FIRST PROVIDIAN LIFE & HEALTH INSUR CO SEPARATE ACCOUNT C, 497, 1998-05-05

FIRST PROVIDIAN LIFE & HEALTH INSUR CO SEPARATE ACCOUNT C
497, 1998-05-05

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FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
SEPARATE ACCOUNT C
PROSPECTUS

FOR THE
ADVISOR'S EDGE VARIABLE ANNUITY
OFFERED BY
FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
(A NEW YORK STOCK COMPANY)
ADMINISTRATIVE OFFICES
520 COLUMBIA DRIVE
JOHNSON CITY, NEW YORK 13790

The Advisor's Edge variable annuity contract (the "Contract"), offered through
First Providian Life and Health Insurance Company (the "Company", "us", "we" or
"our," and formerly, "National Home Life Assurance Company of New York"),
provides a vehicle for investing on a tax-deferred basis in 9 investment
company Portfolios. The Contract is a group variable annuity contract and is
intended for retirement savings or other long-term investment purposes.

The minimum initial Purchase Payment for Non-Qualified Contracts is $5,000. The
minimum initial Purchase Payment for Qualified Contracts is $2,000 (or $50
monthly by payroll deduction). The Contract is a flexible-premium deferred
variable annuity that provides for a Right to Cancel Period of 10 days (20 days
for replacement) plus a 5 day grace period to allow for mail delivery, during
which you may cancel your investment in the Contract.

You may allocate your Net Purchase Payments for the Contract among 9
Subaccounts of First Providian Life and Health Insurance Company's Separate
Account C. Assets of each Subaccount are invested in one of the following
Portfolios (which are contained within three open-end, diversified investment
companies):

. Federated American Leaders Fund
II
. Montgomery Growth Portfolio
. Montgomery Emerging Markets
. Federated Utility Fund II Portfolio
. Federated Prime Money Fund II . Wanger U.S. Small Cap Advisor
. Federated High Income Bond Fund
II
. Wanger International Small Cap
Advisor
. Federated Fund for U.S.
Government Securities II

Your initial Net Purchase Payment(s) will, when your Contract is issued, be
invested immediately in your chosen Portfolios, unless you indicate otherwise.

The Contract's Accumulated Value varies with the investment performance of the
Portfolios you select. You bear all investment risk associated with the
Portfolios. Investment results for your Contract are not guaranteed.

The Contract offers a number of ways of withdrawing monies at a future date,
including a lump sum payment and several Annuity Payment Options. You may make
full or partial withdrawals of the Contract's Surrender Value at any time,
although in many instances withdrawals made prior to age 59 1/2 are subject to
a 10% penalty tax (and a portion may be subject to ordinary income taxes). If
you elect an Annuity Payment Option, Annuity Payments may be received on a
fixed and/or variable basis. You also have significant flexibility in choosing
the Annuity Date on which Annuity Payments begin.

This Prospectus sets forth the information you should know before investing in
the Contract. It must be accompanied by a current Prospectus for each Fund.
Please read the Prospectuses carefully and retain them for future reference. A
Statement of Additional Information for the Contract Prospectus, which has the
same date as this Prospectus, has also been filed with the Securities and
Exchange Commission, is incorporated herein by reference and is available free
by calling our Administrative Offices at 1-800-797-9177. The Table of Contents
of the Statement of Additional Information is included at the end of this
Prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION WHERE IT
WOULD BE UNLAWFUL TO MAKE AN OFFERING LIKE THIS. WE HAVE NOT AUTHORIZED ANYONE
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS ABOUT THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS. YOU SHOULD NOT RELY ON ANY OTHER
INFORMATION OR REPRESENTATIONS.

The date of this Prospectus is May 1, 1998.
FM-0989 (NY)
<PAGE>

TABLE OF CONTENTS
Page
<TABLE>
<S> <C>
GLOSSARY.................................................................... 2
HIGHLIGHTS.................................................................. 5
FEE TABLE................................................................... 7
Condensed Financial Information............................................. 9
Financial Statements........................................................ 9
Performance Measures........................................................ 9
Additional Performance Measures............................................. 10
Yield and Effective Yield................................................... 10
The Company and the Separate Account........................................ 11
The Federated Insurance Series.............................................. 12
The Montgomery Funds III.................................................... 12
Wanger Advisors Trust....................................................... 12
The Portfolios.............................................................. 12
CONTRACT FEATURES........................................................... 14
Contract Application and Purchase Payments................................ 14
Purchasing by Wire........................................................ 14
Right to Cancel Period.................................................... 15
Allocation of Purchase Payments........................................... 15
Exchanges Among the Portfolios............................................ 15
Dollar Cost Averaging Option.............................................. 15
Accumulated Value......................................................... 15
Charges and Deductions.................................................... 16
Minimum Balance Requirement............................................... 17
DISTRIBUTIONS UNDER THE CONTRACT............................................ 17
Full and Partial Withdrawals.............................................. 17
Lump Sum Payment Option................................................... 18
Systematic Withdrawal Option.............................................. 18
Annuity Date.............................................................. 18
Annuity Payment Options................................................... 18
Death Benefit............................................................. 20
Deferment of Payment...................................................... 21
FEDERAL TAX CONSIDERATIONS.................................................. 21
GENERAL INFORMATION......................................................... 26
</TABLE>

GLOSSARY

Accumulation Unit - A measure of your ownership interest in the Contract prior
to the Annuity Date.

Accumulation Unit Value - The value of each Accumulation Unit which is
calculated each Valuation Period.

Accumulated Value - The value of all amounts accumulated under the Contract
prior to the Annuity Date.

Adjusted Death Benefit - The sum of all Net Purchase Payments made during the
first six Contract Years, less any partial withdrawals taken. During each
subsequent six-year period, the Adjusted Death Benefit will be the Death
Benefit on the last day of the previous six-year period plus any Net Purchase
Payments made, less any partial withdrawals taken during the current six-year
period. After the Annuitant attains age 75, the Adjusted Death Benefit will
remain equal to the Death Benefit on the last day of the six-year period
before age 75 occurs plus any Net Purchase Payments subsequently made, less
any partial withdrawals subsequently taken.

Annual Contract Fee - The $30 annual fee charged by the Company to cover the
cost of administering each Contract. The Annual Contract Fee will be deducted
on each Contract Anniversary and upon surrender, on a pro rata basis, from
each Subaccount.

2
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Annuitant - The person whose life is used to determine the duration of any
Annuity Payments and upon whose death, prior to the Annuity Date, benefits
under the Contract are paid.

Annuitant's Beneficiary - The person(s) to whom any benefits are due upon the
Annuitant's death prior to the Annuity Date.

Annuity Date - The date on which Annuity Payments begin. The Annuity Date is
always the first day of the month you specify.

Annuity Payment - One of a series of payments made under an Annuity Payment
Option.

Annuity Payment Option - One of several ways in which withdrawals from the
Contract may be made. Under a Fixed Annuity Option (see "Annuity Payment
Options," page 18), the dollar amount of each Annuity Payment does not change
over time. Under a Variable Annuity Option (see "Annuity Payment Options,"
page 18), the dollar amount of each Annuity Payment may change over time,
depending upon the investment experience of the Portfolio or Portfolios you
choose. Annuity Payments are based on the Contract's Accumulated Value as of
10 Business Days prior to the Annuity Date.

Annuity Unit - Unit of measure used to calculate Variable Annuity Payments
(see "Annuity Payment Options," page 18).

Annuity Unit Value - The value of each Annuity Unit which is calculated each
Valuation Period.

Business Day - A day when the New York Stock Exchange is open for trading.

Code - The Internal Revenue Code of 1986, as amended.

Company ("we", "us", "our") - First Providian Life and Health Insurance
Company, a New York stock company.

Contract - The group flexible premium variable annuity contract described in
this Prospectus, participation in which will be evidenced by a certificate
issued to the Contract Owner.

Contract Anniversary - Any anniversary of the Contract Date.

Contract Date - The date of issue of this Contract.

Contract Owner ("you", "your") - The person or persons designated as the
Contract Owner in the Contract application. The term shall also include any
person named as Joint Owner. A Joint Owner shares ownership in all respects
with the Contract Owner. Prior to the Annuity Date, the Contract Owner has the
right to assign ownership, designate beneficiaries, make permitted withdrawals
and Exchanges among Subaccounts.

Contract Year - A period of 12 months starting with the Contract Date or any
Contract Anniversary.

Death Benefit - The greater of the Contract's Accumulated Value on the date
the Company receives due Proof of Death of the Annuitant or the Adjusted Death
Benefit.

Exchange - One Exchange will be deemed to occur with each voluntary transfer
from any Subaccount.

Funds - Each of (i) Federated Insurance Series (advised by Federated
Advisers), (ii) The Montgomery Funds III (advised by Montgomery Asset
Management, L.P.), and (iii) Wanger Advisors Trust (advised by Wanger Asset
Management, L.P.).

General Account - The account which contains all of our assets other than
those held in our separate accounts.

Net Purchase Payment - Any Purchase Payment less the Premium Tax, if any.

Non-Qualified Contract - Any Contract other than those described under the
Qualified Contract reference in this Glossary.

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Owner's Designated Beneficiary - The person to whom ownership of this Contract
passes upon the Contract Owner's death, unless the Contract Owner was also the
Annuitant-in which case the Annuitant's Beneficiary is entitled to the Death
Benefit. (Note: this transfer of ownership to the Owner's Designated
Beneficiary will generally not be subject to probate, but will be subject to
estate and inheritance taxes. Consult with your tax and estate adviser to be
sure which rules will apply to you.)

Payee - The Contract Owner, Annuitant, Annuitant's Beneficiary, or any other
person, estate, or legal entity to whom benefits are to be paid.

Portfolio - A separate investment portfolio of the Funds. The Funds currently
offer 9 Portfolios in the Advisor's Edge Variable Annuity: the Federated
American Leaders Fund II (the "Federated American Leaders Portfolio"), the
Federated Utility Fund II (the "Federated Utility Portfolio"), the Federated
Prime Money Fund II (the "Federated Prime Money Portfolio"), the Federated
Fund for U.S. Government Securities II (the "Federated U.S. Government
Securities Portfolio") and the Federated High Income Bond Fund II (the
"Federated High Income Bond Portfolio") of Federated Insurance Series; the
Montgomery Variable Series: Growth Fund (the "Montgomery Growth Portfolio")
and the Montgomery Variable Series: Emerging Markets Fund (the "Montgomery
Emerging Markets Portfolio") of The Montgomery Funds III; the Wanger U.S.
Small Cap Advisor (the "Wanger U.S. Small Cap Advisor Portfolio"); and the
Wanger International Small Cap Advisor (the "Wanger International Small Cap
Advisor Portfolio") of Wanger Advisors Trust (each, a "Portfolio" and
collectively, the "Portfolios"). In this Prospectus, Portfolio will also be
used to refer to the Subaccount that invests in the corresponding Portfolio.

Premium Tax - A regulatory tax that may be assessed by your state on the
Purchase Payments you make to this Contract. The amount which we must pay as
Premium Tax, if any, will be deducted from each Purchase Payment or from your
Accumulated Value as it is incurred by us.

Proof of Death - (a) A certified death certificate; (b) a certified decree of
a court of competent jurisdiction as to the finding of death; (c) a written
statement by a medical doctor who attended the deceased; or (d) any other
proof of death satisfactory to the Company.

Purchase Payment - Any premium payment. The minimum initial Purchase Payment
is $5,000 for Non-Qualified Contracts and $2,000 for Qualified Contracts (or
$50 monthly by payroll deduction for Qualified Contracts); each additional
Purchase Payment must be at least $500 for Non-Qualified Contracts or $50 for
Qualified Contracts. Purchase Payments may be made at any time prior to the
Annuity Date as long as the Annuitant is living.

Qualified Contract - An annuity contract as defined under Sections 403(b),
408(b), and 408A of the Code.

Right to Cancel Period - The period during which the Contract can be canceled
and treated as void from the Contract Date.

Separate Account - That portion of First Providian Life and Health Insurance
Company's Separate Account C dedicated to the Contract. The Separate Account
consists of assets that are segregated by First Providian Life and Health
Insurance Company and, for Contract Owners, invested in the Portfolios. The
Separate Account is independent of the general assets of the Company. The
Separate Account invests in the Portfolios.

Subaccount - That portion of the Separate Account that invests in shares of
the Funds' Portfolios. Each Subaccount will only invest in a single Portfolio.
The investment performance of each Subaccount is linked directly to the
investment performance of one of the 9 Portfolios.

Surrender Value - The Accumulated Value less any Premium Taxes incurred but
not yet deducted.

Valuation Period - The relative performance of your Contract is measured by
the Accumulation Unit Value. This value is calculated each Valuation Period. A
Valuation Period is defined as the period of time between the close of
business on one Business Day and the close of business on the following
Business Day.

4
<PAGE>

HIGHLIGHTS

YOU CAN FIND DEFINITIONS OF IMPORTANT TERMS IN THE GLOSSARY (PAGE 2).

THE ADVISOR'S EDGE

The Contract provides a vehicle for investing on a tax-deferred basis in 9
investment company Portfolios. You may subsequently withdraw monies from the
Contract either as a lump sum or as annuity income as permitted under the
Contract. Accumulated Values and Annuity Payments depend on the investment
experience of the selected Portfolios. The investment performance of the
Portfolios is not guaranteed. Thus, you bear all investment risk for monies
invested under the Contract.

WHO SHOULD INVEST

The Contract is designed for investors seeking long term, tax-deferred
accumulation of funds, generally for retirement but also for other long-term
investment purposes. The tax-deferred feature of the Contract is most
attractive to investors in high federal and state marginal income tax
brackets. The Contract is offered as both a Qualified Contract and a Non-
Qualified Contract. Both Qualified and Non-Qualified Contracts offer tax-
deferral on increases in the Contract's value prior to withdrawal or
distribution; however Purchase Payments made by Contract Owners of Qualified
Contracts may be excludible or deductible from gross income in the year such
payments are made, subject to certain statutory restrictions and limitations.
(See "Federal Tax Considerations," at page 21.)

INVESTMENT CHOICES

Your investment in the Contract may be allocated among 9 Subaccounts of the
Separate Account. The Subaccounts in turn invest exclusively in the following
9 Portfolios offered by the Funds: the Federated American Leaders Portfolio,
the Federated Utility Portfolio, the Federated Prime Money Portfolio, the
Federated U.S. Government Securities Portfolio, the Federated High Income Bond
Portfolio, the Montgomery Growth Portfolio, the Montgomery Emerging Markets
Portfolio, the Wanger U.S. Small Cap Advisor Portfolio, and the Wanger
International Small Cap Advisor Portfolio.The assets of each Portfolio are
separate, and each Portfolio has distinct investment objectives and policies
as described in the corresponding Fund Prospectus.......................Page 12

CONTRACT OWNER

The Contract Owner is the person designated as the owner of the Contract in
the Contract application. The Contract Owner may designate any person as a
Joint Owner. A Joint Owner shares ownership in all respects with the Contract
Owner. Prior to the Annuity Date, the Contract Owner has the right to assign
ownership, designate beneficiaries, and make permitted withdrawals and
Exchanges among the Subaccounts.

ANNUITANT

The Annuitant is a person whose life is used to determine the duration of any
Annuity Payments and upon whose death, prior to the Annuity Date, benefits
under the Contract are paid.

ANNUITANT'S BENEFICIARY

The Contract Owner may designate any person to receive benefits under the
Contract which are payable upon the death of the Annuitant prior to the
Annuity Date.

HOW TO INVEST

5
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Qualified Contracts); subsequent Purchase Payments must be at least $500 for
Non-Qualified Contracts or $50 for Qualified Contracts. You may make
subsequent Purchase Payments at any time before the Contract's Annuity Date,
as long as the Annuitant specified in the Contract is living............Page 14

ALLOCATION OF PURCHASE PAYMENTS

Your initial Net Purchase Payment(s) will, unless you indicate otherwise, be
invested in your chosen Portfolios immediately upon our receipt thereof, IN
WHICH CASE YOU WILL BEAR FULL INVESTMENT RISK FOR ANY AMOUNTS ALLOCATED TO THE
PORTFOLIOS DURING THE RIGHT TO CANCEL PERIOD. You must fill out and send us
the appropriate form or comply with other designated Company procedures if you
would like to change how subsequent Net Purchase Payments are allocated....Page
15

RIGHT TO CANCEL PERIOD

The Contract provides for a Right to Cancel Period of 10 days (20 days for
replacement) plus a 5 day grace period to allow for mail delivery, during
which you may cancel your investment in the Contract. To cancel your
investment, please return your Contract to us or to the agent from whom you
purchased the Contract. When we receive the Contract, we will return the
Accumulated Value of your Purchase Payment(s) invested in the Portfolios plus
any fees and/or Premium Taxes that may have been subtracted from such
amount..................................................................Page 15

EXCHANGES

You may make unlimited Exchanges among the Portfolios provided you maintain a
minimum balance of $250, except in cases where Purchase Payments are made by
monthly payroll deduction, in each Subaccount to which you have allocated a
portion of your Accumulated Value. No fee is currently imposed for such
Exchanges; however, we reserve the right to charge a $15 fee for Exchanges in
excess of 12 per Contract Year. Exchanges must not reduce the value of any
Subaccount below $250, except in cases where Purchase Payments are made by
monthly payroll deduction, or that remaining amount will be transferred to
your other Subaccounts on a pro rata basis. (See also "Charges and
Deductions," page 16.)..................................................Page 15

DEATH BENEFIT

If the Annuitant specified in your Contract dies prior to the Annuity Date,
your named Annuitant's Beneficiary will receive the Death Benefit under the
Contract. The Death Benefit is the greater of your Accumulated Value or the
Adjusted Death Benefit on the date we receive due proof of the Annuitant's
death. During the first six Contract Years, the Adjusted Death Benefit will be
the sum of all Net Purchase Payments made, less any partial withdrawals taken.
During each subsequent six-year period, the Adjusted Death Benefit will be the
Death Benefit on the last day of the previous six-year period plus any Net
Purchase Payments made, less any partial withdrawals taken during the current
six-year period. After the Annuitant attains age 75, the Adjusted Death
Benefit will remain equal to the Death Benefit on the last day of the six-year
period before age 75 occurs plus any Net Purchase Payments subsequently made,
less any partial withdrawals subsequently taken. The Annuitant's Beneficiary
may elect to receive these proceeds as a lump sum or as Annuity Payments. If
the Annuitant dies on or after the Annuity Date, any unpaid payments certain
will be paid, generally to the Annuitant's Beneficiary, in accordance with the
Contract................................................................Page 20

ANNUITY PAYMENT OPTIONS

In addition to the full and partial withdrawal privileges, you may also choose
to create an income stream by requesting an annuity income from us. As the
Contract Owner, you may elect one of several Annuity Payment Options. By
electing an Annuity Payment Option, you are asking us to systematically
liquidate your Contract. We provide you with a variety of payment options. At
your discretion, payments may be either fixed or variable or both. Fixed
payouts are guaranteed for a designated period or for life (either single or
joint). Variable payments will vary depending on the performance of the
underlying Portfolio or Portfolios selected.............................Page 18

CONTRACT AND POLICYHOLDER INFORMATION

If you have questions about your Contract, please telephone our Administrative
Offices at 1-800-797-9177 between the hours of 8:00 A.M. to 5:00 P.M. Eastern
time. Please have the Contract number and the Contract Owner's name ready when
you call. As Contract Owner you will receive periodic statements confirming
any financial transactions that take place, as well as quarterly statements
and an annual statement.

6
<PAGE>

CHARGES AND DEDUCTIONS UNDER THE CONTRACT

The Contract has no sales charges and has an annual mortality and expense risk
charge of .50%. Contract Owners may withdraw up to 100% of the Accumulated
Value without incurring a surrender charge. The Contract also includes
administrative charges and policy fees which pay for administering the
Contract, and management, advisory and other fees, which reflect the costs of
the Funds...............................................................Page 16

FULL AND PARTIAL WITHDRAWALS

You may withdraw all or part of the Surrender Value of the Contract before the
earlier of the Annuity Date or the Annuitant's death. Withdrawals made prior
to age 59 1/2 may be subject to a 10% penalty tax (and a portion thereof may
be subject to ordinary income taxes)....................................Page 17

FEE TABLE

The following table illustrates all expenses (except for Premium Taxes that
may be assessed by your state) that you would incur as an owner of a Contract
(see page 16). The purpose of this table is to assist you in understanding the
various costs and expenses that you would bear directly or indirectly as a
purchaser of the Contract. The fee table reflects all expenses for both the
Separate Account and the Funds. For a complete discussion of Contract costs
and expenses, see "Charges and Deductions," page 16.

CONTRACTOWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases......................................... None
Contingent Deferred Sales Load (surrender charge)....................... None
Exchange Fees........................................................... None
ANNUAL CONTRACT FEE..................................................... $30
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of assets in the
Separate Account)
Mortality and Expense Risk Charge....................................... .50%
Administrative Charge................................................... .15%
----
Total Annual Separate Account Expenses.................................. .65%
</TABLE>

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PORTFOLIO ANNUAL EXPENSES

Except as may be indicated, the figures below are based on actual expenses for
fiscal year 1997 (as a percentage of each Portfolio's average net assets after
fee waiver and/or expense reimbursement, if applicable).

<TABLE>
<CAPTION>
TOTAL
MANAGEMENT PORTFOLIO
AND ADVISORY OTHER ANNUAL
EXPENSES EXPENSES EXPENSES
------------ -------- ---------
<S> <C> <C> <C>
Federated American Leaders Portfolio(1)........ 0.66% 0.19% 0.85%
Federated Utility Portfolio(1)................. 0.48% 0.37% 0.85%
Federated Prime Money Portfolio(1)............. 0.30% 0.50% 0.80%
Federated U.S. Government Securities
Portfolio(1).................................. 0.15% 0.65% 0.80%
Federated High Income Bond Portfolio(1)........ 0.51% 0.29% 0.80%
Montgomery Growth Portfolio(2)................. 0.00% 0.34% 0.34%
Montgomery Emerging Markets Portfolio(2)....... 1.25% 0.50% 1.75%
Wanger U.S. Small Cap Advisor Portfolio(3)..... 0.97% 0.09% 1.06%
Wanger International Small Cap Advisor
Portfolio(3).................................. 1.28% 0.32% 1.60%
</TABLE>

(1) The expense figures shown reflect actual expenses for fiscal year 1997
including voluntary waivers of a portion of the management fees and/or
assumption of expenses. The maximum Management and Advisory Expenses
and Total Portfolio Annual Expenses absent the voluntary waivers would
have been as follows: 0.75% and 0.94%, respectively, for the Federated
American Leaders Portfolio; 0.75% and 1.12%, respectively, for the
Federated Utility Portfolio; 0.50% and 1.00%, respectively, for the
Federated Prime Money Portfolio; 0.60% and 1.26%, respectively, for the
Federated U.S. Government Securities Portfolio; and 0.60 and 0.89%,
respectively, for the Federated High Income Bond Portfolio.

(2) The fee for Management and Advisory Expenses has been reduced to
reflect the adviser's voluntary waiver of a portion of the management
fee. The adviser can terminate this waiver at any time in its sole
discretion. The maximum fee for Management and Advisory Expenses is
0.50%. Without this voluntary waiver, Total Portfolio Annual Expenses
would have been 1.00%.

(3) As required by the Securities and Exchange Commission rules, "Other
Expenses" reflects gross custodian fees. Net of custodian fees paid
indirectly, Other Expenses would have been 0.07% for U.S. Small Cap
Advisor Portfolio and 0.31% for International Small Cap Advisor
Portfolio; Total Portfolio Annual Expenses would have been 1.04% and
1.59%, respectively.

The following example illustrates the expenses that you would incur on a
$1,000 Purchase Payment over various periods, assuming (1) a 5% annual rate of
return and (2) redemption at the end of each period. As noted in the table
above, the Contract imposes no surrender or withdrawal charges of any kind.
Your expenses are identical whether you continue the Contract or withdraw the
entire value of your Contract at the end of the applicable period as a lump
sum or under one of the Contract's Annuity Payment Options.

<TABLE>
<CAPTION>
3 5 10
1 YEAR YEARS YEARS YEARS
------ ------ ------ -------
<S> <C> <C> <C> <C>
Federated American Leaders Portfolio............... $15.55 $48.27 $83.25 $181.73
Federated Utility Portfolio........................ 15.55 48.27 83.25 181.73
Federated Prime Money Portfolio.................... 15.05 46.72 80.62 176.21
Federated U.S. Government Securities Portfolio..... 15.05 46.72 80.62 176.21
Federated High Income Bond Portfolio............... 15.05 46.72 80.62 176.21
Montgomery Growth Portfolio........................ 10.39 32.39 56.13 124.06
Montgomery Emerging Markets Portfolio.............. 24.60 75.69 129.42 276.18
Wanger U.S. Small Cap Advisor Portfolio............ 17.67 54.73 94.21 204.59
Wanger International Small Cap Advisor Portfolio... 23.10 71.17 121.87 261.06
</TABLE>

8
<PAGE>

year period.) The Annual Contract Fee will be deducted on each Contract
Anniversary and upon surrender or annuitization of the Contract, on a pro rata
basis, from each Subaccount. The Company may also deduct Premium Taxes, if
any, as incurred by the Company.

This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be higher or lower than those
shown, subject to the guarantees in the Contract.

CONDENSED FINANCIAL INFORMATION
(FOR THE PERIOD JANUARY 1, 1997 THROUGH DECEMBER 31, 1997)

<TABLE>
<CAPTION>
FEDERATED FEDERATED FEDERATED FEDERATED MONTGOMERY
AMERICAN FEDERATED PRIME US GOV'T HIGH INCOME MONTGOMERY EMERGING
LEADERS UTILITY MONEY SECURITIES BOND GROWTH MARKETS
--------- --------- --------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value
as of:
Start Date:* 10.000 10.000 10.000 10.000 10.000 10.000 10.000
12/31/97.............. 12.304 12.476 10.404 10.751 11.156 12.389 8.827
Number of units
outstanding as of:
12/31/97.............. 6,260.806 6,250.427 291.043 22,834.496 45,383.287 3,048.704 6,209.783
</TABLE>

*Date of commencement of operations for Federated American Leaders was 5/1/97;
for Federated Utility was 5/1/97; for Federated Prime Money was 1/22/97; for
Federated U.S. Government Securities was 3/7/97; for Federated High Income
Bond was 5/1/97; for Montgomery Growth was 5/1/97; and for Montgomery Emerging
Markets was 2/26/97.

<TABLE>
<CAPTION>
WANGER WANGER
U.S. SMALL CAP INT'L SMALL CAP
-------------- ---------------
<S> <C> <C>
Accumulation unit value as of:
Start Date:* 10.000 10.000
12/31/97....................................... 13.396 9.569
Number of units outstanding as of:
12/31/97....................................... 4,702.844 2,280.053
</TABLE>

*Date of commencement of operations for Wanger U.S. Small Cap was 5/1/97; and
for Wanger International Small Cap was 5/1/97.

FINANCIAL STATEMENTS

The audited statutory-basis financial statements of the Company and of the
Separate Account (as well as the Independent Auditors' Report thereon) are
contained in the Statement of Additional Information.

PERFORMANCE MEASURES

Performance for the Subaccounts of the Separate Account, including the yield
and effective yield of the Federated Prime Money Portfolio, the yield of the
other Subaccounts, and the total return of all Subaccounts may appear in
reports and promotional literature to current or prospective Contract Owners.

Please refer to the discussion below and to the Statement of Additional
Information for a more detailed description of the method used to calculate a
Portfolio's yield and total return, and a list of the indexes and other
benchmarks used in evaluating a Portfolio's performance.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

9
<PAGE>

a single $1,000 payment made at the beginning of the period and full
redemption at the end of the period. It reflects the deduction of the Annual
Contract Fee and all other Portfolio, Separate Account and Contract level
charges except Premium Taxes, if any.

ADDITIONAL PERFORMANCE MEASURES

NON-STANDARDIZED ACTUAL TOTAL RETURN AND NON-STANDARDIZED ACTUAL AVERAGE
ANNUAL TOTAL RETURN

The Company may show actual Total Return (i.e., the percentage change in the
value of an Accumulation Unit) for one or more Subaccounts with respect to one
or more periods. The Company may also show actual Average Annual Total Return
(i.e., the average annual change in Accumulation Unit Values) with respect to
one or more periods. For one year, the actual Total Return and the actual
Average Annual Total Return are effective annual rates of return and are
equal. For periods greater than one year, the actual Average Annual Total
Return is the effective annual compounded rate of return for the periods
stated. Because the value of an Accumulation Unit reflects the Separate
Account and Portfolio expenses (see "Fee Table"), the actual Total Return and
actual Average Annual Total Return also reflect these expenses. These
percentages, however, do not reflect the Annual Contract Fee or Premium Taxes
(if any) which, if included, would reduce the percentages reported.

NON-STANDARDIZED TOTAL RETURN YEAR-TO-DATE

The Company may show Non-Standardized Total Return Year-to-Date as of a
particular date, or simply Total Return YTD, for one or more Subaccounts with
respect to one or more non-standardized base periods commencing at the
beginning of a calendar year. Total Return YTD figures reflect the percentage
change in actual Accumulation Unit Values during the relevant period. These
percentages reflect a deduction for the Separate Account and Portfolio
expenses, but do not include the Annual Contract Fee, any sales loads or
Premium Taxes (if any), which if included would reduce the percentages
reported by the Company.

NON-STANDARDIZED ONE YEAR RETURN

The Company may show Non-Standardized One Year Return for one or more
Subaccounts with respect to one or more non-standardized base periods
commencing at the beginning of a calendar year (or date of inception, if
during the relevant year) and ending at the end of such calendar year. One
Year Return figures reflect the percentage change in actual Accumulation Unit
Values during the relevant period. These percentages reflect a deduction for
the Separate Account and Portfolios expenses, but do not include the Annual
Contract Fee, any sales loads or Premium Taxes (if any), which if included
would reduce the percentages reported by the Company.

NON-STANDARDIZED HYPOTHETICAL TOTAL RETURN AND NON-STANDARDIZED HYPOTHETICAL
AVERAGE ANNUAL TOTAL RETURN

The Company may show Non-Standardized Hypothetical Total Return and Non-
Standardized Hypothetical Average Annual Total Return, calculated on the basis
of the historical performance of the Portfolios, and may assume the Contract
was in existence prior to its inception date (which it was not). After the
Contract's inception date, the calculations will reflect actual Accumulation
Unit Values. These returns are based on specified premium patterns which
produce the resulting Accumulated Values. They reflect a deduction for the
Separate Account expenses and Portfolio expenses. They do not include the
Annual Contract Fee or Premium Taxes (if any) which, if included, would reduce
the percentages reported.

The Non-Standardized Hypothetical Total Return for a Subaccount is the
effective annual rate of return that would have produced the ending
Accumulated Value of the stated one-year period.

The Non-Standardized Hypothetical Average Annual Total Return for a Subaccount
is the effective annual compounded rate of return that would have produced the
ending Accumulated Value over the stated period had the performance remained
constant throughout.

