Banner Life Insurance Co – ‘485BPOS’ on 4/30/96

As of:  Tuesday, 4/30/96   ·   Effective:  4/30/96   ·   Accession #:  9781-96-17   ·   File #s:  33-19236, 33-19236

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485BPOS     Filing Document                                       87±   362K 
 2: EX-99.1     Part 2                                                 5±    21K 
 3: EX-99.2     Opinion Letters                                        5     14K 

485BPOS   —   Filing Document
Document Table of Contents

485BPOS
1st “Page” of 8
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
PROSPECTUS:  FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY                  
Issued by Banner Life Insurance Company (a Maryland Stock Company)              
1701 Research Boulevard  Rockville, Maryland  20850               

This Prospectus describes a Flexible Premium Variable Life                      
Insurance Policy ("Policy") issued by Banner Life Insurance                     
Company ("Banner Life").  The Policy provides lifetime insurance                
protection to age 95, and provides flexibility to vary the amount               
and frequency of premiums and to adjust the level of Death                      
Benefit payable under the Policy.  A Policyowner also has the                   
opportunity, beginning 30 days after the Issue Date, to allocate                
net premiums among several Sub-Accounts of the Banner Life                      
Variable Account (the "Variable Account") and Banner Life's                     
General Account.  Thus, the Policyowner can adjust premiums,                    
Death Benefit, and the underlying investments to provide for                    
changing insurance and financial planning needs under a single                  
insurance policy.                                                               

The Policy provides for a Death Benefit payable at the Insured's                
death and for a Cash Surrender Value that can be obtained by                    
completely surrendering the Policy or by making partial                         
surrenders.  The Policy also provides for loans using the Policy                
as the sole collateral.  (Surrenders and loans may have adverse                 
tax consequences).  As long as the Policy remains in force, the                 
Death Benefit will not be less than the current Specified Amount                
of the Policy.  The Policy will remain in force so long as the                  
Cash Surrender Value is sufficient to pay certain monthly charges               
imposed in connection with the Policy (if the Guaranteed Death                  
Benefit Rider is in effect with respect to the Policy, or during                
the first three policy years, the Policy will remain in force so                
long as the Policyowner has met the Guarantee Premium                           
Requirement, even if the Cash Surrender Value is insufficient to                
pay monthly charges).                                                           

The Account Value and the duration of the Policy will vary to                   
reflect the investment performance of the Sub-Accounts of the                   
Variable Account.  Depending on the Benefit option elected, the                 
amount of the Death Benefit above the Specified Amount may also                 
vary with that investment performance.  The Policyowner selects                 
the Sub-Accounts that the net premiums are invested in and                      
determines the allocation of the net premium among those                        
Sub-Accounts and the General Account.  Each Sub-Account of the                  
Variable Account will invest solely in a corresponding series of                
the Scudder Variable Life Investment Fund ("Fund"), a mutual fund               
that has seven investment portfolios of Class A shares that are                 
available under the Policies:  a Money Market Portfolio, a Bond                 
Portfolio, a Capital Growth Portfolio, a Balanced Portfolio, a                  
Growth and Income Portfolio, an International Portfolio and a                   
Global Discovery Portfolio ("Portfolios").  The accompanying                    
prospectus for the Fund describes the investment objectives and                 
policies and the risks of these Portfolios.  The Policyowner                    
bears the entire investment risk under the Policy for all amounts               
allocated to the Variable Account; with respect to all such                     
amounts, there is no guaranteed minimum Account Value, and in any               
event there is no guarantee that the Policy will remain in force                
regardless of the amount of premiums paid (unless the Guaranteed                
Death Benefit Rider is in effect or the Policy duration is three                
years or less and the Policyowner has met the Guarantee Premium                 
Requirement).                                                                   

This Prospectus generally describes only the variable portion of                
the Policy.                                                                     

It may not be advantageous to purchase a Policy as a replacement                
for another type of life insurance or as a means to obtain                      
additional insurance protection if the purchaser already owns a                 
flexible premium variable life insurance policy.                                

THIS PROSPECTUS MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT                    
PROSPECTUS FOR SCUDDER VARIABLE LIFE INVESTMENT FUND.  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.  PLEASE                   
READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE                         
REFERENCE.                                                                      

The Date of This Prospectus is May 1, 1996.                 

TABLE OF CONTENTS               
DEFINITIONS................................................   1                 

SUMMARY....................................................   2                 

BANNER LIFE INSURANCE COMPANY AND BANNER LIFE VARIABLE                          
ACCOUNT....................................................   7                 
Banner Life Insurance Company   ......................   7            
Banner Life Variable Account  ........................   7            
Scudder Variable Life Investment Fund.................   7            
Portfolios of the Fund................................   8            

POLICY RIGHTS AND BENEFITS.................................   9                 
Account Value.....................................       9            
Surrenders...........................................   10            
Partial Surrenders.................................     10            
Policy Loans........................................... 11            
Transfers.............................................  12            
Death Benefit.......................................... 12            
Right to Examine Policy.............................    15            
Right to Exchange for Fixed Life Insurance............. 15            
Voting Rights.........................................  16            
Additional Benefits Provided by Rider.................  16            

PREMIUMS AND                                                                    
ALLOCATION.................................................   19                
Issuance of a Policy.................................... 19           
Premiums.............................................    19           
Allocation of Premiums.................................. 20           
Lapse, Grace Period, Guaranteed Death Benefit Rider                   
and Reinstatement...................................     20           

CHARGES AND DEDUCTIONS....................................... 22                
Surrender Charges....................................    22           
Premium Expense Charge............................       22           
Monthly Deduction.....................................   23           
Variable Account Charges...........................      24           
Other Charges.....................................       25           

PAYMENT OPTIONS.............................................. 25                
Election of Payment Option...........................    25           
Available Options.....................................   25           
Payment of Proceeds................................      26           
Automatic Payment Option..............................   26           
Additional Options...................................    26           
Excess Interest......................................... 26           

GENERAL PROVISIONS........................................    27                
Postponement of Payments................................ 27           
The Contract..........................................   27           
Not Contestable After Two Years.....................     27           
Misstatement of Age and Sex.........................     28           
Effective Date of Coverage.............................. 28           
Termination..........................................    28           
Annual Report.........................................   28           
Projection of Values...................................  28           
Suicide.............................................     28           
Ownership............................................    28           
Assignment of Policy..................................   29           
Beneficiary..........................................    29           
Change of Beneficiary .................................  29           
Death of Beneficiary...................................  29           

THE GENERAL ACCOUNT.....................................      29                
General Description ..................................   29           
General Account Value.................................   29           
Transfers............................................... 30           

DISTRIBUTION OF THE POLICIES.............................     31                

FEDERAL TAX MATTERS.......................................... 31                
Tax Status of the Policy..............................   31           
Tax Treatment of Policy Benefits........................ 32           
Taxation of Banner Life.............................     34           
Employment-Related Benefit Plans.......................  34           

ADDITIONAL INFORMATION....................................    35                
Safekeeping of the Account's Assets...................   35           
Addition, Deletion, or Substitution of Investments...    35           
State Regulation.......................................  35           
Senior Officers and Directors of Banner Life Insurance                
Company...............................................   36           
Legal Matters.......................................     37           
Legal Proceedings....................................    37           
Experts................................................. 37           

FINANCIAL STATEMENTS......................................    37                

APPENDIX A A-1                                                                  
Illustrations of Death Benefits and Values A-1              

APPENDIX B B-1                                                                  
Type A Option Example B-1                                   
Type B Option Example B-1                                   
Corridor Percentages B-2                                    

The Policy is not available in all States.                                      

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY                          
JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE.  NO               
DEALER, SALESMAN, OR OTHER PERSONS IS AUTHORIZED TO GIVE ANY                    
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS                 
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF                 
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT               
BE RELIED UPON.                                                                 

THE PRIMARY PURPOSE OF THIS POLICY IS TO PROVIDE INSURANCE                      
PROTECTION.  NO CLAIM IS MADE THAT THE POLICY IS IN ANY WAY                     
SIMILAR OR COMPARABLE TO AN INVESTMENT IN A MUTUAL FUND.                        

DEFINITIONS               
Account Value - The sum of the Variable Account Value and the                   
General Account Value.                                                          

Attained Age - The age of the Insured on his/her birthday prior                 
to the last Policy Anniversary.                                                 

Beneficiary - The person or persons to whom Banner Life pays the                
Death Benefit when the Insured dies.                                            

Cash Surrender Value - The Policy Proceeds if the Policy is                     
surrendered in full prior to the Maturity Date.  It is the                      
Account Value on the date of surrender less any Indebtedness and                
any applicable surrender charge.                                                

Death Benefit - The amount payable when the Insured dies.  This                 
amount may or may not include the Account Value, as selected by                 
the Policyowner.                                                                

Fund - The Scudder Variable Life Investment Fund, a mutual fund                 
of the series type which includes seven separate investment                     
portfolios of Class A shares in which the Variable Account                      
invests.                                                                        

General Account Value - The Policy's value in the General Account               
of Banner Life.                                                                 

Indebtedness - The sum of all unpaid Policy loans and accrued                   
interest on loans.                                                              

Insured - The person whose life is insured by the Policy.                       

Issue Date - The date on which processing of an approved                        
application is completed and a Policy is issued to the                          
Policyowner.                                                                    

Maturity Date - The date on which the Policy's Cash Surrender                   
Value becomes payable to the Policyowner, if living.  This date                 
may be designated by the Policyowner.  If no designation is made,               
the Maturity Date will be the Policy Anniversary after the                      
Insured's 95th birthday.  The Policy terminates on the Maturity                 
Date.                                                                           

Monthly Guarantee Premium - A scheduled premium based on the                    
Specified Amount of the Policy.  The Policyowner is not required                
to follow this schedule but following the schedule does ensure                  
that the Policy will remain in force during the Guarantee Period.               

Monthly Anniversary - The same date in each succeeding month as                 
the Policy Date except that whenever the Monthly Anniversary                    
falls on a date other than a Valuation Day, the Monthly                         
Anniversary will be deemed to be the next Valuation Day.  If any                
Monthly Anniversary is the 29th, 30th, or 31st day of a month                   
that does not have that number of days, then the Monthly                        
Anniversary will be the last day of that month.                                 

Planned Annual Premium - A schedule of premium payments designed                
solely as an aid to financial planning and to facilitate premium                
reminder notices.  There is no obligation to adhere to this                     
schedule, and doing so does not assure that the Policy will not                 
lapse.                                                                          

Policyowner - The person named as the owner in the application,                 
unless he or she has assigned ownership to someone else.                        

Policy Anniversary - The same day and month as the Policy Date                  
each year that the Policy remains in force.                                     

Policy Date- The date the Policy becomes effective, and the date                
from which Monthly Anniversaries, Policy Months, Policy                         
Anniversaries and Policy Years are determined.                                  

Policy Month - A month that begins on the same day of each month                
as the Policy Date.                                                             

Portfolio - A separate investment division of the Scudder                       
Variable Life Investment Fund.  The Scudder Variable Life                       
Investment Fund has seven Portfolios of Class A shares available                
for investment by the Variable Account:  a Money Market                         
Portfolio, a Bond Portfolio, a Capital Growth Portfolio, a                      
Balanced Portfolio, a Growth and Income Portfolio, an                           
International Portfolio, and a Global Discovery Portfolio.                      

Policy Year - A year that starts on the Policy Date or on a                     
Policy Anniversary.                                                             

Proceeds - The amount payable under a Policy (a) upon the death                 
of the Insured, (b) on the Maturity Date, or (c) upon the                       
surrender of the Policy.                                                        

Specified Amount - The minimum Death Benefit payable under the                  
Policy so long as the Policy remains in force.                                  

Sub-Account- One of the subdivisions of the Variable Account.                   

Valuation Day - Any day that Banner Life is open for business and               
the New York Stock Exchange is open for trading.                                

Valuation Period - The period of time from the end of one                       
Valuation Day to the end of the next Valuation Day.                             

Variable Account Value - The sum of the Policy's value in each                  
Sub-Account.                                                                    

SUMMARY               

The following summary of Prospectus information should be read in               
conjunction with the detailed information appearing elsewhere in                
this Prospectus and is qualified in its entirety by that detailed               
information.  Any variations from information in this Prospectus,               
which may be required in certain states, are contained in                       
supplements to this Prospectus or in the individual Policy                      
delivered in a particular state, as appropriate.  Unless                        
otherwise indicated the description of the Policy contained in                  
this Prospectus assumes that the Policy is in force and there is                
no Indebtedness.                                                                

The Policy                                                                      

The Flexible Premium Variable Life Insurance Policy described in                
this Prospectus is a life insurance contract that provides for                  
life insurance coverage on the named Insured up to age 95, cash                 
values, surrender rights, loan privileges, and other features                   
associated with conventional life insurance.  The Policy is a                   
"variable" policy because the cash value (called the "Account                   
Value") will increase or decrease depending upon the investment                 
experience of the Sub-Accounts of the Variable Account to which                 
the Policyowner allocates the premium.  The Death Benefit may                   
also vary with that investment experience (depending on the                     
Benefit option selected by the Policyowner) but, so long as the                 
Policy is in force, will always be at least equal to the                        
Specified Amount of the Policy.  However, if and to the extent                  
the Policyowner allocates premiums to Banner Life's General                     
Account, then the Account Value is guaranteed.  (The Account                    
Value and Death Benefits under a conventional, fixed-benefit life               
insurance policy are guaranteed and do not vary with investment                 
experience.)  The minimum Specified Amount for which a Policy                   
will be issued is $25,000.                                                      

The Policy is a "flexible premium" policy because the Policyowner               
does not have to pay premiums according to a fixed schedule.  The               
Policyowner will establish a schedule of planned premiums, but                  
the failure to pay the Planned Annual Premiums will not                         
necessarily cause the Policy to lapse nor will paying the Planned               
Annual Premiums necessarily keep the Policy in force to the                     
Maturity Date.  Additional premiums may be paid at the                          
Policyowner's option at any time before the Maturity Date (within               
certain limits), and additional premiums may be required in order               
to keep the Policy in force.  However, the Policy will not lapse                
if the Guaranteed Death Benefit Rider is in effect and the                      
Policyowner has met the Guarantee Premium Requirement.  In                      
addition, the Policy will not lapse during the Guarantee Period                 
of three years from the Policy Date if the guarantee premium                    
requirement has been met.  (See Lapse, Grace Period, Guaranteed                 
Death Benefit Rider and Reinstatement.)  An unscheduled or                      
additional premium payment may have Federal income tax                          
consequences.  (See Federal Tax Matters.)  Generally no Policy                  
will be issued covering an Insured over age 80 at the outset.                   

Subject to the terms of any Beneficiary designation or                          
assignment, during the Insured's lifetime the Policyowner may:                  

(1)   assign or surrender the Policy;                                           

(2)  obtain a Policy loan;                                                      

(3)   obtain a partial surrender;                                               

(4)  transfer Account Value among the Sub-Accounts and the                      
General Account;                                                      

(5)  make a change in the Policy with Banner Life's consent;                    

(6)  transfer the ownership of the Policy; and                                  

(7)  exercise other rights and receive other benefits as defined                
in the Policy.                                                                  

The Variable Account                                                            

The Policyowner determines the allocation of the premiums and                   
Account Value among the Sub-Accounts of the Variable Account and                
the General Account.  (See Premiums and Allocation of Premiums.)                
The Variable Account currently has seven Sub-Accounts.  The                     
Sub-Accounts invest solely in shares of a corresponding portfolio               
of the Scudder Variable Investment Fund (the "Fund"), which                     
currently has the following seven separate investment portfolios                
of Class A shares: the Money Market Portfolio, the Bond                         
Portfolio, the Capital Growth Portfolio, the Balanced Portfolio,                
the Growth and Income Portfolio, the International Portfolio and                
the Global Discovery Portfolio (collectively the "Portfolios").                 
Each of the Portfolios has a different investment objective.                    
(See Scudder Variable Life Investment Fund.)                                    

Transfers                                                                       

The Policyowner may transfer all or part of the Account Value                   
among the Sub-Accounts or between one or more Sub-Accounts and                  
the General Account.  Currently, there is no limit on the                       
frequency of transfers from a Sub-Account (however, Banner Life                 
reserves the right to impose such a limit in the future).  There                
currently is no charge for the first four transfers in a Policy                 
Year.  There currently is a charge of $15 for the fifth and each                
subsequent transfer in each Policy Year (Banner Life reserves the               
right to impose a charge of up to $25 for all transfers).  The                  
minimum amount that may be transferred is $500 or, if less, the                 
entire value of the Sub-Account or General Account from which the               
transfer is being made (excluding amounts in the General Account                
securing Policy loans).  (See Transfers.)  Transfers from the                   
General Account are limited in frequency, time, and amount, and                 
are subject to postponement.  (See The General Account.)                        

Death Benefit                                                                   

The Policy provides for the payment of a Death Benefit upon the                 
death of the Insured.  The Policy contains two Benefit options,                 
Type A Option and Type B Option.  Under Type A Option (the                      
"variable" Death Benefit option), the Death Benefit will be at                  
least the Specified Amount plus the Account Value on the date of                
the Insured's death.  Under Type B Option, the Death Benefit will               
be at least the Specified Amount.                                               

Under either Benefit option, so long as the Policy remains in                   
force, the Death Benefit will not be less than the Specified                    
Amount.  The Death Benefit may, however, exceed the Specified                   
Amount.  The amount by which the Death Benefit exceeds the                      
Specified Amount depends upon the Benefit option chosen and the                 
Account Value of the Policy.  Under either option, the Death                    
Benefit will be no less than the Account Value on the date of the               
Insured's death multiplied by the applicable corridor percentage.               
(See Death Benefit.)  The Death Benefit Proceeds will be reduced                
by any Indebtedness and any due and unpaid charges.  The Death                  
Benefit may be paid in a lump sum or under a Payment Option.                    
(See Payment Options.)                                                          

At any time after the first Policy Year, the Policyowner may                    
adjust the Death Benefit by increasing or decreasing the                        
Specified Amount.  (Such an increase or decrease may have Federal               
income tax consequences.  See Federal Tax Matters.)  In addition,               
the Policyowner may change the Benefit option.  Changing the                    
Specified Amount and Death Benefit option are both subject to                   
certain restrictions.  (See Death Benefit - Change in Benefit                   
Option; Death Benefit - Change in Specified Amount; or Death                    
Benefit - Decrease in Specified Amount.)                                        

Account Value                                                                   

On the Issue Date the Account Value equals the amount of the                    
first net premium less the monthly deduction for the month                      
following the Policy Date.  Thereafter, the Account Value will                  
increase or decrease from day to day depending on the investment                
experience of the selected Sub-Accounts.  There is no guaranteed                
minimum Account Value.  The Policyowner may surrender the Policy                
at any time for its Cash Surrender Value, which is equal to the                 
Account Value reduced by any Indebtedness and any applicable                    
surrender charge.  The Policyowner may also make a partial                      
surrender and obtain a portion of the Account Value at any time.                
Surrenders may have adverse tax consequences.  (See Federal Tax                 
Matters.)  Partial surrenders may be subject to a surrender                     
charge and will reduce both the Account Value and Death Benefit.                
Therefore, partial surrenders that would reduce the Death Benefit               
below $25,000 are not permitted.                                                

The Account Value is equal to the sum of the Variable Account                   
Value and the General Account Value.  The Account Value will                    
reflect the premiums paid, the investment experience of the                     
selected Sub-Accounts, any Policy loan activity, any partial                    
surrenders, the charges imposed in connection with the Policy,                  
and indirectly the expenses of the Fund.  (See Account Value.)                  
Accordingly, although the Policy offers the possibility that the                
Account Value will increase, there is no assurance that it will                 
increase and it may decrease.                                                   

The Variable Account Value is equal to the sum of the values of                 
each Sub-Account.  (See Account Value - Variable Account Value.)                
The minimum General Account Value is guaranteed by Banner Life.                 
(See The General Account - General Account Value.)                              

Charges and Deductions                                                          

A surrender charge composed of a flat amount for underwriting                   
administrative costs and a percentage of premiums paid in the                   
first two Policy Years up to one guideline annual premium for                   
sales expenses may be imposed in the event of a full surrender                  
during the first ten Policy Years.  The flat amount is $200 and                 
the percentage is 27.5% of premiums for the first five Policy                   
Years, and these amounts will grade down to zero over the next                  
five Policy Years.  (See Surrender Charges.)                                    

In any event, the surrender charge will not exceed $200 plus                    
27.5% of one guideline annual premium.  For this purpose, the                   
guideline annual premium will be deemed never to exceed $141 per                
$1,000 of Specified Amount.                                                     

A partial surrender charge is imposed upon a partial surrender.                 
The charge is the full surrender charge multiplied by the ratio                 
of the partial surrender amount to the Cash Surrender Value, plus               
up to $25 for administrative costs.  (See Surrender Charges.)                   

Additional surrender charges are imposed on surrendered amounts                 
attributable to an increase in the Specified Amount.  The charge                
is composed of a flat amount for underwriting administrative                    
costs and a percentage of premiums attributable to the increase                 
paid in the two years following the increase up to the guideline                
annual premium attributable to the increase for sales expenses.                 
The flat amount is $200 and the percentage is 27.5% for five                    
years after the date of the increase, and these amounts will                    
grade down to zero over the next five years.  (See Surrender                    
Charges.)                                                                       

Banner Life imposes a 5% premium expense charge against each                    
premium prior to its allocation to the selected Sub-Accounts                    
and/or the General Account.  The premium expense charge consists                
of a 2.5% sales charge and a 2.5% charge for premium taxes.  (See               
Premium Expense Charge.)  The surrender charge, imposed on                      
certain surrenders, also includes a sales charge (see above).                   

A "monthly deduction" will be deducted from the Account Value on                
each Monthly Anniversary.  The monthly deduction consists of the                
cost of insurance charge, described below, an administrative                    
expense charge (which is currently $5 per month, and is                         
guaranteed not to exceed $7.50 per month) and the cost of any                   
additional benefits provided by rider.  (See Monthly Deduction.)                

The monthly cost of insurance charge is based on the Policy's net               
amount at risk (which is equal to the difference between the                    
Death Benefit divided by 1.0032737 and the Account Value on the                 
monthly anniversary) and on the Attained Age, sex and risk class                
of the Insured.  Annual cost of insurance rates will be                         
determined by Banner Life based upon its expectations as to                     
future mortality experience.  The cost of insurance rates are                   
guaranteed not to exceed the maximum cost of insurance rates                    
specified in the Policy.  (See Monthly Deduction - Cost of                      
Insurance.)                                                                     

A daily charge, currently at an effective annual rate of .75% of                
the average daily net assets of each Sub-Account (and guaranteed                
not to exceed .90%), will be deducted from the Sub-Accounts for                 
Banner Life's assumption of certain mortality and expense risks                 
incurred in connection with the Policy.  (See Variable Account                  
Charges - Mortality and Expense Risk Charge.)                                   

The value of the net assets of the Sub-Accounts will also reflect               
the investment management fee and other expenses incurred by the                
Fund because the Variable Account purchases shares of the Fund.                 

Banner Life may also impose a transfer charge of up to $25 on                   
each transfer request.  Currently the first four transfer                       
requests each Policy Year are free, and additional transfer                     
requests cost $15 each.  (See Other Changes - Transfer Charge.)                 
There is also a charge of $25 for each projection of values after               
the first projection in each Policy Year.  (See Other Charges.)                 

Illustrations                                                                   

Sample projections of hypothetical Death Benefits, Cash Surrender               
Values, and Account Values are included in Appendix A to this                   
Prospectus.  These projections of hypothetical values may be                    
helpful in understanding the long-term effects of different                     
levels of investment performance, the charges and deductions, and               
generally in comparing this Policy to other life insurance                      
policies.  These projections also show the value of the planned                 
premiums accumulated with interest, and show that if the Policy                 
is surrendered in the early Policy Years, the Cash Surrender                    
Value payable may be low compared to the premiums accumulated at                
interest.  This reflects the cost of insurance protection and                   
other charges prior to surrender, and demonstrates that the                     
Policy should not be purchased as a short-term investment.                      

Tax Treatment                                                                   

Banner Life believes that a Policy issued on a standard premium                 
class basis generally should meet the Section 7702 definition of                
a life insurance contract. With respect to a Policy issued on a                 
substandard basis or a Policy issued with a Primary Insured Term                
Rider, there is insufficient guidance to determine if such a                    
Policy would satisfy the Section 7702 definition of a life                      
insurance contract, particularly if the Owner pays the full                     
amount of premiums permitted under such a Policy.                               

