<PAGE>
FORTIS
MASTERS+
VARIABLE
ANNUITY
Certificates Under Flexible
Premium Deferred
Combination Variable and
Fixed Annuity Contracts

PROSPECTUS DATED
May 1, 1998

FORTIS

FORTIS BENEFITS INSURANCE COMPANY
MAILING ADDRESS:          STREET ADDRESS:                 PHONE: 1-800-800-2000
P.O. BOX 64272            500 BIELENBERG DRIVE                   EXTENSION 3057
ST. PAUL                  WOODBURY
MINNESOTA 55164           MINNESOTA 55125

This Prospectus describes interests under flexible premium deferred combination
variable and fixed annuity contracts issued either on a group basis or as
individual contracts by Fortis Benefits Insurance Company ("Fortis Benefits").
Participation in a group contract will be accounted for by the issuance of a
certificate showing your interest under the group contract. Participation in an
individual contract is shown by the issuance of an individual annuity contract.
The certificate and the individual contract are hereafter both referred to as
the "Certificate". The minimum initial purchase payment under a Certificate is
generally $5,000 ($2,000 for a qualified plan) and there is a $1,000 minimum for
each subsequent purchase payment.

A Certificate allows you to accumulate funds on a tax-deferred basis. You may
elect a guaranteed interest accumulation option through Fortis Benefits' Fixed
Account or a variable return accumulation option through Variable Account D (the
"Variable Account") of Fortis Benefits, or a combination of these two options.
Under the variable rate accumulation option, you can choose among one or more of
the following investment portfolios of Fortis Series Fund, Inc. (the
"Portfolios"):

<TABLE>
<S>                                       <C>
Money Market Series                       S&P 500 Index Series
U.S. Government Securities Series         Blue Chip Stock Series
Diversified Income Series                 International Stock Series
Global Bond Series                        Mid Cap Stock Series
High Yield Series                         Small Cap Value Series
Global Asset Allocation Series            Global Growth Series
Asset Allocation Series                   Large Cap Growth Series
Value Series                              Growth Stock Series
Growth & Income Series                    Aggressive Growth Series
</TABLE>

The accompanying Prospectuses for the Portfolios describe the investment
objectives, policies and risks of each of the Portfolios. Under the guaranteed
interest accumulation option, you can choose among ten different guarantee
periods, each of which has its own interest rate.

The Certificate provides several different types of retirement and death
benefits, including fixed and variable annuity income options. Within limits,
you may make partial surrenders of the Certificate Value or may totally
surrender the Certificate for its Cash Surrender Value.

You have the right to examine a Certificate for ten days (or longer in some
states) from the time you receive the Certificate and return it for a refund of
all purchase payments that have been made, without interest or appreciation or
depreciation. However, in certain states where permitted by state law the refund
will be in the amount of the then current Certificate Value.

This Prospectus gives prospective investors information about the Certificates
that they should know before investing. This Prospectus must be accompanied by a
current Prospectus of the Portfolios. All of the Prospectuses should be read
carefully and kept for future reference.

A Statement of Additional Information, dated May 1, 1998, about certain aspects
of the Certificates has been filed with the Securities and Exchange Commission
and is available without charge, from Fortis Benefits at the address and phone
number printed above. The Table of Contents for the Statement of Additional
Information appears on page 23 of this Prospectus.

THESE POLICIES ARE NOT OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK,
CREDIT UNION, BROKER-DEALER OR OTHER FINANCIAL INSTITUTION. THEY ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY; AND INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.

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

99183 (Ed. 5/98)
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                             PAGE
<S>                                                                                                        <C>
Special Terms Used in this Prospectus....................................................................          3
Information Concerning Fees and Charges..................................................................          4
Summary of Certificate Features..........................................................................          6
    - Fortis Benefits/Fortis Financial Group Member......................................................          8
The Variable Account.....................................................................................          8
The Portfolios...........................................................................................          8
The Fixed Account........................................................................................          8
    - Guaranteed Interest Rates/Guarantee Periods........................................................          8
    - Market Value Adjustment............................................................................          9
    - Investments by Fortis Benefits.....................................................................          9
Accumulation Period......................................................................................         10
    - Issuance of a Certificate and Purchase Payments....................................................         10
    - Certificate Value..................................................................................         10
    - Allocation of Purchase Payments and Certificate Value..............................................         10
    - Total and Partial Surrenders.......................................................................         11
    - Benefit Payable on Death of Participant (or Annuitant).............................................         11
The Annuity Period.......................................................................................         12
    - Annuity Commencement Date..........................................................................         12
    - Commencement of Annuity Payments...................................................................         12
    - Relationship Between Subaccount Investment Performance and Amount of Variable Annuity Payments.....         13
    - Annuity Forms......................................................................................         13
    - Death of Annuitant or Other Payee..................................................................         13
Charges and Deductions...................................................................................         13
    - Premium Taxes......................................................................................         13
    - Charges Against the Variable Account...............................................................         14
    - Tax Charge.........................................................................................         14
    - Surrender Charge...................................................................................         14
    - Nursing Care/Hospitalization Waiver of Surrender Charges...........................................         15
    - Disability Waiver of Surrender Charges.............................................................         15
    - Miscellaneous......................................................................................         15
    - Reduction of Charges...............................................................................         15
General Provisions.......................................................................................         15
    - The Certificates...................................................................................         15
    - Postponement of Payment............................................................................         15
    - Misstatement of Age or Sex and Other Errors........................................................         15
    - Assignment.........................................................................................         15
    - Beneficiary........................................................................................         15
    - Reports............................................................................................         16
Rights Reserved By Fortis Benefits.......................................................................         16
Distribution.............................................................................................         16
Federal Tax Matters......................................................................................         16
Further Information about Fortis Benefits................................................................         18
    - General............................................................................................         18
    - Selected Financial Data............................................................................         18
    - Management's Discussion and Analysis of Financial Condition and Results of Operations..............         19
    - Directors and Executive Officers...................................................................         20
    - Executive Compensation.............................................................................         21
    - Ownership of Securities............................................................................         22
Voting Privileges........................................................................................         22
Legal Matters............................................................................................         22
Other Information........................................................................................         23
Contents of Statement of Additional Information..........................................................         23
Fortis Benefits Financial Statements.....................................................................        F-1
Appendix A--Sample Market Value Adjustment Calculations..................................................        A-1
Appendix B--Sample Death Benefit Calculations............................................................        B-1
Appendix C--Explanation of Expense Calculations..........................................................        C-1
</TABLE>

THE CERTIFICATES ARE NOT AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE. FORTIS BENEFITS DOES NOT AUTHORIZE ANY INFORMATION OR
REPRESENTATION REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS WHICH IS NOT
INCLUDED IN THIS PROSPECTUS, THE RELATED STATEMENT OF ADDITIONAL INFORMATION, OR
ANY SUPPLEMENTS THERETO OR IN ANY SUPPLEMENTAL SALES MATERIAL AUTHORIZED BY
FORTIS BENEFITS.
<PAGE>
SPECIAL TERMS USED IN THIS PROSPECTUS

<TABLE>
<S>              <C>
ACCUMULATION     The time period under a Certificate between the Certificate Issue Date and the Annuity
PERIOD           Commencement Date.
ACCUMULATION     A unit of measure used to calculate the Participants' interest in the Variable Account during
UNIT             the Accumulation Period.
ANNUITANT        A person during whose life annuity payments are to be made by Fortis Benefits under the
                 Certificate. The Annuitant is the person named in the application for the Certificate. If such
                 person dies before the Annuity Commencement Date and there is an additional annuitant named in
                 the application, the additonal annuitant shall become the Annuitant. If there is no named
                 additional annuitant, or the additional annuitant has predeceased the annuitant who is named
                 in the application, the Participant, if he or she is a natural person, shall become the
                 Annuitant.
ANNUITY          The date on which the Annuity Period commences.
COMMENCEMENT
DATE
ANNUITY PERIOD   The time period following the Accumulation Period, during which annuity payments are made by
                 Fortis Benefits.
ANNUITY UNIT     A unit of measurement used to calculate variable annuity payments.
BENEFICIARY      The person entitled to receive benefits under the terms of the Certificate.
CASH SURRENDER   The amount payable to the Participant on surrender of the Certificate after all applicable
VALUE            adjustments and deduction of all applicable charges.
CERTIFICATE      The date on which the Certificate becomes effective as shown on the Certificate Data Page.
ISSUE DATE
CERTIFICATE      The sum of the Fixed Account Value and the Variable Account Value.
VALUE
FIXED ACCOUNT    The name of the alternative under which purchase payments are allocated to Fortis Benefits
                 General Account.
FIXED ACCOUNT    The amount of your Certificate Value which is in the Fixed Account.
VALUE
FIXED ANNUITY    An annuity option under which Fortis Benefits promises to pay the Annuitant or any other payee
OPTION           that you designate one or more fixed payments.
GENERAL ACCOUNT  All assets of Fortis Benefits other than those in the Variable Account, and other than those
                 in any other legally segregated separate account established by Fortis Benefits.
GUARANTEED       The rate of interest we credit during any Guarantee Period, on an effective annual basis.
INTEREST RATE
GUARANTEE        The period for which a Guaranteed Interest Rate is credited.
PERIOD
HOME OFFICE      Our office at 500 Bielenberg Drive, Woodbury, Minnesota 55125; 1-800-800-2638, extension 3057;
                 Mailing address: P.O. Box 64272, St. Paul, MN 55164.
MARKET VALUE     Positive or negative adjustment in Fixed Account Value that we make if such value is paid out
ADJUSTMENT       more than fifteen days before or after the end of a Guarantee Period in which it was being
                 held.
NET PURCHASE     The gross amount of a purchase payment less any applicable premium taxes or similar
PAYMENT          governmental assessments.
NON-QUALIFIED    Certificates that do not qualify for the special federal income tax treatment applicable in
CERTIFICATES     connection with certain retirement plans.
PARTICIPANT      The person or company named in the application for a Certificate, who is entitled to exercise
                 all rights and privileges of ownership under the Certificate during the Accumulation Period.
PORTFOLIO        Each separate investment portfolio available for investment by the Variable Account.
QUALIFIED        Certificates that are qualified for the special federal income tax treatment applicable in
CERTIFICATES     connection with certain retirement plans.
SUBACCOUNTS      The several Subaccounts of the Variable Account, each of which invests its assets in a
                 different Portfolio.
VALUATION DATE   All business days except, with respect to any Subaccount, days on which the related Portfolio
                 does not value its shares. Generally, the Portfolios value their shares on each day the New
                 York Stock Exchange is open.
VALUATION        The period that starts at the close of regular trading on the New York Stock Exchange on a
PERIOD           Valuation Date and ends at the close of regular trading on the exchange on the next succeeding
                 Valuation Date.
VARIABLE         The segregated asset account referred to as Variable Account D of Fortis Benefits Insurance
ACCOUNT          Company established to receive and invest purchase payments under Certificates.
VARIABLE         The amount of your Certificate Value in the Subaccounts of the Variable Account.
ACCOUNT VALUE
</TABLE>

                                       3
<PAGE>
<TABLE>
<S>              <C>
VARIABLE         An annuity option under which Fortis Benefits promises to pay the Annuitant or any other payee
ANNUITY OPTION   chosen by you one or more payments which vary in amount in accordance with the net investment
                 experience of the Subaccounts selected by the Annuitant.
WRITTEN REQUEST  A written, signed and dated request, in form and substance satisfactory to Fortis Benefits and
                 received at our Home Office.
</TABLE>

 INFORMATION CONCERNING FEES AND CHARGES

 PARTICIPANT TRANSACTION CHARGES

<TABLE>
<S>                                                                        <C>
Front-End Sales Charge Imposed on Purchases..............................   0%
Maximum Surrender Charge for Sales Expenses..............................   7%(1)
</TABLE>

<TABLE>
<CAPTION>
                                    SURRENDER CHARGE AS A
    NUMBER OF YEARS SINCE           PERCENTAGE OF PURCHASE
PURCHASE PAYMENT WAS CREDITED              PAYMENT
------------------------------      ----------------------
<S>                                 <C>
                   Less than 2                 7%
    At least 2 but less than 4                 6%
    At least 4 but less than 5                 5%
    At least 5 but less than 6                 3%
    At least 6 but less than 7                 1%
                     7 or more                 0%
</TABLE>

<TABLE>
<S>                                                                     <C>
       Other Surrender Fees...........................................     0%
       Exchange Fee...................................................     0%
ANNUAL CERTIFICATE ADMINISTRATION CHARGE..............................  $  0
VARIABLE ACCOUNT ANNUAL EXPENSES
 (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE)
        Mortality and Expense Risk Charge.............................  1.25%
        Variable Account Administrative Charge........................   .10%
                                                                         ---
          Total Variable Account Annual Expenses......................  1.35%
</TABLE>

 ---------------------------------
 (1) This charge does not apply in certain cases such as partial surrenders
     each year of up to 10% of "new purchase payments" as defined under the
     heading "surrender charge," or payment of a death benefit.

 MARKET VALUE ADJUSTMENT WITH RESPECT TO FIXED ACCOUNT
 Surrenders and other withdrawals from the Fixed Account more than fifteen days
 from the end of a Guarantee Period other than the one year Guarantee Period
 are subject to a Market Value Adjustment. The Market Value Adjustment may
 increase or reduce the Fixed Account Value. It is computed pursuant to a
 formula that is described in more detail under "Market Value Adjustment."

 PORTFOLIO ANNUAL EXPENSES (a)

<TABLE>
<CAPTION>
                                            U.S.                                        GLOBAL
                                MONEY    GOVERNMENT   DIVERSIFIED   GLOBAL    HIGH      ASSET        ASSET               GROWTH &
                                MARKET   SECURITIES     INCOME       BOND    YIELD    ALLOCATION   ALLOCATION   VALUE     INCOME
                                SERIES     SERIES       SERIES      SERIES   SERIES     SERIES       SERIES     SERIES    SERIES
                                ------   ----------   -----------   ------   ------   ----------   ----------   ------   --------
<S>                             <C>      <C>          <C>           <C>      <C>      <C>          <C>          <C>      <C>
Investment Advisory and
 Management Fee...............
Other Expenses................
Total Series Fund Operating
 Expenses.....................
</TABLE>

<TABLE>
<CAPTION>
                                           BLUE                     MID     SMALL             LARGE
                                S&P 500    CHIP                     CAP      CAP     GLOBAL    CAP     GROWTH   AGGRESSIVE
                                 INDEX    STOCK    INTERNATIONAL   STOCK    VALUE    GROWTH   GROWTH   STOCK      GROWTH
                                SERIES    SERIES   STOCK SERIES    SERIES   SERIES   SERIES   SERIES   SERIES     SERIES
                                -------   ------   -------------   ------   ------   ------   ------   ------   ----------
<S>                             <C>       <C>      <C>             <C>      <C>      <C>      <C>      <C>      <C>
Investment Advisory and
 Management Fee...............
Other Expenses................
Total Series Fund Operating
 Expenses.....................
</TABLE>

 ---------------------------------
 (a) As a percentage of Portfolio average net assets based on 1997 historical
     data except that for Small Cap Value Series, Mid Cap Stock Series and
     Large Cap Growth Series these amounts are based upon estimates for their
     current fiscal year.

                                       4
<PAGE>

 EXAMPLES*
 IF YOU SURRENDER your Certificate in full at the end of any of the time
 periods shown below, you would pay the following cumulative expenses on a
 $1,000 investment, assuming a 5% annual return on assets:

<TABLE>
<CAPTION>
IF ALL AMOUNTS ARE INVESTED IN ONE
PORTFOLIO:                                                           1 YEAR       3 YEARS      5 YEARS     10 YEARS
                                                                   -----------  -----------  -----------  -----------
<S>                                                                <C>          <C>          <C>          <C>
Money Market Series..............................................
U.S. Government Securities Series................................
Diversified Income Series........................................
Global Bond Series...............................................
High Yield Series................................................
Global Asset Allocation Series...................................
Asset Allocation Series..........................................
Value Series.....................................................
Growth & Income Series...........................................
S&P 500 Index Series.............................................
Blue Chip Stock Series...........................................
International Stock Series.......................................
Mid Cap Stock Series.............................................
Small Cap Value Series...........................................
Global Growth Series.............................................
Large Cap Growth Series..........................................
Growth Stock Series..............................................
Aggressive Growth Series.........................................
</TABLE>

 If you COMMENCE AN ANNUITY payment option, or do NOT surrender your
 Certificate, you would pay the following cumulative expenses on a $1,000
 investment, assuming a 5% annual return on assets:

<TABLE>
<CAPTION>
IF ALL AMOUNTS ARE INVESTED IN ONE
PORTFOLIO:                                                           1 YEAR       3 YEARS      5 YEARS     10 YEARS
                                                                   -----------  -----------  -----------  -----------
<S>                                                                <C>          <C>          <C>          <C>
Money Market Series..............................................
U.S. Government Securities Series................................
Diversified Income Series........................................
Global Bond Series...............................................
High Yield Series................................................
Global Asset Allocation Series...................................
Asset Allocation Series..........................................
Value Series.....................................................
Growth & Income Series...........................................
S&P 500 Index Series.............................................
Blue Chip Stock Series...........................................
International Stock Series.......................................
Mid Cap Stock Series.............................................
Small Cap Value Series...........................................
Global Growth Series.............................................
Large Cap Growth Series..........................................
Growth Stock Series..............................................
Aggressive Growth Series.........................................
</TABLE>

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

 * Does not include the effect of any Market Value Adjustment.

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

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

 The foregoing tables and examples are included to assist you in understanding
 the transaction and operating expenses imposed directly or indirectly under
 the Certificates and the Portfolios. Amounts for state premium taxes or
 similar assessments will also be deducted, where applicable.

 See Appendix C for an explanation of the calculation of the amounts set forth
 above.

                                       5
<PAGE>
SUMMARY OF CERTIFICATE FEATURES

The following summary should be read in conjunction with the detailed
information in this Prospectus. Variations from the information appearing in
this Prospectus due to requirements particular to your state are described in
supplements which are attached to this Prospectus, or in endorsements to the
Certificate as appropriate.

The Certificates are designed to provide individuals with retirement benefits
through the accumulation of Net Purchase Payments on a fixed or variable basis,
and by the application of such accumulations to provide fixed or variable
annuity payments.

"We," "our," and "us" mean Fortis Benefits Insurance Company. "You" and "your"
mean a reader of this Prospectus who is contemplating making purchase payments
or taking any other action in connection with a Certificate.

PURCHASE PAYMENTS
The initial purchase payment under a Certificate must be at least $5,000 ($2,000
for a Certificate pursuant to a qualified contract). Additional purchase
payments under a Certificate must be at least $1,000 ($50 for a Certificate
pursuant to a qualified contract). See "Issuance of a Certificate and Purchase
Payments."

On the Certificate Issue Date, the initial purchase payment is allocated, as
specified by the Participant in the Certificate application, among one or more
of the Subaccounts of the Variable Account, or to one or more of the Guarantee
Periods in the Fixed Account, or to a combination thereof. Subsequent purchase
payments are allocated in the same way, or pursuant to different allocation
percentages that the Participant may subsequently request In Writing.

VARIABLE ACCOUNT INVESTMENT OPTIONS
Each of the Subaccounts of the Variable Account invests in shares of a
corresponding Portfolio. Certificate Value in each of the Subaccounts of the
Variable Account will vary to reflect the investment experience of each of the
corresponding Portfolios, as well as deductions for certain charges.

Each Portfolio has a separate and distinct investment objective and is managed
by Fortis Advisers, Inc. or a subadviser of Fortis Advisers, Inc. A full
description of the Portfolios and their investment objectives, policies, risks
and expenses can be found in the current Prospectus for the Portfolios, which
accompanies this Prospectus, and the Portfolios' Statement of Additional
Information which is available upon request.

FIXED ACCOUNT INVESTMENT OPTIONS
Any amount allocated by the Participant to the Fixed Account earns a Guaranteed
Interest Rate. The level of the Guaranteed Interest Rate depends on the length
of the Guarantee Period selected by the Participant. We currently make available
ten different Guarantee Periods, ranging from one to ten years.

If amounts are transferred, surrendered or otherwise paid out more than fifteen
days before or after the end of the applicable Guarantee Period other than the 1
year Guarantee Period, a Market Value Adjustment will be applied to increase or
decrease the amount of Fixed Account Value that is paid out. Accordingly, the
Market Value Adjustment can result in gains or losses to you. There is no Market
Value Adjustment for transfers or surrenders from the one-year Guarantee Period
of the Fixed Account.

THE FIXED ACCOUNT INVESTMENT OPTION IS NOT AVAILABLE FOR CERTIFICATES ISSUED IN
THE STATES OF PENNSYLVANIA AND NEVADA.

For a more complete discussion of the Fixed Account investment options and the
Market Value Adjustment, see "The Fixed Account."

TRANSFERS
During the Accumulation Period, you can transfer all or part of your Certificate
Value from one Subaccount to another or into the Fixed Account and, subject to
any Market Value Adjustment, from one Guarantee Period to another or into a
Subaccount. There is currently no charge for these transfers. We reserve the
right to restrict the frequency of or otherwise condition, terminate, or impose
charges upon, transfers from a Subaccount during the Accumulation Period. During
the Annuity Period the person receiving annuity payments may make up to four
transfers (but not from a Fixed Annuity Option) during each year of the Annuity
Period. For a description of certain limitations on transfer rights, see
"Allocations of Purchase Payments and Certificate Value--Transfers."

TOTAL OR PARTIAL SURRENDERS
Subject to certain conditions, all or part of the Certificate Value may be
surrendered by the Participant before the earlier of (1) if the participant is a
non-natural person the Annuitant's death, or (2) the Annuity Commencement Date.
Amounts surrendered may be subject to a surrender charge and, in addition,
amounts surrendered from the Fixed Account may be subject to a Market Value
Adjustment. See "Total and Partial Surrenders," "Surrender Charge" and "Market
Value Adjustment." Particular attention should be paid to the tax implications
of any surrender, including possible penalties for premature distributions. See
"Federal Tax Matters."

ANNUITY PAYMENTS
The Contract provides several types of annuity benefits to Participants or other
persons they properly designate to receive such payments, including Fixed and
Variable Annuity Options. The Participant has considerable flexibility in
choosing the Annuity Commencement Date. However, the tax implications of an
Annuity Commencement Date must be carefully considered, including the
possibility of penalties for commencing benefits either too soon or too late.
See "Annuity Commencement Date," "Annuity Forms" and "Federal Tax Matters" in
this Prospectus and "Taxation Under Certain Retirement Plans" in the Statement
of Additional Information.

DEATH BENEFIT
In the event of the death of the Participant, or the Annuitant if the
participant is a non-natural person, prior to the Annuity Commencement Date, a
death benefit is payable to the Beneficiary. See "Benefit Payable on Death of
Annuitant or Participant."