YIELD AND EFFECTIVE YIELD

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Portfolio over a seven-day period, which is then "annualized." That is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in the Federated Prime Money
Portfolio is assumed to be reinvested. Therefore the effective yield will be
slightly higher than the yield because of the compounding effect of this
assumed reinvestment. These figures do not reflect the Annual Contract Fee or
Premium Taxes (if any) which, if included, would reduce the yields reported.

From time to time a Portfolio of a Fund may advertise its yield and total
return investment performance. For each Subaccount other than the Federated
Prime Money Portfolio for which the Company advertises yield, the Company
shall furnish a yield quotation referring to the Portfolio computed in the
following manner: the net investment income per Accumulation Unit earned
during a recent one month period is divided by the Accumulation Unit Value on
the last day of the period.

Please refer to the Statement of Additional Information for a description of
the method used to calculate a Portfolio's yield and total return, and a list
of the indexes and other benchmarks used in evaluating a Portfolio's
performance.

The performance measures discussed above reflect results of the Portfolios and
are not intended to indicate or predict future performance. For more detailed
information, see the Statement of Additional Information.

Performance information for the Subaccounts may be contrasted with other
comparable variable annuity separate accounts or other investment products
surveyed by Lipper Analytical Services, a nationally recognized independent
reporting service which ranks mutual funds and other investment companies by
overall performance, investment objectives and assets. Performance may also be
tracked by other ratings services, companies, publications or persons who rank
separate accounts or other investment products on overall performance or other
criteria. Performance figures will be calculated in accordance with
standardized methods established by each reporting service.

THE COMPANY AND THE SEPARATE ACCOUNT

FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

The Company (formerly National Home Life Assurance Company of New York) is a
stock life insurance company incorporated under the laws of New York on March
23, 1970, with administrative offices at 520 Columbia Drive, Johnson City, New
York 13790. The Company is principally engaged in offering life insurance,
annuity contracts, and accident and health insurance and is admitted to do
business in 10 states and the District of Columbia. As of December 31, 1997,
the Company had assets of approximately $396 million. The Company is a wholly
owned subsidiary of AEGON USA, Inc., which conducts substantially all of its
operations through subsidiary companies engaged in the insurance business or
in providing non-insurance financial services. All of the stock of AEGON USA,
Inc. is indirectly owned by AEGON n.v. of the Netherlands. AEGON n.v., a
holding company, conducts its business through subsidiary companies engaged
primarily in the insurance business.

FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY SEPARATE ACCOUNT C

The Separate Account was established by the Company as a separate account
under the laws of New York on November 4, 1994, pursuant to a resolution of
the Company's Board of Directors. The Separate Account is a unit investment
trust registered with the SEC under the Investment Company Act of 1940 (the
"1940 Act"). Such registration does not signify that the SEC supervises the
management or the investment practices or policies of the Separate Account.
The Separate Account meets the definition of a "separate account" under the
federal securities laws.

The assets of the Separate Account are owned by the Company and the
obligations under the Contract are obligations of the Company. These assets
are held separately from the other assets of the Company and are not
chargeable with liabilities incurred in any other business operation of the
Company (except to the extent that assets in the Separate Account exceed the
reserves and other liabilities of the Separate Account). Income, gains and
losses incurred on the assets in the Separate Account, whether or not
realized, are credited to or charged against the Separate Account without
regard to other income, gains or losses of the Company. Therefore, the
investment performance of the Separate Account is entirely independent of the
investment performance of the General Account assets or any other separate
account maintained by the Company.

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The Separate Account has dedicated 9 Subaccounts to the Contract, each of
which invests solely in a corresponding Portfolio of the Funds. Additional
Subaccounts may be established at the discretion of the Company. The Separate
Account also includes other subaccounts which are not available under the
Contract.

THE FEDERATED INSURANCE SERIES (ADVISED BY FEDERATED ADVISERS)

The Federated Insurance Series is an open-end management investment company
organized as a Massachusetts business trust and registered under the 1940 Act.
The Fund consists of eight investment portfolios, five of which are available
as part of the Advisor's Edge: the Federated American Leaders Portfolio, the
Federated Utility Portfolio, the Federated Prime Money Portfolio, the
Federated U.S. Government Securities Portfolio and the Federated High Income
Bond Portfolio. Federated Advisers serves as this Fund's investment advisor.

THE MONTGOMERY FUNDS III (ADVISED BY MONTGOMERY ASSET MANAGEMENT, LLC)

The Montgomery Funds III, an open-end management investment company, was
organized as a Delaware business trust in 1994 and is registered under the
1940 Act. The Fund consists of three professionally managed investment
portfolios, two of which are available as part of the Advisor's Edge: the
Montgomery Growth Portfolio and the Montgomery Emerging Markets Portfolio.
Montgomery Asset Management, LLC ("MAM") was organized as a Delaware limited
liability company in 1997 and is the investment adviser for the Fund. On July
31, 1997, Montgomery Asset Management, L.P., formed in 1990, completed the
sale of substantially all of its assets to MAM.

WANGER ADVISORS TRUST (ADVISED BY WANGER ASSET MANAGEMENT, L.P.)

Wanger Advisors Trust, an open-end management investment company, was
organized as a Massachusetts business trust in 1994 and is registered under
the 1940 Act. The Fund consists of two series available as part of the
Advisor's Edge: the Wanger U.S. Small Cap Advisor Portfolio and the Wanger
International Small Cap Advisor Portfolio. Wanger Asset Management, L.P., a
limited partnership managed by its general partner, Wanger Asset Management,
Ltd., serves as this Fund's investment advisor.

THE PORTFOLIOS (SEE ACCOMPANYING PROSPECTUSES)

FOR MORE INFORMATION CONCERNING THE RISKS ASSOCIATED WITH EACH PORTFOLIO'S
INVESTMENTS, PLEASE REFER TO THE APPLICABLE UNDERLYING FUND PROSPECTUS.

FEDERATED AMERICAN LEADERS FUND II ("FEDERATED AMERICAN LEADERS PORTFOLIO")

The primary investment objective of the Federated American Leaders Portfolio
is to achieve long-term growth of capital. The Portfolio's secondary objective
is to provide income. The Portfolio pursues its investment objectives by
investing, under normal circumstances, at least 65% of its total assets in
common stock of "blue-chip" companies. This Portfolio was formerly known as
the Federated Equity Growth and Income Portfolio.

FEDERATED UTILITY FUND II ("FEDERATED UTILITY PORTFOLIO")

The investment objective of the Federated Utility Portfolio is to achieve high
current income and moderate capital appreciation. The Portfolio endeavors to
achieve its objective by investing primarily in a professional managed and
diversified portfolio of equity and debt securities of utility companies.

FEDERATED PRIME MONEY FUND II ("FEDERATED PRIME MONEY PORTFOLIO")

The investment objective of the Federated Prime Money Portfolio is to provide
current income consistent with stability of principal and liquidity. The
Portfolio pursues its investment objective by investing exclusively in a
portfolio of money market instruments maturing in 397 days or less.

FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II ("FEDERATED U.S. GOVERNMENT
SECURITIES PORTFOLIO")

The investment objective of the Federated U.S. Government Securities Portfolio
is to provide current income. Under normal circumstances, the Portfolio
pursues its investment objective by investing at least 65% of the value of its
total

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assets in securities issued or guaranteed as to payment of principal and
interest by the U.S. government, its agencies or instrumentalities. This
Portfolio was formerly known as the Federated U.S. Government Bond Portfolio.

FEDERATED HIGH INCOME BOND FUND II ("FEDERATED HIGH INCOME BOND PORTFOLIO")

The investment objective of the Federated High Income Bond Portfolio is to
seek high current income. The Portfolio endeavors to achieve its investment
objective by investing primarily in a diversified portfolio of professionally
managed fixed income securities. The fixed income securities in which the
Portfolio intends to invest are lower-rated corporate debt obligations, which
are commonly referred to as "junk-bonds." Some of these fixed income
securities may involve equity features. Capital growth will be considered, but
only when consistent with the investment objective of high current income.
This Portfolio was formerly known as the Federated Corporate Bond Portfolio.

MONTGOMERY VARIABLE SERIES: GROWTH FUND ("MONTGOMERY GROWTH PORTFOLIO")

The investment objective of the Montgomery Growth Portfolio is capital
appreciation, which, under normal conditions it seeks by investing at least
65% of its total assets in equity securities of domestic companies. The
Portfolio emphasizes investments in common stocks but also invests in other
types of equity securities. In addition to capital appreciation, the Portfolio
emphasizes value.

MONTGOMERY VARIABLE SERIES: EMERGING MARKETS FUND ("MONTGOMERY EMERGING
MARKETS PORTFOLIO")

The investment objective of the Montgomery Emerging Markets Portfolio is
capital appreciation, which, under normal conditions it seeks by investing at
least 65% of its total assets in equity securities of companies in countries
having emerging markets. For these purposes, the Portfolio defines an emerging
market country as having an economy that is or would be considered by the
World Bank or the United Nations to be emerging or developing. The Portfolio
invests primarily in common stock but may also invest in other types of equity
securities, and in certain types of debt securities issued by the governments
of emerging market countries that are or may be eligible for conversion into
investments in emerging market companies under debt conversion programs
sponsored by such governments.

WANGER U.S. SMALL CAP ADVISOR ("WANGER U.S. SMALL CAP ADVISOR PORTFOLIO")

The investment objective of the Wanger U.S. Small Cap Advisor Portfolio is to
seek long-term growth of capital. The Portfolio pursues its investment
objective by investing primarily in stocks of United States companies with a
total common stock market capitalization of less than $1 billion. The Fund is
not required to sell a security that grows to a larger market capitalization.
The Portfolio may also invest in debt securities, including lower-rated debt
securities, which may be regarded as having speculative characteristics and
are commonly referred to as "junk bonds."

WANGER INTERNATIONAL SMALL CAP ADVISOR ("WANGER INTERNATIONAL SMALL CAP
ADVISOR PORTFOLIO")

The investment objective of the Wanger International Small Cap Advisor
Portfolio is to seek long-term growth of capital. The Portfolio pursues its
investment objective by investing primarily in the stocks of foreign companies
with a total common stock market capitalization of less than $1 billion. The
Fund is not required to sell a security that grows to a larger market
capitalization. The Portfolio may also invest in debt securities, including
lower-rated debt securities, which may be regarded as having speculative
characteristics and are commonly referred to as "junk bonds."

OTHER PORTFOLIO INFORMATION

There is no assurance that a Portfolio will achieve its stated investment
objective.

Additional information concerning the investment objectives and policies of
the Portfolios and the investment advisory services, total expenses and
charges can be found in the current prospectuses for the corresponding Funds.
THE FUNDS' PROSPECTUSES SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
CONCERNING THE ALLOCATION OF NET PURCHASE PAYMENTS TO A PORTFOLIO.

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<PAGE>

retirement plan receiving favorable tax treatment under the Code, that
qualifies to purchase shares of the Funds under Section 817(h) of the Code.
Although we believe it is unlikely, a material conflict could arise among the
interests of the Separate Account and one or more of the other participating
separate accounts and other qualified persons or plans. In the event of a
material conflict, the affected insurance companies agree to take any
necessary steps, including removing their separate accounts from the Funds if
required by law, to resolve the matter.

CONTRACT FEATURES

The rights and benefits under the Contract are as described below; however,
the description of the Contract contained in this Prospectus is qualified in
its entirety by the Contract itself, including any endorsements to it, a copy
of which is available from the Company. The Company reserves the right to make
any modification to conform the Contract to, or give the Contract Owner the
benefit of, any federal or state statute or any rule or regulation of the
United States Treasury Department.

CONTRACT APPLICATION AND PURCHASE PAYMENTS

If an applicant wishes to purchase a Contract, the applicant should send his
or her completed application and initial Purchase Payment to the address
indicated on the application, or to such other location as the Company may
from time to time designate. If the applicant wishes to make personal delivery
by hand or courier to the Company of the completed application and initial
Purchase Payment (rather than through the mail), he or she must do so at our
Administrative Offices at 520 Columbia Drive, Johnson City, New York 13790.
The initial Purchase Payment for a Non-Qualified Contract must be equal to at
least the $5,000 minimum investment requirement. The initial Purchase Payment
for a Qualified Contract must be equal to at least $2,000 (or you may
establish a payment schedule of $50 a month by payroll deduction).

The Contract will be issued and the initial Purchase Payment less any Premium
Taxes will be credited within two Business Days after acceptance of the
application and the initial Purchase Payment. Acceptance is subject to the
application being received in good order, and the Company reserves the right
to reject any application or initial Purchase Payment.

If the initial Purchase Payment cannot be credited because the application is
incomplete, we will contact the applicant, explain the reason for the delay
and refund the initial Purchase Payment within five Business Days, unless the
applicant instructs us to retain the initial Purchase Payment and credit it as
soon as the necessary requirements are fulfilled.

You may make additional Purchase Payments at any time before the Annuity Date,
as long as the Annuitant is living. Additional Purchase Payments must be for
at least $500 for Non-Qualified Contracts, or $50 for Qualified Contracts.
Additional Purchase Payments received prior to the close of the New York Stock
Exchange (generally 4:00 P.M. Eastern time) are credited to the Accumulated
Value at the close of business that same day. Additional Purchase Payments
received after the close of the New York Stock Exchange are processed the next
Business Day.

Total Purchase Payments may not exceed $1,000,000 without our prior approval.

The Company reserves the right to refuse to issue this Contract in cases
involving an exchange for another Contract. In cases where a Contract Owner or
former Contract Owner requests the Company to reverse a surrender or
withdrawal transaction, whether full or partial, the Company reserves the
right to refuse such requests or to grant such requests on the condition that
the Contract's Accumulated Value be adjusted to reflect appropriate investment
results, administrative costs, or loss of interest during the relevant period.

PURCHASING BY WIRE

For wiring instructions please contact our Administrative Offices at 1-800-
797-9177.

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RIGHT TO CANCEL PERIOD

A Right to Cancel Period exists for 10 days after you receive the Contract (20
days for replacement) plus a 5 day grace period to allow for mail delivery.
You may cancel the Contract during the Right to Cancel Period by returning the
Contract to our Administrative Offices, 520 Columbia Drive, Johnson City, New
York 13790 or to the agent from whom you purchased the Contract or mailing it
to us at P.O. Box 1950, Binghamton, New York 13902. Upon cancellation, the
Contract is treated as void from the Contract Date and when we receive the
Contract, we will return the Accumulated Value of your Purchase Payment(s)
invested in the Portfolios plus any fees and/or Premium Taxes that may have
been subtracted from such amount.

ALLOCATION OF PURCHASE PAYMENTS

You specify in the Contract application how your Net Purchase Payments will be
allocated. You may allocate each Net Purchase Payment to one or more of the
Portfolios as long as such portions are whole number percentages provided no
Portfolio may contain a balance of less than $250, except in cases where
Purchase Payments are made by monthly payroll deduction. You may choose not to
allocate any monies to a particular Portfolio. You may change allocation
instructions for future Net Purchase Payments by sending us the appropriate
Company form or by complying with other designated Company procedures.

Your initial Net Purchase Payment(s) will, unless you indicate otherwise, be
invested in your Portfolios immediately upon our receipt thereof, in which
case you will bear full investment risk for any amounts allocated to the
Portfolios during the Right to Cancel Period.

EXCHANGES AMONG THE PORTFOLIOS

Should your investment goals change, you may exchange Accumulated Value among
the Portfolios of the Funds. Requests for Exchanges, received by mail prior to
the close of the New York Stock Exchange (generally 4:00 P.M. Eastern time),
are processed at the close of business that same day. Requests received after
the close of the New York Stock Exchange are processed the next Business Day.

DOLLAR COST AVERAGING OPTION

If you have at least $5,000 of Accumulated Value in the Federated Prime Money
Portfolio, you may choose to have a specified dollar amount transferred from
this Portfolio to other Portfolios in the Separate Account on a monthly basis.
The main objective of Dollar Cost Averaging is to shield your investment from
short term price fluctuations. Since the same dollar amount is transferred to
other Portfolios each month, more units are purchased in a Portfolio if the
value per unit is low and less units are purchased if the value per unit is
high. Therefore, a lower average cost per unit may be achieved over the long
term. This plan of investing allows investors to take advantage of market
fluctuations but does not assure a profit or protect against a loss in
declining markets.

This Dollar Cost Averaging Option may be elected on the application or at a
later date. The minimum amount that may be transferred each month into any
Portfolio is $250. The maximum amount which may be transferred is equal to the
Accumulated Value in the Federated Prime Money Portfolio when elected, divided
by 12.

The transfer date will be the same calendar day each month as the Contract
Date. The dollar amount will be allocated to the Portfolios in the proportions
you specify on the appropriate Company form, or, if none are specified, in
accordance with your original investment allocation. If, on any transfer date,
the Accumulated Value is equal to or less than the amount you have elected to
have transferred, the entire amount will be transferred and the option will
end. You may change the transfer amount once each Contract Year, or cancel
this option by sending the appropriate Company form to our Administrative
Offices which must be received at least seven days before the next transfer
date.

ACCUMULATED VALUE

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<PAGE>

results of the selected Portfolio(s); and reduced by: (i) any decrease in the
Accumulated Value due to investment results of the selected Portfolio(s), (ii)
a daily charge to cover the mortality and expense risks assumed by the
Company, (iii) any charge to cover the cost of administering the Contract,
(iv) any partial withdrawals, and, if exercised by the Company, (v) any
charges for any Exchanges made after the first 12 in any Contract Year.

CHARGES AND DEDUCTIONS

There are no sales charges for the Contracts.

MORTALITY AND EXPENSE RISK CHARGE

We impose a charge as compensation for bearing certain mortality and expense
risks under the Contracts. The annual charge is assessed daily based on the
net asset value of the Separate Account. The annual mortality and expense risk
charge is .50% of the net asset value of the Separate Account.

We guarantee that this annual charge will never increase. If this charge is
insufficient to cover actual costs and assumed risks, the loss will fall on
us. Conversely, if the charge proves more than sufficient, any excess will be
added to the Company surplus and will be used for any lawful purpose,
including any shortfall on the costs of distributing the Contracts.

The mortality risk borne by us under the Contracts, where one of the life
Annuity Payment Options is selected, is to make monthly Annuity Payments
(determined in accordance with the annuity tables and other provisions
contained in the Contract) regardless of how long all Annuitants may live. We
also assume mortality risk as a result of our guarantee of a Death Benefit in
the event the Annuitant dies prior to the Annuity Date.

The expense risk borne by us under the Contracts is the risk that the charges
for administrative expenses which are guaranteed for the life of the Contract
may be insufficient to cover the actual costs of issuing and administering the
Contract.

ADMINISTRATIVE CHARGE AND ANNUAL CONTRACT FEE

An administrative charge equal to .15% annually of the net asset value of the
Separate Account is assessed daily along with the Annual Contract Fee of $30.
The Annual Contract Fee is deducted proportionately from the Subaccounts. For
any Contract with amounts allocated to the Subaccounts, the $30 fee is
assessed per Contract, not per Portfolio chosen. The Annual Contract Fee will
be deducted on each Contract Anniversary and upon surrender, on a pro rata
basis, from each Subaccount. These deductions represent reimbursement for the
costs expected to be incurred over the life of the Contract for issuing and
maintaining each Contract and the Separate Account.

EXCHANGE FEE

Each Contract Year you may make an unlimited number of Exchanges between
Portfolios, provided that after an Exchange no Portfolio may contain a balance
less than $250, except in cases where Purchase Payments are made by monthly
payroll deduction. No fee is currently imposed for such Exchanges; however, we
reserve the right to charge a $15 fee for Exchanges in excess of 12 per
Contract Year.

TAXES

Under present laws, the Company will not incur New York state or local taxes.
If there is a change in state or local tax laws, charges for such taxes may be
made. The Company does not expect to incur any federal income tax liability
attributable to investment income or capital gains retained as part of the
reserves under the Contracts. (See "Federal Tax Considerations," page 21.)
Based upon these expectations, no charge is currently being made to the
Separate Account for corporate federal income taxes that may be attributable
to the Separate Account.

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<PAGE>

what the Company currently believes it to be, if there are changes made in the
federal income tax treatment of annuities at the corporate level, or if there
is a change in the Company's tax status. In the event that the Company should
incur federal income taxes attributable to investment income or capital gains
retained as part of the reserves under the Contracts, the Accumulated Value of
the Contract would be correspondingly adjusted by any provision or charge for
such taxes.

PORTFOLIO EXPENSES

The value of the assets in the Separate Account reflect the fees and expenses
paid by the Portfolios. A complete description of these expenses is found in
the "Fee Table" section of this Prospectus and in each Fund's Prospectus and
Statement of Additional Information.

EXCEPTIONS TO CHARGES AND TO TRANSACTION OR BALANCE REQUIREMENTS

The administrative charges or fees may be reduced for sales of Contracts to a
trustee, employer or similar entity representing a group where the Company
determines that such sales result in savings of administrative expenses. In
addition, directors, officers and bona fide full-time employees (and their
spouses and minor children) of the Company, its ultimate parent company, and
certain of their affiliates are permitted to purchase Contracts with
substantial reduction of administrative charges or fees or with a waiver or
modification of certain minimum or maximum purchase and transaction amounts or
balance requirements. Contracts so purchased are for investment purposes only
and may not be resold except to the Company.

In no event will reduction or elimination of fees or charges or waiver or
modification of transaction or balance requirements be permitted where such
reduction, elimination, waiver or modification will be unfairly discriminatory
to any person. Additional information about reductions in charges is contained
in the Statement of Additional Information.

MINIMUM BALANCE REQUIREMENT

We will transfer the balance in any Portfolio that falls below $250, except in
cases where Purchase Payments are made by monthly payroll deduction, due to a
partial withdrawal or Exchange, to the remaining Portfolios held under that
Contract on a pro rata basis. In the event that the entire value of the
Contract falls below $1,000, and if no Purchase Payment has been received
within three years, we reserve the right to liquidate the account. You would
be notified that the Accumulated Value of your account is below the Contract's
minimum requirement and be allowed 60 days to make an additional investment
before the account is liquidated. Proceeds would be promptly paid to the
Contract Owner. The full proceeds would be taxable as a withdrawal. We will
not exercise this right with respect to Qualified Contracts.

DISTRIBUTIONS UNDER THE CONTRACT

FULL AND PARTIAL WITHDRAWALS

At any time before the Annuity Date and while the Annuitant is living, you may
make a partial or full withdrawal of the Contract to receive all or part of
the Surrender Value by sending a written request to our Administrative
Offices. Full or partial withdrawals may only be made before the Annuity Date
and all partial withdrawal requests must be for at least $500. The amount
available for full or partial withdrawal is the Surrender Value at the end of
the Valuation Period during which the written request for withdrawal is
received. The Surrender Value is an amount equal to the Accumulated Value,
less any Premium Taxes incurred but not yet deducted. The withdrawal amount
may be paid in a lump sum to you, or if elected, all or any part may be paid
out under an Annuity Payment Option. (See "Annuity Payment Options," page 18.)

You can make a withdrawal by sending the appropriate Company form to our
Administrative Offices. Your proceeds will normally be processed and mailed to
you within two Business Days after the receipt of the request but in no event
will it be later than seven calendar days, subject to postponement in certain
circumstances. (See "Deferment of Payment," page 21.)

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<PAGE>

Payments under the Contract of any amounts derived from premiums paid by check
may be delayed until the check has cleared your bank. If, at the time the
Contract Owner requests a full or partial withdrawal, he has not provided the
Company with a written election not to have federal income taxes withheld, the
Company must by law withhold 10% from the taxable portion of any full or
partial withdrawal and remit that amount to the federal government. Moreover,
the Code provides that a 10% penalty tax may be imposed on certain early
withdrawals. (See "Federal Tax Considerations," page 21.)

Since the Contract Owner assumes the investment risk with respect to amounts
allocated to the Separate Account, the total amount paid upon withdrawal of
the Contract (taking into account any prior withdrawals) may be more or less
than the total Net Purchase Payments made.

LUMP SUM PAYMENT OPTION

You may surrender the Contract at any time while the Annuitant is living and
before the Annuity Date. The Surrender Value is equal to the Accumulated
Value, less any Premium Taxes incurred but not yet deducted.

SYSTEMATIC WITHDRAWAL OPTION

You may choose to have a specified dollar amount provided to you on a regular
basis from the portion of your Contract's Accumulated Value that is allocated
to the Portfolios. By electing the Systematic Withdrawal Option, withdrawals
may be made on a monthly, quarterly, semi-annual or annual basis. The minimum
amount for each withdrawal is $100.

Like any other partial withdrawal, each Systematic Withdrawal is subject to
taxes on earnings. If the Contract Owner has not provided the Company with a
written election not to have federal income taxes withheld, the Company must
by law withhold 10% from the taxable portion of the Systematic Withdrawal and
remit that amount to the federal government. Moreover, the Code provides that
a 10% penalty tax may be imposed on certain early withdrawals. (See "Federal
Tax Considerations," page 21.) You may wish to consult a tax advisor regarding
any tax consequences that might result prior to electing the Systematic
Withdrawal Option.

We reserve the right to discontinue offering the Systematic Withdrawal Option
upon 30 days' written notice. We also reserve the right to charge a fee for
such service.

ANNUITY DATE

You may specify an Annuity Date in the application, which can be no later than
the first day of the month after the Annuitant's 85th birthday, without the
Company's prior approval. The Annuity Date is the date that Annuity Payments
are scheduled to commence under the Contract unless the Contract has been
surrendered or an amount has been paid as proceeds to the designated
Annuitant's Beneficiary prior to that date.

You may advance or defer the Annuity Date. However, the Annuity Date may not
be advanced to a date prior to 30 days after the date of receipt of a written
request or, without the Company's prior approval, deferred to a date beyond
the first day of the month after the Annuitant's 85th birthday. The Annuity
Date may only be changed by written request during the Annuitant's lifetime
and must be made at least 30 days before the then-scheduled Annuity Date. The
Annuity Date and the Annuity Payment options available for Qualified Contracts
may also be controlled by endorsements, the plan or applicable law.

ANNUITY PAYMENT OPTIONS

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Portfolio or Portfolios you have chosen. All Annuity Payment Options are also
offered as "Fixed Annuity Options." This means that the amount of each payment
will be set on the Annuity Date and will not change. The following Annuity
Payment Options are available under the Contract:

Life Annuity--Monthly Annuity Payments are paid for the life of an Annuitant,
ceasing with the last Annuity Payment due prior to the Annuitant's death.

Joint and Last Survivor Annuity--Monthly Annuity Payments are paid for the
life of two Annuitants and thereafter for the life of the survivor, ceasing
with the last Annuity Payment due prior to the survivor's death.

Life Annuity with Period Certain--Monthly Annuity Payments are paid for the
life of an Annuitant, with a Period Certain of not less than 120, 180, or 240
months, as elected.

Installment or Unit Refund Life Annuity--Available as either a Fixed
(Installment Refund) or Variable (Unit Refund) Annuity Option. Monthly Annuity
Payments are paid for the life of an Annuitant, with a Period Certain
determined by dividing the Accumulated Value by the first Annuity Payment.

Designated Period Annuity--Only available as a Fixed Annuity Option. Monthly
Annuity Payments are paid for a Period Certain as elected, which may be from
10 to 30 years.

Before the Annuity Date and while the Annuitant is living, you may change the
Annuity Payment Option by written request. The request for change must be made
at least 30 days prior to the Annuity Date and is subject to the approval of
the Company. If an Annuity Payment Option is chosen that depends on the
continuation of the life of the Annuitant, proof of birth date may be required
before Annuity Payments begin. For Annuity Payment Options involving life
income, the actual age of the Annuitant will affect the amount of each
payment. Since payments to older Annuitants are expected to be fewer in
number, the amount of each Annuity Payment will generally be greater.

All or part of the Accumulated Value may be placed under one or more Annuity
Payment Options. If Annuity Payments are to be paid under more than one
option, the Company must be told what part of the Accumulated Value is to be
paid under each option.

If at the time of any Annuity Payment you have not provided the Company with a
written election not to have federal income taxes withheld, the Company must
by law withhold such taxes from the taxable portions of such Annuity Payment
and remit that amount to the federal government.

In the event that an Annuity Payment Option is not selected, the Company will
make monthly Annuity Payments that will go on for as long as the Annuitant
lives (120 payments guaranteed) in accordance with the Life Annuity with
Period Certain Option and the annuity benefit sections of the Contract. That
portion of the Accumulated Value that has been held in a Portfolio prior to
the Annuity Date will be applied under a Variable Annuity Option based on the
performance of that Portfolio. Subject to approval by the Company, you may
select any other Annuity Payment Option then being offered by the Company. All
Fixed Annuity Payments and the initial Variable Annuity Payment are guaranteed
to be not less than as provided by the Annuity Tables and the Annuity Payment
Option elected by the Contract Owner. The minimum payment, however, is $100.
If the Accumulated Value is less than $2,000, the Company has the right to pay
that amount in a lump sum. From time to time, the Company may require proof
that the Annuitant or Contract Owner is living. Annuity Payment Options are
not available to: (1) an assignee; or (2) any other than a natural person,
except with the consent of the Company.

We may, at the time of election of an Annuity Payment Option, offer more
favorable rates in lieu of the guaranteed rates specified in the Annuity
Tables found in the Contract.

The value of Variable Annuity Payments will reflect the investment experience
of the chosen Portfolio. Only one Variable Annuity Option may be chosen from
among those made available by the Company for each Portfolio. The Annuity
Tables, which are contained in the Contract and are used to calculate the
value of the initial Variable Annuity Payment, are based on an assumed
interest rate of 4%. If the actual net investment experience exactly equals
the assumed interest rate, then the Variable Annuity Payments will remain the
same (equal to the first Annuity Payment). However, if actual investment
experience exceeds the assumed interest rate, the Variable Annuity Payments
will increase; conversely, they will decrease if the actual experience is
lower. The method of computation of Variable Annuity Payments is described in
more detail in the Statement of Additional Information.

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The value of all payments, both fixed and variable, will be greater for
shorter guaranteed periods than for longer guaranteed periods, and greater for
life annuities than for joint and survivor annuities, because they are
expected to be made for a shorter period.

After the Annuity Date, you may change the Portfolio funding the Variable
Annuity Payments on the appropriate Company form or by calling our
Administrative Offices at 1-800-797-9177.

If you choose an Annuity Payment Option and the postal or other delivery
service is unable to deliver checks to the Payee's address of record, no
interest will accrue on amounts represented by uncashed Annuity Payment
checks. It is the Payee's responsibility to keep the Company informed of the
Payee's current address of record.

DEATH BENEFIT

Generally, federal tax law requires that if any Contract Owner is a natural
person and dies before the Annuity Date, then the entire value of the Contract
must be distributed within five years of the date of death of the Contract
Owner. If the Contract Owner is not a natural person, the death of the Primary
Annuitant triggers the same distribution requirement. Special rules may apply
to a surviving spouse.

