCoopers LLP(7)
(b) Consent of Sutherland, Asbill & Brennan LLP(7).

8. Powers of Attorney for Directors.(5)

A. Robert E. Boardman F. Thomas P. Salmon
B. David R. Coates G. Roger B. Porter
C. Benjamin F. Edwards III H. Thomas R. Williams
D. E. Miles Prentice III I. Patricia K. Woolf

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

(1) Incorporated herein by reference to the Pre-Effective Amendment No. 2
to the Form S-6 Registration Statement (File No. 333-67003) for
National Variable Life Insurance Account (COLI) filed on February
11, 1999.

(2) Incorporated herein by reference to Post-Effective Amendment No. 2
to the Form N-4 Registration Statement (File No. 333-19583) for
National Variable Annuity Account II (Sentinel Advantage) filed
February 25, 1999.

(3) Incorporated herein by reference to Post Effective Amendment No. 1 to
the Form S-6 Registration Statement (File No. 33-91938) for National
Variable Life Insurance Account (VariTrak) filed March 12, 1996,
Accession Number 0000950133-96-000202.

(4) Incorporated herein by reference to Post-Effective Amendment No. 2 to
the Form S-6 Registration Statement filed April 30, 1997 for National
Variable Life Insurance Account (VariTrak) (File No. 33-91938),
Accession Number 0000950133-97-001551.

(5) Incorporated herein by reference to Pre-Effective Amendment
No. 1 to the Form S-6 Registration Statement filed April 16, 1998 for
National Variable Life Insurance Account (Sent. Est. Provider)
(File No. 333-44723), Accession No. 950133-98-1468.

(6) Incorporated herein by reference to Post-Effective Amendment
No. 3 to the Form S-6 Registration Statement for National Variable
Life Insurance Account (VariTrak) filed May 1, 1998 (File No. 33-91938)

(7) To be filed by Amendment.

<PAGE> 140

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant, National Variable Life Insurance Account, has duly caused this
Post-Effective Amendment No. 4 to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Montpelier and the State of Vermont,
on the 26th day of February, 1999.

NATIONAL VARIABLE LIFE INSURANCE ACCOUNT
(Registrant)

By: NATIONAL LIFE INSURANCE COMPANY

Attest: /s/ Christine M. Bilbrey By: /s/ PATRICK E. WELCH
------------------------- -----------------------------
Christine M. Bilbrey Patrick E. Welch
Assistant Secretary Chairman of the Board and
Chief Executive Officer

<PAGE> 141

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, National
Life Insurance Company has duly caused this Post-Effective Amendment No. 4
to the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal fixed and attested, in the City of
Montpelier and the State of Vermont, on the 26th day of February, 1999.

NATIONAL LIFE INSURANCE COMPANY
(SEAL) (Depositor)

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 4 to the Registration Statement has been signed
below by the following persons in the capacities indicated on the date(s) set
forth below.

<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----

<S> <C> <C>
/s/ PATRICK E. WELCH Chairman of the Board and 2/26/99
- ------------------------ and Chief Executive Officer
Patrick E. Welch

/s/ THOMAS H. MACLEAY President, Chief Operating 2/26/99
- ------------------------ Officer and Director
Thomas H. MacLeay

/s/ William A. Smith Executive Vice President 2/26/99
- ------------------------ Chief Financial Officer
John L. LaGue, Jr.

Robert E. Boardman* Director 2/26/99
- ------------------
Robert E. Boardman

</TABLE>

<PAGE> 142

<TABLE>
<S> <C> <C>
*By /s/ EARLE H. HARBISON JR.* Director Date:
-------------------------- February 26, 1999
Earle H. Harbison JR.
Pursuant to Power of Attorney

*By /s/ A. Gary Shilling* Director Date:
-------------------------- February 26, 1999
A. Gary Shilling

*By /s/ PATRICK E. WELCH Date:
-------------------------- February 26, 1999
Patrick E. Welch
Pursuant to Power of Attorney
</TABLE>

<PAGE> 143

EXHIBIT INDEX

1.A.(5) (a) Specimen VariTrak Policy Form

(b) Rider for Guaranteed Insurability Options

(d) Rider for Accidental Death Benefit

(e) Rider for Guaranteed Death Benefit

(10)(a) VariTrak Application Form

2. Opinion and Consent of Michele S. Gatto, Senior Vice President
and General Counsel as to the legality of the securities being
offered.

<PAGE> 1
NATIONAL LIFE INSURANCE COMPANY
One National Life Drive, Montpelier, Vermont 05604
(802) 229-3333

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

We, NATIONAL LIFE INSURANCE COMPANY, agree to pay the Death Benefit to the
Beneficiary, subject to the terms of this policy, when we receive at our Home
Office due proof that the Insured died while this policy was in force.

The data and the terms on this and all following pages are part of this policy.

Signed for NATIONAL LIFE INSURANCE COMPANY at Montpelier, Vermont, as
of the Date of Issue, by

/s/ [SIG]
Chairman of the Board
and
Chief Executive Officer

/s/ [SIG]
Secretary

Registrar

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

FLEXIBLE PREMIUM ADJUSTABLE BENEFIT VARIABLE LIFE INSURANCE. FLEXIBLE PREMIUMS
MAY BE PAID UNTIL THE DEATH OF THE INSURED. THE ADJUSTABLE DEATH BENEFIT IS
PAYABLE UPON THE DEATH OF THE INSURED. THIS POLICY IS PARTICIPATING.

The amount and duration of the Death Benefit may increase or decrease daily, as
described in the DEATH BENEFIT AND POLICY CHANGES section of this policy. The
dollar amount of the Death Benefit is not guaranteed.

The Cash Surrender Value of this policy is dependent on the Accumulated Value in
the Separate Account, which fluctuates according to the investment experience of
the Sub-Accounts of the Separate Account chosen by the Owner. The Cash Surrender
Value may increase or decrease daily, and is not guaranteed as to dollar amount.

RIGHT TO REVIEW POLICY. This policy may be returned to us at any time prior to
the later of the end of the tenth day following its receipt by the Owner, the
end of the tenth day after we mail notice of policy issue to the Owner, and the
end of the forty-fifth day after the Applicant has signed the application in
consideration of which this policy was issued. The policy may be returned in
person or by mail to us or to the agent through whom it was bought. Upon such
return, we will refund any premiums paid, and the policy will be deemed void as
of its Date of Issue.

NATIONAL LIFE
- --------------------------------- ----------------------------------
7206(0395) OF VERMONT Cat. No. 43580

<PAGE> 2
INDEX

<TABLE>
<CAPTION>
Page Page
<S> <C>
1 GENERAL TERMS OF THIS POLICY 4 PREMIUMS
1 Consideration 4 Policy Protection Period
1 Entire Contract 4 Payment of Premiums
1 Representations 4 Net Premium
1 Incontestability 4 Premium Tax
1 Policy Months, Years and Anniversaries 4 Right to Policy Review
1 Policy Effective Dates 4 Premium Allocation
1 Attained Age 5 Grace Period
1 Misstatement of Age or Sex 5 Reinstatement
2 Valuation Date and Valuation Period 6 DEATH BENEFIT AND
2 Interest Rates POLICY CHANGES
2 Basis of Values 6 Death Benefit
2 Payment of Benefits 6 Suicide Limitation
2 Postponement of Payments 6 Death Benefit Options
2 Notices 6 Option A
2 Annual Report 6 Option B
2 Projection Report 6 Death Benefit Standard
3 Arbitration 7 Changes in Face Amount and Death Benefit Option
3 ROLES IN THIS POLICY 7 Face Amount Increases
3 Owner 7 Face Amount Decreases
3 Insured 7 Death Benefit Option Changes
3 Beneficiary 8 INVESTMENT
3 Change of Beneficiary 8 General Account
3 Trust Beneficiary 8 Interest Rates Credited to the Accumulated
3 Unnamed Beneficiary Value in the General Account
3 Assignments 8 Separate Account
3 Spendthrift Provision 8 Sub-Accounts
9 Valuation
9 Transfers
</TABLE>
- ------------------------------------ I -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)Ia

<PAGE> 3

INDEX (continued)

<TABLE>
<CAPTION>
Page Page
<S> <C>
10 POLICY VALUES 14 POLICY LOAN
10 Accumulated Value of the Policy 14 Loan Value
10 Accumulated Value in the General Account 14 Loan Interest Rate
10 Accumulated Value in the Separate Account 14 General Loan Terms
10 Accumulated Value in a Sub-Account 14 Allocation of Policy Loans
10 Units in a Sub-Account 15 PAYMENT OPTIONS
10 Unit Value 15 Option Effective Date
11 Net Investment Factor 15 General Payment Option Terms
11 Accumulated Value upon Reinstatement 15 Choice of Option
11 Cash Surrender Value 15 Change of Payment Option
11 Surrender Charges 15 Lump Sum Removal of Proceeds Applied under a Payment Option
11 Dividends 15 Option 1 - Payments of Interest Only
12 CHARGES AGAINST THE ACCUMULATED VALUE 16 Option 2 - Payments for a Stated Time
12 Mortality and Expense Risk Charge 16 Option 3 - Payments for Life
12 Tax Charge 17 Option 4 - Payments of a Stated Amount
12 Monthly Deduction 17 Option 5 - Life Annuity
12 Cost of Insurance Charge 17 Option 6 - Joint and Two-Thirds Annuity
12 Monthly Administrative Charge 18 Option 7 - 50% Survivor Annuity
12 Transfer Charge
13 WITHDRAWALS
13 Withdrawal Charge
13 Allocation of Withdrawals
</TABLE>

Any Riders and Endorsements, and a copy of the application, follow page 18.

- ------------------------------------ II -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)Ib

<PAGE> 4

SRC020 DATA SECTION
VARIABLE LIFE INSURANCE

POLICY NUMBER: NL4000502 DATE OF ISSUE: APR. 15, 1998

INSURED: ETHAN ALLEN

ISSUE AGE: 35 FACE AMOUNT: $100000

OWNER: AS STATED IN THE APPLICATION UNLESS LATER CHANGED

BENEFICIARY: AS STATED IN THE APPLICATION UNLESS LATER CHANGED

DEATH BENEFIT OPTION: A

MONTHLY POLICY DATE: 15TH

MINIMUM INITIAL PREMIUM: $137.16
MINIMUM MONTHLY PREMIUM: $68.58

PLANNED PERIODIC PREMIUM: $1000.00 PAYABLE ANNUALLY

MINIMUM FACE AMOUNT: $5000.00
MINIMUM INCREASE AMOUNT: $2000.00
MINIMUM WITHDRAWAL AMOUNT: $100.00

LOAN INTEREST RATE: 6.00%

DATA SECTION
VRTK NL4000502 COVER PAGE

<PAGE> 5

We, National Life Insurance Company, agree to pay the Death Benefit to the
Beneficiary, subject to the terms of this policy, when we receive at our Home
Office due proof that the Insured died while this policy was in force.

GENERAL TERMS OF THIS POLICY

CONSIDERATION. This policy is issued in consideration of the application and
payment of at least the Minimum Initial Premium shown in the Data Section. We
will incur no liability if no premium is paid.

ENTIRE CONTRACT. On the Date of Issue the entire contract between the parties is
this policy and a copy of the application which is attached at issue. Any change
of this contract must be written and may be made only by one of our authorized
officers or registrars. We will send the Owner a copy of any application for a
change which we approve. It and any additional Data Section shall become part of
this contract on the effective date of such change.

REPRESENTATIONS. Any statement made by or for the Insured shall be deemed a
representation and not a warranty. Unless such statement is in the attached
application or in any subsequent application, it shall not be used to:

1. make this policy void; or

2. make any increase in Face Amount void; or

3. make any Reinstatement void; or

4. defend any claim.

INCONTESTABILITY. After this policy has been in force during the life of the
Insured for two years from the policy Date of Issue, we will not contest it;
however,

1. we may contest any increase in Face Amount for which an application
is required until such increase has been in force during the life of
the Insured for two years from its Effective Date; and

2. we may contest any Reinstatement until such Reinstatement has been
in force during the life of the Insured for two years from its
Effective Date.

POLICY MONTHS, YEARS AND ANNIVERSARIES. Policy Months, Years and Anniversaries
shall be measured from the Date of Issue.

The Date of Issue is the first Monthly Policy Date. The Monthly Policy Date
shown in the Data Section occurs on the same day each month or on the last day
of any month having no such date.

A Contract Anniversary falls on each successive anniversary of the Date of
Issue. The first Contract Year begins on the Date of Issue and ends on the day
before the first Contract Anniversary. Each subsequent Contract Year begins on a
Contract Anniversary and ends on the day before the next Contract Anniversary.

POLICY EFFECTIVE DATES. The Face Amount on the Date of Issue shall become
effective on the Date of Issue shown in the Data Section.

Any increase in Face Amount for which an application is required shall become
effective on the Monthly Policy Date on or next following the date we approve
the application for such increase in Face Amount.

Any increase in Face Amount for which an application is not required shall
become effective on the Monthly Policy Date on or next following the date we
receive the request for such increase unless otherwise provided by the policy.

Any decrease in Face Amount requested shall become effective on the Monthly
Policy Date on or next following the date we receive the request for such
decrease.

Any reinstatement of this policy shall become effective on the Monthly Policy
Date on or next following the date we approve the application for Reinstatement.

Any change of Death Benefit Option shall become effective on the Monthly Policy
Date on or next following the date we receive the request for such change.

ATTAINED AGE. The Attained Age of the Insured on any date is the Issue Age shown
in the Data Section plus the number of full Policy Years which have passed since
the Date of Issue.

