Filed with the Securities and Exchange Commission on April 26, 1996


                            Registration No.333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-1

            Registration Statement Under The Securities Act of 1933*

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
             (Exact name of registrant as specified in its charter)

                                   CONNECTICUT
         (State or other jurisdiction of incorporation or organization)

                                       63
            (Primary Standard Industrial Classification Code Number)

                                   06-1241288
                      (I.R.S. Employer Identification No.)

         ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484 (203) 926-1888
   (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                      M. PATRICIA PAEZ, CORPORATE SECRETARY
                 ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484
        (203) 926-1888 (Name, address, including zip code, and telephone
               number, including area code, of agent for service)

                                    Copy To:

                              JOHN T. BUCKLEY, ESQ.
                                WERNER & KENNEDY
             1633 Broadway, New York, New York 10019 (212) 408-6900
             -------------------------------------------------------

Approximate date of commencement of proposed sale to the public: May 1, 1996 or
 as soon as practical after the effective date of this Registration Statement

If any of the securities  being  registered on this form are to be offered on a
delayed or continuous  basis pursuant to Rule 415 under the Securities Act of
1933 check the following:  X.
                           --

                         Calculation of Registration Fee
<TABLE>
<CAPTION>
=================================================================================================================================
            Title of each                                 Proposed              Proposed
              class of                                     maximum               maximum
             securities              Amount               offering              aggregate             Amount of
                to be                 to be                 price               offering            registration
             registered            registered             per unit               price**                 fee
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                   <C>
   
          Annuity Contracts                                                        $10,000,000.00       $3448.00                   
    
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     *The prospectus  contained in this  Registration  Statement also relates to
annuity  contracts  which are  covered by our  earlier  registration  statement,
including Registration File Numbers 33-67614 and 33-89674.
- --------------------------------------------------------------------------------
**The proposed  aggregate offering price is estimated solely for determining the
registration  fee. The amount to be registered and the proposed maximum offering
price per unit are not  applicable  since  these  securities  are not  issued in
predetermined amounts or units.
================================================================================
Registrant  hereby amends this  Registration  Statement on such date or dates as
may be necessary to delay its effective date until the  registrant  shall file a
further amendment which  specifically  states that this  Registration  Statement
shall  thereafter  become effective in accordance with the provisions of Section
8(a) of the Securities  Act of 1933 or until the  Registration  Statement  shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
- --------------------------------------------------------------------------------
Gal2
- --------------------------------------------------------------------------------



           CROSS REFERENCE SHEET PURSUANT TO REGULATION S-K, ITEM 501

<TABLE>
<CAPTION>
<S>      <C>                                                                                             <C>
         S-1 Item No.                                                                                    Prospectus Heading

1.       Forepart of the Registration Statement and            Facing Page, Cross Reference Sheet, Outside Front Cover Page
         Outside Front Cover Page of Prospectus

2.       Inside Front Cover and Outside Back Cover of Prospectus           Available Information, Incorporation of Certain
                                                                                Documents by Reference, Reports to You,
                                                                                Table of Contents

3.       Summary Information, Risk Factors and Ratio of Earnings                Highlights, Cover Page, Separate Account D,
         to Fixed Charges                                                                  Insurance Aspects of the Annuity

4.       Use of Proceeds                                    Fixed Investment Options, Separate Accounts, Separate Account D

5.       Determination of the Offering Price                                                       Fixed Investment Options

6.       Dilution                                                                                            Not applicable

7.       Selling Security Holders                                                                            Not applicable

8.       Plan of Distribution                                                                         Sale of the Annuities

9.       Description of the Securities to be Registered         Investment Options, Purchasing Annuities, Account Value and
                                                                             Surrender Value, Rights, Benefits and Services

10.      Interest of named Expert and Counsel                                                                Not applicable

11.      Information with Respect to the Registrant                                                             The Company

12.      Disclosure of Commission Position on Indemnification for                                           Indemnification
         Securities Act Liabilities
                                                                                                            Part II Heading

13.      Other Expenses of Issuance                                                              Other Expenses of Issuance
         and Distribution                                                                                  and Distribution

14.      Indemnification of Directors and Officers                                Indemnification of Directors and Officers

15.      Recent Sales of Unregistered Securities                                    Recent Sales of Unregistered Securities