Assuming that a Policy qualifies as a life insurance contract for               
Federal income tax purposes, a Policyowner should not be deemed                 
to be in constructive receipt of Policy Account Value under a                   
Policy until there is a distribution from the Policy. Moreover,                 
death benefits payable under a Policy should be completely                      
excludable from the gross income of the Beneficiary. As a result,               
the Beneficiary generally should not be taxed on these proceeds.                
(See "Tax Status of the Policy," page 31.)                                      

Under certain circumstances, a Policy may be treated as a                       
"Modified Endowment Contract." If the Policy is a Modified                      
Endowment Contract, then all pre-death distributions, including                 
Policy loans, will be treated first as a distribution of taxable                
income and then as a return of basis or investment in the                       
contract. In addition, prior to age 59.5 any such distributions                 
generally will be subject to a 10% penalty tax. (For further                    
discussion on the circumstances under which a Policy will be                    
treated as a Modified Endowment Contract, see "Tax Treatment of                 
Policy Benefits," page 32.)                                                     

If the Policy is not a Modified Endowment Contract, distributions               
generally will be treated first as a return of basis or                         
investment in the contract and then as disbursing taxable income.               
Moreover, loans will not be treated as distributions. Finally,                  
neither distributions nor loans from a Policy that is not a                     
Modified Endowment Contract are subject to the 10% penalty tax.                 
(See "Distributions from Policies Not Classified as Modified                    
Endowment Contracts," page 33.)                                                 

Correspondence                                                                  

All correspondence regarding the Policy should be addressed or                  
directed to the sales agent who sold the Policy or to Banner Life               
at the following address:                                                       

Banner Life Insurance Company                                         
1701 Research Boulevard                                               
Rockville, Maryland  20850                                            
Phone: (301) 294-6940                                                 

All inquiries should include the Policy number and the Insured's                
name and Owner's name, if different.                                            

This Prospectus describes only the variable or Variable Account                 
aspects of the Policy, except where fixed or General Account                    
aspects are specifically mentioned.  For a brief summary see The                
General Account.                                                                

BANNER LIFE INSURANCE COMPANY AND BANNER LIFE SEPARATE ACCOUNT              

Banner Life Insurance Company                                                   

Banner Life Insurance Company ("Banner Life") is a stock life                   
insurance company that is a wholly owned subsidiary of Legal and                
General Life Insurance Company of America, Inc., which is a                     
wholly owned subsidiary of Legal and General America, Inc., which               
in turn is wholly owned by Legal and General Netherlands -                      
Holdings BV, which is a wholly-owned subsidiary of Legal &                      
General International Limited, a United Kingdom based holding                   
company.  The ultimate controlling entity is Legal and General                  
Group Plc, a United Kingdom company.  Banner Life is principally                
engaged in offering universal life and term insurance and is                    
licensed in the District of Columbia and all states except Maine                
and New York.                                                                   

Banner Life is the successor to Government Employees Life                       
Insurance Company ("GELICO"), which was a subsidiary of GEICO                   
Corporation.  GELICO was organized as a District of Columbia                    
corporation on April 28, 1949.  GELICO changed its name to Banner               
Life Insurance Company, and became a wholly owned indirect                      
subsidiary of Legal and General Group Plc on December 1, 1983.                  

Banner Life Variable Account                                                    

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

Although the assets in the Variable Account are the property of                 
Banner Life, the assets in the Variable Account attributable to                 
the Policies are not chargeable with liabilities  arising out of                
any other business which Banner Life may conduct.  The Variable                 
Account was established by Banner Life as a segregated asset                    
account on September 3, 1987.  The Variable Account will receive                
and invest the premiums allocated to it under the Policies.                     

The Variable Account has been registered as a unit investment                   
trust under the Investment Company Act of 1940 and meets the                    
definition of a separate account under the federal securities                   
laws.  Registration with the Securities and Exchange Commission                 
does not involve supervision of the management or investment                    
practices or policies of the Variable Account or Banner Life by                 
the Commission.                                                                 

Scudder Variable Life Investment Fund                                           

The Variable Account invests in shares of the Scudder Variable                  
Life Investment Fund (the "Fund"), a mutual fund of the series                  
type.  The Fund consists of the following portfolios of Class A                 
shares: a Money Market Portfolio, a Bond Portfolio, a Capital                   
Growth Portfolio, a Balanced Portfolio, a Growth and Income                     
Portfolio, an International Portfolio and a Global Discovery                    
Portfolio (collectively, the "Portfolios").  The assets of each                 
Portfolio of the Fund are held separate from the assets of the                  
other Portfolios.  Thus, each Portfolio operates as a separate                  
investment portfolio, and the income or losses of one Portfolio                 
have no effect on the investment performance of any other                       
Portfolio.                                                                      

The investment objectives and policies of each Portfolio are                    
summarized below.  There is no assurance that any of the                        
Portfolios will achieve its stated objectives.  More detailed                   
information, including a description of risks, is in the Fund's                 
prospectus, which accompanies this Prospectus and which should be               
read carefully in conjunction with this Prospectus and kept for                 
future reference.                                                               

The Fund is designed to provide investment vehicles for variable                
annuity or variable life insurance contracts of various insurance               
companies.  For more information about the risks associated with                
the use of the same funding vehicle for both variable annuity and               
variable life insurance contracts of various insurance companies,               
see the Fund's prospectus.                                                      

Portfolios of the Fund                                                          

The following seven Portfolios of the Fund are available under                  
the Policies:                                                                   

Money Market Portfolio (Class A Shares).  This Portfolio seeks to               
maintain stability of capital and, consistent therewith, to                     
maintain liquidity of capital and to provide current income.  The               
Portfolio purchases money market securities such as U.S. Treasury               
obligations, commercial paper, and certificates of deposit and                  
banker's acceptances of domestic and foreign banks, including                   
foreign branches of domestic banks, and enters into repurchase                  
agreements.  An investment in this  Portfolio is neither insured                
nor guaranteed by the U.S. government, and there is no assurance                
that the portfolio will be able to maintain a stable net asset                  
value.                                                                          

Bond Portfolio (Class A shares).  This Portfolio pursues a policy               
of investing for a high level of income consistent with a high                  
quality portfolio of securities.  Under normal circumstances, the               
Portfolio invests at least 65% of its assets in bonds, including                
U.S. Government, corporate, and other notes and bonds paying high               
current income.  The Portfolio may also invest in preferred                     
stocks consistent with the Portfolio's objectives.                              

Capital Growth Portfolio (Class A shares).  This Portfolio seeks                
long-term capital appreciation and, consistent therewith, current               
income through a broad and flexible investment program.  The                    
Portfolio seeks to achieve these objectives by investing                        
primarily in income producing, publicly-traded equity securities,               
such as common stocks and securities convertible into common                    
stock, with an emphasis on securities of established companies.                 
However, in order to reduce risk, as market or economic                         
conditions may periodically warrant, the Portfolio may also                     
invest up to 25% of its assets in short-term indebtedness.                      

Balanced Portfolio (Class A shares).  The investment objective of               
this Portfolio is to realize a high level of long-term total rate               
of return consistent with prudent investment risk.  The assets of               
this  Portfolio will be invested in the following three market                  
sectors:  (1) common stock, preferred stock, and other equity                   
securities; (2) bonds and other debt securities with maturities                 
generally exceeding one year; and (3) money market instruments                  
and other debt securities with maturities generally not exceeding               
one year.                                                                       

Growth and Income Portfolio (Class A shares). This Portfolio                    
seeks long-term growth of capital, current income and growth of                 
income.   The Portfolio invests primarily in common stocks,                     
preferred stocks, and securities convertible into common stocks                 
of companies which offer the prospect for growth of earnings                    
while paying current dividends.  The Portfolio allocates its                    
investments among different industries and companies, and changes               
its portfolio securities for investment considerations and not                  
for trading purposes.  The Portfolio attempts to achieve its                    
investment objective by investing heavily in dividend-paying                    
stocks, preferred stocks and securities convertible into common                 
stocks.  The Portfolio may also invest in foreign securities and                
in repurchase agreements.                                                       

International Portfolio (Class A shares).  This Portfolio seeks                 
long-term growth of capital primarily through diversified                       
holdings of marketable foreign equity investments.  The Portfolio               
invests in companies, wherever organized, which do business                     
primarily outside the United States.  The Portfolio intends to                  
diversify investments among several countries and not to                        
concentrate investments in any particular industry.  The                        
Portfolio primarily invests in equity securities, and it may also               
invest in fixed income securities of foreign governments and                    
companies.                                                                      

Global Discovery Portfolio (Class A shares).  This Portfolio                    
seeks above-average capital appreciation over the long term by                  
investing primarily in the equity securities of small companies                 
located throughout the world.  The Portfolio is designed for                    
investors looking for above-average appreciation potential (when                
compared with the overall domestic stock market as reflected by                 
Standard & Poor's 500 Composite Price Index) and the benefits of                
investing globally, but who are willing to accept above-average                 
stock market risk, the impact of currency fluctuation and little                
or no current income.   The Portfolio generally invests in small,               
rapidly growing companies that offer the potential for above-average            
returns relative to larger companies, yet are frequently                        
overlooked and thus under-valued by the market.  The Portfolio                  
has the flexibility to invest in any region of the world.  It can               
invest in companies based in emerging markets as well as firms                  
operating in developed economies.                                               

Fund Management and Fees                                                        

Scudder, Stevens & Clark, Inc. (the "Adviser"), provides                        
management and investment advisory services to the Fund.  The                   
Adviser provides investment research and portfolio management                   
services to a number of mutual funds and other clients.  Each                   
Portfolio pays the Adviser a fee for its investment advisory                    
services at the following annual rates:                                         

Percentage of the Portfolio's 
Portfolio                Average Daily Net Asset Value                          

Money Market Portfolio*            .370%                                        
Bond Portfolio*                    .475%                                        
Capital Growth Portfolio*          .475%                                        
Balanced Portfolio*                .475%                                        
Growth and Income Portfolio*       .475%                                        
International Portfolio*           .875%                                        
Global Discovery Portfolio*        .975%                                        

* Class A shares                                                                

POLICY RIGHTS AND BENEFITS              

Account Value                                                                   

Each Policy has an Account Value.  The Account Value forms the                  
basis for the Cash Surrender Value, which the Policyowner can                   
obtain by completely or partially surrendering the Policy or by                 
taking out a Policy loan although such transactions may be                      
taxable.  (See Federal Tax Matters.)  The Account Value can also                
affect the amount of the Death Benefit above any minimum.                       

The Account Value on the Issue Date will be equal to any net                    
premiums received on or before the Issue Date less any monthly                  
deductions due on or before the Issue Date.  (See Charges and                   
Deductions.)                                                                    

On any subsequent Valuation Day the Account Value is equal to the               
Variable Account Value plus the General Account Value.  The                     
following discussion relates only to the Variable Account.  The                 
General Account is discussed elsewhere in this Prospectus.  (See                
The General Account.)                                                           

Variable Account Value.  The Variable Account Value is equal to                 
the sum of the values of each Sub-Account.  The value of each                   
Sub-Account is calculated first on the Issue Date and thereafter                
on each Valuation Day.  The value held in any Sub-Account is                    
equal to the number of Sub-Account units allocated to the Policy                
multiplied by that Sub-Account's unit value.                                    

For each Sub-Account, the unit value was initially set at $1.00.                
The unit value for each subsequent Valuation Period is the Net                  
Investment Factor for that Valuation Period multiplied by the                   
unit value for the immediately preceding Valuation Period.  Each                
Valuation Period has a single unit value which applies for each                 
day in the period.                                                              

The Net Investment Factor measures the investment performance of                
a Sub-Account during a Valuation Period.  Each Sub-Account has                  
its own distinct Net Investment Factor.  The Net Investment                     
Factor of a Sub-Account for a Valuation Period is equal to the                  
result of dividing (1) minus (2) by (3) and then subtracting (4),               
where:                                                                          

(1)  is the value of the net assets of the shares of the Fund                   
Portfolio held by the Sub-Account, determined at the end of           
the Valuation Period;                                                 

(2)  is any amount charged against the Sub-Account for taxes                    
which we may consider necessary or any amount set aside               
during the Valuation Period by Banner Life as a provision             
for taxes attributable to the operation or maintenance of             
the Sub-Account;                                                      

(3)  is the value of the net assets of the shares of the Fund                   
Portfolio held by the Sub-Account, determined at the end of           
the preceding Valuation Period; and                                   

(4)  is the charge imposed each day in the Valuation Period to                  
compensate Banner Life for certain mortality and expense risks                  
assumed, which will never be more than an annual rate of .90% of                
the net assets of the Sub-Account and is currently set at 0.75%.                

The Net Investment Factor may be greater or less than one;                      
therefore, the valuation of a unit may increase or decrease.  It                
should be noted that changes in the Net Investment Factor may not               
be directly proportional to changes in the net asset value of                   
underlying Fund shares because of Policy charges, any charge or                 
credit for tax reserves, and the effect of the various purchase                 
and sale transactions on any particular day.                                    

The number of Sub-Account units allocated to a Policy will                      
increase when:                                                                  

(1)  net premiums are allocated to that Sub-Account; and                        

(2)  transfers from other Sub-Accounts or the General Account are               
allocated to that Sub-Account.                                        

The number of Sub-Account units allocated to a Policy will                      
decrease when:                                                                  

(1)  transfers to other Sub-Accounts or to the General Account                  
are made from that Sub-Account;                                       

(2)  a portion of the monthly deduction is allocated to that                    
Sub-Account;                                                                    

(3)  any loan or loan interest is transferred from that                         
Sub-Account; and                                                                

(4)  any partial surrender and its partial surrender charge is                  
allocated to that Sub-Account.                                                  

The number of Sub-Account units added or subtracted by each                     
transaction is determined by dividing the dollar amount of the                  
transaction by the unit value on the date of the transaction.                   

Surrenders                                                                      

The Policyowner may surrender the Policy for its Cash Surrender                 
Value at any time before the Maturity Date while the Insured is                 
alive by sending a written request to Banner Life.  The surrender               
will be effective on the date the written request is received at                
Banner Life's Administrative Office or any subsequent date the                  
Policyowner may specify.                                                        

If a Policy is surrendered, Banner Life will pay the Cash                       
Surrender Value, which is the Account Value less any Indebtedness               
and less the surrender charge, if any.  (See Surrender Charges.)                
The Proceeds may be received in a lump sum or under a Payment                   
Option.  (See Payment Options.)  Coverage under the Policy will                 
terminate as of the date the surrender is effective.  Surrenders                
may have Federal income tax consequences.  (See Federal Tax                     
Matters.)                                                                       

Partial Surrenders                                                              

A partial surrender may be made after the first Policy Year, and                
prior to the Maturity Date, by written request.  (Partial                       
surrenders may also have Federal income tax consequences.  See                  
Federal Tax Matters.)  The minimum amount which will be paid as a               
partial surrender is $500.  In addition, the Cash Surrender Value               
after a partial surrender must be at least $1,000.  Partial                     
surrenders may be subject to a surrender charge and a transaction               
fee of up to $25, and may be taxable transactions.  (See                        
Surrender Charges.)  Banner Life reserves the right to limit the                
number of partial surrenders in a Policy Year.                                  

When a partial surrender is made, the amount of the partial                     
surrender (including any partial surrender charge) will be                      
deducted from the Account Value, and if the Benefit Type B Option               
is in effect (See Death Benefit), the Specified Amount will be                  
decreased by any amount necessary to ensure that the net amount                 
at risk is not increased after the partial surrender.  The                      
decrease will reduce first the Specified Amount provided under                  
the original application and then increases in the Specified                    
Amount in the order of those increases.  (Banner Life reserves                  
the right to restrict partial surrenders that would decrease the                
Specified Amount in the first five Policy Years.)  Those partial                
surrenders may affect the way in which the cost of insurance is                 
calculated.  (See Monthly Deduction - Cost of Insurance; Death                  
Benefit - Methods of Affecting Insurance Protection.)  If the                   
Benefit Type A Option is in effect, the Specified Amount will not               
change.                                                                         

A partial surrender cannot be made if it would result in                        
reduction of the Specified Amount to less than the greater of (a)               
$25,000; or (b) under Type A Option Policies, the Account Value                 
multiplied by the applicable corridor percentage, less the                      
Account Value; or (c) under Type B Option Policies, the Account                 
Value multiplied by the applicable corridor percentage.                         

The Policyowner may specify how a partial surrender should be                   
allocated among the General Account and the Sub-Accounts of the                 
Variable Account, provided that the minimum amount remaining in                 
the General Account or any Sub-Account is at least $100.  If the                
Policyowner does not so specify, the partial surrender will be                  
allocated among the General Account and the Sub-Accounts in                     
proportion to the values in each.                                               

Policy Loans                                                                    

While the Policy is in force the Policyowner may obtain all or                  
part of the available loan value by written notice.  The Policy,                
assigned to Banner Life, is the only security needed.  Loan                     
payments may be deferred (See General Provisions - Postponement                 
of Payments), however, a Policy loan used to pay a premium on any               
Policy issued by Banner Life will not be postponed.  A loan taken               
from, or secured by, a Policy may have Federal income tax                       
consequences.  (See Federal Tax Matters.)                                       

The loan value will be 90% of the Account Value of the Policy,                  
minus the surrender charge, if any.  The available loan value                   
will be the loan value less the sum of:                                         

(1)  any existing Policy loan;                                                  

(2)  loan interest in advance to the next Policy Anniversary; and               

(3)  any due and unpaid monthly deductions.                                     

Interest on Policy loans will be payable in advance from the date               
of the loan to the next Policy Anniversary at the annual interest               
rate of 7.4% (which is equivalent to an annual rate of 8.0% if                  
paid in arrears).  Interest is payable in advance at the                        
beginning of each Policy Year (if a loan is repaid during the                   
year, Banner Life will return any unearned interest to the                      
Account Value).  If interest is not paid when due, it will be                   
added to the loan and bear interest at the same rate.  This                     
capitalization of interest may have Federal income tax                          
consequences.  In addition, there are limits on the deductibility               
of interest on Policy loans for Federal income tax purposes.                    
(See Federal Tax Matters.)                                                      

When a Policy loan is made or if interest is not paid when due, a               
transfer sufficient to secure the loan will be made from the                    
Variable Account to the General Account.  This amount will earn                 
interest at an annual rate of at least 4%.  The Policyowner may                 
allocate the transfer among the Sub-Accounts, providing that the                
amount remaining in any Sub-Account is at least $100.  If the                   
Policyowner does not make such an allocation, Banner Life will                  
allocate the transfer in proportion to the account value in each                
Sub-Account of the Variable Account.                                            

At all times when a Policy loan is outstanding, there must be                   
sufficient value in the General Account to secure the                           
Indebtedness.                                                                   

A Policy loan may be repaid in full or in part, in minimum                      
amounts of $50 (or any remaining loan outstanding, if less), at                 
any time while the Policy is in force.  Failure to pay back a                   
loan will not terminate the Policy unless the Indebtedness equals               
or exceeds the Cash Surrender Value.  (See Lapse, Grace Period,                 
Guaranteed Death Benefit Rider and Reinstatement - Lapse.)                      

When a loan repayment is made, the Policyowner may request that                 
value in the General Account, related to that repayment, be                     
transferred to one or more Sub-Accounts of the Variable Account.                
Otherwise, such amount will remain in the General Account.                      

A Policy loan will permanently affect the Account Value of a                    
Policy, and may permanently affect the amount of the Death                      
Benefit, even if the loan is repaid.  The effect could be                       
favorable or unfavorable depending on whether the investment                    
performance of the Sub-Accounts selected by the Policyowner is                  
less than or greater than the interest rate credited to the value               
in the General Account securing the loan.  In comparison to a                   
Policy under which no loan was made, Account Values will be lower               
if the General Account interest rate is less than the investment                
performance of the Sub-Accounts, and greater if the General                     
Account interest rate is higher than the investment performance                 
of the Sub-Accounts.  If  Policy loan interest is not paid but is               
taken out of the Account Value, this would also affect the                      
Account Value and Death Benefit.                                                

Transfers                                                                       

The Policyowner may transfer all or part of the Account Value                   
among the Sub-Accounts or between one or more Sub-Accounts and                  
the General Account.                                                            

Transfers may be made by a written request.  Currently, there is                
no limit on the frequency of transfers from a Sub-Account                       
(however, Banner Life reserves the right to impose such a limit                 
in the future).  Transfers from the General Account are limited                 
in frequency, time, and amount, and are subject to postponement.                
(See The General Account.)                                                      

The minimum amount that may be transferred from a Sub-Account of                
the Variable Account is $500 or, if less, the entire value of the               
Sub-Account from which the transfer is being made.  Transfers                   
from a Sub-Account will generally occur at the end of the day on                
which the written request is received.  (See General Provisions -               
Postponement of Payments.)                                                      

Currently, there is no charge for the first four transfer                       
requests each Policy Year.  A $15 charge is currently imposed on                
the fifth and each subsequent transfer request.  Banner Life                    
reserves the right to impose a charge of up to $25 on all                       
transfer requests.  Transferring Account Value from two                         
Sub-Accounts into another Sub-Account or the General Account                    
counts as one transfer request.  Similarly, transferring Account                
Value from one Sub-Account into two Sub-Accounts counts as one                  
transfer request.                                                               

Death Benefit                                                                   

The Policy provides two Benefit options and the Policyowner                     
selects one of the options in the application.  The Death Benefit               
under either option will never be less than the current Specified               
Amount of the Policy as long as the Policy remains in force.                    
(See Lapse, Grace Period, Guaranteed Death Benefit Rider and                    
Reinstatement.)  The minimum Specified Amount is $25,000.                       

Type A Option.  Under Type A Option, the Death Benefit will be                  
the greater of (i) the Specified Amount plus the Account Value on               
the date of death, or (ii) the Account Value on the date of death               
multiplied by the applicable corridor percentage.  The applicable               
corridor percentage is 250% for an Insured attained age 40 or                   
below.  For Insureds with an Attained Age over 40, the percentage               
declines as shown in the Corridor Percentage Table in Appendix B.               
Accordingly, under Type A Option the Death Benefit will always                  
vary as the Account Value varies.  Policyowners who prefer to                   
have favorable investment performance and any additional premiums               
above the Guarantee Premiums reflected in increased Death                       
Benefits should select Type A Option.  Examples illustrating the                
Type A Option are in Appendix B.                                                

Type B Option.  Under Type B Option, the Death Benefit will be                  
the greater of (i) the Specified Amount, or (ii) the Account                    
Value on the date of death multiplied by the applicable corridor                
percentage.  The applicable corridor percentage is the same as                  
under Type A Option: 250% for an Insured attained age 40 or below               
and for Insureds with an Attained Age over 40, the percentage                   
declines as shown in the Corridor Percentage Table in Appendix B.               
Accordingly, under Type B Option the Death Benefit will remain                  
level unless the Account Value multiplied by the applicable                     
corridor percentage exceeds the Specified Amount, in which case                 
the Death Benefit will vary as the Account Value varies.                        
Policyowners who are satisfied with the amount of their insurance               
coverage under the Policy and who prefer to have favorable                      
investment performance and any additional premiums above the                    
Guarantee Premiums reflected in higher Account Value, rather than               
increased insurance coverage, generally should select Type B                    
Option.  Examples illustrating the Type B Option are in Appendix                
B.                                                                              

Change in Benefit Option.  The Policyowner may change the Benefit               
option by sending a written request to Banner Life.  The                        
effective date of change will be the Monthly Anniversary on or                  
next following the date the request is received by Banner Life or               
the date the change is approved by Banner Life if evidence of                   
insurability is requested.  A change in the Benefit Option may                  
have Federal income tax consequences.  (See Federal Tax Matters.)               

If the Benefit option is changed from Type A Option to Type B                   
Option, the Specified Amount after the change will equal the                    
Specified Amount before the change plus the Account Value on the                
effective date of the change (i.e., the Specified Amount will be                
increased to equal the Death Benefit on the effective date of the               
change).                                                                        

If the Benefit option is changed from Type B Option to Type A                   
Option, the Specified Amount after the change will equal the                    
Specified Amount before the change less the Account Value on the                
effective date of the change (i.e., the Specified Amount will be                
decreased to equal the Death Benefit less the Account Value on                  
the effective date of the change).  Banner Life will not allow                  
such a change if it would result in a Specified Amount which is                 
less than the minimum Specified Amount.  This change is subject                 
to the premium limitation provision.  (See Premiums - Premium                   
Limitation.)                                                                    

No increased sales charges will be imposed upon a change in                     
Benefit option, nor will such a change in and of itself result in               
an immediate change in the Account Value.  Surrender charges are                
not affected by a change in Benefit option.  If, however, prior                 
to or accompanying a change in the Benefit option there has been                
an increase in the Specified Amount, the cost of insurance charge               
may be different for the increased amount.  (See Monthly                        
Deduction - Cost of Insurance.)                                                 

Increase in Specified Amount.  The Policyowner may request an                   
increase in the Specified Amount at any time after the first                    
Policy Year by submitting a written application.  Banner Life                   
will also require additional satisfactory evidence of                           
insurability.  The increase may not be less than $10,000.  The                  
effective date of the increase will be the Monthly Anniversary on               
or next following the date the increase is approved.  Although an               
increase need not necessarily be accompanied by an additional                   
premium, on the effective date of the increase the Cash Surrender               
Value must be sufficient to cover the monthly deduction on the                  
effective date of the increase to prevent the Policy from                       
lapsing.  (See Monthly Deduction and Lapse, Grace Period,                       
Guaranteed Death Benefit Rider and Reinstatement - Lapse.)                      
Requesting an increase in the Specified Amount will result in                   
certain additional or higher charges, including an increased                    
surrender charge.  (See Charges and Deductions.)  An increase in                
the Specified Amount may have Federal income tax consequences.                  
(See Federal Tax Matters.)                                                      

The increase in surrender charges will be payable for ten years                 
from the date of increase, and will be based on a flat amount                   
plus a percentage of any increase in premiums paid during the two               
years following the increase in Specified Amount up to the                      
guideline annual premium attributable to the increase.  (See                    
Surrender Charges.)  Banner Life will provide the Policyowner                   
with a revised table of full surrender charges for the Policy.                  