RIGHT TO EXAMINE THE CONTRACT
The Participant can cancel a Certificate by delivering or mailing it, together
with a Written Request, to Fortis Benefits' Home Office or to the sales
representative through whom it was purchased, before the close of business on
the tenth day after receipt of the Certificate. If these items are sent by mail,
properly addressed and postage prepaid, they will be deemed to be received by
Fortis Benefits on the date postmarked. Fortis Benefits will refund to you all
purchase payments that have been made, without interest or appreciation or
depreciation. However, in certain states where permitted by state law the refund
will be in the amount of the then current Certificate Value.

LIMITATIONS IMPOSED BY RETIREMENT PLANS AND EMPLOYERS
Certain rights you would otherwise have under a Certificate may be limited by
the terms of any applicable employee benefit plan. These limitations may
restrict such things as total and partial surrenders, the amount or timing of
purchase payments that may be made, when annuity payments must start and the
type of annuity options that may be selected. Accordingly, you should
familiarize yourself with these and all other aspects of any retirement plan in
connection with which a Certificate is issued.

The record owner of the group variable annuity contract pursuant to which
Certificates will be issued will be a bank trustee whose sole function is to
hold record ownership of the contract or an employer (or

                                       6
<PAGE>
the employer's designee) in connection with an employee benefit plan. In the
latter cases, certain rights that a Participant otherwise would have under a
Certificate may be reserved instead by the employer.

TAX IMPLICATIONS
The tax implications for Participants or any other persons who may receive
payments under a Certificate, and those of any related employee benefit plan can
be quite important. A brief discussion of some of these is set out under
"Federal Tax Matters" in this Prospectus and "Taxation Under Certain Retirement
Plans" in the Statement of Additional Information, but such discussion is not
comprehensive. Therefore, you should consider these matters carefully and
consult a qualified tax adviser before making purchase payments or taking any
other action in connection with a Certificate or any related employee benefit
plan. Failure to do so could result in serious adverse tax consequences which
might otherwise have been avoided.

QUESTIONS AND OTHER COMMUNICATIONS
Any question about procedures of the Certificate should be directed to your
sales representative, or Fortis Benefits' Home Office: P.O. Box 64272, St. Paul,
Minnesota, 55164: 1-800-800-2000, extension 3057. Purchase payments and Written
Requests should be mailed or delivered to the same Home Office address. All
communications should include the Certificate number, the Participant's name
and, if different, the Annuitant's name. The number for telephone transfers is
1-800-800-2000 (extension 3057).

Any purchase payment or other communication, except a 10-day cancellation
notice, is deemed received at Fortis Benefit's Home Office on the actual date of
receipt there in proper form unless received (1) after the close of regular
trading on The New York Stock Exchange, or (2) on a date that is not a Valuation
Date. In either of these two cases, the date of receipt will be deemed to be the
next Valuation Date.

FINANCIAL AND PERFORMANCE INFORMATION
The information presented below reflects the Accumulation Unit information for
subaccounts of the Separate Account through December 31, 1997.
<TABLE>
<CAPTION>
                                                U.S. GOV'T    DIVERSIFIED
                                MONEY MARKET    SECURITIES       INCOME      GLOBAL BOND     HIGH YIELD
                                ------------   ------------   ------------   ------------   ------------
<S>                             <C>            <C>            <C>            <C>            <C>
DECEMBER 31, 1997
Accumulation Units in Force...
Accumulation Unit Values......
DECEMBER 31, 1996
Accumulation Units in Force...    36,220,947      9,635,092     55,653,680      1,088,043      3,337,604
Accumulation Unit Values......         1.418         15.935          1.801         11.961         11.928
JANUARY 1, 1996*
Accumulation Unit Values......       --             --             --             --             --
DECEMBER 31, 1995
Accumulation Units in Force...    26,915,975     10,989,914     59,213,865        574,142      2,321,419
Accumulation Unit Value.......        $1.367        $15.805         $1.753        $11.743        $10.941
JANUARY 2, 1995*
Accumulation Unit Value.......       --             --             --             $10.000        --
DECEMBER 31, 1994
Accumulation Units in Force...    30,697,754     12,271,738     62,744,615        --           1,216,957
Accumulation Unit Value.......        $1.311        $13.483         $1.515        --             --
MAY 1, 1994*
Accumulation Unit Value.......       --             --             --             --             --
DECEMBER 31, 1993
Accumulation Units in Force...    21,315,022     15,601,818     56,005,709        --             --
Accumulation Unit Value.......        $1.278        $14.609         $1.621        --             --
DECEMBER 31, 1992
Accumulation Units in Force...    20,674,556      9,505,984     19,353,521        --             --
Accumulation Unit Value.......        $1.261        $13.529         $1.457        --             --
MAY 1, 1992*
Accumulation Unit Value.......       --             --             --             --             --
DECEMBER 31, 1991
Accumulation Units in Force...  7,235,168.03   3,595,759.23   6,056,976.03        --             --
Accumulation Unit Value.......        $1.237        $12.921         $1.379        --             --
DECEMBER 31, 1990
Accumulation Units in Force...  5,632,146.27     747,992.12   2,352,517.74        --             --
Accumulation Unit Value.......        $1.183        $11.450         $1.219        --             --
DECEMBER 31, 1989
Accumulation Units in Force...    754,306.35      70,701.23   1,306,717.80        --             --
Accumulation Unit Value.......        $1.112        $10.756         $1.135        --             --
MAY 1, 1989*
Accumulation Unit Value.......       --             10.0000        --             --             --
DECEMBER 31, 1988
Accumulation Units in Force...     92,261.56        --          493,007.87        --             --
Accumulation Unit Value.......        $1.030        --              $1.024        --             --
MAY 2, 1988*
Accumulation Unit Value.......        $1.000        --              $1.000        --             --

<CAPTION>
                                GLOBAL ASSET       ASSET                       GROWTH &         S&P            BLUE
                                 ALLOCATION     ALLOCATION       VALUE          INCOME          500            CHIP
                                ------------   -------------  ------------   ------------   ------------   ------------
<S>                             <C>            <C>            <C>            <C>
DECEMBER 31, 1997
Accumulation Units in Force...
Accumulation Unit Values......
DECEMBER 31, 1996
Accumulation Units in Force...     2,330,884     154,525,474     1,071,648      7,892,683      1,259,758        915,358
Accumulation Unit Values......        12.884           2.368        11.048         15.468         11.326         11.520
JANUARY 1, 1996*
Accumulation Unit Values......       --             --              10.000                        10.000         10.000
DECEMBER 31, 1995
Accumulation Units in Force...     1,117,596     148,700,081                    4,204,164
Accumulation Unit Value.......       $11.590          $2.134                      $12.904
JANUARY 2, 1995*
Accumulation Unit Value.......       $10.000        --                            --
DECEMBER 31, 1994
Accumulation Units in Force...       --          137,642,102                    1,489,517
Accumulation Unit Value.......        $9.834          $1.773                      $10.083
MAY 1, 1994*
Accumulation Unit Value.......      $10.0000        --                           $10.0000
DECEMBER 31, 1993
Accumulation Units in Force...       --          106,834,367                      --
Accumulation Unit Value.......       --               $1.797                      --
DECEMBER 31, 1992
Accumulation Units in Force...       --           49,688,937                      --
Accumulation Unit Value.......       --               $1.664                      --
MAY 1, 1992*
Accumulation Unit Value.......       --             --                            --
DECEMBER 31, 1991
Accumulation Units in Force...       --        17,772,322.83                      --
Accumulation Unit Value.......       --               $1.577                      --
DECEMBER 31, 1990
Accumulation Units in Force...       --         8,249,373.75                      --
Accumulation Unit Value.......       --               $1.252                      --
DECEMBER 31, 1989
Accumulation Units in Force...       --         2,760,936.67                      --
Accumulation Unit Value.......       --               $1.245                      --
MAY 1, 1989*
Accumulation Unit Value.......       --             --                            --
DECEMBER 31, 1988
Accumulation Units in Force...       --           703,763.76                      --
Accumulation Unit Value.......       --               $1.019                      --
MAY 2, 1988*
Accumulation Unit Value.......       --               $1.000                      --

<CAPTION>
                                INTERNATIONAL     GLOBAL                      AGGRESSIVE
                                   STOCK          GROWTH      GROWTH STOCK      GROWTH
                                ------------   ------------   -------------  ------------
DECEMBER 31, 1997
Accumulation Units in Force...
Accumulation Unit Values......
DECEMBER 31, 1996
Accumulation Units in Force...    3,137,348      13,713,860     169,095,500    5,706,895
Accumulation Unit Values......       12.690          18.510           2.971       13.232
JANUARY 1, 1996*
Accumulation Unit Values......      --              --             --
DECEMBER 31, 1995
Accumulation Units in Force...    1,157,064      10,769,830     160,247,280    3,033,587
Accumulation Unit Value.......      $11.271         $15.754          $2.587      $12.461
JANUARY 2, 1995*
Accumulation Unit Value.......      $10.000         --             --            --
DECEMBER 31, 1994
Accumulation Units in Force...      --           10,055,959     148,657,108    1,115,647
Accumulation Unit Value.......      --              $12.236          $2.054       $9.723
MAY 1, 1994*
Accumulation Unit Value.......      --              --             --           $10.0000
DECEMBER 31, 1993
Accumulation Units in Force...      --            5,108,957     118,720,649      --
Accumulation Unit Value.......      --              $12.784          $2.142      --
DECEMBER 31, 1992
Accumulation Units in Force...      --              698,720      79,582,321      --
Accumulation Unit Value.......      --              $10.988          $1.996      --
MAY 1, 1992*
Accumulation Unit Value.......      --              10.0000        --            --
DECEMBER 31, 1991
Accumulation Units in Force...      --              --        42,946,178.33      --
Accumulation Unit Value.......      --              --               $1.965      --
DECEMBER 31, 1990
Accumulation Units in Force...      --              --        14,690,313.64      --
Accumulation Unit Value.......      --              --               $1.298      --
DECEMBER 31, 1989
Accumulation Units in Force...      --              --         3,507,971.91      --
Accumulation Unit Value.......      --              --               $1.357      --
MAY 1, 1989*
Accumulation Unit Value.......      --              --             --            --
DECEMBER 31, 1988
Accumulation Units in Force...      --              --           684,667.95      --
Accumulation Unit Value.......      --              --               $1.008      --
MAY 2, 1988*
Accumulation Unit Value.......      --              --               $1.000      --
</TABLE>

----------------------------------------
* Accumulation Unit Value at Date of initial registration statement
effectiveness

Audited financial statements of the Variable Account are included in the
Statement of Additional Information.

Advertising and other sales materials may include yield and total return figures
for the Subaccounts of the Variable Account. These figures are based on
historical results and are not intended to indicate future performance. "Yield"
is the income generated by an investment in the Subaccount over a period of time
specified in the advertisement. This rate of return is assumed to be earned over
a full year and is shown as a percentage of the investment. "Total return" is
the total change in value of an investment in the Subaccount over a period of
time specified in the advertisement. The rate of return shown would produce that
change in value over the specified period, if compounded annually. Yield figures
do not reflect the surrender charge and yield and total return figures do not
reflect premium tax charges. This makes the performance shown more favorable.

Financial information concerning Fortis Benefits is included in this Prospectus
under "Additional Information About Fortis Benefits" and "Fortis Benefits
Financial Statements."

                                       7
<PAGE>
FORTIS BENEFITS/FORTIS FINANCIAL GROUP MEMBER
Fortis Benefits Insurance Company, the issuer of the Certificates, was founded
in 1910. At the end of 1997, Fortis Benefits had approximately $94 billion of
total life insurance in force. Fortis Benefits is a Minnesota corporation and is
qualified to sell life insurance and annuity contracts in the District of
Columbia and in all states except New York. Fortis Benefits is an indirectly
wholly-owned subsidiary of Fortis, Inc., which is itself indirectly owned 50% by
Fortis AMEV and 50% by Fortis AG. Fortis, Inc. manages the United States
operations for these two companies.

Fortis Benefits is a member of the Fortis Financial Group, a joint effort by
Fortis Benefits, Fortis Advisers, Inc., Fortis Investors, Inc., and Fortis
Insurance Company, offering financial products through the management, marketing
and servicing of mutual funds, annuities and life insurance.

Fortis AMEV is a diversified financial services company headquartered in
Utrecht, The Netherlands, where its insurance operations began in 1847. Fortis
AG is a diversified financial services company headquartered in Brussels,
Belgium, where its insurance operations began in 1824. Fortis AMEV and Fortis AG
have merged their operating companies under the trade name of Fortis. The Fortis
group of companies is active in insurance, banking and financial services, and
real estate development in The Netherlands, Belgium, the United States, Western
Europe, and the Pacific Rim. The Fortis group of companies had approximately
$167 billion in assets as of year-end 1997.

All of the guarantees and commitments under the Certificates are general
obligations of Fortis Benefits, regardless of whether the Certificate Value has
been allocated to the Separate Account or to the Fixed Account. None of Fortis
Benefits' affiliated companies has any legal obligation to back Fortis Benefits'
obligations under the Certificates.

THE VARIABLE ACCOUNT

The Variable Account, which is a segregated investment account of Fortis
Benefits, was established as Variable Account D by Fortis Benefits pursuant to
the insurance laws of Minnesota as of October 14, 1987. Although the Variable
Account is an integral part of Fortis Benefits, the Variable Account is
registered with the Securities and Exchange Commission as a unit investment
trust under the Investment Company Act of 1940. Assets in the Variable Account
representing reserves and liabilities under Certificates and other variable
annuity contracts issued by Fortis Benefits will not be chargeable with
liabilities arising out of any other business of Fortis Benefits.

There are Subaccounts in the Variable Account. The assets in each Subaccount are
invested exclusively in one of the Portfolios listed on the first page of the
prospectus, each of which represents a separate investment Portfolio. Income and
both realized and unrealized gains or losses from the assets of each Subaccount
of the Variable Account are credited to or charged against that Subaccount
without regard to income, gains or losses from any other Subaccount of the
Variable Account or arising out of any other business we may conduct. New
Subaccounts may be added as new Portfolios are added and made available.
Correspondingly, if any Portfolios are eliminated, Subaccounts may be eliminated
from the Variable Account.

THE PORTFOLIOS

Certificate holders may choose from among a number of different Portfolios, each
of which is a mutual fund available for purchase only as a funding vehicle for
benefits under variable life insurance and variable annuities issued by Fortis
Benefits and other life insurance companies. Each Portfolio corresponds to one
of the Subaccounts of the Variable Account. The assets of each Portfolio are
separate from the others and each Portfolio operates as a separate investment
portfolio whose performance has no effect on the investment performance of any
other Portfolio. More detailed information for each Portfolio offered, such as
its investment policies and restrictions, charges, risks attendant to investing
in it, and other aspects of its operations, may be found in the current
prospectus for each Portfolio. Such a prospectus for the Portfolios being
considered must accompany this Prospectus and should be read in conjunction with
it. A copy of each prospectus may be obtained without charge from Fortis
Benefits by calling 1-800-800-2000, ext. 3057, or writing P.O. Box 64272, St.
Paul, Minnesota 55164.

Fortis Benefits purchases and redeems Portfolios' shares for the Variable
Account at their net asset value without the imposition of any sales or
redemption charges. Any dividend or capital gain distributions attributable to
Certificates are automatically reinvested in shares of the Portfolio from which
they are received at the Portfolio's net asset value on the date paid. Such
dividends and distributions will have the effect of reducing the new asset value
of each share of the corresponding Portfolio and increasing, by an equivalent
value, the number of shares outstanding of the Portfolio. However, the value of
your interest in the corresponding Subaccount will not change as a result of any
such dividends and distributions.

As indicated, Portfolios may also be available to registered separate accounts
offering variable annuity and variable life products of other participating
insurance companies, as well as to the Variable Account and other separate
accounts of Fortis Benefits. Although Fortis Benefits does not anticipate any
disadvantages to this, there is a possibility that a material conflict may arise
between the interest of the Variable Account and one or more of the other
separate accounts participating in the Portfolios. A conflict may occur due to a
change in law affecting the operations of variable life and variable annuity
separate accounts, differences in the voting instructions of the Participants
and those of other companies, or some other reason. In the event of conflict,
Fortis Benefits will take any steps necessary to protect the Participants and
variable annuity payees.

THE FIXED ACCOUNT

GUARANTEED INTEREST RATES/GUARANTEE PERIODS
Any amount allocated by the Participant to the Fixed Account earns a Guaranteed
Interest Rate commencing with the date of such allocation. This Guaranteed
Interest Rate continues for a number of years (not to exceed ten) selected by
the Participant. At the end of this Guarantee Period, the Participant's
Certificate Value in that Guarantee Period, including interest accrued thereon,
will be allocated to a new Guarantee Period of the same length unless Fortis
Benefits has received a Written Request from the Participant to allocate this
amount to a different Guarantee Period or periods or to one or more of the
Subaccounts. We must receive this Written Request at least three business days
prior to the end of the Guarantee Period. The first day of the new Guarantee
Period (or other reallocation) will be the day after the end of the prior
Guarantee Period. We will notify the Participant at least 45 days and not more
than 75 days prior to the end of any Guarantee Period.

We currently make available ten different Guarantee Periods, ranging from one to
ten years. Each Guarantee Period has its own Guaranteed Interest Rate, which may
differ from those for other Guarantee Periods. From time to time we will, at our
discretion, change the Guaranteed Interest Rate for future Guarantee Periods of
various lengths. These changes will not affect the Guaranteed Interest Rates
being paid on Guarantee Periods that have already commenced. Each allocation or
transfer of an amount to a Guarantee Period commences the running of a new
Guarantee Period with respect to that amount, which will earn a Guaranteed
Interest Rate that will continue unchanged until the end of that period. The
Guaranteed Interest Rate will never be less than an effective annual rate of 3%.

                                       8
<PAGE>
Fortis Benefits declares the Guaranteed Interest Rates from time to time as
market conditions dictate. Fortis Benefits advises a Participant of the
Guaranteed Interest Rate for a chosen Guarantee Period at the time a purchase
payment is received, a transfer is effectuated or a Guarantee Period is renewed.

Fortis Benefits has no specific formula for establishing the Guaranteed Interest
Rates for the Guarantee Periods. The rate may be influenced by, but not
necessarily correspond to, interest rates generally available on the types of
investments acquired with amounts allocated to the Guarantee Period. See
"Investments by Fortis Benefits." Fortis Benefits in determining Guaranteed
Interest Rates, may also consider, among other factors, the duration of a
Guarantee Period, regulatory and tax requirements, sales and administrative
expenses borne by Fortis Benefits, risks assumed by Fortis Benefits, Fortis
Benefits' profitability objectives, and general economic trends.

FORTIS BENEFITS' MANAGEMENT MAKES THE FINAL DETERMINATION OF THE GUARANTEED
INTEREST RATES TO BE DECLARED. FORTIS BENEFITS CANNOT PREDICT OR ASSURE THE
LEVEL OF ANY FUTURE GUARANTEED INTEREST RATES IN EXCESS OF AN EFFECTIVE ANNUAL
RATE OF 3%.

THE FIXED ACCOUNT INVESTMENT OPTION IS NOT AVAILABLE FOR CERTIFICATES ISSUED IN
THE STATES OF PENNSYLVANIA AND NEVADA.

Information concerning the Guaranteed Interest Rates applicable to the various
Guarantee Periods at any time may be obtained from our Home Office or from your
sales representative.

MARKET VALUE ADJUSTMENT
Except as described below, if any Fixed Account Value is surrendered,
transferred or otherwise paid out before the end of the Guarantee Period in
which it is being held, a Market Value Adjustment will be applied. This
generally includes amounts applied to an annuity option and amounts paid as a
single sum in lieu of an annuity. However, NO Market Value Adjustment will be
applied to amounts that are paid out during the period beginning fifteen days
before and ending fifteen days after the end of a Guarantee Period in which it
was being held. Additionally, no Market Value Adjustment will be applied to
amounts that are withdrawn from a Guarantee Period and paid out to the
Participant, or transferred to the Variable Account, on an automatic periodic
basis under a formal Fortis Benefits program for the withdrawal or transfer of
the earnings of the Fixed Account. (There may be conditions and limitations
imposed by Fortis Benefits associated with such a program. See your Fortis
Benefits representative for the availability of any such program, and the
conditions and limitations of such a program, in your state.) Also, no Market
Value Adjustment will be applied to amounts that are paid out as a death benefit
pursuant to the Certificate or to amounts withdrawn or transferred from the
one-year Guarantee Period.

The Market Value Adjustment may increase or decrease the amount of Fixed Account
Value being withdrawn or transferred. The comparison of two Guaranteed Interest
Rates determines whether the Market Value Adjustment produces an increase or a
decrease. The first rate to compare is the Guaranteed Interest Rate for the
amount being transferred or withdrawn. The second rate is the Guaranteed
Interest Rate then being offered for new Guarantee Periods of the same duration
as that remaining in the Guarantee Period from which the funds are being
withdrawn or transferred. If the first rate exceeds the second by more than
1/2%, the Market Value Adjustment produces an increase. If the first rate does
not exceed the second by at least 1/2%, the Market Value Adjustment produces a
decrease. Sample calculations are shown in Appendix A.

The Market Value Adjustment will be determined by multiplying the amount being
withdrawn or transferred from the Guarantee Period (before deduction of any
applicable surrender charge) by the following factor:

<TABLE>
<C>  <C>         <C>  <C>   <S>
        1 + I         n / 12
      ----------            - 1
 (   1 + J + .005  )
</TABLE>

where,

    - I is the Guaranteed Interest Rate being credited to the amount being
      withdrawn from the existing Guarantee Period,

    - J is the Guaranteed Interest Rate then being offered for new Guarantee
      Periods with durations equal to the number of years remaining in the
      existing Guarantee Period (rounded up to the next higher number of years),
      and

    - N is the number of months remaining in the existing Guarantee Period
      (rounded up to the next higher number of months).

INVESTMENTS BY FORTIS BENEFITS
Our obligations with respect to the Fixed Account are legal obligations of
Fortis Benefits and are supported by our General Account assets, which also
support obligations incurred by us under other insurance and annuity contracts.
Investments purchased with amounts allocated to the Fixed Account are the
property of Fortis Benefits and Participants have no legal rights in such
investments. Subject to applicable law, we have sole discretion over the
investment of assets in our General Account and in the Fixed Account, and
neither of such accounts is subject to registration under the Investment Company
Act of 1940.