16.      Exhibits and Financial Statement Schedules                              Exhibits and Financial Statement Schedules

17.      Undertakings                                                                                          Undertakings
</TABLE>
                                                          

This  Prospectus  describes a type of annuity (the  "Annuity")  being offered by
American Skandia Life Assurance Corporation ("we", "our" or "us"), One Corporate
Drive, Shelton, Connecticut, 06484. This flexible premium Annuity may be offered
as individual annuity contracts or as interests in a group annuity. The Table of
Contents starts on Page 4.  Definitions  applicable to this Prospectus  start on
page 6. The highlights of this offering are described  beginning on Page 8. This
Prospectus  contains a detailed discussion of matters you should consider before
purchasing  this Annuity.  A Statement of Additional  Information has been filed
with the  Securities  and Exchange  Commission  and is available from us without
charge upon request. The contents of the Statement of Additional Information are
described on Page 40. The Annuity or certain of its  investment  options may not
be  available  in all  jurisdictions.  Various  rights and  benefits  may differ
between jurisdictions to meet applicable laws and/or regulations.

A Purchase  Payment for this Annuity is assessed any  applicable tax charge (see
"Tax  Charges")  and set-up fee (see Set-Up  Fee).  It is then  allocated to the
investment options you select except in certain jurisdictions, where allocations
of Purchase Payments we receive during the "free-look" period that you direct to
any Sub-accounts are temporarily allocated to a money-market type of Sub-account
(see  "Allocation  of Net Purchase  Payments").  You may transfer  Account Value
between investment options (see "Investment  Options" and "Transfers").  Account
Value may be distributed as periodic annuity payments in a "payout phase".  Such
annuity payments can be guaranteed for life (see "Annuity Payments"). During the
"accumulation phase" (the period before any payout phase), you may surrender the
Annuity for its Surrender Value or make withdrawals (see "Distributions").  Such
distributions  may be subject to tax,  including a tax penalty.  A death benefit
may be payable during the accumulation phase (see "Death Benefit").

Account Value in the variable investment options increases or decreases daily to
reflect investment  performance and the deduction of charges.  No minimum amount
is guaranteed (see "Account Value in the Sub-accounts"). The variable investment
options are Sub-accounts of American Skandia Life Assurance Corporation Separate
Account E ("Separate Account E"). Each Sub-account currently invests exclusively
in one of the following portfolios of the Galaxy VIP Fund: (a) Money Market; (b)
Equity; (c) High Quality Bond; and (d) Asset Allocation.

   
In most  jurisdictions,  Account  Value may be allocated  to a fixed  investment
option during the accumulation  phase.  Account Value so allocated earns a fixed
rate of  interest  for a  specified  period of time  referred  to as a Guarantee
Period.  Guarantee  Periods of  different  durations  may be offered (see "Fixed
Investment  Options").  Such an allocation and the interest earned is guaranteed
by us only if held to its Maturity Date, and, where required by law, the 30 days
prior to the Maturity  Date.  You are  cautioned  that with respect to the Fixed
Investment  Options  during the  accumulation  phase,  we do not  guarantee  any
minimum  amount,  because the value may be  increased  or  decreased by a market
value  adjustment  (see  "Account  Value  of  the  Fixed  Allocations").  Assets
supporting  such  allocations  in the  accumulation  phase are held in  American
Skandia Life Assurance  Corporation  Separate  Account D ("Separate  Account D")
(see "Separate  Accounts" and "Separate  Account D"). Fixed allocations were not
available on Annuities solicited prior to March 30, 1994.
    
- --------------------------------------------------------------------------------
Annuities:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Are NOT FDIC  insured,  or insured  by the  Federal  Reserve  Board or any other
agency 
Are NOT Obligations of Fleet Bank or its affiliates
- --------------------------------------------------------------------------------
Are NOT guaranteed or endorsed by Fleet Bank or its affiliates
- --------------------------------------------------------------------------------
DO involve risks, including possible loss of principal amount invested
- --------------------------------------------------------------------------------
                             (continued on Page 2)

- --------------------------------------------------------------------------------
THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE  SECURITIES  COMMISSION  PASSED UPON THE  ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.  ANY  REPRESENTATION TO THE CONTRARY IS A CRIMINAL  OFFENSE.  PLEASE
READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------

                  FOR FURTHER INFORMATION CALL 1-800-444-3970.