DEATH OF ANNUITANT BEFORE ANNUITY DATE

If the Annuitant dies prior to the Annuity Date, an amount will be paid as
proceeds to the Annuitant's Beneficiary. The Death Benefit is calculated and
is payable upon receipt of due Proof of Death of the Annuitant as well as
proof that the Annuitant died prior to the Annuity Date. Upon receipt of this
proof, the Death Benefit will be paid within seven days, or as soon thereafter
as the Company has sufficient information about the Annuitant's Beneficiary to
make the payment. The Annuitant's Beneficiary may receive the amount payable
in a lump sum cash benefit or under one of the Annuity Payment Options.

The Death Benefit is the greater of:

(1) The Accumulated Value on the date we receive due Proof of Death; or

(2) The Adjusted Death Benefit.

During the first six Contract Years, the Adjusted Death Benefit will be the
sum of all Net Purchase Payments made, less any partial withdrawals taken.
During each subsequent six-year period, the Adjusted Death Benefit will be the
Death Benefit on the last day of the previous six-year period plus any Net
Purchase Payments made, less any partial withdrawals taken during the current
six-year period. After the Annuitant attains age 75, the Adjusted Death
Benefit will remain equal to the Death Benefit on the last day of the six-year
period before age 75 occurs plus any Net Purchase Payments subsequently made,
less any partial withdrawals subsequently taken.

DEATH OF ANNUITANT ON OR AFTER ANNUITY DATE

The Death Benefit, if any, payable if the Annuitant dies on or after the
Annuity Date depends on the Annuity Payment Option selected. Upon the
Annuitant's death, the remaining portion of the value of the Contract will be
distributed to the Annuitant's Beneficiary at least as rapidly as under the
method of distribution being used on the date of the Annuitant's death.

DESIGNATION OF AN ANNUITANT'S BENEFICIARY

The Contract Owner may select one or more Annuitant's Beneficiaries and name
them in the application. Thereafter, while the Annuitant is living, the
Contract Owner may change the Annuitant's Beneficiary by sending us the
appropriate Company form. Such change will take effect on the date such form
is signed by the Contract Owner but will not affect any payment made or other
action taken before the Company acknowledges such form. You may also make the
designation of Annuitant's Beneficiary irrevocable by sending us the
appropriate Company form and obtaining approval from the Company. Changes in
the Annuitant's Beneficiary may then be made only with the consent of the
designated irrevocable Annuitant's Beneficiary.

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If the Annuitant dies prior to the Annuity Date, the following will apply
unless the Contract Owner has made other provisions.

(a) If there is more than one Annuitant's Beneficiary, each will share in
the Death Benefits equally;

(b) If one or two or more Annuitant's Beneficiaries have already died,
that share of the Death Benefit will be paid equally to the
survivor(s);

(d) Unless otherwise provided, if an Annuitant's Beneficiary dies at the
same time as the Annuitant, the proceeds will be paid as though the
Annuitant's Beneficiary had died first. Unless otherwise provided, if
an Annuitant's Beneficiary dies within 15 days after the Annuitant's
death and before the Company receives due proof of the Annuitant's
death, proceeds will be paid as though the Annuitant's Beneficiary had
died first.

If an Annuitant's Beneficiary who is receiving Annuity Payments dies, any
remaining payments certain will be paid to that Annuitant's Beneficiary's
named beneficiary(ies) when due. If no Annuitant's Beneficiary survives the
Annuitant, the right to any amount payable will pass to the Contract Owner. If
the Contract Owner is the Annuitant, this right will pass to his or her
estate. If a Life Annuity with Period Certain option was elected, and if the
Annuitant dies on or after the Annuity Date, any unpaid payments certain will
be paid to the Annuitant's Beneficiary or your designated Payee.

DEATH OF CONTRACT OWNER

DEATH OF CONTRACT OWNER BEFORE ANNUITY DATE. With two exceptions, federal tax
law requires that when either the Contract Owner or the Joint Owner (if any)
dies before the Annuity Date, the entire value of the Contract must be
distributed within five years of the date of death. First exception: If the
entire interest is to be distributed to the Owner's Designated Beneficiary, he
or she may elect to have it paid as an annuity over his or her life or over a
period certain not to exceed his or her life expectancy as long as the
payments begin within one year of the date of death. Second exception: If the
Owner's Designated Beneficiary is the spouse of the Contract Owner (or Joint
Owner), the spouse may elect to continue the Contract in his or her name as
Contract Owner indefinitely and to continue deferring tax on the accrued and
future income under the Contract. ("Owner's Designated Beneficiary" means the
natural person named by the Owner as a beneficiary and who becomes Owner of
the Contract upon the Contract Owner's death.) If the Contract Owner and the
Annuitant are the same person, then upon that person's death the Annuitant's
Beneficiary is entitled to the Death Benefit. In this regard, see "Death of
Annuitant Before Annuity Date," page 20.

DEATH OF CONTRACT OWNER ON OR AFTER ANNUITY DATE. Federal tax law requires
that when either the Contract Owner or the Joint Owner (if any) dies on or
after the Annuity Date, the remaining portions of the value of the Contract
must be distributed at least as rapidly as under the method of distribution
being used on the date of death.

NON-NATURAL PERSON AS CONTRACT OWNER. Where the Contract Owner is not a
natural person, the death of the "primary Annuitant" is treated as the death
of the Contract Owner for purposes of federal tax law. (The Code defines a
primary Annuitant as the individual who is of primary importance in affecting
the timing or the amount of payout under a
Contract.) In addition, where the Contract Owner is not a natural person, a
change in the identity of the primary Annuitant is also treated as the death
of the Contract Owner for purposes of federal tax law.

DEFERMENT OF PAYMENT

Payment of any cash withdrawal or lump sum Death Benefit due from the Separate
Account will occur within seven days from the date the election becomes
effective except that the Company may be permitted to defer such payment if:
(1) the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the New York Stock Exchange is otherwise restricted;
or (2) an emergency exists as defined by the SEC, or the SEC requires that
trading be restricted; or (3) the SEC permits a delay for the protection of
Contract Owners.

FEDERAL TAX CONSIDERATIONS

INTRODUCTION

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the individuals concerned. The following discussion is general in nature and
is not intended as tax advice. You should consult a tax advisor regarding the
tax consequences of purchasing a Contract. No attempt is made to consider any
applicable state or other tax laws. Moreover, the discussion is based upon the
Company's understanding of the federal income tax laws as they are currently
interpreted. No representation is made regarding the likelihood of
continuation of the federal income tax laws, the Treasury regulations or the
current interpretations by the Internal Revenue Service. We reserve the right
to make uniform changes in the Contract to the extent necessary to continue to
qualify the Contract as an annuity. For a discussion of federal income taxes
as they relate to the Funds, please see the accompanying Prospectuses for the
Funds.

TAXATION OF ANNUITIES IN GENERAL

GENERAL RULE OF TAX DEFERRAL

Section 72 of the Code governs taxation of annuities. In general, a Contract
Owner is not taxed on increases in value under a Contract until some form of
withdrawal or distribution is made under it. However, under certain
circumstances, the increase in value may be subject to current federal income
tax. (See "Annuity Contracts Owned by Non-Natural Persons," page 23 and
"Diversification Standards," page 24.)

TAXATION OF FULL OR PARTIAL WITHDRAWALS

Section 72 provides that the proceeds of a full or partial withdrawal from a
Contract prior to the Annuity Date will be treated as taxable income to the
extent the amounts held under the Contract exceed the "investment in the
Contract," as that term is defined in the Code. The "investment in the
Contract" can generally be described as the cost of the Contract, and
generally constitutes all Purchase Payments paid for the Contract less any
amounts received under the Contract that are excluded from the individual's
gross income. The taxable portion is taxed at ordinary income tax rates. For
purposes of this rule, a pledge or assignment of a Contract is treated as a
payment received on account of a partial withdrawal of a Contract.

Upon receipt of a full or partial withdrawal or an Annuity Payment under the
Contract, you will be taxed if the value of the Contract exceeds the
investment in the Contract. Ordinarily, the taxable portion of such payments
will be taxed at ordinary income tax rates. Partial withdrawals are generally
taken out of earnings first and then investment in the Contract.

TAXATION OF ANNUITY PAYMENTS

For Fixed Annuity Payments, in general, the taxable portion of each payment is
determined by using a formula known as the "exclusion ratio," which
establishes the ratio that the investment in the Contract bears to the total
expected amount of Annuity Payments for the term of the Contract. That ratio
is then applied to each payment to determine the non-taxable portion of the
payment. The remaining portion of each payment is taxed at ordinary income tax
rates. For Variable Annuity Payments, in general, the taxable portion is
determined by a formula that establishes a specific dollar amount of each
payment that is not taxed. The dollar amount is determined by dividing the
investment in the Contract by the total number of expected periodic payments.
The remaining portion of each payment is taxed at ordinary income tax rates.
Once the excludible portion of Annuity Payments to date equals the investment
in the Contract, the balance of the Annuity Payments will be fully taxable.

Generally, the entire amount distributed from a Qualified Contract is taxable
to the Contract Owner. In the case of Qualified Contracts with after tax
contributions, the Contract Owner is entitled to exclude the portion of each
withdrawal or annuity payment constituting a return of after tax
contributions. Once all of your after tax contributions have been returned to
you on a non-taxable basis, subsequent withdrawals or annuity payments are
fully taxable as ordinary income. Since the Company has no knowledge of the
amount of after tax contributions you have made, you will need to make this
computation in the preparation of your federal income tax return.

TAX WITHHOLDING

Withholding of federal income taxes on all distributions is required unless
the recipient elects not to have any amounts withheld and properly notifies
the Company of that election. In certain situations, taxes will be withheld on
distributions to non-resident aliens at a flat 30% rate unless an exemption
from withholding applies under an applicable tax treaty.

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PENALTY TAXES

With respect to amounts withdrawn or distributed before the taxpayer reaches
age 59 1/2, a penalty tax is imposed equal to 10% of the taxable portion of
amounts withdrawn or distributed. However, the penalty tax will not apply to
withdrawals (i) made on or after the death of the Contract Owner or, where the
Contract Owner is not an individual, the death of the primary Annuitant, who
is defined as the individual the events in whose life are of primary
importance in affecting the timing and payment under the Contracts; (ii)
attributable to the taxpayer's becoming disabled within the meaning of Code
Section 72(m)(7); (iii) that are part of a series of substantially equal
periodic payments made at least annually for the life (or life expectancy) of
the taxpayer, or joint lives (or joint life expectancies) of the taxpayer and
his or her beneficiary; (iv) from a qualified plan (note, however, other
penalties may apply); (v) under a qualified funding asset (as defined in Code
Section 130(d)); (vi) under an immediate annuity contract as defined in
Section 72(u)(4); (vii) allocable to the investment in the Contract prior to
August 14, 1982; or (viii) that are purchased by an employer on termination of
certain types of qualified plans and that are held by the employer until the
employee separates from service. Other tax penalties may apply to certain
distributions as well as to certain contributions and other transactions under
Qualified Contracts.

If the penalty tax does not apply to a withdrawal as a result of the
application of item (iii) above, and the series of payments are subsequently
modified (other than by reason of death or disability), the tax for the year
in which the modification occurs will be increased by an amount (as determined
under Treasury Regulations) equal to the penalty tax that would have been
imposed but for item (iii) above, plus interest for the deferral period. The
foregoing rule applies if the modification takes place (a) before the close of
the period that is five years from the date of the first payment and after the
taxpayer attains age 59 1/2, or (b) before the taxpayer reaches age 59 1/2.
The tax penalty may also not apply to distributions from Qualified Contracts
issued under Section 408(b) or 408A of the Code used to pay qualified higher
education expenses or the acquisition costs (up to $10,000) involved in the
purchase of a principal residence by a first-time homebuyer.

ANNUITY CONTRACTS OWNED BY NON-NATURAL PERSONS

Where the Contract is held by a non-natural person (for example, a
corporation), the Contract is generally not treated as an annuity contract for
federal income tax purposes, and the income on that Contract (generally the
increase in the net Accumulated Value less the payments) is includible in
taxable income each year. The rule does not apply where the non-natural person
is only a nominal owner such as a trust or other entity acting as an agent for
a natural person. The rule also does not apply where the Contract is acquired
by the estate of a decedent, where the Contract is a qualified funding asset
for structured settlements, where the Contract is purchased by an employer on
behalf of an employee upon termination of a qualified plan, and in the case of
an immediate annuity, as defined under Section 72(u)(4) of the Code.

MULTIPLE-CONTRACTS RULE

All non-qualified annuity contracts issued by the same company (or affiliate)
to the same Contract Owner during any calendar year are to be aggregated and
treated as one contract for purposes of determining the amount includible in
the taxpayer's gross income. Thus, any amount received under any Contract
prior to the Contract's Annuity Date, such as a partial withdrawal, will be
taxable (and possibly subject to the 10% federal penalty tax) to the extent of
the combined income in all such contracts. The Treasury Department has
specific authority to issue regulations that prevent the avoidance of Code
Section 72(e) through the serial purchase of annuity contracts or otherwise.
In addition, there may be other situations in which the Treasury Department
may conclude that it would be appropriate to aggregate two or more Contracts
purchased by the same Contract Owner. The aggregation rules do not apply to
immediate annuities as defined under Section 72(u)(4) of the Code.
Accordingly, a Contract Owner should consult a tax advisor before purchasing
more than one Contract or other annuity contracts.

TRANSFERS OF ANNUITY CONTRACTS

Any transfer of a Non-Qualified Contract prior to the Annuity Date for less
than full and adequate consideration will generally trigger income tax (and
possibly the 10% federal penalty tax) on the gain in the Contract to the
Contract Owner at the time of such transfer. The investment in the Contract of
the transferee will be increased by any amount included in the Contract
Owner's income. This provision, however, does not apply to those transfers
between spouses or former spouses incident to a divorce which are governed by
Code Section 1041(a).

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ASSIGNMENTS OF ANNUITY CONTRACTS

A transfer of ownership of a Contract, a collateral assignment or the
designation of an Annuitant or other beneficiary who is not also the Contract
Owner may result in tax consequences to the Contract Owner, Annuitant or
beneficiary that are not discussed herein. A Contract Owner contemplating such
a transfer or assignment of a Contract should contact a tax advisor with
respect to the potential tax effects of such a transaction.

THE COMPANY'S TAX STATUS

The Company is taxed as a life insurance company under Part I of Subchapter L
of the Code. Since the Separate Account is not a separate entity from the
Company and its operations form a part of the Company, it will not be taxed
separately as a "regulated investment company" under Subchapter M of the Code.

Investment income and realized capital gains on the assets of the Separate
Account are reinvested and taken into account in determining the Accumulated
Value. Under existing federal income tax law, the Separate Account's
investment income, including realized net capital gains, is not taxed to the
Company. The Company reserves the right to make a deduction for taxes should
they be imposed with respect to such items in the future.

DIVERSIFICATION STANDARDS

To comply with certain diversification regulations (the "Regulations") under
Code Section 817(h), after a start up period, each Subaccount of the Separate
Account will be required to diversify its investments. The Regulations
generally require that on the last day of each quarter of a calendar year, no
more than 55% of the value of each Subaccount of the Separate Account is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. A "look-through" rule
applies that suggests that each Subaccount of the Separate Account will be
tested for compliance with the percentage limitations by looking through to
the assets of the Portfolios in which each such Subaccount invests. All
securities of the same issuer are treated as a single investment. Each
government agency or instrumentality will be treated as a separate issuer for
purposes of those limitations.

In connection with the issuance of temporary diversification regulations in
1986, the Treasury Department announced that such regulations did not provide
guidance concerning the extent to which Contract Owners may direct their
investments to particular divisions of a separate account. It is possible that
regulations or revenue rulings may be issued in this area at some time in the
future. It is not clear, at this time, what these regulations or rulings would
provide. It is possible that when the regulations or ruling are issued, the
Contracts may need to be modified in order to remain in compliance. For these
reasons, the Company reserves the right to modify the Contracts, as necessary,
to prevent the Contract Owner from being considered the owner of assets of the
Separate Account.

We intend to comply with the Regulations to assure that the Contracts continue
to be treated as annuity contracts for federal income tax purposes.

403(B) CONTRACTS

Contracts will be offered in connection with retirement plans adopted by
public school systems and certain tax-exempt organizations (Code Section
501(c)(3) organizations) for their employees under Section 403(b) of the Code
except, as discussed below and subject to any conditions in an employer's
plan, a Contract used in connection with a Section 403(b) Plan offers the same
benefits and is subject to the same charges described in this Prospectus.

Under 403(b) Contracts, the Contract Owner and the Annuitant must be the same
person. The Code imposes a maximum limit on annual Purchase Payments which may
be excluded from your gross income. Such limit must be calculated in
accordance with Sections 403(b), 415 and 402(g) of the Code. In addition,
Purchase Payments will be excluded from your gross income only if the 403(b)
Plan meets certain Code non-discrimination requirements.

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made, or $10,000, and (b) is $50,000 reduced by the excess, if any, of the
highest outstanding balance of loans during the one-year period ending on the
day before the current loan is made, over the outstanding balance of loans on
the date of the current loan. If you are married, your spouse must consent in
writing to a loan request. This consent must be given within the 90-day period
before the loan is to be made.

The loan interest rate is variable, is determined monthly, and is based on the
Moody's Corporate Bond Yield Averages-Monthly Average Corporates (the
"Average"), which is published by Moody's Investors Service, Inc. We will
notify you of the initial loan interest rate at the time the loan is made. The
initial interest rate may be increased or reduced by us during the life of the
loan based on changes of the Average. If a change in the Average would cause
the initial loan interest rate (or a subsequent rate that has been previously
increased or reduced by us) to be reduced by 0.50% per annum or more, we must
reduce the loan interest rate. If a change in the Average would cause the
initial loan interest rate (or a subsequent rate that has been previously
increased or reduced by us) to be increased by 0.50% per annum, we may
increase the loan interest rate at our discretion. In no event will the loan
interest rate be greater than the maximum allowed by the insurance regulations
of the State of New York. On the first Business Day of each calendar month,
the Company will determine a loan interest rate. The loan interest rate for
the calendar month in which the loan is effective will apply for one year from
the loan effective date. Annually on the anniversary of the loan effective
date, the rate will be adjusted to equal the loan interest rate determined for
the month in which the loan anniversary occurs.

Principal and interest on loans must be repaid in substantially level
payments, not less frequently than quarterly, over a five year term except for
certain loans for the purchase of a principal residence. If the loan interest
rate is adjusted, future payments will be adjusted so that the outstanding
loan balance is amortized in equal quarterly installments over the remaining
term. The remainder of each repayment will be credited to the individual
account.

If a loan payment is not made when due, interest will continue to accrue. The
defaulted payment plus accrued interest will be deducted from any future
distributions under the Contract and paid to us. Any loan payment which is not
made when due, plus interest, will be treated as a distribution, as permitted
by law. The loan payment may be taxable to the borrower, and may be subject to
the early withdrawal tax penalty.

When a loan is made, unless you instruct us to the contrary, the number of
Accumulation Units equal to the loan amount will be withdrawn from the
individual account and placed in the Collateral Fixed Account. Accumulation
Units taken from the individual account to provide a loan do not participate
in the investment experience of the related Portfolios. Unless instructed to
the contrary by you, the loan amount will be withdrawn on a pro rata basis
from the Portfolios to which Accumulated Value has been allocated. Until the
loan is repaid in full, that portion of the Collateral Fixed Account shall be
credited with interest at a rate of 2% less than the loan interest rate
applicable to the loan. However, the interest rate credited to the Collateral
Fixed Account will never be less than the guaranteed rate of 3%.

A bill in the amount of the quarterly principal and interest will be mailed
directly to you in advance of the payment due date. The initial quarterly
repayment will be due three months from the loan date. The loan date will be
the date that the Company receives the loan request form in good order.
Payment is due within 30 calendar days after the due date. Subsequent
quarterly installments are based on the first due date.

When repayment of principal is made, Accumulation Units will be reallocated on
a current value basis among the same investment Portfolios and in the same
proportion as when the loan was initially made, unless you specify otherwise.
If a repayment in excess of a billed amount is received, the excess will be
applied towards the principal portion of the outstanding loan. Payments
received which are less than the billed amount will not be accepted and will
be returned to you.

If a partial surrender is taken from your individual account due to nonpayment
of a billed quarterly installment, the date of the surrender will be the first
Business Day following the 30 calendar day period in which the repayment was
due.

Prepayment of the entire loan is allowed. At the time of prepayment, the
Company will bill you for any accrued interest. The Company will consider the
loan paid when the loan balance and accrued interest are paid.

If the individual account is surrendered or if the Contract Owner dies with an
outstanding loan balance, the outstanding loan balance and accrued interest
will be deducted from the Surrender Value or the Death Benefit, respectively.
If an Annuity Payment Option is elected while there is an outstanding loan
balance, the outstanding loan balance and accrued interest will be deducted
from the Accumulated Value.

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The Company may require that any outstanding loan be paid if the individual
account value falls below an amount equal to 25% of total loans outstanding.

The Code requires the aggregation of all loans made to an individual employee
under a single employer-sponsored 403(b) Plan. However, since the Company has
no information concerning the outstanding loans that you may have with other
companies, it will only use the information available under Contracts issued
by the Company.

The Code imposes restrictions on full or partial surrenders from 403(b)
individual accounts attributable to Purchase Payments under a salary reduction
agreement and to any earnings on the entire 403(b) individual account credited
on and after January 1, 1989. Surrenders of these amounts are allowed only if
the Contract Owner (a) has died, (b) has become disabled, as defined in the
Code, (c) has attained age 59 1/2, or (d) has separated from service.
Surrenders are also allowed if the Contract Owner can show "hardship," as
defined by the Internal Revenue Service, but the surrender is limited to the
lesser of Purchase Payments made on or after January 1, 1989 or the amount
necessary to relieve the hardship. Even if a surrender is permitted under
these provisions, a 10% federal tax penalty may be assessed on the withdrawn
amount if it does not otherwise meet the exceptions to the penalty tax
provisions. (See "Taxation of Annuities in General," page 22.)

Under the Code, you may request a full or partial surrender of an amount equal
to the individual account cash value as of December 31, 1988 (the
"grandfathered" amount), subject to the terms of the 403(b) Plan. Although the
Code surrender restrictions do not apply to this amount, a 10% federal penalty
tax may be assessed on the withdrawn amount if it does not otherwise meet the
exceptions to the penalty tax provisions (See "Taxation of Annuities in
General," page 22.)

The Company believes that the Code surrender restrictions do not apply to tax-
free transfers pursuant to Revenue Ruling 90-24. The Company further believes
that the surrender restrictions will not apply to any "grandfathered" amount
transferred pursuant to Revenue Ruling 90-24 into another 403(b) Contract.

GENERAL INFORMATION

ADDITIONS, DELETIONS, OR SUBSTITUTIONS OF INVESTMENTS

The Company retains the right, subject to any applicable law, to make certain
changes. The Company reserves the right to eliminate the shares of any of the
Portfolios and to substitute shares of another Portfolio of the Funds, or of
another registered, open-end management investment company, if the shares of
the Portfolios are no longer available for investment, or, if in the Company's
judgment, investment in any Portfolio would be inappropriate in view of the
purposes of the Separate Account. To the extent required by the 1940 Act,
substitutions of shares attributable to a Contract Owner's interest in a
Portfolio will not be made until SEC approval has been obtained and the
Contract Owner has been notified of the change.

New Portfolios may be established at the discretion of the Company. Any new
Portfolio will be made available to existing Contract Owners on a basis to be
determined by the Company. The Company may also eliminate one or more
Portfolios if marketing, tax, investment or other conditions so warrant.

In the event of any such substitution or change, the Company may, by
appropriate endorsement, make such changes in the Contracts as may be
necessary or appropriate to reflect such substitution or change. Furthermore,
if deemed to be in the best interests of persons having voting rights under
the Contracts, the Separate Account may be operated as a management company
under the 1940 Act or any other form permitted by law, may be deregistered
under the 1940 Act in the event such registration is no longer required, or
may be combined with one or more other separate accounts.

VOTING RIGHTS

26
<PAGE>

have no beneficial interest will be voted in proportion to the voting
instructions that are received with respect to all Contracts participating in
that Portfolio. Voting instructions to abstain on any item to be voted upon
will be applied on a pro rata basis to reduce the votes eligible to be cast.

The number of votes that are available to a Contract Owner will be calculated
separately for each Portfolio. That number will be determined by applying his
or her percentage interest, if any, in a particular Portfolio to the total
number of votes attributable to the Portfolio.

Prior to the Annuity Date, a Contract Owner holds a voting interest in each
Portfolio to which the Accumulated Value is allocated. The number of votes
which are available to a Contract Owner will be determined by dividing the
Accumulated Value attributable to a Portfolio by the net asset value per share
of the applicable Portfolio. After the Annuity Date, the person receiving
Annuity Payments has the voting interest. The number of votes after the
Annuity Date will be determined by dividing the reserve for such Contract
allocated to the Portfolio by the net asset value per share of the
corresponding Portfolio. After the Annuity Date, the votes attributable to a
Contract decrease as the reserves allocated to the Portfolio decrease. In
determining the number of votes, fractional shares will be recognized.

The number of votes of the Portfolio that are available will be determined as
of the date coincident with the date established by that Portfolio for
determining shareholders eligible to vote at the meeting of the corresponding
Fund. Voting instructions will be solicited by written communication prior to
such meeting in accordance with procedures established by such Fund.

YEAR 2000 MATTERS

In March 1997, the Company adopted and currently has in place a Year 2000
Assessment and Planning Project (the "Plan") to review and analyze existing
hardware and software systems, as well as voice and data communications
systems, to determine if they are Year 2000 compatible.The Plan provides for a
management process that ensures that when a particular system, or software
application, is determined to be "non-compliant" the proper steps are in place
to either remedy the "non-compliance" or cease using the particular system or
software. The Plan also provides that the Chief Information Officer report to
the Board of Directors as to the status of the efforts under the Plan on a
regular and routine basis. The Company has engaged the services of a third-
party provider that is specialized in year 2000 issues to work on the project.

The Plan has four specific objectives: (1) to develop an inventory of all
applications; (2) to evaluate all applications in the inventory to determine
the most prudent manner to move them to Year 2000 compliance, if required; (3)
to estimate budgets, resources and schedules for the migration of the
"affected" applications to Year 2000 compliance; and (4) to define testing and
deployment requirements to successfully manage validations and re-deployment
of any changed code. It is anticipated that all compliance issues will be
resolved by December 1998.

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

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

AUDITORS

Ernst & Young LLP serves as independent auditors for the Separate Account and
the Company and will audit their financial statements annually.

LEGAL MATTERS

Jorden Burt Boros Cicchetti Berenson & Johnson LLP of Washington, D.C. has
provided legal advice relating to the federal securities laws applicable to
the issue and sale of the Contracts. All matters of New York law pertaining to
the validity of the Contract and the Company's right to issue such Contracts
have been passed upon by Gregory E. Miller-Breetz, Esquire, on behalf of the
Company.

27
<PAGE>

TABLE OF CONTENTS FOR THE ADVISOR'S EDGE VARIABLE ANNUITY

AND FOR THE DIMENSIONAL VARIABLE ANNUITY

STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
PAGE
<S> <C>
THE CONTRACT.............................................................. 2
Computation of Variable Annuity Income Payments......................... 2
Exchanges............................................................... 3
Exceptions to Charges and to Transaction or Balance Requirements........ 3
GENERAL MATTERS........................................................... 3
Non-Participating....................................................... 3
Misstatement of Age or Sex.............................................. 3
Assignment.............................................................. 4
Annuity Data............................................................ 4
Annual Statement........................................................ 4
Incontestability........................................................ 4
Ownership............................................................... 4
PERFORMANCE INFORMATION................................................... 4
Federated Prime Money Portfolio Subaccount Yields....................... 5
30-Day Yield for Non-Money Market Subaccounts........................... 5
Standardized Average Annual Total Return for Subaccounts................ 6
ADDITIONAL PERFORMANCE MEASURES........................................... 6
Non-Standardized Actual Total Return and Non-Standardized Actual Average
Annual Total Return.................................................... 6
Non-Standardized Total Return Year-to-Date.............................. 6
Non-Standardized One Year Return........................................ 7
Non-Standardized Hypothetical Total Return and Non-Standardized
Hypothetical Average Annual Total Return............................... 7
Individual Computer Generated Illustrations............................. 7
PERFORMANCE COMPARISONS................................................... 7
SAFEKEEPING OF ACCOUNT ASSETS............................................. 9
THE COMPANY............................................................... 10
STATE REGULATION.......................................................... 10
RECORDS AND REPORTS....................................................... 10
DISTRIBUTION OF THE CONTRACTS............................................. 10
LEGAL PROCEEDINGS......................................................... 11
OTHER INFORMATION......................................................... 11
FINANCIAL STATEMENTS...................................................... 11
Audited Financial Statements............................................ 11
</TABLE>

28
<PAGE>

FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
SEPARATE ACCOUNT C
PROSPECTUS

FOR THE
DIMENSIONAL VARIABLE ANNUITY
OFFERED BY
FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
(A NEW YORK STOCK COMPANY)
ADMINISTRATIVE OFFICES
520 COLUMBIA DRIVE
JOHNSON CITY, NEW YORK 13790

The Dimensional Variable Annuity contract (the "Contract"), offered through
First Providian Life and Health Insurance Company (the "Company", "us", "we"
or "our," and formerly, "National Home Life Assurance Company of New York"),
provides a vehicle for investing on a tax-deferred basis in 7 investment
company Portfolios. The Contract is a group variable annuity contract and is
intended for retirement savings or other long-term investment purposes.

The minimum initial Purchase Payment for Non-Qualified Contracts is $5,000.
The minimum initial Purchase Payment for Qualified Contracts is $2,000 (or $50
monthly by payroll deduction). The Contract is a flexible-premium deferred
variable annuity that provides for a Right to Cancel Period of 10 days (20
days for replacement) plus a 5 day grace period to allow for mail delivery,
during which you may cancel your investment in the Contract.

You may allocate your Net Purchase Payments for the Contract among 7
Subaccounts of First Providian Life and Health Insurance Company's Separate
Account C. Assets of each Subaccount are invested in one of the following
Portfolios (which are contained within two open-end, diversified investment
companies):

. DFA Small Value Portfolio . DFA Short-term Fixed Portfolio
. DFA Large Value Portfolio . DFA Global Bond Portfolio
. DFA International Value Portfolio
. Federated Prime Money Fund II
. DFA International Small Portfolio

Your initial Net Purchase Payment(s) will, when your Contract is issued, be
invested immediately in your chosen Portfolios, unless you indicate otherwise.

The Contract offers a number of ways of withdrawing monies at a future date,
including a lump sum payment and several Annuity Payment Options. Full or
partial withdrawals of the Contract's Surrender Value may be made at any time,
although in many instances withdrawals made prior to age 59 1/2 are subject to
a 10% penalty tax (and a portion may be subject to ordinary income taxes). If
you elect an Annuity Payment Option, Annuity Payments may be received on a
fixed and/or variable basis. You also have significant flexibility in choosing
the Annuity Date on which Annuity Payments begin.