Amounts in the Fortis Benefits' General Account and the Fixed Account will be
invested in compliance with applicable state insurance laws and regulations
concerning the nature and quality of investments for the General Account. Within
specified limits and subject to certain standards and limitations, these laws
generally permit investment in federal, state and municipal obligations,
preferred and common stocks, corporate bonds, real estate mortgages, real estate
and certain other investments. See Fortis Benefits' Financial Statements" for
information on Fortis Benefits' investments. Investment management for amounts
in the General Account and in the Fixed Account is provided to Fortis Benefits
by Fortis Advisors, Inc.

Fortis Benefits intends to consider the return available on the instruments in
which it intends to invest amounts allocated to the Fixed Account when it
establishes Guaranteed Interest Rates. Such return is only one of many factors
considered in establishing the Guaranteed Interest Rates. See "Guaranteed
Interest Rates/Guarantee Periods."

Fortis Benefits expects that amounts allocated to the Fixed Account generally
will be invested in debt instruments that approximately match Fortis Benefits'
liabilities with regard to the Guarantee Periods. Fortis Benefits expects that
these will include primarily the following types of debt instruments: (1)
securities issued by the United States Government or its agencies or
instrumentalities, which securities may or may not be guaranteed by the United
States Government; (2) debt securities which have an investment grade, at the
time of purchase, within the four highest grades assigned by Moody's Investors
Services, Inc. ("Moody's") (Aaa, Aa, A or Baa), Standard & Poor's Corporation
("Standard & Poor's") (AAA, AA, A or BBB), or any other nationally recognized
rating service; (3) other debt instruments including, but not limited to, issues
of or guaranteed by banks or bank holding companies and corporations, which
obligations although not rated by Moody's or Standard & Poor's, are deemed by
Fortis Benefits to have an investment quality comparable to securities which may
be purchased as stated above; and (4) other evidences of indebtedness secured by
mortgages or deeds of trust representing liens upon real estate. Notwithstanding
the foregoing, Fortis Benefits is not obligated

                                       9
<PAGE>
to invest amounts allocated to the Fixed Account according to any particular
strategy, except as may be required by applicable state insurance laws and
regulations. See "Regulation and Reserves."

ACCUMULATION PERIOD

ISSUANCE OF A CERTIFICATE AND PURCHASE PAYMENTS
Fortis Benefits reserves the right to reject any application for a Certificate
or any purchase payment for any reason. If the issuing instructions can be
accepted in the form received, the initial purchase payment will be credited
within two Valuation Dates after the later of receipt of the issuing
instructions or receipt of the initial purchase payment at Fortis Benefits' Home
Office. If the initial purchase payment cannot be credited within five Valuation
Dates after receipt because the issuing instructions are incomplete, the initial
purchase payment will be returned unless the applicant consents to our retaining
the initial purchase payment and crediting it as of the end of the Valuation
Period in which the necessary requirements are fulfilled. The initial purchase
payment must be at least $5,000 ($2,000 for a Certificate issued pursuant to a
qualified plan).

The date that the initial purchase payment is applied to the purchase of the
Certificate is also the Certificate Issue Date. The Certificate Issue Date is
the date used to determine Certificate years, regardless of when the Certificate
is delivered. The crediting of investment experience in the Variable Account, or
a fixed rate of return in the Fixed Account, begins as of the Certificate Issue
Date.

The Participant may make additional purchase payments at any time after the
Certificate Issue Date and prior to the Annuity Commencement Date, as long as
the Annuitant is living. Purchase payments (together with any required
information identifying the proper Certificates and account to be credited with
purchase payments) must be transmitted to our Home Office. Additional purchase
payments are credited to the Certificate and added to the Certificate Value as
of the end of the Valuation Period in which they are received in good order.

Each additional purchase payment under a Certificate must be at least $1,000
($50 for a Certificate issued pursuant to a qualified plan). The total of all
purchase payments for all Fortis Benefits annuities having the same owner or
participant, or annuitant, may not exceed $1 million (not more than $500,000
allocated to the Fixed Account) without Fortis Benefits' prior approval, and we
reserve the right to modify this limitation at any time.

Purchase payments in excess of the initial minimum may be made by monthly draft
against the bank account of any Participant who has completed and returned to us
a special "Thrift-O-Matic" authorization form that may be obtained from your
sales representative or from our Home Office. Arrangements can also be made for
purchase payments by wire transfer, payroll deduction, military allotment,
direct deposit and billing. Purchase payments by check should be made payable to
Fortis Benefits Insurance Company.

If the Certificate Value is less than $1,000, we may cancel the Certificate on
any Valuation Date. We will notify the Participant at least 90 days in advance
of our intention to cancel the Certificate. Such cancellation would be
considered a full surrender of the Certificate.

CERTIFICATE VALUE
Certificate Value is the total of any Variable Account Value in all the
Subaccounts of the Variable Account pursuant to the Certificate, plus any Fixed
Account Value in all the Guarantee Periods.

There is no guaranteed minimum Variable Account Value. To the extent Certificate
Value is allocated to the Variable Account, you bear the entire investment risk.

DETERMINATION OF VARIABLE ACCOUNT VALUE. A Certificate's Variable Account Value
is based on Accumulation Unit values, which are determined on each Valuation
Date. The value of an Accumulation Unit for a Subaccount on any Valuation Date
is equal to the previous value of that Subaccount's Accumulation Unit multiplied
by that Subaccount's net investment factor (discussed directly below) for the
Valuation Period ending on that Valuation Date. At the end of any Valuation
Period, a Certificate's Variable Account Value in a Subaccount is equal to the
number of Accumulation Units in the Subaccount times the value of one
Accumulation Unit for that Subaccount.

The number of Accumulation Units in each Subaccount is equal to:

    - Accumulation Units purchased at the time that any Net Purchase Payments or
      transferred amounts are allocated to the Subaccount; less

    - Accumulation Units redeemed to pay for the portion of any transfers from
      or partial surrenders allocated to the Subaccount; less

    - Accumulation Units redeemed to pay charges under the Contract.

NET INVESTMENT FACTOR. If a Subaccount's net investment factor is greater than
one, the Subaccount's Accumulation Unit value has increased. If the net
investment factor is less than one, the Subaccount's Accumulation Unit value has
decreased. The net investment factor for a Subaccount is determined by dividing
(1) the net asset value per share of the Portfolio shares held by the
Subaccount, determined at the end of the current Valuation Period, plus the per
share amount of any dividend or capital gains distribution made with respect to
the Portfolio shares held by the Subaccount during the current Valuation Period,
minus a per share charge for the increase, plus a per share credit for the
decrease, in any income taxes assessed which we determine to have resulted from
the investment operation of the subaccount or any other taxes which are
attributable to this Certificate, by (2) the net asset value per share of the
Portfolio shares held in the Subaccount as determined at the end of the previous
Valuation Period, and subtracting from that result a factor representing the
mortality risk, expense risk and administrative expense charge.

DETERMINATION OF FIXED ACCOUNT VALUE. A Certificate's Fixed Account Value is
guaranteed by Fortis Benefits. Therefore, Fortis Benefits bears the investment
risk with respect to amounts allocated to the Fixed Account, except to the
extent that (a) Fortis Benefits may vary the Guaranteed Interest Rate for future
Guarantee Periods (subject to the 3% effective annual minimum) and (b) the
Market Value Adjustment imposes investment risks on the Participant.

The Certificate's Fixed Account Value on any Valuation Date is the sum of its
Fixed Account Values in each Guarantee Period on that date. The Fixed Account
Value in a Guarantee Period is equal to the following amounts, in each case
increased by accrued interest at the applicable Guaranteed Interest Rate:

    - The amount of Net Purchase Payments or transferred amounts allocated to
      the Guarantee Period; less

    - The amount of any transfers or surrenders out of the Guarantee Period.

ALLOCATION OF PURCHASE PAYMENTS AND CERTIFICATE VALUE
ALLOCATION OF PURCHASE PAYMENTS. In the application for a Certificate, the
Participant can allocate Net Purchase Payments, or portions thereof, to the
available Subaccounts of the Variable Account or to the Guarantee Periods in the
Fixed Account, or a combination thereof. Percentages must be in whole numbers
and the total allocation must equal 100%. The percentage allocations for future
Net Purchase Payments may be changed, without charge, at any time by sending a
Written Request to Fortis Benefits' Home Office. Changes in the allocation of
future Net Purchase Payments will be effective on the date we receive the
Participant's Written Request.

                                       10
<PAGE>
TRANSFERS. Transfers of Certificate Value from one available Subaccount to
another or into the Fixed Account, or from one Guarantee Period to another or to
the Subaccount, can be made by the Participant in Written Request to Fortis
Benefits' Home Office, or by telephone transfer as described below. There is
currently no charge for any transfer, although transfers from a Guarantee Period
other than the one year Guarantee Period that are (1) more than 15 days before
or after the expiration thereof, or (2) are not a part of a formal Fortis
Benefits program for the transfer of earnings of the Fixed Account may be
subject to a Market Value Adjustment. See "Market Value Adjustment." The minimum
transfer from a Subaccount or Guarantee Period is the lesser of $1,000 or all of
the Certificate Value in the Subaccount or Guarantee Period. Irrespective of the
above we may permit a continuing request for transfers of lesser specified
amounts automatically on a periodic basis. However, we reserve the right to
restrict the frequency of or otherwise condition, terminate or impose charges
(not to exceed $25 per transfer) upon transfers. We will count all transfers
between and among the Subaccounts of the Variable Account and the Fixed Account
as one transfer, if all the transfer requests are made at the same time as part
of one request. We will execute the transfers and determine all values in
connection with transfers as of the end of the Valuation Period in which we
receive the transfer request. The amount of any positive or negative Market
Value Adjustment, respectively, will be added to or deducted from the
transferred amount.

If you complete and return the telephone transfer section of the application,
transfers may be made pursuant to telephone instructions. We will honor
telephone transfer instructions from any person who provides the correct
identifying information. Fortis Benefits will not be responsible for, and you
will bear the risk of loss from, oral instructions, including fraudulent
instructions, which are reasonably believed to be genuine. We will employ
reasonable procedures to confirm that telephone instructions are genuine, but if
such procedures are not deemed reasonable, we may be liable for any losses due
to unauthorized or fraudulent instructions. Our procedures are to verify address
and social security number, tape record the telephone call, and provide written
confirmation of the transaction. We may modify or terminate our telephone
transfer procedures at any time. The number for telephone transfers is
1-800-800-2000.

Certain restrictions on very substantial investments in any one Subaccount are
set forth under "Limitations on Allocations" in the Statement of Additional
Information.

TOTAL AND PARTIAL SURRENDERS

TOTAL SURRENDERS. The Participant may surrender all of the Cash Surrender Value
at any time during the life of the Annuitant and prior to the Annuity
Commencement Date by a Written Request sent to Fortis Benefits' Home Office. We
reserve the right to require that the Certificate be returned to us prior to
making payment, although this will not affect our determination of the amount of
the Cash Surrender Value. Cash Surrender Value is the Certificate Value at the
end of the Valuation Period during which the Written Request for the total
surrender is received by Fortis Benefits at its Home Office, less any applicable
surrender charge and after any Market Value Adjustment. See "Surrender Charge"
and "Market Value Adjustment."

The written consent of all collateral assignees and irrevocable beneficiaries
must be obtained prior to any total surrender. Surrenders from the Variable
Account will generally be paid within seven days of the date of receipt by
Fortis Benefits' Home Office of the Written Request. Postponement of payments
may occur, however, in certain circumstances. See "Postponement of Payment."

The amount paid upon total surrender of the Cash Surrender Value (taking into
account any prior partial surrenders) may be more or less than the total Net
Purchase Payments made. After a surrender of the Cash Surrender Value or at any
time the Certificate Value is zero, all rights of the Participant, Annuitant, or
any other person will terminate.

PARTIAL SURRENDERS. At any time prior to the Annuity Commencement Date and
during the lifetime of the Annuitant, the Participant may surrender a portion of
the Fixed Account Value and/or the Variable Account Value by sending to Fortis
Benefits' Home Office a Written Request. We will not accept a partial surrender
request unless the net proceeds payable to you as a result of the request are at
least $1,000. If the total Certificate Value in both the Variable Account and
Fixed Account would be less than $1,000 after the partial surrender, Fortis
Benefits will surrender the entire Cash Surrender Value under the Certificate.

In order for a request to be processed, the Participant must specify from which
Subaccounts of the Variable Account or Guarantee Periods of the Fixed Account a
partial surrender should be made.

We will surrender Accumulation Units from the Variable Account and/ or dollar
amounts from the Fixed Account so that the total amount of the partial surrender
equals the dollar amount of the partial surrender request. The amount payable to
the Participant will be reduced by any applicable surrender charge.
Additionally, if the surrender is from a Guarantee Period other than the one
year Guarantee Period, the amount payable to the Contract Participant will be
reduced by any negative Market Value Adjustment, or increased by any positive
Market Value Adjustment unless the surrender is (1) within 15 days before or
after the expiration of a Guarantee Period, or (2) is a part of a formal Fortis
Benefits program for the withdrawal of earnings from the Fixed Account. The
partial surrender will be effective at the end of the Valuation Period in which
Fortis Benefits receives the Written Request for partial surrender at its Home
Office. Payments will generally be made within seven days of the effective date
of such request, although certain delays are permitted. See "Postponement of
Payment."

The Internal Revenue Code provides that a penalty tax will be imposed on certain
premature surrenders. For a discussion of this and other tax implications of
total and partial surrenders, including withholding requirements, see "Federal
Tax Matters." Also, under tax deferred annuity Certificates pursuant to Section
403(b) of the Internal Revenue Code, no distributions of voluntary salary
reduction amounts will be permitted prior to one of the following events:
attainment of age 59 1/2 by the employee or the employee's separation from
service, death, disability or hardship. (Hardship distributions will be limited
to the lesser of the amount of the hardship or the amount of salary reduction
contributions, exclusive of earnings thereon.)

BENEFIT PAYABLE ON DEATH OF PARTICIPANT (OR ANNUITANT)
If the Participant dies prior to the Annuity Commencement Date, a death benefit
will be paid to the Beneficiary. If the Participant is a non-natural person, a
death benefit will be paid upon the death of the Annuitant prior to the Annuity
Commencement Date. In such case, if more than one Annuitant has been named, the
death benefit payable upon the death of an Annuitant will only be paid upon the
death of the last survivor of the persons so named.

The term "decedent" in the death benefit description below refers to the death
of the Participant unless the Participant is a non-natural person, in which case
it refers to the death of the Annuitant. Also, the death benefit description
refers to the age of the Participant. If the Participant is a non-natural
person, the relevant age will instead be that of the Annuitant.

Additionally, the death benefit description makes reference to "Pro Rata
Adjustments." A Pro Rata Adjustment is calculated separately for each
withdrawal, creating a decrease in the death benefit proportional to the
decrease the withdrawal makes in the Certificate Value. Pro Rata

                                       11
<PAGE>
Adjustments are made for amounts withdrawn for partial surrenders and any
associated surrender charge (which shall be deemed to be an amount withdrawn),
but not for any Certificate fee-related surrenders.

The death benefit will equal the greatest of (1), (2), or (3):

(1) The Certificate Value as of the date used for valuing the death benefit.

(2) The highest Anniversary Value of each of the Certificate's anniversaries
    prior to the earlier of: (1) the decedent's death, or (2) the Participant's
    attainment of age 75.

   An Anniversary Value is equal to:

    (a) the Certificate Value on the anniversary, plus

    (b) any Purchase Payments made since the anniversary, reduced by

    (c) Pro Rata Adjustments for any withdrawals made since the anniversary.

   The Pro Rata Adjustment for a given withdrawal is equal to:

    (a) the withdrawn amount, divided by

    (b) the Certificate Value immediately before the amount was withdrawn, the
        result multiplied by

    (c) the quantity equal to:

        (i)  the Certificate Value on the anniversary, plus

        (ii) Purchase Payments made since the anniversary and before the
            withdrawal, plus

        (iii) Pro Rata Adjustments for withdrawals made since the anniversary
            and before the given withdrawal.

(3) If the decedent dies prior to the date the Participant reaches age 75, the
    amount of the death benefit is the lesser of (a) and (b), as follows:

    (a) the sum of:

        (i)  the accumulation (without interest) of Net Purchase Payments,
            reduced by Pro Rata Adjustments for any withdrawals; plus

        (ii) An amount equal to interest on such net accumulation value, as it
            is adjusted for each applicable Purchase Payment and Pro Rata
            Adjustment, at an effective annual rate of 5.0%;

        or

    (b) 200% of (a)(i).

   The resulting amount (the lesser of (a) and (b)) will be referred to as the
    "Roll-up Amount."

   If the decedent dies on or after the date the Participant reaches age 75, the
    amount of the death benefit is equal to:

    (a) The "Roll-up Amount" as of the date the Participant reached age 75; plus

    (b) the accumulation (without interest) of Net Purchase Payments made on or
        after the date the Participant reached age 75; reduced by

    (c) Pro Rata Adjustments for any withdrawals made on or after the date the
        Participant reached age 75.

   The Pro Rata Adjustment for a given withdrawal is equal to:

    (a) the withdrawn amount; divided by

    (b) the Certificate Value immediately before the amount was withdrawn; the
        result multiplied by

    (c) the quantity equal to:

        (i)  the Roll-up Amount prior to the withdrawal; plus

        (ii) any Net Purchase Payments made on or after the date the Participant
            reached age 75 and before the given withdrawal; reduced by

        (iii) Pro Rata Adjustments for any withdrawals made on or after the date
            the Participant reached age 75 and before the given withdrawal.

The value of the death benefit is determined as of the end of the Valuation
Period in which we receive, at our Home Office, proof of death and the written
request as to the manner of payment. Upon receipt of these items, the death
benefit generally will be paid within seven days. Under certain circumstances,
payment of the death benefit may be postponed. See "Postponement of Payment." If
we do not receive a Written Request for a settlement method, we will pay the
death benefit in a single sum, based on values determined at that time.

The Beneficiary may (a) receive a single sum payment, which terminates the
Certificate, or (b) select an annuity option. If the Beneficiary selects an
annuity option, he or she will have all the rights and privileges of a payee
under the Certificate. If the Beneficiary desires an Annuity option, the
election should be made within 60 days of the date the death benefit becomes
payable. Failure to make a timely election can result in unfavorable tax
consequences. For further information, see "Federal Tax Matters."

We accept any of the following as proof of death: a copy of a certified death
certificate; a copy of a certified decree of a court of competent jurisdiction
as to the finding of death; or a written statement by a medical doctor who
attended the deceased at the time of death.

If the Participant dies before the Annuity Commencement Date with respect to a
Non-Qualified Certificate certain additional requirements are mandated by the
Internal Revenue Code, which are discussed below under "Federal Tax
Matters--Required Distributions for Non-Qualified Certificates." It is
imperative that Written Notice of the death of the Participant be promptly
transmitted to Fortis Benefits at its Home Office, so that arrangements can be
made for distribution of the entire interest in the Certificate to the
Beneficiary in a manner that satisfies the Internal Revenue Code requirements.
Failure to satisfy these requirements may result in the Certificate not being
treated as an annuity contract for federal income tax purposes, which could have
adverse tax consequences.

THE ANNUITY PERIOD

ANNUITY COMMENCEMENT DATE
The Participant may specify an Annuity Commencement Date in the application. The
Annuity Commencement Date marks the beginning of the period during which an
Annuitant or other payee designated by the Participant receives annuity payments
under the Certificate. The Annuity Commencement Date must be at least two years
after the Certificate Issue Date.

Depending on the type of retirement arrangement involved, amounts that are
distributed either too soon or too late may be subject to penalty taxes under
the Internal Revenue Code. See "Federal Tax Matters." You should consider this
carefully in selecting or changing an Annuity Commencement Date.

In order to advance or defer the Annuity Commencement Date, the Participant must
submit a Written Request. The request must be received at our Home Office at
least 30 days before the then-scheduled Annuity Commencement Date. The new
Annuity Commencement Date must also be at least 30 days after the Written
Request is received. There is no right to make any total or partial surrender
during the Annuity Period.

COMMENCEMENT OF ANNUITY PAYMENTS
If the Certificate Value at the end of the Valuation Period which contains the
Annuity Commencement Date is less than $1,000, we may

                                       12
<PAGE>
pay the entire Certificate Value, without the imposition of any charges other
than the premium tax charge, if applicable, in a single sum payment to the
Annuitant or other payee chosen by the Participant and cancel the Certificate.

Otherwise, Fortis Benefits will apply (1) the Fixed Account Value to provide a
Fixed Annuity Option and (2) the Variable Account Value in any Subaccount to
provide a Variable Annuity Option using the same Subaccount, unless the
Participant has notified us by Written Request to apply the Fixed Account Value
and Variable Account Value in different proportions. Any such Written Request
must be received by us at our Home Office at least 30 days before the Annuity
Commencement Date.

Annuity payments under a Fixed or Variable Annuity Option will be made on a
monthly basis to the Annuitant or other properly-designated payee, unless we
agree to a different payment schedule. If more than one person is named as an
Annuitant, the Contract Owner may elect to name one of such persons to be the
sole Annuitant as of the Annuity Commencement Date. We reserve the right to
change the frequency of any annuity payment so that each payment will be at
least $50 ($20 in Texas). There is no right to make any total or partial
surrender during the Annuity Period.

The amount of each annuity payment will depend on the amount of Certificate
Value applied to an annuity option, the form of annuity selected and the age of
the Annuitant. Information concerning the relationship between the Annuitant's
sex and the amount of annuity payments, including special requirements in
connection with employee benefits plans, is set forth under "Calculations of
Annuity Payments" in the Statement of Additional Information. The Statement of
Additional Information also contains detailed information about how the amount
of each annuity payment is computed.

The dollar amount of any fixed annuity payments is specified during the entire
period of annuity payments according to the provisions of the annuity form
selected. The dollar amount of variable annuity payments varies during the
annuity period based on changes in Annuity Unit Values for the Subaccounts that
you choose to use in connection with your payments.

RELATIONSHIP BETWEEN SUBACCOUNT INVESTMENT PERFORMANCE AND AMOUNT OF VARIABLE
ANNUITY PAYMENTS
If a Subaccount on which a variable annuity payment is based has an average
effective net investment return higher than 3% per annum during the period
between two such annuity payments, the Annuity Unit Value will increase, and the
second payment will be higher than the first. Conversely, if the Subaccount's
average effective net investment return over the period between the annuity
payments is less than 3% per annum, the Annuity Unit Value will decrease, and
the second payment will be lower than the first. "Net investment return," for
this purpose, refers to the Subaccount's overall investment performance, net of
the mortality and expense risk and administrative expense charges, which are
assessed at a nominal aggregate annual rate of 1.35%. We guarantee that the
amount of each variable annuity payment after the first payment will not be
affected by variations in our mortality experience or our expenses.

TRANSFERS. During the Annuity Period, the person receiving annuity payments may
make up to four transfers a year among Subaccounts. The current procedures for
and conditions on these transfers are the same as described above under
"Allocation of Purchase Payments and Certificate Value--Transfers." Transfers
from a Fixed Annuity Option are not permitted during the Annuity Period.