     Prospectus  Dated: May 1, 1996     Statement of Additional  Information 
                                           Dated: May 1, 1996 
GA-PROS-(5/96)


<PAGE>


We guarantee fixed annuity  payments.  We also guarantee any adjustable  annuity
payments we may make available (see "Annuity Payments").

Taxes on gains during the accumulation  phase may be deferred until you begin to
take  distributions  from your Annuity.  Distributions  before age 59 1/2 may be
subject to a tax penalty. In the payout phase, a portion of each annuity payment
may be  treated as a return of your  "investment  in the  contract"  until it is
completely  recovered.  Transfers between  investment options are not subject to
taxation.  The Annuity may also qualify for special tax treatment  under certain
sections of the Code  including,  but not limited to,  Sections 401, 403 and 408
(see "Certain Tax Considerations").

Broker-dealers   or  entities  which  may  offer  variable   annuities   without
registration  as  broker-dealers  may offer Annuities to persons or entities who
have  established an account with such  broker-dealer  or entity.  Such eligible
persons also will be customers of one or more  subsidiaries  of Fleet  Financial
Group,  Inc.  The  investment  advisor  of the  underlying  mutual  fund,  Fleet
Investment  Advisors,  Inc., is a subsidiary of Fleet Financial  Group,  Inc. In
certain  cases,  the  broker-dealer  may also be an affiliate of the  investment
advisor of the underlying mutual fund.





                       (This page has been purposely left blank.)