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

The date of this Prospectus is May 1, 1998.
FM-1206 (NY)
<PAGE>

TABLE OF CONTENTS
Page
<TABLE>
<S> <C>
GLOSSARY.................................................................... 2
HIGHLIGHTS.................................................................. 5
FEE TABLE................................................................... 7
Condensed Financial Information............................................. 8
Financial Statements........................................................ 9
Performance Measures........................................................ 9
Additional Performance Measures............................................. 9
Yield and Effective Yield................................................... 10
The Company and the Separate Account........................................ 11
DFA Investment Dimensions Group Inc......................................... 11
The Federated Insurance Series.............................................. 11
The Portfolios.............................................................. 11
CONTRACT FEATURES........................................................... 13
Contract Application and Purchase Payments................................ 13
Purchasing by Wire........................................................ 14
Right to Cancel Period.................................................... 14
Allocation of Purchase Payments........................................... 14
Exchanges Among the Portfolios............................................ 14
Dollar Cost Averaging Option.............................................. 15
Accumulated Value......................................................... 15
Charges and Deductions.................................................... 15
Minimum Balance Requirement............................................... 16
DISTRIBUTIONS UNDER THE CONTRACT............................................ 17
Full and Partial Withdrawals.............................................. 17
Lump Sum Payment Option................................................... 17
Systematic Withdrawal Option.............................................. 17
Annuity Date.............................................................. 18
Annuity Payment Options................................................... 18
Death Benefit............................................................. 19
Deferment of Payment...................................................... 21
FEDERAL TAX CONSIDERATIONS.................................................. 21
GENERAL INFORMATION......................................................... 26
</TABLE>

GLOSSARY

Accumulation Unit - A measure of your ownership interest in the Contract prior
to the Annuity Date.

Accumulation Unit Value - The value of each Accumulation Unit which is
calculated each Valuation Period.

Accumulated Value - The value of all amounts accumulated under the Contract
prior to the Annuity Date.

2
<PAGE>

Annuitant - The person whose life is used to determine the duration of any
Annuity Payments and upon whose death, prior to the Annuity Date, benefits
under the Contract are paid.

Annuitant's Beneficiary - The person(s) to whom any benefits are due upon the
Annuitant's death prior to the Annuity Date.

Annuity Date - The date on which Annuity Payments begin. The Annuity Date is
always the first day of the month you specify.

Annuity Payment - One of a series of payments made under an Annuity Payment
Option.

Annuity Unit - Unit of measure used to calculate Variable Annuity Payments
(see "Annuity Payment Options," page 18).

Annuity Unit Value - The value of each Annuity Unit which is calculated each
Valuation Period.

Business Day - A day when the New York Stock Exchange is open for trading.

Code - The Internal Revenue Code of 1986, as amended.

Company ("we", "us", "our") - First Providian Life and Health Insurance
Company, a New York stock company.

Contract - The group flexible premium variable annuity contract described in
this Prospectus, participation in which will be evidenced by a certificate
issued to the Contract Owner.

Contract Anniversary - Any anniversary of the Contract Date.

Contract Date - The date of issue of this Contract.

Contract Year - A period of 12 months starting with the Contract Date or any
Contract Anniversary.

Death Benefit - The greater of the Contract's Accumulated Value on the date
the Company receives due Proof of Death of the Annuitant or the Adjusted Death
Benefit.

Exchange - One Exchange will be deemed to occur with each voluntary transfer
from any Subaccount.

Funds - Each of (i) DFA Investment Dimensions Group Inc., and (ii) Federated
Insurance Series (advised by Federated Advisers).

General Account - The account which contains all of our assets other than
those held in our separate accounts.

Net Purchase Payment - Any Purchase Payment less the Premium Tax, if any.

Non-Qualified Contract - Any Contract other than those described under the
Qualified Contract reference in this Glossary.

3
<PAGE>

Death Benefit. (Note: this transfer of ownership to the Owner's Designated
Beneficiary will generally not be subject to probate, but will be subject to
estate and inheritance taxes. Consult with your tax and estate adviser to be
sure which rules will apply to you.)

Payee - The Contract Owner, Annuitant, Annuitant's Beneficiary, or any other
person, estate, or legal entity to whom benefits are to be paid.

Portfolio - A separate investment portfolio of the Funds. The Funds currently
offer 7 Portfolios in the Dimensional Variable Annuity: the VA Small Value
Portfolio (the "DFA Small Value Portfolio"), the VA Large Value Portfolio (the
"DFA Large Value Portfolio"), the VA International Value Portfolio (the "DFA
International Value Portfolio"), the VA International Small Portfolio (the
"DFA International Small Portfolio"), the VA Short-Term Fixed Portfolio (the
"DFA Short-Term Fixed Portfolio") and the VA Global Bond Portfolio (the "DFA
Global Bond Portfolio") of DFA Investment Dimensions Group Inc.; and the
Federated Prime Money Fund II (the "Federated Prime Money Portfolio") of
Federated Insurance Series (each, a "Portfolio" and collectively, the
"Portfolios"). In this Prospectus, Portfolio will also be used to refer to the
Subaccount that invests in the corresponding Portfolio.

Qualified Contract - An annuity contract as defined under Sections 403(b),
408(b), and 408A of the Code.

Right to Cancel Period - The period during which the Contract can be canceled
and treated as void from the Contract Date.

Surrender Value - The Accumulated Value less any Premium Taxes incurred but
not yet deducted.

4
<PAGE>

HIGHLIGHTS

YOU CAN FIND DEFINITIONS OF IMPORTANT TERMS IN THE GLOSSARY (PAGE 2).

DIMENSIONAL VARIABLE ANNUITY

The Contract provides a vehicle for investing on a tax-deferred basis in 7
investment company Portfolios. You may subsequently withdraw monies from the
Contract either as a lump sum or as annuity income as permitted under the
Contract. Accumulated Values and Annuity Payments depend on the investment
experience of the selected Portfolios. The investment performance of the
Portfolios is not guaranteed. Thus, you bear all investment risk for monies
invested under the Contract.

WHO SHOULD INVEST

INVESTMENT CHOICES

Your investment in the Contract may be allocated among 7 Subaccounts of the
Separate Account. The Subaccounts in turn invest exclusively in the following
7 Portfolios offered by the Funds: the DFA Small Value Portfolio, the DFA
Large Value Portfolio, the DFA International Value Portfolio, the DFA
International Small Portfolio, the DFA Short-Term Fixed Portfolio, the DFA
Global Bond Portfolio and the Federated Prime Money Portfolio. The assets of
each Portfolio are separate, and each Portfolio has distinct investment
objectives and policies as described in the corresponding Fund Prospectus..Page
12

CONTRACT OWNER

ANNUITANT

The Annuitant is a person whose life is used to determine the duration of any
Annuity Payments and upon whose death, prior to the Annuity Date, benefits
under the Contract are paid.

ANNUITANT'S BENEFICIARY

The Contract Owner may designate any person to receive benefits under the
Contract which are payable upon the death of the Annuitant prior to the
Annuity Date.

HOW TO INVEST

To invest in the Contract, please consult your advisor, who will assist you in
completing the Contract application. You will need to select an Annuitant. The
Annuitant may not be older than age 75. The minimum initial Purchase Payment
is $5,000 for Non-Qualified Contracts, and $2,000 for Qualified Contracts (or
$50 monthly by payroll deduction for Qualified Contracts); subsequent Purchase
Payments must be at least $500 for Non-Qualified Contracts or $50 for
Qualified Contracts. You may make subsequent Purchase Payments at any time
before the Contract's Annuity Date, as long as the Annuitant specified in the
Contract is living......................................................Page 13

5
<PAGE>

ALLOCATION OF PURCHASE PAYMENTS

RIGHT TO CANCEL PERIOD

EXCHANGES

You may make unlimited Exchanges among the Portfolios provided you maintain a
minimum balance of $250, except in cases where Purchase Payments are made by
monthly payroll deduction, in each Subaccount to which you have allocated a
portion of your Accumulated Value. No fee is currently imposed for such
Exchanges, however, we reserve the right to charge a $15 fee for Exchanges in
excess of 12 per Contract Year. Exchanges must not reduce the value of any
Subaccount below $250, except in cases where Purchase Payments are made by
monthly payroll deduction, or that remaining amount will be transferred to
your other Subaccounts on a pro rata basis. (See also "Charges and
Deductions," page 15.)..................................................Page 14

DEATH BENEFIT

ANNUITY PAYMENT OPTIONS

CONTRACT AND POLICYHOLDER INFORMATION

6
<PAGE>

CHARGES AND DEDUCTIONS UNDER THE CONTRACT

FULL AND PARTIAL WITHDRAWALS

FEE TABLE

The following table illustrates all expenses (except for Premium Taxes that
may be assessed by your state) that you would incur as an owner of a Contract
(see page 15). The purpose of this table is to assist you in understanding the
various costs and expenses that you would bear directly or indirectly as a
purchaser of the Contract. The fee table reflects all expenses for both the
Separate Account and the Funds. For a complete discussion of Contract costs
and expenses, see "Charges and Deductions," page 15.

7
<PAGE>

PORTFOLIO ANNUAL EXPENSES

<TABLE>
<CAPTION>
TOTAL
MANAGEMENT PORTFOLIO
AND ADVISORY OTHER ANNUAL
EXPENSES EXPENSES EXPENSES
------------ -------- ---------
<S> <C> <C> <C>
DFA Small Value Portfolio....................... 0.50% 0.21% 0.71%
DFA Large Value Portfolio....................... 0.25% 0.23% 0.48%
DFA International Value Portfolio............... 0.40% 0.36% 0.76%
DFA International Small Portfolio............... 0.50% 0.49% 0.99%
DFA Short-Term Fixed Portfolio.................. 0.25% 0.18% 0.43%
DFA Global Bond Portfolio....................... 0.25% 0.40% 0.65%
Federated Prime Money Portfolio*................ 0.30% 0.50% 0.80%
</TABLE>

*The fee for Management and Advisory Expenses has been reduced to reflect
the adviser's voluntary waiver of a portion of the management fee. The
adviser can terminate this waiver at any time in its sole discretion. The
maximum fee for Management and Advisory Expenses is 0.50%. Without this
voluntary waiver, Total Portfolio Annual Expenses would have been 1.00%.

<TABLE>
<CAPTION>
3
1 YEAR YEARS 5 YEARS 10 YEARS
------ ------ ------- --------
<S> <C> <C> <C> <C>
DFA Small Value Portfolio........................ $14.14 $43.93 $ 75.87 $166.21
DFA Large Value Portfolio........................ 11.81 36.77 63.65 140.20
DFA International Value Portfolio................ 14.64 45.48 78.51 171.78
DFA International Small Portfolio................ 16.97 52.58 90.57 197.03
DFA Short-Term Fixed Portfolio................... 11.30 35.21 60.97 134.46
DFA Global Bond Portfolio........................ 13.53 42.07 72.70 159.48
Federated Prime Money Portfolio.................. 15.05 46.72 80.62 176.21
</TABLE>

The Annual Contract Fee is reflected in these examples as a percentage equal
to the estimated total amount of fees collected during a calendar year divided
by the estimated total average net assets of the Portfolios during the same
calendar year. The fee is assumed to remain the same in each of the above
periods. (With respect to partial year periods, if any, in the examples, the
Annual Contract Fee is pro-rated to reflect only the applicable portion of the
partial year period.) The Annual Contract Fee will be deducted on each
Contract Anniversary and upon surrender or annuitization of the Contract, on a
pro rata basis, from each Subaccount. The Company may also deduct Premium
Taxes, if any, as incurred by the Company.

This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be higher or lower than those
shown, subject to the guarantees in the Contract.

CONDENSED FINANCIAL INFORMATION

(FOR THE PERIOD JANUARY 1, 1997 THROUGH DECEMBER 31, 1997)

<TABLE>
<CAPTION>
DFA SHORT DFA FEDERATED
DFA SMALL DFA LARGE DFA INT'L DFA INT'L TERM GLOBAL PRIME
VALUE VALUE VALUE SMALL FIXED BOND MONEY
--------- --------- --------- --------- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value
as of:
Start Date:**......... 10.000 10.000 10.000 10.000 10.000 10.000 10.000
12/31/97.............. 12.645 12.242 9.995 7.661 10.426 10.640 10.403
Number of units
outstanding as of:
12/31/97.............. 1,573.785 2,756.600 3,320.401 3,273.454 1,916.472 0 0
</TABLE>

**Date of commencement of operations for DFA Small Value was 1/23/97; for DFA
Large Value was 1/23/97; for DFA International Value was 1/23/97; for DFA
International Small was 1/23/97; for DFA Short Term Fixed was 2/21/97; for
DFA Global Bond was 1/23/97; for Federated Prime Money was 1/22/97.

8
<PAGE>

FINANCIAL STATEMENTS

PERFORMANCE MEASURES

Certain total return and performance information for operations of the DFA
Small Value Portfolio, DFA Large Value Portfolio, DFA International Value
Portfolio, DFA International Small Portfolio, DFA Short-Term Fixed Portfolio,
and DFA Global Bond Portfolio (collectively, the "DFA Subaccounts") for the
period from the inception of the DFA Subaccounts to March 30, 1997 reflect
operations of the DFA Subaccounts in the Advisor's Edge Variable Annuity.

Until October 1995, the DFA Large Value Portfolio (formerly DFA Global Value
Portfolio) invested its assets in both U.S. and international securities.
Depending on the period presented, total return and performance information
presented for the DFA Large Value Portfolio may reflect the performance of the
Portfolio when it invested in the stocks of both U.S. and international
companies. Total return and performance information for the DFA Large Value
Portfolio which include the period prior to October 1995 should not be
considered indicative of the Portfolio's future performance. (See also "VA
Large Value Portfolio," page 12.)

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

When advertising performance of the Subaccounts, the Company will show the
Standardized Average Annual Total Return for a Subaccount which, as prescribed
by the rules of the Securities and Exchange Commission ("SEC"), is the
effective annual compounded rate of return that would have produced the cash
redemption value over the stated period had the performance remained constant
throughout. The Standardized Average Annual Total Return assumes a single
$1,000 payment made at the beginning of the period and full redemption at the
end of the period. It reflects the deduction of the Annual Contract Fee and
all other Portfolio, Separate Account and Contract level charges except
Premium Taxes, if any.

ADDITIONAL PERFORMANCE MEASURES

NON-STANDARDIZED ACTUAL TOTAL RETURN AND NON-STANDARDIZED ACTUAL AVERAGE
ANNUAL TOTAL RETURN

NON-STANDARDIZED TOTAL RETURN YEAR-TO-DATE

9
<PAGE>

NON-STANDARDIZED ONE YEAR RETURN

NON-STANDARDIZED HYPOTHETICAL TOTAL RETURN AND NON-STANDARDIZED HYPOTHETICAL
AVERAGE ANNUAL TOTAL RETURN

The Non-Standardized Hypothetical Total Return for a Subaccount is the
effective annual rate of return that would have produced the ending
Accumulated Value of the stated one-year period.

YIELD AND EFFECTIVE YIELD

The Company may also show yield and effective yield figures for the Subaccount
investing in shares of the Federated Prime Money Portfolio. "Yield" refers to
the income generated by an investment in the Federated Prime Money Portfolio
over a seven-day period, which is then "annualized." That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in the Federated Prime Money
Portfolio is assumed to be reinvested. Therefore the effective yield will be
slightly higher than the yield because of the compounding effect of this
assumed reinvestment. These figures do not reflect the Annual Contract Fee or
Premium Taxes (if any) which, if included, would reduce the yields reported.

10
<PAGE>

THE COMPANY AND THE SEPARATE ACCOUNT

FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

The Company (formerly National Home Life Assurance Company of New York) is a
stock life insurance company incorporated under the laws of the State of New
York on March 23, 1970, with administrative offices at 520 Columbia Drive,
Johnson City, New York 13790. The Company is principally engaged in offering
life insurance, annuity contracts, and accident and health insurance and is
admitted to do business in 10 states and the District of Columbia. As of
December 31, 1997, the Company had assets of approximately $396 million. The
Company is a wholly owned subsidiary of AEGON USA, Inc., which conducts
substantially all of its operations through subsidiary companies engaged in
the insurance business or in providing non-insurance financial services. All
of the stock of AEGON USA, Inc. is indirectly owned by AEGON n.v. of the
Netherlands. AEGON n.v., a holding company, conducts its business through
subsidiary companies engaged primarily in the insurance business.

FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY SEPARATE ACCOUNT C

The Separate Account has dedicated 7 Subaccounts to the Contract, each of
which invests solely in a corresponding Portfolio of the Funds. Additional
Subaccounts may be established at the discretion of the Company. The Separate
Account also includes other subaccounts which are not available under the
Contract.

DFA INVESTMENT DIMENSIONS GROUP INC. (ADVISED BY DIMENSIONAL FUND ADVISORS
INC.)

DFA Investment Dimensions Group Inc. is an open-end management investment
company organized under Maryland law in 1981, and is registered under the 1940
Act. The Fund issues 28 series of shares, including the DFA Small Value
Portfolio, the DFA Large Value Portfolio (formerly, the DFA Global Value
Portfolio), the DFA International Value Portfolio, the DFA International Small
Portfolio, the DFA Short-Term Fixed Portfolio and the DFA Global Bond
Portfolio, which are the only portfolios available as part of the Dimensional
Variable Annuity. Dimensional Fund Advisors Inc. serves as this Fund's
investment advisor.

THE FEDERATED INSURANCE SERIES (ADVISED BY FEDERATED ADVISERS)

THE PORTFOLIOS (SEE ACCOMPANYING PROSPECTUSES)

FOR MORE INFORMATION CONCERNING THE RISKS ASSOCIATED WITH EACH PORTFOLIO'S
INVESTMENTS, PLEASE REFER TO THE APPLICABLE UNDERLYING FUND PROSPECTUS.

The median market capitalization referred to in the description of the VA
Small Value and VA Large Value Portfolios set forth below is determined based
on size ranges on the appropriate securities markets. Size ranges are created
by ranking companies listed on the appropriate securities market by market
capitalization. Once the ranking is done,

11
<PAGE>

companies are divided into ten groups (deciles) with each group containing an
equal number of companies. The first decile contains the 10% largest companies
and the tenth decile contains the 10% smallest companies. The median is
determined by averaging the market capitalization of the last company in the
fifth decile and the market capitalization of the first company in the sixth
decile.

VA SMALL VALUE PORTFOLIO ("DFA SMALL VALUE PORTFOLIO")

The investment objective of the DFA Small Value Portfolio is to achieve long-
term capital appreciation. This Portfolio seeks to achieve its investment
objective by investing in common stocks of U.S. companies (a) that are value
stocks, primarily because they have a high book value in relation to their
market value (a "book to market ratio"), and (b) whose market capitalizations
are smaller than that of the company having the median market capitalization
of companies whose shares are listed on the NYSE. Book to market distributions
are created by ranking the NYSE by book to market ratios, forming 10 groups
(deciles) with each group containing an equal number of companies. A company's
shares will be considered to have a high book to market ratio if the ratio
equals or exceeds the ratios of any of the 30% of companies with the highest
positive book to market ratios whose shares are listed on the NYSE.

VA LARGE VALUE PORTFOLIO ("DFA LARGE VALUE PORTFOLIO")

The investment objective of the DFA Large Value Portfolio is to achieve long-
term capital appreciation. This Portfolio seeks to achieve its investment
objective by investing in common stocks of U.S. companies (a) that are value
stocks, primarily because they have a high book to market ratio and (b) whose
market capitalizations equal or exceed that of the company having the median
market capitalization of companies whose shares are listed on the NYSE.
Pursuant to a special meeting of this Portfolio's shareholders held on
September 15, 1995, the DFA Large Value Portfolio's investment policy was
changed to permit the Portfolio to achieve its investment objective by
investing substantially all of its assets in the stock of U.S. companies and
the sale of the Portfolio's non-U.S. securities to another series of shares of
DFA Investment Dimensions Group Inc.

VA INTERNATIONAL VALUE PORTFOLIO ("DFA INTERNATIONAL VALUE PORTFOLIO")

The investment objective of the DFA International Portfolio is to achieve
long-term capital appreciation. This Portfolio seeks to achieve its investment
objective by investing in value stocks of large non-U.S. companies. Securities
are considered value stocks primarily because a company's shares at the time
of purchase have a book to market ratio that equals or exceeds the ratios of
any of the 30% of companies in that country with the highest positive book to
market ratios.

VA INTERNATIONAL SMALL PORTFOLIO ("DFA INTERNATIONAL SMALL PORTFOLIO")

The investment objective of the DFA International Small Portfolio is to
achieve long-term capital appreciation. This Portfolio provides investors with
access to securities portfolios consisting of small Japanese, United Kingdom,
Continental and Pacific Rim companies. The Portfolio seeks to achieve its
investment objective by investing its assets in a broad and diverse group of
marketable stocks of (1) Japanese small companies which are traded in the
Japanese securities markets; (2) United Kingdom small companies which are
traded principally on the International Stock Exchange of the United Kingdom
and the Republic of Ireland ("ISE"); (3) small companies organized under the
laws of certain European countries; and (4) small companies located in
Australia, New Zealand and Asian countries whose shares are traded principally
on the securities markets located in those countries. A "Japanese small
company" means a company located in Japan whose market capitalization is not
larger than the largest of those in the smaller one-half (deciles 6 through
10) of companies whose securities are listed on the First Section of the Tokyo
Stock Exchange. A "United Kingdom small company" means a company organized in
the United Kingdom, with shares listed on the ISE whose market capitalization
is not larger than the largest of those in the smaller one-half (deciles 6
through 10) of companies included in the Financial Times-Actuaries All Share
Index. With respect to small companies organized under the laws of certain
European countries, company size will be determined by the investment advisor
in a manner that will compare the market capitalizations for companies in all
countries of this segment in which the Portfolio invests (i.e., on a European
basis). The size of companies located in Australia, New Zealand and Asian
countries will be determined by the investment advisor in a manner that will
compare the market capitalizations of the companies in all countries of this
segment in which the Portfolio invest (i.e., on a Pacific Rim basis).

12
<PAGE>

VA SHORT-TERM FIXED PORTFOLIO ("DFA SHORT-TERM FIXED PORTFOLIO")

The investment objective of the DFA Short-Term Fixed Portfolio is to achieve a
stable real value (i.e., a return in excess of the rate of inflation) of
invested capital with a minimum of risk. This Portfolio seeks to achieve its
investment objective by investing in U.S. government obligations, U.S.
government agency obligations, dollar denominated obligations of foreign
issuers issued in the U.S., bank obligations, including U.S. subsidiaries and
branches of foreign banks, corporate obligations, commercial paper, repurchase
agreements and obligations of supranational organizations. Generally, this
Portfolio will acquire obligations which mature within one year from the date
of settlement, but substantial investments may be made in obligations maturing
within two years from the date of settlement when greater returns are
available.

VA GLOBAL BOND PORTFOLIO ("DFA GLOBAL BOND PORTFOLIO")

The DFA Global Bond Portfolio seeks to provide a market rate of return for a
global fixed income portfolio with low relative volatility of returns. This
Portfolio will invest primarily in obligations issued or guaranteed by the
U.S. and foreign governments, their agencies and instrumentalities,
obligations of other foreign issuers rated AA or better and supranational
organizations, such as the World Bank, the European Investment Bank, European
Economic Community, and European Coal and Steel Community and corporate debt
obligations.

FEDERATED PRIME MONEY FUND II ("FEDERATED PRIME MONEY PORTFOLIO")

OTHER PORTFOLIO INFORMATION

There is no assurance that a Portfolio will achieve its stated investment
objective.

The Portfolios may be made available to registered separate accounts offering
variable annuity and variable life products of the Company as well as other
insurance companies or to a person or plan, including a pension or retirement
plan receiving favorable tax treatment under the Code, that qualifies to
purchase shares of the Funds under Section 817(h) of the Code. Although we
believe it is unlikely, a material conflict could arise among the interests of
the Separate Account and one or more of the other participating separate
accounts and other qualified persons or plans. In the event of a material
conflict, the affected insurance companies agree to take any necessary steps,
including removing their separate accounts from the Funds if required by law,
to resolve the matter.

CONTRACT FEATURES

The rights and benefits under the Contract are described below; however, the
description of the Contract contained in this Prospectus is qualified in its
entirety by the Contract itself, including any endorsements to it, a copy of
which is available from the Company. The Company reserves the right to make
any modification to conform the Contract to, or give the Contract Owner the
benefit of, any federal or state statute or any rule or regulation of the
United States Treasury Department.

CONTRACT APPLICATION AND PURCHASE PAYMENTS

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<PAGE>

Acceptance is subject to the application being received in good order, and the
Company reserves the right to reject any application or initial Purchase
Payment.

Total Purchase Payments may not exceed $1,000,000 without our prior approval.

PURCHASING BY WIRE

For wiring instructions please contact our Administrative Offices at 1-800-
797-9177.

RIGHT TO CANCEL PERIOD

ALLOCATION OF PURCHASE PAYMENTS

EXCHANGES AMONG THE PORTFOLIOS

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<PAGE>

Eastern time), are processed at the close of business that same day. Requests
received after the close of the New York Stock Exchange are processed the next
Business Day.

DOLLAR COST AVERAGING OPTION

ACCUMULATED VALUE

At the commencement of the Contract, the Accumulated Value equals the initial
Net Purchase Payment. Thereafter, the Accumulated Value equals the Accumulated
Value from the previous Business Day increased by: (i) any additional Net
Purchase Payments received by the Company and (ii) any increase in the
Accumulated Value due to investment results of the selected Portfolio(s); and
reduced by: (i) any decrease in the Accumulated Value due to investment
results of the selected Portfolio(s), (ii) a daily charge to cover the
mortality and expense risks assumed by the Company, (iii) any charge to cover
the cost of administering the Contract, (iv) any partial withdrawals, and, if
exercised by the Company, (vi) any charges for any Exchanges made after the
first 12 in any Contract Year.

CHARGES AND DEDUCTIONS

There are no sales charges for the Contracts.

MORTALITY AND EXPENSE RISK CHARGE

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<PAGE>

ADMINISTRATIVE CHARGE AND ANNUAL CONTRACT FEE

EXCHANGE FEE

TAXES

The Company will periodically review the question of a charge to the Separate
Account for federal income taxes related to the Separate Account. Such a
charge may be made in future years for any federal income taxes incurred by
the Company. This might become necessary if the tax treatment of the Company
is ultimately determined to be other than what the Company currently believes
it to be, if there are changes made in the federal income tax treatment of
annuities at the corporate level, or if there is a change in the Company's tax
status. In the event that the Company should incur federal income taxes
attributable to investment income or capital gains retained as part of the
reserves under the Contracts, the Accumulated Value of the Contract would be
correspondingly adjusted by any provision or charge for such taxes.

PORTFOLIO EXPENSES

The value of the assets in the Separate Account reflects the fees and expenses
paid by the Portfolios. A complete description of these expenses is found in
the "Fee Table" section of this Prospectus and in each Fund's Prospectus and
Statement of Additional Information.

EXCEPTIONS TO CHARGES AND TO TRANSACTION OR BALANCE REQUIREMENTS

MINIMUM BALANCE REQUIREMENT

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<PAGE>

Contract on a pro rata basis. In the event that the entire value of the
Contract falls below $1,000, and if no Purchase Payment has been received
within three years, we reserve the right to liquidate the account. You would
be notified that the Accumulated Value of your account is below the Contract's
minimum requirement and be allowed 60 days to make an additional investment
before the account is liquidated. Proceeds would be promptly paid to the
Contract Owner. The full proceeds would be taxable as a withdrawal. We will
not exercise this right with respect to Qualified Contracts.

DISTRIBUTIONS UNDER THE CONTRACT

FULL AND PARTIAL WITHDRAWALS

Payments under the Contract of any amounts derived from premiums paid by check
may be delayed until the check has cleared your bank. If, at the time the
Contract Owner requests a full or partial withdrawal, he has not provided the
Company with a written election not to have federal income taxes withheld, the
Company must by law withhold such taxes from the taxable portion of any full
or partial withdrawal and remit that amount to the federal government.
Moreover, the Code provides that a 10% penalty tax may be imposed on certain
early withdrawals. (See "Federal Tax Considerations," page 21.)

LUMP SUM PAYMENT OPTION

SYSTEMATIC WITHDRAWAL OPTION

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<PAGE>

We reserve the right to discontinue offering the Systematic Withdrawal Option
upon 30 days' written notice. We also reserve the right to charge a fee for
such service.

ANNUITY DATE

You may advance or defer the Annuity Date. However, the Annuity Date may not
be advanced to a date prior to 30 days after the date of receipt of a written
request or, without the Company's prior approval, deferred to a date beyond
the first day of the month after the Annuitant's 85th birthday. The Annuity
Date may only be changed by written request during the Annuitant's lifetime
and must be made at least 30 days before the then-scheduled Annuity Date. The
Annuity Date and Annuity Payment options available for Qualified Contracts may
also be controlled by endorsements, the plan or applicable law.

ANNUITY PAYMENT OPTIONS

All Annuity Payment Options (except for the Designated Period Annuity Option)
are offered as "Variable Annuity Options." This means that Annuity Payments,
after the initial payment, will reflect the investment experience of the
Portfolio or Portfolios you have chosen. All Annuity Payment Options are also
offered as "Fixed Annuity Options." This means that the amount of each payment
will be set on the Annuity Date and will not change. The following Annuity
Payment Options are available under the Contract:

Life Annuity--Monthly Annuity Payments are paid for the life of an Annuitant,
ceasing with the last Annuity Payment due prior to the Annuitant's death.

Life Annuity with Period Certain--Monthly Annuity Payments are paid for the
life of an Annuitant, with a Period Certain of not less than 120, 180, or 240
months, as elected.

Designated Period Annuity--Only available as a Fixed Annuity Option. Monthly
Annuity Payments are paid for a Period Certain as elected, which may be from
10 to 30 years.

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<PAGE>

We may, at the time of election of an Annuity Payment Option, offer more
favorable rates in lieu of the guaranteed rates specified in the Annuity
Tables found in the Contract.

After the Annuity Date, you may change the Portfolio funding the Variable
Annuity Payments on the appropriate Company form or by calling our
Administrative Offices at 1-800-797-9177.

DEATH BENEFIT

DEATH OF ANNUITANT BEFORE ANNUITY DATE

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The Death Benefit is the greater of:

(1) The Accumulated Value on the date we receive due Proof of Death; or

(2) The Adjusted Death Benefit.

DEATH OF ANNUITANT ON OR AFTER ANNUITY DATE

DESIGNATION OF AN ANNUITANT'S BENEFICIARY

If the Annuitant dies prior to the Annuity Date, the following will apply
unless the Contract Owner has made other provisions.

(a) If there is more than one Annuitant's Beneficiary, each will share in
the Death Benefits equally;

(b) If one or two or more Annuitant's Beneficiaries have already died,
that share of the Death Benefit will be paid equally to the
survivor(s);

DEATH OF CONTRACT OWNER

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<PAGE>

named by the Owner as a beneficiary and who becomes Owner of the Contract upon
the Contract Owner's death.) If the Contract Owner and the Annuitant are the
same person, then upon that person's death the Annuitant's Beneficiary is
entitled to the Death Benefit. In this regard, see "Death of Annuitant Before
Annuity Date," page 19.