The Policyowner may cancel any increase in Specified Amount, for                
a limited period following the increase, by giving written notice               
to Banner Life's Administrative Office or to the agent through                  
whom the increase was arranged.  (See Right to Examine Policy.)                 

Decrease in Specified Amount. The Policyowner may request a                     
decrease in the Specified Amount any time after the first Policy                
Year.  Any decrease in the Specified Amount will become effective               
on the Monthly Anniversary on or following receipt of a written                 
request by Banner Life.  Banner Life reserves the right to limit                
the amount of any decreases in the Specified Amount during the                  
first five Policy Years and the Specified Amount may not be                     
decreased below $25,000.  Under Type A Option the Specified                     
Amount may not be decreased below the Account Value times the                   
applicable corridor percentage, less the Account Value, and under               
Type B Option it may not be decreased below the Account Value                   
times the applicable corridor percentage.  If, following the                    
decrease in Specified Amount, the Policy would not comply with                  
the premium limitation (See Premiums - Premium Limitation), the                 
decrease may be limited or Account Value may be returned to the                 
Policyowner (at the Policyowner's election), to the extent                      
necessary to meet these requirements.  Any decrease in the                      
Specified Amount will reduce insurance (and therefore the net                   
amount at risk) in the following order:                                         

(a)  insurance provided by the most recent increase;                            

(b)  insurance provided by the next most recent increases,                      
successively; and                                                               

(c)  insurance provided under the original application.                         

Decreases in the Specified Amount will affect the cost of                       
insurance charge.  (See Monthly Deduction - Cost of Insurance.)                 
The surrender charge will not be affected by a decrease in the                  
Specified Amount.  A decrease in the Specified Amount may have                  
Federal income tax consequences.  (See Federal Tax Matters.)                    

Methods of Affecting Insurance Protection.  The pure insurance                  
protection provided by a Policy is the difference between the                   
Death Benefit and the Account Value, and the Policyowner can                    
change this in several ways as his/her insurance or other needs                 
change.  These ways include increasing or decreasing the                        
Specified Amount of insurance, changing the level of premiums,                  
and, to a lesser extent, partially surrendering the Policy.                     
Although the consequences of each of these methods will depend                  
upon the individual circumstances, they may be summarized as                    
follows:                                                                        

(a)  A decrease in the Specified Amount will, subject to the                    
applicable corridor percentage limitations (See Death                 
Benefit), decrease the pure insurance protection and the              
cost of insurance charges under the Policy without generally          
reducing the Account Value.                                           

(b)  An increase in the Specified Amount may increase the amount                
of pure insurance protection, depending on the amount of              
Account Value and the resultant applicable corridor                   
percentage.  If the insurance protection is increased, the            
cost of insurance charge generally will increase as well.             

(c)  An increased level of premiums will increase the Account                   
Value and reduce the pure insurance protection, until the             
applicable corridor percentage of Account Value exceeds               
either the Account Value plus the Specified Amount (if Type           
A Option is in effect) or the Specified Amount (if Type B             
Option is in effect).  Increased premiums should also                 
increase the amount of funds available to keep the Policy in          
force.  An increased level of premiums may have Federal               
income tax consequences.  (See Federal Tax Matters.)                  

(d)  A reduced level of premiums generally will increase the                    
amount of pure insurance protection, depending on the                 
applicable corridor percentage limitations.  It also will             
result in a reduced amount of Account Value and will                  
increase the possibility that the Policy will lapse.                  

(e)  A partial surrender will reduce the Death Benefit.  (See                   
Partial Surrenders.)  However, it only affects the amount of          
pure insurance protection if the Death Benefit is based on            
the applicable corridor percentage of Account Value, because          
otherwise the decrease in the Death Benefit is offset by the          
amount of Account Value withdrawn.  The primary use of a              
partial surrender is to withdraw cash and reduce the Account          
Value.                                                                

In comparison, an increase in the Death Benefit Proceeds payable                
due to the operation of the applicable corridor percentage occurs               
automatically and is intended to help assure that the Policy                    
remains qualified as life insurance under federal tax law.  The                 
calculation of the Death Benefit based upon the applicable                      
corridor percentage occurs only when the Account Value of a                     
Policy reaches a certain proportion of the Specified Amount                     
(which may or may not occur).  Additional premiums, favorable                   
investment performance and large initial premiums tend to                       
increase the likelihood of the applicable corridor percentage                   
becoming operational after the first few Policy Years.  Such                    
increases will be temporary, however, if the investment                         
performance becomes unfavorable and/or premiums are stopped or                  
decreased.                                                                      

Payment of Death Benefit Proceeds.  Banner Life generally will                  
pay the Death Benefit Proceeds within 7 days after receipt of due               
proof of the Insured's death.  (See General Provisions -                        
Postponement of Payments.)  Banner Life will add interest to the                
Death Benefit from the date of death to the date of payment if                  
required by applicable law.  The Death Benefit may be paid in a                 
lump sum or under one of the Payment Options set forth in the                   
Policy.  (See Payment Options - Payment of Proceeds.)                           

Banner Life will accept as due proof of death of the Insured a                  
completed Claimant's Certificate, which will be furnished by                    
Banner Life, together with a certified copy of the Certificate of               
Death.  In some circumstances, Banner Life may require additional               
information to verify due proof of death even though a                          
Certificate of Death is furnished.                                              

Right to Examine Policy                                                         

The Policyowner may cancel the Policy within the later of 10 days               
from the date of receipt of the Policy, 10 days from the mailing                
or personal delivery to the Policyowner of the notice of the                    
right of withdrawal, or 45 days from the date the Policyowner                   
signs Part 1 of the application.  If the Policyowner cancels the                
Policy within this time period, Banner Life will refund any                     
premium paid.                                                                   

To cancel the Policy, the Policyowner should return it to the                   
agent through whom it was purchased or to Banner Life's                         
Administrative Office or such other method as described in the                  
contract.  A refund of premiums paid by check may be delayed                    
until the check has cleared the Policyowner's bank.  (See General               
Provisions - Postponement of Payments.)                                         

Similarly, the Policyowner may cancel any increase in Specified                 
Amount by giving written notice to Banner Life's Administrative                 
Office or to the agent through whom the increase was arranged                   
before the latest of:                                                           

(1)  10 days from the date of receipt of the Policy amendment                   
showing the increase;                                                           

(2)  10 days from the mailing or personal delivery to the                       
Policyowner of the notice of the right of withdrawal; or                        

(3)  45 days from the date the Policyowner signs the application                
for the increase.                                                               

Canceling an increase does not require Banner Life to return any                
premiums that may have been paid, although Banner Life reserves                 
the right to return any premiums associated with or allocable to                
a canceled increase in Specified Amount.                                        

Right to Exchange for Fixed Life Insurance                                      

For two years after the Issue Date, the Policyowner may exchange                
the Policy for a flexible premium life insurance policy.  The                   
Account Value of the new policy will not increase or decrease                   
with the investment performance of the Variable Account.  To                    
accomplish this, Banner Life will transfer, without charge, the                 
entire Variable Account Value to the General Account.  (See The                 
General Account.)  All future premiums will be allocated only to                
the General Account.  The issue age, premium class and net amount               
at risk will be the same as those of the Policy being exchanged.                

If the Policyowner increases the Specified Amount of the Policy                 
(and such increase is not the result of a change in Benefit                     
option), then during the two years following the increase the                   
Policyowner may convert the Policy to a flexible premium life                   
insurance policy issued by Banner Life subject to the same                      
conditions and principles applicable to a conversion of a newly                 
issued Policy.  Alternatively, the Policyowner can convert only                 
the increased amount simply by a transfer to the General Account,               
and if this is done then there will be no transfer fee for the                  
conversion.                                                                     

Voting Rights                                                                   

To the extent required by law, Banner Life will vote the Fund's                 
shares held in the Variable Account at regular and special                      
shareholder meetings of the Fund in accordance with instructions                
received from persons having voting interests in the                            
corresponding Sub-Accounts of the Variable Account.  If, however,               
the 1940 Act or any regulation thereunder should be amended or if               
the present interpretation or general practice in respect thereof               
should change, and as a result Banner Life determines that it is                
allowed to vote the Fund's shares in its own right, Banner Life                 
may elect to do so.                                                             

The number of votes which a Policyowner has the right to instruct               
will be calculated separately for each Sub-Account.  The number                 
of votes which each Policyowner has the right to instruct will be               
determined by applying the Policyowner's percentage interest in                 
the Sub-Account (based on the Variable Account Value) to the                    
total number of votes attributable to the Sub-Account.                          
Fractional votes will be counted.  The number of votes of a                     
Portfolio which the Policyowner has the right to instruct will be               
determined as of a date established by Banner Life, but not more                
than 90 days before the meeting of the Fund.  Voting instructions               
will be solicited by written communication prior to such meeting.               
Each person having a voting interest in a Sub-Account will                      
receive proxy material, reports and other materials relating to                 
the appropriate Portfolio.                                                      

Banner Life will vote Fund shares attributable to the Policies as               
to which no timely instructions are received and any Fund shares                
held by Banner Life as to which Policyowners have no beneficial                 
interest, in proportion to the voting instructions which are                    
received with respect to all Policies participating in that                     
Portfolio.  Voting instructions to abstain on any item to be                    
voted upon will be applied on a pro rata basis to reduce the                    
votes eligible to be cast.                                                      

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

Additional Benefits Provided by Rider                                           

In addition to the basic rights and benefits summarized above,                  
the Policy may provide additional benefits if the Policyowner has               
elected to have one or more riders added to the Policy.  The                    
riders currently available are briefly summarized below, but the                
following descriptions are qualified in their entirety by the                   
actual riders, which should be consulted for a complete                         
description of the benefits provided and the restrictions,                      
exceptions, and limitations that may be applicable.  Of course,                 
the benefits provided by rider do not apply unless the rider is                 
in force at the applicable time.  All Riders may not be available               
in all states.                                                                  

There is a separate charge for each rider.  The charge will vary                
depending on factors such as age, sex, and risk classification.                 
The charge is included in the monthly deduction.  (See Monthly                  
Deduction.)                                                                     

Certain combinations of riders are not permitted.  Neither the                  
Waiver of Monthly Deduction Benefit Rider nor the Mortgage                      
Disability Income Rider can be combined with the Disability                     
Benefit Rider.                                                                  

Waiver of Monthly Deduction Benefit Rider.  This rider provides                 
that Banner Life will waive the monthly deduction if the insured                
becomes totally disabled (as defined in the rider) prior to age                 
65 while the Policy and the rider are in force.  The waiver                     
applies to the monthly cost of insurance charges for the Policy                 
and the monthly administrative charge.  The waiver does not begin               
until the insured has been disabled for six months.  If the                     
disability occurs before age 60, the waiver continues until                     
maturity, surrender, or termination as long as the insured                      
continues to be totally disabled.  If the disability occurs after               
age 60 and before age 65, the waiver continues until age 65 or                  
during the first year of the disability, whichever is longer.                   
(The rider terminates at age 65).                                               

It is important to note that this rider does not necessarily                    
prevent the Policy from lapsing even if the monthly deduction is                
being waived, because nevertheless the Account Value can be                     
reduced to zero due to negative investment performance.                         

Accidental Death Benefit Rider.  This rider provides that Banner                
Life will pay the accidental death benefit amount, in addition to               
the death benefit provided under the basic coverage, if the                     
insured dies from an "accidental death," as defined in the rider.               
Generally, an accidental death is one that occurs within 90 days                
of an accidental bodily injury or an accidental drowning and that               
results directly from that accidental occurrence.  The accidental               
death can result from a disease or infection, provided that such                
disease or infection results directly from an accidental bodily                 
injury and begins within 30 days after the date of the injury.                  
In addition, there are a number of specific exclusions listed in                
the rider.  This rider terminates no later than age 70.  The                    
maximum amount available under this rider is the lower of (a) the               
sum of any Specified Amount plus the Primary Insured Term Rider                 
(as described below) under the basic coverage or (b) $200,000.                  

Primary Insured Term Rider. Term life insurance to age 95 is                    
available through this rider on the life of the person insured                  
under the basic coverage.  This provides an additional death                    
benefit, but no additional Account Value.  The maximum amount                   
available under the rider is five (5) times the Specified Amount                
under the basic coverage.  This rider terminates upon maturity,                 
surrender, or termination of the basic coverage, or upon the                    
Policyowner's request.                                                          

Other Insured Term Rider.  This rider provides term life                        
insurance to age 95 on a specified individual (the "other                       
insured") other than the insured under the basic coverage (the                  
"primary insured").  An insurable interest must exist between the               
"other insured" and the primary insured.  This rider does not                   
provide any additional Account Value.  The maximum amount                       
available is the initial Specified amount under the basic                       
coverage plus the amount, if any, under a Primary Insured Term                  
Rider.  This rider may be converted, without evidence of                        
insurability, to a permanent plan if the exchange is made before                
the "other insured" attains age 70.  If the "other insured"                     
survives the primary insured, he or she may convert this rider                  
within sixty (60) days of the primary insured's death.                          

Child Term Rider.  This rider provides term life insurance on                   
children of the primary insured.  The minimum amount available is               
$5,000 (but the death benefit will be only $1,000 if the child's                
death occurs before 30 days of age), and the maximum amount                     
available is $25,000.  Each insured child should be named                       
separately in the Policy.  This rider terminates when the child                 
reaches age 25.  At certain times, this rider can be converted to               
a permanent life plan covering the insured child without evidence               
of insurability, but the conversion must be made before the                     
insured child reaches age 25.  If the primary insured dies while                
this rider is in force, the insurance on the child(ren) will                    
continue to age 25 with no further premiums due.                                

Spouse Term Rider.  Term insurance to age 75 for the insured's                  
spouse is provided by this rider.  The maximum amount is the                    
initial Specified Amount for the basic coverage plus the amount,                
if any,  under a Primary Insured Term Rider.  If the primary                    
insured dies while the rider is in force, the insurance on the                  
spouse will continue to age 75 with no further premiums due.                    
This rider may be converted, without evidence of insurability, to               
a permanent plan of insurance if the conversion is made before                  
the spouse attains age 70.                                                      

Cost of Living Adjustment Rider.  The Specified Amount of the                   
Policy would be periodically increased to reflect increases in                  
the Consumer Price Index while this rider is in force.  The                     
increases would take place every two years.  However, there would               
be no further increases after the insured attains age 56 (or the                
fifth policy year, if later).  Individual increases would never                 
exceed $30,000 every two years (regardless of the actual change                 
in the CPI) and the total of all increases in the Specified                     
Amount as a result of the rider could never exceed $200,000.  The               
monthly cost of insurance charge would be increased to reflect                  
the increased Specified Amount since that would cause an increase               
in the net amount at risk.  (See Monthly Deduction - Cost of                    
Insurance.)  Policyowners will be notified before an increase is                
to take effect, and they can elect not to accept the increase.                  
If they elect not to accept the increase, no further increases                  
will be offered, and the rider will terminate.                                  

Disability Benefit Rider.  Upon continued total disability of the               
insured, this rider provides for monthly payments into the                      
Account Value.  The rider will only be issued with respect to                   
insureds age 15 to 55.  The benefit is only payable for total                   
disabilities that (a) result from bodily injury or disease; (b)                 
prevent the insured from working at an occupation for                           
compensation or profit; (c) start while the rider is in force;                  
(d) and continue for at least four months.  However, certain                    
permanent and total losses (listed in the rider) need not prevent               
working at an occupation in order for the disability benefits to                
be payable.  Certain exclusions are listed in the rider (for                    
example, disabilities resulting from self-inflicted injuries,                   
from any act or incident of war whether declared or not, and from               
certain aircraft related activities are not covered).  The                      
benefit amount will be established at issue in units of $10.00.                 
The rider terminates when the insured reaches age 60 (unless the                
insured is already disabled upon reaching age 60, in which case                 
the rider does not terminate until recovery) or when the basic                  
coverage terminates, whichever is earlier.                                      

It is important to note that even if disability benefit payments                
are being made into the Account Value under this rider, the                     
Policy could still lapse.  This might occur due to adverse                      
investment experience or lack of sufficient benefit amounts to                  
cover the monthly deduction, which would continue to be made.  If               
the Policy does lapse, the rider will terminate and benefit                     
payments will cease.                                                            

Mortgage Disability Income Rider.  This rider provides for                      
monthly benefit payments to the insured upon his or her total                   
disability.  This differs from the Disability Benefit Rider in                  
that cash payments are to be made directly to the insured instead               
of into the Policy's Account Value.  The rider will only be                     
issued with respect to insureds age 20 to 55 who have a mortgage.               
This rider pays benefits for the same total disabilities as the                 
Disability Benefit Rider and is subject to the same limitations                 
and exclusions.  Also like that rider, the benefit amount will be               
established at issue in units of $10.00 with a minimum benefit of               
$250.  The benefits under this rider do not increase the Account                
Value, and the Policy could lapse while this rider is in effect                 
and benefit payments are being paid.  If the basic coverage                     
lapses, the rider will terminate and benefit payments will cease.               

Guaranteed Death Benefit Rider.  See Lapse, Grace Period,                       
Guaranteed Death Benefit Rider and Reinstatement - Guaranteed                   
Death Benefit Rider.                                                            

PREMIUMS AND ALLOCATION                 

Issuance of a Policy                                                            

Individuals wishing to purchase a Policy must complete an                       
application and send it to Banner Life's Administrative Office.                 
Banner Life will review the application, and any medical                        
information or other data which it requires, to determine if the                
individual is insurable under its underwriting rules.  No Policy                
will be issued covering Insureds over the age of 80.  Coverage                  
will only become effective on the Policy Date after Banner Life                 
approves the amount applied for, assuming that the premium has                  
already been tendered.  Should an individual die before the                     
Policy Date, Banner Life's sole liability will be to return the                 
premium paid plus any interest earned on it.                                    

Premiums                                                                        

Premiums after the first must be paid to Banner Life at its                     
Administrative Office.  The first premium is due on the Policy                  
Date.  Additional premiums may be paid at any time while the                    
Insured is alive prior to the Maturity Date.  Each premium will                 
be subject to the premium expense charge.  A net premium is a                   
premium less the premium expense charge.  (See Premium Expense                  
Charge.)                                                                        

The Policy Schedule will indicate the amount of the Planned                     
Annual Premium.  The Planned Annual Premium may be increased or                 
decreased subject to the premium limitation and Banner Life's                   
approval.  Paying the Planned Annual Premiums is not mandatory                  
and does not mean the Policy will remain in force.  The Planned                 
Annual Premium is designed solely as an aid to financial planning               
and to facilitate premium reminder notices.  An unplanned premium               
payment may have Federal income tax consequences.  (See Federal                 
Tax Matters.)                                                                   

The Policy Schedule will also indicate the Monthly Guarantee                    
Premium on the Policy Date.  The Monthly Guarantee Premium                      
determines whether the Policy remains in effect during the                      
Guarantee Period, even if the Cash Surrender Value is                           
insufficient to pay the monthly deduction.  (See Lapse, Grace                   
Period, Guaranteed Death Benefit Rider and Reinstatement.)  The                 
Monthly Guarantee Premium will change if (1) the Specified Amount               
of the Policy is increased or decreased; (2) there is an increase               
in the amount of insurance of any riders or benefits attached to                
the Policy; (3) riders or benefits are added to or deleted from                 
the Policy; or (4) the rating classification is changed.  Banner                
Life will notify the Policyowner of the new Monthly Guarantee                   
Premium.  The new Monthly Guarantee Premium will be based on the                
Attained Age of the Insured at the date of the increase and the                 
total amount of coverage provided by the Policy, including any                  
riders and benefits attached to the Policy, following the change.               
(See Lapse, Grace Period, Guaranteed Death Benefit Rider and                    
Reinstatement.)                                                                 

Neither the Planned Annual Premium nor the Monthly Guarantee                    
Premium are mandatory.  If these premiums are not paid, insurance               
coverage under the Policy will nevertheless be continued until                  
the Cash Surrender Value is insufficient to pay the monthly                     
deduction.  (See Lapse, Grace Period, Guaranteed Death Benefit                  
Rider and Reinstatement.)  Conversely, except during the                        
Guarantee Period, paying the Planned Annual Premium or the                      
Monthly Guarantee Premium does not assure that the Policy will                  
remain in force.                                                                

Premium Limitation.  The sum of the premiums paid under the                     
Policy may not at any time exceed the premium limitation as of                  
such time.  The premium limitation is the greater of the                        
guideline single premium or the guideline level premium                         
multiplied by the number of years the Policy has been in force.                 
The guideline single premium and the guideline level premium are                
shown in the Policy and are defined generally in the Internal                   
Revenue Code.  These guideline premiums will be adjusted if the                 
Specified Amount is changed.  The premium limitation will not                   
apply if a premium is required to prevent termination of the                    
Policy.  (See Lapse, Grace Period, Guaranteed Death Benefit Rider               
and Reinstatement.)                                                             

Allocation of Premiums                                                          

The Policyowner determines in the application how the net                       
premiums will be allocated among the Sub-Accounts of the Variable               
Account and the General Account.  The Policyowner may allocate                  
any whole percentage of at least 10%, to any one or more                        
Sub-Accounts or to the General Account.  The total allocation                   
must equal 100%.  The Policyowner may change the net premium                    
allocation instructions at any time by written notice to Banner                 
Life's Administrative Office.  Premiums received after the Issue                
Date will be allocated at the end of the Valuation Period during                
which they are received.                                                        

Prior to the Issue Date and for 30 days thereafter, all net                     
premiums allocated to the Variable Account will be allocated to                 
the Money Market Sub-Account.  At the end of that 30 day period                 
the value in the Money Market Sub-Account will be transferred to                
the selected Sub-Accounts in accordance with the allocation                     
percentages specified by the Policyowner in the application.                    
This transfer will be made automatically without charge.  Net                   
premiums received in respect of an increase in Specified Amount                 
and allocated to the Variable Account will be held in the Money                 
Market Sub-Account for 30 days after the date of increase.                      

The Account Value will vary with the investment performance of                  
the selected Sub-Accounts and the Policyowner bears the entire                  
investment risk for the amounts allocated to the Variable                       
Account.  This will affect not only the Account Value, but it may               
also affect the Death Benefit and whether the Policy may lapse.                 
The Policyowner should periodically review the allocations of                   
Account Value in light of all relevant factors, including market                
conditions and his/her overall financial planning requirements.                 

Lapse, Grace Period, Guaranteed Death Benefit Rider and                         
Reinstatement                                                                   

Lapse.  The failure to pay a Planned Annual Premium or a Monthly                
Guarantee Premium will not itself cause the Policy to lapse, nor                
will paying those premiums necessarily prevent lapse except                     
during a Guarantee Period.  Lapse will only occur when the Cash                 
Surrender Value is less than the monthly deduction and the grace                
period expires without a sufficient payment (unless a Guaranteed                
Death Benefit Rider is in effect - see discussion below).                       
Insurance coverage will continue during the grace period but the                
Policy will be deemed to have no Account Value for purposes of                  
Policy loans and surrenders.                                                    

Grace Entry Except During A Guarantee Period.  The Policy will go               
into a grace period of 61 days if, on a Monthly Anniversary, the                
Cash Surrender Value is less than the monthly deduction.  Unless                
the Policy is within the Guarantee Period, the Policy will not                  
lapse if a premium equal to at least three monthly deductions is                
received during the grace period; however, if the Policy is                     
within the Guarantee Period (described below), the Policy will                  
not lapse if a premium equal to at least three times the current                
Monthly Guarantee Premium is received during the grace period.                  
The grace period of 61 days begins when Banner Life sends a                     
notice that the grace period has begun.                                         

At the time of going into the grace period any values in the                    
Sub-Accounts will be transferred to the General Account and will                
remain there until the required premium has been paid.                          