<PAGE>
<TABLE>
<CAPTION>



                                TABLE OF CONTENTS
<S>                                                                                                                              <C>
DEFINITIONS........................................................................................................................6
HIGHLIGHTS.........................................................................................................................8
AVAILABLE INFORMATION.............................................................................................................10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................................................................10
CONTRACT EXPENSE SUMMARY..........................................................................................................10
EXPENSE EXAMPLES..................................................................................................................11
CONDENSED FINANCIAL INFORMATION...................................................................................................12
   Unit Prices And Numbers of Units...............................................................................................12
   Yields On Money Market Sub-account.............................................................................................12
INVESTMENT OPTIONS................................................................................................................12
   Variable Investment Options....................................................................................................12
   Fixed Investment Options.......................................................................................................13
OPERATIONS OF THE SEPARATE ACCOUNTS...............................................................................................14
   Separate Accounts..............................................................................................................14
   Separate Account  E............................................................................................................14
   Separate Account D.............................................................................................................15
INSURANCE ASPECTS OF THE ANNUITY..................................................................................................16
CHARGES ASSESSED OR ASSESSABLE AGAINST THE ANNUITY................................................................................16
   Set-Up Fee.....................................................................................................................16
   Maintenance Fee................................................................................................................16
   Tax Charges....................................................................................................................16
   Transfer Fee...................................................................................................................16
   Allocation Of Annuity Charges..................................................................................................16
CHARGES ASSESSED AGAINST THE ASSETS...............................................................................................16
   Administration Charge..........................................................................................................16
   Mortality and Expense Risk Charges.............................................................................................17
CHARGES OF THE UNDERLYING MUTUAL FUNDS............................................................................................17
PURCHASING ANNUITIES..............................................................................................................17
   Uses Of The Annuity............................................................................................................17
   Application And Initial Payment................................................................................................17
   Bank Drafting..................................................................................................................18
   Periodic Purchase Payments.....................................................................................................18
   Right to Return the Annuity....................................................................................................18
   Allocation of Net Purchase Payments............................................................................................18
   Balanced Investment Program....................................................................................................18
   Participant, Annuitant and Beneficiary Designations............................................................................19
ACCOUNT VALUE AND SURRENDER VALUE.................................................................................................19
   Account Value in the Sub-accounts..............................................................................................19
   Account Value of the Fixed Allocations.........................................................................................19
RIGHTS, BENEFITS AND SERVICES.....................................................................................................20
   Additional Purchase Payments...................................................................................................20
   Changing Revocable Designations................................................................................................20
   Allocation Rules...............................................................................................................21
   Transfers......................................................................................................................21
     Renewals.....................................................................................................................22
     Dollar Cost Averaging........................................................................................................22
   Distributions..................................................................................................................22
     Surrender....................................................................................................................22
     Partial Withdrawals..........................................................................................................23
     Systematic Withdrawals.......................................................................................................23
     Minimum Distributions........................................................................................................23
     Death Benefit................................................................................................................23
     Annuity Payments.............................................................................................................24
     Qualified Plan Withdrawal Limitations........................................................................................25
   Pricing of Transfers and Distributions.........................................................................................26
   Voting Rights..................................................................................................................26
   Transfers, Assignments or Pledges..............................................................................................26
   Reports to You.................................................................................................................27
SALE OF THE ANNUITIES.............................................................................................................27
   Distribution...................................................................................................................27
   Advertising....................................................................................................................27
CERTAIN TAX CONSIDERATIONS........................................................................................................28
   Our Tax Considerations.........................................................................................................28
   Tax Considerations Relating to Your Annuity....................................................................................28
     Non-natural Persons..........................................................................................................28
     Natural Persons..............................................................................................................28
     Distributions................................................................................................................28
     Assignments and Pledges......................................................................................................29
     Penalty on Distributions.....................................................................................................29
     Annuity Payments.............................................................................................................29
     Gifts........................................................................................................................29
     Tax Free Exchanges...........................................................................................................29
     Transfers Between Investment Options.........................................................................................29
     Generation-Skipping Transfers................................................................................................30
     Diversification..............................................................................................................30
     Federal Income Tax Withholding...............................................................................................30
   Tax Considerations When Using Annuities in Conjunction with Qualified Plans....................................................30
     Individual Retirement Programs...............................................................................................30
     Tax Sheltered Annuities......................................................................................................30
     Corporate Pension and Profit-sharing Plans...................................................................................31
     H.R. 10 Plans................................................................................................................31
     Tax Treatment of Distributions from Qualified Annuities......................................................................31
     Section 457 Plans............................................................................................................31
OTHER MATTERS.....................................................................................................................31
   Deferral of Transactions.......................................................................................................31
   Resolving Material Conflicts...................................................................................................31
   Modification...................................................................................................................32
   Misstatement of Age or Sex.....................................................................................................32
   Ending the Offer...............................................................................................................32
   Indemnification................................................................................................................32
   Legal Proceedings..............................................................................................................32
THE COMPANY............................................................................................                           32
   Lines of Business..............................................................................................................33
   Selected Financial Data........................................................................................................33
   Management's Discussion and Analysis of Financial Condition and Results of Operations..........................................34
     Results of Operations........................................................................................................34
     Liquidity and Capital Resources..............................................................................................34
     Segment Information..........................................................................................................34
   Reinsurance....................................................................................................................34
   Surplus Notes..................................................................................................................34
   Reserves.......................................................................................................................34
   Competition....................................................................................................................34
   Employees......................................................................................................................34
   Regulation.....................................................................................................................35
   Executive Officers and Directors...............................................................................................35
   Executive Compensation.........................................................................................................37
     Summary Compensation Table...................................................................................................37
     Long-Term Incentive Plans - Awards in the Last Fiscal Year...................................................................38
     Compensation of Directors....................................................................................................39
     Compensation Committee Interlocks and Insider Participation..................................................................39
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION...............................................................................39
FINANCIAL STATEMENTS..............................................................................................................39
APPENDIX A  FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION..................................................40
APPENDIX B  SHORT DESCRIPTIONS OF THE UNDERLYING MUTUAL FUNDS' PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES.......................40
</TABLE>


<PAGE>


DEFINITIONS:  The  following are key terms used in this  Prospectus.  Other
terms are defined in this Prospectus as they appear.

ACCOUNT  VALUE  is the  value of each  allocation  to a  Sub-account  or a Fixed
Allocation prior to the Annuity Date, plus any earnings, and/or less any losses,
distributions  and  charges  thereon,  and/or any  applicable  maintenance  fee.
Account Value is determined  separately for each  Sub-account and for each Fixed
Allocation, and then totaled to determine Account Value for your entire Annuity.
Account  Value of each Fixed  Allocation  on other than such Fixed  Allocation's
Maturity Date may be calculated using a market value adjustment.

ANNUITANT is the person upon whose life your Annuity is written.