MISSTATEMENT OF AGE OR SEX. The Issue Age shown in the Data Section is the age
of the Insured on the Insured's birthday nearest to the Date of Issue. It is
based on the date of birth shown in the application.

If the age or sex of the Insured has been misstated, we will adjust the
Accumulated Value to be the Accumulated Value that would have resulted had the
Cost of Insurance Charges been based on the correct age and sex of the Insured.
The adjustment shall take effect on the Monthly Policy Date on or next following
the date we have proof to our satisfaction of such misstatement.

If the Insured has died, we will similarly adjust the Accumulated Value as of
the last Monthly Policy Date prior to the Insured's death. To the extent that
the recomputed, adjusted Accumulated Value is negative, we will deduct such
negative amount from the Death Benefit otherwise payable.

VALUATION DATE AND VALUATION PERIOD. A Valuation Date is each day that the New
York Stock Exchange is customarily open for trading, except for:

1. the day following Thanksgiving in each year; and

2. any day on which trading is restricted by directive of the
Securities and Exchange Commission.

A Valuation Period is the period between two successive Valuation Dates.

- ------------------------------------ 1 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)1

<PAGE> 6

INTEREST RATES. All interest rates stated in this policy are effective annual
rates.

BASIS OF VALUES. Any guaranteed values for this policy are equal to or greater
than those required by the law of the state where this policy is delivered. Any
guaranteed values are based on interest at the Minimum General Account Interest
Rate and the Mortality Table shown in the Data Section. A detailed statement of
the method of computing values has been filed in the state in which this policy
is delivered.

PAYMENT OF BENEFITS. We will pay all benefits under this policy at our Home
Office. Before payment of any Death Benefit we may investigate the death.

POSTPONEMENT OF PAYMENTS. We will pay any amounts which are payable as a result
of Cash Surrender, Withdrawals, or Policy Loans and which are allocated to the

SEPARATE ACCOUNT within seven days after we receive written request in a form
satisfactory to us. However, determination and payment of any amount payable
from the Separate Account may be postponed whenever:

1. the New York Stock Exchange is closed, or trading on the New York
Stock Exchange is restricted by directive of the Securities and
Exchange Commission; or

2. the Securities and Exchange Commission by order permits postponement
for the protection of policyowners; or

3. an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which it is not reasonably practicable to
dispose of securities or to determine the value of the net assets of
the Separate Account.

Transfers to or from the Sub-Accounts of the Separate Account, though normally
occurring on the same day we receive the request for transfer, may also be
postponed upon any of the above events.

We may delay payment of any amounts which are payable as a result of Cash
Surrender, Withdrawals, or Policy Loans and which are allocated to the GENERAL
ACCOUNT for up to six months after we receive written request in a form
satisfactory to us.

We will pay the Death Benefit within seven days after we receive due proof
satisfactory to us of the Insured's death while this policy is in force. We may
postpone determination and payment of any Death Benefit in excess of the Face
Amount, net of any debt to us on this policy, upon any of the events enumerated
above.

We have the right to postpone payment which is derived from any amount recently
paid to us by check or draft, until we are satisfied the check or draft has been
paid by the bank or other financial institution on which it is drawn.

NOTICES. Unless this policy provides otherwise, any requests, changes,
or notices:

1. from us to the Owner shall be sent to the last address known to us
of the Owner; and

2. from us to an assignee shall be sent to the last address known to us
of such assignee; and

3. from the Owner or an assignee to us must be in writing and received
by us at our Home Office in Montpelier, Vermont.

ANNUAL REPORT. At least once each Policy Year we will send a report to the
Owner. The report will show, as of its date:

1. the Accumulated Value of the policy, detailing the Accumulated Value
in the General Account and the Accumulated Value in each Sub-Account
of the Separate Account; and

2. the Face Amount; and

3. the Cash Surrender Value; and

4. any debt to us on this policy; and

5. the Death Benefit.

The report will also show a summary of transactions of the previous year and any
information required by law.

PROJECTION REPORT. The Owner may request in writing a report which projects
future values and future Death Benefits for this policy. The report will also
show any information required by law. The Projection Report will be based on:

1. data the Owner gives us as to Face Amount and premiums; and

2. such assumptions as either we or the Owner specifies.

We may charge the Owner for each Projection Report.

ARBITRATION. Any controversy arising under, out of, in connection with, or
relating to this policy, or any amendment to or breach of this policy, shall be
determined and settled by arbitration in the state of residence of the Owner, in
accordance with the rules of the American Arbitration Association or any similar
rules to which the parties agree. Any reward rendered through arbitration shall
be final and binding on each and all parties involved, and judgment may be
entered thereon in any court of competent jurisdiction.

- ------------------------------------ 2 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)2

<PAGE> 7
ROLES IN THIS POLICY

If used, the term "estate" of any person shall be deemed to be a designation of
the executors or administrators of that person's estate.

OWNER. The Owner may exercise all rights under this policy, including those
described below:

1. assign the policy; and

2. release or discharge the policy; and

3. change the policy if we agree to such change; and

4. change the Beneficiary as stated in the Beneficiary provision; and

5. enjoy the benefits under this policy.

These actions may be taken without the consent and against the interest of any
Beneficiary and any contingent owner. If the Owner has waived the right to
change the Beneficiary, these actions may be taken by the Owner only with the
written consent of all Beneficiaries that the Owner can not change. These
actions may be taken only while the Insured is alive.

INSURED. The Death Benefit becomes payable upon the death of the Insured. The
Insured, in his or her role as the Insured, has no rights and receives no
benefits under this policy.

BENEFICIARY. The Beneficiary receives the Death Benefit payable upon the death
of the Insured. Unless later changed, the Beneficiary shall be as stated in the
application. The interest of any Beneficiary who dies before the Insured shall
vest in the Owner unless otherwise stated.

CHANGE OF BENEFICIARY. The Owner has the right to change the Beneficiary. If the
Owner expressly waives this right, no change can be made without the written
consent of the Beneficiary.

A new Beneficiary may be named during the life of the Insured by filing at our
Home Office written notice in such form as we may require. When notice is
received at our Home Office, the change shall take effect as of the date the
notice is signed whether or not the Insured is living at the time of receipt. We
will not be liable for any payment we make before receipt of the written notice
at our Home Office.

TRUST BENEFICIARY. Unless an authorized officer or registrar of the Company
explicitly agrees otherwise in writing, the following provision shall apply when
a trust is named as Beneficiary.

In no event is the Company responsible for the application or disposition of any
proceeds it pays to a Trust Beneficiary. Payment to a Trust Beneficiary is a
full discharge of the liability of the Company. If a designated trust provides
for successor trustees, the designation in this policy includes successor
trustees. Likewise, if the trust allows amendments, the trust, if so amended,
remains as a designated Beneficiary.

A Trust Beneficiary is considered to be a Beneficiary who did not survive the
Insured if:

1. the trust has been terminated; or

2. the specified testamentary trust does not qualify as such; or

3. for any other reason a Trust Beneficiary is not entitled to any
proceeds.

UNNAMED BENEFICIARY. We may rely on an affidavit by any person who in our
judgment knows the facts to identify any Beneficiary not specified by name. All
our liability shall cease when we pay on the basis of such affidavit.

If used, the term "children" of any person shall include only lawful children
born to or legally adopted by that person.

ASSIGNMENTS. If this contract is assigned, such assignment shall transfer to the
assignee the interest of:

1. any Beneficiary whom the assignor can change; and

2. any contingent owner.

If the assignee acquires a right to proceeds, they shall be paid in one sum even
though a Payment Option may be in effect at the time the assignment was signed.
However, if we specifically agree, an assignment may limit the method of payment
of any proceeds.

We are not responsible for the validity or effect of any assignment of this
policy. We will not recognize any assignment until it has been filed at our Home
Office.

SPENDTHRIFT PROVISION. If we receive at our Home Office written request by the
Owner for this Spendthrift Provision, then, to the extent allowed by law and by
this policy:

1. only the Owner may transfer, anticipate, commute, or encumber the
proceeds of this policy; and

2. only legal process against the Owner may affect the proceeds of this
policy.

Any proceeds payable after this request is withdrawn by the Owner shall not be
affected by this provision.

- ------------------------------------ 3 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)3

<PAGE> 8
PREMIUMS

POLICY PROTECTION PERIOD. The first 60 months following the Date of Issue during
which this policy remains continuously in force is referred to as the Policy
Protection Period.

PAYMENT OF PREMIUMS. A premium at least equal to the Minimum Initial Premium
stated in the Data Section is due on the Date of Issue. Thereafter, premiums may
be paid towards this policy under the circumstances described below.

During the Policy Protection Period payment of total accumulated premiums, in
excess of withdrawals and debt, at least equal to the sum of all unique Minimum
Monthly Premiums in effect since the Date of Issue times the number of Monthly
Policy Dates that have elapsed while each Minimum Monthly Premium was in effect,
will keep the policy in force to the next Monthly Policy Date. This policy will
always remain in force, both during the Policy Protection Period and beyond, as
long as the Cash Surrender Value is sufficient to provide for Monthly
Deductions.

The Planned Periodic Premiums are the premiums the Applicant has requested be
billed. The Owner may change the amount or frequency of Planned Periodic
Premiums at any time by sending a written notice to us at our Home Office. We
may, however, limit any increase in either amount or frequency.

In addition, we will accept unscheduled premiums, which are premiums in addition
to the Minimum Initial, Minimum Monthly, or Planned Periodic Premiums. We may
limit the number and amount of such premiums.

All premiums are limited by a minimum and a maximum. The minimum is $50 per
premium payment. The maximum is the limit imposed by the Internal Revenue Code
for qualifying the policy as "Life Insurance" for Federal Income Tax purposes,
or such lower amount as we may set. We will not accept any premium in excess of
the maximum.

The first premium may be paid to us either through our duly authorized agent in
exchange for a receipt signed by that agent, or at our Home Office. All later
premiums must be paid to us at our Home Office, and will be credited and
allocated on the day we receive them.

NET PREMIUM. A net premium is the amount of any premium paid after the deduction
of the applicable Premium Tax.

PREMIUM TAX. We will deduct from each premium paid percentages for the payment
of premium taxes before allocating such premium to the Accumulated Value. The
State Premium Tax percentage and the percentage for Taxes Attributable to
Specified Policy Acquisition Expenses under Internal Revenue Code Section 848
deducted from the premium paid as of the Date of Issue of the policy are stated
in the Data Section.

RIGHT TO POLICY REVIEW. This policy may be returned to us at any time prior to
the later of:

1. the end of the 10th day following its receipt by the Owner; and

2. the end of the 10th day after we mail notice of policy issue to the
Owner; and

3. the end of the 45th day after the Applicant signed the application
in consideration of which this policy was issued.

This policy may be returned in person or by mail to us or to the agent through
whom it was bought. Upon a return we will refund any premiums paid, and the
policy will be deemed void as of its Date of Issue.

PREMIUM ALLOCATION. The Owner has the right to designate the allocation of net
premiums among the General Account and the Sub-Accounts of the Separate Account.
The initial allocation is shown in the Data Section. That portion of the premium
due on the Date of Issue which is allocated to the General Account will be
transferred to the General Account upon receipt. However, any portion of the
premium due on the Date of Issue which is allocated to a Sub-Account of the
Separate Account will be held in the Money Market Fund Sub-Account until the
later of:

1. the end of the 10th day following receipt of the policy by the
Owner; and

2. the date we receive at our Home Office a signed delivery receipt for
this policy.

It will then be transferred to any other accounts as designated by the Owner.

The allocation must be made in percentages. Each percentage must be a whole
number. No allocation need be made to the General Account or to any particular
Sub-Account. Each allocation made must be at least five percent.

The Owner may change the allocation of future premiums by notifying us in
writing at our Home Office. Any allocation made will remain in effect until
changed.

- ------------------------------------ 4 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)4
<PAGE> 9
GRACE PERIOD. A Grace Period shall start:

1. if on any Monthly Policy Date during the Policy Protection Period,
both of the following occur:

a. the amount of Cash Surrender Value is smaller than the amount of
the Monthly Deductions on that date; and

b. the sum of the Minimum Monthly Premiums in effect on this policy
for all months since the Date of Issue is greater than a sum
equal to:

i. all premiums paid; less

ii. all withdrawals made; less

iii. any debt to us on this policy.

2. if on any Monthly Policy Date on or after the end of the Policy
Protection Period, the Cash Surrender Value is smaller than the
Monthly Deductions on such date.

A Grace Period shall not be less than 61 days. During a Grace Period this
policy shall remain in force.

The premium needed to keep the policy in force beyond a Grace Period shall be
the net premium sufficient to produce a Cash Surrender Value equal to three
times the Monthly Deduction due on the date the Grace Period began.

We will mail notice of the premium needed to the Owner. If the premium needed
is unpaid on the 61st day after the notice is sent, then the Grace Period shall
end and this policy shall terminate without value. This policy shall then be
null and void and all rights shall cease, except as may be provided in
Reinstatement.

A Grace Period will not begin solely because payments of Planned Periodic
Premiums are discontinued. Whether or not premiums are paid, Charges Against
the Accumulated Value will be made. The Accumulated Value will be as set forth
in the POLICY VALUES section of this policy. The terms of this Grace Period
provision will determine if and when a Grace Period starts.

REINSTATEMENT. If this policy terminates after the end of a Grace Period, it
may be reinstated. It must be reinstated on a Monthly Policy Date within five
years from the start of such Grace Period.