ANNUITY FORMS
The Participant may select an annuity form or change a previous selection by
Written Request, which must be received by us at least 30 days before the
Annuity Commencement Date. One annuity form may be selected, although as
discussed above, payments under that form may be received on a combination fixed
and variable basis. If no annuity form selection is in effect on the Annuity
Commencement Date, in most cases we automatically apply Option B (described
below), with payments guaranteed for 10 years. If the Certificate is issued
under certain retirement plans, however, federal pension law may require that
any default payments be made pursuant to plan provisions and/or federal law. Tax
laws and regulations may impose further restrictions to assure that the primary
purpose of the plan is distribution of the accumulated funds to the employee.

The following options are available for fixed annuity payments and for variable
annuity payments.

OPTION A, LIFE ANNUITY. Payments are made as of the first Valuation Date of each
monthly period during the Annuitant's life, starting with the Annuity
Commencement Date. No payments will be made after the Annuitant dies. It is
possible for the payee to receive only one payment under this option, if the
Annuitant dies before the second payment is due.

OPTION B, LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 YEARS TO 20
YEARS. Payments are made as of the first Valuation Date of each monthly period
starting on the Annuity Commencement Date. Payments will continue as long as the
Annuitant lives. If the Annuitant dies before all of the guaranteed payments
have been made, we will continue installments of the guaranteed payments to the
Beneficiary.

OPTION C, JOINT AND FULL SURVIVOR ANNUITY. Payments are made as of the first
Valuation Date of each monthly period starting with the Annuity Commencement
Date. Payments will continue as long as either the Annuitant or the joint
Annuitant is alive. Payments will stop when both the Annuitant and the joint
Annuitant have died. It is possible for the payee or payees under this option to
receive only one payment, if both Annuitants die before the second payment is
due.

OPTION D, JOINT AND ONE-HALF CONTINGENT SURVIVOR ANNUITY. Payments are made as
of the first Valuation Date of each monthly period starting with the Annuity
Commencement Date. Payments will continue as long as either the Annuitant or the
joint Annuitant is alive. If the Annuitant dies first, payments will continue to
the joint Annuitant at one-half the original amount. If the joint Annuitant dies
first, payments will continue to the Annuitant at the original full amount.
Payments will stop when both the Annuitant and the joint Annuitant have died. It
is possible for the payee or payees under this option to receive only one
payment if both Annuitants die before the second payment is due.

We also have other annuity forms available and information about them can be
obtained from your sales representative or by calling or writing to our Home
Office.

DEATH OF ANNUITANT OR OTHER PAYEE
Under most annuity forms offered by Fortis Benefits, the amounts, if any,
payable on the death of the Annuitant during the Annuity Period are the
continuation of annuity payments for any remaining guarantee period or for the
life of any joint Annuitant. In all such cases, the person entitled to receive
payments also receives any rights and privileges under the annuity form in
effect.

Additional rules applicable to such distributions under Non-Qualified
Certificates are described under "Federal Tax Matters--Required Distributions
for Non-Qualified Certificates." Though the rules there described do not apply
to Certificates issued in connection with qualified plans, similar rules apply
to the plans themselves.

CHARGES AND DEDUCTIONS

PREMIUM TAXES
The states of South Dakota and Wyoming impose a premium tax upon the receipt of
a purchase payment. In these states, and in any other

                                       13
<PAGE>
state or jurisdiction where premium taxes or similar assessments are imposed
upon the receipt of purchase payments, Fortis Benefits will pay such taxes on
behalf of the Participant and then deduct a charge for these amounts from the
Certificate Value upon the surrender, death of annuitant or Participant, or
annuitization of the Certificate. In jurisdictions where premium taxes or
similar assessments are imposed at the time annuity payments begin, Fortis
Benefits will deduct a charge for such amounts from the Certificate Value at
that time. In such jurisdictions, the charge will be deducted on a pro-rata
basis from the then-current Fixed Account Value and, by redemption of
Accumulation Units, the then-current Variable Account Value in each Subaccount.
Similarly, Fortis Benefits may deduct premium taxes from Certificate Value when
no deduction was made from purchase payments, but is subsequently determined to
be due. Conversely, Fortis Benefits will credit to the Certificate Value the
amount of any deductions for premium taxes or similar assessments that are
subsequently determined not to be owed.

Applicable premium tax rates depend upon the Participant's then-current place of
residence. Applicable rates are subject to change by legislation, administrative
interpretations or judicial acts.

CHARGES AGAINST THE VARIABLE ACCOUNT

MORTALITY AND EXPENSE RISK CHARGE. We will assess each Subaccount of the
Variable Account with a daily charge for mortality and expense risk at a nominal
annual rate of 1.25% of the average daily net assets of the Variable Account
(consisting of approximately .8% for mortality risk and approximately .45% for
expense risk). This charge is assessed during both the Accumulation Period and
the Annuity Period. We guarantee not to increase this charge for the duration of
the Certificate.

The mortality risk borne by Fortis Benefits arises from its obligation to make
annuity payments (determined in accordance with the annuity tables and other
provisions contained in the Certificate) for the full life of all Annuitants
regardless of how long all Annuitants or any individual Annuitant might live. In
addition, Fortis Benefits bears a mortality risk in that it guarantees to pay a
death benefit upon the death of an Annuitant or Participant prior to the Annuity
Commencement Date. No surrender charge is imposed upon the payment of a death
benefit which places a further mortality risk on the Company.

The expense risk assumed is that actual expenses incurred in connection with
issuing and administering the Certificate will exceed the limits on
administrative charges set in the Certificate.

If the administrative charges and the mortality and expense risk charge are
insufficient to cover the expenses and costs assumed, the loss will be borne by
the Company. Conversely, if the amount deducted proves more than sufficient, the
excess will be profit to the Company.

ADMINISTRATIVE EXPENSE CHARGE. We will assess each Subaccount of the Variable
Account with a daily charge at an annual rate of .10% of the average daily net
assets of the Subaccount. This charge is imposed during both the Accumulation
Period and the Annuity Period. This charge is to help cover administrative costs
such as those incurred in issuing Certificates, establishing and maintaining the
records relating to Certificates, making regulatory filings and furnishing
confirmation notices, voting materials and other communications, providing
computer, actuarial and accounting services, and processing Certificate
transactions. There is no necessary relationship between the amount of
administrative charges imposed on a given Certificate and the amount of expenses
actually attributable to that Certificate.

TAX CHARGE
We currently impose no charge for taxes payable by us in connection with the
Certificate, other than for premium taxes and similar assessments when
applicable. We reserve the right to impose a charge for any other taxes that may
become payable by us in the future in connection with the Certificates or the
Separate Account.

The annual administrative charge and charges against the Variable Account
described above are for the purposes described and Fortis Benefits may receive a
profit as a result of these charges.

SURRENDER CHARGE
No sales charge is collected or deducted at the time Net Purchase Payments are
applied under a Certificate. A surrender charge will be assessed on certain
total or partial surrenders. The amounts obtained from the surrender charge will
be used to partially defray expenses incurred in the sale of the Certificates,
including commissions and other promotional or distribution expenses associated
with the marketing of the Certificates, and costs associated with the printing
and distribution of prospectuses and sales material.

FREE SURRENDERS. The following amounts can be withdrawn from the Certificate
without a surrender charge:

    - Any purchase payments received by us more than seven years prior to the
      surrender date and that have not been previously surrendered;

    - Any earnings that have not been previously surrendered;

    - In any certificate year, up to 10% of the purchase payments received by us
      less than seven years prior to the surrender date (whether or not the
      purchase payments have been previously surrendered).

Earnings are deemed to be withdrawn first. After all earnings have been
withdrawn, all purchase payments not subject to a surrender charge are deemed to
be withdrawn prior to purchase payments which are still subject to a surrender
charge.

No surrender charge is imposed on annuitization (or payment of a single sum
because less than the minimum required Certificate Value is available to provide
an annuity at the Annuity Commencement Date). Nor is the surrender charge
deducted from the payment of any benefit upon the death of an Annuitant or
Participant.

In addition, we have an administrative policy to waive surrender charges for
full surrenders of Certificates that have been in force for at least ten years
provided that the amount then subject to the surrender charge is less than 25%
of the Certificate Value. Since the Certificates have only been offered since
1991, no such waivers have yet been made. We reserve the right to change or
terminate this practice at any time, both for new and for previously issued
Certificates.

AMOUNT OF SURRENDER CHARGE. Surrender charges apply only if the amount being
withdrawn exceeds the sum of the amounts listed above under Free Surrenders
(that is, if the amount being withdrawn includes purchase payments made less
than seven years prior to the surrender date). The surrender charges are:

<TABLE>
<CAPTION>
       NUMBER OF YEARS                 SURRENDER CHARGE
        SINCE PURCHASE                AS A PERCENTAGE OF
     PAYMENT WAS CREDITED              PURCHASE PAYMENT
------------------------------      ----------------------
<S>                                 <C>
         Less than 2                          7%
  At least 2 but less than 4                  6%
  At least 4 but less than 5                  5%
  At least 5 but less than 6                  3%
  At least 6 but less than 7                  1%
          7 or more                           0%
</TABLE>

We anticipate the surrender charge will not be sufficient to cover our
distribution expenses. To the extent that the surrender charge is insufficient
to cover the actual costs of distribution, such costs will be paid from the
Company's General Account assets, which will include profit, if any, derived
from the mortality and expense risk charge.

                                       14
<PAGE>
NURSING CARE/HOSPITALIZATION WAIVER OF SURRENDER CHARGES. Surrender charges will
not be assessed when a total or partial withdrawal is requested: (1) after a
covered person has been confined in a hospital or skilled health care facility
for at least 60 consecutive days and the covered person continues to be confined
in the hospital or skilled care facility when the request is made; or (2) within
60 days following a covered person's discharge from a hospital or skilled health
care facility after confinement of at least 60 consecutive days. Confinement
must begin after the effective date of this provision.

Covered persons are the Certificate owner or owners and the spouse of any
Contract owner if such spouse is the Annuitant. Surrender Charges will not be
waived when a confinement is due to substance abuse, mental or personality
disorders without a demonstrable organic disease. A degenerative brain disease
such as Alzheimer's Disease is considered an organic disease.

This nursing care/hospitalization waiver of surrender charges is provided by
means of a rider to the Certificate, which has not been approved in all states.
Individuals applying for a Certificate should check with their Fortis Benefits
representative to determine if this rider is available in their state.

DISABILITY WAIVER OF SURRENDER CHARGES
Surrender charges will not be assessed when a total or partial withdrawal is
requested where the Participant, or Annuitant if the Participant is a
non-natural person, becomes totally disabled after the issuance of the
Certificate. The surrender charge is waived only if it is associated with a
purchase payment being deemed to be withdrawn which was made prior to the
commencement of the total disability. In order for the waiver to apply, the
total disability must have begun before the disabled person attained age 64 and
been continuous for a period of twelve months or more.

Total disability, for the purpose of this waiver, means the inability to engage
in an occupation for compensation or profit. During the first twelve months of
disability, "occupation" means the inability to perform the substantial and
material duties of the person's regular occupation. After twelve months,
"occupation" means any job suited to the person's education, training, or
experience.

This benefit terminates on the 65th birthday of the Participant, or the
Annuitant if the Participant is a non-natural person.

This disability waiver of surrender charges is provided by means of a rider to
the Certificate, which has not been approved in all states. Individuals applying
for a Certificate should check with their Fortis Benefits representative to
determine if this rider is available in their state.

MISCELLANEOUS
Because the Variable Account invests in shares of the Portfolios, the net assets
of the Variable Account will reflect the investment advisory fees and certain
other expenses incurred by the Portfolios that are described in the prospectus
for the Portfolios.

REDUCTION OF CHARGES
No surrender charge will be imposed under any Certificate owned by: (A) Fortis,
Inc. or its subsidiaries, and the following persons associated with such
companies, if at the Certificate Issue date they are: (1) officers and
directors; (2) employees; or (3) spouses of any such persons or any of such
persons' children, grandchildren, parents, grandparents, or siblings--or spouses
of any of these persons; (B) Series Fund directors, officers, or their spouses
(or such persons' children, grandchildren, parents, or grandparents--or spouses
of any such persons); and (C) representatives or employees (or their spouses) of
Fortis Investors (including agencies) or of other broker-dealers having a sales
agreement with Fortis Investors (or such persons' children, grandchildren,
parents, or grandparents--or spouses of any such persons).

GENERAL PROVISIONS

THE CERTIFICATES
The Certificate, copies of any applications, amendments, riders, or endorsements
attached to the Certificate and copies of any supplemental applications,
amendments, endorsements, or revised Certificate pages which are mailed to you
are the entire Certificate. Only an officer of Fortis Benefits can agree to
change or waive any provisions of a Certificate. Any change or waiver must be in
writing and signed by an officer of Fortis Benefits. The Certificates are
non-participating and do not share in dividends or earnings of Fortis Benefits.

POSTPONEMENT OF PAYMENT
Fortis Benefits may defer for up to 15 days the payment of any amount
attributable to a purchase payment made by check to allow the check reasonable
time to clear. For a description of other circumstances in which amounts payable
out of Variable Account assets could be deferred, see "Postponement of Payments"
in the Statement of Additional Information. Fortis Benefits may also defer
payment of surrender proceeds payable out of the Fixed Account for a period of
up to 6 months.

MISSTATEMENT OF AGE OR SEX AND OTHER ERRORS
If the age or sex of the Annuitant has been misstated, any amount payable will
be that which the purchase payments paid would have purchased at the correct age
and sex. If we have made any overpayments because of incorrect information about
age or sex, or any other miscalculation, Fortis Benefits will deduct the
overpayment from the next payment or payments due. We add underpayments to the
next payment. The amount of any adjustment will be credited or charged with
interest at the effective annual rate of 3% per year.

ASSIGNMENT
Rights and interests under a Qualified Certificate may be assigned only in
certain narrow circumstances referred to in the Certificate. Participants and
other payees may assign their rights and interests under Non-Qualified
Certificates, including their ownership rights.

We take no responsibility for the validity of any assignment. A change in
ownership rights must be made in writing and a copy must be sent to Fortis
Benefits' Home Office. The change will be effective on the date it was made,
although we are not bound by a change until the date we record it.

The rights under a Certificate are subject to any assignment of record at the
Home Office of Fortis Benefits. An assignment or pledge of a Certificate may
have adverse tax consequences. See below under "Federal Tax Matters."

BENEFICIARY
Before the Annuity Commencement Date, the Participant may name or change a
beneficiary or a contingent beneficiary by sending a Written Request of the
change to Fortis Benefits. Under certain retirement programs, however, spousal
consent may be required to name or change a beneficiary, and the right to name a
beneficiary other than the spouse may be subject to applicable tax laws and
regulations. We are not responsible for the validity of any change. A change
will take effect as of the date it is signed but will not affect any payments we
make or action we take before receiving the Written Request. We also need the
consent of any irrevocably named person before making a requested change.

In the event of the death of a Participant, or the Annuitant, if the Participant
is a non-natural person, prior to the Annuity Commencement date the Beneficiary
will be determined as follows:

    - If there is any surviving Participant, the surviving Participant will be
      the Beneficiary (this overrides any other beneficiary designation).

                                       15
<PAGE>
    - If there is no surviving Participant, the Beneficiary will be the
      beneficiary designated by the Participant.

    - If there is no surviving Participant and no surviving beneficiary who has
      been designated by the Participant, then the estate of the last surviving
      Participant will be the Beneficiary.

REPORTS
We will mail to the Participant (or to the person receiving payments during the
annuity period), at the last known address of record, any reports and
communications required by any applicable law or regulation. You should
therefore give us prompt written notice of any address change. This will include
annual audited financial statements of the Portfolios, but not necessarily of
the Variable Account or Fortis Benefits.

RIGHTS RESERVED BY FORTIS BENEFITS

Fortis Benefits reserves the right to make certain changes if, in its judgment,
they would best serve the interests of Participants and Annuitants or would be
appropriate in carrying out the purposes of the Certificates. Any changes will
be made only to the extent and in the manner permitted by applicable laws. Also,
when required by law, Fortis Benefits will obtain your approval of the changes
and approval from any appropriate regulatory authority. Such approval may not be
required in all cases, however. Examples of the changes Fortis Benefits may make
include:

    - To operate the Variable Account in any form permitted under the Investment
      Company Act of 1940 or in any other form permitted by law.

    - To transfer any assets in any Subaccount to another Subaccount, or to one
      or more separate accounts, or to the Fixed Account; or to add, combine or
      remove Subaccounts in the Variable Account.

    - To substitute, for the Portfolio shares held in any Subaccount, the shares
      of another Portfolio or the shares of another investment company or any
      other investment permitted by law.

    - To make any changes required by the Internal Revenue Code or by any other
      applicable law in order to continue treatment of the Certificate as an
      annuity.

    - To change the time or time of day at which a Valuation Date is deemed to
      have ended.

    - To make any other necessary technical changes in the Certificate in order
      to conform with any action the above provisions permit Fortis Benefits to
      take, including to change the way Fortis Benefits assesses charges, but
      without increasing as to any then outstanding Certificate the aggregate
      amount of the types of charges which Fortis Benefits has guaranteed.

DISTRIBUTION

The Certificates will be sold by individuals who, in addition to being licensed
by state insurance authorities to sell the Certificates of Fortis Benefits, are
also registered representatives of Fortis Investors, Inc. ("Fortis Investors"),
the principal underwriter of the Certificates or registered representatives of
other broker-dealer firms or representatives of other firms that are exempt from
broker dealer regulation. Fortis Investors and any such other broker-dealer
firms are registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as broker-dealers and are members of the
National Association of Securities Dealers, Inc.

Fortis Investors will pay a selling allowance to its registered representatives
and selling brokers in varying amounts which under normal circumstances is not
expected to exceed 6.25% of purchase payments plus a servicing fee of .25% of
contract value per year, starting in the first contract year. Fortis Investors
may, under certain flexible compensation arrangements, pay lesser or greater
selling allowances and larger or smaller service fees to its registered
representatives and other broker dealer firms than as set forth above. However,
in such case, such flexible compensation arrangements will have actuarial
present values which are approximately equivalent to the amounts of the selling
allowances and service fees set forth above. Additionally, registered
representatives, broker-dealer firms, and exempt firms may be eligible for
additional compensation based upon meeting certain production standards. Fortis
Investors may charge back commissions paid to others if the Certificate upon
which the commission was paid is surrendered or cancelled within certain
specified time periods.

Fortis Benefits paid a total of $29,918,620, $30,567,607 and $xxxx to Fortis
Investors for annuity contract distribution services during 1995, 1996 and 1997,
respectively, $3,925,959 of which in 1995, $7,531,629 in 1996 and $xxxx in 1997
was not reallowed to other broker-dealers or exempt firms. In the distribution
agreement, Fortis Benefits has agreed to indemnify Fortis Investors (and its
agents, employees, and controlling persons) for certain damages and expenses,
including those arising under federal securities laws.

Fortis or Fortis Investors may also provide additional compenstion to
broker-dealers in connection with sales of Certificates. Compensation may
include financial assistance to broker-dealers in connection with conferences,
sales or training programs for their employees, seminars for the public,
advertising, sales campaigns regarding Certificates, and other broker-dealer
sponsored programs or events. Compensation may include payment for travel
expenses incurred in connection with trips taken by invited sales
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature.

See Note 12 to the Notes to Fortis Benefits' Financial Statements as to amounts
it has paid to Fortis, Inc. for various services.

Fortis Investors is an indirect subsidiary of Fortis AMEV and Fortis AG and is
therefore under common control with Fortis Benefits. Fortis Investors' principal
business address is the same as that of our Home Office. Fortis Investors is not
obligated to sell any specific amount of interests under the Certificates.
$110,000,000 of interests in the Fixed Account and an indefinite amount of
interests in the Variable Account have been registered with the Securities and
Exchange Commission.

FEDERAL TAX MATTERS

The following description is a general summary of the tax rules, primarily
related to federal income taxes, which in the opinion of Fortis Benefits are
currently in effect. These rules are based on laws, regulations and
interpretations which are subject to change at any time. This summary is not
comprehensive and is not intended as tax advice. Federal estate and gift tax
considerations, as well as state and local taxes, may also be material. You
should consult a qualified tax adviser as to the tax implications of taking any
action under a Certificate or related retirement plan.

NON-QUALIFIED CERTIFICATES
Section 72 of the Internal Revenue Code ("Code") governs the taxation of
annuities in general. Purchase payments made under Non-Qualified Certificates
are not excludible or deductible from the gross income of the Participant or any
other person. However, any increase in the accumulated value of a Non-Qualified
Certificate resulting from the investment performance of the Variable Account or
interest credited to the Fixed Account is generally not taxable to the
Participant or other payee until received by him or her, as surrender proceeds,
death benefit proceeds, or otherwise. The exception to this rule is that,
generally, Participants who are not natural persons ARE taxed

                                       16
<PAGE>
annually on any increase in the Certificate Value. However, this exception does
not apply in all cases, and you may wish to discuss this with your tax adviser.

The following discussion applies generally to Certificates owned by natural
persons.

In general, surrenders or partial withdrawals under Certificates are taxed as
ordinary income to the extent of the accumulated income or gain under the
Certificate. If a Participant assigns or pledges any part of the value of a
Certificate, the value so pledged or assigned is taxed to the Participant as
ordinary income to the same extent as a partial withdrawal.

With respect to annuity payment options, although the tax consequences may vary
depending on the option elected under the Certificate, until the investment in
the Certificate is recovered, generally only the portion of the annuity payment
that represents the amount by which the Certificate Value exceeds the
"investment in the Certificate" will be taxed. In general, a person's
"investment in the Certificate" is the aggregate amount of purchase payments
made by him or her. After an Annuitant's or other payee's "investment in the
Certificate" is recovered, the full amount of any additional annuity payments is
taxable. For variable annuity payments, in general, the taxable portion of each
annuity payment (prior to recovery of the "investment in the Certificate") is
determined by a formula which establishes the specific dollar amount of each
annuity payment that is not taxed. This dollar amount is determined by dividing
the "investment in the Certificate" by the total number of expected annuity
payments. For fixed annuity payments, in general, prior to recovery of the
"investment in the Certificate," there is no tax on the amount of each payment
which bears the same ratio to that payment as the "investment in the
Certificate" bears to the total expected value of the annuity payments for the
term of the payments. However, the remainder of each annuity payment is taxable.
The taxable portion of a distribution (in the form of an annuity or a single sum
payment) is taxed as ordinary income.

For purposes of determining the amount of taxable income resulting from
distributions, all Certificates and other annuity contracts issued by us or our
affiliates to the Participant within the same calendar year will be treated as
if they were a single Certificate.