ANNUITY is the type of annuity being offered pursuant to this Prospectus.  It is
also, if issued,  your individual  Annuity,  or with respect to a group Annuity,
the  certificate  evidencing  your  participation  in a group  Annuity.  It also
represents an account we set up and maintain to track our obligations to you.

ANNUITY DATE is the date annuity payments are to commence.

ANNUITY YEARS are continuous  12-month periods  commencing on the Issue Date and
each anniversary of the Issue Date.

APPLICATION  is the enrollment  form or  application  form we may require you to
submit for an Annuity.

BENEFICIARY is a person designated as the recipient of the death benefit.

CODE is the Internal Revenue Code of 1986, as amended from time to time.

CONTINGENT  ANNUITANT  is the  person  named  to  become  the  Annuitant  on the
Annuitant's death prior to the Annuity Date.

CURRENT RATES are the interest rates we offer to credit to Fixed Allocations for
the duration of newly beginning  Guarantee  Periods under this Annuity.  Current
Rates are contained in a schedule of rates  established  by us from time to time
for the  Guarantee  Periods  then  being  offered.  We may  establish  different
schedules for different classes and for different annuities.

FIXED  ALLOCATION  is an  allocation  of Account  Value that is to be credited a
fixed rate of interest for a specified  Guarantee Period during the accumulation
phase and is to be supported by assets in Separate Account D.

GUARANTEE PERIOD is a period of time during the accumulation  phase during which
we credit a fixed rate of interest on a Fixed Allocation.

IN WRITING is in a written form satisfactory to us and filed at the Office.

INTERIM  VALUE is,  as of any  particular  date,  the  initial  value of a Fixed
Allocation  plus all  interest  credited  thereon,  less the sum of all previous
transfers and withdrawals of any type from such Fixed Allocation of such Interim
Value and interest thereon from the date of each withdrawal or transfer.

ISSUE DATE is the effective date of your Annuity.

MVA is a market value  adjustment used in the  determination of Account Value of
each Fixed Allocation as of a date other than such Fixed  Allocation's  Maturity
Date, and, where required by law, the 30 days prior to the Maturity Date.

MATURITY DATE is the last day in a Guarantee Period.

MINIMUM  DISTRIBUTIONS  are minimum  amounts that must be distributed  each year
from an Annuity if used in relation to certain qualified plans under the Code.

NET PURCHASE PAYMENT is a Purchase Payment less any applicable  charge for taxes
and any applicable set-up fee.

OFFICE is our business office, American Skandia Life Assurance Corporation,
One Corporate Drive, P.O. Box 883, Shelton, Connecticut 06484.

PARTICIPANT  is either an eligible  entity or person  named as having  ownership
rights in relation to an Annuity issued as a certificate  evidencing interest in
a group annuity contract. An Annuity may be issued as an individual contract. If
so, the  rights,  benefits  and  requirements  of and the events  relating  to a
Participant,  as described in this Prospectus,  will be the rights, benefits and
requirements  of and events  relating to the person or entity  designated as the
owner in such contract.

PURCHASE  PAYMENT is a cash  consideration  you give to us for  certain  rights,
privileges and benefits provided under an Annuity according to its terms.

SUB-ACCOUNT  is a  division  of  Separate  Account  E.  We use  Sub-accounts  to
calculate variable benefits under this Annuity.

SURRENDER  VALUE is the value of your Annuity  available upon surrender prior to
the  Annuity  Date.  It  equals  the  Account  Value as of the date we price the
surrender less any applicable maintenance fee.

SYSTEMATIC  WITHDRAWAL  is one of a plan of periodic  withdrawals  of  Surrender
Value during the accumulation phase. Such a plan is subject to our rules.

UNIT is a measure used to calculate your Account Value in a Sub-account prior to
the Annuity Date.

UNIT  PRICE is used for  calculating:  (a) the  number of Units  allocated  to a
Sub-account;  and (b) the value of transactions  into or out of a Sub-account or
benefits based on Account Value in a Sub-account prior to the Annuity Date. Each
Sub-account  has its own Unit  Price  which will vary each  Valuation  Period to
reflect the investment experience of that Sub-account.

VALUATION  DAY is every day the New York Stock  Exchange  is open for trading or
any other day that the Securities and Exchange  Commission requires mutual funds
or unit investment trusts to be valued.