DEFERMENT OF PAYMENT

FEDERAL TAX CONSIDERATIONS

INTRODUCTION

The ultimate effect of federal income taxes on the amounts paid for the
Contract, on the investment return on assets held under a Contract, on Annuity
Payments, and on the economic benefits to the Contract Owner, Annuitant or
Annuitant's Beneficiary, depends on the terms of the Contract, the Company's
tax status and upon the tax status of the individuals concerned. The following
discussion is general in nature and is not intended as tax advice. You should
consult a tax advisor regarding the tax consequences of purchasing a Contract.
No attempt is made to consider any applicable state or other tax laws.
Moreover, the discussion is based upon the Company's understanding of the
federal income tax laws as they are currently interpreted. No representation
is made regarding the likelihood of continuation of the federal income tax
laws, the Treasury regulations or the current interpretations by the Internal
Revenue Service. We reserve the right to make uniform changes in the Contract
to the extent necessary to continue to qualify the Contract as an annuity. For
a discussion of federal income taxes as they relate to the Funds, please see
the accompanying Prospectuses for the Funds.

TAXATION OF ANNUITIES IN GENERAL

GENERAL RULE OF TAX DEFERRAL

TAXATION OF FULL OR PARTIAL WITHDRAWALS

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<PAGE>

TAXATION OF ANNUITY PAYMENTS

TAX WITHHOLDING

Withholding of federal income taxes on all distributions is required unless
the recipient elects not to have any amounts withheld and properly notifies
the Company of that election. In certain situations, taxes will be withheld on
distributions to non-resident aliens at a 30% flat rate unless an exemption
from withholding applies under an applicable tax treaty.

PENALTY TAXES

The tax penalty may also not apply to distributions from Qualified Contracts
issued under Section 408(b) or 408A of the Code used to pay qualified higher
education expenses or the acquisition costs (up to $10,000) involved in the
purchase of a principal residence by a first-time homebuyer.

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<PAGE>

ANNUITY CONTRACTS OWNED BY NON-NATURAL PERSONS

MULTIPLE-CONTRACTS RULE

TRANSFERS OF ANNUITY CONTRACTS

ASSIGNMENTS OF ANNUITY CONTRACTS

THE COMPANY'S TAX STATUS

DIVERSIFICATION STANDARDS

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<PAGE>

by any four investments. A "look-through" rule applies that suggests that each
Subaccount of the Separate Account will be tested for compliance with the
percentage limitations by looking through to the assets of the Portfolios in
which each such Subaccount invests. All securities of the same issuer are
treated as a single investment. Each government agency or instrumentality will
be treated as a separate issuer for purposes of those limitations.

We intend to comply with the Regulations to assure that the Contracts continue
to be treated as annuity contracts for federal income tax purposes.

403(B) CONTRACTS

Under your 403(b) Contract, you may borrow against your Contract's Surrender
Value after the first Contract Year. No additional loans will be extended
until prior loan balances are paid in full. The loan amount must be at least
$1,000 and your Contract must have a minimum vested Accumulated Value of
$2,000. The loan amount may not exceed the lesser of (a) or (b), where (a) is
50% of the Contract's vested Accumulated Value on the date on which the loan
is made, or $10,000, and (b) is $50,000 reduced by the excess, if any, of the
highest outstanding balance of loans during the one-year period ending on the
day before the current loan is made, over the outstanding balance of loans on
the date of the current loan. If you are married, your spouse must consent in
writing to a loan request. This consent must be given within the 90-day period
before the loan is to be made.

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<PAGE>

If a loan payment is not made when due, interest will continue to accrue. The
defaulted payment plus accrued interest will be deducted from any future
distributions under the Contract and paid to us. Any loan payment which is not
made
when due, plus interest, will be treated as a distribution, as permitted by
law. The loan payment may be taxable to the borrower, and may be subject to
the early withdrawal tax penalty.

If the individual account is surrendered or if the Contract Owner dies with an
outstanding loan balance, the outstanding loan balance and accrued interest
will be deducted from the Surrender Value or the Death Benefit respectively.
If an Annuity Payment Option is elected while there is an outstanding loan
balance, the outstanding loan balance and accrued interest will be deducted
from the Accumulated Value.

The Company may require that any outstanding loan be paid if the individual
account value falls below an amount equal to 25% of total loans outstanding.

25
<PAGE>

GENERAL INFORMATION

ADDITIONS, DELETIONS, OR SUBSTITUTIONS OF INVESTMENTS

VOTING RIGHTS

The Funds do not hold regular meetings of shareholders. The Directors/Trustees
of each Fund may call special meetings of shareholders as may be required by
the 1940 Act or other applicable law. To the extent required by law, the
Portfolio shares held in the Separate Account will be voted by the Company at
shareholder meetings of each Fund in accordance with instructions received
from persons having voting interests in the corresponding Portfolio. Fund
shares as to which no timely instructions are received or shares held by the
Company as to which Contract Owners have no beneficial interest will be voted
in proportion to the voting instructions that are received with respect to all
Contracts participating in that Portfolio. Voting instructions to abstain on
any item to be voted upon will be applied on a pro rata basis to reduce the
votes eligible to be cast.

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<PAGE>

YEAR 2000 MATTERS

In March 1997, the Company adopted and currently has in place a Year 2000
Assessment and Planning Project (the "Plan") to review and analyze existing
hardware and software systems, as well as voice and data communications
systems, to determine if they are Year 2000 compatible. The Plan provides for
a management process that ensures that when a particular system, or software
application, is determined to be "non-compliant" the proper steps are in place
to either remedy the "non-compliance" or cease using the particular system or
software. The Plan also provides that the Chief Information Officer report to
the Board of Directors as to the status of the efforts under the Plan on a
regular and routine basis. The Company has engaged the services of a third-
party provider that is specialized in Year 2000 issues to work on the project.

The Plan has four specific objectives: (1) to develop an inventory of all
applications; (2) to evaluate all applications in the inventory to determine
the most prudent manner to move them to Year 2000 compliance, if required; (3)
to estimate budgets, resources and schedules for the migration of the
"affected" applications to Year 2000 compliance; and (4) to define testing and
deployment requirements to successfully manage validation and re-deployment of
any changed code. It is anticipated that all compliance issues will be
resolved by December 1998.

AUDITORS

Ernst & Young LLP serves as independent auditors for the Separate Account and
the Company and will audit their financial statements annually.

LEGAL MATTERS

27
<PAGE>

TABLE OF CONTENTS FOR THE ADVISOR'S EDGE VARIABLE ANNUITY AND FOR THE
DIMENSIONAL VARIABLE ANNUITY

STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
PAGE
<S> <C>
THE CONTRACTS............................................................. 2
Computation of Variable Annuity Income Payments......................... 2
Exchanges............................................................... 3
Exceptions to Charges and to Transaction or Balance Requirements........ 3
GENERAL MATTERS........................................................... 3
Non-Participating....................................................... 3
Misstatement of Age or Sex.............................................. 3
Assignment.............................................................. 4
Annuity Data............................................................ 4
Annual Statement........................................................ 4
Incontestability........................................................ 4
Ownership............................................................... 4
PERFORMANCE INFORMATION................................................... 4
Federated Prime Money Portfolio Subaccount Yields....................... 5
30-Day Yield for Non-Money Market Subaccounts........................... 5
Standardized Average Annual Total Return for Subaccounts................ 6
ADDITIONAL PERFORMANCE MEASURES........................................... 6
Non-Standardized Actual Total Return and Non-Standardized Actual Average
Annual Total Return.................................................... 6
Non-Standardized Total Return Year-to-Date.............................. 6
Non-Standardized One Year Return........................................ 7
Non-Standardized Hypothetical Total Return and Non-Standardized
Hypothetical Average Annual Total Return............................... 7
Individual Computer Generated Illustrations............................. 7
PERFORMANCE COMPARISONS................................................... 7
SAFEKEEPING OF ACCOUNT ASSETS............................................. 9
THE COMPANY............................................................... 10
STATE REGULATION.......................................................... 10
RECORDS AND REPORTS....................................................... 10
DISTRIBUTION OF THE CONTRACTS............................................. 10
LEGAL PROCEEDINGS......................................................... 11
OTHER INFORMATION......................................................... 11
FINANCIAL STATEMENTS...................................................... 11
Audited Financial Statements............................................ 11
</TABLE>

28
<PAGE>

FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY SEPARATE ACCOUNT C
PROSPECTUS
FOR THE
PGA RETIREMENT ANNUITY
OFFERED BY
FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
(A NEW YORK STOCK COMPANY)
ADMINISTRATIVE OFFICES
520 COLUMBIA DRIVE
JOHNSON CITY, NEW YORK 13790

The PGA Retirement Annuity contract (the "Contract"), offered through First
Providian Life and Health Insurance Company (the "Company," "us," "we" or
"our," and formerly, "National Home Life Assurance Company of New York"),
provides a vehicle for investing on a tax-deferred basis in 5 investment
company Portfolios. The Contract is a group variable annuity contract and is
intended for retirement savings or other long-term investment purposes.

The minimum initial Purchase Payment for Non-Qualified Contracts is $250. (A
minimum of $3,000 in Purchase Payments less any withdrawals must be attained
by the first day of the third Contract Year.) The minimum initial purchase
payment for Qualified Contracts is $2,000 (or $50 monthly by payroll
deduction). The Contract is a flexible-premium deferred variable annuity that
provides for a Right to Cancel Period of 10 days (20 days for replacement)
plus a 5 day grace period to allow for mail delivery, during which you may
cancel your investment in the Contract.

You may allocate your Net Purchase Payments for the Contract among 5
Subaccounts of First Providian Life and Health Insurance Company's Separate
Account C. Assets of each Subaccount are invested in one of the following
Portfolios:

. CAPITAL PRESERVATION PORTFOLIO
. INCOME ORIENTED PORTFOLIO
. GROWTH AND INCOME PORTFOLIO
. CAPITAL GROWTH PORTFOLIO
. MAXIMUM APPRECIATION PORTFOLIO

Your initial Net Purchase Payment(s), when your Contract is issued, will be
invested immediately in your chosen Portfolio(s), unless you indicate
otherwise.

The Contract's Accumulated Value varies with the investment performance of the
Portfolio(s) you select. You bear all investment risk associated with the
Portfolios. Investment results for your Contract are not guaranteed.

The Contract offers a number of ways of withdrawing monies at a future date,
including a lump sum payment and several Annuity Payment Options. You may make
full or partial withdrawals of the Contract's Surrender Value at any time,
although in many instances withdrawals made prior to age 59 1/2 are subject to
a 10% federal tax penalty (and a portion may be subject to ordinary income
taxes). If you elect an Annuity Payment Option, Annuity Payments may be
received on a fixed and/or variable basis. You also have significant
flexibility in choosing the Annuity Date on which Annuity Payments begin.

This Prospectus sets forth the information you should know before investing in
the Contract. It must be accompanied by a current Prospectus for the
Portfolios. Please read the Prospectus carefully and retain it for future
reference. A Statement of Additional Information for the Contract Prospectus,
which has the same date as this Prospectus, has also been filed with the
Securities and Exchange Commission, is incorporated herein by reference and is
available free by calling our Administrative Offices at 1-800-866-0005. The
Table of Contents of the Statement of Additional Information is included at
the end of this Prospectus.

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

The date of this Prospectus is May 1, 1998.
FM-1189 (NY)
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
GLOSSARY................................................................... 3
HIGHLIGHTS................................................................. 5
FEE TABLE.................................................................. 7
Condensed Financial Information............................................ 8
Financial Statements....................................................... 8
Performance Measures....................................................... 9
Additional Performance Measures............................................ 9
Yield and Effective Yield.................................................. 9
The Company and the Separate Account....................................... 10
PB Series Trust............................................................ 10
The Portfolios............................................................. 10
CONTRACT FEATURES.......................................................... 11
Contract Purchase and Purchase Payments.................................. 11
Purchasing by Wire....................................................... 12
Right to Cancel Period................................................... 12
Allocation of Purchase Payments.......................................... 12
Exchanges Among the Portfolios........................................... 12
Accumulated Value........................................................ 12
Charges and Deductions................................................... 13
Minimum Balance Requirement.............................................. 14
DISTRIBUTIONS UNDER THE CONTRACT........................................... 14
Full and Partial Withdrawals............................................. 14
Lump Sum Payment Option.................................................. 15
Systematic Withdrawal Option............................................. 15
Annuity Date............................................................. 15
Annuity Payment Options.................................................. 15
Death Benefit............................................................ 17
Deferment of Payment..................................................... 18
FEDERAL TAX CONSIDERATIONS................................................. 18
GENERAL INFORMATION........................................................ 21
</TABLE>

2
<PAGE>

GLOSSARY

Accumulation Unit - A measure of your ownership interest in the Contract prior
to the Annuity Date.

Accumulation Unit Value - The value of each Accumulation Unit which is
calculated each Valuation Period.

Accumulated Value - The value of all amounts accumulated under the Contract
prior to the Annuity Date.

Adjusted Death Benefit - The sum of all Net Purchase Payments made during the
first six Contract Years, less any partial withdrawals taken. During each
subsequent six-year period, the Adjusted Death Benefit will be the Death
Benefit on the last day of the previous six-year period plus any Net Purchase
Payments made, less any partial withdrawals taken during the current six-year
period. After the Annuitant attains age 75, the Adjusted Death Benefit will
remain equal to the Death Benefit on the last day of the six-year period
ending before age 75 occurs plus any Net Purchase Payments subsequently made,
less any partial withdrawals subsequently taken.

Annuitant - The person whose life is used to determine the duration of any
Annuity Payments and upon whose death, prior to the Annuity Date, benefits
under the Contract are paid.

Annuitant's Beneficiary - The person(s) to whom any benefits are due upon the
Annuitant's death prior to the Annuity Date.

Annuity Date - The date on which Annuity Payments begin. The Annuity Date is
always the first day of the month you specify.

Annuity Payment - One of a series of payments made under an Annuity Payment
Option.

Annuity Payment Option - One of several ways in which withdrawals from the
Contract may be made. Under a Fixed Annuity Option (see "Annuity Payment
Options," page 15), the dollar amount of each Annuity Payment does not change
over time. Under a Variable Annuity Option (see "Annuity Payment Options,"
page 15), the dollar amount of each Annuity Payment may change over time,
depending upon the investment experience of the Portfolio or Portfolios you
choose. Annuity Payments are based on the Contract's Accumulated Value as of
10 Business Days prior to the Annuity Date.

Annuity Unit - Unit of measure used to calculate Variable Annuity Payments
(see "Annuity Payment Options," page 15).

Annuity Unit Value - The value of each Annuity Unit which is calculated each
Valuation Period.

Business Day - A day when the New York Stock Exchange is open for trading.

Code - The Internal Revenue Code of 1986, as amended.

Company ("we," "us," "our") - First Providian Life and Health Insurance
Company, a New York stock company.

Contract Anniversary - Any anniversary of the Contract Date.

Contract Date - The date of issue of this Contract.

Contract Owner ("you," "your") - The person or persons designated as the
Contract Owner in the Contract. The term shall also include any person named
as Joint Owner. A Joint Owner shares ownership in all respects with the
Contract Owner. Prior to the Annuity Date, the Contract Owner has the right to
assign ownership, designate beneficiaries, make permitted withdrawals and
Exchanges among Subaccounts.

Contract Year - A period of 12 months starting with the Contract Date or any
Contract Anniversary.

Death Benefit - The greater of the Contract's Accumulated Value on the date
the Company receives due Proof of Death of the Annuitant or the Adjusted Death
Benefit.

Exchange - One Exchange will be deemed to occur with each voluntary transfer
from any Subaccount.

3
<PAGE>

General Account - The account which contains all of our assets other than
those held in our separate accounts.

Net Purchase Payment - Any Purchase Payment less the Premium Tax, if any.

Non-Qualified Contract - Any Contract other than those described under the
Qualified Contract reference in this Glossary.

Owner's Designated Beneficiary - The person to whom ownership of this Contract
passes upon the Contract Owner's death, unless the Contract Owner was also the
Annuitant, in which case the Annuitant's Beneficiary is entitled to the Death
Benefit. (Note: this transfer of ownership to the Owner's Designated
Beneficiary will generally not be subject to probate, but will be subject to
estate and inheritance taxes. Consult with your tax and estate adviser to be
sure which rules will apply to you.)

Payee - The Contract Owner, Annuitant, Annuitant's Beneficiary, or any other
person, estate, or legal entity to whom benefits are to be paid.

Portfolio - A separate investment series of the Trust. The Trust currently
offers 5 series in the PGA Retirement Annuity: the Capital Preservation
Portfolio, the Income Oriented Portfolio, the Growth and Income Portfolio, the
Capital Growth Portfolio, and the Maximum Appreciation Portfolio (each a
"Portfolio" and, collectively, the "Portfolios"). In this Prospectus,
Portfolio will also be used to refer to the Subaccount that invests in the
corresponding Portfolio.

Purchase Payment - Any premium payment. The minimum initial Purchase Payment
is $250 for Non-Qualified Contracts (although a minimum of $3,000 in Purchase
Payments less any withdrawals must be attained by the first day of the third
Contract Year) and $2,000 for Qualified Contracts (or $50 monthly by payroll
deduction for Qualified Contracts); each additional Purchase Payment must be
at least $125 for Non-Qualified Contracts or $50 for Qualified Contracts.The
Company reserves the right to impose a $500 minimum on additional Purchase
Payments for Non-Qualified Contracts at any time in the future on its sole
discretion. Purchase Payments may be made at any time prior to the Annuity
Date as long as the Annuitant is living.

Qualified Contract - An annuity contract as defined under Sections 408(b) and
408A of the Code.

Right to Cancel Period - The period during which the Contract can be canceled
and treated as void from the Contract Date.

Subaccount - That portion of the Separate Account that invests in shares of
the Portfolios. Each Subaccount will only invest in a single Portfolio. The
investment performance of each Subaccount is linked directly to the investment
performance of one of the Portfolios.

Surrender Value - The Accumulated Value less any Premium Taxes incurred but
not yet deducted.

Trust - The PB Series Trust, formerly Providian Series Trust.

Underlying Funds - Four series of the Trust in which the Portfolios invest.
The four series are the High Quality Stock Fund, Fixed Income Fund,
International Active Fund, and Money Market Fund.

Valuation Period - The performance of your Contract is measured by using the
Accumulation Unit Value. This value is calculated at the close of each
Business Day. A Valuation Period is defined as the period of time between the
close of business on one Business Day and the close of business on the
following Business Day.

4
<PAGE>

HIGHLIGHTS

YOU CAN FIND DEFINITIONS OF IMPORTANT TERMS IN THE GLOSSARY (PAGE 3).

PGA RETIREMENT ANNUITY

The Contract provides a vehicle for investing on a tax-deferred basis in 5
investment company Portfolios. Monies may be subsequently withdrawn from the
Contract either as a lump sum or as annuity income as permitted under the
Contract. Accumulated Values and Annuity Payments depend on the investment
experience of the selected Portfolio(s). The investment performance of the
Portfolios is not guaranteed. Thus, you bear all investment risk for monies
invested under the Contract.

WHO SHOULD INVEST

The Contract is designed for investors seeking long term, tax-deferred
accumulation of funds, generally for retirement but also for other long-term
investment purposes. The tax-deferred feature of the Contract is most
attractive to investors in high federal and state marginal income tax
brackets. The Contract is offered as both a Qualified Contract and a Non-
Qualified Contract. Both Qualified and Non-Qualified Contracts offer tax-
deferral on increases in the Contract's value prior to withdrawal or
distribution; however, Purchase Payments made by Contract Owners of Qualified
Contracts may be excludible or deductible from gross income in the year such
payments are made, subject to certain statutory restrictions and limitations.
(See "Federal Tax Considerations," page 18.)

INVESTMENT CHOICES

Your investment in the Contract may be allocated among 5 Subaccounts of the
Separate Account. The Subaccounts in turn invest exclusively in the following
5 Portfolios offered by the Trust: the Capital Preservation Portfolio, the
Income Oriented Portfolio, the Growth and Income Portfolio, the Capital Growth
Portfolio, and the Maximum Appreciation Portfolio. The assets of each
Portfolio are separate. Each Portfolio has distinct investment objectives and
policies as described in the prospectus for the Portfolios. (See page 10.)

CONTRACT OWNER

ANNUITANT

The Annuitant is a person whose life is used to determine the duration of any
Annuity Payments and upon whose death, prior to the Annuity Date, benefits
under the Contract are paid. The Annuitant may not be older than age 75.

ANNUITANT'S BENEFICIARY

The Contract Owner may designate any person to receive benefits under the
Contract which are payable upon the death of the Annuitant prior to the
Annuity Date.

HOW TO INVEST

To invest in the Contract, you will need to provide the necessary information
to us in the Contract application. You will need to select an Annuitant. The
Annuitant may not be older than age 75 at the time the Contract is issued. For
Non- Qualified Contracts, the minimum initial Purchase Payment is $250. (A
minimum of $3,000 in Purchase Payments less any withdrawals must be attained
by the first day of the third Contract Year.) The minimum initial Purchase
Payment is $2,000 for Qualified Contracts (or $50 monthly by payroll deduction
for Qualified Contracts). Subsequent Purchase Payments must be at least $125
for Non-Qualified Contracts or $50 for Qualified Contracts. The Company
reserves the right to impose a $500 minimum on additional Purchase Payments
for Non-Qualified Contracts at any time in the future in its

5
<PAGE>

sole discretion. You may make subsequent Purchase Payments at any time before
the Contract's Annuity Date, as long as the Annuitant specified in the
Contract is living.

ALLOCATION OF PURCHASE PAYMENTS

Your initial Net Purchase Payment(s) will, unless you indicate otherwise, be
invested in the Portfolio(s) you selected immediately upon our receipt
thereof, IN WHICH CASE YOU WILL BEAR FULL INVESTMENT RISK FOR ANY AMOUNTS
ALLOCATED TO THE PORTFOLIOS DURING THE RIGHT TO CANCEL PERIOD. You must fill
out and send us the appropriate form or comply with other designated Company
procedures if you would like to change how subsequent Net Purchase Payments
are allocated. (See page 12.)

RIGHT TO CANCEL PERIOD

The Contract provides for a Right to Cancel Period of 10 days (20 days for
replacement) plus a 5 day grace period to allow for mail delivery, during
which you may cancel your investment in the Contract. To cancel your
investment, please return your Contract to us. When we receive the Contract,
we will return the Accumulated Value of your Purchase Payment(s) invested in
the Portfolios plus any fees and/or Premium Taxes that may have been
subtracted from such amount. (See page 12.)

EXCHANGES

You may make unlimited Exchanges among the Portfolios provided you maintain a
minimum balance of $250, except in cases where Purchase Payments are made by
monthly payroll deduction, in each Subaccount to which you have allocated a
portion of your Accumulated Value. No fee is currently imposed for such
Exchanges; however, we reserve the right to charge a $15 fee for Exchanges in
excess of 12 per Contract Year. Exchanges must not reduce the value of any
allocation to any Subaccount below $250, except in cases where Purchase
Payments are made by monthly payroll deduction, or that remaining amount will
be transferred to your other Subaccounts on a pro rata basis. (See also
"Charges and Deductions," page 13.)

DEATH BENEFIT

If the Annuitant specified in your Contract dies prior to the Annuity Date,
your named Annuitant's Beneficiary will receive the Death Benefit under the
Contract. The Death Benefit is the greater of your Accumulated Value or the
Adjusted Death Benefit on the date we receive due proof of the Annuitant's
death. During the first six Contract Years, the Adjusted Death Benefit will be
the sum of all Net Purchase Payments made, less any partial withdrawals taken.
During each subsequent six-year period, the Adjusted Death Benefit will be the
Death Benefit on the last day of the previous six-year period plus any Net
Purchase Payments made, less any partial withdrawals taken during the current
six-year period. After the Annuitant attains age 75, the Adjusted Death
Benefit will remain equal to the Death Benefit on the last day of the six-year
period ending before age 75 occurs plus any Net Purchase Payments subsequently
made, less any partial withdrawals subsequently taken. The Annuitant's
Beneficiary may elect to receive these proceeds as a lump sum or as Annuity
Payments. If the Annuitant dies on or after the Annuity Date, any unpaid
payments certain will be paid, generally to the Annuitant's Beneficiary, in
accordance with the Contract. (See page 17.)

ANNUITY PAYMENT OPTIONS

6
<PAGE>

CONTRACT AND POLICYHOLDER INFORMATION

If you have questions about your Contract, please telephone our Administrative
Offices at 1-800-866-6007 between the hours of 8:00 A.M. to 5:00 P.M. Eastern
time. Please have the Contract number and the Contract Owner's name ready when
you call. As Contract Owner you will receive periodic statements confirming
any financial transactions that take place, as well as quarterly statements
and an annual statement.

CHARGES AND DEDUCTIONS UNDER THE CONTRACT

The Contract has no sales charges and has an annual mortality and expense risk
charge of .55%. Contract Owners may withdraw up to 100% of the Accumulated
Value without incurring a surrender charge. The Contract also includes
administrative charges and policy fees, which pay for administering the
Contract, as well as portions of the management, advisory and other fees,
which reflect the costs of operating the Portfolios. (See page 13.)

FULL AND PARTIAL WITHDRAWALS

You may withdraw all or part of the Surrender Value of the Contract before the
earlier of the Annuity Date or the Annuitant's death. Withdrawals made prior
to age 59 1/2 may be subject to a 10% federal tax penalty (and a portion
thereof may be subject to ordinary income taxes). (See page 14.)

FEE TABLE

The following table illustrates all expenses (except for Premium Taxes that
may be assessed by your state) that you would incur as an owner of a Contract
(see page 13). The purpose of this table is to assist you in understanding the
various costs and expenses that you would bear directly or indirectly as a
purchaser of the Contract. The fee table reflects all expenses for both the
Separate Account and the Portfolios. For a complete discussion of Contract
costs and expenses, see "Charges and Deductions," page 13.

<TABLE>
<S> <C>
CONTRACTOWNER TRANSACTION EXPENSES
Sales Load Imposed on Purchases......................................... None
Contingent Deferred Sales Load (surrender charge)....................... None
Exchange Fees........................................................... None
ANNUAL CONTRACT FEE..................................................... $ 30
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of assets in the
Separate Account)
Mortality and Expense Risk Charge....................................... .55%
Administrative Charge................................................... .15%
----
Total Annual Separate Account Expenses.................................. .70%
</TABLE>

PORTFOLIO ANNUAL EXPENSES

The Portfolios will operate at a zero expense level during the first three
years of operations. However, while those Portfolios are expected to operate
without expenses, including management fees, Contract Owners in those
Portfolios bear indirectly the expenses of the Underlying Funds in which those
Portfolios invest. The following chart illustrates the indirect expense ratio
that each Portfolio incurred based on certain allocations among the Underlying
Funds. Except as may be indicated, the figures below are based on expenses for
the 1997 fiscal year of operation (as a percentage of each such Portfolio's
average net assets after fee waiver and/or expense reimbursement).

<TABLE>
<CAPTION>
TOTAL
PORTFOLIO
ANNUAL
EXPENSES
---------
<S> <C>
Capital Preservation Portfolio.................................. 0.78%*
Income Oriented Portfolio....................................... 0.88%*
Growth and Income Portfolio..................................... 0.90%*
Capital Growth Portfolio........................................ 0.94%*
Maximum Appreciation Portfolio.................................. 0.95%*
</TABLE>

7
<PAGE>

* These numbers are based on an agreement by PB Investment Advisors, Inc.,
formerly Providian Investment Advisors, Inc. (the "Adviser"), to limit
the Other Expenses of each Underlying Fund so that the ratio of expenses
(excluding advisory fees) to net assets on an annual basis does not
exceed 0.25%. Expenses in excess of such amounts will be assumed by the
Adviser until the earlier of (a) the end of three years after
commencement of operations or (b) the termination by the Trust's Trustees
or the Portfolios' shareholders, but not the Adviser, of the Trust's
Advisory Agreement with the Adviser. For fiscal year 1997, the actual
expenses of the Portfolios, absent the Adviser's agreement to assume the
Portfolio's expenses and certain of the Underlying Funds' expenses, were
adversely affected by the small size of the Portfolios and would have
been: Capital Preservation Portfolio 161.07%; Income Oriented Portfolio
1978.36%; Growth and Income Portfolio 30.27%; Capital Growth Portfolio
20.00%; and Maximum Appreciation Portfolio 24.50%. For more information
concerning the actual expenses of the Portfolios, please see the Trust's
Annual Report, which is available by calling 1-800-866-0005.

The following example illustrates the expenses that you would incur on a $1,000
Purchase Payment over various periods, assuming (1) a 5% annual rate of return
and (2) redemption at the end of each period. As noted in the table above, the
Contract imposes no surrender or withdrawal charges of any kind. Your expenses
are identical whether you continue the Contract or withdraw the entire value of
your Contract at the end of the applicable period as a lump sum or under one of
the Contract's Annuity Payment Options.

<TABLE>
<CAPTION>
3
1 YEAR YEARS
------ ------
<S> <C> <C>
Capital Preservation Portfolio............................. $24.99 $76.11
Income Oriented Portfolio.................................. $25.99 $79.15
Growth and Income Portfolio................................ $26.19 $79.76
Capital Growth Portfolio................................... $26.59 $80.97
Maximum Appreciation Portfolio............................. $26.69 $81.28
</TABLE>

The Annual Contract Fee in these examples is estimated and reflects a
percentage equal to the total amount of fees collected during a calendar year
divided by the total average net assets of the Portfolios during the same
calendar year. During the first year of operations, we have assumed an average
Contract size of $3,000. The fee is assumed to remain the same in each year of
the above periods. (With respect to partial year periods, if any, in the
examples, the Annual Contract Fee is pro-rated to reflect only the applicable
portion of the partial year period.) The Annual Contract Fee will be deducted
on each Contract Anniversary and upon surrender or annuitization of the
Contract, on a pro rata basis, from each Subaccount. The Company may also
deduct Premium Taxes, if any, as incurred by the Company.

This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be higher or lower than those
shown, subject to the guarantees in the Contract.

CONDENSED FINANCIAL INFORMATION
(FOR THE PERIOD JANUARY 1, 1997 THROUGH DECEMBER 31, 1997)

<TABLE>
<CAPTION>
GROWTH
CAPITAL INCOME AND CAPITAL MAXIMUM
PRESERVATION ORIENTED INCOME GROWTH APPRECIATION
------------ -------- ------ ------- ------------
<S> <C> <C> <C> <C> <C>
Accumulation unit value
as of:
12/31/97.............. N/A N/A N/A N/A N/A
Number of units
outstanding as of:
12/31/97.............. N/A N/A N/A N/A N/A
</TABLE>

FINANCIAL STATEMENTS

The audited statutory-basis financial statements of the Company (as well as
the Independent Auditors' Report thereon) are contained in the Statement of
Additional Information. No financial statements are included for the Separate
Account because, as of the end of the most recent fiscal year, the Subaccounts
of the Separate Account offered by the PGA Retirement Annuity had not
commenced operations, and consequently had no assets or liabilities.