There is a 10% penalty under the Code on the taxable portion of a "premature
distribution." Generally, an amount is a "premature distribution" unless the
distribution is (1) made on or after the Participant or other payee reaches age
59 1/2, (2) made to a Beneficiary on or after death of the Participant, (3) made
upon the disability of the Participant or other payee, or (4) part of a series
of substantially equal annuity payments for the life or life expectancy of the
Participant or the Participant and Beneficiary. Premature distributions may
result, for example, from an early Annuity Commencement Date, an early
surrender, partial surrender or assignment of a Certificate or the early death
of an Annuitant who is not also the Participant or other person receiving
annuity payments under the Certificate.

A transfer of ownership of a Certificate, or designation of an Annuitant or
other payee who is not also the Participant, may result in certain income or
gift tax consequences to the Participant that are beyond the scope of this
discussion. A Participant contemplating any transfer or assignment of a
Certificate should contact a competent tax adviser with respect to the potential
tax effects of such transaction.

REQUIRED DISTRIBUTIONS FOR NON-QUALIFIED CERTIFICATES
In order that a Non-Qualified Certificate be treated as an annuity contract for
federal income tax purposes, Section 72(s) of the Code requires (a) if any
person receiving annuity payments dies on or after the Annuity Commencement Date
but prior to the time the entire interest in the Certificate has been
distributed, the remaining portion of such interest will be distributed at least
as rapidly as under the method of distribution being used as of the date of the
person's death; and (b) if any Participant dies prior to the Annuity
Commencement Date, the entire interest in the Certificate will be distributed
(1) within five years after the date of that person's death or (2) as annuity
payments which will begin within one year of that Participant's death and which
will be made over the life of the Participant's designated Beneficiary or over a
period not extending beyond the life expectancy of that Beneficiary. However, if
the Participant's designated Beneficiary is the surviving spouse of the
Participant, the Certificate may be continued with the surviving spouse deemed
to be the new Participant. Where the Participant or other person receiving
payments is not a natural person, the required distributions provided by Section
72(A) apply upon the death of the primary Annuitant.

No regulations interpreting the requirements of Section 72(s) have yet been
issued (although proposed regulations have been issued interpreting similar
requirements for qualified plans). Fortis Benefits intends to review and modify
the Certificate if necessary to ensure that it complies with the requirements of
Section 72(s) when clarified by regulation or otherwise.

Generally, unless the Beneficiary elects otherwise, the above requirements will
be satisfied where the death occurs prior to the Annuity Commencement Date by
paying the death benefit in a single sum, subject to proof of the Participant's
death. The Beneficiary, however, may elect by Written Request to receive an
annuity option instead of a lump sum payment. However, if the election is not
made within 60 days of the date the single sum death benefit otherwise becomes
payable, particularly where the annuitant dies and the annuitant is not the
Participant, the IRS may disregard the election for tax purposes and tax the
Beneficiary as if a single sum payment had been made.

QUALIFIED CERTIFICATES
The Certificates may be used with several types of tax-qualified plans. The tax
rules applicable to Participants, Annuitants and other payees vary according to
the type of plan and the terms and conditions of the plan itself. In general,
purchase payments made under a retirement program recognized under the Code on
behalf of an individual are excludable from the individual's gross income for
tax purposes during the Accumulation Period. The portion, if any, of any
purchase payment made by or on behalf of an individual under a Certificate that
is not excluded from the individual's gross income for tax purposes during the
Accumulation Period constitutes the individual's "investment in the
Certificate." Aggregate deferrals under all plans at the employee's option may
be subject to limitations.

When annuity payments begin, the individual will receive back his or her
"investment in the Certificate" if any, as a tax-free return of capital. The
dollar amount of annuity payments received in any year in excess of such return
is taxable as ordinary income. When payments are received as an annuity, the
tax-free return of capital is treated as if received ratably over the entire
period of the annuity until fully recovered (as described above with respect to
Non-Qualified Certificates).

The Certificates are available in connection with the following types of
retirement plans: Section 403(b) annuity plans for employees of certain
tax-exempt organizations and public educational institutions; Section 401 or
403(a) qualified pension, profit-sharing or annuity plans; individual retirement
annuities ("IRAs") under Section 408(b); simplified employee pension plans
("SEPs") under Section 408(k); SIMPLE IRA Plans under Section 408(p); Section
457 unfunded deferred compensation plans of public employers and tax-exempt
organizations' and private employer unfunded deferred compensation plans. The
tax implications of these plans are further discussed in the Statement of
Additional Information under the heading "Taxation Under Certain Retirement
Plans."

                                       17
<PAGE>
WITHHOLDING
Annuity payments and other amounts received under Certificates are subject to
income tax withholding unless the recipient elects not to have taxes withheld.
The amounts withheld will vary among recipients depending on the tax status of
the individual and the type of payments from which taxes are withheld.

Notwithstanding the recipient's election, withholding may be required with
respect to certain payments to be delivered outside the United States and with
respect to certain distributions from certain types of qualified retirement
plans, unless the proceeds are transferred directly from the qualified plan to
another qualified retirement plan. Moreover, special "backup withholding" rules
may require Fortis Benefits to disregard the recipient's election if the
recipient fails to supply Fortis Benefits with a "TIN" or taxpayer
identification number (social security number for individuals), or if the
Internal Revenue Service notifies Fortis Benefits that the TIN provided by the
recipient is incorrect.

PORTFOLIO DIVERSIFICATION
The United States Treasury Department has adopted regulations under Section
817(h) of the Code which set standards of diversification for the investments
underlying the Certificates, in order for the Certificates to be treated as
annuities. Fortis Benefits believes that these diversification standards will be
satisfied. Failure to do so would result in immediate taxation to Participants
or persons receiving annuity payments of all returns credited to Certificates,
except in the case of certain Qualified Certificates. Also, current regulations
do not provide guidance as to any circumstances in which control over allocation
of values among different investment alternatives may cause Participants or
persons receiving annuity payments to be treated as the owners of Variable
Account assets for tax purposes. Fortis Benefits reserves the right to amend the
Certificates in any way necessary to avoid any such result. The Treasury
Department may establish standards in this regard through regulations or
rulings. Such standards may apply only prospectively, although retroactive
application is possible if such standards were considered not to embody a new
position.

CERTAIN EXCHANGES
Section 1035 of the Code provides generally that no gain or loss will be
recognized under the exchange of a life insurance or annuity contract for an
annuity contract. Thus, a properly completed exchange from one of these types of
products into a Certificate pursuant to the special annuity contract exchange
form we provide for this purpose is not generally a taxable event under the
Code, and your investment in the Certificate will be the same as your investment
in the product you exchanged out of.

Because of the complexity of these and other tax aspects in connection with an
exchange, you should consult a tax adviser before making any exchange.

TAX LAW RESTRICTIONS AFFECTING SECTION 403(b) PLANS
Section 403(b)(12) of the Internal Revenue Code restricts the distribution under
Section 403(b) annuity contracts of:

    (1) elective contributions made for years beginning after December 31, 1988;

    (2) earnings on those contributions; and

    (3) earnings on amounts held as of December 31, 1988.

Distribution of these amounts may only occur upon death of the employee,
attainment of age 59 1/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions made after
December 31, 1988 may not be distributed in the case of hardship.

FURTHER INFORMATION ABOUT FORTIS BENEFITS

GENERAL
Fortis Benefits is engaged in the offer and sale of insurance products,
including fixed and variable life insurance policies, fixed and variable annuity
contracts, and group life, accident and health insurance policies. The Company
markets its products to small business and individuals through a national
network of independent agents, brokers, and financial institutions.

SELECTED FINANCIAL DATA
The following is a summary of certain financial data of Fortis Benefits. This
summary has been derived in part from, and should be read in conjunction with,
the financial statements of Fortis Benefits included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
                                                                              YEAR ENDED DECEMBER 31,
                                                             ----------------------------------------------------------
                      (IN THOUSANDS)                            1997        1996        1995        1994        1993
                                                             ----------  ----------  ----------  ----------  ----------
<S>                                                          <C>         <C>         <C>         <C>         <C>
INCOME STATEMENT DATA
  Premiums and policy charges..............................  $1,238,006  $1,295,878  $1,232,329  $1,022,446  $  955,053
  Net investment income....................................     228,724     206,023     203,537     162,514     153,657
  Net realized gains (losses) on investment................      41,101      25,731      55,080     (28,815)     73,623
  Other income.............................................      36,458      31,725      33,085      35,958      27,100
                                                             ----------  ----------  ----------  ----------  ----------
    TOTAL REVENUES.........................................  $1,544,289  $1,559,357  $1,524,031  $1,192,103  $1,209,433
                                                             ----------  ----------  ----------  ----------  ----------
                                                             ----------  ----------  ----------  ----------  ----------
  Total benefits and expenses..............................  $1,442,059  $1,470,066  $1,442,270  $1,157,651  $1,100,199
  Federal Income taxes.....................................      35,120      31,099      27,891      11,595      31,090
  Income before cumulative effect of accounting changes....      67,110      58,192      53,870      22,857      78,144
  Net income...............................................      67,110      58,192      53,870      22,857      81,707

BALANCE SHEET DATA
  Total assets.............................................  $6,819,484  $5,951,876  $5,143,012  $4,043,914  $3,584,139
  Total liabilities........................................   5,939,378   5,171,203   4,431,914   3,569,717   3,052,231
  Total shareholder's equity...............................     880,106     780,673     711,098     474,197     531,908
</TABLE>

                                       18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

1997 COMPARED TO 1996

FINANCIAL POSITION
Total invested assets of Fortis Benefits Insurance Company (the "Company")
increased to $3.3 billion in 1997 compared to $3.1 billion in 1996. As of
December 31, 1997, 96% of the Company's fixed maturity securities consisted of
investment grade bonds. Mortgage loans represent 18.1% of total invested assets
compared to 18.9% in 1996. The Company believes that adequate reserves have been
established for potential delinquencies and foreclosures. The mortgage loan
portfolio consists generally of small loans on commercial properties, dispersed
throughout the United States. The Company's delinquency and foreclosure rate are
well below industry averages.

RESULTS OF OPERATIONS

REVENUES
The Company's major products are group medical, group disability and dental,
group life, and annuity and individual life insurance coverages sold through a
network of independent agents and brokers. Total group medical, group disability
and dental, group life, and annuity and individual life premiums represented
37%, 35%, 21% and 7% respectively of total premium in 1997 and 45%, 30%, 19% and
6% respectively in 1996. The decrease in group medical premium is the result of
a decision in 1996 to discontinue new sales of certain medical products.

The Company continues to match investment portfolio composition to liquidity
needs and capital requirements. Changes in interest rates during 1997, 1996, and
1995 resulted in recognition of realized gains and losses.

BENEFITS
Policyholder benefit to premium ratio decreased from 84% in 1996 to 82% in 1997,
as a result of general improved experience. The primary improvement was in the
group life business which experienced these mortality declines consistently
throughout 1997. Annuity and individual life also experienced lower mortality
experience in 1997 in addition to higher interest crediting on the Company's
steadily increasing policy base of interest sensitive and investment products.
Group medical, group disability and dental, group life, and annuity and
individual life benefit to premium ratio was 77%, 82%, 76% and 124% respectively
in 1997 and 78%, 84%, 86%, and 131% respectively in 1996.

EXPENSES
The Company's general and administrative expense to premium ratio has increased
in 1997 to 17.5% from 15.3% in 1996. Enabling the application systems to be Year
2000 compliant and managed dental initiatives are the primary reasons for this
increase. Included in the managed dental initiative expense is an $13.5 million
write-off of the expenses incurred on behalf of a company that provides the
managed care services.

Commission rates have increased from the levels in 1996. This is primarily due
to changes in the mix of business by product lines as well as the change in
first year versus renewal premiums.

YEAR 2000
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Company and any of
its businesses or subsidiaries. All of the Company's major businesses are
heavily dependent upon internal computer systems, and many have significant
interaction with systems of third parties.

A comprehensive review of the Company's computer systems and business processes
has been conducted to identify the major systems that could be affected by the
Year 2000 issue. Steps are being taken to resolve any potential problems
including modification to existing software and the purchase of new software.
These measures are scheduled to be completed and tested on a timely basis. The
Company's goal is to complete internal remediation and testing of each system by
early 1999.

Factors that could influence the total costs to be incurred by the Company in
connection with the Year 2000 issue include the ability of the Company to
successfully identify systems containing two-digit year codes, the nature and
amount of programming required to fix the affected programs, the related labor
and consulting costs for such remediation, and the ability of third parties that
interface with the Company to successfully address their Year 2000 issues.

The Company is evaluating the Year 2000 readiness of advisors and other third
parties whose system failures could have an impact on the Company's operations.
The potential materiality of any such impact is not entirely know at this time.
The Company is closely monitoring these entities to avoid any unforeseen
circumstances.

1996 COMPARED TO 1995

REVENUES
Traditional life insurance premiums of Fortis Benefits (the "Company") are
principally composed of group life coverages. Total life premiums increased over
1995 due primarily to group life sales in 1996. Interest sensitive and
investment product policy charges, which consist primarily of cost of insurance
charges, increased 37% from 1995 to 1996. Continued sales of interest sensitive
and investment products has steadily increased the policy base on which these
charges are assessed.

Total accident and health premiums increased in 1996 compared to 1995 due to an
increase in the group disability product sales and strong persistency. Partially
offsetting this increase was a 3% decrease in the group medical products driven
by a decision to roll the fully insured medical business into a common medical
plan and the decision to cease new sales of large group self funded medical
plans, effective January 1, 1996. Beginning April 1, 1996 and continuing into
1997, the groups will gradually be rolled to a third party administrator.

The Company continues to match investment portfolio composition to liquidity
needs and capital requirements. Changes in interest rates during 1996, 1995 and
1994 resulted in recognition of realized gains and losses.

BENEFITS
The Company's group life benefits which are included in the traditional life
benefits were higher in 1996 compared to 1995 as a result of increased
mortality. Interest sensitive and investment product benefits for the period
ended December 31, 1996 increased 23% from 1995. This increase was the result of
higher interest crediting on the Company's steadily increasing policy base in
1996 compared to 1995.

The accident and health claims to premium ratio improved from 1995 to 1996 due
primarily to the improved claim closure rates in the group disability lines.

EXPENSES
The commission rates have declined from the levels in 1995. This is primarily
due to change in the mix of business by product lines as well as the change in
the first year versus renewal premiums. Interest sensitive and investment
products commission increased from 1996 compared to 1995; however, the Company
deferred $62.4 million of these commissions in 1996, compared to $52.7 million
in 1995. The additional commission and deferral is the result of an increase in
sales

                                       19
<PAGE>
of the company's variable life and variable annuity products. This increase in
deferred commissions more than offset the increase in paid commissions and
lowered the net commission expense for 1996.

In 1996, the Company consolidated the fully insured group medical business
administration processing. This has resulted in expense savings as demonstrated
by the reduction in the general and administrative expenses. Also contributing
to the expense reduction was the decision to discontinue issuing large group
self funded medical business.

CASH FLOW AND LIQUIDITY
The market value of cash, short-term investments and publicly traded bonds and
stocks is at least equal to all policyholder reserves and liabilities. The
Company's portfolio is readily marketable and convertible to cash to a degree
sufficient to provide for short-term needs. The Company expects its operating
activities to continue to meet its capital resource needs. The Company
consistently monitors its liability durations and invests assets accordingly.
The Company has no material commitments or off-balance sheet financing
arrangements which would reduce sources of funds in the upcoming year.

The National Association of Insurance Commissioners' risk-based capital formula
helps to establish guidelines for capital levels. At December 31, 1997, the
Company's capital exceeded the minimum recommended risk-based capital level.

COMPETITION
Fortis Benefits seeks to compete primarily on the basis of customer service,
product design, and, in the case of products funded through Series Fund, the
investment results achieved by Fortis Advisers, Inc. Many other insurance
companies compete with Fortis Benefits in each of its markets, including on the
basis of price. Many of these companies, which include some of the largest and
best known insurance companies, have considerably greater resources than Fortis
Benefits.

REGULATION AND RESERVES
The Company is subject to regulation and supervision by the insurance
departments of the states in which it is licensed to do business. This
regulation covers a variety of areas, including benefit reserve requirements,
adequacy of insurance company capital and surplus, various operational
standards, and accounting and financial reporting procedures. Fortis Benefits'
operations and accounts are subject to periodic examination by insurance
regulatory authorities.

Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed up to prescribed limits for insurance contract losses,
if covered, incurred by insolvent companies. The amount of any future
assessments of Fortis Benefits under these laws cannot be reasonably estimated.
Most of these laws do provide, however, that an assessment may be excused or
deferred if it would threaten an insurer's own financial strength.

Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Federal measures that may adversely affect the insurance
business include health care reform, employee benefit regulation, controls on
medicare costs and medical entitlement programs, tax law changes affecting the
taxation of insurance companies or of insurance products, changes in the
relative desirability of various personal investment vehicles, and removal of
impediments on the entry of banking institutions into the business of insurance.

Pursuant to state insurance laws and regulations, Fortis Benefits is obligated
to carry on its books, as liabilities, reserves to meet its obligations under
outstanding insurance contracts. These reserves are based on assumptions about,
among other things, future claims experience and investment returns. Neither the
reserve requirements nor the other aspects of state insurance regulation provide
absolute protection to holders of insurance contracts, including the
Certificates, if Fortis Benefits were to incur claims or expenses at rates
significantly higher than expected (due, for example, to acquired immune
deficiency syndrome or other infectious diseases or catastrophes) or significant
unexpected losses on its investments.

EMPLOYEES AND FACILITIES
Fortis Benefits has approximately 2,000 employees and considers its employee
relations to be excellent; Fortis Benefits owns its Home Office building,
consisting of 295,000 square feet in Woodbury, Minnesota. It also has
administrative offices in Kansas City, Missouri. Fortis Benefits leases a
portion of that building consisting of 297,000 square feet. In addition Fortis
Benefits has several regional claims and sales offices throughout the United
States. Fortis Benefits occupies approximately 100% of its home office and 70%
of its administration building, which it expects will be adequate for its
purposes for the foreseeable future.

DIRECTORS AND EXECUTIVE OFFICERS

Set forth is information concerning the Company's directors and executive
officers, to the extent responsible for its variable annuity operations,
together with their business experience and principal occupations for the past
five years:

<TABLE>
<S>                         <C>
OFFICER-DIRECTORS
Dean C. Kopperud, 45        Senior Vice President--Marketing and Sales; also
Director since 1995         officer of affiliated companies.
Robert Brian Pollock, 43    President and Chief Executive Officer; before then
Director Since 1988         Senior Vice President--Life and Disability.
Thomas Michael Keller, 50   Executive Vice President; before then Senior Vice
Director since 1990         President of Fortis, Inc.
OTHER DIRECTORS
Allen Royal Freedman, 57    Chairman and Chief Executive Officer of Fortis, Inc.
Chairman of the Board
since 1995
J. Kerry Clayton, 52        Executive Vice President of Fortis, Inc.
Director Since 1997
Arie Aristide Fakkert, 54   Assistant General Manager of Fortis International
Director Since 1987         N.V.
</TABLE>

                                       20
<PAGE>
<TABLE>
<S>                         <C>
EXECUTIVE OFFICERS
Rhonda Schwartz, 39         Senior Vice President and General Counsel--Life and
                            Investment Products; before then secretary and
                            General Counsel of Fortis Inc.
Michael John Peninger, 43   Senior Vice President and Chief Financial Officer
Jon H. Nicholson, 48        Senior Vice President--Custom Solutions Group.
Peggy L. Ettestad, 40       Senior Vice President--Life Operations; before that
                            Vice President of General Electric Company.
</TABLE>

Fortis Benefits' officers serve at the pleasure of the board of directors, and
members of the board serve without compensation (except for expenses of
attending board meetings), until their successors are duly elected and
qualified.

Mr. Freedman is a director of Systems and Computer Technology Corporation and
Genesis Health Ventures. Mr. Freedman is also a director of the following
registered investment companies: Fortis Equity Portfolios, Inc.; Fortis Growth
Fund, Inc.; Fortis Fiduciary Fund, Inc., Fortis Income Portfolios, Inc.; Fortis
Securities, Inc.; Fortis Tax-Free Portfolios, Inc.; Fortis Money Portfolios,
Inc.; Fortis Advantage Portfolios, Inc.; Fortis World Wide Portfolios, Inc.;
Fortis Series Fund, Inc.; Special Portfolios, Inc.

EXECUTIVE COMPENSATION
Set forth below is certain information concerning the compensation of the
executive officers of Fortis Benefits.

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

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                  ANNUAL COMPENSATION                  LONG-TERM COMPENSATION
                                                        ---------------------------------------  ----------------------------------
                                                                                OTHER ANNUAL                           ALL OTHER
        NAME AND PRINCIPAL POSITION            YEAR      SALARY      BONUS      COMPENSATION       LTIP PAYOUTS     COMPENSATION (1)
-------------------------------------------  ---------  ---------  ---------  -----------------  -----------------  ---------------
<S>                                          <C>        <C>        <C>        <C>                <C>                <C>
Robert B. Pollock                                 1997  $ 275,000  $  56,817      $       0          $       0         $  15,762
 President and Chief Executive Officer            1996    215,000     69,660              0                  0            15,318
                                                  1995    215,000     84,000              0                  0            14,851
-----------------------------------------------------------------------------------------------------------------------------------
Francis J. Guthrie                                1997    235,000    140,388              0                  0            15,762
 Executive Vice President                         1996     88,125          0              0                  0            12,279
                                                  1995        N/A        N/A              0                  0                 0
-----------------------------------------------------------------------------------------------------------------------------------
Debra Foss                                        1997    160,000     63,100              0                  0            13,386
 Sr. Vice President--                             1996    150,000     15,100              0                  0             1,500
 Human Resources                                  1995     37,500      5,000              0                  0       NOT ELIGIBLE
-----------------------------------------------------------------------------------------------------------------------------------
William D. Greiter                                1997    187,000     48,195              0                  0            14,112
 Senior Vice President--                          1996    178,500     48,195              0                  0            12,829
 Provider Markets                                 1995    170,000     38,808              0                  0            12,528
-----------------------------------------------------------------------------------------------------------------------------------
Michael John Peninger                             1997    200,000     31,194              0                  0            13,872
 Senior Vice President and                        1996    165,000     51,975              0                  0            13,018
 Chief Financial Officer                          1995    165,000     39,150              0                  0            12,249
</TABLE>

------------------------
(1) This column includes contributions made by Fortis Benefits for the year for
    the benefit for the named individual to a defined contribution retirement
    plan.