VALUATION  PERIOD is the period of time between the close of business of the New
York Stock Exchange on successive Valuation Days.

   
"We",  "us",  "our", or "the Company" means American Skandia Life Assurance
Corporation.
    

"You" or "your" means the Participant.



<PAGE>


HIGHLIGHTS:  The  following  are only the  highlights  of the Annuity being
offered pursuant to this Prospectus.  A more detailed  description follows these
highlights.

     (1)......Investment  Options: We currently offer multiple variable
investment  options in the accumulation  phase. Each of these investment options
is a  Sub-account  which  invests  exclusively  in a portfolio of an  underlying
mutual fund. As of the date of this Prospectus,  we offer four Sub-accounts each
of which  invests  exclusively  in one  portfolio  of the Galaxy  VIP Fund.  The
available  portfolios  of the Galaxy VIP Fund are as follows:  (a) Money  Market
Fund;  (b) Equity Fund;  (c) High Quality  Bond Fund;  and (d) Asset  Allocation
Fund. In the payout phase,  you may elect fixed  annuity  payments  based on our
then current  annuity  rates.  For more  information,  see the section  entitled
Investment Options.

In most jurisdictions, we also offer the option during the accumulation phase of
earning one or more fixed rates of interest on all or a portion of your  Account
Value.  As of the  date  of this  Prospectus,  we  offered  the  option  to make
allocations  that could be  guaranteed  interest  rates for 1, 2, 3, 5, 7 and 10
years. Each such Fixed Allocation earns the fixed interest rate applicable as of
the date of such  allocation.  The interest rate credited to a Fixed  Allocation
does not change during its Guarantee  Period.  You may maintain  multiple  Fixed
Allocations.  From  time-to-time we declare Current Rates for Fixed  Allocations
beginning a new Guarantee Period. The rates we declare are subject to a minimum,
but we may declare  higher  rates.  The minimum is  determined in relation to an
index that we do not control.

The end of a  Guarantee  Period for a specific  Fixed  Allocation  is called its
Maturity Date. At that time, the Guarantee Period normally "renews" and we begin
crediting interest for a new Guarantee Period lasting the same amount of time as
the one just ended.  That Fixed  Allocation  then earns interest  during the new
Guarantee  Period at a rate that is not less than the one then  being  earned by
Fixed  Allocations  for that Guarantee  Period by new Annuity  purchasers in the
same class. You also may choose a different Guarantee Period from among those we
are then currently  making available or you may transfer that Account Value to a
variable Sub-account.

In the payout  phase,  you may elect fixed  annuity  payments  based on our then
current annuity rates. We also may make available adjustable annuity rates.

For  more  information,   see  the  section  entitled  Investment  Options,
including the following  subsections:  (a) Variable Investment Options;  and (b)
Fixed Investment Options.

     (2)......Operations  of the Separate Accounts:  In the accumulation  phase,
the assets  supporting  guarantees we make in relation to Fixed  Allocations are
held in our  Separate  Account  D. This is a  "non-unitized"  separate  account.
However,  values and benefits  calculated on the basis of Fixed  Allocations are
guaranteed by our general  account  assets.  In the payout phase,  fixed annuity
payments and any  adjustable  annuity  payments we may make  available  are also
guaranteed by our general account,  but the assets  supporting such payments are
not held in Separate Account D.

In the accumulation  phase, the assets  supporting the Account Values maintained
in the  Sub-accounts  are held in our  Separate  Account E. Values and  benefits
based on these Sub-accounts are not guaranteed and will vary with the investment
performance of the underlying mutual fund portfolios. In the payout phase, fixed
annuity payments, and any adjustable annuity payments we may make available, are
guaranteed by our general account.

For more  information,  see the  section  entitled  Operations  of the  Separate
Accounts,  including  the  following  subsections:  (a) Separate  Accounts;  (b)
Separate Account E; and (c) Separate Account D.

     (3)......Insurance  Aspects of the  Annuity:  There are  insurance
risks which we bear in relation to the Annuity.  For more  information,  see the
section entitled Insurance Aspects of the Annuity.