For Reinstatement we will require:

1. an application for Reinstatement; and

2. proof to our satisfaction that the Insured is insurable; and

3. payment of a net premium which will make the Cash Surrender Value
sufficient to provide:

a. two times the Monthly Deduction due on the date the Grace Period
began; plus

b. three times the Monthly Deduction due on the date of
Reinstatement.

We will send the Owner notice of the required payment upon request.

In the event of Reinstatement:

1. the Surrender Charge in effect on the Monthly Policy Date on which
the Grace Period began shall become the Surrender Charge on the
Monthly Policy Date of Reinstatement; and

2. the schedule of Surrender Charges for the policy months following
the date the Grace Period began shall become the schedule of
Surrender Charges for the policy months following the date of
Reinstatement; and

3. the Policy Protection Period is terminated.

- ------------------------------------ 5 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)5

<PAGE> 10

DEATH BENEFIT AND
POLICY CHANGES

DEATH BENEFIT. We will pay the Death Benefit to the Beneficiary when we receive
at our Home Office due proof that the Insured died while this policy was in
force. We will pay the Death Benefit in one sum unless a Payment Option is
chosen. If the Death Benefit is paid in one sum, it shall be increased by
interest from the date of the Insured's death to the date of payment. We will
set the rate of interest at not less than the Minimum Interest Paid On Death
Claims percentage shown in the Data Section.

SUICIDE LIMITATION. If the Insured dies within two years of the Date of Issue
as the result of suicide, while sane or insane, we will pay only a sum equal
to:

1. the premiums paid; less

2. any debt to us on this policy; less

3. any withdrawals made.

Payment will be made to the Beneficiary.

A similar two year period shall apply to any increase in Face Amount for which
an application is required. Such period shall begin on the Effective Date of
any such increase. During such period if the Insured dies as the result of
suicide, while sane or insane, we will pay, in lieu of any such increase in
Face Amount, only a sum equal to the Cost of Insurance Charges that we have
deducted from the Accumulated Value for such increase. However, if such
increase became effective within two years after the Effective Date of a
Reinstatement, we will pay only the amount set forth in the next paragraph.

If this policy is reinstated, a similar two year period shall start from the
Effective Date of the Reinstatement. During such period, if the Insured dies as
the result of suicide, while sane or insane, we will pay only a sum equal to:

1. the premiums paid since the Effective Date of the Reinstatement;
less

2. any debt to us on this policy; less

3. any withdrawals made since the Effective Date of the Reinstatement.

DEATH BENEFIT OPTIONS. The Owner may elect either of two Death Benefit Options,
Option A or Option B, for the period prior to the Insured's Attained Age 99.
The Death Benefit Option in effect on the Date of Issue is stated in the Data
Section made a part of this policy on that date.

OPTION A. Under Option A the Death Benefit shall be the greater of the Death
Benefit Standard or the following:

1. the Face Amount on the date of the Insured's death; less

2. the amount of any Monthly Deductions then due; less

3. any debt to us on this policy.

OPTION B. Under Option B the Death Benefit shall be the greater of the Death
Benefit Standard or the following:

1. the Face Amount on the date of the Insured's death; plus

2. the Accumulated Value of the policy on the date of the Insured's
death; less

3. the amount of any Monthly Deductions then due; less

4. any debt to us on this policy.

DEATH BENEFIT STANDARD. The Death Benefit Standard is established in
conformance with Section 7702 of the Internal Revenue Code, which defines "Life
Insurance" for Federal Income Tax purposes. The Death Benefit Standard is:

1. the Death Benefit Factor multiplied by the Accumulated Value of the
policy on the date of the Insured's death; less

2. the amount of any Monthly Deductions then due; less

3. any debt to us on this policy.

The Death Benefit Factor depends on the Insured's Attained Age at the start of
a Policy Year as follows:

<TABLE>
<CAPTION>
Death Death
Attained Benefit Attained Benefit
Age Factor Age Factor
- --------------------------------------------------------
<S> <C> <C> <C>
40 2.50 58 1.38
41 2.43 59 1.34
42 2.36 60 1.30
43 2.29 61 1.28
44 2.22 62 1.26
45 2.15 63 1.24
46 2.09 64 1.22
47 2.03 65 1.20
48 1.97 66 1.19
49 1.91 67 1.18
50 1.85 68 1.17
51 1.78 69 1.16
52 1.71 70 1.15
53 1.64 71 1.13
54 1.57 72 1.11
55 1.50 73 1.09
56 1.46 74 1.07
57 1.42 75 1.05
</TABLE>

The Death Benefit Factor for all Attained Ages below 40 is 2.50. The Death
Benefit Factor for all Attained Ages above 75 is 1.05.

- ------------------------------------ 6 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)6

<PAGE> 11
CHANGES IN FACE AMOUNT AND DEATH BENEFIT OPTION.
The Owner may request any of the following changes. We will make a change
subject to the conditions stated. These changes may be made only while the
Insured is living, and after the first policy anniversary. We will send the
Owner a revised or additional Data Section if any of these changes is made.

1. FACE AMOUNT INCREASES. Face Amount Increases may be made only while
the Insured is Attained Age 85 or less. We will require an
application from the Owner and proof to our satisfaction that the
Insured is then insurable. An increase in Face Amount, and an
associated redetermination of the Minimum Monthly Premium, shall be
effective upon the Monthly Policy Date on or next following our
approval. Any increase in Face Amount must be at least as large as
the Minimum Increase Amount stated in the Data Section.

2. FACE AMOUNT DECREASES. We will require a written request by the
Owner. A decrease in Face Amount shall be effective upon the Monthly
Policy Date on or next following our receipt of the request.

a. Decreases shall not be permitted which would reduce the Face
Amount to less than any of the following:

i. the minimum insurance amount for which the policy would
qualify as "Life Insurance" for Federal Income Tax purposes
under the Internal Revenue Code; or

ii. the Minimum Face Amount shown in the Data Section; or

iii. 75% of the largest Face Amount in force at any time in the
twelve policy months immediately preceding our receipt of
the request.

b. A decrease in total insurance coverage shall apply in the
following order:

i. first, to any increases in Face Amount in the reverse order
in which they were made;

ii. second, to the Face Amount on the Date of Issue.

3. DEATH BENEFIT OPTION CHANGES. The Death Benefit Option may be
changed once each Policy Year prior to the Insured's Attained Age
99. We will require a written request from the Owner. A change will
be effective on the Monthly Policy Date on or next following our
receipt of the request. The change may be made only if after such
change the policy would qualify as "Life Insurance" for Federal
Income Tax purposes under the Internal Revenue Code.

a. Upon a change from Option A to Option B, the Face Amount shall
decrease by an amount equal to the Accumulated Value of the
policy just prior to the Effective Date of the change. However,
the change may be made only if after such change the Face Amount
would not be below the Minimum Coverage Amount shown in the Data
Section.

b. Upon a change from Option B to Option A, the Face Amount shall
increase by an amount equal to the Accumulated Value just prior
to the Effective Date of the change.

At the Insured's Attained Age 99, if this policy is still in force, the Face
Amount of this policy will be set equal to the Accumulated Value, and the Death
Benefit Option will automatically revert to Option A. The Death Benefit Option
may not thereafter be changed.

- ------------------------------------ 7 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)7

<PAGE> 12
INVESTMENT

Investment of the Accumulated Value of the policy may be made in the General
Account and/or in one or more of the Sub-Accounts of the National Variable Life
Insurance Account (herein called the "Separate Account"). The Accumulated Value
in the Separate Account is based on the investment experience of the chosen
Sub-Account(s) of the Separate Account, and may increase or decrease daily. It
is not guaranteed as to dollar amount.

GENERAL ACCOUNT. The General Account is composed of the admitted assets of
National Life Insurance Company other than those in the Separate Account or any
other separate account.

INTEREST RATES CREDITED TO THE ACCUMULATED VALUE IN THE GENERAL ACCOUNT. The
rate of interest credited on any portion of the Accumulated Value in the General
Account shall never be less than the Minimum General Account Interest Rate shown
in the Data Section. We may credit interest at a higher interest rate. Any
higher interest rate credited on Accumulated Value in the General Account shall
remain in effect for at least a one-year period.

Interest at different rates may be credited to:

1. that portion which is equal to any debt to us on this policy; and

2. any portion in excess of any such debt.

SEPARATE ACCOUNT. The Separate Account is composed of assets owned by National
Life Insurance Company. These assets are held separate and apart from General
Account assets. The Separate Account is devoted exclusively to the investment
of assets of variable life insurance policies. Income, gains, and losses from
assets allocated to the Separate Account, whether or not realized, are credited
to or charged against such account without regard to our other income, gains,
or losses. The portion of the assets of the Separate Account equal to the
reserves and other liabilities for these policies shall not be chargeable with
liabilities arising out of any other business which we may conduct.

We may transfer assets which exceed the reserves and other liabilities of the
Separate Account to our General Account.

The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940 ("the 1940
Act"). It is also governed by applicable state law. We may make certain changes
if, in our sole judgment, they would best serve the interests of the owners of
policies such as this one or would be appropriate in carrying out the purposes
of such policies. Any changes will be made only if permitted by applicable laws
and regulations. Also, when required by law, we will obtain the approval of
policyowners of the changes and the approval of any appropriate regulatory
authority.

For example, we may:

1. operate the Separate Account as a management company under the 1940
Act;

2. deregister the Separate Account under the 1940 Act if registration
is no longer required; and

3. combine or substitute separate accounts; and

4. transfer all or part of the assets of the Separate Account to another
separate account or to the General Account; and

5. make any changes necessary to comply with, or obtain and continue any
exemptions from the 1940 Act; and

6. make any other necessary technical changes in this policy to conform
with any action this provision permits us to take.

SUB-ACCOUNTS. The Separate Account has several Sub-Accounts. Each Sub-Account
will buy shares of an investment fund. Each investment fund represents a
separate investment portfolio.

If, in our judgment, an investment fund no longer suits the investment goals of
the policy, or tax or marketing conditions so warrant, we may substitute shares
of another investment fund or shares of another investment company. If the
Owner has an interest in the Sub-Account affected, we will notify the Owner
before doing so and, to the extent required by law, we will get prior approval
from the Securities and Exchange Commission. We also will secure any other
required approvals. If this policy has Accumulated Value in a Sub-Account
affected by any such change, and if the Owner wishes, we will transfer that
value at the Owner's written direction from that Sub-Account, without charge,
to the General Account or another Sub-Account.

We may also eliminate, combine, or substitute Sub-Accounts and establish new
Sub-Accounts if in our judgment marketing needs, tax considerations, or
investment conditions warrant. Any new Sub-Accounts may be made available to
existing policies on a basis to be determined by us. We also may transfer
assets from a Sub-Account to another Sub-Account or separate account if the
transfer in our judgment would best serve the interests of the owners of
policies such as this one or would be appropriate in carrying out the purposes
of such policies, but only if permitted by applicable laws or regulations. If
any of these changes is made, we may by appropriate endorsement change the
policy to reflect the change.

If the Owner has Accumulated Value in a Sub-Account that will be eliminated, we
will notify the Owner at least 30 days before the elimination, and will request
that the Owner designate the account(s) to which the Accumulated Value in the
Sub-Account to be eliminated should be transferred. Upon the elimination of
such a Sub-Account, the Accumulated Value in that Sub-Account will be
transferred to the General Account and/or Sub-Account(s) in accordance with the
designation received by us from the Owner or, if such a designation is not
received prior to the liquidation date, to the Money Market Fund Sub-Account. A
transfer charge will not be imposed for transfers made upon elimination of a
Sub-Account.

- ------------------------------------ 8 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)8

<PAGE> 13

Income and realized and unrealized gains or losses from the assets of each
Sub-Account of the Separate Account are credited to or charged against that
Sub-Account without regard to income, gains, or losses in the other
Sub-Accounts of the Separate Account, the General Account, or any other
separate accounts. We reserve the right to credit or charge a Sub-Account in a
different manner if required, or made appropriate, by reason of a change in the
law. We maintain records of all purchases and redemptions of investment fund
shares by each of the Sub-Accounts.

VALUATION. We will value the assets of each Sub-Account of the Separate Account
on each Valuation Date.

TRANSFERS. Subject to any applicable Transfer Charges, the Owner may transfer
Accumulated Value among the Sub-Accounts or to the General Account without
limitation. However, only one transfer from the General Account to the Separate
Account may be made during any Policy Year. The Accumulated Value transferred
from the General Account in any Policy Year may not exceed the greater of:

1. 25% of the unloaned portion of the Accumulated Value in the General
Account immediately prior to the transfer; and

2. $1,000.

- ------------------------------------ 9 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)9

<PAGE> 14
POLICY VALUES

ACCUMULATED VALUE OF THE POLICY. The Accumulated Value of the policy is equal
to the sum of the Accumulated Value in the General Account and the Accumulated
Value in the Separate Account.

ACCUMULATED VALUE IN THE GENERAL ACCOUNT. The Accumulated Value in the General
Account on any day is:

1. the Accumulated Value in the General Account on the just prior
Monthly Policy Date, if any; plus

2. interest on the Accumulated Value in the General Account on the just
prior Monthly Policy Date from the just prior Monthly Policy Date to
such day; plus

3. the amount of all net premiums accepted since the just prior Monthly
Policy Date which are allocated to the General Account; plus

4. interest on item (3) from the date of net premium allocation to the
General Account to such day; plus

5. the amount of all Accumulated Values transferred to the General
Account from a Sub-Account of the Separate Account since the just
prior Monthly Policy Date; plus

6. interest on item (5) from the date of the transfer to such day; less

7. the amount of all Accumulated Values transferred from the General
Account to a Sub-Account of the Separate Account since the just
prior Monthly Policy Date; less

8. interest on item (7) from the date of transfer to such day; less

9. the amount of all Accumulated Values withdrawn from the General
Account since the just prior Monthly Policy Date; less

10. interest on item (9) from the date of withdrawal to such day; less

11. any Monthly Deduction allocated to the General Account for the month
next following the Monthly Policy Date which is due on such day.