LONG-TERM INCENTIVE PLAN AWARDS TABLE
(LONG-TERM INCENTIVE PLAN(1) AWARDS IN LAST FISCAL YEAR)

<TABLE>
<CAPTION>
                                                                       PERFORMANCE OR
                                                                        OTHER PERIOD      ESTIMATED FUTURE PAYOUTS UNDER
                                                        NUMBER OF           UNTIL          NON-STOCK PRICE BASED PLANS
                                                     SHARES, UNITS OR   MATURATION OR   ----------------------------------
NAME                                                   OTHER RIGHTS        PAYOUT       THRESHOLD    TARGET      MAXIMUM
---------------------------------------------------  ----------------  ---------------  ---------  ----------  -----------
<S>                                                  <C>               <C>              <C>        <C>         <C>
Robert B. Pollock..................................       348 Units         3 years      0 Units    348 Units  1,044 Units
Francis J. Guthrie.................................       174 Units         3 years      0 Units    174 Units    522 Units
Debra Foss.........................................         0 Units         3 years      0 Units      0 Units      0 Units
William D. Greiter.................................       184 Units         3 years      0 Units    184 Units    552 Units
Michael John Peninger..............................       178 Units         3 years      0 Units    178 Units    534 Units
</TABLE>

------------------------
(1) Units shown in this table represent performance units granted pursuant to an
    Executive Incentive Compensation Plan in which officers and managers of
    Fortis Benefits participate. Awards are made pursuant to this plan based on
    the employee's position with Fortis Benefits and salary level and the extent
    to which the employee and Fortis Benefits meet certain performance
    objectives over 1- and 3-year periods. Employees may elect to defer awards
    payable to them under this plan.

As additional compensation to its employees and executive officers, Fortis
Benefits has an Employees' Uniform Retirement Plan and an Executive Retirement
Plan which generally provide an annual annuity benefit upon retirement at age 65
(or a reduced benefit upon early retirement) equal to: .9% of the employee's
Average Annual compensation up to the employee's social security covered
compensation, plus

                                       21
<PAGE>
1.3% of compensation above the social security covered compensation, up to
$255,300, as adjusted by an index, multiplied by the employee's years of
credited services.

In addition, Fortis Benefits provides an unfunded Supplemental Executive
Retirement Plan for certain executives of Fortis Benefits. Mr. Pollock is the
only named executive currently covered by the Plan. Under the Supplemental
Executive Retirement Plan, the annual benefit is calculated by subtracting the
benefit payable under the Employees' Uniform Retirement Plan and the estimated
Social Security benefit from the "Target Benefit." The "Target Benefit" is equal
to 50% of Final Average Salary (average salary over the final 36 consecutive
months of employment) reduced for less than 20 years of service at retirement.
Upon retirement prior to age 65 and after attaining age 55 with 10 years of
service, special early retirement rules apply. The salary used to calculate the
Final Average Salary consists of regular compensation and the annual target
incentive bonus of the participant. The estimated annual benefit of Mr. Pollock,
based on current compensation levels, under this plan is $63,740.

The following table illustrates the COMBINED estimated life annuity benefit
payable from the Employees' Uniform Retirement Plan and Executive Retirement
Plan to employees with the specified Final Average Salary and years of service
upon retirement.

PENSION PLAN TABLE*

<TABLE>
<CAPTION>
                                                     YEARS OF SERVICE
                             ----------------------------------------------------------------
FINAL AVERAGE SALARY            10         15         20         25         30         35
---------------------------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                          <C>        <C>        <C>        <C>        <C>        <C>
$125,000...................    $15,078  $  22,617  $  30,156  $  37,695  $  45,234  $  52,772
 150,000...................     18,328     27,492     36,656     45,820     54,984     64,147
 175,000...................     21,578     32,367     43,156     53,945     64,734     75,522
 200,000...................     24,828     37,242     49,656     62,070     74,484     86,897
 225,000...................     28,078     42,117     56,156     70,195     84,234     98,272
 250,000...................     30,695     46,042     61,389     76,737     92,084    107,432
 275,000+..................     31,163     46,744     62,326     77,907     93,489    109,070
</TABLE>

------------------------
* The table excludes social security benefits. In general, for the purposes of
  these plans, compensation includes salary and bonuses. The credited years of
  service with Fortis Benefits for these individuals named in the Summary
  Compensation Table above are as follows: 18, 4, 2, 14, and 13, respectively.

OWNERSHIP OF SECURITIES
All of Fortis Benefits' outstanding shares are owned by Fortis Insurance, Inc.,
515 West Wells, Milwaukee, Wisc. 53201, which is itself wholly owned by Fortis,
Inc., One Chase Manhattan Plaza, New York, N.Y. 10005. Fortis, Inc., in turn is
wholly owned by Fortis International, Inc., which is wholly owned by AMEV/VSB
1990 N.V., both of which share the same address with N.V. AMEV., Archimedeslaan
10, 3584 BA, Utrecht, The Netherlands. AMEV/VSB 1990 N.V. is 50% owned by Fortis
AMEV and 50% owned, through certain subsidiaries, by Fortis AG, Boulevard Emile
Jacqmain 53, 1000 Brussels, Belgium.

VOTING PRIVILEGES

In accordance with its view of current applicable law, Fortis Benefits will vote
shares of each of the Portfolios which are attributable to a Certificate at
regular and special meetings of the shareholders of a Portfolio in proportion to
instructions received from the persons having the voting interest in the
Certificate as of the record date for the corresponding Portfolio shareholders
meeting. Participants have the voting interest during the Accumulation Period,
persons receiving annuity payments during the Annuity Period, and Beneficiaries
after the death of the Annuitant or Participant. However, if the Investment
Company Act of 1940 or any rules thereunder should be amended or if the present
interpretation thereof should change, and as a result Fortis Benefits determines
that it is permitted to vote shares of the Portfolios in its own right, it may
elect to do so.

During the Accumulation Period, the number of shares of a Portfolio attributable
to a Certificate is determined by dividing the amount of Certificate Value in
the corresponding Subaccount pursuant to the Certificate as of the record date
for the shareholders meeting by the net asset value of one Portfolio share as of
that date. During the Annuity Period, or after the death of the Annuitant or
Participant, the number of Portfolio shares deemed attributable to the
Certificate will be computed in a comparable manner, based on the liability for
future variable annuity payments allocable to that Subaccount under the
Certificate as of the record date. Such liability for future payments will be
calculated on the basis of the mortality assumptions and the assumed interest
rate used in determining the number of Annuity Units credited to the Certificate
and the applicable Annuity Unit value on the record date. During the Annuity
Period, the number of votes attributable to a Certificate will generally
decrease since funds set aside to make the annuity payments will decrease.

Fortis Benefits will vote shares for which it has received no timely
instructions, and any shares attributable to excess amounts Fortis Benefits has
accumulated in the related Subaccount, in proportion to the voting instructions
which it receives with respect to all Certificates and other variable annuity
contracts participating in a Portfolio. To the extent that Fortis Benefits or
any affiliated company holds any shares of a Portfolio, they will be voted in
the same proportion as instructions for that Portfolio that are received from
persons holding the voting interest with respect to all Fortis Benefits separate
accounts participating in that Portfolio. Shares held by separate accounts other
than the Variable Account will in general be voted in accordance with
instructions of participants in such other separate accounts. This diminishes
the relative voting influence of the Certificates.

Each person having a voting interest in a Subaccount of the Separate Account
will receive proxy material, reports and other materials relating to the
appropriate Portfolio. Pursuant to the procedures described above, these persons
may give instructions regarding the election of the Board of Directors of a
Portfolio, ratification of the selection of its independent auditors, the
approval of the investment managers of a Portfolio, changes in fundamental
investment policies of a Portfolio and all other matters that are put to a vote
of Portfolio shareholders.

LEGAL MATTERS

The legality of the Certificates described in this Prospectus has been passed
upon by Douglas R. Lowe, Esquire, Associate General Counsel with the law
department of Fortis Benefits. Messrs. Freedman, Levy, Kroll & Simonds,
Washington, D.C., have advised Fortis Benefits on certain federal securities law
matters.

                                       22
<PAGE>
OTHER INFORMATION

Registration Statements have been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended, with respect to the
Certificates discussed in this Prospectus. Not all of the information set forth
in the Registration Statement, amendments and exhibits thereto has been included
in this Prospectus. Statements contained in this Prospectus concerning the
content of the Certificates 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.

A Statement of Additional Information is available upon request. Its contents
are as follows:

CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
                                                    PAGE
<S>                                              <C>
Fortis Benefits and the Variable Account.......           2
Calculation of Annuity Payments................           2
Postponement of Payments.......................           3
Services.......................................           4
  - Safekeeping of Variable Account Assets.....           4
  - Experts....................................           4
  - Principal Underwriter......................           4
Limitations on Allocations.....................           4
Change of Investment Adviser or Investment
 Policy........................................           4
Taxation Under Certain Retirement Plans........           5
Withholding....................................           9
Terms of Exemptive Relief in Connection With
 Mortality and Expense Risk Charge.............           9
Variable Account Financial Statements..........          10
APPENDIX A--Performance Information............         A-1
</TABLE>

FORTIS BENEFITS FINANCIAL STATEMENTS
The financial statements of Fortis Benefits that are included in this Prospectus
should be considered primarily as bearing on the ability of Fortis Benefits to
meet its obligations under the Certificates. The Certificates are not entitled
to participate in earnings, dividends or surplus of Fortis Benefits.

                                       23
<PAGE>
REPORT OF INDEPENDENT AUDITORS

Board of Directors
Fortis Benefits Insurance Company

We  have audited  the accompanying balance  sheets of  Fortis Benefits Insurance
Company, an indirect, wholly-owned subsidiary of  Fortis AMEV and Fortis AG,  as
of  December 31, 1997 and 1996, and the related statements of income, changes in
shareholder's equity and cash flows  for each of the  three years in the  period
ended  December 31, 1997.  These financial statements  are the responsibility of
the Company's management. Our responsibility is  to express an opinion on  these
financial statements based on our audits.

We   conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards. Those standards require that we plan and perform the audit to  obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also  includes
assessing  the  accounting principles  used  and significant  estimates  made by
management, as well as evaluating the overall financial statement  presentation.
We believe that our audits provide a reasonable basis for our opinion.

In  our opinion, the  financial statements referred to  above present fairly, in
all material  respects,  the financial  position  of Fortis  Benefits  Insurance
Company at December 31, 1997 and 1996, and the results of its operations and its
cash  flows for each  of three years in  the period ended  December 31, 1997, in
conformity with generally accepted accounting principles.

                                                    /s/ Ernst & Young, LLP
Minneapolis, Minnesota
February 27, 1998

                                      F-1
<PAGE>
BALANCE SHEETS
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                             DECEMBER 31
                                                                                         --------------------
                                                                                           1997       1996
                                                                                         ---------  ---------
<S>                                                                                      <C>        <C>
ASSETS
Investments:
  Fixed maturities, at fair value (amortized cost 1997--$2,325,589;
   1996--$2,078,438)...................................................................  $2,415,915 $2,115,499
  Equity securities, at fair value (cost 1997--$88,719; 1996--$84,144).................    109,832    106,290
  Mortgage loans on real estate, less allowance for possible losses (1997--$11,085;
   1996--$9,697).......................................................................    602,064    582,869
  Policy loans.........................................................................     68,566     60,722
  Short-term investments...............................................................     70,537    182,817
  Real estate and other investments....................................................     55,035     29,628
                                                                                         ---------  ---------
                                                                                         3,321,949  3,077,825

Cash and cash equivalents..............................................................      9,901     20,474

Receivables:
  Uncollected premiums.................................................................     74,220     71,386
  Reinsurance recoverable on unpaid and paid losses....................................     13,852     12,939
  Other................................................................................     19,762      9,045
                                                                                         ---------  ---------
                                                                                           107,834     93,370
Accrued investment income..............................................................     47,376     39,519
Deferred policy acquisition costs......................................................    291,742    268,075
Property and equipment at cost, less accumulated depreciation..........................     42,773     52,882
Deferred federal income taxes..........................................................     15,037     17,008
Other assets...........................................................................      4,250      8,005
Assets held in separate accounts.......................................................  2,978,622  2,374,718
                                                                                         ---------  ---------
TOTAL ASSETS...........................................................................  $6,819,484 $5,951,876
                                                                                         ---------  ---------
                                                                                         ---------  ---------
</TABLE>

                            See accompanying notes.

                                      F-2
<PAGE>
BALANCE SHEETS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                             DECEMBER 31
                                                                                         --------------------
                                                                                           1997       1996
                                                                                         ---------  ---------
<S>                                                                                      <C>        <C>
POLICY RESERVES, LIABILITIES AND SHAREHOLDER'S EQUITY
POLICY RESERVES AND LIABILITIES:
  Future policy benefit reserves:
    Traditional life insurance.........................................................  $ 449,017  $ 434,378
    Interest sensitive and investment products.........................................  1,264,227  1,175,480
    Accident and health................................................................    792,249    834,119
                                                                                         ---------  ---------
                                                                                         2,505,493  2,443,977
  Unearned revenues....................................................................     10,653     12,622
  Other policy claims and benefits payable.............................................    260,596    191,940
  Policyholder dividends payable.......................................................      8,197      8,783
                                                                                         ---------  ---------
                                                                                         2,784,939  2,657,322

  Debt.................................................................................     26,433         --
  Accrued expenses.....................................................................     49,909     42,223
  Current income taxes payable.........................................................     10,549     17,424
  Other liabilities....................................................................    113,222    104,834
  Due to affiliates....................................................................      6,925      4,926
  Liabilities related to separate accounts.............................................  2,947,401  2,344,474
                                                                                         ---------  ---------
TOTAL POLICY RESERVES AND LIABILITIES..................................................  5,939,378  5,171,203

SHAREHOLDER'S EQUITY:
  Common Stock, $5 par value:
    Authorized, issued and outstanding shares--1,000,000...............................      5,000      5,000
  Additional paid-in capital...........................................................    468,000    468,000
  Retained earnings....................................................................    332,723    265,613
  Unrealized gains on investments, net.................................................     68,981     36,290
  Unrealized gains on assets held in separate accounts, net............................      5,402      5,770
                                                                                         ---------  ---------
TOTAL SHAREHOLDER'S EQUITY.............................................................    880,106    780,673
                                                                                         ---------  ---------
TOTAL POLICY RESERVES, LIABILITIES AND SHAREHOLDER'S EQUITY............................  $6,819,484 $5,951,876
                                                                                         ---------  ---------
                                                                                         ---------  ---------
</TABLE>

                            See accompanying notes.

                                      F-3
<PAGE>
FORTIS BENEFITS INSURANCE COMPANY
STATEMENTS OF INCOME
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                     YEAR ENDED DECEMBER 31
                                                                                --------------------------------
                                                                                   1997       1996       1995
                                                                                ----------  ---------  ---------
<S>                                                                             <C>         <C>        <C>
REVENUES
  Insurance operations:
    Traditional life insurance premiums.......................................  $  269,540  $ 258,496  $ 251,353
    Interest sensitive and investment product policy charges..................      77,429     63,336     46,076
    Accident and health insurance premiums....................................     891,037    974,046    934,900
                                                                                ----------  ---------  ---------
                                                                                 1,238,006  1,295,878  1,232,329

  Net investment income.......................................................     228,724    206,023    203,537
  Net realized gains on investments...........................................      41,101     25,731     55,080
  Other income................................................................      36,458     31,725     33,085
                                                                                ----------  ---------  ---------
    TOTAL REVENUES............................................................   1,544,289  1,559,357  1,524,031

BENEFITS AND EXPENSES
  Benefits to policyholders:
    Traditional life insurance................................................     204,497    220,227    202,911
    Interest sensitive investment products....................................     103,077     90,358     73,676
    Accident and health claims................................................     707,113    778,439    769,588
                                                                                ----------  ---------  ---------
                                                                                 1,014,687  1,089,024  1,046,175

Policyholder dividends........................................................       2,935      4,169      4,305
Amortization of deferred policy acquisition costs.............................      43,931     39,325     41,291
Insurance commissions.........................................................     107,378     94,723     95,559
General and administrative expenses...........................................     273,128    242,825    254,940
                                                                                ----------  ---------  ---------
    TOTAL BENEFITS AND EXPENSES...............................................   1,442,059  1,470,066  1,442,270
                                                                                ----------  ---------  ---------
Income before federal income taxes............................................     102,230     89,291     81,761
Federal income taxes..........................................................      35,120     31,099     27,891
                                                                                ----------  ---------  ---------
NET INCOME....................................................................  $   67,110  $  58,192  $  53,870
                                                                                ----------  ---------  ---------
                                                                                ----------  ---------  ---------
</TABLE>

                            See accompanying notes.

                                      F-4
<PAGE>
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                     UNREALIZED
                                                                                    UNREALIZED          GAINS
                                                                                       GAINS         (LOSSES) ON
                                                        ADDITIONAL                  (LOSSES) ON    ASSETS HELD IN
                                             COMMON       PAID-IN     RETAINED     INVESTMENTS,       SEPARATE
                                              STOCK       CAPITAL     EARNINGS          NET         ACCOUNTS, NET     TOTAL
                                           -----------  -----------  -----------  ---------------  ---------------  ---------
<S>                                        <C>          <C>          <C>          <C>              <C>              <C>
Balance, January 1, 1995.................   $   5,000    $ 358,000    $ 153,551      $ (42,908)       $     554     $ 474,197
Net income...............................          --           --       53,870             --               --        53,870
Additional paid-in capital...............          --       50,000           --             --               --        50,000
Change in unrealized gains (losses) on
 investments, net........................          --           --           --        131,039               --       131,039
Change in unrealized gains (losses) on
 assets held in separate accounts, net...          --           --           --             --            1,992         1,992
                                           -----------  -----------  -----------       -------           ------     ---------
Balance, December 31, 1995...............       5,000      408,000      207,421         88,131            2,546       711,098
Net income...............................          --           --       58,192             --               --        58,192
Additional paid-in capital...............          --       60,000           --             --               --        60,000
Change in unrealized gains (losses) on
 investments, net........................          --           --           --        (51,841)              --       (51,841)
Change in unrealized gains (losses) on
 assets held in separate accounts, net...          --           --           --             --            3,224         3,224
                                           -----------  -----------  -----------       -------           ------     ---------
Balance, December 31, 1996...............       5,000      468,000      265,613         36,290            5,770       780,673
Net income...............................          --           --       67,110             --               --        67,110
Change in unrealized gains (losses) on
 investments, net........................          --           --           --         32,691               --        32,691
Change in unrealized gains (losses) on
 assets held in separate account, net....          --           --           --             --             (368)         (368)
                                           -----------  -----------  -----------       -------           ------     ---------
Balance, December 31, 1997...............   $   5,000    $ 468,000    $ 332,723      $  68,981        $   5,402     $ 880,106
                                           -----------  -----------  -----------       -------           ------     ---------
                                           -----------  -----------  -----------       -------           ------     ---------
</TABLE>

                            See accompanying notes.

                                      F-5
<PAGE>
STATEMENTS OF CASH FLOWS
FORTIS BENEFITS INSURANCE COMPANY
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED DECEMBER 31
                                                                           -------------------------------------
                                                                               1997         1996        1995
                                                                           ------------  ----------  -----------
<S>                                                                        <C>           <C>         <C>
OPERATING ACTIVITIES
  Net income.............................................................  $     67,110  $   58,192  $    53,870
  Adjustments to reconcile net income to net cash provided by operating
   activities:
    (Decrease)/increase in future policy benefit reserves for
     traditional, interest sensitive and accident and health policies....        (2,496)     26,193       80,478
    Increase in other policy claims and benefits and policyholder
     dividends payable...................................................        68,070      18,638       27,676
    Provision for deferred federal income taxes..........................        (6,449)     (1,094)     (13,584)
    (Decrease)/increase in income taxes payable..........................        (6,875)     12,049        1,023
    Amortization of deferred policy acquisition costs....................        43,931      39,325       41,291
    Policy acquisition costs deferred....................................       (69,694)    (66,515)     (56,391)
    Provision for mortgage loan losses...................................         1,388       1,344          924
    Provision for depreciation...........................................        14,351      17,312       15,654
    Write-off of investment..............................................         3,000          --           --
    Amortization of investment (discounts) premiums, net.................          (466)      1,821         (239)
    Change in receivables, accrued investment income, unearned premiums,
     accrued expenses and other liabilities..............................        (2,720)     38,614        3,427
    Net realized gains on investments....................................       (41,101)    (25,731)     (55,080)
    Other................................................................       (12,496)       (261)      (2,431)
                                                                           ------------  ----------  -----------
        NET CASH PROVIDED BY OPERATING ACTIVITIES........................        55,553     119,887       96,618

INVESTING ACTIVITIES
  Purchases of fixed maturity investments................................    (3,611,770) (2,778,352)  (2,151,133)
  Sales or maturities of fixed maturity investments......................     3,378,898   2,652,887    2,000,068
  Decrease (increase) in short-term investments..........................       112,280     (29,318)     (35,908)
  Purchases of other investments.........................................      (209,771)   (210,182)    (240,264)
  Sales of other investments.............................................       205,084     163,569      112,598
  Purchases of property and equipment....................................        (4,242)    (10,992)     (19,975)
  Other..................................................................          (617)         --        1,229
                                                                           ------------  ----------  -----------
        NET CASH USED IN INVESTING ACTIVITIES............................      (130,138)   (212,388)    (333,385)

FINANCING ACTIVITIES
  Activities related to investment products:
    Considerations received..............................................       200,760     128,446      187,484
    Surrenders and death benefits........................................      (190,361)   (125,274)     (60,522)
    Interest credited to policyholders...................................        53,613      49,802       48,918
  Additional paid-in capital from shareholder............................            --      60,000       50,000
                                                                           ------------  ----------  -----------
        NET CASH PROVIDED BY FINANCING ACTIVITIES........................        64,012     112,974      225,880
                                                                           ------------  ----------  -----------
(Decrease) increase in cash and cash equivalents.........................       (10,573)     20,473      (10,887)
        CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR...................        20,474           1       10,888
                                                                           ------------  ----------  -----------
        CASH AND CASH EQUIVALENTS AT END OF YEAR.........................  $      9,901  $   20,474  $         1
                                                                           ------------  ----------  -----------
                                                                           ------------  ----------  -----------
</TABLE>

                            See accompanying notes.

                                      F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FORTIS BENEFITS INSURANCE COMPANY

DECEMBER 31, 1997

1.  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS

Fortis  Benefits Insurance  Company (the  Company) is  an indirect, wholly-owned
subsidiary of  Fortis  AMEV  and  Fortis AG.  The  Company  is  incorporated  in
Minnesota  and distributes its products in all  states except New York. To date,
the majority of  the Company's revenues  have been derived  from group  employee
benefits products and the remainder from individual life and annuity products.