Banner Life will send a notice of the premium due to the                        
Policyowner's last known address and to any assignee of record at               
least 30 days prior to the date the Policy is to terminate.  If                 
the premium due on such Monthly Anniversary is not paid within                  
the grace period, all coverage under the Policy will terminate                  
without value at the end of the grace period.  If a death claim                 
occurs during the grace period, overdue monthly deductions will                 
be deducted from the Proceeds.                                                  

Guarantee Period.  The Guarantee Period is a period during which                
a special grace provision applies.  During the Guarantee Period,                
the Policy will remain in force if the sum of all premiums paid                 
since the beginning of the Guarantee Period (minus any Policy                   
loans and partial surrenders), is at least as great as the sum of               
all Monthly Guarantee Premiums for each of the Policy Months from               
the Policy Date to the end of the current Policy Month.  If this                
requirement is not met, the Policy will enter a grace period if                 
the Cash Surrender Value is less than the monthly deduction.  The               
Policy will lapse at the end of the grace period unless a premium               
equal to three times the current Monthly Guarantee Premium is                   
paid during the grace period.  The grace period of 61 days begins               
when Banner Life sends a notice that the grace period has begun.                

The Monthly Guarantee Premium is shown in the Policy Schedule,                  
and described below.                                                            

The Guarantee Period starts on the Policy Date and lasts for                    
three years.                                                                    

If a Policy enters a grace period and the required premium is not               
paid before the grace period ends, the Policy will lapse.                       

Guaranteed Death Benefit Rider.  A Guaranteed Death Benefit Rider               
is available under this Policy.  If a Policyowner purchases a                   
Guaranteed Death Benefit Rider, and if the Guarantee Premium                    
Requirement is met, the Policy will not enter a grace period (and               
thus will not lapse) even if the Cash Surrender Value is less                   
than the monthly deduction on a Monthly Anniversary.                            

The Guarantee Premium Requirement on each Monthly Anniversary is                
met if the sum of all premiums paid (less any partial surrenders                
and policy loans) is greater than the sum of all Monthly                        
Guarantee Premiums to date (including the Guarantee Premium for                 
the current Monthly Anniversary).  If on any Monthly Anniversary                
the Guarantee Premium Requirement is not met, Banner Life will                  
send a notice of the premium required to the Policy Owner.  If                  
the premium required is not received by Banner Life at its                      
Administrative Office prior to the next Monthly Anniversary, the                
Guaranteed Death Benefit Rider will terminate.  Thereafter, the                 
Policy will remain in force unless the Cash Surrender Value is                  
less than the monthly deduction, and the grace period expires                   
without a sufficient premium being paid, as described below.                    

The Monthly Guarantee Premium is shown in the Policy Schedule and               
described below.                                                                

The Guaranteed Death Benefit Rider will terminate:                              

(1)  on any Monthly Anniversary following Banner Life's notice to               
the Policyowner that the Guarantee Premium Requirement was            
not met, if Banner Life has not received the premium                  
required;                                                             

(2)  on the Monthly Anniversary coinciding with or next following               
written request from the Policyowner for termination of the           
Guaranteed Death Benefit Rider;                                       

(3)  upon termination of the Policy; or                                         

(4)  on the Policy Anniversary following the Insured's seventieth               
birthday.                                                                       

There is a charge for the Guaranteed Death Benefit Rider.  (See                 
Monthly Deduction - Rider Charge.)                                              

Monthly Guarantee Premium.  The Monthly Guarantee Premium is a                  
feature of the Policy which is used for two purposes: (1) to                    
measure the amount of premiums needed to be paid in order to                    
ensure that the Policy does not terminate during the Guarantee                  
Period; and (2) while a Guaranteed Death Benefit Rider is in                    
effect, to measure the amount of premiums needed to be paid in                  
order to ensure that the Policy does not terminate at any time                  
prior to age 70.  The Monthly Guarantee Premium is the same for                 
both of these purposes.                                                         

The Monthly Guarantee Premium is specified in the Policy                        
Schedule.  There will be a change in the Monthly Guarantee                      
Premium if:                                                                     

(1)  the Specified Amount of the Policy is increased or                         
decreased;                                                                      

(2)  the Insured's rating classification is changed;                            

(3)  there is an increase or decrease in the amount of insurance                
of any riders or benefits attached to the Policy; or                            

(4)  riders or benefits are added to, or deleted from, the                      
Policy.                                                                         

Reinstatement.  A Policy which terminates in accordance with the                
grace period provision may be reinstated within five years after                
the expiration of the grace period if:                                          

(1)  the Policyowner submits a written application;                             

(2)  evidence of the Insured's insurability is received and                     
approved by Banner Life; and                                                    

(3)  the required premium as described below is paid.                           

Except as provided below, the required premium is the sum of (a)                
plus (b) where:                                                                 

(a)  is the greater of zero, and the result of (i) the surrender                
charge at the date of entering the grace period plus (ii)             
any Indebtedness at that date, minus (iii) the Account Value          
at that date, all divided by the result of 1.00 minus the             
premium expense charge; and                                           

(b)  is a premium sufficient, in Banner Life's view, to keep the                
Policy in force for three months.                                               

On the date of reinstatement the Account Value of the Policy will               
equal the surrender charge at that time together with the Account               
Value provided by the premium in (b) above.                                     

If the policy is reinstated within a Guarantee Period then, in                  
lieu of the required premium above, a premium equal to (c) plus                 
(d) may be paid where:                                                          

(c)  is the Monthly Guarantee Premium times the number of months                
between the date of entering the grace period and the date            
of reinstatement; and                                                 

(d)  is a premium sufficient, in Banner Life's view, to keep the                
Policy in force for three months.                                               

In this case, the Account Value of the Policy on the date of                    
reinstatement will equal the Account Value at the date of                       
entering the grace period together with the Account Value                       
provided by the premium in (c) and (d) above.                                   

If the Policy is reinstated, then the surrender charges will be                 
the same as if the Policy had been continuously in force from its               
original Policy Date.                                                           

The effective date of reinstatement will be the Monthly                         
Anniversary following the date the application for reinstatement                
is approved by Banner Life.                                                     

CHARGES AND DEDUCTIONS              

Surrender Charges                                                               

If a Policy is surrendered during the first ten Policy Years,                   
Banner Life will assess a full surrender charge.  The full                      
surrender charge consists of a flat amount for initial                          
administrative expenses and a percentage of premiums paid in the                
first two Policy Years (up to the guideline annual premium) for                 
sales expenses.  During the first five Policy Years, the flat                   
amount is $200 and the percentage is 27.5% of those premiums.                   
The full surrender charge then grades down to zero over the next                
five Policy Years in regular monthly intervals.  The "guideline                 
annual premium" for a particular Policy is specified in the                     
Policy Schedule, which also contains a table of surrender charges               
based on the assumption that Planned Annual Premiums are paid for               
the first two Policy Years.  This serves to limit the sales load                
component of the surrender charge.  The flat amount for initial                 
administrative expenses is not expected to exceed actual costs.                 

In any event, the surrender charge will not exceed $200 plus                    
27.5% of $141 per $1,000 of Specified Amount.                                   

On a partial surrender from the Policy, a partial surrender                     
charge will be imposed and deducted from the amount of the                      
partial surrender.  The partial surrender charge equals (a) the                 
full surrender charge multiplied by the ratio of the partial                    
surrender amount to the Cash Surrender Value of the Policy, plus                
(b) the lesser of 2% of the amount of the partial surrender or                  
$25 for administrative costs (Banner Life does not expect any                   
profit from this administrative charge).  Future surrender                      
charges will be reduced by the same ratio used in (a).                          

Additional surrender charges apply to surrenders after an                       
increase in Specified Amount.  Banner Life will provide a new                   
table of surrender charges when an increase occurs.  The increase               
in surrender charges will be imposed on any surrender within ten                
years from the date of increase, and will be based on a flat                    
amount for underwriting administrative costs plus a percentage of               
any premium (up to one guideline annual premium) attributable to                
the increase in Specified Amount paid in the two years following                
the increase for sales expenses.  The flat amount is $200 and the               
percentage is 27.5% for the first five years from the date of                   
increase.  The additional surrender charge then grades down to                  
zero over the next five years.                                                  

The amount of premiums attributable to an increase in Specified                 
Amount will be based on a proportionate allocation of premiums                  
between the Specified Amount before the increase and the amount                 
of the increase in Specified Amount (on the basis of their                      
relative guideline annual premiums).                                            

Banner Life does not anticipate that the revenues derived from                  
the sales charges will be sufficient to cover all expected                      
distribution expenses.  Accordingly, Banner Life will pay such                  
expenses out of its general corporate funds, which include                      
amounts derived from the mortality and expense risk charge as                   
well as amounts derived from other types of insurance products,                 
amounts derived from Banner Life's investments, and all other                   
sources of funds available to Banner Life.                                      

Premium Expense Charge                                                          

Prior to the allocation of net premiums to the Sub-Accounts of                  
the Variable Account and to the General Account, Banner Life will               
deduct a 5.0% premium expense charge consisting of a 2.5% sales                 
charge and a 2.5% charge for premium taxes.  The premium less the               
premium expense charge equals the net premium.                                  

Sales Charge.  A sales charge of 2.5% of each premium will be                   
deducted to compensate Banner Life for certain sales and                        
distribution expenses.  Sales and distribution expenses include                 
agent sales commissions, the cost of printing prospectuses and                  
sales literature, and any advertising costs.  Sales and                         
distribution expenses may also be covered by the surrender                      
charge, described above.                                                        

Premium Taxes.  Various states and subdivisions impose a tax on                 
premiums received by insurance companies.  Therefore, the premium               
expense charge currently includes a deduction of 2.5% of every                  
premium for these taxes.  Premium taxes vary from state to state.               
The deduction represents an amount Banner Life considers                        
necessary to pay all premium taxes imposed by states and any                    
subdivisions thereof.  Banner Life reserves the right to change                 
the amount of this premium tax charge.                                          

Monthly Deduction                                                               

A monthly deduction is made from the Account Value of each Policy               
to compensate Banner Life for the cost of insurance coverage and                
any optional benefits added by rider, and for certain                           
administrative costs.  The monthly deduction will be deducted on                
the Policy Date and on each Monthly Anniversary.  Because                       
portions of the monthly deduction, such as the cost of insurance,               
can vary from month to month, the monthly deduction itself will                 
vary in amount from month to month.                                             

The monthly deduction will be calculated on each Monthly                        
Anniversary and will equal:                                                     

(1)  the cost of insurance for the Policy; plus                                 

(2)  the cost of any riders; plus                                               

(3)  the monthly policy fee.                                                    

The monthly deduction will be made from the Sub-Accounts and the                
General Account in proportion to the values held in those                       
accounts.                                                                       

Cost of Insurance.  A mortality charge will be deducted on each                 
Monthly Anniversary to compensate Banner Life for the cost of                   
insurance for the succeeding Policy Month.  This charge is                      
designed to compensate Banner Life for the anticipated cost of                  
paying Death Benefits to the Beneficiaries of Insureds who die                  
while the Policy is in force.  The cost of insurance is                         
determined on a monthly basis, and is determined separately for                 
the Specified Amount in the original application and for any                    
subsequent increases.                                                           

The mortality charge is based on the Policy's net amount at risk                
(which is the difference between the Death Benefit divided by                   
1.0032737 and the Account Value as of the beginning of the Policy               
Month) and on the Attained Age, sex and rating classification of                
the Insured.  Monthly cost of insurance rates will be determined                
by Banner Life based upon its expectation as to future mortality                
experience.  Tobacco users can qualify for standard risk                        
classification, while non-tobacco users can qualify for a                       
preferred risk classification.  The rates are guaranteed not to                 
exceed the maximum cost of insurance rates specified in the                     
Policy, which are based on the 1980 Commissioners' Standard                     
Ordinary Mortality Table, age last birthday, male or female, and                
the rating classification.  For standard and preferred risk                     
classifications, the cost of insurance rates are guaranteed not                 
to exceed 100% of the rates in that Table.  Banner Life may use                 
lower monthly cost of insurance rates at its option and currently               
intends to charge between 75% and 100% of the rates specified in                
that table for standard risks.  The rates may be higher than 100%               
of the rates in the applicable Table for Insureds in special or                 
sub-standard rating classifications.  Policyowners should not                   
assume that the maximum rates will not be charged.                              

The cost of insurance is (1) multiplied by the result of (2)                    
minus (3) where:                                                                

(1)  is the monthly cost of insurance rate;                                     

(2)  is the Death Benefit on the Monthly Anniversary divided by                 
1.0032737; and                                                                  

(3)  is the Account Value on the Monthly Anniversary.                           

If the Death Benefit is Type B Option and there has been an                     
increase in the Specified Amount, then the Account Value will                   
first be considered a part of the Specified Amount when the                     
Policy was issued.  If the Account Value is greater than the                    
Specified Amount, it will then be considered a part of each                     
increase in  order, starting with the first increase.                           

Rider Charge.  Banner Life deducts a monthly charge from the                    
Account Value for additional coverage provided by riders to the                 
Policy.                                                                         

Expense Charge.  Banner Life currently deducts a charge on each                 
Monthly Anniversary to compensate it for expenses incurred in                   
administering the Policy.  These expenses include costs of                      
maintaining records, processing Death Benefit claims, surrenders,               
transfers, and Policy loans, providing reports to Policyowners,                 
and appropriate overhead costs.  There is not necessarily a                     
relationship between the amount of the charge imposed on a                      
particular Policy and the amount of administrative expenses that                
may be attributable to that Policy.  This charge is "cost-based"                
and Banner Life does not expect a profit from this charge.  The                 
monthly charge is currently $5.00, and Banner Life guarantees                   
that this charge will never exceed $7.50 per month.                             

Variable Account Charges                                                        

Mortality and Expense Risk Charge.  Banner Life deducts a daily                 
charge from the Sub-Accounts as compensation for assuming certain               
mortality and expense risks under the Policy.  Banner Life may                  
realize a profit from this charge.  This charge is guaranteed not               
to exceed an effective annual rate of .90% of the average daily                 
net assets of each Sub-Account, and the current rate is .75%.                   
The mortality risk is the risk that the cost of insurance charges               
specified in the Policy will be insufficient to meet actual                     
claims.  Banner Life also assumes the risk that other expense                   
charges may be insufficient to cover the actual expenses incurred               
in connection with the Policy.                                                  

Federal Taxes.  Currently no charge is made to the Variable                     
Account for federal income taxes that may be attributable to the                
Variable Account.  Banner Life may, however, make such a charge                 
in the future.  Charges for other taxes, if any, attributable to                
the Variable Account may also be made.  (See Federal Tax                        
Matters.)                                                                       

Fund Expenses.  The value of the assets of the Variable Account                 
will reflect the investment management fee (See Scudder Variable                
Life Investment Fund - Fund Management and Fees) and other                      
expenses incurred by the Fund.                                                  

Other Charges                                                                   

Transfer Charge.  A transfer charge may be imposed for each                     
transfer request.  The charge will be deducted from the amount                  
transferred to compensate Banner Life for the costs in                          
effectuating the transfer.  The transfer charge is guaranteed not               
to exceed $25.  Currently, there is no charge for the first four                
transfers in each Policy Year, and a $15 charge is imposed on                   
each additional transfer request.                                               

Projection of Values Charge.  One projection of illustrative                    
future Death Benefits and Account Values will be provided each                  
Policy Year without a service fee.  Extra projections will be                   
provided upon request and payment of a $25 service fee.                         

PAYMENT OPTIONS                                                                 

Election of Payment Option                                                      

During the Policyowner's lifetime, the Policyowner may elect any                
Payment Option and may change such election if he or she has                    
reserved the right to do so.  Otherwise, any amount payable under               
the Policy will be paid in one lump sum.                                        

If the Policyowner elects a Payment Option for the Beneficiary,                 
the Beneficiary may not:                                                        

(1)  change or cancel the election;                                             

(2)  assign or transfer the amount held by Banner Life; or                      

(3)  withdraw any future installments or unpaid interest                        
installments unless these rights are granted in the                   
election.                                                             

If the Policyowner does not elect a Payment Option, the                         
Beneficiary may do so after the Policyowner's death.                            

Any election or change must be made by written notice to Banner                 
Life.  No election or change will be effective until Banner Life                
records it.                                                                     

Available Options                                                               

The Payment Options are all fixed options, so the amount of the                 
payments will be fixed and guaranteed at the time the payments                  
begin.                                                                          

Option A - Income for a Specified Period.  Based on each $1,000                 
of Proceeds, payments will be made in equal annual or monthly                   
installments for a specified period.  Payments will be made in                  
accordance with the Option A table in the Policy.  The first                    
installment will be paid on the date Proceeds are settled under                 
this option.  The Option A table is based on a guaranteed                       
interest rate of 3% a year, compounded yearly.                                  

Option B - Life Income.  Based on each $1,000 of Proceeds,                      
payments will be made in equal monthly installments during the                  
payee's lifetime.  Payments will be made in accordance with the                 
Option B table in the Policy:                                                   

(1)  with 240 installments guaranteed (20 year period certain);                 
or                                                                              

(2)  with 120 installments guaranteed (10 year period certain);                 
or                                                                              

(3)  with refund (specified installments will be paid until the                 
proceeds are exhausted); or                                                     

(4)  without refund (payments will be made only during the                      
payee's lifetime).                                                              

Under the Life Income without refund option, only one payment                   
would be made if the payee died before the second payment was                   
due, only two payments would be made if the payee died before the               
third payment was due, and so on.                                               

The first installment will be paid on the date Proceeds are                     
settled under this option.  The Option B table is based on a                    
guaranteed interest rate of 2-1/2% a year, compounded yearly.                   
Banner Life has the right to require satisfactory proof of any                  
payee's age.  The right to change options is not available after                
payments commence under this option.                                            

Under this option, the payee may choose an alternate monthly life               
income.  Proceeds may be used to buy a monthly life income at                   
rates then in use for single premium immediate annuities.                       

Banner Life shall deem that an election made under this Option B                
will have been made for the longest period certain which could                  
have been elected by the payee for the payee's age and amount                   
available, unless otherwise specified.                                          

Option C - Income of a Specified Amount.  The proceeds will be                  
paid in equal annual or monthly installments of a specified                     
amount until the Proceeds, with interest, are exhausted.  The                   
first installment will be paid on the date the Proceeds are                     
settled under this option.  The guaranteed interest rate is 3% a                
year, compounded yearly.                                                        

Option D - At Interest.  The proceeds may be left with Banner                   
Life to draw interest.  Interest may be paid annually,                          
semiannually, quarterly, or monthly.  The first payment will be                 
made at the end of the interest frequency period chosen.  The                   
guaranteed interest rate is 3% a year, compounded yearly.                       

Payment of Proceeds                                                             

Any amount payable under the Policy will be paid in one sum                     
unless otherwise provided.  All or part of this sum may be                      
applied to any Payment Option.  However, Payment Options will not               
be available if:                                                                

(1)  the Proceeds are less than $2,500;                                         

(2)  the amount of each payment is less than $50; or                            

(3)  in the case of Payment Option B, the payee is not a natural                
person receiving payment in his/her own right.                        

Proceeds left with Banner Life may be withdrawn by written notice               
where such right is given.                                                      

Automatic Payment Option                                                        

If settlement of the Proceeds of the Policy is delayed over 30                  
days, Option D will be applied automatically.  Interest will be                 
paid yearly and the person(s) entitled to the Proceeds has the                  
right to withdraw the Proceeds or elect any Payment Option                      
permitted by the Policy.                                                        

Additional Options                                                              

Any Proceeds payable under the Policy may be paid under any other               
method of payment agreed to by Banner Life at the time of                       
settlement.                                                                     

Excess Interest                                                                 

Interest credits during any guaranteed period will be increased                 
by any additional interest Banner Life may authorize in its sole                
discretion.  Banner Life is not required to authorize any                       
additional interest, and it may choose not to do so.                            

GENERAL PROVISIONS                

Postponement of Payments                                                        

Banner Life may postpone the calculation and payment of Cash                    
Surrender Values, loans, transfers or Death Benefits from the                   
Variable Account if:                                                            

(1)  the New York Stock Exchange is closed on other than                        
customary week-end and holiday closures, or trading on the            
New York Stock Exchange is restricted as determined by the            
SEC; or                                                               

(2)  the SEC by order permits postponement for the protection of                
Policyholders; or                                                               

(3)  an emergency exists, as determined by the SEC, as a result                 
of which disposal of securities is not reasonable, or                 
practicable, or it is not reasonable or practicable to                
determine the value of the net assets of the Variable                 
Account.                                                              

In addition, while it is Banner Life's current intent to process                
all transfers from Sub-Accounts immediately upon receipt of a                   
transfer request, Banner Life reserves the right to delay                       
effecting a transfer from a Sub-Account for up to seven days.                   
Banner Life may delay effecting such a transfer to avoid severe                 
disruptions to the Portfolios of the Fund if one of the                         
Portfolios must sell portfolio securities in order to make funds                
available for large amounts of redemptions or transfers being                   
made at the same time by or on behalf of Policyowners.  If this                 
happens, Banner Life will calculate the dollar value or number of               
units involved on or as of the date Banner Life receives a                      
written transfer request, but will not process the transfer to                  
the transferee Sub-Account or the General Account until a later                 
date during the 7-day delay period when the Portfolio underlying                
the transferring Sub-Account obtains liquidity to fund the                      
transfer request through sales of portfolio securities, new                     
Premium payments, transfers by Policyowners or otherwise.  During               
this delay period, the amount transferred will not be invested in               
a Sub-Account or the General Account.                                           

Banner Life may postpone the calculation and payment of Cash                    
Surrender Values, loans or transfers from the General Account for               
up to 6 months.                                                                 

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

The Contract                                                                    

The Policy, attached riders, amendments, benefits, and the                      
application, and any supplemental applications for additional                   
amounts, form the entire contract.  Only the President, a Vice                  
President, or the Secretary of Banner Life may change or waive                  
any provision in the Policy.  Any changes or waivers must be in                 
writing.                                                                        

Banner Life may not change or amend the Policy, except as                       
expressly provided in the Policy, without the Policyowner's                     
consent.  However, Banner Life may change or amend the Policy if                
such change or amendment is necessary for the Policy to comply                  
with or take advantage of any state or federal law, rule or                     
regulation.                                                                     

Not Contestable After Two Years                                                 

Statements in the application are considered representations, not               
warranties.  Statements may be used to contest the validity of                  
the Policy or in defense of a claim only if they are contained in               
the application, supplemental application, or in an endorsement                 
or amendment, and a copy of that application, endorsement or                    
amendment is attached to the Policy at issue or is made a part of               
the Policy when a change becomes effective.                                     

Banner Life cannot contest the Policy after it has been in force                
two years during the Policyowner's lifetime from the date of                    
issue or the date of any reinstatement.  If the Policy has been                 
reinstated, only statements in the reinstatement application may                
be contested.  Any increase in Specified Amount effective after                 
the date of issue will be incontestable only after such increase                
has been in force during the Policyowner's lifetime for two years               
following the effective date of such increase.                                  

Misstatement of Age and Sex                                                     

If the Insured's age or sex has been misstated, the Proceeds                    
payable will be those purchased by the most recent monthly                      
deduction at the correct age and sex.  If any payments have been                
made under a Payment Option that depends on age or sex,                         
adjustments in future payments or other adjustments will be made                
if the age or sex has been misstated.                                           

Effective Date of Coverage                                                      

The effective date of coverage under the Policy will be as                      
follows:                                                                        

(1)  for all coverage provided in the original application, the                 
effective date will be the Policy Date;                               

(2)  for any increase or addition to coverage, the effective date               
will be the Monthly Anniversary on or next following the              
date the supplemental application is approved by Banner               
Life; and                                                             

(3)  for any insurance that has been reinstated, the effective                  
date will be the Monthly Anniversary on or next following             
the date the application for reinstatement is approved by             
Banner Life.                                                          

Termination                                                                     

All coverage under the Policy will terminate when any one of the                
following events occurs:                                                        

(1)       the Policyowner surrenders the Policy;                                

(2)       the Insured dies;                                                     

(3)       the Policy matures; or                                                

(4)       the grace period ends.                                                

Annual Report                                                                   

Banner Life will send the Policyowner at least once each year a                 
report which shows the current Account Value, Cash Surrender                    
Value, premiums paid, charges made since the last report, and                   
outstanding Policy loans.  The annual report will also include                  
other information as required by state law, regulation or                       
authority.                                                                      

The report will be mailed within 45 days of the Policy                          
Anniversary and within 13 months of the last report.                            