ACCUMULATED VALUE IN THE SEPARATE ACCOUNT. The Accumulated Value in the
Separate Account is the sum of the Accumulated Values in each Sub-Account of
the Separate Account.

ACCUMULATED VALUE IN A SUB-ACCOUNT. On the later of the Date of Issue of the
policy or the date at least the Minimum Initial Premium is received by us, that
portion of the net premium allocated to any Sub-Account of the Separate Account
will be credited to the Money Market Fund Sub-Account. The Accumulated Value in
the Money Market Fund Sub-Account on that date is that portion of the net
premium less the Monthly Deductions assessed since the Date of Issue.

On any later day which is a Valuation Date, the policy's Accumulated Value in
each Sub-Account is the number of units in the Sub-Account multiplied by the
Unit Value on that date.

UNITS IN A SUB-ACCOUNT. Amounts allocated, transferred, or added to a
Sub-Account are used to purchase units in that Sub-Account. Units are redeemed
when amounts are deducted, transferred, or withdrawn. The number of units in
any given Sub-Account attributable to this policy on any given date equals the
number of units purchased by funds attributable to this policy minus the number
of units redeemed under this policy up to such date. For each Sub-Account, the
number of units purchased or redeemed in connection with a particular
transaction is determined by dividing the dollar amount of the transaction by
the Unit Value on the day the transaction is performed.

UNIT VALUE. The Unit Value in a Sub-Account on any Valuation Date is equal to
that Unit Value on the immediately preceding Valuation Date multiplied by the
Net Investment Factor for that Sub-Account on that Valuation Date.

- ------------------------------------ 10 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)10

<PAGE> 15

NET INVESTMENT FACTOR. Each Sub-Account of the Separate Account has its own Net
Investment Factor. The Net Investment Factor measures the performance of the
Sub-Account for individual Valuation Periods. The Net Investment Factor is
calculated as follows:

1. Take the net asset value per share of the corresponding investment
fund on the current Valuation Date.

2. Add the per share capital gain or loss and dividend distribution of
the investment fund during the current Valuation Period.

3. Divide the result of item (2) by the net asset value per share of
the corresponding investment fund on the just prior Valuation Date.

4. Subtract from the result of item (3) any Tax Charge during the
current Valuation Period.

5. Subtract from the result of item (4) the Mortality and Expense Risk
Charge shown in the Data Section multiplied by the number of days in
the Valuation Period.

The result of item (5) is the Net Investment Factor on the current Valuation
Date.

On any date after the Date of Issue other than a Valuation Date, the
Accumulated Value in a Sub-Account is the Accumulated Value of such Sub-Account
on the next following Valuation Date.

ACCUMULATED VALUE UPON REINSTATEMENT. If this policy is reinstated, the
Accumulated Value on the date of Reinstatement shall be:

1. the Accumulated Value on the date the Grace Period began; less

2. two times the Monthly Deduction due on the date the Grace Period
began; plus

3. the net premium paid to reinstate the policy; less

4. the Monthly Deduction due on such date.

CASH SURRENDER VALUE. The Owner may, by written request to us, surrender this
policy while the Insured is living for its Cash Surrender Value. We may require
that the policy be returned to us. When this policy has been surrendered, it
shall be null and void and all rights shall cease. Proceeds shall be paid in
one lump sum unless a Payment Option is chosen.

The Cash Surrender Value on any day shall be equal to:

1. the Accumulated Value on such day; less

2. any debt to us on this policy; less

3. any Surrender Charges which apply on such day.

SURRENDER CHARGES. Surrender Charges apply during the first 180 Policy Months.
The total Surrender Charge is the sum of the Deferred Administrative Charge
and the Deferred Sales Charge shown in the Data Section.

DIVIDENDS. We may credit this policy with shares, called dividends, from our
divisible surplus. However, it is expected that no dividends will be credited
to this policy. Any dividends shall be set by us and shall be credited on the
policy anniversary. Any dividends credited shall be paid in cash.

- ------------------------------------ 11 -------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)11

<PAGE> 16

CHARGES AGAINST THE
ACCUMULATED VALUE

MORTALITY AND EXPENSE RISK CHARGE. We will deduct the Mortality and Expense
Risk Charge shown in the Data Section from the Accumulated Value in each
Sub-Account of the Separate Account on each day that the policy is in force to
cover mortality and expense risk. The Mortality and Expense Risk Charge is not
deducted from funds held in the General Account.

TAX CHARGE. We reserve the right to deduct any charge for taxes or amounts set
aside as a reserve for taxes in determining the value of an Accumulated Value
Unit for each of the Sub-Accounts in the event that such a tax is levied on
that Sub-Account in the future.

MONTHLY DEDUCTION. The Monthly Deduction is the sum of the Cost of Insurance
Charge and the Monthly Administrative Charge. The Monthly Deduction shall be
deducted from the Accumulated Value of the policy on the Monthly Policy Date.

1. The Owner may elect to allocate the Monthly Deduction entirely to the
Money Market Fund Sub-Account, by notifying us in writing. If the
Accumulated Value in the Money Market Fund Sub-Account is not sufficient
to provide for the entire Monthly Deduction on a Monthly Policy Date,
the Monthly Deduction will be taken from the Money Market Fund
Sub-Account until that account is exhausted, and any additional amount
necessary to fund the full Monthly Deduction shall be allocated among
and deducted from the General Account and the other Sub-Accounts in
proportion to the respective Accumulated Values held in those accounts
on the Monthly Policy Date.

2. If the Owner does not elect 1, above, the Monthly Deduction shall be
allocated among and deducted from the General Account and the
Sub-Accounts in proportion to the respective Accumulated Values held in
those accounts on the Monthly Policy Date.

COST OF INSURANCE CHARGE. The Cost of Insurance rate on any day shall be based
on the size and duration of this policy, the Insured's sex and then Attained
Age, the rate class of the Face Amount on the Date of Issue, and the rate class
of each increase in Face Amount.

On any Monthly Policy Date, the Cost of Insurance Charge of the policy shall be
the Cost of Insurance rate on such date multiplied by the excess of:

1. the Death Benefit of the policy plus any debt to us on the policy
divided by the Cost of Insurance Divisor; over

2. the Accumulated Value of the policy on such date before the Cost of
Insurance Charge is deducted.

We may change the Cost of Insurance rates from time to time based on our
expectations of future experience. Any change in the Cost of Insurance rates
shall apply to all policies of the same size and duration, insuring persons of
the same sex, Attained Age, and rate class as the Insured.

The Cost of Insurance rates shall not be greater than the rates set forth in
the Table of Guaranteed Maximum Cost of Insurance rates shown in the Data
Section. These rates are based on the Mortality Table named in the Data
Section.

The rate class of the Insured at the time of an increase in Face Amount for
which an application is required may differ from the rate class on the Date of
Issue. For determining the Cost of Insurance Charge:

1. the Accumulated Value is first considered part of the Face Amount on the
Date of Issue; and

2. then, if the Accumulated Value is more than the Face Amount on the Date
of Issue, the excess is considered part of the increases in Face Amount
in the order of occurrence of such increases; and

3. if the Death Benefit is the Death Benefit Standard, the excess of the
Death Benefit over the total Face Amount is assigned the rate class of
the Face Amount in effect on the Date of Issue.

MONTHLY ADMINISTRATIVE CHARGE. The Monthly Administrative Charge is shown in
the Data Section.

TRANSFER CHARGE. We may charge a Transfer Charge for the sixth and each
subsequent requested transfer of Accumulated Value between and among the
General Account and the Sub-Accounts occurring during any Policy Year.
Transfers to or from more than one account at the same time shall be treated as
one transfer. The Transfer Charge may not exceed the Maximum Transfer Charge
stated in the Data Section. Transfer Charges shall be allocated among and
deducted from the General Account and the Sub-Accounts in proportion to the
Accumulated Values to be transferred from such accounts.

No Transfer Charge will be imposed for the following transactions, nor will any
of the following transactions be counted against the five free transfers
allowed each Policy Year:

1. the transfer of all Accumulated Value to the General Account if during
the first two Policy Years and in one transaction; and

2. the transfer of Accumulated Value from a Sub-Account of the Separate
Account to another Sub-Account or to the General Account, if there has
been a material change in the investment policy of the fund in which the
funds of that Sub-Account are invested; and

3. the initial allocation of the premium due on the Date of Issue from the
Money Market Fund Sub-Account; and

4. transfers of Accumulated Value from the Separate Account into the
General Account pursuant to the taking of a Policy Loan; and

5. allocation of the payment of any debt to us on this policy.

- ------------------------------------- 12 ------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)12

<PAGE> 17

WITHDRAWALS

After the first policy anniversary, the Owner may make withdrawals by written
request to us. Withdrawals shall be subject to all of the following terms.

1. The amount withdrawn may not be less than the Minimum Withdrawal Amount
stated in the Data Section.

2. The amount withdrawn may not exceed the Cash Surrender Value on the date
of withdrawal less three times the Monthly Deduction for the next
Monthly Policy Date.

3. The amount withdrawn may not be such that it reduces the Face Amount
below the Minimum Face Amount stated in the Data Section.

WITHDRAWAL CHARGE. We will assess a Withdrawal Charge equal to the lesser of:

1. 2% of the amount withdrawn; and

2. $25.

This Withdrawal Charge will be deducted from the amount withdrawn.

ALLOCATION OF WITHDRAWALS. The amount withdrawn shall be allocated among and
deducted from the Accumulated Values held in each account according to the
following prioritization:

1. first, from the Accumulated Value held in specific Sub-Accounts as
specified by the Owner, if the Owner so specifies; and

2. second, from the Accumulated Value in proportion to the Accumulated
Values held in the Sub-Accounts on the day the withdrawal is made; and

3. finally, from the non-loaned Accumulated Value held in the General
Account.

If the Accumulated Value in any Sub-Account from which the Owner has requested
that withdrawals be allocated and deducted is insufficient to cover the amount
of the withdrawal, the withdrawal will not be processed until further
instructions are received by us from the Owner.

If Death Benefit Option A is in effect on the date of the withdrawal and if the
Face Amount divided by the Death Benefit Factor at the Insured's Attained Age
on the date of the withdrawal exceeds the Accumulated Value of the policy just
after the withdrawal, the Face Amount shall also be decreased. The decrease in
Face Amount shall equal the lesser of such excess or the amount of the
withdrawal. A decrease in total insurance coverage shall apply first to any
increases in Face Amount in the reverse order in which they were made, and then
to the Face Amount on the Date of Issue.

If Death Benefit Option B is in effect on the date of the withdrawal, there
shall be no decrease in the Face Amount.

- ------------------------------------- 13 ------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)13

<PAGE> 18

POLICY LOANS

We will loan an amount up to the Loan Value of the policy less the amount of
any outstanding debt, at any time after the first Policy Year. At the time of
the loan the policy must be in force. The policy shall be the sole security for
the loan and must be duly assigned to us.

LOAN VALUE. The Loan Value on any day is equal to:

1. the Accumulated Value on such day; less

2. the Surrender Charges on such day; less

3. three times the Monthly Deduction for the next Monthly Policy Date.

LOAN INTEREST RATE. Any loan shall bear interest from the date the loan is
made. The Loan Interest Rate is shown in the Data Section.

GENERAL LOAN TERMS. After the loan is made, loan interest shall be due on the
next and all later Policy Anniversaries. If any interest is not paid when due,
it shall be added to the loan and bear interest on the same terms.

The debt secured by this policy includes loans, unpaid loan interest, and
accrued loan interest not otherwise due.

All or any part of the debt may be paid to us at any time prior to:

1. the death of the Insured; and

2. surrender of the policy.

However, during a Grace Period the debt may not be repaid.

Unless the Owner specifies, any payment to us shall be deemed a premium payment
and not a payment of the debt. At the death of the Insured or upon the
surrender of the policy, all debt shall become due at once. It shall be paid
from the policy values.

ALLOCATION OF POLICY LOANS. The loaned amounts allocated to the Sub-Accounts
shall be transferred from the Sub-Accounts and placed into the General Account.
Policy Loans shall be allocated among and transferred from the Accumulated
Values held in each account according to the following prioritization:

1. first, from the Accumulated Value held in specific Sub-Accounts as
specified by the Owner, if the Owner so specifies; and

2. second, from the Accumulated Value in proportion to the Accumulated
Values held in the Sub-Accounts on the day the loan is made; and

3. finally, from the non-loaned Accumulated Value held in the General
Account.

If the Accumulated Value in any Sub-Account from which the Owner has requested
that loaned amounts be transferred is insufficient to cover the amount of the
loan, the loan will not be processed until further instructions are received by
us from the Owner.

Loan repayments shall be allocated among the General Account and the
Sub-Accounts in proportion to the Premium Allocation percentages assigned by
the Owner.

Any loan interest due and not paid shall be allocated among and transferred, on
the date the interest is due, from the Accumulated Values held in each account:

1. first, in proportion to the Accumulated Values held in the Sub-Accounts
of the Separate Account until those accounts are exhausted; and

2. then from the non-loaned Accumulated Value held in the General Account.

These amounts shall be placed in, or segmented within, the General Account.