8
<PAGE>

PERFORMANCE MEASURES

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

Please refer to the discussion below and to the Statement of Additional
Information for a more detailed description of the method used to calculate a
Portfolio's and Subaccount's yield and total return, and a list of the indexes
and other benchmarks used in evaluating a Portfolio's and Subaccount's
performance.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

ADDITIONAL PERFORMANCE MEASURES

NON-STANDARDIZED ACTUAL TOTAL RETURN AND NON-STANDARDIZED ACTUAL AVERAGE
ANNUAL TOTAL RETURN

The Company may show actual Total Return (i.e., the percentage change in the
value of an Accumulation Unit) for one or more Subaccounts with respect to one
or more periods, including Total Return Year-to-Date with respect to certain
periods. The Company may also show actual Average Annual Total Return (i.e.,
the average annual change in Accumulation Unit Values) with respect to one or
more periods. For one year, the actual Total Return and the actual Average
Annual Total Return are effective annual rates of return and are equal. For
periods greater than one year, the actual Average Annual Total Return is the
effective annual compounded rate of return for the periods stated. Because the
value of an Accumulation Unit reflects the Separate Account and Portfolio
expenses (see "Fee Table"), the actual Total Return and actual Average Annual
Total Return also reflect these expenses. These percentages, however, do not
reflect the Annual Contract Fee or Premium Taxes (if any) which, if included,
would reduce the percentages reported.

YIELD AND EFFECTIVE YIELD

From time to time a Portfolio may advertise its yield and total return
investment performance. For each Subaccount for which the Company advertises
yield, the Company shall furnish a yield quotation referring to the Portfolio
computed in the following manner: the net investment income per Accumulation
Unit earned during a recent one month period is divided by the Accumulation
Unit Value on the last day of the period.

Performance information for the Subaccounts may be contrasted with other
comparable variable annuity separate accounts or other investment products
surveyed by Lipper Analytical Services, a nationally recognized independent
reporting service which ranks mutual funds and other investment companies by
overall performance, investment objectives and assets. Performance may also be
tracked by other ratings services, companies, publications or persons who rank
separate accounts or other investment products on overall performance or other
criteria, including Morningstar, Inc. Performance figures will be calculated
in accordance with standardized methods established by each reporting service.

9
<PAGE>

THE COMPANY AND THE SEPARATE ACCOUNT

FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY

The Company (formerly National Home Life Assurance Company of New York) is a
stock life insurance company incorporated under the laws of the State of New
York on March 23, 1970, with administrative offices at 520 Columbia Drive,
Johnson City, New York 13790. The Company is principally engaged in offering
life insurance, annuity contracts, and accident and health insurance and is
admitted to do business in 10 states and the District of Columbia. As of
December 31, 1997, the Company had assets of approximately $396 million. The
Company is a wholly owned subsidiary of AEGON USA, Inc., which conducts
substantially all of its operations through subsidiary companies engaged in
the insurance business or in providing non-insurance financial services. All
of the stock of AEGON USA, Inc., is indirectly owned by AEGON n.v. of the
Netherlands. AEGON n.v., a holding company, conducts its business through
subsidiary companies engaged primarily in the insurance business.

FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY SEPARATE ACCOUNT C

The Separate Account has dedicated 5 Subaccounts to the Contract, each of
which invests solely in a corresponding Portfolio of the Trust. Additional
subaccounts may be established at the discretion of the Company. The Separate
Account also includes other subaccounts which are not available under the
Contract.

PB SERIES TRUST

The Trust is a diversified investment company presently consisting of 9
separate series each having different investment objectives and policies. This
Contract offers 5 series of shares, each a professionally managed investment
Portfolio. Each Portfolio seeks to achieve its objective by investing in a
number of other series offered by the Trust. The Adviser has retained Atlanta
Capital Management Company, L.L.C. ("Atlanta Capital") to serve as sub-adviser
for the Portfolios. Subject to the supervision and direction of the Board of
Trustees of the Trust, Atlanta Capital determines how each of its Portfolios'
assets will be invested in the Underlying Funds. Atlanta Capital receives a
fee, which is paid by the Adviser and is a percentage of the annual net asset
value of the Underlying Funds for which Atlanta Capital serves as sub-adviser
and in which the Portfolios invest. The advisory fee is deducted automatically
from the assets of the Underlying Funds, and is therefore paid indirectly by
the Portfolios.

THE PORTFOLIOS (SEE ACCOMPANYING PROSPECTUS)

FOR MORE INFORMATION CONCERNING THE RISKS ASSOCIATED WITH EACH PORTFOLIO'S
INVESTMENTS, PLEASE REFER TO THE PROSPECTUS FOR THE PORTFOLIOS.

THE CAPITAL PRESERVATION PORTFOLIO-seeks high current income with low
volatility of principal.

THE INCOME ORIENTED PORTFOLIO-seeks income and, secondarily, long term growth
of capital.

10
<PAGE>

THE GROWTH AND INCOME PORTFOLIO-seeks growth of capital and income.

THE CAPITAL GROWTH PORTFOLIO-seeks long term growth of capital and,
secondarily, current income.

THE MAXIMUM APPRECIATION PORTFOLIO-seeks capital appreciation.

OTHER PORTFOLIO INFORMATION

There is no assurance that a Portfolio will achieve its stated investment
objective.

Additional information concerning the investment objectives and policies of
the Portfolios and the investment advisory services, total expenses and
charges can be found in the current prospectuses for the Portfolios. THE
PORTFOLIOS' PROSPECTUS SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
CONCERNING THE ALLOCATION OF NET PURCHASE PAYMENTS TO A PORTFOLIO.

The Portfolios may, in the future, be made available to registered separate
accounts offering variable annuity and variable life products of the Company
as well as other insurance companies or to a person or plan, including a
pension or retirement plan receiving favorable tax treatment under the Code,
that qualifies to purchase shares of the Portfolios under Section 817(h) of
the Code. Although we believe it is unlikely, a material conflict could arise
among the interests of the Separate Account and one or more of the other
participating separate accounts and other qualified persons or plans. In the
event of a material conflict, the affected insurance companies agree to take
any necessary steps, including removing their separate accounts from the
Portfolios if required by law, to resolve the matter.

CONTRACT FEATURES

CONTRACT PURCHASE AND PURCHASE PAYMENTS

If you wish to purchase a Contract, you should complete the application and
forward it and the initial Purchase Payment to the address indicated on the
application, or to such address as the Company may from time to time
designate. If you wish to make personal delivery by hand or courier to the
Company of the completed application form and the initial Purchase Payment
(rather than through the mail), you must do so at our Administrative Offices
at 520 Columbia Drive, Johnson City, New York 13790. For a Non-Qualified
Contract, the initial Purchase Payment must be equal to a least $250. If at
any time after the second Contract Anniversary the sum of all Purchase
Payments made less any withdrawals taken is not at least $3,000, we reserve
the right to terminate the Contract, in which case we will pay you the
Accumulated Value.The Initial Purchase Payment for a Qualified Contract must
be equal to at least $2,000 (or you may establish a payment schedule of $50 a
month by payroll deduction). To obtain an application, please call our
Administrative Offices at 1-800-866-0005.

The Contract will be issued and the initial Purchase Payment less any Premium
Taxes will be credited within 2 Business Days after receipt of the application
and the initial Purchase Payment in good order. The Company reserves the right
to reject any application or initial Purchase Payment.

If the initial Purchase Payment cannot be credited within 5 Business Days
because the application is incomplete, we will contact the applicant, explain
the reason for the delay and refund the initial Purchase Payment, unless the
applicant instructs us to retain the initial Purchase Payment and credit it as
soon as the necessary requirements are fulfilled.

You may make additional Purchase Payments at any time before the Annuity Date,
as long as the Annuitant is living. For Non-Qualified Contracts, additional
Purchase Payments must be for at least $125, although we reserve the right to
impose a $500 minimum on additional Purchase Payments at any time in the
future in our sole discretion. Additional

11
<PAGE>

Purchase Payments must be for at least $50 for Qualified Contracts. Additional
Purchase Payments received prior to the close of the New York Stock Exchange
(generally 4:00 P.M. Eastern time) are credited to the Accumulated Value at
the close of business that same day. Additional Purchase Payments received
after the close of the New York Stock Exchange are processed the next Business
Day.

Total Purchase Payments may not exceed $1,000,000 without our prior approval.

The Company reserves the right to refuse to issue this Contract in cases
involving an exchange for another Contract. In cases where a Contract Owner or
former Contract Owner requests the Company to reverse a surrender or
withdrawal transaction, whether full or partial, the Company reserves the
right to refuse such requests or grant such requests on condition that the
Contract's Accumulated Value be adjusted to reflect appropriate investment
results, administration costs or loss of interest during the relevant period.

PURCHASING BY WIRE

For wiring instructions please contact our Administrative Offices at 1-800-
866-0005.

RIGHT TO CANCEL PERIOD

A Right to Cancel Period exists for 10 days after you receive the Contract (20
days for replacement) plus a 5 day grace period to allow for mail delivery.
The Contract permits you to cancel the Contract during the Right to Cancel
Period by returning the Contract to our Administrative Offices, 520 Columbia
Drive, Johnson City, New York 13790 or mailing it to us at P.O. Box 1950,
Binghamton, New York 13902. Upon cancellation, the Contract is treated as void
from the Contract Date and when we receive the Contract, we will return the
Accumulated Value of your Purchase Payment(s) invested in the Portfolios plus
any fees and/or Premium Taxes that may have been subtracted from such amount.

ALLOCATION OF PURCHASE PAYMENTS

You decide how your Net Purchase Payments will be allocated. You may allocate
each Net Purchase Payment to one of the Portfolios as long as such portions
are whole number percentages provided no Portfolio may contain a balance of
less than $250, except in cases where Purchase Payments are made by monthly
payroll deduction. You may change allocation instructions for future Net
Purchase Payments by sending us the appropriate Company form or by complying
with other designated Company procedures. If an additional Net Purchase
Payment is not accompanied by allocation instructions, it will be allocated to
the same Portfolio(s) as your prior Net Purchase Payments are invested at that
time, unless otherwise directed by you in writing in advance.

Your initial Net Purchase Payment(s) will, unless you indicate otherwise, be
invested in your Portfolio(s) immediately upon our receipt thereof, IN WHICH
CASE YOU WILL BEAR FULL INVESTMENT RISK FOR ANY AMOUNTS ALLOCATED TO THE
PORTFOLIOS DURING THE RIGHT TO CANCEL PERIOD.

EXCHANGES AMONG THE PORTFOLIOS

Should your investment goals change, you may exchange Accumulated Value among
the Portfolios. Requests for Exchanges, received by mail prior to the close of
the New York Stock Exchange (generally 4:00 P.M. Eastern time), are processed
at the close of business that same day. Requests received after the close of
the New York Stock Exchange are processed the next Business Day.

ACCUMULATED VALUE

At the commencement of the Contract, the Accumulated Value equals the initial
Net Purchase Payment. Thereafter, the Accumulated Value equals the Accumulated
Value from the previous Business Day increased by: (i) any additional Net
Purchase Payments received by the Company and (ii) any increase in the
Accumulated Value due to investment results of the selected Portfolio(s)
during the Valuation Period; and reduced by: (i) any decrease in the
Accumulated Value due to investment results of the selected Portfolio(s), (ii)
a daily charge to cover the mortality and expense risks assumed by the
Company, (iii) any charge to cover the cost of administering the Contract,
(iv) any partial withdrawals, and (v) any charges for any Exchanges made after
the first 12 in any Contract Year.

12
<PAGE>

CHARGES AND DEDUCTIONS

There are no sales charges for the Contracts.

MORTALITY AND EXPENSE RISK CHARGE

ADMINISTRATIVE CHARGE AND ANNUAL CONTRACT FEE

An administrative charge equal to .15% annually of the net asset value of the
Separate Account is assessed daily along with the Annual Contract Fee of $30.
The Annual Contract Fee is deducted proportionately from the Subaccounts. For
any Contract with amounts allocated to the Subaccounts, the $30 fee is
assessed per Contract, not per Portfolio chosen. The Annual Contract Fee will
be deducted from each Subaccount on each Contract Anniversary and upon
surrender, on a pro rata basis based on the number of months that have passed
since the last anniversary date. These deductions represent reimbursement for
the costs expected to be incurred over the life of the Contract for issuing
and maintaining each Contract and the Separate Account.

EXCHANGE FEE

Each Contract Year you may make an unlimited number of Exchanges between
Portfolios, provided that after an Exchange no Portfolio may contain a balance
of less than $250, except in cases where Purchase Payments are made by monthly
payroll deduction. No fee is currently imposed for such Exchanges; however, we
reserve the right to charge a $15 fee for Exchanges in excess of 12 per
Contract Year.

TAXES

Under present laws, the Company will not incur New York state or local taxes.
If there is a change in state or local tax laws, charges for such taxes may be
made. The Company does not expect to incur any federal income tax liability
attributable to investment income or capital gains retained as part of the
reserves under the Contracts. (See "Federal Tax Considerations," page 18.)
Based upon these expectations, no charge is currently being made to the
Separate Account for corporate federal income taxes that may be attributable
to the Separate Account.

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PORTFOLIO EXPENSES

The value of the assets in the Separate Account reflects the fees and expenses
paid by the Portfolios. A complete description of these expenses is found in
the "Fee Table" section of this Prospectus and in the Trust's Prospectus and
Statement of Additional Information.

EXCEPTIONS TO CHARGES AND TO TRANSACTION OR BALANCE REQUIREMENTS

MINIMUM BALANCE REQUIREMENT

We will transfer the balance in any Portfolio that falls below $250, except in
cases where Purchase Payments are made by monthly payroll deduction, due to a
partial withdrawal or Exchange, to the remaining Portfolio(s) held under that
Contract on a pro rata basis. If at any time after the second Contract
Anniversary the sum of Purchase Payments made less any withdrawals taken is
not at least $3,000, we reserve the right to terminate the Contract, in which
case we will pay you the Accumulated Value. The full proceeds would be taxable
as a withdrawal. We will not exercise this right with respect to Qualified
Contracts.

DISTRIBUTIONS UNDER THE CONTRACT

FULL AND PARTIAL WITHDRAWALS

You can make a withdrawal by sending the appropriate Company form to our
Administrative Offices. Your proceeds will normally be processed and mailed to
you within 2 Business Days after the receipt of the request but in no event
will it be later than 7 calendar days, subject to postponement in certain
circumstances. (See "Deferment of Payment," page 18.)

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LUMP SUM PAYMENT OPTION

SYSTEMATIC WITHDRAWAL OPTION

This option may be elected by completing the Systematic Withdrawal Request
Form. This form must be received by us at least 30 days prior to the date
systematic withdrawals will begin. Each withdrawal will be processed on the
day and at the frequency indicated on the Systematic Withdrawal Request Form.
The start date for the systematic withdrawals must be between the first and
twenty-eighth day of the month. You may discontinue the Systematic Withdrawal
Option at any time by notifying us in writing at least 30 days prior to your
next scheduled withdrawal date. Like any other partial withdrawal, each
Systematic Withdrawal is subject to taxes on earnings. If the owner has not
provided the Company with a written election not to have federal income taxes
withheld, the Company must by law withhold 10% from the taxable portion of the
Systematic Withdrawal and remit that amount to the federal government.
Moreover, the Code provides that a 10% penalty tax may be imposed on certain
early withdrawals. (See "Federal Tax Considerations," page 18.) You may wish
to consult a tax adviser regarding any tax consequences that might result
prior to electing the Systematic Withdrawal Option.

We reserve the right to discontinue offering the Systematic Withdrawal Option
upon 30 days' written notice. We also reserve the right to charge a fee for
such service.

ANNUITY DATE

ANNUITY PAYMENT OPTIONS

Life Annuity--Monthly Annuity Payments are paid for the life of an Annuitant,
ceasing with the last Annuity Payment due prior to the Annuitant's death.

Life Annuity with Period Certain--Monthly Annuity Payments are paid for the
life of an Annuitant, with a Period Certain of not less than 120, 180, or 240
months, as elected.

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Designated Period Annuity--Only available as a Fixed Annuity Option. Monthly
Annuity Payments are paid for a Period Certain as elected, which may be from
10 to 30 years.

We may, at the time of election of an Annuity Payment Option, offer more
favorable rates in lieu of the guaranteed rates specified in the Annuity
Tables found in the Contract.

After the Annuity Date, you may change the Portfolio funding the Variable
Annuity Payments on the appropriate Company form or by calling our
Administrative Offices at 1-800-866-6007.

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DEATH BENEFIT

DEATH OF ANNUITANT BEFORE ANNUITY DATE

The Death Benefit is the greater of:

(1) The Accumulated Value on the date we receive due Proof of Death; or

(2) The Adjusted Death Benefit.

During the first six Contract Years, the Adjusted Death Benefit will be the
sum of all Net Purchase Payments made, less any partial withdrawals taken.
During each subsequent six-year period, the Adjusted Death Benefit will be the
Death Benefit on the last day of the previous six-year period plus any Net
Purchase Payments made, less any partial withdrawals taken during the current
six-year period. After the Annuitant attains age 75, the Adjusted Death
Benefit will remain equal to the Death Benefit on the last day of the six-year
period ending before age 75 occurs plus any Net Purchase Payments subsequently
made, less any partial withdrawals subsequently taken.

DEATH OF ANNUITANT ON OR AFTER ANNUITY DATE

DESIGNATION OF AN ANNUITANT'S BENEFICIARY

If the Annuitant dies prior to the Annuity Date, the following will apply
unless the Contract Owner has made other provisions.

(a) If there is more than one Annuitant's Beneficiary, each will share in
the Death Benefits equally;

(b) If one or two or more Annuitant's Beneficiaries have already died,
that share of the Death Benefit will be paid equally to the
survivor(s);

(d) If an Annuitant's Beneficiary dies at the same time as the Annuitant,
the proceeds will be paid as though the Annuitant's Beneficiary had
died first. If an Annuitant's Beneficiary dies within 15 days after
the Annuitant's death and before the Company receives due proof of the
Annuitant's death, proceeds will be paid as though the Annuitant's
Beneficiary had died first.

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DEATH OF CONTRACT OWNER

DEFERMENT OF PAYMENT

Payment of any cash withdrawal or lump sum Death Benefit due from the Separate
Account will occur within 7 days from the date the election becomes effective
except that the Company may be permitted to defer such payment if: (1) the New
York Stock Exchange is closed for other than usual weekends or holidays, or
trading on the New York Stock Exchange is otherwise restricted; or (2) an
emergency exists as defined by the SEC, or the SEC requires that trading be
restricted; or (3) the SEC permits a delay for the protection of Contract
Owners.

FEDERAL TAX CONSIDERATIONS

INTRODUCTION

The ultimate effect of federal income taxes on the amounts paid for the
Contract, on the investment return on assets held under a Contract, on Annuity
Payments, and on the economic benefits to the Contract Owner, Annuitant or
Annuitant's Beneficiary, depends on the terms of the Contract, the Company's
tax status and upon the tax status of the individuals concerned. The following
discussion is general in nature and is not intended as tax advice. You should
consult a tax adviser regarding the tax consequences of purchasing a Contract.
No attempt is made to consider any applicable state or other tax laws.
Moreover, the discussion is based upon the Company's understanding of the
federal income tax laws as they are currently interpreted. No representation
is made regarding the likelihood of continuation of the federal income tax
laws, the Treasury regulations or the current interpretations by the Internal
Revenue Service. We reserve the right to make uniform changes in the Contract
to the extent necessary to continue to qualify the Contract as an annuity. For
a discussion of federal income taxes as they relate to the Funds, please see
the accompanying Prospectuses for the Funds.

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TAXATION OF ANNUITIES IN GENERAL

GENERAL RULE OF TAX DEFERRAL

TAXATION OF FULL OR PARTIAL WITHDRAWALS

Upon receipt of a full or partial withdrawal or an Annuity Payment under the
Contract, you will be taxed if the value of the Contract exceeds the
investment in the Contract. Generally, the taxable portion of such payments
will be taxed at ordinary income tax rates. Partial withdrawals are generally
taken out of earnings first and then investment in the Contract.

TAXATION OF ANNUITY PAYMENTS

TAX WITHHOLDING

Withholding of federal income taxes on all distributions is required unless
the recipient elects not to have any amounts withheld and properly notifies
the Company of that election. In certain situations, taxes will be withheld on
distributions to nonresident aliens at a 30% flat rate unless an exemption
from withholding applies under the applicable tax treaty.

PENALTY TAXES

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annually for the life (or life expectancy) of the taxpayer, or joint lives (or
joint life expectancies) of the taxpayer and his or her beneficiary; (iv) from
a qualified plan (note, however, other penalties may apply); (v) under a
qualified funding asset (as defined in Code Section 130(d)); (vi) under an
immediate annuity contract as defined in Section 72(u)(4); (vii) allocable to
the investment in the Contract prior to August 14, 1982; or (viii) that are
purchased by an employer on termination of certain types of qualified plans
and that are held by the employer until the employee separates from service.
Other tax penalties may apply to certain distributions as well as to certain
contributions and other transactions under Qualified Contracts.

ANNUITY CONTRACTS OWNED BY NON-NATURAL PERSONS

MULTIPLE-CONTRACTS RULE

All non-qualified annuity contracts issued by the same company (or affiliate)
to the same Contract Owner during any calendar year are to be aggregated and
treated as one contract for purposes of determining the amount includible in
the taxpayer's gross income. Thus, any amount received under any Contract
prior to the Contract's Annuity Date, such as a partial withdrawal, will be
taxable (and possibly subject to the 10% federal penalty tax) to the extent of
the combined income in all such contracts. The Treasury Department has
specific authority to issue regulations that prevent the avoidance of Code
Section 72(e) through the serial purchase of annuity contracts or otherwise.
In addition, there may be other situations in which the Treasury Department
may conclude that it would be appropriate to aggregate two or more Contracts
purchased by the same Contract Owner. The aggregation rules do not apply to
immediate annuities as defined under Section 72(u)(4) of the Code.
Accordingly, a Contract Owner should consult a tax adviser before purchasing
more than one Contract or other annuity contracts.

TRANSFERS OF ANNUITY CONTRACTS

ASSIGNMENTS OF ANNUITY CONTRACTS

A transfer of ownership of a Contract, a collateral assignment or the
designation of an Annuitant or other beneficiary who is not also the Contract
Owner may result in tax consequences to the Contract Owner, Annuitant or
beneficiary that are not discussed herein. A Contract Owner contemplating such
a transfer or assignment of a Contract should contact a tax adviser with
respect to the potential tax effects of such a transaction.

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THE COMPANY'S TAX STATUS

DIVERSIFICATION STANDARDS

To comply with certain diversification regulations (the "Regulations") under
Code Section 817(h), one year after the start up period, each Subaccount of
the Separate Account will be required to diversify its investments. The
Regulations generally require that on the last day of each quarter of a
calendar year, no more than 55% of the value of each Subaccount of the
Separate Account is represented by any one investment, no more than 70% is
represented by any two investments, no more than 80% is represented by any
three investments, and no more than 90% is represented by any four
investments. A "look-through" rule applies that suggests that each Subaccount
of the Separate Account will be tested for compliance with the percentage
limitations by looking through to the assets of the Portfolios in which each
such Subaccount invests. The Company believes that under this rule, the
Separate Account must be tested for compliance with the percentage limitations
by "looking through" both the shares in Portfolios that are held by the
Separate Account and the shares in the Underlying Funds that are held by the
Portfolios to the investment assets held by the Underlying Funds. All
securities of the same issuer are treated as a single investment. Each
government agency or instrumentality will be treated as a separate issuer for
purposes of those limitations.

We intend to comply with the Regulations to assure that the Contracts continue
to be treated as annuity contracts for federal income tax purposes.

GENERAL INFORMATION

ADDITIONS, DELETIONS, OR SUBSTITUTIONS OF INVESTMENTS

The Company retains the right, subject to any applicable law, to make certain
changes. The Company reserves the right to eliminate the shares of any of the
Portfolios and to substitute shares of another Portfolio, or of another
registered, open-end management investment company, if the shares of the
Portfolios are no longer available for investment, or, if in the Company's
judgment, investment in any Portfolio would be inappropriate in view of the
purposes of the Separate Account. To the extent required by the 1940 Act,
substitutions of shares attributable to a Contract Owner's interest in a
Portfolio will not be made until SEC approval has been obtained and the
Contract Owner has been notified of the change.

New portfolios may be established at the discretion of the Company. Any new
portfolios will be made available to existing Contract Owners on a basis to be
determined by the Company. The Company may also eliminate one or more
Portfolios if marketing, tax, investment or other conditions so warrant.

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<PAGE>

a management company under the 1940 Act or any other form permitted by law,
may be deregistered under the 1940 Act in the event such registration is no
longer required, or may be combined with one or more other separate accounts.

VOTING RIGHTS

The Trust does not hold regular meetings of shareholders. The Trustees of the
Trust may call special meetings of shareholders as may be required by the 1940
Act or other applicable law. To the extent required by law, the Portfolio
shares held in the Separate Account will be voted by the Company at
shareholder meetings of the Trust in accordance with instructions received
from persons having voting interests in the corresponding Portfolio. Trust
shares as to which no timely instructions are received or shares held by the
Company as to which Contract Owners have no beneficial interest will be voted
in proportion to the voting instructions that are received with respect to all
Contracts participating in that Portfolio. Voting instructions to abstain on
any item to be voted upon will be applied on a pro rata basis to reduce the
votes eligible to be cast.

The number of votes of the Portfolio that are available will be determined as
of the date coincident with the date established by that Portfolio for
determining shareholders eligible to vote at the meeting of the corresponding
Portfolio. Voting instructions will be solicited by written communication
prior to such meeting in accordance with procedures established by the Trust.

YEAR 2000 MATTERS

In March 1997, the Company adopted and currently has in place a Year 2000
Assessment and Planning Project (the "Plan") to review and analyze existing
hardware and software systems, as well as voice and data communications
systems, to determine if they are Year 2000 compatible. The Plan provides for
a management process that ensures that when a particular system, or software
application, is determined to be "non-compliant" the proper steps are in place
to either remedy the "non-compliance" or cease using the particular system or
software. The Plan also provides that the Chief Information Officer report to
the Board of Directors as to the status of the efforts under the Plan on a
regular and routine basis. The Company has engaged the services of a third-
party provider that is specialized in Year 2000 issues to work on the project.

The Plan has four specific objectives: (1) to develop an inventory of all
applications; (2) to evaluate all applications in the inventory to determine
the most prudent manner to move them to Year 2000 compliance, if required; (3)
to estimate budgets, resources and schedules for the migration of the
"affected" applications to Year 2000 compliance; and (4) to define testing and
deployment requirements to successfully manage validation and re-deployment of
any changed code. It is anticipated that all compliance issues will be
resolved by December 1998.

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<PAGE>

success. Further, notwithstanding its efforts or results, the Company's
ability to function unaffected to and through the Year 2000 may be adversely
affected by actions (or failures to act) of third parties beyond its knowledge
or control.

AUDITORS

Ernst & Young LLP serves as independent auditors for the Separate Account and
the Company and will audit their financial statements annually.

LEGAL MATTERS

23
<PAGE>

TABLE OF CONTENTS FOR THE PGA RETIREMENT ANNUITY

STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
PAGE
<S> <C>
THE CONTRACT.............................................................. 1
Computation of Variable Annuity Income Payments......................... 1
Exchanges............................................................... 2
Exceptions to Charges and to Transaction or Balance Requirements........ 2
GENERAL MATTERS........................................................... 3
Non-Participating....................................................... 3
Misstatement of Age or Sex.............................................. 3
Assignment.............................................................. 3
Annuity Data............................................................ 3
Annual Statement........................................................ 3
Incontestability........................................................ 4
Ownership............................................................... 4
PERFORMANCE INFORMATION................................................... 4
30-Day Yield for Subaccounts............................................ 4
Standardized Average Annual Total Return for Subaccounts................ 5
ADDITIONAL PERFORMANCE MEASURES........................................... 6
Non-Standardized Actual Total Return and Non-Standardized Actual Average
Annual Total Return.................................................... 6
Non-Standardized Total Return Year-to-Date.............................. 6
Non-Standardized One Year Return........................................ 6
PERFORMANCE COMPARISONS................................................... 7
SAFEKEEPING OF ACCOUNT ASSETS............................................. 10
THE COMPANY............................................................... 10
STATE REGULATION.......................................................... 10
RECORDS AND REPORTS....................................................... 10
DISTRIBUTION OF THE CONTRACTS............................................. 11
LEGAL PROCEEDINGS......................................................... 11
OTHER INFORMATION......................................................... 11
FINANCIAL STATEMENTS...................................................... 11
</TABLE>

24
<PAGE>

FIRST PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
SEPARATE ACCOUNT C
STATEMENT OF ADDITIONAL INFORMATION
FOR THE ADVISOR'S EDGE VARIABLE ANNUITY
AND FOR THE DIMENSIONAL VARIABLE ANNUITY

Offered by First Providian Life and Health
Insurance Company (A New York Stock Company)
Administrative Offices
520 Columbia Drive
Johnson City, New York 13790

This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the Advisor's Edge and the Dimensional Variable Annuity
variable annuity contracts (the "Contracts" and each a "Contract," respectively)
offered by First Providian Life and Health Insurance Company (the "Company").
You may obtain a copy of either or both Prospectuses dated May 1, 1998, by
calling 1-800-797-9177 or by writing to our Administrative Offices, 520 Columbia
Drive, Johnson City, New York 13790. Terms used in the current Prospectuses for
the respective Contracts are incorporated in this Statement.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
ONLY IN CONJUNCTION WITH THE APPLICABLE PROSPECTUS FOR EACH CONTRACT.

May 1, 1998

<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- ----------------- ----
<S> <C>
THE CONTRACTS..................................................................................... 2
Computation of Variable Annuity Income Payments.................................................. 2
Exchanges........................................................................................ 3
Exceptions to Charges and to Transaction or Balance Requirements................................. 3
GENERAL MATTERS................................................................................... 3
Non-Participating................................................................................ 3
Misstatement of Age or Sex....................................................................... 3
Assignment....................................................................................... 4
Annuity Data..................................................................................... 4
Annual Statement................................................................................. 4
Incontestability................................................................................. 4
Ownership........................................................................................ 4
PERFORMANCE INFORMATION........................................................................... 4
Federated Prime Money Portfolio Subaccount Yield................................................. 5
30-Day Yield for Non-Money Market Subaccounts.................................................... 5
Standardized Average Annual Total Return for Subaccounts......................................... 6
ADDITIONAL PERFORMANCE MEASURES................................................................... 6
Non-Standardized Actual Total Return and Non-Standardized Actual Average Annual Total
Return.......................................................................................... 6
Non-Standardized Total Return Year-to-Date....................................................... 6
Non-Standardized One Year Return................................................................. 7
Non-Standardized Hypothetical Total Return and Non-Standardized Hypothetical Average
Annual Total Return............................................................................ 7
Individualized Computer Generated Illustrations.................................................. 7
PERFORMANCE COMPARISONS........................................................................... 7
SAFEKEEPING OF ACCOUNT ASSETS..................................................................... 9
THE COMPANY....................................................................................... 10
STATE REGULATION.................................................................................. 10
RECORDS AND REPORTS............................................................................... 10
DISTRIBUTION OF THE CONTRACTS..................................................................... 10
LEGAL PROCEEDINGS................................................................................. 11
OTHER INFORMATION................................................................................. 11
FINANCIAL STATEMENTS.............................................................................. 11
Audited Financial Statements.................................................................... 11
</TABLE>
<PAGE>

THE CONTRACTS

In order to supplement the description in the applicable Prospectus, the
following provides additional information about the Contracts which may be of
interest to Contract Owners.