Projection of Values                                                            

Banner Life will provide a projection of illustrative future                    
Death Benefits and Account Values upon written request.  The                    
first projection in any Policy Year will be provided without a                  
service fee.  Extra projections will be provided upon request and               
payment of a $25 service fee.                                                   

The illustration will be based on assumptions as to Specified                   
Amount(s), type of coverage option(s), and future premium                       
payments, as may be specified by Banner Life and/or the                         
Policyowner, and other assumptions.                                             

Suicide                                                                         

For the first two full years from the date of issue, Banner Life                
will not pay the Death Benefit if the Insured commits suicide,                  
while sane or insane.  Banner Life will terminate the Policy and                
give back the premiums paid less any Indebtedness and any partial               
surrender amount.                                                               

A like limitation applies to any increase in benefits and the                   
effective date of such increase.  Banner Life will give back the                
monthly deductions for the increase in Specified Amount as a                    
death benefit as of the effective date of such increase in                      
Specified Amount.                                                               

Ownership                                                                       

Unless otherwise noted, the Insured is the owner of the Policy.                 
During the Insured's lifetime, only the Policyowner may exercise                
all the rights and agree with Banner Life as to any changes in                  
the Policy.  If the Insured is not the Policyowner and the                      
Policyowner dies, then the Insured will become the Policyowner.                 
However, if the Insured is a minor when the Policyowner dies,                   
then ownership will pass to the Policyowner's estate.                           

Assignment of Policy                                                            

The Policy may be assigned.  Banner Life will not be responsible                
for the validity of an assignment.  Banner Life will not be                     
liable for any payments made or actions taken before written                    
notice to Banner Life of any assignment.  Payments to any                       
assignee will only be made in a lump sum.  An assignment may have               
Federal income tax consequences.  (See Federal Tax Matters.)                    

Beneficiary                                                                     

Unless otherwise provided by notice to Banner Life, the                         
beneficiaries are named in the application.                                     

Change of Beneficiary                                                           

During the Policyowner's lifetime, the Policyowner may change the               
beneficiary designation unless he or she has waived the right to                
do so.  No beneficiary change will take effect until a written                  
notice is received at Banner Life's Administrative Office.  Such                
changes will become effective on the date notice is received by                 
Banner Life.  All changes will be subject to any payment made by                
Banner Life before notice was received.                                         

Death of Beneficiary                                                            

Unless otherwise provided in the beneficiary designation:                       

(1)  the interest of any beneficiary who dies before the                        
Policyowner will pass to any surviving beneficiaries                  
according to their respective interests; or                           

(2)  if no beneficiary survives, the proceeds will be paid in one               
sum to the Policyowner, if living; otherwise, to the                  
Policyowner's estate.                                                 

THE GENERAL ACCOUNT               

By virtue of exclusionary provisions, interests in the General                  
Account have not been registered under the Securities Act of 1933               
and the General Account has not been registered as an investment                
company under the Investment Company Act of 1940.  Accordingly,                 
neither the General Account nor any interests therein are subject               
to the provisions of these Acts.                                                

General Description                                                             

The General Account consists of all assets owned by Banner Life                 
other than those in the Variable Account and any other separate                 
accounts Banner Life may establish.  Subject to applicable law,                 
Banner Life has sole discretion over the investment of the assets               
of the General Account.                                                         

The Policyowner may elect to allocate net premiums to the General               
Account or to transfer Account Value to the General Account from                
the Sub-Accounts of the Variable Account.  The allocation or                    
transfer of funds to the General Account does not entitle the                   
Policyowner to share in the investment experience of the General                
Account.  Instead, Banner Life guarantees that the General                      
Account Value will accrue interest at an effective annual rate of               
at least 4%, without regard to the actual investment experience                 
of the General Account.  Consequently, if the Policyowner                       
allocates all net premiums only to the General Account and makes                
no transfers or Policy loans, the minimum amount and duration of                
the Death Benefit will be determinable and guaranteed depending                 
on the amount and frequency of premium payments.                                

General Account Value                                                           

The General Account Value is the sum of (1) plus (2) plus (3)                   
minus the sum of (4) plus (5) where:                                            

(1)  is the General Account Value on the prior Monthly                          
Anniversary, less any proportion of the monthly deduction             
made from the General Account on that day, plus interest              
from that day;                                                        

(2)  are net premiums credited to the General Account since the                 
prior Monthly Anniversary, plus interest from the day                 
premiums are credited;                                                

(3)  are transfers from the Variable Account to the General                     
Account since the prior Monthly Anniversary, plus interest            
from the date of transfer;                                            

(4)  are transfers to the Variable Account from the General                     
Account since the prior Monthly Anniversary, plus interest            
from the date of transfer; and                                        

(5)  are partial surrenders from the General Account together                   
with associated charges since the prior Monthly Anniversary,          
plus interest from the date of partial surrender.                     

On any day other than a Monthly Anniversary, the General Account                
Value will be calculated on a consistent basis as prescribed                    
above.                                                                          

The guaranteed interest rate used in the calculation of the                     
General Account Value is .32737% a month, compounded monthly.                   
This is equivalent to 4% per year, compounded yearly.  Interest                 
in excess of the guaranteed rate, if any, may be used in the                    
calculation of the General Account Value at such increased rate                 
and in such manner as determined by Banner Life in its sole                     
discretion.                                                                     

Transfers                                                                       

Transfers from the General Account may be made once per Policy                  
Year, only on the Policy Anniversary, and Banner Life must                      
receive the transfer request at least 30 days prior to the Policy               
Anniversary.  The minimum amount that may be transferred from the               
General Account is the lesser of:  (1) $500; or (2) the entire                  
General Account Value, excluding amounts securing Policy loans.                 
The maximum amount that may be transferred from the General                     
Account is the greater of:  (1) $500; or (2) 25% of General                     
Account Value, excluding any amounts securing Policy loans.                     

Banner Life may postpone the calculation and payment of Cash                    
Surrender Values, loans or transfers from the General Account for               
up to 6 months.                                                                 

DISTRIBUTION OF THE POLICIES                

The Policies will be sold by individuals who, in addition to                    
being licensed as life insurance agents for Banner Life, are also               
registered representatives of Banner Financial Services Group,                  
Inc. ("Banner Financial"), the principal underwriter of the                     
Policies, or of broker-dealers who have entered into written                    
sales agreements with Banner Financial.  Banner Financial is                    
registered with the Securities and Exchange Commission under the                
Securities Exchange of Act of 1934 as a broker-dealer and is a                  
member of the National Association of Securities Dealers.  Banner               
Financial is an affiliate of Banner Life.                                       

A commission of up to 50% of premium plus bonus compensation may                
be paid to broker-dealers or agents in connection with sales of                 
the Policies.                                                                   

Federal Tax Matters                                                             

The following summary provides a general description of the                     
Federal income tax considerations associated with the Policy but                
does not purport to be complete or to cover all situations.  This               
discussion is not intended as tax advice.  Counsel or other                     
competent tax advisers should be consulted for more complete                    
information before a Policy is purchased or other transactions                  
made.  This discussion is based upon Banner Life's understanding                
of the present Federal income tax laws as they are currently                    
interpreted by the Internal Revenue Service.  No representation                 
is made as to the likelihood of continuation of the present                     
Federal income tax laws or of the current interpretations by the                
Internal Revenue Service.  Moreover, generally no attempt has                   
been made to consider any applicable state or other tax laws.                   

Tax Status of the Policy                                                        

Section 7702 of the Internal Revenue Code of 1986, as amended                   
(the "Code") includes a definition of a life insurance contract                 
for Federal tax purposes.  The Secretary of the Treasury (the                   
"Treasury") has issued proposed regulations that would specify                  
what will be considered reasonable mortality charges.  However,                 
guidance as to how section 7702 requirements are to be applied is               
limited.  If a Policy were determined not to be a life insurance                
contract for purposes of section 7702, such Policy would not                    
provide most of the tax advantages normally provided by a life                  
insurance policy.                                                               

With respect to a Policy issued on a standard risk basis, while                 
there is some uncertainty due to the limited guidance on the                    
section 7702 requirements, Banner Life nonetheless believes that                
such a Policy should meet the section 7702 definition of a life                 
insurance contract.  With respect to a Policy issued on a special               
or sub-standard rating classification basis (i.e., a premium                    
class involving higher than standard mortality risk), or a Policy               
with a Primary Insured Term Rider, however, it is not clear                     
whether or not such a Policy would satisfy section 7702,                        
particularly if the Policyowner pays the full amount of premiums                
permitted under the Policy.  If it is subsequently determined                   
that a Policy does not satisfy section 7702, Banner Life will                   
take whatever steps are appropriate and necessary to attempt to                 
cause such a Policy to comply with section 7702, including                      
possibly refunding any premiums paid that exceed the limitations                
allowable under section 7702 (together with interest or other                   
earnings on any such premiums refunded as required by law).  For                
these reasons, Banner Life reserves the right to modify the                     
Policy as necessary to attempt to qualify it as a life insurance                
contract under section 7702.                                                    

Section 817(h) of the Code authorizes the Treasury to set                       
standards by regulation or otherwise for the investments of each                
Sub-Account of the Variable Account to be "adequately                           
diversified" in order for the Policy to be treated as a life                    
insurance contract for Federal tax purposes.  The Variable                      
Account, through the Fund, intends to comply with the                           
diversification requirements prescribed in Treasury Regulation                  
section 1.817-5, which affect how the assets in each Portfolio of               
the Fund may be invested.  Banner Life does not have control over               
the Fund, its investments or its investment adviser.                            
Nonetheless, Banner Life believes that each Portfolio of the Fund               
in which the Variable Account owns shares will be operated in                   
compliance with the requirements prescribed by the Treasury.                    

In certain circumstances, owners of variable life insurance                     
contracts may be considered the owners, for federal income tax                  
purposes, of the assets of the separate account used to support                 
their contracts.  In those circumstances, income and gains from                 
the separate account assets would be includible in the variable                 
contract owner's gross income.  The IRS has stated in published                 
rulings that a variable contract owner will be considered the                   
owner of separate account assets if the contract owner possesses                
incidents of ownership in those assets, such as the ability to                  
exercise investment control over the assets.  The Treasury                      
Department also announced , in connection with the issuance of                  
regulations concerning diversification, that those regulations                  
"do not provide guidance concerning the circumstances in which                  
investor control of the investments of a segregated asset account               
may cause the investor (i.e., the Policyowner), rather than the                 
insurance company, to be treated as the owner of the assets in                  
the account."  This announcement also stated that guidance would                
be issued by way of regulations or rulings on the "extent to                    
which policyholders may direct their investments to particular                  
sub-account without being treated as owners of the underlying                   
assets."                                                                        

The ownership rights under the Policy are similar to, but                       
different in certain respects from, those described by the IRS in               
rulings in which it was determined that Policyowners were not                   
owners of separate account assets.  For example, a Policyowner                  
has additional flexibility in allocating premium payments and                   
policy values.  These differences could result in a Policyowner                 
being treated as the owner of a pro rata portion of the assets of               
the Variable Account.  In addition, we do not know what standards               
will be set forth, if any, in the regulations or rulings which                  
the Treasury Department has stated it expects to issue.  Banner                 
Life therefore reserves the right to modify the Policy as                       
necessary to attempt to prevent a Policyowner from being                        
considered the owner of a pro rata share of the assets of the                   
Variable Account.                                                               

Tax Treatment of Policy Benefits                                                

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

In General.  Banner Life believes that the proceeds and Account                 
Value increases of a Policy (if any) should be treated in a                     
manner consistent with a fixed-benefit life insurance policy for                
Federal income tax purposes.  Thus, the death benefit under the                 
Policy should be excludible from the gross income of the                        
Beneficiary under section 101(a)(1) of the Code.                                

A change in a Policy's Specified Amount, the payment of an                      
unplanned premium, a Policy loan, a partial withdrawal, a                       
surrender, a lapse with outstanding indebtedness, a change in                   
death benefit options, the exchange of a Policy for a                           
fixed-benefit policy (see Policy Rights and Benefits - Right to                 
Exchange for Fixed Life Insurance), the assignment of a Policy                  
(see GENERAL PROVISIONS- Assignment of Policy) may have tax                     
consequences depending upon the circumstances.  In addition,                    
Federal estate and state and local estate, inheritance, and other               
tax consequences of ownership or receipt of Policy proceeds                     
depend upon the circumstances of each Policyowner or Beneficiary.               
A competent tax adviser should be consulted for further                         
information.                                                                    
Generally, the Policyowner will not be deemed to be in                          
constructive receipt of the Account Value, including increments                 
thereof (if any), under the Policy until there is a distribution.               
The tax consequences of distributions from, and loans taken from                
or secured by, a Policy depend on whether the Policy is                         
classified as a "modified endowment contract".                                  

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

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

Distributions from Policies Classified As Modified Endowment                    
Contracts.  Policies classified as modified endowment contracts                 
are subject to the following tax rules:  First, all                             
distributions, including distributions upon surrender and                       
benefits paid at maturity, from such a Policy are treated as                    
ordinary income subject to tax up to the amount equal to the                    
excess (if any) of the cash value (as calculated for Federal                    
income tax purposes) immediately before the distribution over the               
investment in the Policy (described below) at such time.  Second,               
loans taken from, or secured by, such a Policy are treated as                   
distributions from such a Policy and taxed accordingly.  In this                
regard, the Internal Revenue Service may treat capitalized                      
interest on Policy loans as a distribution.  Third, a 10 percent                
additional income tax is imposed on the portion of any                          
distribution from, or loan taken from or secured by, such a                     
Policy that is included in income except where the distribution                 
or loan is made on or after the Owner attains age 59.5, is                      
attributable to the Policyowner's becoming disabled, or is part                 
of a series of substantially equal periodic payments for the life               
(or life expectancy) of the Policyowner or the joint lives (or                  
joint life expectancies) of the Policyowner and the Policyowner's               
Beneficiary.                                                                    

Distributions from Policies Not Classified As Modified Endowment                
Contracts.  Distributions from a Policy that is not classified as               
a modified endowment contract are generally treated as first                    
recovering the investment in the Policy (described below) and                   
then, only after the return of all such investment in the Policy,               
as distributing taxable income.  An exception to this general                   
rule occurs in the case of a partial withdrawal, a decrease in                  
the face amount, or any other change that reduces benefits under                
the Policy in the first 15 years after the Policy is issued and                 
that results in a cash distribution to the Policyowner in order                 
for the Policy to continue complying with the section 7702                      
definitional limits.  In that case, such distribution will be                   
taxed in whole or in part as ordinary income (to the extent of                  
any gain in the Policy) under rules prescribed in section 7702.                 

Loans from, or secured by, a Policy that is not a modified                      
endowment contract are not treated as distributions.  Instead,                  
such loans are treated as indebtedness of the Policyowner.                      

Upon a complete surrender or lapse of a Policy that is not a                    
modified endowment contract, or when benefits are paid at such a                
Policy's maturity date, if the amount received plus the amount of               
indebtedness exceeds the total investment in the Policy, the                    
excess will generally be treated as ordinary income subject to                  
tax.                                                                            

Finally, neither distributions (including distributions upon                    
surrender or lapse) nor loans from, or secured by, a Policy that                
is not a modified endowment contract are subject to the 10                      
percent additional income tax.                                                  

Policy Loan Interest.  Generally, personal interest paid on loan                
under an individually-owned Policy  will not be deductible.  In                 
addition, interest on any loan under a Policy owned by a business               
taxpayer and covering the life of any individual who is an                      
officer of or is financially interested in the business carried                 
on by that taxpayer will not be tax deductible to the extent the                
aggregate amount of such loans with respect to contracts covering               
such individual exceeds $50,000.  The deductibility of Policy                   
loan interest may be further limited by section 264 of the Code.                
Therefore, a competent tax adviser should determine whether                     
Policy loan interest will be deductible.                                        

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

Multiple Policies.  All modified endowment contracts issued by                  
Banner Life (or its affiliates) to the same Policyowner during                  
any calendar year will be treated as one contract for purposes of               
determining the amount includible in gross income at the time of                
a distribution from any such contract.                                          

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

Taxation of Banner Life                                                         

Banner Life is presently taxed as a "life insurance company"                    
under the Code.  Banner Life does not expect to incur any Federal               
income tax liability attributable to investment income or capital               
gains retained as part of the reserves under the Policy.  Based                 
on this, no charge is being made currently to the Variable                      
Account for Federal income taxes which may be attributable to the               
Variable Account.                                                               

Banner Life will review the question of a charge to the Variable                
Account for its Federal income tax from time to time.  Such a                   
charge may be made in future years for any Federal income taxes                 
incurred by Banner Life.  This might become necessary if the tax                
treatment of Banner Life is ultimately determined to be other                   
than what Banner Life currently believes it to be, if there are                 
changes made in the Federal income tax treatment of variable life               
insurance at the company level, or if there is a change in Banner               
Life's tax status.  Any such charge would be designed to cover                  
the Federal income taxes attributable to the investment results                 
of the Variable Account.                                                        

Under current laws, Banner Life may incur state and local taxes                 
in certain states.  At present, these taxes are not significant.                
If there is a material change in applicable state or local tax                  
laws, charges may be made for such taxes or reserves for such                   
taxes, if any, attributable to the Variable Account.                            

Employment-Related Benefit Plans                                                

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

485BPOS
2nd “Page” of 8
TOC
1st
Previous
Next
↓Bottom
Just 2nd
ADDITIONAL INFORMATION                

Safekeeping of the Account's Assets                                             

Banner Life holds the assets of the Variable Account.  These                    
assets, the Fund shares, are held in book-entry form separate and               
apart from the General Account.  Banner Life maintains records of               
all purchases and redemptions of Fund shares by each of the                     
Sub-Accounts.                                                                   

Addition, Deletion, or Substitution of Investments                              

Banner Life does not control the Fund and cannot guarantee that                 
it or any Portfolio will be available for investment in the                     
future or that it or any Portfolio thereof will accept premiums                 
or transfers.  In the event that the Fund or any Portfolio is not               
available, Banner Life intends to take reasonable action to                     
ensure that appropriate variable funding vehicles are available.                
If the Fund or other funding vehicle restricts or refuses to                    
accept transfers or other transactions, then the transfer                       
privilege may be modified or revoked or other changes made.                     

Banner Life reserves the right, subject to compliance with                      
applicable law, to make additions to, deletions from, or                        
substitutions for the shares of the Fund that are held by the                   
Variable Account (or any Sub-Account) or that the Variable                      
Account (or any Sub-Account) may purchase.  Banner Life reserves                
the right to eliminate the shares of any of the Portfolios of the               
Fund and to substitute shares of another Portfolio of the Fund or               
any other investment vehicle or of another open-end, registered                 
investment company if laws or regulations are changed, if the                   
shares of the Fund or a Portfolio are no longer available for                   
investment, or if in our judgment further investment in any                     
Portfolio should become inappropriate in view of the purposes of                
the Sub-Account Division.  Banner Life will not substitute any                  
shares attributable to a Policyowner's interest in a Sub-Account                
of the Variable Account without notice and prior approval of the                
Securities and Exchange Commission and the insurance regulator of               
the state where the Policy was delivered, if and where required.                
Nothing contained herein shall prevent the Variable Account from                
purchasing other securities for other series or classes of                      
policies, or from permitting a conversion between series or                     
classes of policies on the basis of requests made by                            
Policyowners.                                                                   

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

In the event of any such substitution or change, Banner Life may,               
by appropriate endorsement, make such changes in this and other                 
policies as may be necessary or appropriate to reflect such                     
substitution or change.  If deemed by Banner Life to be in the                  
best interests of persons having voting rights under the                        
Policies, the Variable Account may be operated as a management                  
company under the Investment Company Act of 1940, it may be                     
deregistered under that Act in the event such registration is no                
longer required, or it may be combined with other Banner Life                   
separate accounts.                                                              

State Regulation                                                                

Banner Life is subject to regulation by the Maryland Insurance                  
Administration. An annual statement is filed with the Maryland                  
Insurance Administration on or before March 1st of each year                    
covering the operations and reporting on the financial condition                
of Banner Life as of December 31 of the preceding year.                         
Annually, the Maryland Insurance Administration or other                        
authorities examine the reserves of Banner Life and certifies                   
their adequacy. A full examination of Banner Life's operations is               
conducted periodically by the Maryland Insurance Administration.                

In addition, Banner Life is subject to the insurance laws and                   
regulations of other states within which it is licensed or may                  
become licensed to operate.  Generally, the Insurance Department                
of any other state applies the laws of the state of domicile in                 
determining permissible investments.                                            

A Policy is governed by the law of the state in which it is                     
delivered.  The values and benefits of each policy are at least                 
equal to those required by such state.                                          

Senior Officers and Directors of Banner Life Insurance Company                  

Name and Position                  Principal Occupation                         
with Banner Life1                  Last Five Years                              

Mark A. Canter                     Vice President,                              
Vice President, Secretary          Secretary and                                
and General Counsel                General Counsel,                             
 Banner Life

Barbara A. Esau                    Vice President,                              
Vice President and                 Human Resources,                             
Director                           Banner Life                                  

Robert E. Freeman2                 President and Chief                          
Director                           Operating Officer                            
   (now retired)
                         William Penn Life Insurance Company
 of New York
     Garden City, NY

Gene R. Gilbertson                 Senior Vice President,                       
Senior Vice President,             CFO & Treasurer                              
CFO, Treasurer and                 Banner Life                                  
Director                                                                        

Dewey D. Goodrich, Jr.             Senior Vice President -                      
Senior Vice President and          Information Systems and Services             
Director                           Legal & General America, Inc. (1995)         
                           Vice President - Information Services
                  Interstate Assurance Company
      Des Moines, Iowa

Robert L. Hill                     Vice President and                           
Vice President and                 Controller (1993)                            
Controller                         Assistant Controller                         
 Banner Life

Bentti O. Hoiska                   Chief Investment Officer and                 
Executive Vice President           Executive Vice President                     
and Director                       Legal & General America, Inc. (1995)         
Principal 
                  State Street Global Advisors
           Boston, Massachusetts

David S. Lenaburg                  President and Chief                          
Chairman, President                Executive Officer,                           
and Chief Executive                Banner Life                                  
Officer                                                                         

Charles A. Lingaas3                Senior Vice President,                       
Senior Vice President              Customer Service                             
and Director                       William Penn Life                            
       Insurance Company
 of New York

Otto P. Marracello3                Senior Vice President,                       
Senior Vice President              Underwriting                                 
and Director                       William Penn Life                            
       Insurance Company
 of New York

Vincent R. McLean2                 Retired                                      
Director                                                                        

Wayne L. Miller                    Vice President, Sales                        
Vice President, Sales              Banner Life                                  

Michael D. Mullaney                Vice President,                              
Vice President,                    Corporate Taxation,                          
Corporate Taxation                 Legal & General America, Inc.                