- ------------------------------------- 14 ------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)14

<PAGE> 19

PAYMENT OPTIONS

In lieu of a lump sum settlement, all or part of the proceeds of this contract
may be applied under a Payment Option. When proceeds are applied under a
Payment Option, all other rights and benefits under this contract shall cease.

In addition to the following options, other payment options may be available.

OPTION EFFECTIVE DATE. The Option Effective Date is the date the proceeds
become payable.

GENERAL PAYMENT OPTION TERMS. If the proceeds to be placed under a Payment
Option are less than $3,500, we may pay them in one sum to the payee who
otherwise would receive the first payment under the option. If any payments
would be less than $100, we will change the frequency to provide payments of at
least $100.

If the proceeds are assigned on the Option Effective Date, we will pay the
assignee's share in one sum and place only the balance under the option. After
the Option Effective Date neither the payments nor the remaining value may be
assigned or encumbered. To the extent the law permits, they are not subject to
any claims against the payee.

We may require proof to our satisfaction that any payee is alive on the date
any payment is due.

CHOICE OF OPTION. Choice of an option may be made:

1. by the Owner if the Insured is living; or

2. by the Beneficiary if the Insured is not living and if no option is in
effect.

Equivalent payments for 12-, 6-, 3-, or 1-month intervals may be chosen. The
options are described in terms of monthly payments. We will quote the amount of
the other payments on request.

We may issue a document stating the terms of the option.

CHANGE OF PAYMENT OPTION. The right to change Payment Options exists under
Options 1, 2, or 4. At the time of change the remaining value under the old
option shall become the proceeds to be placed under the new option.

LUMP SUM REMOVAL OF PROCEEDS APPLIED UNDER A PAYMENT OPTION. Lump sum payments
may be taken from the remaining proceeds placed under Payment Options 1, 2, or
4.

1. Under Options 1 and 4 all or any part of the remaining value may be
taken at any time, though no more than four transactions may be made
during any calendar year.

2. Under Option 2 the entire remaining value may be taken at any time.

No lump sum removal of proceeds may be made under Option 3, 5, 6, or 7.

OPTION 1 - PAYMENTS OF INTEREST ONLY. Interest at a rate of 3 1/2% per year
shall be paid either for:

1. the life of a chosen human being; or

2. a chosen period.

We may pay more interest in any year. Upon the earlier of the death of the
chosen human being or the end of the chosen period, any remaining value will be
paid. The first payment shall be made one month after the Option Effective
Date. If the payee is not a human being, payments may not continue for more
than 30 years.

- ------------------------------------- 15 ------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)15

<PAGE> 20

OPTION 2 -PAYMENTS FOR A STATED TIME. Equal monthly payments shall be made for
a stated number of years. The first payment shall be made on the Option
Effective Date. The amount of each monthly payment is shown in the table. The
monthly payments are based on an interest rate of 3 1/2% per year. We may pay
more interest in any year.

<TABLE>
<CAPTION>
OPTION 2 TABLE
MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS
- --------------------------------------------
Stated No. of Years Monthly Payments
- -----------------------------------------------
<S> <C>
1 $84.65
2 43.05
3 29.19
4 22.27
5 18.12
6 15.35
7 13.38
8 11.90
9 10.75
10 9.83
11 9.09
12 8.46
13 7.94
14 7.49
15 7.10
16 6.76
17 6.47
18 6.20
19 5.97
20 5.75
21 5.56
22 5.39
23 5.24
24 5.09
25 4.96
26 4.84
27 4.73
28 4.63
29 4.53
30 4.45
</TABLE>

OPTION 3 - PAYMENTS FOR LIFE. Equal monthly payments shall be made for any
guaranteed period chosen and thereafter during the life of a chosen human
being. The first payment shall be made on the Option Effective Date. The amount
of each monthly payment depends on the age and sex of the chosen human being on
the Option Effective Date and on any guaranteed period chosen. We may require
proof to our satisfaction of such age. We may require like proof that such
human being is alive on the date any payment is due. The guaranteed period may
be five or ten years or a Refund period. A Refund period extends until the sum
of the payments is equal to the proceeds placed under the option. The monthly
payments are based on an interest rate of 3 1/2% per year. We may pay more
interest in any year during the guaranteed period. We will quote the amount of
monthly payments for lower ages and guaranteed periods not shown in the Option
3 Table on request.

- ------------------------------------- 16 ------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)16

<PAGE> 21

<TABLE>
<CAPTION>
OPTION 3 TABLE
MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS

(Amounts shown are for the age nearest birthday
on the Effective Date)
- ------------------------------------------------------

Guaranteed Period
------------------------------------------------

Male Female
--------------------- ------------------------
10 10
Age None Years Refund None Years Refund
<S> <C> <C> <C> <C> <C> <C>
50 $4.44 $4.40 $4.29 $4.10 $4.09 $4.03
51 4.52 4.47 4.35 4.16 4.14 4.08
52 4.59 4.54 4.42 4.22 4.20 4.13
53 4.67 4.62 4.48 4.29 4.26 4.19
54 4.76 4.70 4.55 4.35 4.33 4.24
55 4.85 4.78 4.62 4.42 4.39 4.30
56 4.94 4.86 4.70 4.50 4.47 4.37
57 5.04 4.96 4.78 4.58 4.54 4.44
58 5.15 5.05 4.86 4.66 4.62 4.51
59 5.26 5.15 4.95 4.75 4.70 4.58
60 5.38 5.26 5.04 4.85 4.79 4.66
61 5.51 5.37 5.14 4.95 4.89 4.74
62 5.65 5.49 5.24 5.06 4.99 4.83
63 5.80 5.62 5.35 5.17 5.09 4.92
64 5.96 5.75 5.47 5.30 5.20 5.02
65 6.13 5.88 5.59 5.43 5.32 5.12
66 6.31 6.03 5.71 5.57 5.44 5.23
67 6.51 6.17 5.84 5.72 5.57 5.34
68 6.72 6.33 5.98 5.88 5.71 5.47
69 6.94 6.48 6.13 6.05 5.85 5.60
70 7.18 6.65 6.28 6.24 6.01 5.73
71 7.43 6.81 6.45 6.44 6.17 5.87
72 7.70 6.98 6.61 6.66 6.34 6.03
73 7.99 7.15 6.79 6.90 6.51 6.19
74 8.29 7.33 6.99 7.16 6.69 6.37
75 8.62 7.50 7.17 7.44 6.88 6.55
76 8.98 7.67 7.38 7.74 7.07 6.74
77 9.35 7.85 7.61 8.06 7.27 6.95
78 9.76 8.02 7.84 8.41 7.46 7.16
79 10.19 8.18 8.08 8.79 7.66 7.39
80 10.66 8.34 8.35 9.20 7.86 7.65
81 11.15 8.50 8.59 9.65 8.05 7.90
82 11.68 8.65 8.88 10.13 8.24 8.16
83 12.24 8.79 9.19 10.65 8.42 8.45
84 12.83 8.91 9.47 11.21 8.59 8.74
85+ 13.46 9.04 9.81 11.82 8.74 9.09
+ Higher ages the same
</TABLE>

OPTION 4 - PAYMENTS OF A STATED AMOUNT. Equal monthly payments of a stated
amount shall be made until the proceeds, with interest at 3 1/2% per year on the
unpaid balance, are used up. The first payment shall be made on the Option
Effective Date. The amount chosen must be at least $10 per month for each
$1,000 of proceeds placed under this option. We may add more interest to the
unpaid balance in any year, which will extend the number of payments. The last
payment will be for the balance only.

OPTION 5 - LIFE ANNUITY. Equal monthly payments shall be made in the same
manner as Option 3 except:

1. the amount of each payment shall be based on our current settlement
rates on the Option Effective Date; and

2. no additional interest shall be paid.

OPTION 6 - JOINT AND TWO-THIRDS ANNUITY. Equal monthly payments shall be made
while two chosen human beings are both living. Upon the death of either,
two-thirds of the amount of such payments shall continue during the life of the
survivor. The first payment shall be made on the Option Effective Date. The
amount of each monthly payment depends on the ages and sexes of the chosen
human beings on the Option Effective Date. We may require proof to our
satisfaction of their ages. We may require like proof that any chosen human
being is alive on the date any payment conditioned on the life of such human
being is due. The initial amount of each monthly payment is shown in the table.
We will quote the amount of monthly payments for any other age combination on
request. The monthly payments are based on an interest rate of 3 1/2% per year.
No additional interest shall be paid.

- ------------------------------------- 17 ------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)17

<PAGE> 22

OPTION 6 TABLE
MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS
(Amounts shown are for the age nearest birthday
on the Effective Date)

<TABLE>
<CAPTION>
Ages One Male Ages One Male
of and of and
Both One Female Both One Female
- ---- ---------- ---- ----------
<S> <C> <C> <C>
50 $4.11 68 $5.86
51 4.17 69 6.03
52 4.23 70 6.21
53 4.29 71 6.41
54 4.35 72 6.62
55 4.42 73 6.84
56 4.50 74 7.08
57 4.58 75 7.35
58 4.66 76 7.63
59 4.75 77 7.93
60 4.84 78 8.25
61 4.94 79 8.60
62 5.05 80 8.97
63 5.16 81 9.38
64 5.29 82 9.81
65 5.42 83 10.27
66 5.55 84 10.77
67 5.70 85+ 11.31
+ Higher ages the same
</TABLE>

OPTION 7 - 50% SURVIVOR ANNUITY. Equal monthly payments shall be made during
the life of the chosen primary human being. Upon the death of the chosen
primary human being, 50% of the amount of such payments shall continue during
the life of the chosen secondary human being. The first payment shall be made
on the Option Effective Date. The amount of each monthly payment depends on the
ages and sexes of the chosen human beings on the Option Effective Date. We may
require proof to our satisfaction of their ages. We may require like proof that
any chosen human being is alive on the date any payment conditioned on the life
of such human being is due. The initial amount of each monthly payment is shown
in the table. We will quote the amount of monthly payments for any other age
combination on request. The monthly payments are based on an interest rate of
3 1/2% per year. No additional interest shall be paid.

OPTION 7 TABLE
MONTHLY PAYMENTS FOR EACH $1,000 OF PROCEEDS
(Amounts shown are for the age nearest birthday
on the Effective Date)
<TABLE>
<CAPTION>
Male Female Male Female
Primary Primary Primary Primary
Ages ------- ------- Ages ------- -------
of Female Male of Female Male
Both Secondary Secondary Both Secondary Secondary
- ---- --------- --------- ---- --------- ---------
<S> <C> <C> <C> <C> <C>
50 $4.11 $3.96 68 $5.85 $5.51
51 4.17 4.01 69 6.02 5.66
52 4.23 4.06 70 6.20 5.82
53 4.29 4.12 71 6.39 6.00
54 4.35 4.18 72 6.59 6.18
55 4.42 4.24 73 6.81 6.39
56 4.50 4.31 74 7.05 6.60
57 4.58 4.38 75 7.30 6.84
58 4.66 4.45 76 7.57 7.09
59 4.75 4.53 77 7.86 7.36
60 4.84 4.61 78 8.17 7.66
61 4.94 4.70 79 8.51 7.97
62 5.05 4.79 80 8.86 8.32
63 5.16 4.89 81 9.25 8.68
64 5.28 5.00 82 9.66 9.08
65 5.41 5.12 83 10.10 9.51
66 5.55 5.24 84 10.56 9.97
67 5.69 5.37 85+ 11.06 10.47
+ Higher ages the same
</TABLE>

- ------------------------------------- 18 ------------------------------------
National Life Insurance Company
One National Life Drive - Montpelier, Vermont 05604 - (802) 229-3333

7206(0395)18

<PAGE> 23

The Owner is a member of National Life Insurance Company while this contract is
in force. The annual meetings of the Company are held at its Home Office in
Montpelier, Vermont, on the first Friday in February in each year at 9 o'clock
A.M.

<PAGE> 1
EXHIBIT 1.A.(5)(b)

RIDER FOR GUARANTEED INSURABILITY OPTIONS

<PAGE> 2

RIDER FOR GUARANTEED INSURABILITY OPTIONS

We, National Life Insurance Company, grant the right to add to the Face Amount
of the policy without proof that the Insured is insurable while this rider is in
force, subject to its terms.

The date of issue of this rider is the policy Date of Issue unless a later date
is set forth below.

REGULAR OPTION PERIODS. Regular Option Periods start 60 days before and end 31
days after each of the policy anniversaries on which the Insured reaches
Attained Ages 25, 28, 31, 34, 37, and 40.

ALTERNATE OPTION PERIODS. Alternate Option Periods start on:

1. the date of marriage of the Insured; or

2. the date of birth of any child of the Insured; or

3. the date of legal adoption of any child under the age of 18 years
by the Insured.

The starting date must occur at least 60 days before the date the Insured
reaches Attained Age 40. Each period ends on the third Monthly Policy Date after
it starts.

OPTION AMOUNT. The Option Amount is shown in the Data Section.

BENEFITS DURING A REGULAR OPTION PERIOD. We will add to the Face Amount of this
policy without proof that the Insured is insurable subject to the following
terms.

1. We must receive an acceptable application at our Home Office
during a Regular Option Period.

2. The right to add to the Face Amount under this rider during such
Regular Option Period must be available. This right may not be
available because of previous amount added to the Face Amount
under this rider during an Alternate Option Period.

3. This rider must be in force on the first day of such Regular
Option Period.

BENEFITS DURING AN ALTERNATE OPTION PERIOD. We will add to the Face Amount of
this policy without proof that the Insured is insurable subject to the following
terms.