     (4)......Charges  Assessed or Assessable  Against the Annuity:  The Annuity
charges which are assessed or may be assessable under certain  circumstances are
the set-up  fee,  the  maintenance  fee, a charge for taxes and a transfer  fee.
These  charges  are  allocated  according  to our rules.  We may also charge for
certain special services. For more information, see the section entitled Charges
Assessed or Assessable Against the Annuity, including the following subsections:
(a) Set-Up Fee; (b) Maintenance Fee; (c) Tax Charges;  (d) Transfer Fee; and (e)
Allocation of Annuity Charges.

     (5)......Charges  Assessed Against the Assets: The charges assessed against
assets in the Sub-accounts are the  administration  charge and the mortality and
expense risk charges.  There are no charges deducted from the assets  supporting
Fixed  Allocations.  For more  information,  see the  section  entitled  Charges
Assessed  Against  the  Assets,   including  the  following   subsections:   (a)
Administration Charge; and (b) Mortality and Expense Risk Charges.

     (6)......Charges Of The Underlying Mutual Funds: The underlying mutual fund
assesses  various  charges,  including  charges for  investment  management  and
investment  advisory fees.  These charges  generally  differ between  portfolios
within the underlying mutual fund. You will find additional details in each fund
prospectus and its statement of additional information.

   
     (7)......Purchasing  Annuities:  Annuities are available for multiple uses,
including as a funding vehicle for various retirement programs which qualify for
special  treatment  under  the  Code.  We  may  require  a  properly   completed
Application,  an acceptable Purchase Payment,  and any other materials under our
underwriting  rules  before we agree to issue an Annuity.  You have the right to
return an Annuity within a "free-look"  period if you are not satisfied with it.
In most  jurisdictions,  the initial Purchase Payment and any Purchase  Payments
received  during  the  "free-look"  period  are  allocated   according  to  your
instructions.  In jurisdictions that require a "free-look"  provision such that,
if the Annuity is returned  under that  provision,  we must return at least your
Purchase  Payments less any withdrawals,  we temporarily  allocate such Purchase
Payments to the GAL Money  Market  Sub-account.  Where  permitted by law in such
jurisdictions,  we  will  allocate  such  Purchase  Payments  according  to your
instructions,   without  any  temporary  allocation  to  the  GAL  Money  Market
Sub-account,  if you  execute a return  waiver.  We offer a balanced  investment
program in relation to your initial Purchase Payment.  Certain designations must
be made,  including a Participant  and an  Annuitant.  You may also make certain
other  designations  that apply to the  Annuity if  issued.  These  designations
include, a contingent Participant, a Contingent Annuitant (Contingent Annuitants
may be required in conjunction with certain uses of the Annuity), a Beneficiary,
and a contingent  Beneficiary.  See the section entitled  Purchasing  Annuities,
including the following  subsections:  (a) Uses of the Annuity;  (b) Application
and Initial Payment;  (c) Bank Drafting;  (d) Periodic  Purchase  Payments;  (e)
Right to Return the  Annuity;  (f)  Allocation  of Net  Purchase  Payments;  (g)
Balanced  Investment  Program;  and (h)  Participant,  Annuitant and Beneficiary
Designations.
    

     (8)......Account  Value and Surrender Value: In the accumulation phase your
Annuity has an Account Value.  Your total Account Value as of a particular  date
is the  sum of  your  Account  Value  in  each  Sub-account  and in  each  Fixed
Allocation. Surrender Value is the Account Value less any applicable maintenance
fee. To determine  your Account Value in each  Sub-account  we multiply the Unit
Price as of the Valuation  Period for which the  calculation is being made times
the number of Units attributable to you in that Sub-account as of that Valuation
Period.  We  also  determine  your  Account  Value  separately  for  each  Fixed
Allocation.  A Fixed  Allocation's  Account  Value  as of a  particular  date is
determined by multiplying  its then current  Interim Value times the MVA. No MVA
applies to a Fixed  Allocation as of its Maturity  Date,  and, where required by
law,  the 30 days prior to the  Maturity  Date.  For more  information,  see the
section  entitled  Account  Value and Surrender  Value,  including the following
subsections:  (a) Account  Value in the  Sub-accounts;  and (b) Account Value of
Fixed Allocations.