BASIS OF STATEMENT PRESENTATION

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

The  Company follows  generally accepted  accounting principles  which differ in
certain respects from statutory accounting practices prescribed or permitted  by
regulatory authorities. The more significant of these principles are:

REVENUE RECOGNITION AND FUTURE POLICY BENEFIT RESERVES

Premiums for traditional life insurance are recognized as revenues when due over
the  premium-paying  period. Reserves  for future  policy benefits  are computed
using the net level method and include investment yield, mortality,  withdrawal,
and  other assumptions based on the  Company's experience, modified as necessary
to reflect anticipated trends and to include provisions for possible unfavorable
deviations.

Revenues for  interest  sensitive and  investment  products consist  of  charges
assessed  against  policy account  balances during  the period  for the  cost of
insurance, policy administration, and  surrender charges. Future policy  benefit
reserves  are computed  under the  retrospective deposit  method and  consist of
policy account  balances before  applicable surrender  charges. Policy  benefits
charged  to expense during the  period include amounts paid  in excess of policy
account balances  and interest  credited to  policy account  balances.  Interest
crediting  rates for universal life and  investment products ranged from 2.5% to
8.75% in 1997 and 1996.

Premiums for accident and health insurance products, including medical, long and
short-term disability and dental insurance products, are recognized as  revenues
ratably over the contract period in proportion to the risk insured. Reserves for
future  disability benefits are based on the 1964 Commissioners Disability Table
at 6% interest. Calculated reserves are  modified based on the Company's  actual
experience.

CLAIMS AND BENEFITS PAYABLE

Other  policy  claims and  benefits payable  for reported  and incurred  but not
reported claims  and related  claims adjustment  expenses are  determined  using
case-basis  estimates and past experience. The  methods of making such estimates
and establishing the related liabilities  are continually reviewed and  updated.
Any adjustments resulting therefrom are reflected in income currently.

DEFERRED POLICY ACQUISITION COSTS

The costs of acquiring new business, which vary with and are directly related to
the  production  of new  business, are  deferred to  the extent  recoverable and
amortized. For traditional  life insurance  products, such  costs are  amortized
over  the premium paying period. For interest sensitive and investment products,
such costs  are amortized  in relation  to expected  future gross  profits.  For
accident and health and group life insurance products, these costs represent the
present  value at the acquisition of these lines in the October 1, 1991 purchase
(see Note 2) of future profits which are amortized against the expected  premium
revenues  of the  lines acquired.  Estimation of  future gross  profits requires
significant management judgment and are reviewed periodically. As excess amounts
of deferred costs  over future premiums  or gross profits  are identified,  such
excess amounts are expensed.

INVESTMENTS

The  Company's investment strategy is developed  based on many factors including
insurance liability  matching,  rate  of  return,  maturity,  credit  risk,  tax
considerations and regulatory requirements.

All  fixed  maturity  investments  and  all  marketable  equity  securities  are
classified as available-for-sale and carried at fair value.

Changes in fair values of available-for-sale securities, after related  deferred
income  taxes and after adjustment for the changes in pattern of amortization of
deferred policy acquisition costs  and participating policyholder dividends  are
reported  directly  in  shareholder's  equity as  unrealized  gains  (losses) on
investments and,  accordingly, have  no  effect on  net income.  The  unrealized
appreciation  or  depreciation  is  net  of  deferred  policy  acquisition  cost
amortization and taxes that would  have been required as  a charge or credit  to
income had such unrealized amounts been realized.

Mortgage loans constitute first liens on commercial real estate and other income
producing properties. The insurance statutes in Minnesota generally require that
the  initial  principal loaned  not exceed  80%  of the  appraised value  of the
property securing  the  loan. The  Company's  policy fully  complies  with  this
statute.  Mortgage loans on real estate are reported at unpaid balance, adjusted
for amortization of premium or discount, less allowance for possible losses. The
change in the allowance for possible losses is recorded with realized gains  and
losses on investments.

Policy loans are reported at their unpaid balance. Short term investments are at
cost which approximates fair value.

Realized  gains and losses on sales of investments, and declines in value judged
to be other-than-temporary, are recognized on the specific identification basis.
Investment income is recorded as earned.

                                      F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

1.  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT

Property and equipment are recorded  at cost less accumulated depreciation.  The
Company  provides for depreciation principally  on the straight-line method over
the estimated useful lives of the related property.

INCOME TAXES

Income taxes have been  provided using the liability  method in accordance  with
Financial  Accounting  Standards Board  ("FASB")  Statement 109,  ACCOUNTING FOR
INCOME TAXES. Deferred tax  assets and liabilities are  determined based on  the
differences  between the financial reporting and  the tax bases and are measured
using the enacted tax rates.

SEPARATE ACCOUNTS

Revenues and expenses related to the separate account assets and liabilities, to
the extent of benefits paid, are provided to the separate account  policyholders
and  are excluded  from the amounts  reported in the  accompanying statements of
operations.

Assets and liabilities associated with the separate accounts relate to  deposits
and  annuity considerations for variable life and annuity products for which the
contract holder, rather than  the Company, bears  the investment risk.  Separate
account assets are reported at fair value.

GUARANTY FUND ASSESSMENTS

There  are a number  of insurance companies that  are currently under regulatory
supervision. This  may  result in  future  assessments by  state  guaranty  fund
associations  to  cover losses  to policyholders  of insolvent  or rehabilitated
companies. These assessments can be  partially recovered through a reduction  in
future  premium taxes  in some  states. The  Company believes  it has adequately
provided for the impact of future assessments.

STATEMENTS OF CASH FLOWS

The Company  considers  investments  with  a  maturity  at  the  date  of  their
acquisition of three months or less to be cash equivalents. These securities are
carried principally at amortized cost which approximates fair value.

NEW FINANCIAL ACCOUNTING STANDARDS

In  June 1997, the  FASB issued SFAS No.  130, "Reporting Comprehensive Income."
SFAS No. 130 defines the financial  statement presentation for all changes in  a
company's  equity during  a period  except those  resulting from  investments by
owners and distributions to owners. SFAS No. 130 will be adopted by the  Company
in  the  first quarter  of 1998.  Because the  statement is  merely a  change in
presentation, the Company does not expect the adoption of this statement to have
a significant impact on the financial statements.

RECLASSIFICATIONS

Certain amounts in the 1996 and 1995 financial statements have been reclassified
to conform to the 1997 presentation.

2.  ACQUIRED BUSINESS
    In  1991,  the  Company  purchased   certain  assets  and  assumed   certain
liabilities  from The  Mutual Benefit  Life Insurance  Company in Rehabilitation
(MBL). The  seller  transferred  to  the Company,  the  assets  and  liabilities
relating to the group life, accident and health, disability and dental insurance
business  of MBL. The acquisition was accounted  for as a purchase. The original
purchase price  of  the  acquisition  was  $318,000,000.  Subsequent  additional
payments  of $20,850,000 were made ending in 1994. These additional payments, as
well as  $126,515,000 of  the original  purchase price  represent the  estimated
present value of future profits on the lines of business acquired at the date of
acquisition  and have  been accounted for  as deferred  policy acquisition costs
(see Note 4).

                                      F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

3.  INVESTMENTS
AVAILABLE-FOR-SALE SECURITIES

The following is a summary of the available-for-sale securities (in thousands):

<TABLE>
<CAPTION>
                                                              GROSS     GROSS
                                                 AMORTIZED   UNREALIZED UNREALIZED
                                                    COST       GAIN      LOSS    FAIR VALUE
                                                 ----------  --------  --------  ----------
<S>                                              <C>         <C>       <C>       <C>
December 31, 1997:
  Fixed maturities:
  Governments..................................  $  228,856  $ 8,698   $    30   $  237,524
  Public utilities.............................     121,128    4,217        13      125,332
  Industrial and miscellaneous.................   1,932,894   77,442     1,625    2,008,711
  Other........................................      42,711    1,637        --       44,348
                                                 ----------  --------  --------  ----------
  Total fixed maturities.......................   2,325,589   91,994     1,668    2,415,915
  Equity securities............................      88,719   24,769     3,656      109,832
                                                 ----------  --------  --------  ----------
    Total......................................  $2,414,308  $116,763  $ 5,324   $2,525,747
                                                 ----------  --------  --------  ----------
                                                 ----------  --------  --------  ----------
December 31, 1996:
Fixed maturities:
  Governments..................................  $  321,574  $ 3,418   $ 1,323   $  323,669
  Public utilities.............................      92,116    2,758       403       94,471
  Industrial and miscellaneous.................   1,656,420   38,413     6,527    1,688,306
  Other........................................       8,328      750        25        9,053
                                                 ----------  --------  --------  ----------
  Total fixed maturities.......................   2,078,438   45,339     8,278    2,115,499
  Equity securities............................      84,144   23,340     1,194      106,290
                                                 ----------  --------  --------  ----------
    Total......................................  $2,162,582  $68,679   $ 9,472   $2,221,789
                                                 ----------  --------  --------  ----------
                                                 ----------  --------  --------  ----------
</TABLE>

The amortized cost  and fair  value of available-for-sale  investments in  fixed
maturities  at December 31,  1997, by contractual maturity,  are shown below (in
thousands).

<TABLE>
<CAPTION>
                                                                        AMORTIZED
                                                                           COST     FAIR VALUE
                                                                        ----------  ----------
<S>                                                                     <C>         <C>
Due in one year or less...............................................  $   75,748  $   76,109
Due after one year through five years.................................     849,193     865,006
Due after five years through ten years................................     543,847     562,900
Due after ten years...................................................     856,801     911,900
                                                                        ----------  ----------
Total.................................................................  $2,325,589  $2,415,915
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>

Expected maturities will  differ from contractual  maturities because  borrowers
may  have  the right  to  call or  prepay obligations  with  or without  call or
prepayment penalties.

MORTGAGE LOANS

The  Company  has  issued  commercial  mortgage  loans  on  properties   located
throughout  the  United States.  Approximately 37%  of outstanding  principal is
concentrated in the states of New York, California and Florida, at December  31,
1997  as compared to concentrated interests in California, Texas and New York of
36% at December 31,  1996. Loan commitments  outstanding totaled $34,235,000  at
December 31, 1997.

INVESTMENTS ON DEPOSIT

The  Company  had  fixed  maturities carried  at  $2,548,000  and  $2,537,000 at
December 31, 1997 and 1996,  respectively, on deposit with various  governmental
authorities as required by law.

INVESTMENT IN MANAGED DENTAL INITIATIVE

In  1997, the Company  acquired a 99%  ownership in a  managed dental initiative
called Dental Health Alliance,  Inc. (DHA). Based on  an analysis of future  DHA
profitability,  the entire investment was written-off  at December 31, 1997. The
income statement  reflects $13,561,000  of general  and administrative  expenses
related to 1997 DHA losses and ownership write-off.

                                      F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

3.  INVESTMENTS (CONTINUED)
NET UNREALIZED GAINS (LOSSES)

The  adjusted net unrealized gains (losses) recorded in shareholder's equity for
the year ended December 31 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                       1997       1996       1995
                                                                     ---------  ---------  ---------
<S>                                                                  <C>        <C>        <C>
Change in unrealized gains (losses) before adjustments.............  $  53,239  $ (83,065) $ 214,452
Adjustments:
Increase) decrease in amortization of deferred policy acquisition
 costs.............................................................     (2,096)     3,376     (9,789)
Deferred income taxes (expense) benefit............................    (18,820)    31,072    (71,632)
                                                                     ---------  ---------  ---------
Change in net unrealized gains (losses)............................     32,323    (48,617)   133,031
Net unrealized gains (losses), beginning of year...................     42,060     90,677    (42,354)
                                                                     ---------  ---------  ---------
Net unrealized gains, end of year..................................  $  74,383  $  42,060  $  90,677
                                                                     ---------  ---------  ---------
                                                                     ---------  ---------  ---------
</TABLE>

NET INVESTMENT INCOME AND NET REALIZED GAINS ON INVESTMENTS

Major categories of net investment income and realized gains on investments  for
each year were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                       1997       1996       1995
                                                                     ---------  ---------  ---------
<S>                                                                  <C>        <C>        <C>
NET INVESTMENT INCOME
Fixed maturities...................................................  $ 160,444  $ 141,973  $ 139,062
Equity securities..................................................      9,306      6,682      2,026
Mortgage loans on real estate......................................     54,662     52,949     49,227
Policy loans.......................................................      4,144      3,195      2,797
Short-term investments.............................................      2,851      5,175     11,863
Real estate and other investments..................................      4,635      5,358      4,750
                                                                     ---------  ---------  ---------
                                                                       236,042    215,332    209,725
Expenses...........................................................     (7,318)    (9,309)    (6,188)
                                                                     ---------  ---------  ---------
                                                                     $ 228,724  $ 206,023  $ 203,537
                                                                     ---------  ---------  ---------
                                                                     ---------  ---------  ---------
NET REALIZED GAINS ON INVESTMENTS
Fixed maturities...................................................  $  13,827  $   3,334  $  50,393
Equity securities..................................................     26,760     18,281      2,830
Mortgage loans on real estate......................................        301       (144)      (242)
Short-term investments.............................................         --         57         (3)
Real estate and other investments..................................        213      4,203      2,102
                                                                     ---------  ---------  ---------
                                                                     $  41,101  $  25,731  $  55,080
                                                                     ---------  ---------  ---------
                                                                     ---------  ---------  ---------
</TABLE>

Proceeds  from  sales of  investments in  fixed maturities  were $3,360,682,000,
$2,652,887,000, and $2,000,068,000 in 1997,  1996 and 1995, respectively.  Gross
gains   of  $30,860,000,  $28,606,000  and   $61,070,000  and  gross  losses  of
$17,033,000, $25,272,000, and $10,677,000  were realized on  the sales in  1997,
1996 and 1995, respectively.

4.    DEFERRED POLICY ACQUISITION COSTS
    The  changes in deferred policy acquisition costs by product were as follows
(in thousands):

<TABLE>
<CAPTION>
                                                                 INTEREST
                                                               SENSITIVE AND
                                                 TRADITIONAL    INVESTMENT      ACCIDENT
                                                    LIFE         PRODUCTS      AND HEALTH     TOTAL
                                                 -----------  ---------------  -----------  ---------
<S>                                              <C>          <C>              <C>          <C>
Balance, January 1, 1996.......................   $  38,532      $ 170,840      $  28,137   $ 237,509
Acquisition costs deferred.....................          --         66,515             --      66,515
Acquisition costs amortized....................      (5,375)       (19,695)       (14,255)    (39,325)
Reduced amortization of deferred acquisition
 costs from unrealized losses on
 available-for-sale securities.................          --          3,376             --       3,376
                                                 -----------  ---------------  -----------  ---------
Balance, January 1, 1997.......................      33,157        221,036         13,882     268,075
Acquisition costs deferred.....................      37,857         31,837             --      69,694
Acquisition costs amortized....................     (20,738)       (14,501)        (8,692)    (43,931)
Increased amortization of deferred acquisition
 costs from unrealized gains on
 available-for-sale securities.................          --         (2,096)            --      (2,096)
                                                 -----------  ---------------  -----------  ---------
Balance, December 31, 1997.....................   $  50,276      $ 236,276      $   5,190   $ 291,742
                                                 -----------  ---------------  -----------  ---------
                                                 -----------  ---------------  -----------  ---------
</TABLE>

                                      F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

4.    DEFERRED POLICY ACQUISITION COSTS (CONTINUED)
Included within total deferred policy acquisition costs at December 31, 1997  is
$10,434,000 of present value of future profits (PVP) resulting from acquisitions
accounted for as a purchase. All remaining PVP will be amortized in 1998.

During  1997,  1996  and  1995,  the Company  sold  portions  of  its investment
portfolio and  in accordance  with FASB  Statement 97,  the recognition  of  the
realized  net  capital gains  resulted  in additional  amortization  of deferred
acquisition costs  of  $732,000,  $1,894,000 and  $4,825,000,  respectively.  In
addition,  the Company recorded policyholder  dividends payable of $1,095,000 in
1995.

5.  PROPERTY AND EQUIPMENT
    A summary of property and equipment at December 31 for each year follows (in
thousands):

<TABLE>
<CAPTION>
                                                                                1997       1996
                                                                              ---------  ---------
<S>                                                                           <C>        <C>
Land........................................................................  $   1,900  $   1,900
Building and improvements...................................................     24,148     25,133
Furniture and equipment.....................................................     87,537     95,370
                                                                              ---------  ---------
                                                                                113,585    122,403
Less accumulated depreciation...............................................    (70,812)   (69,521)
                                                                              ---------  ---------
Net property and equipment..................................................  $  42,773  $  52,882
                                                                              ---------  ---------
                                                                              ---------  ---------
</TABLE>

6.  ACCIDENT AND HEALTH RESERVES
    Activity for the liability for unpaid accident and health claims and  claims
adjustment expenses is summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31
                                                                     -------------------------------
                                                                       1997       1996       1995
                                                                     ---------  ---------  ---------
<S>                                                                  <C>        <C>        <C>
Balance as of January 1, net of reinsurance recoverables...........  $ 947,711  $ 928,832  $ 838,810
Add: Incurred losses related to:
  Current year.....................................................    773,316    865,907    827,261
  Prior years......................................................    (59,634)   (64,094)   (28,520)
                                                                     ---------  ---------  ---------
    Total incurred losses..........................................    713,682    801,813    798,741
Deduct: Paid losses related to:
  Current year.....................................................    437,405    549,144    492,460
  Prior years......................................................    235,952    233,790    216,259
                                                                     ---------  ---------  ---------
    Total paid losses..............................................    673,357    782,934    708,719
                                                                     ---------  ---------  ---------
Balance as of December 31, net of reinsurance recoverables.........  $ 988,036  $ 947,711  $ 928,832
                                                                     ---------  ---------  ---------
                                                                     ---------  ---------  ---------
</TABLE>

The  table above compares  to the amounts  reported on the  balance sheet in the
following respects: (1) the  table above is presented  net of ceded  reinsurance
and  the accident and health reserves reported on the balance sheet are gross of
ceded reinsurance;  (2)  the  table above  includes  claims  adjustment  expense
liabilities  that are included in accrued expenses on the balance sheet; and (3)
the table above includes accident and health benefits payable which are included
with other policy claims and benefits payable reported on the balance sheet.

In each of the years presented above, the accident and health insurance line  of
business   experienced   overall  favorable   development  on   claims  reserves
established as of the previous year end. The favorable development was a  result
of  lower medical  costs due to  less uncertainty  in the health  business and a
reduction of loss reserves  due to lower than  anticipated inflation in  medical
costs.

Management  has incorporated the favorable  reserve development into its current
estimates of reserve  levels. Accordingly,  future development  on December  31,
1997 reserves is not expected to be as favorable as that experienced in the past
two years.

7.  FEDERAL INCOME TAXES
    The  Company reports its taxable income in a consolidated federal income tax
return along  with other  affiliated  subsidiaries of  Fortis, Inc.  Income  tax
expense  or credits are allocated among  the affiliated subsidiaries by applying
corporate income tax rates  to taxable income or  loss determined on a  separate
return basis according to a Tax Allocation Agreement.

Deferred  income  taxes reflect  the net  tax  effects of  temporary differences
between the basis of assets and liabilities for financial statement purposes and
for income tax purposes.

                                      F-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

7.  FEDERAL INCOME TAXES (CONTINUED)
The significant components of the Company's deferred tax liabilities and  assets
as of December 31, 1997 and 1996 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                1997       1996
                                                                              ---------  ---------
<S>                                                                           <C>        <C>
Deferred tax assets:
  Separate account assets/liabilities.......................................  $  56,620  $  40,989
  Reserves..................................................................     43,143     51,271
  Claims and benefits payable...............................................     15,238      7,764
  Accrued liabilities.......................................................      8,785      8,439
  Investments...............................................................      4,795      2,648
  Other.....................................................................      3,042      1,549
                                                                              ---------  ---------
    Total deferred tax assets...............................................    131,623    112,660

Deferred tax liabilities:
  Deferred policy acquisition costs.........................................     72,369     67,850
  Unrealized gains..........................................................     39,015     20,402
  Fixed assets..............................................................      3,914      3,110
  Investments...............................................................      1,220      1,942
  Other.....................................................................         68      2,348
                                                                              ---------  ---------
    Total deferred tax liabilities..........................................    116,586     95,652
                                                                              ---------  ---------
    Net deferred tax asset..................................................  $  15,037  $  17,008
                                                                              ---------  ---------
                                                                              ---------  ---------
</TABLE>

The  Company is required to  establish a valuation allowance  for any portion of
the deferred tax  asset that management  believes will not  be realized. In  the
opinion  of management, it is more likely than not that the Company will realize
the benefit  of the  deferred  tax assets,  and,  therefore, no  such  valuation
allowance has been established.

The  Company's tax expense (benefit) for the  year ended December 31 is shown as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                         1997       1996       1995
                                                                       ---------  ---------  ---------
<S>                                                                    <C>        <C>        <C>
Current..............................................................  $  41,569  $  32,193  $  39,660
Deferred.............................................................     (6,449)    (1,094)   (11,769)
                                                                       ---------  ---------  ---------
                                                                       $  35,120  $  31,099  $  27,891
                                                                       ---------  ---------  ---------
                                                                       ---------  ---------  ---------
</TABLE>

Federal income tax payments and refunds resulted in net payments of $58,859,000,
$16,434,000, and $40,453,000 in 1997, 1996 and 1995, respectively.

The Company's effective income tax rate varied from the statutory federal income
tax rate as follows:

<TABLE>
<CAPTION>
                                                                         1997       1996       1995
                                                                       ---------  ---------  ---------
<S>                                                                    <C>        <C>        <C>
Statutory income tax rate............................................      35.0%      35.0%      35.0%
Other, net...........................................................        (.6)       (.2)      (0.9)
                                                                       ---------  ---------  ---------
                                                                           34.4%      34.8%      34.1%
                                                                       ---------  ---------  ---------
                                                                       ---------  ---------  ---------
</TABLE>

8.  ASSETS HELD IN SEPARATE ACCOUNTS
    Separate account assets at December 31 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                               1997        1996
                                                                            ----------  ----------
<S>                                                                         <C>         <C>
Premium and annuity considerations for the variable annuity products and
 variable universal life products for which the contract holder, rather
 than the Company, bears the investment risk..............................  $2,947,401  $2,344,474
Assets of the separate accounts owned by the Company, at fair value.......      31,221      30,244
                                                                            ----------  ----------
                                                                            $2,978,622  $2,374,718
                                                                            ----------  ----------
                                                                            ----------  ----------
</TABLE>

9.  REINSURANCE
    In the second quarter  of 1996, First Fortis  Life Insurance Company  (First
Fortis),  an  affiliate, received  approval from  the  New York  State Insurance
Department for a reinsurance  agreement with the  Company. The agreement,  which
became  effective  as  of January  1,  1996, decreased  First  Fortis' long-term
disability reinsurance retention from a $10,000 net monthly benefit to a  $2,000
net  monthly  benefit for  claims incurred  on  and after  January 1,  1996. The
Company has assumed $5,742,000  and $6,144,000 of premium  from First Fortis  in
1997  and 1996, respectively. The Company  has assumed $5,452,000 and $3,599,000
of reserves in 1997 and 1996, respectively, from First Fortis.