David J. Orr                       Senior Vice President, Sales                 
Senior Vice President,             Banner Life                                  
and Chief Actuary                                                               
and Director                                                                    

1    The principal business address of each person listed, unless               
otherwise indicated, is Banner Life Insurance Company, 1701 Research            
Boulevard, Rockville, Maryland 20850.                                           
2    Messrs. Freeman and McLean and retired and thus have no                    
business address.                                                               
3    100 Quentin Roosevelt Boulevard, Garden City, NY  11530                    

Legal Matters                                                                   

Legal advice regarding certain matters relating to the federal                  
securities laws applicable to the issuance of the flexible                      
premium variable life insurance policy described in this                        
Prospectus has been provided by Sutherland, Asbill & Brennan,                   
Washington, D.C.  All matters of Maryland law pertaining to the                 
Policy, including the validity of the Policy and Banner Life's                  
right to issue the Policy under Maryland Insurance Law and any                  
other applicable state insurance or securities laws, have been                  
passed upon by Mark A. Canter, Vice President, Secretary &                      
General Counsel of Banner Life.                                                 

Legal Proceedings                                                               

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

Experts                                                                         

The consolidated financial statements of Banner Life Insurance                  
Company as of December 31, 1995, 1994 and 1993 and for each of                  
the three years in the period ended December 31, 1995 and the                   
financial statements of the Banner Life Variable Account as of                  
December 31, 1995 and for each of the three years in the period                 
ended December 31, 1995 included in this Prospectus have been so                
included in reliance on the reports of Price Waterhouse LLP,                    
independent accountants, given on the authority of said firm as                 
experts in auditing and accounting.                                             

Actuarial matters included in this Prospectus have been examined                
by David J. Orr, F.I.A. and M.A.A.A., Senior Vice President and                 
Chief Actuary of Banner Life, as stated in the opinion filed as                 
an exhibit to the Registration Statement.                                       

The consolidated financial statements of Banner Life which are                  
included in this Prospectus should be considered only as bearing                
on the ability of Banner Life to meet its obligations under the                 
Policies.  They should not be considered as bearing on the                      
investment performance of the assets held in the Variable                       
Account.                                                                        

BANNER LIFE                                       
VARIABLE ACCOUNT                                        
REPORT AND FINANCIAL STATEMENTS                                         
FOR THE YEAR ENDED DECEMBER 31, 1995                                        

REPORT OF INDEPENDENT ACCOUNTANTS                                           

April 10, 1996                                                                  

To Banner Life Insurance Company                                                
and Contract Owners of                                                      
The Banner Life Variable Account                                            

In our opinion, the accompanying statement of assets and liabilities and the    
related statements of operations and of changes in net assets present fairly,   
in all material respects, the financial position of The Banner Life Variable    
Account and the Money Market, Balanced, Bond, Capital Growth, Growth & Income   
and International subaccounts thereof at December 31, 1995, and the results of  
their operations and the changes in their net assets for each of the three      
years in the period then ended in conformity with generally accepted accounting 
principles.  These financial statements are the responsibility of Banner Life   
Insurance Company's management; our responsibility is to express an opinion on  
these financial statements based on our audits.  We conducted our audits of     
these financial statements in accordance with generally accepted auditing       
standards which 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, assessing   
the accounting principles used and significant estimates made by management,    
and evaluating the overall financial statement presentation.  We believe that   
our audits, which included confirmation of shares held at December 31, 1995 by  
correspondence with the transfer agent, provide a reasonable basis for the      
opinion expressed above.                                                        

/S/ Price Waterhouse LLP                                                        

                                                        [Enlarge/Download Table]
                     BANNER LIFE VARIABLE ACCOUNT                                                                        
                  STATEMENT OF ASSETS AND LIABILITIES                                                                    
                            AS OF DECEMBER 31, 1995                                                                      


                                            Subaccounts                                                                  

                                      Money                           Capital      Growth                                
                                      Market   Balanced     Bond       Growth      & Income    International  Total      

ASSETS                                                                                                                   
                                                                                                                         
Money Market Fund, 63,185                                                                                                
shares at net asset value                                                                                                
of $1.00 per share (cost                                                                                                 
$63,185)                              $63,185                                                                      63,185

Balanced Fund, 52,987                                                                                                    
shares at net asset value of                                                                                             
$10.95 per share (cost                                                                                                   
$506,828)                                       $580,211                                                          580,211

Bond Fund, 27,048 shares                                                                                                 
at net asset value of $7.17                                                                                              
per share (cost $181,365)                                 $193,934                                                193,934

Capital Growth Fund, 160,534                                                                                             
shares at net asset value of                                                                                             
$15.08 per share (cost $2,117,143)                                    $2,420,846                                2,420,846

Growth & Income Fund, 20,136                                                                                             
shares at net asset value of                                                                                             
$7.98 per share (cost $148,745)                                                     $160,685                      160,685

International Fund, 122,311                                                                                              
shares at net asset value of                                                                                             
$11.82 per share (cost $1,356,745)                                                             $1,445,714       1,445,714

Total assets                            63,185   580,211   193,934     2,420,846     160,685    1,445,714       4,864,575

LIABILITIES                                                                                                              

Mortality and expense risk                                                                                               
 fee payable                             1,402     5,819     1,961        21,557         456       11,107          42,302

Net assets                             $61,783  $574,392  $191,973    $2,399,289    $160,229    1,434,607      $4,822,273
Number of units outstanding             53,017   402,230   152,790     1,443,782     127,592    1,116,496                
Net asset value per unit                 $1.17     $1.43     $1.26         $1.66       $1.26        $1.28                

<FN>                                                                                                                     
                                                        See Notes to the Financial Statements                            
                                                        [Enlarge/Download Table]

BANNER LIFE VARIABLE ACCOUNT                                                                                                 
STATEMENTS OF CHANGES IN NET ASSETS                                                                                          
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993                                                                         

                                                                                                                             
                                         Money Market                      Balanced                           Bond           
                                         Subaccount                        Subaccount                       Subaccount       
                                1995       1994       1993        1995       1994       1993       1995       1994     1993  
                                                                                                                             
INCREASE (DECREASE) IN NET                                                                                                   
ASSETS FROM OPERATIONS                                                                                                       

Net investment income (loss)    $3,202    $2,098      $250        $9,784     $5,333     $1,033     $9,015     $3,981    $311 

Net realized gain (loss) on                                                                                                  
investments                       -          -          -            413     (3,247)       869       (835)    (1,115)    144 

Net realized gain distribution    -          -          -          2,347     11,781        564       -           531      97 

Net change in unrealized                                                                                                     
appreciation (depreciation)                                                                                                  
of investments                    -          -          -         87,541    (17,293)     1,483     17,238     (4,836)      9 

Net change in net assets resulting                                                                                           
from operations                  3,202      2,098        250     100,085     (3,426)     3,949     25,418     (1,439)    561 

UNIT TRANSACTIONS                                                                                                            

Proceeds from units issued     632,021    851,824    198,417     160,860    135,680     61,938     39,954     53,223   4,210 
Net asset value of units                                                                                                     
 redeemed                      (60,964)   (64,561)   (13,209)    (91,381)   (33,196)    (7,362)   (18,217)    (9,685) (1,635)
Transfer (to) from other                                                                                                     
 subaccounts                  (549,707)  (787,229)  (151,843)     61,789    113,676     49,136     12,371     76,634   6,882 

Net increase in net assets                                                                                                   
 from unit transactions         21,350         34     33,365     131,268    216,160    103,712     34,108    120,172   9,457 

Net change in net assets        24,552      2,132     33,615     231,353    212,734    107,661     59,526    118,733  10,018 

NET ASSETS                                                                                                                   

Beginning of period             37,231     35,099      1,484     343,039    130,305     22,644    132,447     13,714   3,696 
End of period                  $61,783    $37,231    $35,099    $574,392   $343,039   $130,305   $191,973   $132,447 $13,714 

<FN>                                                                                                                          
                                            See Notes to Financial Statements                                                
</FN>                                                                                                                         
                                                                             
                                                           [Enlarge/Download Table]
                                                                                                                               
                                                                                                                                 
            Capital Growth                    Growth & Income                 International                                      
              Subaccount                        Subaccount                      Subaccount                        Total          
     1995       1994       1993        1995       1994    1993       1995       1994       1993        1995       1994     1993  
                                                                                                                                 

       384    $(2,771)    $(914)        $674     $(2)      -       $(4,263)  $(1,743)     $1,071     $18,796     $6,896   $1,751 

     1,196      1,119      5,789       1,367       -       -         7,833     15,256      1,137       9,974     12,013    7,939 

    44,162     38,690      2,565          34       -       -          -          -          -         46,543     51,002    3,226 

   357,516    (92,751)    32,857      11,926       14      -       102,650    (31,841)    19,101     576,871   (146,707)  53,450 

   403,258    (55,713)    40,297      14,001       12      -       106,220    (18,328)    21,309     652,184    (76,796)  66,366 

 1,022,998    719,583    228,219      78,256        811    -       885,257    445,648     31,163   2,819,346  2,206,769  523,947 
  (427,161)  (228,723)   (70,033)    (18,301)       (43)   -      (364,849)  (104,371)   (17,149)   (980,873)  (440,579)(109,388)
   205,353    366,403     88,806      85,236        257    -       169,358    224,911      7,019     (15,600)    (5,348)      -  

   801,190    857,263    246,992     145,191      1,025    -       689,766    566,188     21,033   1,822,873  1,760,842  414,559 

 1,204,448    801,550    287,289     159,192      1,037    -       795,986    547,860     42,342   2,475,057  1,684,046  480,925 

 1,194,841   393,291    106,002       1,037       -        -       638,621     90,761     48,419    2,347,216    663,170  182,245
$2,399,289 $1,194,841  $393,291    $160,229      $1,037    -    $1,434,607   $638,621   $90,761   $4,822,273 $2,347,216 $663,170 
                                                        [Enlarge/Download Table]
BANNER LIFE VARIABLE ACCOUNT                                                                                                
STATEMENTS OF OPERATIONS                                                                                                    
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993                                                                        

                                                                                                                            

                              Money Market                      Balanced                           Bond                     
                              Subaccount                        Subaccount                       Subaccount                 
                                1995       1994       1993        1995       1994       1993       1995       1994     1993 

                                                                                                                            

INVESTMENT INCOME                                                                                                           

Dividends                       $3,717     $2,779       $387     $13,171     $6,993     $1,608    $10,227     $4,517   $377 
Mortality and expense fee         (515)      (681)      (137)     (3,387)    (1,660)      (575)    (1,212)      (536)   (66)

  Net investment income                                                                                                     
     (loss)                      3,202      2,098        250       9,784      5,333      1,033      9,015      3,981    311 

REALIZED AND UNREALIZED                                                                                                     
GAIN (LOSS) ON INVESTMENTS                                                                                                  

Net realized gain (loss) on                                                                                                 
  investments                     -          -          -            413     (3,247)       869       (835)    (1,115)   144 

Net realized gain distribution    -          -          -          2,347     11,781        564       -           531     97 

Net change in unrealized                                                                                                    
  appreciation (depreciation)                                                                                               
  of investments                  -          -          -         87,541    (17,293)     1,483     17,238     (4,836)     9 

Net gain (loss) on investments    -          -          -         90,301     (8,759)     2,916     16,403     (5,420)   250 

Net change in net assets                                                                                                    
  resulting from operations     $3,202     $2,098       $250    $100,085    $(3,426)    $3,949    $25,418    $(1,439)  $561 
<FN>                                                                                                                            
                                                            See Notes to Financial Statements                               
</FN>                                                                                                                           

                                                        [Enlarge/Download Table]


         Capital Growth                  Growth & Income          International                                         
          Subaccount                      Subaccount               Subaccount                         Total             
     1995       1994       1993      1995   1994   1993     1995       1994       1993      1995       1994      1993   

                                                                                                                        

 $13,509     $2,717       $966    $1,128     -     -       $3,370       $799     $1,596    $45,122    $17,805    $4,934 
 (13,125)    (5,488)    (1,880)     (454)   $(2)   -       (7,633)    (2,542)      (525)   (26,326)   (10,909)   (3,183)

     384     (2,771)      (914)      674     (2)   -       (4,263)    (1,743)     1,071     18,796      6,896     1,751 

   1,196      1,119      5,789     1,367     -     -        7,833     15,256      1,137      9,974     12,013     7,939 

  44,162     38,690      2,565        34     -     -         -          -          -        46,543     51,002     3,226 

 357,516    (92,751)    32,857    11,926     14    -      102,650    (31,841)    19,101    576,871   (146,707)   53,450 

 402,874    (52,942)    41,211    13,327     14    -      110,483    (16,585)    20,238    633,388    (83,692)   64,615 

$403,258   $(55,713)   $40,297   $14,001    $12    -     $106,220   $(18,328)   $21,309   $652,184   $(76,796)  $66,366 

BANNER LIFE VARIABLE ACCOUNT  
NOTES TO FINANCIAL STATEMENTS 
FOR THE YEAR ENDED DECEMBER 31, 1995  

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES                                        

The Banner Life Variable Account (the Account) is registered under the          
Investment Company Act of 1940, as amended, as a unit investment trust.         
The Account invests in shares of the Scudder Variable Life Investment Fund      
(the Fund), a mutual fund of the series type.  The Account contains six         
subaccounts - Money Market, Balanced (previously named Diversified), Bond,      
Capital Growth, Growth & Income and International.  The assets of each          
subaccount are held separate from the assets of the other subaccounts.          
The operations of the Account are part of Banner Life Insurance Company (the    
Insurance Company).  The Account commenced operations on June 1, 1991.          

The following is a summary of significant accounting policies consistently      
followed by the Account in conformity with generally accepted accounting        
principles.                                                                     

Use of Estimates                                                                

The preparation of financial statements in conformity with generally accepted   
accounting principles requires management to make estimates and assumptions     
that affect the reported amounts of assets and liabilities at the date of the   
financial statements and the reported amounts of revenue and expenses during    
the reporting period.  Actual results could differ from those estimates.        

Security valuation                                                              

Investments are valued at the net asset value of fund shares held which         
approximates fair value.                                                        

Security transactions and related investment income                             

Security transactions are accounted for on the trade date (the date the         
order to buy or sell is executed).  Dividend distributions received from the    
Fund are reinvested in additional shares of the Fund, and dividend income is    
recorded on the ex-dividend date.  Gains and losses from sales of investments   
are computed on the basis of average cost.                                      

Federal income taxes                                                            

The operations of the Account are taxed as part of the total operations of      
the Insurance Company.  The Insurance Company is taxed as a life insurance      
company under the Internal Revenue Code.  Under existing Federal income tax     
law, no taxes are payable on the investment income or on the capital gains      
of the Account.                                                                 

Reclassification                                                                

Certain prior year amounts were reclassified to conform to current year         
presentation.                                                                   

NOTE 2 - PURCHASES AND SALES OF INVESTMENTS                                     

The aggregate cost of purchases and proceeds from sales of investments for the  
years ended December 31, 1995, 1994 and 1993 were as follows:                   

                                                                [Download Table]

                                               Subaccounts                       
            Money                        Capital          Growth                 
            Market   Balanced   Bond      Growth          & Income  International
                                                                                 
1995:                                                                            

Purchases  $490,629  $194,761   $54,361  $994,892         $154,733    $816,701   
Sales       463,722    49,367    10,131   138,515           10,550     123,319   

1994:                                                                            

Purchases  $706,454  $273,359  $139,053  $982,052           $1,125    $620,838   
Sales       704,382    38,451    13,970    86,187               13      59,133   

1993:                                                                            

Purchases   $32,877  $112,803   $11,739  $290,229                -     $32,676   
Sales         1,377     7,553     1,849    43,605                -      10,923   


NOTE 3 - RELATED PARTY TRANSACTIONS                                             

Although variable life benefits differ according to the investment              
performance of the Account, they are not affected by mortality or expense       
experience because the Insurance Company assumes the mortality risk and         
the expense risk under the contracts.  The Insurance Company charges the        
Account assets for assuming those risks.  For the year ended December           
31, 1995, the Account was charged an annual rate of .75% of net asset           
value for mortality and expense risk charges.                                   

The expense risk assumed by the Insurance Company is the risk that the          
deductions for sales and administrative expenses and for investment advisory    
services provided for in the variable life contract may prove insufficient to   
cover the cost of those items.                                                  

The mortality risk is the risk that the cost of insurance charges specified     
in the policy may prove insufficient to meet actual claims.                     

Funds received by the Account for the sale of Account units represent gross     
contract premiums received by the Insurance Company less deductions for sales   
distribution expenses of 2.5% and premium taxes of 2.5% of the gross contract   
premium.  Total deductions from gross contract premiums for the years ended     
December 31, 1995, 1994 and 1993 were as follows:                               

                                                        [Enlarge/Download Table]
                                                                                       1995                              
                                                                        Subaccounts                                      

                      Money                         Capital                    Growth                 1994         1993  
                      Market   Balanced   Bond      Growth    International   & Income     Total      Total        Total 
                                                                                                                         

Original costs                                                                                                           
  to investors       $665,285   $169,326  $42,056  $1,076,840    $931,849     $82,374    $2,967,730  $2,322,913  $551,525

Less:                                                                                                                    
  Premium taxes        16,632      4,233    1,051      26,921      23,296       2,059        74,192      58,072    13,789
  Sales distribution                                                                                                     
  expenses             16,632      4,233    1,051      26,921      23,296       2,059        74,192      58,072    13,789

Net amount                                                                                                               
  applicable to                                                                                                          
  investors          $632,021   $160,860  $39,954  $1,022,998    $885,257     $78,256    $2,819,346  $2,206,769  $523,947


If a policy is surrendered during the first ten policy years, the Insurance     
Company will assess a full surrender charge. The full surrender charge          
consists of a flat amount for initial administrative expenses and a percentage  
of premiums paid in the first two policy years (up to the guideline annual      
premium) for sales expenses.  During the first five policy years, the flat      
amount is $200 and the percentage is 27.5% of those premiums.  The full         
surrender charge then grades down to zero over the next five policy years       
in regular monthly intervals.  The Account has been advised that surrender      
charges of $71,775, $4,097 and $2,286 were charged to policyholders in 1995,    
1994 and 1993, respectively.                                                    

A monthly deduction is made from the account value of each policy to compensate 
the Insurance Company for the cost of insurance coverage and any optional       
benefits added by riders, and for certain administrative costs.  The            
monthly charges were $747,850, $395,795 and $93,954  in 1995, 1994 and 1993,    
respectively.  The monthly deductions are made from the subaccounts in          
proportion to the values held in those accounts.                                

A transfer charge may be imposed for each transfer request.  The charge will    
be deducted from the amount transferred to compensate the Insurance Company     
for the costs in effectuating the transfer.  There is no charge for the first   
four transfers in each policy year, and a $15 charge is imposed on each         
additional transfer request.  There were no transfer charges in 1995, 1994      
or 1993.                                                                        

Included in assets of the Account at December 31, 1995 is $3,437 related to     
policies held by an officer of the Insurance Company.                           

NOTE 4 - UNIT ACTIVITY                                                          

Transactions in units of each subaccount were as follows:                       

                                                        [Enlarge/Download Table]
                                           Subaccounts                                       
                       Money                            Capital     Growth                   
                       Market   Balanced     Bond        Growth     & Income    International
                                                                                             

Units outstanding at                                                                         
   December 31, 1992     1,324    19,700     3,367        84,811        -          53,424    

Units issued           176,464    98,840    10,111        238,171       -          38,760    
Units redeemed        (146,717)   (6,499)   (1,483)      (52,911)       -         (16,454)   

Units outstanding at                                                                         
   December 31, 1993    31,071   112,041    11,995        270,071       -          75,730    

Units issued           737,488   219,311   120,920        817,449     1,120       555,757    
Units redeemed        (736,921)  (29,330)   (9,014)      (172,321)      (44)      (86,782)   

Units outstanding at                                                                         
   December 31, 1994    31,638   302,022   123,901        915,199     1,076       544,705    

Units issued           537,441   171,793    46,376        851,579   142,687       900,378    
Units redeemed        (516,062)  (71,585)  (17,487)      (322,996)  (16,171)     (328,587)   

Units outstanding at                                                                         
   December 31, 1995    53,017   402,230   152,790      1,443,782       127,592     1,116,496

BANNER LIFE INSURANCE COMPANY                                                   
(an ultimate wholly-owned subsidiary                                            
of Legal & General Group Plc)                                                 
FINANCIAL STATEMENTS FOR THE YEARS ENDED                                      
DECEMBER 31, 1995, 1994 AND 1993                                              

REPORT OF INDEPENDENT ACCOUNTANTS                                             

February 19, 1996                                                             

To the Board of Directors and                                                 
Shareholder of Banner Life Insurance Company                                

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of shareholder's equity and of cash flows
present fairly, in all material respects, the financial position of Banner  
Life Insurance Company (an ultimate wholly-owned subsidiary of Legal &      
General Group Plc) and its subsidiaries (the Company) at December 31, 1995  
and 1994, and the results of their operations and their cash flows for      
each of the three years in the period ended December 31, 1995 in conformity 
with generally accepted accounting principles.  These financial statements  
are the responsibility of the Company's management; our responsiblity is    
to express an opinion on these financial statements based on our audits.    
We conducted our audits of these statements in accordance with generally    
accepted auditing standards which 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, assessing the accounting principles used and significant        
estimates made by management, and evaluating the overall financial statement
presentation.   We believe that our audits provide a reasonable basis for   
the opinion expressed above.                                                

As discussed in Note 2, the Company, effective January 1, 1994, adopted     
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities."                                 

/S/ Price Waterhouse LLP                                                    

BANNER LIFE INSURANCE COMPANY     
(an ultimate wholly-owned subsidiary of Legal & General Group Plc)      
CONSOLIDATED BALANCE SHEETS     
(in 000's)      

                                                        [Enlarge/Download Table]

                                                                 December 31,             
                                                              1995             1994       
ASSETS                                                                                    
Investments:                                                                              
  Fixed maturities:                                                                       
    Available-for-sale, at market (amortized cost $1,334,453                              
     and $1,191,964)                                          $1,401,147        $1,120,369
    Held-to-maturity, at amortized cost (market $170,526                                  
     and $297,188)                                               164,195           310,827
    Equity securities, available-for-sale, at market                                      
     (amortized cost  $1,543 and $1,358)                           2,878             2,323
    Mortgage loans                                                 1,574             1,968
    Policy loans                                                 129,070           130,365
    Other invested assets                                            398               300
       Total investments                                       1,699,262         1,566,152
Cash and cash equivalents                                        153,315            47,899
Accrued investment income                                         25,582            26,949
Reinsurance recoverable                                           25,420            21,434
Property and equipment                                             6,762             6,973
Deferred policy acquisition costs                                148,803           190,875
Value of business in force                                       101,457           146,796
Goodwill and other intangibles                                    39,787            41,729
Separate account assets                                           23,933            14,594
Other assets                                                       8,632             9,212
  Total assets                                                $2,232,953        $2,072,613

LIABILITIES                                                                               
Life policy reserves                                         $   286,510       $   299,980
Policy account balances                                        1,369,483         1,279,964
Accident and health reserves                                       1,353             1,415
Unearned revenue reserve                                           3,682             4,001
Claim reserves                                                    42,678            37,679
Deferred Federal income taxes                                     49,580            34,007
Accounts payable and accrued expenses                              8,333             5,530
Reinsurance ceded                                                  7,811             6,857
Separate account liabilities                                      23,933            14,594
Other liabilities                                                 28,859            21,295
  Total liabilities                                            1,822,222         1,705,322

SHAREHOLDER'S EQUITY                                                                      
Common stock, $1 par value - 2,500,000 shares authorized, issued and                      
  outstanding                                                      2,500            2,500 
Additional paid-in capital                                       233,659          233,165 
Net unrealized appreciation (depreciation) on investments         15,800          (10,500)
Retained Earnings                                                158,772          142,126 
  Total shareholder's equity                                     410,731          367,291 
  Total liabilities and shareholder's equity                  $2,232,953       $2,072,613 

BANNER LIFE INSURANCE COMPANY 
(an ultimate wholly-owned subsidiary of Legal & General Group Plc)          
CONSOLIDATED STATEMENTS OF CASH FLOWS     
(in 000's)      

                                                        [Enlarge/Download Table]
                                                      Year ended December 31,           
                                                       1995            1994        1993 
                                                                                        
Cash flows from operating activities:                                                   
   Net income                                        $16,646        $17,793     $16,845 
   Adjustments to reconcile net income to net cash                                      
   provided by (used in) operating activities:                                          
     Depreciation and amortization                    10,729          5,965      12,884 
     Realized investment gains                       (18,264)          (974)    (24,730)
     Provision for deferred Federal income taxes       1,382          8,715       5,369 
     Decrease (increase) in accrued investment income  1,367         (2,178)     (1,207)
     Increase in deferred policy acquisition costs   (17,725)       (31,179)    (20,822)
     (Increase) decrease in other assets              (4,684)         2,846       4,337 
     Increase in reserves                             80,667        110,594     130,120 
     Increase (decrease) in accounts payable and other                                  
     liabilities                                      12,645         (1,109)     (1,328)
     Total adjustments                                66,117         92,680     104,623 

Net cash provided by operating activities             82,763        110,473     121,468 

Cash flows from investing activities:                                                   
   Purchases of securities                        (2,612,530)      (189,628)   (523,548)
   Purchases of property and equipment, net             (823)          (525)     (1,146)
   Proceeds from sale of securities                2,625,802         84,501     380,582 
   Maturities of securities                            8,415         36,400      13,250 
   Decrease (increase) in policy loans                 1,295         (2,669)        326 

Net cash provided by (used in) investing activities   22,159        (71,921)   (130,536)

Cash flows from financing activities:                                                   
     Dividend paid to parent                              -          (6,300)     (6,200)
     Capital Contribution - Shawfield merger             494        -             -     
Net cash provided by (used in) financing activities      494         (6,300)     (6,200)

Net increase (decrease) in cash and cash equivalents 105,416         32,252     (15,268)
Cash and cash equivalents at beginning of year        47,899         15,647      30,915 

Cash and cash equivalents at end of year          $  153,315      $  47,899    $ 15,647 

BANNER LIFE INSURANCE COMPANY       
(an ultimate wholly-owned subsidiary of Legal & General Group Plc)      
CONSOLIDATED STATEMENTS OF INCOME       
(in 000's)      

                                                        [Enlarge/Download Table]

                                                    For the Year Ended December 31,         
                                                          1995          1994         1993   
                                                                                            
Insurance revenues:                                                                         
   Life insurance premiums                             $ 38,678        $41,855      $51,036 
   Universal life and investment product policy charges  51,619         46,663       48,520 
   Accident and health premiums                             382            425          457 
Net investment income                                   122,610        117,300      113,194 
Reinsurance allowance                                    11,347         12,170       11,267 
Realized investment gains                                18,264            974       24,730 
Other income                                                726          1,229          851 
   Total revenue                                        243,626        220,616      250,055 