PLEASE NOTE THE FOLLOWING INFORMATION IN CONNECTION WITH THIS STATEMENT OF
ADDITIONAL INFORMATION AND THE CONTRACT PROSPECTUSES.

On and after March 31, 1997, the following portfolios are available through the
Dimensional Variable Annuity contract (and no longer offered through the
Advisor's Edge variable annuity contract):

DFA Small Value Portfolio DFA International Small Portfolio
DFA Large Value Portfolio DFA Short-Term Fixed Portfolio
DFA International Value Portfolio DFA Global Bond Portfolio

On and after the same date, the following portfolios are available through the
Advisor's Edge variable annuity contract:

Federated American Leaders Portfolio Wanger International Small Cap
Federated Utility Portfolio Advisor Portfolio
Federated High Income Bond
Portfolio
Federated U.S. Government
Securities Portfolio
Montgomery Growth Portfolio
Montgonery Emerging Markets
Portfolio
Wanger U.S. Small Cap Advisor
Portfolio

On and after such date the following portfolio is available through both the
Advisor's Edge and Dimensional Variable Annuity contracts:

Federated Prime Money Portfolio

COMPUTATION OF VARIABLE ANNUITY INCOME PAYMENTS

The amounts shown in the Annuity Tables contained in your Contract represent the
guaranteed minimum for each Annuity Payment under a Fixed Payment Option.
Variable annuity income payments are computed as follows. First, the
Accumulated Value (or the portion of the Accumulated Value used to provide
variable payments) is applied under the Annuity Tables contained in your
Contract corresponding to the Annuity Payment Option elected by the Contract
Owner and based on an assumed interest rate of 4%. This will produce a dollar
amount which is the first monthly payment. The Company may, at the time annuity
income payments are computed, offer more favorable rates in lieu of the
guaranteed rates specified in the Annuity Tables.

The amount of each Annuity Payment after the first is determined by means of
Annuity Units. The number of Annuity Units is determined by dividing the first
Annuity Payment by the Annuity Unit Value for the selected Subaccount ten
Business Days prior to the Annuity Date. The number of Annuity Units for the
Subaccount then remains fixed, unless an Exchange of Annuity Units (as set forth
below) is made. After the first Annuity Payment, the dollar amount of each
subsequent Annuity Payment is equal to the number of Annuity Units multiplied by
the Annuity Unit Value for the Subaccount ten Business Days before the due date
of the Annuity Payment.

The Annuity Unit Value for each Subaccount was initially established at $10.00
on the date money was first deposited in that Subaccount. The Annuity Unit
Value for any subsequent Business Day is equal to (a) times (b) times (c), where

(a) = the Annuity Unit Value for the immediately preceding Business Day;

(b) = the Net Investment Factor for the day;

(c) = the investment result adjustment factor (.99989255 per day), which
recognizes an assumed interest rate of 4% per year used in
determining the Annuity Payment amounts.

The Net Investment Factor is a factor applied to a Subaccount that reflects
daily changes in the value of the Subaccount due to:

(a) = any increase or decrease in the value of the Subaccount due to
investment results;

(b) = a daily charge assessed at an annual rate of .50% for the
mortality and expense risks assumed by the Company;

(c) = a daily charge for the cost of administering the Contract
corresponding to an annual charge of .15% of the value of the
Subaccount, plus the Annual Contract Fee.

The Annuity Tables contained in the Contract are based on the 1983 Table "A"
Mortality Table projected for mortality improvement to the year 2000 using
Projection Scale G and an interest rate of 4% a year.

-2-
<PAGE>

EXCHANGES

After the Annuity Date you may, by making a written request, exchange the
current value of an existing Subaccount to Annuity Units of any other
Subaccount(s) then available. The written request for an Exchange must be
received by us, however, at least 10 Business Days prior to the first payment
date on which the Exchange is to take effect. This Exchange shall result in the
same dollar amount as that of the Annuity Payment on the date of Exchange (the
"Exchange Date"). Each year you may make an unlimited number of free Exchanges
between Subaccounts. The Company reserves the right to impose a $15 fee for
Exchanges in excess of twelve per Contract Year.

Exchanges will be made using the Annuity Unit Value for the Subaccounts on the
date the written request for Exchange is received. On the Exchange Date, the
Company will establish a value for the current Subaccounts by multiplying the
Annuity Unit Value by the number of Annuity Units in the existing Subaccounts
and compute the number of Annuity Units for the new Subaccounts by dividing the
Annuity Unit Value of the new Subaccounts into the value previously calculated
for the existing Subaccounts.

EXCEPTIONS TO CHARGES AND TO TRANSACTION OR BALANCE REQUIREMENTS

The Company may reduce administrative charges or other deductions from Purchase
Payments in certain situations where the Company expects to realize significant
economies of scale or other economic benefits with respect to the sale of
Contracts. This is possible because sales costs do not increase in proportion
to the dollar amount of the Contracts sold. For example, the per-dollar
transaction cost for a sale of a Contract equal to $5,000 is generally much
higher than the per-dollar cost for a sale of a Contract equal to $1,000,000.
As a result, any applicable sales charge declines as a percentage of the dollar
amount of Contracts sold as the dollar amount increases.

The Company may also reduce any applicable sales loads and reduce administrative
charges and fees on sales to directors, officers and bona fide full-time
employees (and their spouses and minor children) of the Company, its ultimate
parent company, and their affiliates and certain sales representatives for the
Contract. The Company may also grant waivers or modifications of certain minimum
or maximum purchase or transaction amounts or balance requirements in these
circumstances.

Notwithstanding the above, any variations in the sales loads, administrative
charges or other deductions from Purchase Payments or in the minimum or maximum
transaction or balance requirements shall reflect differences in costs or
services and shall not be unfairly discriminatory against any person.

GENERAL MATTERS

NON-PARTICIPATING

The Contracts are non-participating. No dividends are payable and the Contracts
will not share in the profits or surplus earnings of the Company.

MISSTATEMENT OF AGE OR SEX

The Company may require proof of age and sex before making Annuity Payments. If
the Annuitant's stated age, sex or both in the Contract are incorrect, the
Company will change the annuity benefits payable to those benefits which the
Purchase Payments would have purchased for the correct age and sex. In the case
of correction of the stated age and/or sex after payments have commenced, the
Company will (1) in the case of underpayment, pay the full amount due with the
next payment; (2) in the case of overpayment, deduct the amount due from one or
more future payments.

-3-
<PAGE>

ASSIGNMENT

Any Non-Qualified Contract may be assigned by you prior to the Annuity Date and
during the Annuitant's lifetime. The Company is not responsible for the
validity of any assignment. No assignment will be recognized until the Company
receives the appropriate Company form notifying the Company of such assignment.
The interest of any beneficiary which the assignor has the right to change shall
be subordinate to the interest of an assignee. Any amount paid to the assignee
shall be paid in one sum notwithstanding any settlement agreement in effect at
the time assignment was executed. The Company shall not be liable as to any
payment or other settlement made by the Company before receipt of the
appropriate Company form.

ANNUITY DATA

The Company will not be liable for obligations which depend on receiving
information from a Payee until such information is received in a form
satisfactory to the Company.

ANNUAL STATEMENT

Once each Contract Year, the Company will send you an annual statement of the
current Accumulated Value allocated to each Subaccount; and any Purchase
Payments, charges, Exchanges or withdrawals during the year. This report will
also give you any other information required by law or regulation. You may ask
for an annual statement like this at any time. We will also send you quarterly
statements. However, we reserve the right to discontinue quarterly statements
at any time.

INCONTESTABILITY

This Contract is incontestable from the Contract Date, subject to the
"Misstatement of Age or Sex" provision.

OWNERSHIP

The Contract Owner on the Contract Date is the Annuitant, unless otherwise
specified in the application. The Contract Owner may specify a new Contract
Owner by sending us the appropriate Company form at any time thereafter. The
term Contract Owner also includes any person named as a Joint Owner. A Joint
Owner shares ownership in all respects with the Contract Owner. During the
Annuitant's lifetime, all rights and privileges under this Contract may be
exercised solely by the Contract Owner. Upon the death of the Contract Owner,
ownership is retained by the surviving Joint Owner or passes to the Owner's
Designated Beneficiary, if one has been designated by the Contract Owner. If no
Owner's Designated Beneficiary has been selected or if no Owner's Designated
Beneficiary is living, then the Owner's Designated Beneficiary is the Contract
Owner's estate. From time to time the Company may require proof that the
Contract Owner is still living.

PERFORMANCE INFORMATION

Performance information for the Subaccounts including the yield and effective
yield of the Federated Prime Money Subaccount, the yield of the remaining
Subaccounts, and the total return of all Subaccounts, may appear in reports or
promotional literature to current or prospective Contract Owners.

-4-

<PAGE>

Where applicable in calculating performance information, the Annual Contract Fee
is reflected as a percentage equal to the estimated total amount of fees
collected during a calendar year divided by the estimated total average net
assets of the Portfolios during the same calendar year. The fee is assumed to
remain the same in each year of the applicable period. (With respect to partial
year periods, if any, the Annual Contract Fee is pro-rated to reflect only the
applicable portion of the partial year period.)

Certain total return and performance information for operations of the DFA Small
Value Portfolio, DFA Large Value Portfolio, DFA International Value Portfolio,
DFA International Small Portfolio, DFA Short-Term Fixed Portfolio and DFA Global
Bond Portfolio for periods prior to 3/31/97 reflect operations of these
Subaccounts in the Advisor's Edge Variable Annuity.

Until October 1995, the DFA Large Value Portfolio (formerly DFA Global Value
Portfolio) invested its assets in both U.S. and international securities.
Depending on the period presented, total return and performance information
presented for the DFA Large Value Portfolio may reflect the performance of the
Portfolio when it invested in the stocks of both U.S. and international
companies. Total return and performance information for the DFA Large Value
Portfolio which includes the period prior to October 1995 should not be
considered indicative of the Portfolio's future performance.

Where applicable, the following Subaccount inception dates are used in the
calculation of performance figures: 1/23/97 for DFA Global Bond Portfolio;
1/23/97 for DFA International Small Portfolio; 1/23/97 for DFA International
Value Portfolio; 1/23/97 for DFA Large Value Portfolio; 2/21/97 for DFA Short-
Term Fixed Portfolio; 1/23/97 for DFA Small Value Portfolio; 1/22/97 for
Federated Prime Money Portfolio; 5/1/97 for Federated American Leaders
Portfolio; 5/1/97 for Federated Utility Portfolio; 3/7/97 for Federated U.S.
Government Securities Portfolio; 5/1/97 for Federated High Income Bond
Portfolio; 5/1/97 for Montgomery Growth Portfolio; 2/26/97 for Montgomery
Emerging Markets Portfolio; 5/1/97 for Wanger U.S. Small Cap Advisor Portfolio;
and 5/1/97 for Wanger International Small Cap Advisor Portfolio.

Where applicable, the following Fund inception dates are used in the calculation
of performance figures: 1/18/95 for DFA Global Bond Portfolio; 10/6/95 for DFA
International Small Portfolio; 10/3/95 for DFA International Value Portfolio;
1/18/95 for DFA Large Value Portfolio; 10/9/95 for DFA Short-Term Fixed
Portfolio; 10/6/95 for DFA Small Value Portfolio; 11/21/94 for Federated Prime
Money Portfolio; 2/10/94 for Federated American Leaders Portfolio; 2/10/94 for
Federated Utility Portfolio; 3/28/94 for Federated U.S. Government Securities
Portfolio; 2/2/94 for Federated High Income Bond Portfolio; 2/12/96 for
Montgomery Growth Portfolio; 2/5/96 for Montgomery Emerging Markets Portfolio;
5/3/95 for Wanger U.S. Small Cap Advisor Portfolio; and 5/3/95 for Wanger
International Small Cap Advisor Portfolio.

FEDERATED PRIME MONEY PORTFOLIO SUBACCOUNT YIELDS

Current yield for the Federated Prime Money Subaccount will be based on the
change in the value of a hypothetical investment (exclusive of capital changes)
over a particular 7-day period, less a pro-rata share of Subaccount expenses
accrued over that period (the "base period"), and stated as a percentage of the
investment at the start of the base period (the "base period return"). The base
period return is then annualized by multiplying by 365/7, with the resulting
yield figure carried to at least the nearest hundredth of one percent.

Calculation of "effective yield" begins with the same "base period return" used
in the calculation of yield, which is then annualized to reflect weekly
compounding pursuant to the following formula:

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

30-DAY YIELD FOR NON-MONEY MARKET SUBACCOUNTS

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

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

Where:

[a] equals the net investment income earned during the period by the
Portfolio attributable to shares owned by a Subaccount

[b] equals the expenses accrued for the period (net of reimbursement)

[c] equals the average daily number of Units outstanding during the period

[d] equals the maximum offering price per Accumulation Unit on the last
day of the period

Yield on the Subaccount is earned from the increase in net asset value of shares
of the Portfolio in which the Subaccount invests and from dividends declared and
paid by the Portfolio, which are automatically reinvested in shares of the
Portfolio.

-5-

<PAGE>

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR SUBACCOUNTS

When advertising performance of the Subaccounts, the Company will show the
"Standardized Average Annual Total Return," calculated as prescribed by the
rules of the SEC, for each Subaccount. The Standardized Average Annual Total
Return is the effective annual compounded rate of return that would have
produced the cash redemption value over the stated period had the performance
remained constant throughout. The calculation assumes a single $1,000 payment
made at the beginning of the period and full redemption at the end of the
period. It reflects the deduction of all applicable sales loads (including any
contingent deferred sales load), the Annual Contract Fee and all other
Portfolio, Separate Account and Contract level charges except Premium Taxes, if
any.

Quotations of average annual total return for any Subaccount will be expressed
in terms of the average annual compounded rate of return of a hypothetical
investment in a Contract over a period of one, five and ten years (or, if less,
up to the life of the Subaccount), calculated pursuant to the formula:

P(1 + T)/n/ = ERV

Where:

(1) [P] equals a hypothetical initial Purchase Payment of $1,000

(2) [T] equals an average annual total return

(3) [n] equals the number of years

(4) [ERV] equals the ending redeemable value of a hypothetical $1,000
Purchase Payment made at the beginning of the period (or fractional
portion thereof)

The following table shows the Standardized Average Annual Total Return for the
Subaccounts for the period beginning at the inception of each Subaccount and
ending on December 31, 1997.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING 12/31/97
<TABLE>
<CAPTION>
Since
Subaccount One Year* Portfolio Inception
---------- --------- -------------------
<S> <C> <C>
Federated Prime Money N/A 4.01%
Federated American Leaders N/A 23.02%
Federated U.S. Gov't Securities N/A 7.48%
Federated Utility N/A 24.74%
Federated High Income Bond N/A 11.54%
Wanger Int'l Small Cap N/A -4.33%
Wanger U.S. Small Cap N/A 33.94%
Montgomery Emerging Markets N/A -11.76%
Montgomery Growth N/A 23.87%
DFA Global Bond N/A 6.37%
DFA Large Value N/A 22.39%
DFA Int'l Value N/A -0.08%
DFA Int'l Small N/A -25.26%
DFA Small Value N/A 26.42%
DFA Short-Term Fixed N/A 4.24%
</TABLE>
*Returns shown are for the period from each Portfolio's inception date. As of
12/31/97, the Portfolios had not been in operation for an entire year.

ADDITIONAL PERFORMANCE MEASURES
- -------------------------------

NON-STANDARDIZED ACTUAL TOTAL RETURN AND NON-STANDARDIZED ACTUAL AVERAGE ANNUAL
TOTAL RETURN

The Company may show Non-Standardized Actual Total Return (i.e., the percentage
change in the value of an Accumulation Unit) for one or more Subaccounts with
respect to one or more periods. The Company may also show Non-Standardized
Actual Average Annual Total Return (i.e., the average annual change in
Accumulation Unit Value) with respect to one or more periods. For one year, the
Non-Standardized Actual Total Return and the Non-Standardized Actual Average
Annual Total Return are effective annual rates of return and are equal. For
periods greater than one year, the Non-Standardized Actual Average Annual Total
Return is the effective annual compounded rate of return for the periods stated.
Because the value of an Accumulation Unit reflects the Separate Account and
Portfolio expenses (See Fee Table in the Prospectus), the Non-Standardized
Actual Total Return and Non-Standardized Actual Average Annual Total Return also
reflect these expenses. However, these percentages do not reflect the Annual
Contract Fee, any sales loads or Premium Taxes (if any), which if included would
reduce the percentages reported by the Company.

NON-STANDARDIZED ACTUAL TOTAL RETURN FOR PERIOD ENDING 12/31/97
<TABLE>
<CAPTION>
Since
-----
Subaccount One Year* Portfolio Inception
---------- --------- -------------------
<S> <C> <C>
Federated Prime Money N/A 4.04%
Federated American Leaders N/A 23.04%
Federated U.S. Gov't Securities N/A 7.51%
Federated Utility N/A 24.76%
Federated High Income Bond N/A 11.56%
Wanger Int'l Small Cap N/A -4.31%
Wanger U.S. Small Cap N/A 33.96%
Montgomery Emerging Markets N/A -11.73%
Montgomery Growth N/A 23.89%
DFA Global Bond N/A 6.40%
DFA Large Value N/A 22.42%
DFA Int'l Value N/A -0.05%
DFA Int'l Small N/A -25.23%
DFA Small Value N/A 26.45%
DFA Short-Term Fixed N/A 4.26%
</TABLE>
*Returns shown are for the period from each Portfolio's inception date. As of
12/31/97, the Portfolios had not been in operation for an entire year.

NON-STANDARDIZED ACTUAL AVERAGE ANNUAL RETURN FOR PERIOD ENDING 12/31/97
<TABLE>
<CAPTION>
Since
-----
Subaccount One Year* Portfolio Inception
---------- --------- -------------------
<S> <C> <C>
Federated Prime Money N/A 4.04%
Federated American Leaders N/A 23.04%
Federated U.S. Gov't Securities N/A 7.51%
Federated Utility N/A 24.76%
Federated High Income Bond N/A 11.56%
Wanger Int'l Small Cap N/A -4.31%
Wanger U.S. Small Cap N/A 33.96%
Montgomery Emerging Markets N/A -11.73%
Montgomery Growth N/A 23.89%
DFA Global Bond N/A 6.40%
DFA Large Value N/A 22.42%
DFA Int'l Value N/A -0.05%
DFA Int'l Small N/A -25.23%
DFA Small Value N/A 26.45%
DFA Short-Term Fixed N/A 4.26%
</TABLE>
*Returns shown are for the period from each Portfolio's inception date. As of
12/31/97, the Portfolios had not been in operation for an entire year.

NON-STANDARDIZED TOTAL RETURN YEAR-TO-DATE

The Company may show Non-Standardized Total Return Year-to-Date as of a
particular date, or simply Total Return YTD, for one or more Subaccounts with
respect to one or more non-standardized base periods commencing at the beginning
of a calendar year. Total Return YTD figures reflect the percentage change in
actual Accumulation Unit Values during the relevant period. These percentages
reflect a deduction for the Separate Account and Portfolio expenses, but do not
include the Annual Contract Fee, any sales loads or Premium Taxes (if any),
which if included would reduce the percentages reported by the Company.

NON-STANDARDIZED TOTAL RETURN YEAR-TO-DATE
<TABLE>
<CAPTION>
Total Return YTD
----------------
Subaccount as of 12/31/97*
---------- ----------------
<S> <C>
Federated Prime Money 4.04%
Federated American Leaders 23.04%
Federated U.S. Gov't Securities 7.51%
Federated Utility 24.76%
Federated High Income Bond 11.56%
Wanger Int'l Small Cap -4.31%
Wanger U.S. Small Cap 33.96%
Montgomery Emerging Markets -11.73%
Montgomery Growth 23.89%
DFA Global Bond 6.40%
DFA Large Value 22.42%
DFA Int'l Value -0.05%
DFA Int'l Small -25.23%
DFA Small Value 26.45%
DFA Short-Term Fixed 4.26%
</TABLE>
*Returns shown are for the period from each Portfolio's inception date. As of
12/31/97, the Portfolios had not been in operation for an entire year.

-6-

<PAGE>

NON-STANDARDIZED ONE YEAR RETURN

The Company may show Non-Standardized One Year Return, for one or more
Subaccounts with respect to one or more non-standardized base periods commencing
at the beginning of a calendar year (or date of Portfolio inception, if during
the relevant year) and ending at the end of such calendar year. One Year Return
figures reflect the historical performance of the Portfolios as if the Contract
were in existence before its inception date (which it was not). After the
Contract's inception date, the figures reflect the percentage change in actual
Accumulation Unit Values during the relevant period. These percentages reflect a
deduction for the Separate Account and Portfolio expenses, but do not include
the Annual Contract Fee, any sales loads or Premium Taxes (if any), which if
included would reduce the percentages reported by the Company.

Subaccount 1997 1996 1995
---------- ---- ---- ----
<S> <C> <C> <C>
Federated Prime Money 4.25% 4.08% 4.52%
Federated American Leaders 31.48% 20.78% 32.85%
Federated U.S. Gov't Securities 7.88% 3.12% 8.20%
Federated Utility 25.82% 10.84% 23.39%
Federated High Income Bond 13.09% 13.58% 19.61%
Wanger Int'l Small Cap -4.35% 30.84% N/A
Wanger U.S. Small Cap 25.64% 45.37% N/A
Montgomery Emerging Markets -1.22% N/A N/A
Montgomery Growth 27.74% N/A N/A
DFA Global Bond 7.09% 8.27% N/A
DFA Large Value 28.39% 17.72% N/A
DFA Int'l Value -2.86% 6.41% N/A
DFA Int'l Small -25.56% -0.39% N/A
DFA Small Value 29.60% 21.26% N/A
DFA Short-Term Fixed 5.00% 4.51% N/A
</TABLE>

NON-STANDARDIZED HYPOTHETICAL TOTAL RETURN AND NON-STANDARDIZED HYPOTHETICAL
AVERAGE ANNUAL TOTAL RETURN

The Company may show Non-Standardized Hypothetical Total Return and Non-
Standardized Hypothetical Average Annual Total Return, calculated on the basis
of the historical performance of the Portfolios (calculated beginning from the
end of the year of inception for each Portfolio) and may assume the Contract was
in existence prior to its inception date (which it was not). After the
Contract's inception date, the calculations will reflect actual Accumulation
Unit Values. These returns are based on specified premium patterns which produce
the resulting Accumulated Values. However, they reflect a deduction for the
Separate Account expenses and Portfolio expenses. They do not include the Annual
Contract Fee, any sales loads or Premium Taxes (if any), which if included would
reduce the percentages reported.

The Non-Standardized Hypothetical Total Return for a Subaccount is the effective
annual rate of return that would have produced the ending Accumulated Value of
the stated one-year period.

HYPOTHETICAL TOTAL RETURNS FOR PERIODS ENDING 12/31/97
(BASED ON SINGLE INITIAL PURCHASE)

<TABLE>
<CAPTION>
Total
Since Fund
Subaccount One Year Three Year Inception Year-End
---------- ------- ---------- ------------------
<S> <C> <C> <C>
Federated Prime Money 4.25% 13.41% 13.86%
Federated American Leaders 31.48% 110.97% 105.76%
Federated U.S. Gov't Securities 7.88% 20.37% 23.29%
Federated Utility 25.82% 72.08% 65.43%
Federated High Income Bond 13.09% 53.65% 46.04%
Wanger Int'l Small Cap -4.35% N/A 67.63%
Wanger U.S. Small Cap 25.64% N/A 110.97%
Montgomery Emerging Markets -1.22% N/A 4.86%
Montgomery Growth 27.74% N/A 61.57%
DFA Global Bond 7.09% N/A 31.03%
DFA Large Value 28.39% N/A 81.87%
DFA Int'l Value -2.86% N/A 8.93%
DFA Int'l Small -25.56% N/A -24.77%
DFA Small Value 29.60% N/A 56.33%
DFA Short-Term Fixed 5.00% N/A 10.89%
</TABLE>

HYPOTHETICAL AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/97
(BASED ON SINGLE INITIAL PURCHASE)

Total
Since Fund
Subaccount One Year Three Year Inception Year-End
---------- -------- ---------- ------------------
<S> <C> <C> <C>
Federated Prime Money 4.25% 4.28% 4.26%
Federated American Leaders 31.48% 28.26% 20.39%
Federated U.S. Gov't Securities 7.88% 6.37% 5.72%
Federated Utility 25.82% 19.83% 13.82%
Federated High Income Bond 13.09% 15.39% 10.17%
Wanger Int'l Small Cap -4.35% N/A 21.40%
Wanger U.S. Small Cap 25.64% N/A 32.35%
Montgomery Emerging Markets -1.22% N/A 2.53%
Montgomery Growth 27.74% N/A 29.01%
DFA Global Bond 7.09% N/A 9.59%
DFA Large Value 28.39% N/A 22.47%
DFA Int'l Value -2.86% N/A 3.88%
DFA Int'l Small -25.56% N/A -11.95%
DFA Small Value 29.60% N/A 22.11%
DFA Short-Term Fixed 5.00% N/A 4.75%
</TABLE>

Note: Advertisements and other sales literature for the Portfolios may quote
total returns that are calculated on non-standardized base periods. These total
returns also represent historical change in the value of an investment in the
Portfolios based on monthly reinvestment of dividends over a specific period of
time.

FEDERATED PRIME MONEY PORTFOLIO FEDERATED PRIME MONEY PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994 $50,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 $2,000 N/A N/A N/A 12/31/94 $50,000 N/A N/A N/A N/A
12/31/95 $4,000 $2,090 4.52% 4.52% 12/31/95 $50,000 $52,260 4.52% 4.52% 4.52%
12/31/96 $6,000 $4,257 4.08% 4.22% 12/31/96 $50,000 $54,391 4.08% 4.30% 8.78%
12/31/97 $8,000 $6,523 4.25% 4.24% 12/31/97 $50,000 $56,703 4.25% 4.28% 13.41%
</TABLE>

FEDERATED AMERICAN LEADERS PORTFOLIO FEDERATED AMERICAN LEADERS PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994 $50,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 $2,000 N/A N/A N/A 12/31/94 $50,000 N/A N/A N/A N/A
12/31/95 $4,000 $2,657 32.85% 32.85% 12/31/95 $50,000 $66,425 32.85% 32.85% 32.85%
12/31/96 $6,000 $5,625 20.78% 25.00% 12/31/96 $50,000 $80,230 20.78% 26.67% 60.46%
12/31/97 $8,000 $10,025 31.48% 27.96% 12/31/97 $50,000 $105,486 31.48% 28.26% 110.97%
</TABLE>

<TABLE>
<CAPTION>
FEDERATED U.S. GOV'T SECURITIES PORTFOLIO FEDERATED U.S. GOV'T SECURITIES PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1994
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 $2,000 N/A N/A N/A 12/31/94 $50,000 N/A N/A N/A N/A
12/31/95 $4,000 $2,164 8.20% 8.20% 12/31/95 $50,000 $54,101 8.20% 8.20% 8.20%
12/31/96 $6,000 $4,294 3.12% 4.82% 12/31/96 $50,000 $55,790 3.12% 5.63% 11.58%
12/31/97 $8,000 $6,790 7.88% 6.31% 12/31/97 $50,000 $60,184 7.88% 6.37% 20.37%
</TABLE>

<TABLE>
<CAPTION>
FEDERATED UTILITY PORTFOLIO FEDERATED UTILITY PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1994
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 $2,000 N/A N/A N/A 12/31/94 $50,000 N/A N/A N/A N/A
12/31/95 $4,000 $2,468 23.39% 23.39% 12/31/95 $50,000 $61,696 23.39% 23.39% 23.39%
12/31/96 $6,000 $4,952 10.84% 15.11% 12/31/96 $50,000 $68,386 10.84% 16.95% 36.77%
12/31/97 $8,000 $8,747 25.82% 20.07% 12/31/97 $50,000 $86,041 25.82% 19.83% 72.08%
</TABLE>

<TABLE>
<CAPTION>
FEDERATED HIGH INCOME BOND PORTFOLIO FEDERATED HIGH INCOME BOND PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1994 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1994
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/94 $2,000 N/A N/A N/A 12/31/94 $50,000 N/A N/A N/A N/A
12/31/95 $4,000 $2,392 19.61% 19.61% 12/31/95 $50,000 $59,807 19.61% 19.61% 19.61%
12/31/96 $6,000 $4,989 13.58% 15.67% 12/31/96 $50,000 $67,930 13.58% 16.56% 35.86%
12/31/97 $8,000 $7,904 13.09% 14.43% 12/31/97 $50,000 $76,824 13.09% 15.39% 53.65%
</TABLE>

<TABLE>
<CAPTION>
WANGER INT'L SMALL CAP PORTFOLIO WANGER INT'L SMALL CAP PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 $2,000 N/A N/A N/A 12/31/95 $50,000 N/A N/A N/A N/A
12/31/96 $4,000 $2,617 30.84% 30.84% 12/31/96 $50,000 $65,419 30.84% 30.84% 30.84%
12/31/97 $6,000 $4,416 -4.35% 6.78% 12/31/97 $50,000 $62,573 -4.35% 11.87% 25.15%
</TABLE>

<TABLE>
<CAPTION>
WANGER U.S. SMALL CAP PORTFOLIO WANGER U.S SMALL CAP PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 $2,000 N/A N/A N/A 12/31/95 $50,000 N/A N/A N/A N/A
12/31/96 $4,000 $2,907 45.37% 45.37% 12/31/96 $50,000 $72,687 45.37% 45.37% 45.37%
12/31/97 $6,000 $6,166 25.64% 32.57% 12/31/97 $50,000 $91,322 25.64% 35.15% 82.64%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONTGOMERY EMERGING MARKETS PORTFOLIO MONTGOMERY EMERGING MARKETS PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1996 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1996
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/96 $2,000 N/A N/A N/A 12/31/96 $50,000 N/A N/A N/A N/A
12/31/97 $4,000 $1,976 -1.22% -1.22% 12/31/97 $50,000 $49,388 -1.22% -1.22% -1.22%
</TABLE>

<TABLE>
<CAPTION>
MONTGOMERY GROWTH PORTFOLIO MONTGOMERY GROWTH PORTFOLIO

$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1996 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1996
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/96 $2,000 N/A N/A N/A 12/31/96 $50,000 N/A N/A N/A N/A
12/31/97 $4,000 $2,555 27.74% 27.74% 12/31/97 $50,000 $63,869 27.74% 27.74% 27.74%
</TABLE>

DFA GLOBAL BOND PORTFOLIO DFA GLOBAL BOND PORTFOLIO
$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 $2,000 N/A N/A N/A 12/31/95 $50,000 N/A N/A N/A N/A
12/31/96 $4,000 $2,165 8.27% 8.27% 12/31/96 $50,000 $54,135 8.27% 8.27% 8.27%
12/31/97 $6,000 $4,461 7.09% 7.50% 12/31/97 $50,000 $57,974 7.09% 7.68% 15.95%
</TABLE>

DFA LARGE VALUE PORTFOLIO DFA LARGE VALUE PORTFOLIO
$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 $2,000 N/A N/A N/A 12/31/95 $50,000 N/A N/A N/A N/A
12/31/96 $4,000 $2,354 17.72% 17.72% 12/31/96 $50,000 $58,858 17.72% 17.72% 17.72%
12/31/97 $6,000 $5,591 28.39% 24.51% 12/31/97 $50,000 $75,568 28.39% 22.94% 51.14%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

DFA INTERNATIONAL VALUE PORTFOLIO DFA INTERNATIONAL VALUE PORTFOLIO
$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 $2,000 N/A N/A N/A 12/31/95 $50,000 N/A N/A N/A N/A
12/31/96 $4,000 $2,128 6.41% 6.41% 12/31/96 $50,000 $53,206 6.41% 6.41% 6.41%
12/31/97 $6,000 $4,010 -2.86% 0.17% 12/31/97 $50,000 $51,681 -2.86% 1.67% 3.36%
</TABLE>

DFA INTERNATIONAL SMALL PORTFOLIO DFA INTERNATIONAL SMALL PORTFOLIO
$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 $2,000 N/A N/A N/A 12/31/95 $50,000 N/A N/A N/A N/A
12/31/96 $4,000 $1,992 -0.39% -0.39% 12/31/96 $50,000 $49,804 -0.39% -0.39% -0.39%
12/31/97 $6,000 $2,972 -25.56% -18.24% 12/31/97 $50,000 $37,073 -25.56% -13.89% -25.85%
</TABLE>

DFA SMALL VALUE PORTFOLIO DFA SMALL VALUE PORTFOLIO
$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 $2,000 N/A N/A N/A 12/31/95 $50,000 N/A N/A N/A N/A
12/31/96 $4,000 $2,425 21.26% 21.26% 12/31/96 $50,000 $60,630 21.26% 21.26% 21.26%
12/31/97 $6,000 $5,735 29.60% 26.56% 12/31/97 $50,000 $78,578 29.60% 25.36% 57.16%
</TABLE>

DFA SHORT-TERM FIXED PORTFOLIO DFA SHORT-TERM FIXED PORTFOLIO
$2,000 PURCHASE PAYMENT MADE DECEMBER 31, 1995 $50,000 SINGLE PURCHASE PAYMENT MADE DECEMBER 31, 1995
AND YEARLY DECEMBER 31ST THEREAFTER

Values prior to current Values prior to current
year's purchase payment Non-Standardized year's purchase payment Non-Standardized
----------------------- ---------------- ----------------------- ----------------
One Average One Average
Year Annual Year Annual Cumulative
Cumulative Accumulated Total Total Cumulative Accumulated Total Total Fund Total
Date Payments Value Return Return Date Payments Value Return Return Return
- -------- ---------- ----------- ------ ------- -------- ---------- ----------- ------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/95 $2,000 N/A N/A N/A 12/31/95 $50,000 N/A N/A N/A N/A
12/31/96 $4,000 $2,090 4.51% 4.51% 12/31/96 $50,000 $52,256 4.51% 4.51% 4.51%
12/31/97 $6,000 $4,295 5.00% 4.84% 12/31/97 $50,000 $54,871 5.00% 4.76% 9.74%
</TABLE>

INDIVIDUALIZED COMPUTER GENERATED ILLUSTRATIONS

The Company may from time to time use computer-based software available through
Morningstar, CDA/Wiesenberger and/or other firms to provide registered
representatives and existing and/or potential owners of Contracts with
individualized hypothetical performance illustrations for some or all of the
Portfolios. Such illustrations may include, without limitation, graphs, bar
charts and other types of formats presenting the following information: (i) the
historical results of a hypothetical investment in a single Portfolio; (ii) the
historical fluctuation of the value of a single Portfolio (actual and
hypothetical); (iii) the historical results of a hypothetical investment in more
than one Portfolio; (iv) the historical performance of two or more market
indices in relation to one another and/or one or more Portfolios; (v) the
historical performance of two or more market indices in comparison to a single
Portfolio or a group of Portfolios; (vi) a market risk/reward scatter chart
showing the historical risk/reward relationship of one or more mutual funds or
Portfolios to one or more indices and a broad category of similar anonymous
variable annuity subaccounts; and (vii) Portfolio data sheets showing various
information about one or more Portfolios (such as information concerning total
return for various periods, fees and expenses, standard deviation, alpha and
beta, investment objective, inception date and net assets).