                                      F-12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

9.  REINSURANCE (CONTINUED)
The maximum amount that the Company retains on any one life is $500,000 of  life
insurance  including  accidental  death.  Amounts  in  excess  of  $500,000  are
reinsured with other life insurance companies on a yearly renewable term basis.

Ceded reinsurance premiums for  the year ended December  31 were as follows  (in
thousands):

<TABLE>
<CAPTION>
                                                                          1997       1996       1995
                                                                        ---------  ---------  ---------
<S>                                                                     <C>        <C>        <C>
Life insurance........................................................  $   8,159  $   8,680  $   4,661
Accident and health insurance.........................................     13,712      6,793      3,410
                                                                        ---------  ---------  ---------
                                                                        $  21,871  $  15,473  $   8,071
                                                                        ---------  ---------  ---------
                                                                        ---------  ---------  ---------
</TABLE>

Recoveries  under reinsurance contracts  for the year ended  December 31 were as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                          1997       1996       1995
                                                                        ---------  ---------  ---------
<S>                                                                     <C>        <C>        <C>
Life insurance........................................................  $   2,973  $   7,225  $   2,489
Accident and health insurance.........................................     14,781      5,993      8,807
                                                                        ---------  ---------  ---------
                                                                        $  17,754  $  13,218  $  11,296
                                                                        ---------  ---------  ---------
                                                                        ---------  ---------  ---------
</TABLE>

Reinsurance ceded  would become  a liability  of the  Company in  the event  the
reinsurers  are unable  to meet  the obligations  assumed under  the reinsurance
agreement. To  minimize  its exposure  to  significant losses  from  reinsurance
insolvencies,  the Company evaluates  the financial condition  of its reinsurers
and monitors  concentrations  of credit  risk  arising from  similar  geographic
regions, activities or economic characteristics of the reinsurers.

10. DIVIDEND RESTRICTIONS
    Dividend  distributions  to  parent are  restricted  as to  amount  by state
regulatory requirements. The Company had $52,367,000 free from such restrictions
at December  31, 1997.  Distributions in  excess of  this amount  would  require
regulatory approval.

11. REGULATORY ACCOUNTING REQUIREMENTS
    Statutory-basis   financial  statements  are  prepared  in  accordance  with
accounting practices prescribed or  permitted by Minnesota insurance  regulatory
authorities.  Prescribed  statutory accounting  practices  include a  variety of
publications of the National Association of Insurance Commissioners ("NAIC"), as
well as  state laws,  regulations and  general administrative  rules.  Permitted
statutory  accounting  practices  encompass  all  accounting  practices  not  so
prescribed; such  practices may  differ from  state to  state, may  differ  from
company  to company within  a state, and may  change in the  future. The NAIC is
currently in  the  process of  codifying  statutory accounting  practices.  This
project,  which  is not  expected to  be  completed before  1999, may  result in
changes to the accounting  practices that insurance  enterprises use to  prepare
their statutory-basis financial statements.

Insurance  enterprises are required by State  Insurance Departments to adhere to
minimum risk-based  capital  ("RBC") requirements  developed  by the  NAIC.  The
Company exceeds the minimum RBC requirements.

                                      F-13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

11. REGULATORY ACCOUNTING REQUIREMENTS (CONTINUED)
Reconciliations of net income and shareholder's equity on the basis of statutory
accounting  to the related amounts presented in the accompanying statements were
as follows (in thousands):

<TABLE>
<CAPTION>
                                                           NET INCOME             SHAREHOLDER'S EQUITY
                                                 -------------------------------  --------------------
                                                   1997       1996       1995       1997       1996
                                                 ---------  ---------  ---------  ---------  ---------
<S>                                              <C>        <C>        <C>        <C>        <C>
Based on statutory accounting practices........  $  62,593  $  55,046  $  30,576  $ 528,671  $ 482,507
Deferred policy acquisition costs..............     25,763     27,190     15,100    291,742    268,075
Investment valuation differences...............       (497)    (2,219)       330     80,245     31,326
Deferred and uncollected premiums..............   (107,194)    (4,096)        --         --         --
Policy reserves................................     89,895    (19,873)   (29,238)  (150,649)  (131,159)
Commissions....................................     (3,171)    (1,639)
Current income taxes payable...................      6,450      2,386     (1,294)     3,712     (7,895)
Deferred income taxes..........................      6,449     (1,094)    11,769       (520)    17,008
Realized gains on investments..................        251      2,599      1,938         --         --
Realized gains transferred to the Interest
 Maintenance Reserve (IMR), net of tax.........      9,644      2,335     31,711         --         --
Amortization of IMR, net of tax................     (6,315)    (6,130)    (5,261)        --         --
Write-off of investment........................    (11,705)        --         --         --         --
Pension expense................................     (4,153)        --         --
Guaranty Funds.................................         --      3,023         --
Property and equipment.........................         --         --         --     15,520     20,481
Interest maintenance reserve...................         --         --         --     53,348     50,019
Asset valuation reserve........................         --         --         --     75,939     62,961
Other, net.....................................       (900)       664     (1,761)   (17,902)   (12,650)
                                                 ---------  ---------  ---------  ---------  ---------
As reported herein.............................  $  67,110  $  58,192  $  53,870  $ 880,106  $ 780,673
                                                 ---------  ---------  ---------  ---------  ---------
                                                 ---------  ---------  ---------  ---------  ---------
</TABLE>

12. TRANSACTIONS WITH AFFILIATED COMPANIES
    The Company receives various services from Fortis, Inc. and its  affiliates.
These  services  include assistance  in  benefit plan  administration, corporate
insurance,  accounting,  tax,  auditing,  investment  and  other  administrative
functions.  The fees  paid to  Fortis, Inc. for  these services  for years ended
December 31, 1997, 1996 and 1995, were $12,015,000, $13,319,000 and  $10,074,00,
respectively.

In  conjunction with the marketing of its variable annuity products, the Company
paid $72,105,000, $68,616,000 and $59,308,000  in commissions to its  affiliate,
Fortis  Investors, Inc., for the  years ended December 31,  1997, 1996 and 1995,
respectively.

Administrative expenses allocated for  the Company may be  greater or less  than
the  expenses that would be incurred if the Company were operating on a separate
company basis.

Fortis Information Technology (Fortis IT) is a business unit within the  Company
and  is managed by Fortis, Inc. Based  upon an agreement established with Fortis
Inc., over/under charges are  transferred annually to  Fortis, Inc. The  amounts
transferred  were $5,149,000 in 1997; $476,000 in 1996 and $0 in 1995. Effective
January 1, 1998, Fortis IT operations have been transferred to Fortis, Inc.

13. FAIR VALUE DISCLOSURES

VALUATION METHODS AND ASSUMPTIONS

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

Mortgage loans  are reported  at unpaid  principal balance  less allowances  for
possible  losses.  The  fair  values  of  mortgage  loans  are  estimated  using
discounted cash flow analyses, using interest rates currently being offered  for
similar  loans to  borrowers with  similar credit  ratings. Mortgage  loans with
similar characteristics are aggregated for  purposes of the calculations. It  is
not  practicable to estimate the  fair value of policy  loans as repayment terms
are at  the discretion  of  the policyholder.  For short-term  investments,  the
carrying  amount is a reasonable estimate of fair value. The fair values for the
Company's policy reserves  under the  investment products  are determined  using
cash  surrender value.  As the  debt was underwritten  in the  current year, the
outstanding balance is a reasonable estimate of fair value.

                                      F-14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

13. FAIR VALUE DISCLOSURES (CONTINUED)
The fair values under  all insurance contracts are  taken into consideration  in
the  Company's overall management of interest rate risk, such that the Company's
exposure to  changing  interest  rates  is minimized  through  the  matching  of
investment maturities with amounts due under insurance contracts.

<TABLE>
<CAPTION>
                                                                              (IN THOUSANDS)
                                                                               DECEMBER 31
                                                              ----------------------------------------------
                                                                       1997                    1996
                                                              ----------------------  ----------------------
                                                               CARRYING      FAIR      CARRYING      FAIR
                                                                AMOUNT      VALUE       AMOUNT      VALUE
                                                              ----------  ----------  ----------  ----------
<S>                                                           <C>         <C>         <C>         <C>
Assets:
  Investments:
    Securities available-for-sale:
      Fixed maturities......................................  $2,415,915  $2,415,915  $2,115,499  $2,115,499
      Equity securities.....................................     109,832     109,832     106,290     106,290
  Mortgage loans on real estate.............................     602,064     661,055     582,869     614,555
  Policy loans..............................................      68,566      68,566      60,722      60,722
  Short-term investments....................................      70,537      70,537     182,817     182,817
  Assets held in separate accounts..........................   2,978,622   2,978,622   2,374,718   2,371,601
Liabilities:
  Individual and group annuities (subject to discretionary
   withdrawal)..............................................  $  977,495  $  945,558  $  916,754  $  886,110
  Debt......................................................      26,433      26,433          --          --
</TABLE>

14. COMMITMENTS AND CONTINGENCIES
    The  Company is named  as a defendant  in a number  of legal actions arising
primarily from claims  made under  insurance policies. These  actions have  been
considered  in establishing policy benefit and loss reserves. Management and its
legal counsel are of the opinion that  the settlement of these actions will  not
have a material adverse effect on the Company's financial position or results of
operations.

15. RETIREMENT AND OTHER EMPLOYEE BENEFITS
    The  Company is an  indirect wholly-owned subsidiary  of Fortis, Inc., which
sponsors a defined benefit  pension plan covering  employees and certain  agents
who  meet eligibility requirements as to age and length of service. The benefits
are based on years  of service and career  compensation. Fortis, Inc.'s  funding
policy  is to contribute  annually the maximum  amount that can  be deducted for
federal income tax purposes, and to  charge each subsidiary an allocable  amount
based  on its employee census. Pension cost allocated to the Company amounted to
approximately $1,594,000, $1,354,000  and $1,179,000  for 1997,  1996 and  1995,
respectively.  As  of  January 1,  1997,  the Plan's  total  accumulated benefit
obligation determined in  accordance with ERISA  was approximately  $56,838,000.
This  amount was based on an assumed  interest rate of 8.00% and included vested
benefits of approximately $54,831,000. The fair market value of the Plan  assets
as of January 1, 1997 was approximately $60,004,000.

The  Company participates  in a contributory  profit sharing  plan, sponsored by
Fortis, Inc.,  covering  employees  and  certain  agents  who  meet  eligibility
requirements  as  to  age  and  length  of  service.  Benefits  are  payable  to
participants  on  retirement   or  disability  and   to  the  beneficiaries   of
participants  in the event  of death. The  first three percent  of an employee's
contribution  is  matched  200%  by   the  Company.  The  amount  expensed   was
approximately  $3,926,000,  $3,913,000 and  3,765,000 for  1997, 1996  and 1995,
respectively.

In addition to  retirement benefits,  the Company participates  in other  health
care  and life insurance  benefit plans ("postretirement  benefits") for retired
employees, sponsored  by Fortis,  Inc. Health  care benefits,  either through  a
Fortis  Inc.-sponsored retiree plan for retirees under  age 65 or through a cost
offset for individually purchased Medigap policies for retirees over age 65, are
available to employees  who retire on  or after January  1, 1993, at  age 55  or
older,  with 15  years or  more service.  Life insurance,  on a  retiree pay all
basis, is available to those who retire on or after January 1, 1993.

Net postretirement benefit costs  allocated to the Company  for the years  ended
December  31,  1997,  1996  and  1995  were  $304,000,  $290,000  and  $287,000,
respectively, and includes the expected cost of such benefits for newly eligible
or vested employees, interest  cost, gains and  losses arising from  differences
between  actuarial assumptions  and actual  experience, and  amortization of the
transition  obligation.  The  Company  made   contributions  to  the  plans   of
approximately  $20,000, $8,000 and  $0 in 1997, 1996  and 1995, respectively, as
claims were incurred.

At December 31, 1997  and 1996, the  unfunded postretirement benefit  obligation
for retirees and other fully eligible or vested plan participants was $1,148,000
and   $844,000,  respectively.  The  discount   rate  used  in  determining  the
accumulated postretirement benefit  obligation was  7.5%. The  health care  cost
trend  rate for those under age 65 was  12.8%, graded to 5.5% over 26 years. The
health care cost trend rate for those over age 65 was 12.0%, graded to 6.2% over
26 years.

                                      F-15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FORTIS BENEFITS INSURANCE COMPANY

16. DEBT
    The following is a summary of the debt at December 31, 1997 (in thousands):

<TABLE>
<S>                                                                                     <C>
Mortgage note bearing a floating interest rate of 200 basis points over LIBOR, (5.84%
 at December 31, 1997) adjustable every six months, principal and interest due
 monthly, matures July 2001...........................................................  $   3,150
Mortgage note bearing a floating interest rate of 225 basis points over LIBOR (5.84%
 at December 31, 1997) adjustable every six months, principal and interest due
 monthly, balloon payment due July 1998...............................................     18,100
Mortgage note bearing interest at 7.60%, principal and interest due monthly, matures
 October 2002.........................................................................      5,183
                                                                                        ---------
                                                                                        $  26,433
                                                                                        ---------
                                                                                        ---------
</TABLE>

Maturities of the debt as of December 31, 1997 are as follows (in thousands):

<TABLE>
<S>                                                                                     <C>
1998..................................................................................  $  18,222
1999..................................................................................        126
2000..................................................................................        136
2001..................................................................................      3,119
2002..................................................................................      4,830
                                                                                        ---------
                                                                                           26,433
                                                                                        ---------
                                                                                        ---------
</TABLE>

These mortgage  notes  are collateralized  by  certain real  estate  investments
included in real estate and other investments in the balance sheet.

Interest  expense paid by the Company during 1997 on this debt was approximately
$1,075,000.

17. YEAR 2000 ISSUES (UNAUDITED)
    The Year 2000 issue is the  result of computer programs having been  written
using  two digits  rather than  four to  define a  year. Any  programs that have
time-sensitive software may recognize a date using "00" as the year 1900  rather
than 2000. This could result in the failure of major systems or miscalculations,
which  could have a material impact on the  operations of the Company and any of
its businesses  or  subsidiaries. All  of  the Company's  major  businesses  are
heavily  dependent  upon internal  computer systems,  and many  have significant
interaction with systems of third parties.

A comprehensive review of the Company's computer systems and business  processes
has  been conducted to identify the major  systems that could be affected by the
Year 2000  issue.  Steps are  being  taken  to resolve  any  potential  problems
including  modification to existing  software and the  purchase of new software.
These measures are scheduled to be completed  and tested on a timely basis.  The
Company's goal is to complete internal remediation and testing of each system by
early 1999.

Factors  that could influence the  total costs to be  incurred by the Company in
connection with  the Year  2000 issue  include  the ability  of the  Company  to
successfully  identify systems containing  two-digit year codes,  the nature and
amount of programming required to fix  the affected programs, the related  labor
and consulting costs for such remediation, and the ability of third parties that
interface with the Company to successfully address their Year 2000 issues.

The  Company is evaluating the  Year 2000 readiness of  advisors and other third
parties whose system failures could have an impact on the Company's  operations.
The potential materiality of any such impact is not entirely known at this time.
The  Company  is  closely  monitoring these  entities  to  avoid  any unforeseen
circumstances.

                                      F-16
<PAGE>
APPENDIX A--SAMPLE MARKET VALUE ADJUSTMENT CALCULATIONS
The formula which will be used to determine the Market Value Adjustment is:

<TABLE>
<C>  <C>         <C>  <C>   <S>
        1 + I         n/12
      ----------            - 1
 (   1 + J + .005  )
</TABLE>

Sample Calculation 1: Positive Adjustment

<TABLE>
<S>                                       <C>
Amount withdrawn or transferred           $10,000
Existing Guarantee Period                 7 years
Time of withdrawal or transfer            beginning of 3rd year of Existing
                                          Guarantee Period
Guaranteed Interest Rate (I)              8%*
Guaranteed Interest Rate for
  new 5-year guarantee (J)                7%*
Remaining Guarantee Period (N)            60 months
Market Value Adjustment
</TABLE>

<TABLE>
<S>       <C> <C>            <C> <C>   <C>   <C>
                 1 + .08         60/12
$10,000 x      ------------            - 1]  = $234.73
          [(  1 + .07 + .005  )
</TABLE>

              Amount transferred or withdrawn (adjusted for Market Value
Adjustment): $10,234.73

Sample Calculation 2: Negative Adjustment

<TABLE>
<S>                                       <C>
Amount withdrawn or transferred           $10,000
Existing Guarantee Period                 7 years
Time of withdrawal or transfer            beginning of 3rd year of Existing
                                          Guarantee Period
Guaranteed Interest Rate (I)              8%*
Guaranteed Interest Rate for
  new 5-year guarantee (J)                9%*
Remaining Guarantee Period (N)            60 months
Market Value Adjustment:
</TABLE>

<TABLE>
<S>       <C> <C>            <C> <C>   <C>   <C>
                 1 + .08         60/12
$10,000 x      ------------            - 1]  = - $666.42
          [(  1 + .09 + .005  )
</TABLE>

              Amount transferred or withdrawn (adjusted for Market Value
Adjustment): $9,333.58

Sample Calculation 3: Negative Adjustment

<TABLE>
<S>                                       <C>
Amount withdrawn or transferred           $10,000
Guarantee Period                          7 years
Time of withdrawal or transfer            beginning of 3rd year of Existing
                                          Guarantee Period
Guaranteed Interest Rate (I)              8%*
Guaranteed Interest Rate for
  new 5-year guarantee (J)                7.75%*
Remaining Guarantee Period (N)            60 months
Market Value Adjustment:
</TABLE>

<TABLE>
<S>       <C> <C>              <C> <C>   <C>   <C>
                  1 + .08          60/12
$10,000 x      --------------            - 1]  = - $114.94
          [(  1 + .0775 + .005  )
</TABLE>

              Amount transferred or withdrawn (adjusted for Market Value
Adjustment): $9,885.06
------------------------
* Assumed for illustrative purposes only.

                                      A-1
<PAGE>
APPENDIX B--SAMPLE DEATH BENEFIT CALCULATIONS

DATE OF DEATH IS THE 3RD CONTRACT ANNIVERSARY

<TABLE>
<CAPTION>
                                                                   EXAMPLE 1  EXAMPLE 2  EXAMPLE 3
                                                                   ---------  ---------  ---------
<S>  <C>                                                           <C>        <C>        <C>
a.   Purchase Payments Made Prior to Death, accumulated at 5%....  $ 32,000   $ 32,000   $ 32,000
b.   Contract Value on Date of Death.............................  $ 20,000   $ 36,000   $ 25,000
c.   1 Year Ratchet Option Value.................................  $ 35,000   $ 36,000   $ 31,000
Death Benefit is larger of a, b, and c...........................  $ 35,000   $ 36,000   $ 32,000
</TABLE>

DATE OF DEATH IS THE 5TH CONTRACT ANNIVERSARY

<TABLE>
<CAPTION>
                                                                   EXAMPLE 1  EXAMPLE 2  EXAMPLE 3
                                                                   ---------  ---------  ---------
<S>  <C>                                                           <C>        <C>        <C>
a.   Purchase Payments Made Prior to Death, accumulated at 5%....  $ 34,000   $ 34,000   $ 34,000
b.   Contract Value on Date of Death.............................  $ 38,000   $ 38,000   $ 28,000
c.   1 Year Ratchet Option Value.................................  $ 38,000   $ 40,000   $ 33,000
Death Benefit is larger of a, b, and c...........................  $ 38,000   $ 40,000   $ 34,000
</TABLE>

DATE OF DEATH IS THE 10TH CONTRACT ANNIVERSARY

<TABLE>
<CAPTION>
                                                                   EXAMPLE 1  EXAMPLE 2  EXAMPLE 3
                                                                   ---------  ---------  ---------
<S>  <C>                                                           <C>        <C>        <C>
a.   Purchase Payments Made Prior to Death, accumulated at 5%....  $ 36,000   $ 36,000   $ 36,000
b.   Contract Value on Date of Death.............................  $ 39,000   $ 34,000   $ 31,000
c.   1 Year Ratchet Option Value.................................  $ 39,000   $ 37,000   $ 32,000
Death Benefit is larger of a, b, and c...........................  $ 39,000   $ 37,000   $ 36,000
</TABLE>

                                      B-1
<PAGE>
APPENDIX C--EXPLANATION OF EXPENSE CALCULATIONS
The expense for a given year is calculated by multiplying the projected
beginning of the year policy value by the total expense rate. The total expense
rate is the sum of the variable account expense rate plus the total Portfolio
expense rate plus the annual administrative charge rate.

The policy values are projected by assuming a single payment of $1,000 grows at
an annual rate equal to 5% reduced by the total expense rate described above.

For example, the 3 year expense for the Growth Stock Series is calculated as
follows:

<TABLE>
<C>        <S>                                                                                                 <C>        <C>
          --------------------------------------------------------------------------------------------------------------
           Total Variable Account Annual Expenses                                                                  1.35%
          --------------------------------------------------------------------------------------------------------------
    +      Total Series Fund Operating Expenses
          --------------------------------------------------------------------------------------------------------------
    =      Total Expense Rate
          --------------------------------------------------------------------------------------------------------------
</TABLE>

Year 1 Beginning Policy Value = $1000.00
Year 1 Expense = 1000.00 X      = $

Year 2 Beginning Policy Value = $1029.80
Year 2 Expense =      X      = $

Year 3 Beginning Policy Value = $
Year 3 Expense =      X      = $

So the cumulative expenses for years 1-3 for the Growth Stock Series are equal
to $     + $     + $     = $

If the contract is surrendered, the surrender charge is the surrender charge
percentage times the purchase payment minus the 10% free withdrawal amount:

<TABLE>
<S>                         <C> <C>              <C> <C>                  <C> <C>
Surrender Charge Percentage  X  (Initial Premium  -  10% Free Withdrawal)  =  Surrender Charge
           0.05              X    (  $1000.00     -     $100.00     )      =       $45.00
</TABLE>

So the total expense if surrendered is $     + $     = $

                                      C-1
<PAGE>
FORTIS
FORTIS FINANCIAL GROUP
P.O. BOX 64284
ST. PAUL, MN 55164

               BULK RATE
              U.S. POSTAGE
                  PAID
            PERMIT NO. 3794
            MINNEAPOLIS, MN

PROSPECTUS
MAY 1, 1998

FORTIS
SERIES FUND, INC.

FORTIS MASTERS+
VARIABLE ANNUITY