BENEFITS AND EXPENSES                                                                       
Benefits to policyholders and beneficiaries                                                 
   Life insurance benefits                               57,247        53,745        57,036 
   Universal life and investment product benefits        98,072        84,850        85,902 
   Accident and health benefits                             415           439           714 
Change in policy and other reserves:                                                        
   Life                                                 (13,527)       (5,851)        3,610 
   Accident and health                                      (62)          (42)         (222)
Commissions                                              40,087        46,588        43,197 
Expenses and taxes                                       46,601        42,270        42,362 
Increase in deferred policy acquisition costs           (17,725)      (31,179)      (20,821)
Amortization of value of business in force                5,532         1,010        10,104 
Amortization of goodwill and other intangibles            1,941         1,941         1,941 
          Total benefits and expenses                   218,581       193,771       223,823 

Operating income before Federal income taxes             25,045        26,845        26,232 

Provision for Federal income taxes:                                                         
       Current                                            7,017           337         4,018 
       Deferred                                           1,382         8,715         5,369 
          Total provision for Federal income taxes        8,399         9,052         9,387 

Net income                                              $16,646       $17,793       $16,845 

BANNER LIFE INSURANCE COMPANY     
(an ultimate wholly-owned subsidiary      
of Legal & General Group Plc)     
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY     
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993      
(in 000's)        

                                                        [Enlarge/Download Table]
                                                     Net                                 
                                                  Unrealized                             
                                                  Appreciation                           
                                      Additional  (Depreciation)               Total     
                              Common    Paid in       on         Retained   Shareholder's
                               Stock    Capital    Investments   Earnings     Equity     
                                                                                         
Balance at December 31, 1992  $2,000    $233,165     $846        $120,488     $356,499   
Net income                                                         16,845       16,845   
Dividend payment to parent                                         (6,200)      (6,200)  
Change in net unrealized                                                                 
 appreciation on investments                          261                          261   
Stock dividend                   500                                (500)          -     

Balance at December 31, 1993   2,500     233,165    1,107        130,633       367,405   
Net income                                                        17,793        17,793   
Effect of adoption of SFAS 115                                                           
     on January 1, 1994                             7,056                        7,056   
Dividend payment to parent                                        (6,300)       (6,300)  
Change in net unrealized                                                                 
(depreciation) on investments                     (18,663)                     (18,663)  

Balance at December 31, 1994   2,500     233,165  (10,500)       142,126       367,291   
Net income                                                        16,646        16,646   
Shawfield merger                             494                                   494   
Change in net unrealized                                                                 
appreciation on investments                        26,300                       26,300   

Balance at December 31, 1995  $2,500    $233,659  $15,800       $158,772      $410,731   

<FN>                                                                                     
See Notes to Consolidated Financial Statements                                           
</FN>                                                                                    

BANNER LIFE INSURANCE COMPANY               
(an ultimate wholly-owned subsidiary              
of Legal & General Group Plc)               
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS              
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993              

NOTE 1 - ORGANIZATION AND DESCRIPTION OF OPERATIONS                             

Banner Life Insurance Company (the Company) is a wholly-owned subsidiary of     
Legal & General America, Inc. (Legal & General America), which, in turn,        
is an ultimate wholly-owned subsidiary of                                       
Legal & General Group Plc.                                                      

On December 31, 1995, the Company's parent, Legal & General Life Insurance      
Company of America, Inc. (L&G Life), merged with its parent Legal & General     
America, Inc., a Delaware corporation.  Legal & General America now owns all    
outstanding shares of Banner.  Full control of Legal & General America          
ultimately resides with Legal & General Group, Plc (Legal & General).           
Legal & General was founded in 1836 and is a United Kingdom company with        
primary insurance activities being pension, accident, life and general          
insurance.                                                                      

The Company operates predominantly in the individual traditional life,          
universal life and annuity markets of the life insurance industry and has       
several wholly-owned subsidiaries:  William Penn Life Insurance Company of      
New York (William Penn New York), European Life Insurance Company,              
First British American Life Insurance Company and Group Concepts, Inc.,         
which in turn wholly-owns Banner Financial Services Group, Inc.  The Company    
and its life insurance subsidiaries on a combined basis are licensed to         
transact business in every state except Maine.                                  

At December 31, 1995, Shawfield, Inc. (an ultimate wholly-owned subsidiary      
of Legal & General) was merged into Group Concepts.  The merger is expected     
to provide additional operating and investment opportunities to the Company.    
Shawfield's income and net assets in 1995, 1994 and 1993 were immaterial.       

NOTE 2 - SIGNIFICANT ACCOUNTING PRACTICES                                       

The significant accounting policies followed by the Company and its             
consolidated subsidiaries are described below.                                  

Basis of Financial Reporting                                                    

The preparation of financial statements in conformity with generally accepted   
accounting principles requires management to make estimates and assumption      
that affect the reported amounts of assets and liabilities and disclosure of    
contingent assets and liabilities at the date of the financial statement        
and the reported amounts of revenues and expenses during the reporting period.  
Actual results could differ from those estimates.                               

The accompanying financial statements have been prepared in accordance with     
generally accepted accounting principles.  These accounting principles differ   
in many respects from the statutory accounting practices applicable to the      
Company and its life subsidiaries which are prescribed or permitted by          
regulatory authorities and are primarily designed to demonstrate solvency.      
Under statutory reporting practices, statutory capital and surplus of the       
Company, including equity investments in subsidiaries, at December 31, 1995     
and 1994 was $95,277,000 and $88,584,000, respectively.  Statutory net income   
of the Company was $11,981,000, $2,081,000 and $4,491,000 for the years         
ended December 31, 1995, 1994 and 1993, respectively.                           

The maximum amount of dividends that may be paid by State of Maryland           
insurance companies to shareholders without prior approval of the Insurance     
Commissioner is subject to restrictions relating to statutory capital and       
surplus and statutory gains from operations.  The maximum dividend payout       
which may be made in 1996 without prior approval is $23,819,000.                

Regulatory risk-based capital rules require a specified level of capital        
depending on the types and quality of investments held, the types of business   
written and the types of liabilities maintained.  Depending on the ratio of     
an insurer's surplus to its risk-based capital, the insurer could be subject    
to various regulatory actions ranging from increased scrutiny to                
conservatorship.  The Company's risk-based capital ratios for 1995 and 1994     
are significantly above the regulatory action levels.                           

Basis of Consolidation                                                          

The consolidated financial statements include the accounts of the Company       
and its subsidiaries.  All significant intercompany accounts and transactions   
have been eliminated.                                                           

Investments                                                                     

At January 1, 1994, the Company adopted Statement of Financial Accounting       
Standards No. 115, "Accounting for Certain Investments in Debt and Equity       
Securities," which expanded the use of fair value accounting for those          
securities that a company does not have positive intent and ability to hold     
to maturity.  Accordingly, fixed maturities (comprised of bonds and             
redeemable preferred stocks) which the Company has both the ability and         
intent to hold to maturity are stated at amortized cost. Fixed maturities and   
equity securities which have been identified as available for sale are          
reported at fair value.  Unrealized holding gains or losses for the securities  
classified as available for sale are reported in shareholder's equity, net of   
the effect of the gains or losses on deferred acquisition costs and value of    
business in force, as well as net of deferred Federal income tax.  Fixed        
maturities reported at amortized cost are reduced to estimated net realizable   
value when necessary for impairments in value considered to be other than       
temporary.  Implementation of this statement increased shareholder's equity     
by $7,056,000, net of deferred policy acquisition costs, value of               
business in force and deferred Federal income tax.                              

Mortgage loans on real estate are stated at unpaid balances adjusted for        
amortization of discount. Policy loans are carried at the aggregate of unpaid   
balances with interest.  Prepayment assumptions for loan-backed bonds and       
structured securities were obtained from broker-dealer survey values or         
internal estimates.  These are consistent with the current interest rate        
and economic environment.                                                       

Interest on bonds and policy loans is recorded as income when it is earned.     
Purchase premium or discount is amortized over the life of the investment       
utilizing the effective interest method.  Realized gains and losses are         
reported as a component of revenue based upon specific identification of the    
investments sold.  When impairment of the value of an investment is considered  
other than temporary, the decrease in value is reported as a realized           
investment loss and a new cost basis is established.                            

Cash Equivalents                                                                

The Company considers short-term investments with original maturities of three  
months or less to be cash equivalents.                                          

Reinsurance                                                                     

During 1993, the Company implemented Statement of Financial Accounting          
Standards No. 113 (SFAS 113), "Accounting and Reporting for Reinsurance of      
Short-Duration and Long-Duration Contracts," which requires reinsurance         
recoverables previously netted against insurance reserves to be reclassified    
and reported as assets, and earned premiums ceded and recoveries recognized     
under reinsurance contracts to be disclosed.  The statement also requires       
gains on certain reinsurance contracts to be deferred and recognized over       
the contract settlement period.  The effect on net income from implementation   
of the income recognition provisions of SFAS 113 was not material.              

In the normal course of business, the Company seeks to limit its exposure to    
loss on any single insured and to recover a portion of benefits paid by         
ceding reinsurance to other insurance enterprises or reinsurers under           
excess coverage and coinsurance contracts.                                      

Amounts paid or deemed to have been paid for reinsurance contracts are          
recorded as reinsurance receivables.  The cost of reinsurance related           
to long-duration contracts is accounted for over the life of the underlying     
reinsured policies using assumptions consistent with those used to account      
for the underlying policies.                                                    

Property and Equipment                                                          

Property and equipment is stated at cost less accumulated depreciation.         
Depreciation is charged to operations using the straight-line method over       
their estimated useful lives of twenty-five years for the Company's building    
and five to ten years for furniture, equipment and automobiles.  Gains and      
losses upon disposition are included in other operating income.                 

Separate Accounts                                                               

The separate account assets and liabilities reflected in the financial          
statements represent funds for which the holder of the policy or contract,      
rather than the Company, bears the investment risk.  These include separately   
administered group retirement annuity contracts, variable universal life and    
variable annuity products.  Such amounts are stated at market value.            

Deferred Policy Acquisition Costs                                               

The costs of acquiring new business, which vary with and are primarily          
related to the production of new business, principally commissions, and         
certain policy underwriting and issue costs, have been deferred.                

Deferred policy acquisition costs for traditional life policies are amortized   
through the use of factors in a manner which charges each year's operations     
with costs in proportion to the receipt of policy premiums.  The factors were   
developed consistent with the same assumptions as to interest, mortality        
and withdrawals used in computing the liability for future policy benefits.     

Deferred policy acquisition costs for universal life-type and investment-type   
policies are amortized in relation to the present value of estimated gross      
profits from the related contracts.  The Company performs analyses of actual    
experience on each block of business with respect to interest rates,            
mortality, terminations and expenses, and adjusts the amortization and          
the assets accordingly.                                                         

The Company incurred and deferred total policy acquisition costs of             
$40,214,000, $42,628,000 and $36,326,000 for the years ended December 31,       
1995, 1994 and 1993, respectively.  The related amortization expense was        
$22,489,000, $11,449,000 and $15,505,000 in 1995, 1994 and 1993,                
respectively.                                                                   

Value of Business in Force                                                      

The value of business in force represents the remaining unamortized portion     
of actuarially determined fair market values of blocks of business, including   
the Company's original block of business, valued at acquisition date.           

Amortization of the value of business in force for traditional life blocks of   
business is based on factors developed using the defined valuation premium      
method to estimate the value of business in force at durations subsequent to    
the purchase date.  The value of business in force for the interest sensitive   
blocks of business is amortized in relation to the present value of estimated   
gross profits from the related purchased blocks of business.  The Company       
performs analyses of actual experience on each block of business with respect   
to interest rates, mortality, terminations and expenses, and adjusts the        
amortization and the value of business in force accordingly.                    

Goodwill and Other Intangibles                                                  

Goodwill represents the excess of acquisition cost over the net fair value      
of assets acquired and liabilities assumed in the acquisition of the Company's  
subsidiaries.  Amortization of goodwill and other intangible assets acquired    
is provided on the straight-line method over the periods of benefit,            
which range from five to forty years.  Accumulated amortization of goodwill     
and other intangible assets acquired was $24,842,000 and $22,901,000            
at December 31, 1995 and 1994, respectively.                                    

Reserve for Life Policies                                                       

The reserve for individual traditional life policies is primarily computed      
utilizing the net level premium method based upon assumptions regarding         
interest rates, mortality and withdrawals, including provisions for             
unfavorable deviations from such assumptions.  Level interest rates of 9.0%     
for certain products and 6.25% for other products are assumed for all years     
of issue.  For all other products, a graded scale is assumed which begins at    
rates ranging from 8.5% to 10.0% and grades to rates ranging from 7.0% to       
8.0% over periods of five to twenty years.  Mortality assumptions are based     
on multiples of the 1965 - 1970 and 1975 - 1980 select and ultimate tables.     
The multiples vary with the characteristics of the risks assumed and are        
adjusted for non-smoker mortality where applicable.                             

The reserves for universal life-type policies consist primarily of the          
accumulated policy account balances computed utilizing the retrospective        
deposit method based upon policy account values as defined in the contracts     
before surrender charges.                                                       

Recognition of Premium Revenue and Costs                                        

For individual traditional life policies, premiums are recognized as income     
when due.  Benefits and expenses associated with such premiums are allocated    
over the life of the policies.  This allocation is accomplished by means of     
the reserving method and the amortization of deferred policy acquisition        
costs.                                                                          

For universal life-type policies, revenues are generally recognized as          
mortality, expense and surrender charges are assessed against universal         
life-type policyholder account balances, while excess policy loads are earned   
over the life of the policy.  For annuity contracts, revenues are recognized    
as policy loads and expense charges are assessed against annuity                
contractholder account balances.  Benefits expense consists of interest         
credited to the policy account balances and benefit claims incurred in          
excess of policy account balances.  Such expenses are recognized as incurred.   

Claim reserves include amounts for claims in course of settlement and claims    
incurred but not reported.                                                      

Unearned Revenue Reserve                                                        

Amounts assessed against policyholder account balances as front-load charges    
are accounted for as unearned revenues and are credited to income in the same   
manner as deferred policy acquisition costs are amortized.                      

Income Taxes                                                                    

The Company accounts for income taxes under the liability method which          
requires the recording of deferred taxes based on the differences between       
the basis of assets and liabilities for financial statement purposes            
versus tax purposes at current tax rates.                                       

New Accounting Pronouncements                                                   

In March 1995, the FASB issued Statement No. 121, "Accounting for the           
Impairment of Long-Lived Assets and For Long-Lived Assets to Be Disposed Of,"   
which requires an assessment of impairment of long-lived assets, including      
goodwill, whenever events and changes in circumstances indicate the             
carrying amount of such assets may not be recoverable.  The Statement is        
effective as of January 1, 1996.  Management believes there will be no          
significant impact on the financial statements on adoption.                     

485BPOS
3rd “Page” of 8
TOC
1st
Previous
Next
↓Bottom
Just 3rd
NOTE 3 - REINSURANCE                                                            

During 1993, the Company adopted SFAS 113, "Accounting and Reporting            
for Reinsurance of Short-Duration and Long-Duration Contracts."  The            
accounting policies for reporting the effects of reinsurance are                
described in Note 2.                                                            

The Company generally retains up to a limit of $200,000 for each life           
insured, except for William Penn New York which has a maximum retention         
limit of $250,000.  Business purchased from Monarch is currently subject        
to retention limits up to $400,000, although a spread loss reinsurance          
treaty (coinsurance basis) is in effect, which reduces the net liability        
to the Company's $200,000 retention limit.                                      

The principal reinsurance treaties of William Penn New York function to         
distribute the risk among William Penn New York and the reinsurance pool        
members, of the first dollar of insurance issued up to a retention limit        
of $250,000.  These risks are ceded principally under treaties with pools       
each consisting of four or five reinsurance companies.  The universal life      
products are reinsured on a yearly renewable term basis while the term          
insurance products are reinsured on a coinsurance basis.  Each five member      
and four member pool functions to share proportionately in the reinsurance at   
16.67% and 20% of the policy face amount up to William Penn New York's          
retention limit and at 20% and 25% of the policy face amount in excess of       
William Penn New York's retention limit, respectively.                          

Reinsurance contracts do not relieve the Company from its obligations to        
policyholders.  Failure of reinsurers to honor their obligations could result   
in losses to the Company; consequently, allowances are established for          
amounts deemed uncollectible.  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 to minimize its exposure to significant losses from reinsurers'      
insolvencies.  Reinsurance recoverables with a carrying value of $25.4 million  
and $21.4 million were associated with five reinsurers who compose 68% of all   
reinsurance activities of the Company at both December 31, 1995 and 1994.       
The Company holds collateral under related reinsurance agreements in the form   
of letters of credits and trust agreements totaling $114.1 million              
that can be drawn on for amounts that remain unpaid for more than 120 days.     

Approximately 64%, 64% and 65% of the amount of life insurance in force at      
December 31, 1995, 1994 and 1993, respectively, was reinsured.                  

The effect of reinsurance on premiums earned and benefits incurred for the      
years ended December 31, 1995 and 1994 are as follows (in 000's):               

                               Year Ended December 31,
                                       1995       1994        1993
Direct premiums and amounts assessed against                                    
policyholders                             $169,497    $164,123    $171,344    
Reinsurance assumed                             907       1,001         762     
Reinsurance ceded                           (79,725)    (76,181)    (72,093)    
Net premiums                         $  90,679   $  88,943    $100,013

Direct benefits paid and assessed against                                       
policyholders                             $216,934    $190,581    $188,284    
Reinsurance assumed                              80         170         787     
Reinsurance ceded                           (61,280)    (51,717)    (45,419)    
     Net benefits                     $155,734    $139,034    $143,652

485BPOS
4th “Page” of 8
TOC
1st
Previous
Next
↓Bottom
Just 4th
NOTE 4 - INVESTMENTS                                                            

The following information summarizes the components of investment income and    
realized investment gains (losses) and changes in unrealized investment         
appreciation (in 000's):                                                        

                             Year Ended December 31,
                                1995        1994          1993
Investment income:                                                              
Fixed maturities                    $111,052    $108,218      $104,411      
Equity securities                        997         302           381      
Mortgage loans                           154         211           441      
Policy loans                           8,202       8,540         8,597      
Short-term investments                 4,183       1,581         1,059      
Other                                     80          29            34      

Gross investment income                124,668     118,881       114,923        
Less investment expense                 (2,058)     (1,581)       (1,729)       

Net investment income                 $122,610    $117,300      $113,194        

Realized investment gains (losses)                                              
Fixed maturities                  $  18,127 $       708      $ 24,592     
Equity securities                       182         278           131     
Other                                 (45)        (12)            7   
Gross realized investment gains      $  18,264 $       974      $ 24,730        

Change in unrealized investment appreciation                                    
(depreciation):                                                               
Fixed maturities                   $139,725    $(71,595) $       -        
Equity securities                       370        (713)          396     
                               140,095     (72,308)          396

Amounts attributable to other balance sheet                                     
accounts:                                                                     
Deferred policy acquisition costs   (59,797)     31,692           -       
Value of business in force          (39,807)     22,764           -       
Deferred Federal income taxes       (14,191)      6,245         (135)     
Change in unrealized appreciation (depreciation) on                             
investments                           $ 26,300   $(11,607) $       261        

At December 31, 1995, investments in debt securities held-to-maturity           
include bonds of $164,020,000 and redeemable preferred stock of $175,000        
and investments in debt securities available-for-sale include bonds             
totaling $1,401,147,000.  The amortized cost and market value of investments    
in debt securities at December 31, 1995 are as follows (in 000's):              

                                                                [Download Table]


                                            Gross       Gross               
                                 Amortized  Unrealized  Unrealized    Market
Held-to-Maturity:                Cost       Gains       Losses         Value
                                                                            
U.S. Treasury securities and                                                
 obligations of U.S.                                                        
 government agencies           $26,988       $1,538      $  -        $28,526

Debt securities issued by                                                   
 foreign governments             3,338          339        -           3,677

Corporate securities            38,068        1,895        -          39,963

Mortgage-backed securities      95,801        2,587       (28)        98,360

Total                         $164,195       $6,359      $(28)      $170,526
                                                                [Download Table]


                                            Gross       Gross                 
                                 Amortized  Unrealized  Unrealized  Market    
Available-for-Sale:              Cost       Gains       Losses       Value    
                                                                              

U.S. Treasury securities and                                                  
 obligations of U.S.                                                          
government agencies              $82,599     $2,500       $(23)        $85,076

Debt securities issued by                                                     
 foreign governments              43,578      3,309        (40)         46,847

Corporate securities           1,120,807     59,734       (188)      1,180,352

Mortgage-backed securities        87,469      1,535       (132)         88,872

Total                         $1,334,453    $67,078      $(383)     $1,401,147

The amortized cost and market value of debt securities held as assets at        
December 31, 1995 by contracted maturity are shown below (in 000's).  Actual    
maturities may differ from contractual maturities because borrowers may have    
the right to call or prepay obligations with or without call or prepayment      
penalties.                                                                      

                                                        [Enlarge/Download Table]

                                         Held-to-Maturity              Available-for-sale  
                                        Amortized       Market     Amortized       Market  
                                          Cost          Value        Cost          Value   
                                                                                           
Due in one year or less                    $-            $-         $22,235         $22,354
Due after one year through five years       -             -         357,556         369,635
Due after five years through ten years     49,247        51,430     602,452         634,735
Due after ten years                       114,948       119,096     352,210         374,423

Total                                    $164,195      $170,526  $1,334,453      $1,401,147

At December 31, 1994, investments in debt securities held-to-maturity include   
bonds of $310,653,000 and redeemable preferred stock of $174,000 and            
investments in debt securities available-for-sale include bonds totaling        
$1,120,369,000.  The amortized cost and market value of investments in debt     
securities at December 31, 1994 are as follows (in 000's):                      

                                                                [Download Table]

                                            Gross       Gross              
                               Amortized  Unrealized  Unrealized  Market   
Held-to-Maturity:                Cost       Gains       Losses      Value  
                                                                           
U.S. Treasury securities and                                               
 obligations of U.S.                                                       
 government agencies           $63,914          $20     $(3,572)    $60,362

Debt securities issued by                                                  
 foreign governments            11,530            7        (126)     11,411

Corporate securities           179,919        2,844     (10,593)    172,170
Mortgage backed securities      55,464        -          (2,219)     53,245

Total                         $310,827       $2,871    $(16,510)   $297,188
                                                                [Download Table]

                                              Gross         Gross              
                                 Amortized  Unrealized   Unrealized    Market  
Available-for-Sale:                Cost       Gains        Losses        Value 
                                                                               
U.S. Treasury securities and                                                   
 obligations of U.S.                                                           
government agencies             $164,548           $0    $(8,118)      $156,430

Obligations of states and                                                      
 political subdivisions            7,824          208        (65)         7,967

Debt securities issued by                                                      
 foreign governments              53,460           23     (4,741)        48,742

Corporate securities             784,127        3,913    (51,774)       736,266

Mortgage backed securities       182,005          127    (11,168)       170,964

Total                         $1,191,964       $4,271   $(75,866)    $1,120,369

The proceeds from sales of investments held-to-maturity of $19,113,000 in 1995  
were generated by $1,358,000 of involuntary call activity, $8,415,000 of        
matured securities and $1,702,000 of mortgage-backed security paydowns.         
Gross gains of $492,000 were realized on these sales in 1995. The securities    
had an amortized cost of $18,621,000 in 1995.   On November 30, 1995, the       
Company transferred $247,182,000 of securities classified as held-to-maturity   
to the available-for-sale portfolio.  As a result, unrealized gains on fixed    
maturities increased by $16,853,000.                                            

Proceeds from sales of investments in debt securities classified as             
available-for-sale were $2,142,146,000 in 1995.  Gross gains of $26,237,000     
and gross losses of $9,594,000 were realized on these sales in 1995.            

Proceeds from the sales of debt securities classified as trading were           
$238,457,000 in 1995.  Gross gains of $1,226,000 and gross losses of $234,000   
were realized on these sales in 1995.  There were no securities held in the     
trading portfolio at December 31, 1995.                                         

Proceeds from sales of all other securities were $1,415,600,000 in 1995,        
comprised primarily of $1,174,698,000 in short term investments.  Gross gains   
of $182,000 were realized on these sales in 1995.                               

NOTE 5 - FINANCIAL INSTRUMENTS                                                  

Fair Values of Financial Instruments                                            

Cash and cash equivalents: The carrying amount approximates fair value          
because of the short maturity of those instruments.                             