1. We must receive at our Home Office during an Alternate Option
Period an acceptable application and proof of:

a. marriage of the Insured; or

b. the birth of any child of the Insured; or

c. the legal adoption of any child under age 18 by the
Insured.

2. There must be at least one future Regular Option Period right
available.

3. This rider must be in force on the first day of such Alternate
Option Period.

1
<PAGE> 3

4. When we add to the Face Amount under his rider during an Alternate
Option Period, such added amount shall be in lieu of the next
available right to add to the Face Amount under this rider during
a Regular Option Period. That Regular Option Period right is not
available thereafter.

We will also provide, at no extra charge, temporary insurance for the duration
of each Alternate Option Period on the life of the Insured for the Option
Amount. Such insurance shall be subject to the terms of this policy. If payable
it shall become part of the proceeds of this policy.

FEATURES OF ADDED FACE AMOUNT.

1. The rate class of the Insured on the date of issue of this rider
shall be used in determining the Cost of Insurance Charge rates
for the Face Amount added under this rider.

2. Each time we add to the Face Amount under this rider, the amount
added shall not exceed the Option Amount, except that for
Alternate Options:

a. for multiple births, the added amount shall not exceed the
Option Amount multiplied by the number of children born of
the same pregnancy; and

b. for legal adoption of more than one child at a time, the
added amount shall not exceed the Option Amount multiplied
by the number of children so adopted.

3. The effective date of any Face Amount added under this rider, if
applied for during a Regular Option Period, shall be the Monthly
Policy Date on or next following the date we receive an acceptable
application for such amount.

4. The effective date of any Face Amount added under this rider, if
applied for during an Alternate Option Period, shall be the first
Monthly Policy Date following the end of the Option Period.

5. We will not contest any Face Amount added under this rider after
this rider has been in force during the life of the Insured for
two years from its date of issue.

6. If the death of the Insured occurs as a result of suicide, while
sane or insane:

a. within two years from the policy Date of Issue, we will pay
only as set forth in the Suicide Limitation provision of
this policy; or

b. within two years from the date of issue of this rider but
two or more years after the policy Date of Issue, we will
pay in lieu of any portion of the Face Amount added under
this rider a sum equal to the Cost of Insurance Charges
that we have deducted from the Accumulated Value for any
such added Face Amount under this rider.

7. If the right to add to the Face Amount during a Regular Option
Period is available and if on any day during that Regular Option
Period the Insured is totally disabled as defined in any Rider for
Waiver of Monthly Deductions that is then a part of this policy,
and if the Insured has remained or remains so disabled for 120
consecutive days:

a. we will add the Option Amount to the Face Amount as of the
first Monthly Policy Date following the start of the
Regular Option Period as the exercise of the Regular
Option; and

b. the portion of the Cost of Insurance Charges for the added
Face Amount under this rider shall be deemed a Covered
Monthly Deduction during continuance of such disability.

2
<PAGE> 4

8. Covered Monthly Deductions under a Rider for Waiver of Covered
Monthly Deductions on this policy shall include the portion of the
Cost of Insurance Charges for any amounts added to the Face Amount
under the terms of this Rider for Guaranteed Insurability
Options.

GENERAL OPTION CONDITIONS.

1. The right to add to the Face Amount under this rider during an
Option Period shall expire if not exercised during that Option
Period.

2. Reinstatement of this policy and rider shall not revive any right
to add to the Face Amount under this rider during an Option Period
which ended prior to reinstatement.

3. The right to add to the Face Amount under this rider is reserved
to the Owner alone. The Insured must consent to the added amount
of insurance by signing the application for the added Face Amount.

COST OF THIS RIDER. The monthly cost of this rider is shown in the Data Section.
The monthly cost of this rider shall be deducted from the Accumulated Value of
the policy in the same manner as is the Monthly Deduction.

INCONTESTABILITY. After this rider has been in force during the life of the
Insured for two years from its date of issue, we will not contest it.

CONSIDERATION. This rider is issued in consideration of the application for the
rider and the monthly cost of the rider. The rider and a copy of the application
for the rider shall become part of the policy on the date of issue of the rider.

TERMINATION OF RIGHT TO ADD TO FACE AMOUNT. No further Face Amount may be added
under this rider:

1. after we receive at our Home Office written request for
termination of the right to add Face Amount to the policy under
this rider; or

2. after the last available right to add to the Face Amount under
this rider is exercised; or

3. after the end of the last Regular Option Period; or

4. after the policy terminates.

When no further Face Amount may be added under this rider:

1. there shall be no further monthly costs for this rider; and

2. we will not add any Option Amount to the Face Amount regardless of
whether a Rider for Waiver of Monthly Deductions is a part of this
policy.

Termination of the right to add Face Amount does not terminate other provisions
of this rider. Face Amount previously added under this rider shall continue to
be a part of the policy.

TERMINATION OF RIDER. This rider shall terminate when the policy terminates.

3
<PAGE> 5

Signed for NATIONAL LIFE INSURANCE COMPANY at Montpelier, Vermont, as of the
date of issue, by

Chairman of the Board
and
Chief Executive Officer

<PAGE> 1
EXHIBIT 1.A.(5)(c)

RIDER FOR WAIVER OF MONTHLY DEDUCTIONS
<PAGE> 2

RIDER FOR WAIVER OF MONTHLY DEDUCTIONS

We, National Life Insurance Company, will waive Covered Monthly Deductions
subject to the terms of this rider, when we receive at our Home Office due proof
that:

1. the Insured became totally disabled while this rider was in force;
and

2. the Insured remained so disabled for 120 consecutive days.

We may require that the Insured be examined, at our expense, by a medical
examiner chosen by us.

The date of issue of this rider is the policy Date of Issue unless a later date
is set forth below.

TOTAL DISABILITY DEFINED. The Insured shall be deemed to be totally disabled
only if:

1. due to accidental injury or disease, the Insured becomes unable to
perform the material and substantial duties of:

a. the specific occupation of the Insured at the time such
disability begins, until benefits for any period of
continuous total disability have been paid for 24 months;
and

b. any occupation for which the Insured is or becomes
reasonably fitted by education, training, or experience,
thereafter. Due regard shall be given to vocation and
earnings at the time such disability began; or

2. the Insured has the sole occupation of a student and is unable to
work as a student; or

3. the Insured suffers a Specific Loss, which in this rider means the
complete and irrecoverable loss of:

a. sight, or

b. hearing; or

c. speech; or

d. use of both hands, or use of both feet, or use of one hand
and one foot.

LIMITATION OF LIABILITY. No waiver of Covered Monthly Deductions shall be made
if total disability is due to:

1. purposely self-inflicted injury; or

2. war, declared or undeclared, or any act of war.

NOTICE OF CLAIM. Written notice of claim must be received at our Home Office
during the life of the Insured and during the period of total disability.
Failure to give notice within such time shall not affect a claim if it is shown
that:

1. it was not reasonably possible to give notice within the time
prescribed; and

2. such notice was given as soon as was reasonably possible.

1
<PAGE> 3

COVERED MONTHLY DEDUCTIONS. Covered Monthly Deductions shall be:

1. the portion of the Cost of Insurance Charge for any of the Face
Amount:

a. which was in force when disability of the Insured began;
and

b. which continued in force for the 120 consecutive days
starting on the first day of disability; and

c. for which monthly costs for this rider were deducted on the
Monthly Policy Date just prior to when disability began and
through the 120th consecutive day of disability; plus

2. the portion of the monthly cost of any rider:

a. which was in force when disability of the Insured began;
and

b. which continued in force for the 120 consecutive days
starting on the first day of disability; and

c. for which monthly costs for this rider were deducted on the
Monthly Policy Date just prior to when disability began and
through the 120th consecutive day of disability; plus

3. the Monthly Administrative Charge.

WAIVER OF COVERED MONTHLY DEDUCTIONS. We will waive Covered Monthly Deductions
only if the Insured has been totally disabled for 120 consecutive days. Waiver
of Covered Monthly Deductions will start on the Monthly Policy Date on or next
following the later of:

1. the date the Insured reaches age l0; or

2. the 121st consecutive day of total disability of the Insured.

We will waive the Covered Monthly Deductions only during the continuance of such
disability. However, if such disability starts on or after the date the Insured
reaches Attained Age 60, Covered Monthly Deductions shall not be waived beyond
the later of:

1. the Monthly Policy Date next following the date the Insured
reaches Attained Age 65; or

2. the Monthly Policy Date following two years of such disability.

During the Policy Protection Period of this policy, in addition to waiving any
Covered Monthly Deductions as provided in this rider, we will accept as zero the
value of any Minimum Monthly Premium due during the period of disability in the
performance of any tests to determine the onset of a Grace Period.

If a period of total disability which lasts at least 120 consecutive days begins
within a Grace Period and on or after the date the Insured reaches age 10, then
during such period of disability the policy shall not terminate under the terms
of the Grace Period provision; however, all other provisions of this rider,
including Termination, shall apply. When Waiver of Covered Monthly Deductions
ceases, we will deduct from the Accumulated Value any Covered Monthly Deductions
which were in arrears at the start of disability.

CONTINUED DISABILITY. If we waive Covered Monthly Deductions under this rider,
we may require proof to our satisfaction of continued disability:

2
<PAGE> 4

1. at reasonable intervals during the first two years; and

2. thereafter, from time to time, but not more than once a year.

We may require that the Insured be examined, at our expense, by a medical
examiner chosen by us.

Waiver of Covered Monthly Deductions shall cease if the Insured:

1. ceases to be totally disabled; or

2. fails to give such proof on request; or

3. fails to submit to such examination on request.

Proof of continued disability shall not be required on or after the date the
Insured reaches Attained Age 65 if the Insured is then and has been totally and
continuously disabled for more than five years.

COST OF THIS RIDER. The cost of this rider on any Monthly Policy Date is shown
in the Data Section. It shall be based on the Monthly Deduction and the monthly
costs of any riders to which this rider applies. The monthly cost of this rider
shall be deducted from the Accumulated Value of the policy in the same manner as
is the Monthly Deduction.

INCREASES IN FACE AMOUNT AND ADDITIONAL RIDERS. If, while this rider is in
force, any increases in Face Amount or any additional benefit riders are
requested, we will require an application for additional benefits under this
rider.

If we approve the application for additional benefits under this rider, the
effective date of such additional benefits shall be the Monthly Policy Date on
or next following the date we approve such application.

If we do not approve the application for additional benefits under this rider,
the portion of the Cost of Insurance Charges for the increase or the monthly
cost for the new rider shall not be a Covered Monthly Deduction.

We will not approve an application for additional benefits under this rider for
any increase or riders which become effective after the Insured has reached
Attained Age 60.

INCONTESTABILITY. After this rider has been in force during the life of the
Insured for two years from its date of issue, we will not contest it. Any
additional benefits under this rider for which an application is approved will
be incontestable after such benefits have been in force during the Insured's
lifetime for two years from the effective date of such additional benefits.

CONSIDERATION. This rider is issued in consideration of the application for the
rider and the monthly cost of the rider.

This rider and a copy of the application for the rider shall become a part of
the policy on the date of issue of the rider. We will send the Owner a copy of
any application we approve for additional benefits under this rider. It and any
Data Section issued for such additional benefits shall become a part of this
contract on the effective date of such benefits.

TERMINATION. This rider shall terminate:

1. on the date the Insured reaches Attained Age 65, unless:

3
<PAGE> 5

a. total disability began before the Insured reached Attained
Age 60, and the terms under the Notice of Claim section of
this rider are met, in which event this rider shall
terminate on the later of the date the Insured reaches
Attained Age 65 and the end of such disability; or

b. total disability began on or after the Insured reached
Attained Age 60 and before the Insured reached Attained Age
65, and the terms under the Notice of Claim section of this
rider are met, in which event this rider shall terminate on
the later of the date the Insured reaches Attained Age 65
or the Monthly Policy Date next following two years of such
disability; or

2. on the date the policy terminates; or

3. on any Monthly Policy Date requested, if before that date we
receive at our Home Office written request for termination; or

4. at the end of a Grace Period; however, at the end of any Grace
Period termination will not occur if:

a. a period of total disability lasting at least 120
consecutive days begins prior to the end of such Grace
Period and continues to the end of such Grace Period; and

b. such period of total disability begins on or after the date
the Insured reached age 10; and

c. the terms under the Notice of Claim section of this rider
are met.

When this rider terminates:

1. all rights under this rider shall cease; and

2. there shall be no further monthly costs of this rider; and

3. the policy shall be considered as separate and complete without
this rider; and

4. all rights and benefits arising from disability beginning prior to
termination shall cease.

Signed for NATIONAL LIFE INSURANCE COMPANY at Montpelier, Vermont, as of the
date of issue, by

Chairman of the Board
and
Chief Executive Officer

<PAGE> 1
EXHIBIT 1.A.(5)(d)

RIDER FOR ACCIDENTAL DEATH BENEFIT
<PAGE> 2

RIDER FOR ACCIDENTAL DEATH BENEFIT

We, National Life Insurance Company, will pay the accidental death benefit,
subject to the terms of this rider, in additional to the Death Benefit of this
policy, when we receive at our Home Office due proof that while this rider was
in force the Insured died solely from accidental bodily injuries. The amount of
such benefit is set forth in the Data Section

Any accidental death benefit payable shall be doubled if such proof shows that
the death of the Insured was a result of having been a fare-paying passenger in
or upon a public conveyance operated by a common carrier for passenger service.

The date of issue of this rider is the policy Date of Issue unless a later date
is set forth below.