PERFORMANCE COMPARISONS

Performance information for any Subaccount reflects only the performance of a
hypothetical Contract under which Accumulation Value is allocated to a
Subaccount during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the Portfolio in which
the Subaccount invests, and the market

-7-
<PAGE>

conditions during the given period, and should not be considered as a
representation of what may be achieved in the future.

Reports and marketing materials may, from time to time, include information
concerning the rating of First Providian Life and Health Insurance Company as
determined by one or more of the ratings services listed below, or other
recognized rating services. Reports and promotional literature may also contain
other information including (i) the ranking of any Subaccount derived from
rankings of variable annuity separate accounts or other investment products
tracked by Lipper Analytical Services or by other rating services, companies,
publications, or other person who rank separate accounts or other investment
products on overall performance or other criteria, and (ii) the effect of tax-
deferred compounding on a Subaccount's investment returns, or returns in
general, which may be illustrated by graphs, charts, or otherwise, and which may
include a comparison, at various points in time, of the return from an
investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis.

Each Subaccount's performance depends on, among other things, the performance of
the underlying Portfolio which, in turn, depends upon such variables as:

. quality of underlying investments;
. average maturity of underlying investments;
. type of instruments in which the Portfolio is invested;
. changes in interest rates and market value of underlying investments;
. changes in Portfolio expenses; and
. the relative amount of the Portfolio's cash flow.

From time to time, we may advertise the performance of the Subaccounts and the
underlying Portfolios as compared to similar funds or portfolios using certain
indexes, reporting services and financial publications, and we may advertise
rankings or ratings issued by certain services and/or other institutions. These
may include, but are not limited to, the following:

. DOW JONES INDUSTRIAL AVERAGE ("DJIA"), an unmanaged index representing
share prices of major industrial corporations, public utilities, and
transportation companies. Produced by the Dow Jones & Company, it is cited
as a principal indicator of market conditions.

. STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a composite
index of common stocks in industrial, transportation, and financial and
public utility companies, which can be used to compare to the total returns
of funds whose portfolios are invested primarily in common stocks. In
addition, the Standard & Poor's index assumes reinvestments of all
dividends paid by stocks listed on its index. Taxes due on any of these
distributions are not included, nor are brokerage or other fees calculated
into the Standard & Poor's figures.

. LIPPER ANALYTICAL SERVICES, INC., a reporting service that ranks funds in
various fund categories by making comparative calculations using total
return. Total return assumes the reinvestment of all income dividends and
capital gains distributions, if any. From time to time, we may quote the
Portfolios' Lipper rankings in various fund categories in advertising and
sales literature.

. BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, a financial
reporting service which publishes weekly average rates of 50 leading bank
and thrift institution money market deposit accounts. The rates published
in the index are an average of the personal account rates offered on the
Wednesday prior to the date of publication by ten of the largest banks and
thrifts in each of the five largest Standard Metropolitan Statistical
Areas. Account minimums range upward from $2,500 in each institution, and
compounding methods vary. If more than one rate is offered, the lowest
rate is used. Rates are subject to change at any time specified by the
institution.

-8-

<PAGE>

. SHEARSON LEHMAN GOVERNMENT/CORPORATE (TOTAL) INDEX, an index comprised of
approximately 5,000 issues which include: non-convertible bonds publicly
issued by the U.S. government or its agencies; corporate bonds guaranteed
by the U.S. government and quasi-federal corporations; and publicly issued,
fixed-rate, non-convertible domestic bonds of companies in industry, public
utilities and finance. The average maturity of these bonds approximates
nine years. Tracked by Shearson Lehman, Inc., the index calculates total
returns for one month, three month, twelve month, and ten year periods and
year-to-date.

. SHEARSON LEHMAN GOVERNMENT/CORPORATE (LONG-TERM) INDEX, an index composed
of the same types of issues as defined above. However, the average
maturity of the bonds included in this index approximates 22 years.

. SHEARSON LEHMAN GOVERNMENT INDEX, an unmanaged index comprised of all
publicly issued, non-convertible domestic debt of the U.S. government, or
any agency thereof, or any quasi-federal corporation and of corporate debt
guaranteed by the U.S. government. Only notes and bonds with a minimum
outstanding principal of $1 million and a minimum maturity of one year are
included.

. MORNINGSTAR, INC., an independent rating service that publishes the bi-
weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000 NASDAQ-
listed mutual funds of all types, according to their risk-adjusted returns.
The maximum rating is five stars, and ratings are effective for two weeks.

. MONEY, a monthly magazine that regularly ranks money market funds in
various categories based on the latest available seven-day compound
(effective) yield. From time to time, the Fund will quote its Money
ranking in advertising and sales literature.

. STANDARD & POOR'S UTILITY INDEX, an unmanaged index of common stocks from
forty different utilities. This index indicates daily changes in the price
of the stocks. The index also provides figures for changes in price from
the beginning of the year to date, and for a twelve month period.

. DOW JONES UTILITY INDEX, an unmanaged index comprised of fifteen utility
stocks that tracks changes in price daily and over a six month period. The
index also provides the highs and lows for each of the past five years.

. THE CONSUMER PRICE INDEX, a measure for determining inflation.

Investors may use such indexes (or reporting services) in addition to the Funds'
Prospectuses to obtain a more complete view of each Portfolio's performance
before investing. Of course, when comparing each Portfolio's performance to any
index, conditions such as composition of the index and prevailing market
conditions should be considered in assessing the significance of such companies.
Unmanaged indexes may assume the reinvestment of dividends but generally do not
reflect deductions for administrative and management costs and expenses.

When comparing funds using reporting services, or total return and yield, or
effective yield, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price.

SAFEKEEPING OF ACCOUNT ASSETS

-9-

<PAGE>

of the assets of the Company. Records are maintained of all purchases and
redemptions of eligible Portfolio shares held by each of the Subaccounts and the
General Account.

THE COMPANY

All the stock of the Company is owned by Veterans Life Insurance Company, which
is a wholly owned subsidiary of Providian Life and Health Insurance Company
("PLH"). Commonwealth General Corporation owns a 3.7% interest in PLH and 61%,
15.3%, and 20% interest, respectively, are held by Commonwealth Life Insurance
Company, Peoples Security Life Insurance Company, and Capital Liberty,
L.P. Commonwealth Life Insurance Company and Peoples Security Life Insurance
Company are each wholly owned by Capital General Development Corporation, which
in turn is wholly owned by Commonwealth General Corporation. A 1% interest in
Capital Liberty, L.P. is owned by Commonwealth General Corporation, which is the
general partner, and 79.2% and 19.8% interest, respectively, are held by two
limited partners, Commonwealth Life Insurance Company and Peoples Security Life
Insurance Company.

Commonwealth General Corporation is wholly owned by AEGON USA, Inc., which in
turn is wholly owned by AEGON U.S. Holding Corporation, a wholly owned
subsidiary of AEGON International n.v. AEGON International n.v. is a wholly
owned subsidiary of AEGON n.v. Verening AEGON (a Netherlands membership
association) has a 53.63% interest in AEGON n.v.

STATE REGULATION

The Company is a stock life insurance company organized under the laws of the
State of New York, and is subject to regulation by the New York State Department
of Insurance. An annual statement is filed with the New York Superintendent of
Insurance on or before March 1 of each year covering the operations and
reporting on the financial condition of the Company as of December 31 of the
preceding calendar year. Periodically, the New York Superintendent of Insurance
examines the financial condition of the Company, including the liabilities and
reserves of the Separate Account.

The availability of certain contract rights and provisions depends on state
approval and/or filing and review processes. Where required by state law or
regulation, the Contracts will be modified accordingly.

RECORDS AND REPORTS

All records and accounts relating to the Separate Account will be maintained by
the Company or by its Administrator. As presently required by the Investment
Company Act of 1940 and regulations promulgated thereunder, the Company will
mail to all Contract Owners at their last known address of record, at least
semi-annually, reports containing such information as may be required under that
Act or by any other applicable law or regulation.

DISTRIBUTION OF THE CONTRACTS

AFSG Securities Corporation ("AFSG"), formerly Providian Securities Corporation,
the principal underwriter of the Contracts, is ultimately a wholly owned
subsidiary of AEGON n.v. AFSG is registered with the SEC under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc.

The Contracts are offered to the public through persons or entities licensed
under the federal securities laws and New York State insurance laws that have
entered into agreements with AFSG. The offering of the Contracts is continuous
and AFSG does not anticipate discontinuing the offering of the Contracts.
However, AFSG does reserve the right to discontinue the offering of the
Contracts.

-10-
<PAGE>

LEGAL PROCEEDINGS

There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. The Company is not
involved in any litigation that is of material importance in relation to its
total assets or that relates to the Separate Account.

OTHER INFORMATION

A Registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
Contracts discussed in this Statement of Additional Information. Not all of the
information set forth in the Registration Statement, amendments and exhibits
thereto has been included in this Statement of Additional Information.
Statements contained in this Statement of Additional Information concerning the
content of the Contracts and other legal instruments are intended to be
summaries. For a complete statement of the terms of these documents, reference
should be made to the instruments filed with the Securities and Exchange
Commission.

FINANCIAL STATEMENTS

The audited statutory-basis financial statements of the Company, for the years
ended December 31, 1997 and 1996, respectively, including the Report of
Independent Auditors, thereon, which are also included in this Statement of
Additional Information, should be distinguished from the financial statements of
the Separate Account and should be considered only as bearing on the ability of
the Company to meet its obligations under the Contracts. They should not be
considered as bearing on the investment performance of the assets held in the
Separate Account.

-11-
<PAGE>

THE CONTRACT

In order to supplement the description in the Prospectus, the following provides
additional information about the Contract which may be of interest to Contract
Owners.

COMPUTATION OF VARIABLE ANNUITY INCOME PAYMENTS

The amounts shown in the Annuity Tables contained in your Contract represent the
guaranteed minimum for each Annuity Payment under a Fixed Payment Option.
Variable annuity income payments are computed as follows. First, the Accumulated
Value (or the portion of the Accumulated Value used to provide variable
payments) is applied under the Annuity Tables contained in your Contract
corresponding to the Annuity Payment Option elected by the Contract Owner and
based on an assumed interest rate of 4%. This will produce a dollar amount which
is the first monthly payment. The Company may, at the time annuity income
payments are computed, offer more favorable rates in lieu of the guaranteed
rates specified in the Annuity Tables.

The Annuity Unit Value for each Subaccount was initially established at $10.00
on the date money was first deposited in that Subaccount. The Annuity Unit Value
for any subsequent Business Day is equal to (a) times (b) times (c), where

(a) = the Annuity Unit Value for the immediately preceding Business Day;

(b) = the Net Investment Factor for the day; and

(c) = the investment result adjustment factor (.99989255 per day), which
recognizes an assumed interest rate of 4% per year used in
determining the Annuity Payment amounts.

The Net Investment Factor is a factor applied to a Subaccount that reflects
daily changes in the value of the Subaccount due to:

(a) = any increase or decrease in the value of the Subaccount due to
investment results;

(b) = a daily charge assessed at an annual rate of .55% for the mortality
and expense risks assumed by the Company; and

<PAGE>

(c) = a daily charge for the cost of administering the Contract
corresponding to an annual charge of .15% of the value of the
Subaccount, plus the Annual Contract Fee.

EXCHANGES

After the Annuity Date you may, by making a written request, exchange the
current value of an existing Subaccount to Annuity Units of any other
Subaccount(s) then available. The written request for an Exchange must be
received by us, however, at least 10 Business Days prior to the first payment
date on which the Exchange is to take effect. This Exchange shall result in the
same dollar amount as that of the Annuity Payment on the date of Exchange (the
"Exchange Date"). Each year you may make an unlimited number of free Exchanges
between Subaccounts. No fee is currently imposed for such Exchanges; however, we
reserve the right to charge a $15 fee for Exchanges in excess of twelve per
Contract Year.

EXCEPTIONS TO CHARGES AND TO TRANSACTION OR BALANCE REQUIREMENTS

Notwithstanding the above, any variations in administrative charges or other
deductions from Purchase Payments or in the minimum or maximum transaction or
balance requirements shall reflect differences in costs or services and shall
not be unfairly discriminatory against any person.

2
<PAGE>

GENERAL MATTERS

NON-PARTICIPATING

The Contracts are non-participating. No dividends are payable and the Contracts
will not share in the profits or surplus earnings of the Company.

MISSTATEMENT OF AGE OR SEX

ASSIGNMENT

Any Non-Qualified Contract may be assigned by you prior to the Annuity Date and
during the Annuitant's lifetime. The Company is not responsible for the validity
of any assignment. No assignment will be recognized until the Company receives
the appropriate Company form notifying the Company of such assignment. The
interest of any beneficiary which the assignor has the right to change shall be
subordinate to the interest of an assignee. Any amount paid to the assignee
shall be paid in one sum notwithstanding any settlement agreement in effect at
the time assignment was executed. The Company shall not be liable as to any
payment or other settlement made by the Company before receipt of the
appropriate Company form.

ANNUITY DATA

The Company will not be liable for obligations which depend on receiving
information from a Payee until such information is received in a form
satisfactory to the Company.

ANNUAL STATEMENT

Once each Contract Year, the Company will send you an annual statement of the
current Accumulated Value allocated to each Subaccount and any Purchase
Payments, charges, Exchanges or withdrawals during the year. This report will
also give you any other information required by law or regulation. You may ask
for an annual statement like this at any time. We will also send you quarterly
statements. However, we reserve the right to discontinue quarterly statements at
any time.

3
<PAGE>

INCONTESTABILITY

This Contract is incontestable from the Contract Date, subject to the
"Misstatement of Age or Sex" provision.

OWNERSHIP

PERFORMANCE INFORMATION

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

Where applicable in calculating performance information, the Annual Contract Fee
is reflected as a percentage equal to the total amount of fees collected during
a calendar year divided by the total average net assets of the Portfolios during
the same calendar year. During the first year of operations, we have assumed an
average Contract size of $3,000. The fee is assumed to remain the same in each
year of the applicable period. (With respect to partial year periods, if any, in
the examples, the Annual Contract Fee is pro-rated to reflect only the
applicable portion of the partial year period.)

30-DAY YIELD FOR SUBACCOUNTS

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

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

<PAGE>

Where:

[a] = the net investment income earned during the period by the Portfolio
attributable to shares owned by a Subaccount;

[b] = the expenses accrued for the period (net of reimbursement);

[c] = the average daily number of Units outstanding during the period;
and

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

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR SUBACCOUNTS

When advertising performance of the Subaccounts, the Company will show the
"Standardized Average Annual Total Return," calculated as prescribed by the
rules of the SEC, for each Subaccount. The Standardized Average Annual Total
Return is the effective annual compounded rate of return that would have
produced the cash redemption value over the stated period had the performance
remained constant throughout. The calculation assumes a single $1,000 payment
made at the beginning of the period and full redemption at the end of the
period. It reflects the deduction of the Annual Contract Fee and all other
Portfolio, Separate Account and Contract level charges except Premium Taxes, if
any.

P(1 + T)/n/ = ERV

Where:

[P] = a hypothetical initial Purchase Payment of $1,000;

[T] = an average annual total return;

[n] = the number of years; and

<PAGE>

[ERV] = the ending redeemable value of a hypothetical $1,000 Purchase
Payment made at the beginning of the period (or fractional
portion thereof).

The following table shows the Standardized Average Annual Total Return for the
Subaccounts for the period beginning at the inception of each Subaccount and
ending on December 31, 1997.
<TABLE>
<CAPTION>
Since
Subaccount One Year* Portfolio Inception
---------- --------- -------------------
<S> <C> <C>
Capital Preservation Portfolio N/A 3.79%
Income Oriented Portfolio N/A 7.70%
Growth and Income Portfolio N/A 9.10%
Capital Growth Portfolio N/A 1.51%
Maximum Appreciation Portfolio N/A 13.65%
</TABLE>

* Returns shown are for the period from each Portfolio's inception date. As of
12/31/97, the Portfolios had not been in operation for an entire year.

ADDITIONAL PERFORMANCE MEASURES

NON-STANDARDIZED ACTUAL TOTAL RETURN AND NON-STANDARDIZED ACTUAL AVERAGE ANNUAL
TOTAL RETURN

The Company may show Non-Standardized Actual Total Return (i.e., the percentage
change in the value of an Accumulation Unit) for one or more Subaccounts with
respect to one or more periods. The Company may also show Non-Standardized
Actual Average Annual Total Return (i.e., the average annual change in
Accumulation Unit Value) with respect to one or more periods. For one year, the
Non-Standardized Actual Total Return and the Non-Standardized Actual Average
Annual Total Return are effective annual rates of return and are equal. For
periods greater than one year, the Non-Standardized Actual Average Annual Total
Return is the effective annual compounded rate of return for the periods stated.
Because the value of an Accumulation Unit reflects the Separate Account and
Portfolio expenses (See Fee Table in the Prospectus), the Non-Standardized
Actual Total Return and Non-Standardized Actual Average Annual Total Return also
reflect these expenses. However, these percentages do not reflect the Annual
Contract Fee or Premium Taxes (if any), which if included would reduce the
percentages reported by the Company.

NON-STANDARDIZED ACTUAL TOTAL RETURN FOR THE PERIOD ENDING 12/31/97
<TABLE>
<CAPTION>
Since
Subaccount One Year* Portfolio Inception
---------- --------- -------------------
<S> <C> <C>
Capital Preservation Portfolio N/A 3.79%
Income Oriented Portfolio N/A 7.70%
Growth and Income Portfolio N/A 9.10%
Capital Growth Portfolio N/A 1.51%
Maximum Appreciation Portfolio N/A 13.65%
</TABLE>

* Returns shown are for the period from each Portfolio's inception date. As of
12/31/97, the Portfolios had not been in operation for an entire year.

NON-STANDARDIZED ACTUAL AVERAGE ANNUAL TOTAL RETURN FOR PERIOD ENDING 12/31/97
<TABLE>
<CAPTION>
Since
Subaccount One Year* Portfolio Inception
---------- --------- -------------------
<S> <C> <C>
Capital Preservation Portfolio N/A 3.79%
Income Oriented Portfolio N/A 7.70%
Growth and Income Portfolio N/A 9.10%
Capital Growth Portfolio N/A 1.51%
Maximum Appreciation Portfolio N/A 13.65%
</TABLE>

* Returns shown are for the period from each Portfolio's inception date. As of
12/31/97, the Portfolios had not been in operation for an entire year.

NON-STANDARDIZED TOTAL RETURN YEAR-TO-DATE

The Company may show Non-Standardized Total Return Year-to-Date as of a
particular date, or simply Total Return YTD, for one or more Subaccounts with
respect to one or more non-standardized base periods commencing at the beginning
of a calendar year. Total Return YTD figures reflect the percentage change in
actual Accumulation Unit Values during the relevant period. These percentages
reflect a deduction for the Separate Account and Portfolio expenses, but do not
include the Annual Contract Fee or Premium Taxes (if any), which if included
would reduce the percentages reported by the Company.

NON-STANDARDIZED TOTAL RETURN YEAR-TO-DATE
<TABLE>
<CAPTION>
Total Return YTD
Subaccount as of 12/31/97*
---------- ----------------
<S> <C>
Capital Preservation Portfolio 4.44%
Income Oriented Portfolio 8.35%
Growth and Income Portfolio 9.75%
Capital Growth Portfolio 2.16%
Maximum Appreciation Portfolio 14.30%
</TABLE>

* Returns shown are for the period from each Portfolio's inception date. As of
12/31/97, the Portfolios had not been in operation for an entire year.

NON-STANDARDIZED ONE YEAR RETURN

The Company may show Non-Standardized One Year Return, for one or more
Subaccounts with respect to one or more non-standardized base periods commencing
at the beginning of a calendar year (or date of inception, if during the
relevant year) and ending at the end of such calendar year. One Year Return
figures reflect the percentage change in actual Accumulation Unit Values during
the relevant period. These percentages reflect a deduction for the Separate
Account and Portfolio expenses, but do not include the Annual Contract Fee or
Premium Taxes (if any), which if included would reduce the percentages reported
by the Company.

<TABLE>
<CAPTION>
Non-Standardized
Subaccount One Year Return 1997*
---------- ---------------------
<S> <C>
Capital Preservation Portfolio 4.44%
Income Oriented Portfolio 8.35%
Growth and Income Portfolio 9.75%
Capital Growth Portfolio 2.16%
Maximum Appreciation Portfolio 14.30%
</TABLE>

* Returns shown are for the period from each Portfolio's inception date. As of
12/31/97, the Portfolios had not been in operation for an entire year.

<PAGE>

PERFORMANCE COMPARISONS

Each Subaccount's performance depends on, among other things, the performance of
the underlying Portfolio which, in turn, depends upon such variables as:

. quality of underlying investments;

. average maturity of underlying investments;

. type of instruments in which the Portfolio is invested;

. changes in interest rates and market value of underlying investments;

. changes in Portfolio expenses; and

. the relative amount of the Portfolio's cash flow.

. DOW JONES INDUSTRIAL AVERAGE ("DJIA"), an unmanaged index representing
share prices of major industrial corporations, public utilities, and

<PAGE>

transportation companies. Produced by Dow Jones & Company, it is cited as a
principal indicator of market conditions.

. STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industrial, transportation, and
financial and public utility companies, which can be used to compare to the
total returns of funds whose portfolios are invested primarily in common
stocks. In addition, the Standard & Poor's index assumes reinvestments of
all dividends paid by stocks listed on its index. Taxes due on any of these
distributions are not included, nor are brokerage or other fees calculated
into the Standard & Poor's figures.

. LIPPER ANALYTICAL SERVICES, INC., a reporting service that ranks funds
in various fund categories by making comparative calculations using total
return. Total return assumes the reinvestment of all income dividends and
capital gains distributions, if any. From time to time, we may quote the
Portfolios' Lipper rankings in various fund categories in advertising and
sales literature.

. BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, a financial
reporting service which publishes weekly average rates of 50 leading bank
and thrift institution money market deposit accounts. The rates published
in the index are an average of the personal account rates offered on the
Wednesday prior to the date of publication by ten of the largest banks and
thrifts in each of the five largest Standard Metropolitan Statistical
Areas. Account minimums range upward from $2,500 in each institution, and
compounding methods vary. If more than one rate is offered, the lowest rate
is used. Rates are subject to change at any time specified by the
institution.

. SHEARSON LEHMAN GOVERNMENT/CORPORATE (TOTAL) INDEX, an index comprised
of approximately 5,000 issues which include: non-convertible bonds publicly
issued by the U.S. government or its agencies; corporate bonds guaranteed
by the U.S. government and quasi-federal corporations; and publicly issued,
fixed-rate, non-convertible domestic bonds of companies in industry, public
utilities and finance. The average maturity of these bonds approximates
nine years. Tracked by Shearson Lehman, Inc., the index calculates total
returns for one month, three month, twelve month, and ten year periods and
year-to-date.

<PAGE>

. THE CONSUMER PRICE INDEX, a measure for determining inflation.

Investors may use such indexes (or reporting services) in addition to the Funds'
Prospectuses to obtain a more complete view of each Portfolio's performance
before investing. Of course, when comparing each Portfolio's performance to any
index, conditions such as composition of the index and prevailing market
conditions should be considered in assessing the significance of such
comparisons. Unmanaged indexes may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and management costs and
expenses.

<PAGE>

SAFEKEEPING OF ACCOUNT ASSETS

Title to assets of the Separate Account is held by the Company. The Assets are
kept physically segregated and held separate and apart from the Company's
General Account assets. The General Account contains all of the assets of the
Company. Records are maintained of all purchases and redemptions of eligible
Portfolio shares held by each of the Subaccounts and the General Account.

THE COMPANY

All the stock of the Company is owned by Veterans Life Insurance Company, which
is a wholly owned subsidiary of Providian Life and Health Insurance Company
("PLH"). Commonwealth General Corporation owns a 3.7% interest in PLH and 61%,
15.3%, and 20% interests, respectively, are held by Commonwealth Life Insurance
Company, Peoples Security Life Insurance Company, and Capital Liberty, L.P.
Commonwealth Life Insurance Company and Peoples Security Life Insurance Company
are each wholly owned by Capital General Development Corporation, which in turn
is wholly owned by Commonwealth General Corporation. A 1% interest in Capital
Liberty, L.P. is owned by Commonwealth General Corporation, which is the general
partner, and 79.2% and 19.8% interests, respectively, are held by two limited
partners, Commonwealth Life Insurance Company and Peoples Security Life
Insurance Company.

Commonwealth General Corporation is wholly owned by AEGON USA, Inc., which in
turn is wholly owned by AEGON U.S. Holding Corporation, a wholly owned
subsidiary of AEGON International n.v. AEGON International n.v. Vereniging AEGON
(a Netherlands membership association) has a 53.63% interest in AEGON n.v.

STATE REGULATION

RECORDS AND REPORTS

All records and accounts relating to the Separate Account will be maintained by
the Company. As presently required by the Investment Company Act of 1940 and
regulations promulgated thereunder, the Company will mail to all Contract Owners
at their last known address of record, at least semi-annually, reports
containing such information as may be required under that Act or by any other
applicable law or regulation.

<PAGE>

DISTRIBUTION OF THE CONTRACTS

AFSG Securities Corporation, formerly Providian Securities Corporation ("AFSG"),
the principal underwriter of the Contracts, is ultimately a wholly owned
subsidiary of AEGON n.v. AFSG is registered with the SEC under the Securities
Exchange Act of 1934 as a broker-dealer and is a member of the National
Association of Securities Dealers, Inc.

The Contracts are offered to members and employees of the Professional Golfers
Association of America ("PGA") and other golf related associations approved by
the PGA and the Company through persons or entities licensed under the federal
securities laws and New York State insurance laws that have generally entered
into agreements with AFSG. The offering of the Contracts is continuous and AFSG
does not anticipate discontinuing the offering of the Contracts. However, AFSG
does reserve the right to discontinue the offering of the Contracts.

LEGAL PROCEEDINGS

OTHER INFORMATION

FINANCIAL STATEMENTS

The audited financial statements of the Separate Account for the year ended
December 31, 1997, including the Report of Independent Auditors thereon, are
included in this Statement of Additional Information. The Subaccounts described
in the Contract Prospectus had not yet commenced operations as of the year ended
December 31, 1996, and consequently had no assets or liabilities. Accordingly,
no financial statements are included for the Separate Account for the year ended
December 31, 1996. The audited statutory-basis financial statements of the
Company for the periods ended December 31, 1997 and 1996, including the Reports
of Independent Auditors thereon, which are included in this Statement of
Additional Information, should be considered only as bearing on the ability of
the Company to meet its obligations under the Contracts. They should not be
considered as bearing on the investment performance of the assets to be held in
the Separate Account.