Fixed-income securities: The fair values of fixed income securities are         
estimated based on quoted market prices for those or similar instruments.       
When there is no quoted market price, estimates of fair value are based on      
quotes from industry recognized rating services.  Estimated fair values of      
these instruments are contained in Note 4 to the financial statements.          

Equity securities: The fair values are estimated based principally on quoted    
market prices.  These securities are carried at fair value.                     

Mortgage loans: The carrying amount approximates fair value, because the        
average interest rates on outstanding balances are similar to current market    
rates.                                                                          

Policy loans: Policy loans are issued with varying interest rates, depending    
on the terms of the insurance policies.  Future cash flows are uncertain and    
difficult to predict.  Accordingly, it was not practicable to estimate fair     
value of policy loans.                                                          

Investment contracts: The carrying amount of $515,237,000 approximates fair     
values.  The fair value of annuities in the payout phase is assumed to be       
the present value of the anticipated cash flows discounted at current           
interest rates.  The Fair Value of annuities in the accumulation phase is       
assumed to be the contract holders' account value less surrender charge.        

Financial Instruments with Off-Balance Sheet Risk                               

In 1995, the Company entered into forward purchase contracts for                
mortgage-backed securities which provide for future receipt of securities       
at specified prices.  The contracts are then closed prior to settlement         
without taking delivery of the securities.  These instruments are treated       
as off-balance sheet items.  No cash is required at inception, and the cash     
required at settlement is the notional value. The contract does not require     
collateral.  Risk arises from the potential inability of counterparties to      
perform under the terms of the contracts and from changes in securities         
value and interest rates. Changes in unrealized gains and losses on these       
contracts are included in earnings, with corresponding offsetting amounts       
reflected as assets or liabilities.                                             

At December 31, 1995, the Company had open forward purchase contracts for       
mortgage-backed securities which had a notional (contract) value of $70         
million at an average price of $101.03 (for Banner Life securities) and         
$100.60 (for William Penn New York securities).  The open contracts were        
closed in January 1996 at a gain of $825,000.  Net trading gains for 1995       
related to forward purchase contracts was $1,503,000 including $889,000,        
which was unrealized at December 31, 1995.                                      

NOTE 6 - FEDERAL INCOME TAXES                                                   

The Company and its subsidiaries join in the filing of a life-nonlife           
consolidated Federal income tax return with Legal & General America.            
Each member in the consolidated return provides for income taxes under          
the provisions of an intercompany tax sharing agreement.  The tax sharing       
agreement provides that loss companies are given credit to the extent that      
such losses reduce the consolidated tax liability.  The utilization of          
operating losses of the nonlife companies are generally limited to              
thirty-five percent of the lesser of nonlife subgroup losses or current         
period life subgroup taxable income.  William Penn New York will become         
eligible to join the life-nonlife consolidated Federal income tax return        
in 1995.                                                                        

Deferred income taxes reflect the net tax effects of temporary differences      
between the carrying amounts of assets and liabilities for financial            
reporting purposes and the amounts used for income tax purposes.                
Significant components of the Company's deferred tax assets and liabilities     
as of December 31, 1995 and 1994 are as follows (in 000's):                     

485BPOS
5th “Page” of 8
TOC
1st
Previous
Next
↓Bottom
Just 5th
                                    1995            1994
Deferred tax assets:                                                            
Reserves                                        $43,209          $43,592        
Pension and compensation accruals                   685              253        
Net operating loss carryovers                    17,000              -          
Other, net                                        2,439            1,788        
Gross deferred tax assets                   63,333           45,633   

Deferred tax liabilities:                                                       
Insurance in force                          40,822           40,279   
Policy acquisition costs deferred           45,378           42,556   
Other, net                                   1,198            2,481   
Valuation allowance                         17,000             -      
Gross deferred tax liabilities             104,398           85,316   

Net deferred tax liability before deferred       41,065           39,683        
tax on unrealized appreciation                                            
(depreciation) on investments                                             

Deferred tax on unrealized appreciation           8,515           (5,676)       
(depreciation) on investments                                             

Net deferred tax liability                       49,580           34,007        

As discussed in Note 1, at December 31, 1995, Shawfield Inc. was merged into    
Group Concepts. Shawfield had net operating loss carryovers of approximately    
$50 million that are eligible to offset the future taxable income of Group      
Concepts and a deferred tax asset has been established for these loss           
carryovers.  It is expected that the loss carryovers will be utilized in        
future periods.  A valuation allowance has been established for these loss      
carryovers and will be reduced in future periods as such loss carryovers        
are utilized.                                                                   

The difference between the provision for income taxes and the amount of         
income tax determined by applying the applicable U.S. statutory Federal         
income tax rate to pre-tax income is due to the dividends received deduction,   
the nondeductible expenses, and the expenses related to acquisition             
activities, none of which are material in amount.                               

Income taxes paid by the Company during 1995, 1994 and 1993 were $2,700,000,    
$1,400,000 and $2,200,000 respectively.                                         

485BPOS
6th “Page” of 8
TOC
1st
Previous
Next
↓Bottom
Just 6th
NOTE 7 - EMPLOYEE BENEFIT PLANS                                                 

Legal & General America maintains a non-contributory defined benefit pension    
plan (the Plan) covering substantially all full-time employees of the Company.  

Benefits under the Plan are based on years of service and compensation levels.  
The funding policies of the Plan are to contribute amounts that meet minimum    
funding requirements, but which do not exceed the maximum funding limits as     
currently determined under applicable tax regulations.  The Plan has reached    
its funding limitation and, accordingly, the Company made no contribution to    
the Plan in 1995, 1994 and 1993.                                                

The following table sets forth the consolidated funded status of the Plan at    
January 1, 1995 and 1994 and the amount of prepaid pension cost included in     
the accompanying balance sheets at December 31, 1995 and 1994  (in 000's):      

                                                1995            1994
Actuarial present value of periodic benefit obligations:                        

Vested                                              $6,441        $5,113    
Nonvested                                              340           311    

Accumulated benefit obligation                  $6,781        $5,424

Projected benefit obligation                          $7,351        $5,833      
Plan assets at fair value                              8,105         8,108      

Excess of Plan assets over projected benefit obligation  754         2,275      
Unrecognized prior service cost                         (171)         (193)     
Unrecognized net gain                                    (50)       (1,311)     
Unrecognized portion of net transition assets           (518)         (638)     

Prepaid pension cost included in other assets            $15          $133      

485BPOS
7th “Page” of 8
TOC
1st
Previous
Next
↓Bottom
Just 7th
The consolidated net periodic pension cost for the Plan in 1995, 1994 and       
1993 included the following components (in 000's):                              

                       Year Ended December 31,
                                    1995            1994            1993
Service cost                              $347           $379            $314   
Interest cost                              493            438             411   
Actual return on plan assets              (580)          (546)           (506)  
Net amortization                          (142)          (142)           (136)  

Pension cost                              $118           $129             $83   

The assumptions used in the accounting for the Plan were as follows:            

                                      1995          1994            1993
Discount rate                             7.25%         7.50%           7.50%   
Rate of increase in compensation          6.00%         6.00%           6.00%   
Expected long-term return on Plan assets  8.00%         8.00%           8.00%   

485BPOS
Last “Page” of 8
TOC
1st
Previous
Next
↓Bottom
Just 8th
The Company administers the pension plan funds for the group of companies.      
The Plan's assets are generally invested in U.S. Government securities,         
listed common stocks and investment-grade corporate bonds.  The assets and      
liabilities of the Plan are included in the accompanying balance sheets         
as a component of separate account assets and liabilities.                      

Legal & General America also maintains a voluntary defined contribution         
thrift plan available to substantially all eligible employees of the Company    
with one year of employment and 1,000 hours of service.  Employees'             
contributions, up to the maximum of 6% of their defined compensation, were      
matched 100% by the Company in 1995, 1994 and 1993.  The Company's              
contributions to the plan are charged to expense and amounted to $505,000,      
$454,000 and $392,000 in 1995, 1994 and 1993, respectively.                     

NOTE 8 - COMMITMENTS                                                            

William Penn New York entered into an operating lease effective March 1992.     
The lease contains escalation provisions for operating expenses and taxes       
of four percent per year after 1993 and two renewable option terms of five      
years each.  The base lease terminates in 2002.  Annual rent expense            
incurred was $1,065,000 and $1,047,000 in 1995 and 1994, respectively.          
Future minimum lease payments under the noncancellable operating                
lease are as follows (in 000's):                                                

1996                   $1,123           
1997                    1,163           
1998                    1,205           
1999                    1,248           
2000                    1,293           
Thereafter              1,514           

Total                  $7,546           

NOTE 9 - RELATED PARTY TRANSACTIONS AND PARENT COMPANY ACTIVITIES               

Notes receivable from affiliates, included in Other assets in the               
accompanying financial statements, include the following:                       

                                                                [Download Table]

                                                             December 31,        
                                                        1995              1994   
                                                                                 
Banner Life:                                                                     
  Note receivable from Legal & General America,                                  
    due December 1999 with interest at 7.8%,                                     
    collateralized by the Legal & General Data Center  $1,600,000      $1,600,000
  Accrued interest                                        508,590         356,020
    Total                                              $2,108,590      $1,956,020

The Company had a net intercompany receivable of $4,837,000 from affiliates     
at December 31, 1995 and a net intercompany payable to affiliates of $468,000   
at December 31, 1994.                                                           

The Company paid cash dividends to its parent company, Legal & General Life,    
totaling $6,300,000 and $6,200,000 on December 30, 1994 and December 27,        
1993, respectively.  The Company also paid a stock dividend of $500,000         
to its parent company on September 29, 1993.                                    

The Company allocated $561,000, $541,000 and $545,000 of general and            
administrative expenses to Legal & General America in 1995, 1994 and 1993,      
respectively.  Legal & General America allocated $12,003,000, $10,807,000       
and $6,077,000 of general and administrative expenses to the Company in         
1995, 1994 and 1993, respectively.                                              

NOTE 10 - CONTINGENCIES                                                         

Banner Life Insurance Company (Banner) is party to a purported class action     
suit alleging that Banner, through one general agency, misrepresented its       
universal life insurance policies as investment products to elderly             
consumers.  Banner has tentatively settled this case.  Refund offer letters     
will be mailed to certain qualifying policyowners who may convert their         
policies to Banner annuity contracts or receive a full refund of premiums       
paid plus interest and certain incidental expenses.  The Company has accrued    
$3.0 million for the pre-tax effect of the potential refunds and associated     
legal costs.                                                                    

APPENDIX A - Illustrations of Death Benefits and Values               

The following tables contain examples illustrating how the Account Values,      
Cash Surrender Values, and Death Benefits of a Policy may change with the       
investment experience of the Fund.  The tables show how the Account Values,     
Cash Surrender Values, and Death Benefits of a Policy issued to male            
and female Insureds, age 45, in the preferred risk classification who pay       
the given premium annually would vary over time, also assuming a $100,000       
Specified Amount, for either Benefit Option, if the investment return on        
the assets held in each Portfolio of the Fund were a uniform, gross, after-tax  
annual rate of 0%, 8%, or 12%.  The Values and Death Benefits would be          
different from those shown if the gross annual investment rates of return       
averaged 0%, 8%, and 12% over a period of years, but fluctuated above and       
below those averages for individual Policy Years.                               

The second column of the tables shows the value of the premiums paid            
accumulated at 5% interest. The following columns show the Account Values,      
Cash Surrender Values, and Death Benefits for uniform hypothetical rates of     
return shown in these tables.  The tables illustrate both the current cost      
of insurance, mortality and expense risk, and administrative charges, and the   
maximum cost of insurance, mortality and expense risk, and administrative       
charges.  The tables also reflect the 2.5% premium tax charge.                  

The amounts shown reflect the fact that the net investment return of the        
Investment Divisions is lower than the gross, after-tax return of the assets    
held in the Fund as a result of expenses paid by the Fund and charges levied    
against the Sub-Accounts.  The values shown assume that a Policyowner maintains 
Account Values in equal proportion among the seven portfolios of the Fund, and  
they take into account an average of the daily investment management fee        
currently paid by each Portfolio of the Fund (which is assumed to be equivalent 
to an annual rate of .59% of the aggregate average daily net assets of the      
Fund), the average of the actual, historical operating expenses incurred by     
the Fund (which were at an annual rate of .21% for the year ended December 31,  
1995 ), the daily charge by Banner Life to each Sub-Account for assuming        
mortality and expense risks (which is equivalent to an annual rate of 0.75%),   
the monthly deduction for cost of insurance and the monthly deduction for       
administration expenses.                                                        

Taking into account the current mortality and expense risk charge of .75% and   
the charge for investment management fees from the fund, the illustrated gross  
annual investment rates of return of 0%, 8%, and 12%, correspond to             
approximate net annual rates of  -1.55%, 6.45% and 10.45%, respectively;        
using the maximum or guaranteed mortality and expense risk charge of .90%,      
the figures are -1.70%, 6.30% and 10.30%.                                       

The hypothetical values shown in the tables do not reflect charges for any      
federal income tax burden attributable to the Variable Account, since Banner    
Life is not currently making such charges. However, such charges may be made    
in the future and, in that event, the gross annual investment rate              
of return would have to exceed 0%, 8%, or 12% by an amount sufficient to        
cover the tax charges in order to produce the values illustrated.               
(See Federal Tax Matters.)                                                      

The tables illustrate the values that would result based upon the hypothetical  
investment rates of return if only the indicated premium is paid annually, and  
if no Policy loans have been made.  Illustrated values would be different if    
the proposed Insured were another age, sex, or risk classification.             

Upon request, Banner Life will provide a comparable illustration based upon the 
proposed Insured's age and the initial Death Benefit requested.  After          
purchasing a Policy, Policyowners will be assessed a fee of $25 for any         
illustration requested in excess of the one allowed free each year.             

                                                        [Enlarge/Download Table]
                         BANNER LIFE INSURANCE COMPANY                                                                      
                           ROCKVILLE, MARYLAND 20850                                                                        

                               MALE ISSUE AGE 45                                                                            
                 SPECIFIED AMOUNT: $100,000 - BENEFIT OPTION A                                                              
                         PREFERRED UNDERWRITING CLASS                                                                       
                 CURRENT COST OF INSURANCE AND EXPENSE CHARGES                                                              

VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF                                             


        Premiums                   0% (1) (2)                        8% (1) (2)                       12% (1) (2)           
End of  Accumulated                 Cash                               Cash                              Cash               
Policy  at 5% Interest  Account   Surrender   Death        Account  Surrender     Death     Account   Surrender       Death 
Year    Per Year(1)       Value     Value     Benefit        Value     Value     Benefit      Value      Value       Benefit
                                                                                                                            
1        2,139.90         1,543       848     101,543        1,682       987     101,682      1,751      1,057       101,751
2        4,386.80         3,040     2,345     103,040        3,450     2,755     103,450      3,663      2,969       103,663
3        6,746.03         4,492     3,798     104,492        5,309     4,614     105,309      5,752      5,057       105,752
4        9,223.24         5,898     5,203     105,898        7,263     6,568     107,263      8,032      7,338       108,032
5       11,824.30         7,256     6,561     107,256        9,316     8,621     109,316     10,524      9,829       110,524
6       14,555.41         8,563     8,007     108,563       11,470    10,914     111,470     13,244     12,688       113,244
7       17,423.08         9,816     9,399     109,816       13,728    13,311     113,728     16,213     15,796       116,213
8       20,434.14        11,012    10,734     111,012       16,092    15,814     116,092     19,451     19,173       119,451
9       23,595.74        12,144    12,006     112,144       18,562    18,423     118,562     22,981     22,842       122,981
10      26,915.43        13,212    13,212     113,212       21,142    21,142     121,142     26,828     26,828       126,828
15      46,175.97        17,446    17,446     117,446       35,768    35,768     135,768     51,940     51,940       151,940
20      70,757.84        19,099    19,099     119,099       53,054    53,054     153,054     90,261     90,261       190,261
25     102,131.22        16,598    16,598     116,598       71,831    71,831     171,831    147,942    147,942       247,942
30     142,172.49         7,464     7,464     107,464       89,333    89,333     189,333    233,869    233,869       333,869
35     193,276.43             0         0           0       99,420    99,420     199,420    360,068    360,068       460,068
40     258,499.44             0         0           0       92,065    92,065     192,065    544,772    544,772       544,772
45     341,742.36             0         0           0       48,361    48,361     148,361    812,564    812,564       912,564
50     447,983.78             0         0           0            0         0           0  1,204,265  1,204,265     1,304,265
<FN>                                                                                                                        
(1)  Assumes annual premium payments of $2,038 paid in full at beginning of                                                 
     each policy year.  The values would vary from those shown if the                                                       
     amount or frequency of payments varies.                                                                                

(2)  Assumes that no policy loan or partial withdrawal has been made and no                                                 
     optional insurance riders have been selected.                                                                          

THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE                                                  
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT                                                 
RATES OF RETURN.  ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN                                               
AND WILL DEPEND UPON A NUMBER OF FACTORS INCLUDING THE PREMIUM AND ACCOUNT                                                  
VALUE ALLOCATIONS MADE BY THE OWNER AND THE DIFFERENT RATES OF RETURN OF THE                                                
PORTFOLIOS.  THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A                                                
POLICY WOULD BE DIFFERENT THAN THOSE SHOWN IF ACTUAL INVESTMENT RATES OF                                                    
RETURN AVERAGE 0%, 8% OR 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE                                                   
OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS OR IF ANY PREMIUMS WERE                                                 
ALLOCATED OR ACCOUNT VALUE TRANSFERRED TO THE GENERAL ACCOUNT.  NO                                                          
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE                                                  
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.                                                              
</FN>                                                                                                                       
                                                        [Enlarge/Download Table]
                         BANNER LIFE INSURANCE COMPANY                                                                   
                           ROCKVILLE, MARYLAND 20850                                                                     

                               MALE ISSUE AGE 45                                                                         
                 SPECIFIED AMOUNT: $100,000 - BENEFIT OPTION A                                                           
                         PREFERRED UNDERWRITING CLASS                                                                    
               GUARANTEED COST OF INSURANCE AND EXPENSE CHARGES                                                          

VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF                                          

         Premiums                   0% (1) (2)                         8% (1) (2)                   12% (1) (2)          
End of   Accumulated                 Cash                                 Cash                         Cash              
Policy   at 5% Interest  Account   Surrender   Death        Account    Surrender    Death   Account  Surrender      Death
Year     Per Year(1)      Value     Value      Benefit       Value       Value     Benefit   Value     Value      Benefit
                                                                                                                         
1        2,139.90         1,473       778     101,473         1,609       914     101,609     1,677       982   101,677  
2        4,386.80         2,893     2,198     102,893         3,290     2,595     103,290     3,498     2,803   103,498  
3        6,746.03         4,259     3,564     104,259         5,046     4,352     105,046     5,474     4,779   105,474  
4        9,223.24         5,569     4,874     105,569         6,879     6,184     106,879     7,619     6,924   107,619  
5       11,824.30         6,821     6,126     106,821         8,790     8,095     108,790     9,947     9,252   109,947  
6       14,555.41         8,011     7,455     108,011        10,779    10,223     110,779    12,471    11,915   112,471  
7       17,423.08         9,134     8,718     109,134        12,845    12,428     112,845    15,206    14,789   115,206  
8       20,434.14        10,185     9,907     110,185        14,984    14,706     114,984    18,165    17,887   118,165  
9       23,595.74        11,156    11,017     111,156        17,195    17,056     117,195    21,364    21,225   121,364  
10      26,915.43        12,042    12,042     112,042        19,473    19,473     119,473    24,819    24,819   124,819  
15      46,175.97        14,986    14,986     114,986        31,745    31,745     131,745    46,657    46,657   146,657  
20      70,757.84        14,565    14,565     114,565        44,653    44,653     144,653    78,209    78,209   178,209  
25     102,131.22         8,824     8,824     108,824        55,723    55,723     155,723   122,662   122,662   222,662  
30     142,172.49             0         0           0        59,888    59,888     159,888   183,403   183,403   283,403  
35     193,276.43             0         0           0        47,118    47,118     147,118   262,503   262,503   362,503  
40     258,499.44             0         0           0         1,584     1,584     101,584   361,194   361,194   461,194  
45     341,742.36             0         0           0         0             0           0   474,029   474,029   574,029  
50     447,983.78             0         0           0         0             0           0   591,925   591,925   691,925  

<FN>                                                                                                                     
(1)  Assumes annual premium payments of $2,038 paid in full at beginning of                                              
     each policy year.  The values would vary from those shown if the                                                    
     amount or frequency of payments varies.                                                                             

(2)  Assumes that no policy loan or partial withdrawal has been made and no                                              
     optional insurance riders have been selected.                                                                       

THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE                                               
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE INVESTMENT                                              
RATES OF RETURN.  ACTUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN                                            
AND WILL DEPEND UPON A NUMBER OF FACTORS INCLUDING THE PREMIUM AND ACCOUNT                                               
VALUE ALLOCATIONS MADE BY THE OWNER AND THE DIFFERENT RATES OF RETURN OF THE                                             
PORTFOLIOS.  THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A                                             
POLICY WOULD BE DIFFERENT THAN THOSE SHOWN IF ACTUAL INVESTMENT RATES OF                                                 
RETURN AVERAGE 0%, 8% OR 12% OVER A PERIOD OF YEARS, BUT FLUCTUATED ABOVE                                                
OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS OR IF ANY PREMIUMS WERE                                              
ALLOCATED OR ACCOUNT VALUE TRANSFERRED TO THE GENERAL ACCOUNT.  NO                                                       
REPRESENTATIONS CAN BE MADE THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE                                               
ACHIEVED FOR ANY ONE YEAR OR SUSTAINED FOR ANY PERIOD OF TIME.                                                           
</FN>                                                                                                                    
                                                        [Enlarge/Download Table]
                         BANNER LIFE INSURANCE COMPANY                                                                   
                           ROCKVILLE, MARYLAND 20850                                                                     

                               MALE ISSUE AGE 45                                                                         
                 SPECIFIED AMOUNT: $100,000 - BENEFIT OPTION B                                                           
                         PREFERRED UNDERWRITING CLASS                                                                    
                 CURRENT COST OF INSURANCE AND EXPENSE CHARGES                                                           

VALUES BASED ON ASSUMED HYPOTHETICAL GROSS ANNUAL INVESTMENT RATES OF RETURN OF                                          

         Premiums                  0% (1) (2)                          8% (1) (2)                    12% (1) (2)         
End of   Accumulated                 Cash                                 Cash                          Cash             
Policy   at 5% Interest  Account   Surrender   Death         Account  Surrender    Death    Account   Surrender    Death 
Year     Per Year(1)      Value     Value      Benefit        Value       Value    Benefit   Value      Value     Benefit
                                                                                                                         
1        2,139.90         1,548       853     100,000          1,687        993    100,000    1,757     1,063     100,000
2        4,386.80         3,056     2,361     100,000          3,468      2,773    100,000    3,683     2,988     100,000
3        6,746.03         4,525     3,830     100,000          5,348      4,653    100,000    5,794     5,099     100,000
4        9,223.24         5,953     5,258     100,000          7,333      6,638    100,000    8,110     7,416     100,000
5       11,824.30         7,340     6,645     100,000          9,428      8,734    100,000   10,654     9,959     100,000
6       14,555.41         8,684     8,129     100,000         11,641     11,085    100,000   13,446    12,891     100,000
7       17,423.08         9,983     9,566     100,000         13,977     13,560    100,000   16,514    16,097     100,000
8       20,434.14        11,234    10,956     100,000         16,440     16,162    100,000   19,885    19,607     100,000
9       23,595.74        12,433    12,294     100,000         19,039     18,900    100,000   23,591    23,452     100,000
10      26,915.43        13,579    13,579     100,000         21,781     21,781    100,000   27,669    27,669     100,000
15      46,175.97        18,431    18,431     100,000         38,019     38,019    100,000   55,349    55,349     100,000
20      70,757.84        21,281    21,281     100,000         59,706     59,706    100,000  101,593   101,593     123,944
25     102,131.22        20,865    20,865     100,000         89,970     89,970    104,365  176,615   176,615     204,874
30     142,172.49        14,650    14,650     100,000        132,048    132,048    141,291  297,806   297,806     318,653
35     193,276.43             0         0           0        189,298    189,298    198,763  495,501   495,501     520,276
40     258,499.44             0         0           0        264,251    264,251    277,464  809,122   809,122            

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘485BPOS’ Filing		Date		First		Last			Other Filings
		5/1/96		1
Filed on / Effective on:		4/30/96
		4/10/96		2
		2/19/96		2
		1/1/96		2
		12/31/95		2		8			24F-2NT,  N-30D
		11/30/95		4
		1/1/95		6
		12/31/94		2		8
		12/30/94		8
		1/1/94		2		6
		12/31/93		2		3
		12/27/93		8
		9/29/93		8
		12/31/92		2
									List all Filings