LIMITATION OF LIABILITY. This benefit shall not be payable if the Insured's
death resulted from:

1. suicide or purposely self-inflicted injury, while sane or insane;
or

2. physical or mental infirmity or disease or medical or surgical
treatment therefor; or

3. committing or attempting to commit a felony; or

4. war, declared or undeclared, or any act of war; or

5. travel or flight in an aircraft:

a. while the Insured is a pilot or member of the crew of such
aircraft; or

b. while the aircraft is used for aviation training; or

6. any drug, hypnotic or narcotic, unless taken as prescribed by the
Insured's physician.

AUTOPSY. At our expense, we will have the right to examine the body to make an
autopsy, unless not allowed by law.

INCONTESTABILITY. After this rider has been in force during the life of the
Insured for two years from its date of issue, we will not contest it. We can,
however, at any time contest a claim for benefits under this rider.

TERMINATION. This rider shall terminate on the earliest of:

1. the date the Insured reached Attained Age 70; or

2. the date the policy terminates; or

1
<PAGE> 3

3. any Monthly Policy Date requested, if before that date we receive
at our Home Office written request for termination.

When this rider terminates:

1. all rights under this rider shall cease; and

2. there shall be no further monthly costs for this rider; and

3. the policy shall be considered as separate and complete without
this rider.

Signed for NATIONAL LIFE INSURANCE COMPANY at Montpelier, Vermont, as of the
date of issue of this rider, by

Chairman of the Board
and
Chief Executive Officer

<PAGE> 1
EXHIBIT 1.A.(5)(e)

RIDER FOR GUARANTEED DEATH BENEFIT
<PAGE> 2

GUARANTEED DEATH BENEFIT RIDER

We, National Life Insurance Company, guarantee that the policy will not lapse
prior to the later of:

1. the Insured's 70th birthday; and

2. the end of the 20th Policy Year,

if and as long as the Conditions of this Rider are met. This no lapse guarantee
ensures that a Death Benefit will be payable under this policy for as long as
this rider remains in force.

The date of issue of this rider is the policy Date of Issue.

CONDITIONS OF THIS RIDER. To keep this rider in force, cumulative premiums paid,
in excess of withdrawals and debt, must at all times equal at least the sum of
all unique Minimum Monthly Premiums in effect since the Date of Issue of this
policy times the number of Monthly Policy Dates that elapsed while each Minimum
Monthly Premium was in effect.

COST OF THIS RIDER. The monthly cost of this rider is shown in the Data Section.
It shall be based on the Face Amount of the policy. If, while this rider is in
force, any increase or decrease in the Face Amount of the policy is made, the
monthly cost of this rider will similarly increase or decrease. The monthly cost
of this rider shall be deducted from the Accumulated Value of the policy in the
same manner as is the Monthly Deduction.

SUSPENSION OF MONTHLY DEDUCTIONS. If, while this rider is in force, the
Accumulated Value of the Policy is not sufficient to cover the Monthly
Deductions and the monthly costs of any riders on the policy, Monthly
Deductions and the monthly costs of any riders on the policy will be deducted
from the Accumulated Value until the Accumulated Value is exhausted, and will
thereafter be deferred until such time as the policy has positive Accumulated
Value. Upon the death of the Insured, we will waive that portion of any Monthly
Deductions and monthly costs of any rider on the policy then in arrears.

INCONTESTABILITY. After this rider has been in force during the life of the
Insured for two years from its date of issue, we will not contest it.

NOTICE OF PENDING TERMINATION OF THIS RIDER. If on any Monthly Policy Date the
Conditions of this Rider are not met, the Owner will be sent notice that unless
the premium described below is paid during the first 61 days measured from the
date we mail such notice, this rider will terminate.

The premium needed to keep this rider in force beyond the 61st day measured
from the date we mail a notice of pending termination of this rider is the
following:

1. the sum of the Minimum Monthly Premiums in effect since the Date
of Issue of this policy times the number of Monthly Policy Dates
that elapsed while each Minimum Monthly Premiums was in effect;
plus

2. two times the Minimum Monthly Premium in effect on the date we
mail the notice of termination of this rider; plus

1
<PAGE> 3

3. all withdrawals made from this policy; plus

4. all loans and accrued loan interest on the policy; minus

5. all premium paid on the policy since its Date of Issue.

TERMINATION OF THIS RIDER. This rider shall terminate on the earliest of:

1. the later of:

a. the Insured's 70th birthday; and

b. the end of the 20th Policy Year; or

2. the end of the 61st day following our sending a notice of pending
termination of this rider, if prior to that time the premium
described in Notice of Pending Termination of this Rider is not
paid; or

3. the date the policy terminates. If the policy is reinstated, this
rider will not be reinstated; or

4. any Monthly Policy Date requested, if before that date we receive
at our Home Office written request for termination of this rider.

When this rider terminates:

1. all rights under this rider shall cease; and

2. there shall be no further monthly costs for this rider; and

3. the policy shall be considered as separate and complete without
this rider.

If this rider terminates while the Cash Surrender Value of the policy is zero,
the policy will immediately enter a Grace Period.

Signed for NATIONAL LIFE INSURANCE COMPANY at Montpelier, Vermont, as of the
date of issue of this rider, by

Chairman of the Board
and
Chief Executive Officer

<PAGE> 1

[NATIONAL LIFE
OF VERMONT LOGO]
<TABLE>
<S> <C>
NATIONAL LIFE National Life Insurance Company VARIABLE UNIVERSAL LIFE INSURANCE
OF VERMONT Montpelier, Vermont 05604 APPLICATION - PART A
Tel 802 229-3333
- ---------------------------------------------------------------------------------------------------------------------------
Read instructions before completing this application.
Check the appropriate use of this application: [ ] Life Application [ ] Qualified Retirement Plan - Code:
- ---------------------------------------------------------------------------------------------------------------------------
Agency/Branch Name and Number: Policy Number:

- ---------------------------------------------------------------------------------------------------------------------------
A. PROPOSED INSURED INFORMATION
1. Name: (Print first, middle, last) 10. Smoker Status: Does the Proposed Insured
now use nicotine products in any form
---------------------------------------------------- (including cigarettes, cigars, chewing
2. Social Security Number: tobacco, smokeless tobacco, pipe, "the
patch", snuff or nicotine gum) or has the
---------------------------------------------------- Proposed Insured used nicotine products in
3. Birthdate: (mm/dd/yyyy) any form within the last 12 months?
If `Yes,' details: [ ] Yes [ ] No
----------------------------------------------------
4. Birthplace: (State or Foreign Country)

----------------------------------------------------
5. Sex: [ ] Male [ ] Female

----------------------------------------------------
6. Issue Policy at age:

---------------------------------------------------- -----------------------------------------------
7. Residence Address: (Give street and number, city 11. Have you ever applied for life, health or
or town, state and zip code.) disability insurance or reinstatement of life,
health or disability insurance which was
declined, postponed, rated or modified in
any way? [ ] Yes [ ] No
If 'Yes,' details:
8. In case further information is required please
give residence telephone number and best
time of day to call:

---------------------------------------------------- -----------------------------------------------
9. Employment Information 12. Are you or do you have any intention of
becoming a member of a military organization?
a. Employer: [ ] Yes [ ] No
If 'Yes,' details:
b. Kind of Business:

c. Business Address:

-----------------------------------------------
d. How long employed by present employer: 13. a. Driver's License Number:
--------------------
e. Occupation: b. State Licensed in:
--------------------------
f. Specific duties: c. Have you had any moving vehicle violations
or had your motor vehicle driving license
g. Length of time in present position: suspended or revoked during the last three
years or have you been convicted of Driving
h. Any change contemplated? [ ] Yes [ ] No Under the Influence during the last five
If 'Yes', details: years? [ ] Yes [ ] No
If `Yes' details:
i. Is the Proposed insured actively at work
at the customary workplace and actually doing
the usual duties and functions required by the
position during the normal work hours and -----------------------------------------------
weekly period? [ ] Yes [ ] No 14. In the past Six months have there been
If `No', details: or are there now pending other negotiations
for life or disability insurance?
[ ] Yes [ ] No
j. In case further information is required please If `Yes,' list companies, amount, purpose
give business telephone number and best and total amount to be purchased:
time of day to call:

- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
7160(0798)A 1 of 7
Cat. No. 45556

<PAGE> 2

VARIABLE UNIVERSAL LIFE INSURANCE APPLICATION - PART A - Continued
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
A. PROPOSED INSURED INFORMATION - Continued (The Agent will provide you with any Replacement forms
(If `Yes' is selected for questions 15, 16 or 17, required by law or National Life.)
complete form 1480, Avocation Aviation & Foreign 19. Has there been or will there be a lapse, surrender,
Travel Supplemental Application.) replacement, reissue, conversion, or change to
reduce amount, premium or period of coverage of any
15. Have you within the last three years participated in existing life, disability or annuity contract if the
or do you intend to participate in any motor powered applied for policy or rider is issued? [ ] Yes [ ] No
racing, scuba, skin or sky diving, rodeos, hang If `Yes,' list Company Name(s) and Policy Number(s);
gliding, or any other avocation generally considered
hazardous? [ ] Yes [ ] No
----------------------------------------------------------
16. Have you within the last three years been or do you
have any intention of becoming a pilot, student pilot or
crew member of any type of aircraft? [ ] Yes [ ] No
----------------------------------------------------------
17. Do you intend to travel or reside outside the USA for
more than two weeks in a year? [ ] Yes [ ] No
---------------------------------------------------------- -----------------------------------------------------------
18. Are there any insolvency or bankruptcy proceedings 20. Will there be any substantial borrowing on any life
now pending against the Proposed Insured, or insurance policy if the applied for policy or rider is
has there been any such proceedings during the last issued? [ ] Yes [ ] No
seven years? [ ] Yes [ ]No If `Yes,' list Company Name(s) and Policy Number(s):
If `Yes,' give details:
</TABLE>

- -------------------------------------------------------------------------------
21. LIFE INSURANCE IN FORCE ON LIFE OF PROPOSED INSURED: Indicate Type of
insurance B = Business, G = Group, P = Personal. MUST indicate 'None,' if
no insurance.

<TABLE>
<CAPTION>
Total Coverage
Total Amount Protected by Total Accidental Date of Paid to
Company Name: Type: Life Insurance: Waiver of Premiums: Death Benefit: Issue: Date:
$ $ $
<S> <C> <C> <C> <C> <C> <C>

- -------------------------------------------------------------------------------------------------------------------
</TABLE>
7160(0798)A Page 2 of 7

<PAGE> 3

VARIABLE UNIVERSAL LIFE INSURANCE APPLICATION - PART A - Continued
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
B. Policy InformatIon:
1. Plan: 6. Pension Business ONLY:
a. Issue Date: (mm/dd/yyyy)
-------------------------------------------- -------------------------
2. Amount: $ b. (Check one.) [ ] Sex Distinct [ ] Sex Neutral
-------------------------------------------- c. Underwriting Class: (Select one)
3. Death Benefit Option: (Check one.) [ ] Full Underwriting
[ ] Option A - Face Amount [ ] Guaranteed Issue
[ ] Option B - Face Amount, plus Accumulated [ ] Simplified Underwriting (It either question
Value 1 or 2 is answered `Yes,' give the following
--------------------------------------------- details in the space provided: Nature of
4. Additional Benefits: ailment, date, duration, and names and
[ ] Waiver of Monthly Deductions addresses of attending physicians.)
[ ] Accidental Death Benefit $
-------- 1. Have you been admitted to a hospital or
[ ] Guaranteed Death Benefit m medical facility in the past 90 days or been
[ ] Guaranteed Insurability Option $ advised in the past 90 days by a member of
-------- the medical profession to be admitted to a
[ ] hospital or medical facility?
---------------------------------------- [ ] Yes [ ] No
[ ]
----------------------------------------

5. Premium Information:
a. Premium Interval:
(Check one box and provide requested information)
[ ] Annual 12 Months
[ ] Semiannual 6 Months
[ ] Quarterly 3 Months 2. In the past two years have you been
[ ] Monthly (Group & Pension) 1 Month treated for or advised by a member of the
[ ] COM (No., if existing): 1 Month medical profession to seek treatment for
----- heart problems (including angina), stroke,
[ ] Single Premium or cancer, or been treated for or diagnosed
as having AIDS or AIDS Related
b. Planned Periodic Premium: $ Complex (ARC)?
-------------- [ ] Yes [ ] No
c. Special Billing Type:
(Not available for Pension)
[ ] Group No.:
--------------
[ ] Government Allotment
[ ] Payroll Deduction No.:
--------------

d. Send premium notices to: (Indicate address below.)
[ ] Residence (A.7.)
[ ] Business (A.9.c)
[ ] Owner's (See D.2)
[ ] Other: Give name and address.)

- -------------------------------------------------------------------------------------------------------------------
</TABLE>
7160(0798)A Page 3 of 7

<PAGE> 4

VARIABLE UNIVERSAL LIFE INSURANCE APPLICATION - PART A - Continued
- --------------------------------------------------------------------------------
C. INVESTMENT INFORMATION:
1. Has the Applicant received a prospectus? [ ] Yes [ ] No
--------------------------------------------------------------------------
2. Does the Applicant understand that the Cash Surrender Value and Death
Benefit may increase or decrease based on the policy's investment
return? [ ] Yes [ ] No
--------------------------------------------------------------------------
3. Does the Applicant believe that this policy will meet his or her
insurance needs and financial objectives? [ ] Yes [ ] No
--------------------------------------------------------------------------
4. Telephone Transaction Privilege: (Note: if C.4.b is answered
`Yes,' then C.4.a MUST be answered `Yes' also.)
a. Does the Applicant authorize the Company to accept telephoned
requests by the Owner to:
- Transfer unloaned Accumulated Value among the General Account
and Sub-Accounts of the Separate Account; and
- Effect Policy Loans up to $25,000; and
- Change the premium allocation percentages; and
- Change the distribution of fund allocations according to the
Portfolio Rebalancing feature? [ ] Yes [ ] No
b. If Owner was given authorization in 4.a., does the Applicant
authorize the Company to accept telephoned requests by the
representative for the same excluding effecting
Policy Loans? [ ] Yes [ ] No

Name of Representative: (Print)

--------------------------------------------------------------------------
5. Allocation:
a. Allocate net premium accordingly: (Use only whole percentages.
If a fund is chosen, allocation may not be less than 5%.)

<TABLE>
<S> <C>
SENTINEL/MARKET STREET FUNDS: GOLDMAN SACHS FUNDS:

%______ Money Market %______ International Equity

%______ Growth %______ Global Income

%______ Aggressive Growth %______ CORE Small Cap Equity

%______ Managed %______ Mid Cap Equity

%______ Bond
FIDELITY INVESTMENTS (VIP FUNDS):
%______ International
%_______ Equity Income
%______ Sentinel Growth
%_______ Overseas

AMERICAN CENTURY FUNDS: %_______ Growth

%______ Value %_______ High Income

%______ Income & Growth %_______ Index 500

%_______ Contrafund

J.P. MORGAN FUNDS: THE ALGER AMERICAN FUND:

%_______ International Opportunities %_______ Growth

%_______ Small Company %_______ Small Capitalization

STRONG FUNDS:
NATIONAL LIFE INSURANCE COMPANY:
%_______ Opportunity Fund II
%_______ General Account
%_______ Growth Fund II
OTHER: (As available.)
NEUBERGER & BERMAN FUND:
%_____________________________________________
%_______ Partners
%_____________________________________________

% 100 TOTAL

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

b. Does the Applicant elect that all Monthly Deduction Otherwise, the Monthly Deduction charges will be
charges be deducted from the Money Market deducted from the General Account and all
Sub-Account to the extent the Accumulated Value Sub-Accounts of the Separate Account in proportion
in such Sub-Account is sufficient to pay such to the distribution of the Accumulated Value on the
charges? [ ] Yes [ ] No date of the deduction.
</TABLE>

- -------------------------------------------------------------------------------
7160(0798)A Page 4 of 7
<PAGE> 5

VARIABLE UNIVERSAL LIFE INSURANCE APPLICATION - PART A - Continued
- -------------------------------------------------------------------------------

C. INVESTMENT INFORMATION: Continued

NOTE: YOU MAY ELECT PORTFOLIO REBALANCING OR DOLLAR COST AVERAGING, BUT
NOT BOTH.

6. Portfolio Rebalancing:

Does the Applicant request Portfolio Rebalancing through which the
Accumulated Values in the Sub-Accounts of the Separate Account will be
automatically reallocated every six months according to the fund
allocation percentages? [ ]Yes [ ]No

-----------------------------------------------------------------------
7. Dollar Cost Averaging:

Once each month, the Accumulated Value in the amount designated below
is to be transferred from the Money Market Sub-Account to the other
Sub-Accounts as apportioned below.

SENTINEL/MARKET STREET FUNDS. GOLDMAN SACHS FUNDS:

$ ______ Growth $ ______ International Equity

$ ______ Agressive Growth $ ______ Global Income

$ ______ Managed $ ______ CORE Small Cap Equity

$ ______ Bond $ ______ Mid Cap Equity

$ ______ International

$ ______ Sentinel Growth FIDELITY INVESTMENTS (VIP FUNDS):

$ ______ Equity Income

AMERICAN CENTURY FUNDS: $ ______ Overseas

$ ______ Value $ ______ Growth

$ ______ Income & Growth $ ______ High income

$ ______ Index 500

J.P. MORGAN FUNDS: $ ______ Contrafund

$ _______ International Opportunities

$ _______ Small Company THE ALGER AMERICAN FUND:

STRONG FUNDS: $ ______ Growth

$ ______ Small Capitalization
$ _______ Opportunity Fund II

$ _______ Growth Fund II OTHER: (As available.)

$ _______________________________

NEUBERGER & BERMAN FUND: $ _______________________________

$ ______ Partners

$ ______ Total Allocation

- -------------------------------------------------------------------------------
7160(0798)A Page 5 of 7

<PAGE> 6
VARIABLE UNIVERSAL LIFE INSURANCE APPLICATION - PART A - Continued
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>

D. OWNER INFORMATION: D. OWNER INFORMATION: Continued
1. Owner: (Select one and provide requested information. 2. Address: (Give street and number, city or town,
Owner may not be a minor.) state and zip code.)

[ ] INSURED
[ ] OTHER INDIVIDUAL (Name, Date of Birth & Relationship)

----------------------------------------------------, 3. Owner's Phone Number;
while living, thereafter (Name, Date of Birth &
Relationship) 4. Social Security or Taxpayer ID Number:
(Complete IRS form W-9.)

----------------------------------------------------, ----------------------------------------------------------
contingent owner, while living, and thereafter E. BENEFICIARY INFORMATION:
(Check one.) 1. Beneficiary: (Check one box or fill in the First and
[ ] Insured. Second Beneficiary information.)
[ ] Estate of last survivor of the named owners. The right to change the beneficiary is reserved.
Note: If neither box is checked, the final owner
is the executors or administrators of last survivor [ ] AS PER SUPPLEMENTAL REQUEST.
of the named owners. [ ] QUALIFIIED PENSION AND PROFIT SHARING ONLY:
[ ] CORPORATION (Full Legal Name) Unless otherwise provided in this section, the
----------------------------------------------------- Beneficiary of this policy is the Owner.
[ ] CORPORATION described in section D.
----------------------------------------------------, [ ] PARTNERSHIP described in section D.
incorporated in (State) [ ] LIMITED PARTNERSHIP described in section D.
----------------------------, [ ] LIMITED LIABILITY COMPANY described in
its successors or assigns. section D.
-----------------------
[ ] PARTNERSHIP (Full Legal Name)
-----------------------
[ ] TRUST described in section D.
----------------------------------------------------,
OTHER:
a partnership of (City & State) (Give each beneficiary's name, address,
---------------------, date of birth, Social Security
or any successor Number and relationship to Insured(s).)
-------------------------------------
partnership doing business in said city under FIRST:
said name.
-----------------------------------------------------
[ ] LIMITED PARTNERSHIP (Full Legal Name)
---------------

-----------------------------------------------------
a (State)
--------------------------------------------
Limited Partnership, its successors or assiqns. SECOND:

-----------------------------------------------------
[ ] LIMITED LIABILITY COMPANY (Full Legal Name)

-----------------------------------------------------
a (State)
--------------------------------------------
Limited Liability Company, its successors or assigns. Payment will be shared equally by all First
beneficiaries who survive the Insured: if none,
----------------------------------------------------- by all Second beneficiaries who so survive; if
[ ] TRUST (Name of Trustee(s)) none, payment will be made to the Owner or
executors or administrators of the Owner's
----------------------------------------------------, estate.
trustee(s) under an instrument of trust between
(Name of Trustor)
----------------------------------- ----------------------------------------------------------
F. REMARKS:
-----------------------------------------------------

and said trustee(s), named (Name of Trust)
-----------------------------------------------------

----------------------------------------------------,

----------------------------------------------------,
and dated (Date of Trust)
---------------------------,
as heretofore or hereafter amended if trust is amend-
able, or the successor(s) in said trust or assigns.
[ ] QUALIFIED PENSION OR PROFIT SHARING TRUST
(Name of Trust Agreement)

-----------------------------------------------------
[ ] AS PER SUPPLEMENTAL REQUEST
</TABLE>

- -------------------------------------------------------------------------------
716O(0798)A Page 6 of 7

<PAGE> 7
VARIABLE UNIVERSAL LIFE INSURANCE APPLICATION - PART A - Continued
- -------------------------------------------------------------------------------
G. PROPOSED INSURED'S AND APPLICANT'S CERTIFICATION AND AGREEMENT:

The statements and answers on Part A of this application are, to the best
knowledge and belief of the Proposed Insured, complete and true. They,
together with the statements and answers on Part B of this application,
shall be a part of the contract of insurance if one is issued. The
Applicant, if someone other than the Proposed Insured, agrees to be bound by
all statements and answers signed by the Proposed Insured in Parts A and B
of this application.

----------------------------------------------------------------------------
H. APPLICANT'S AGREEMENT:

National Life Insurance Company (the Company) may make administrative
corrections and changes to this application. These, if any, are noted on the
"Application Amendment" page which is attached to the policy at issue.
Acceptance of any policy issued on this application will ratify and will be
notice of any such change made. If the laws where the application is made so
require, any change of amount, age at issue, class of risk, plan of
insurance or benefits must be ratified in writing.

The Agent taking this application has no authority to make, change or
discharge any contract hereby applied for. The Agent may not extend credit
on behalf of the Company. No statement made to or information acquired by
any representative of the Company shall bind the Company unless set out in
writing in Parts A or B of this application.

If I have elected the Telephone Transaction Privilege, I appoint the Company
as my agent to act upon telephoned instructions reasonably believed to be
authorized by me. I hereby ratify any telephoned instructions so given and
consent to the tape recording of these instructions. So long as the Company
employs reasonable procedures to confirm that the instructions are genuine,
I agree that I will not hold the Company liable for any unauthorized
telephoned instructions.

The Company shall incur no liability under any policy issued on this
application unless and until:

a. such policy is delivered to the Owner, and

b. the first premium is paid prior to any change in the Proposed Insured's
good health and insurability.

I have paid $___________________ for Variable Universal Life Insurance with
this application.

I have received the Receipt and Life Insurance Agreement. I have read it. I
understand it.

I have received and understand a current prospectus for the contract and its
underlying accounts, which describes the variable nature of this product and
the utilization of a Separate Account.

----------------------------------------------------------------------------
I. PROPOSED INSURED'S AGREEMENT:

AUTHORIZATION TO RELEASE INFORMATION: I, the Proposed Insured, hereby
authorize any licensed physician, medical practitioner, hospital, clinic or
other medical or medically related facility, insurance company, the Medical
Information Bureau or other organization, institution or person, that has
any records or knowledge of me or my health, to give to the National Life
Insurance Company or its reinsurers any such information (excluding
information relating to tests for Human Immunodeficiency Virus (HIV)
Antibodies, T-Cell Count, Acquired Immune Deficiency Syndrome (AIDS), or
AIDS Related Complex (ARC)). I authorize National Life to request a copy of
my driving record from the state motor vehicle department.

In addition, I authorize the National Life Insurance Company to obtain an
investigative consumer report. I also acknowledge receipt of copies of the
Prenotifications relating to investigative consumer reports and the Medical
Information Bureau.

This authorization shall remain valid for 24 months from the date shown
below.

A photographic copy of this authorization shall be as valid as the original.

----------------------------------------------------------------------------
J. SIGNATURES:

1. Signed at (City & State) date (mm/dd/yyyy)
------------------------ --------

2. Sign names in If the Proposed insured is the sole Applicant, only one
full below: signature is required.
If Applicant is a Business Entity or Pension or Profit
Sharing Trust, include full legal name and title.
If Applicant is a Personal/Business Trust, include
"Trustee" in signature.
If Applicant is an Individual other than Proposed
Insured, print name below Applicant's signature.

PROPOSED SOLICITING
INSURED: AGENT/REPRESENTATIVE:
------------------------------ -------------------------------------------

APPLICANT:
------------------------------

- -------------------------------------------------------------------------------
7160(0798)A Page 7 of 7

<PAGE> 1
EXHIBIT 2

February 26, 1999

National Life Insurance Company
National Life Drive
Montpelier, Vermont 05604

Dear Sirs:

This opinion is furnished in connection with the filing of a
Post-Effective Amendment No. 4 to a Registration Statement on Form S-6
("Registration Statement") under the Securities Act of 1933, as amended, of
National Variable Life Insurance Account (the "Separate Account") and National
Life Insurance Company ("National Life"), covering an indefinite amount of
premiums expected to be received under certain flexible premium adjustable
benefit individual variable life insurance policies ("Policies") to be offered
by National Life. Under the Policies, amounts will be allocated by National
Life to the Separate Account as described in the prospectuses included in the
Registration Statement to support reserves for such Policies.

In my capacity as Senior Vice President and General Counsel of
National Life, I have examined all such corporate records of National Life and
such other documents and laws as I consider appropriate as a basis for the
opinion hereinafter expressed. Based upon such examination, I am of the
opinion that:

1. National Life is a corporation duly organized and validly
existing under the laws of the State of Vermont.

2. The Separate Account has been duly created and is validly
existing as a separate account pursuant to Title 8, Vermont Statutes Annotated,
Sections 3855 to 3859.

3. The portion of the assets to be held in the Separate Account
equal to the reserves and other liabilities under the Policies is not
chargeable with liabilities arising out of any other business National Life may
conduct.

4. The Policies have been duly authorized by National Life and,
when issued as contemplated by the Registration Statement, will constitute
legal, validly issued and binding obligations of National Life in accordance
with their terms.

I hereby consent to the use of this opinion as an exhibit to Post
Effective Ammendment No. 4 to the S-6 Registration Statement and to the
reference to my name under the heading "Legal Matters" in the prospectuses.

Very truly yours,

Michele S. Gatto
Senior Vice President and
General Counsel