   
     (9)......Rights,  Benefits  and  Services:  You have a number of rights and
benefits  under an Annuity once issued.  We also  currently  provide a number of
services to Participants.  These rights,  benefits and services are subject to a
number of rules and conditions. These rights, benefits and services include, but
are not limited to, those  described in this  Prospectus.  We accept  additional
Purchase  Payments during the  accumulation  phase. You may use bank drafting to
make Purchase Payments. We support certain Periodic Purchase Payments subject to
our rules.  You may change  revocable  designations.  You may  transfer  Account
Values between  investment  options.  Transfers in excess of 12 per Annuity Year
are subject to a fee. We offer  dollar cost  averaging  during the  accumulation
phase (see "Dollar Cost Averaging").  During the accumulation  phase,  surrender
and  partial  withdrawals  are  available.  In the  accumulation  phase we offer
Systematic  Withdrawals  and, for  Annuities  used in qualified  plans,  Minimum
Distributions.  We offer fixed annuity options, and may offer adjustable annuity
options,  that can guarantee  payments for life. In the  accumulation  phase,  a
death  benefit may be payable.  You may transfer or assign your  Annuity  unless
such rights are limited in conjunction with certain uses of the Annuity. You may
exercise  certain  voting  rights in  relation  to the  underlying  mutual  fund
portfolios  in which the  Sub-accounts  invest.  You have the  right to  receive
certain reports periodically.
    

For  additional  information,  see the section  entitled  Rights,  Benefits  and
Services including the following subsections:  (a) Additional Purchase Payments;
(b) Changing Revocable  Designations;  (c) Allocation Rules; (d) Transfers;  (e)
Renewals;  (f)  Dollar  Cost  Averaging;  (g)  Distributions   (including:   (i)
Surrender; (ii) Partial Withdrawals;  (iii) Systematic Withdrawals; (iv) Minimum
Distributions;  (v) Death Benefit;  (vi) Annuity  Payments;  and (vii) Qualified
Plan Withdrawal  Limitations);  (h) Pricing of Transfers and Distributions;  (i)
Voting Rights; (j) Transfers, Assignments and Pledges; and (k) Reports to You.

   
     (10).....The  Company:  American  Skandia Life  Assurance  Corporation is a
wholly owned  subsidiary of American  Skandia  Investment  Holding  Corporation,
whose  indirect  parent is Skandia  Insurance  Company  Ltd.  Skandia  Insurance
Company Ltd. is a Swedish company that holds a number of insurance  companies in
many countries.  The  predecessor to Skandia  Insurance  Company Ltd.  commenced
operations in 1855. For more  information,  see the section entitled The Company
and the following  subsections:  (a) Lines of Business;  (b) Selected  Financial
Data;  (c)  Management's  Discussion  and  Analysis of Financial  Condition  and
Results of Operations (including: (i) Results of Operations;  (ii) Liquidity and
Capital  Resources;  and  (iii)  Segment  Information);   (d)  Reinsurance;  (e)
Reserves; (f) Competition; (g) Employees; (h) Regulation; (i) Executive Officers
and  Directors;   and  (j)  Executive  Compensation   (including:   (i)  Summary
Compensation  Table;  (ii) Long Term Incentive  Plans-Awards  in the Last Fiscal
Year;  (iii)  Compensation  of  Directors;   and  (iv)  Compensation   Committee
Interlocks and Insider Participation).

     AVAILABLE  INFORMATION:  A Statement of Additional Information is available
from us without  charge  upon  request.  It  includes  further  information,  as
described in the section of this Prospectus  entitled "Contents of the Statement
of Additional Information". You may obtain a copy of the Statement of Additional
Information by filling in the coupon at the end of the Prospectus and sending it
(or  a  written  request)  to  American  Skandia  Life  Assurance   Corporation,
Attention:  Galaxy Annuity Customer Service,  P.O. Box 883,  Shelton,  CT 06484.
This  Prospectus  is part of the  registration  statements  we  filed  with  the
Securities and Exchange  Commission ("SEC") regarding this offering.  Additional
information  on  us  and  this  offering  is  available  in  those  registration
statements and the exhibits thereto. You may obtain copies of these materials at
the prescribed rates from the SEC's Public Reference  Section,  450 Fifth Street
N.W.,  Washington,  D.C.,  20549.  You may inspect  and copy those  registration
statements and the exhibits thereto at the SEC's public reference  facilities at
the above address,  Rm. 1024, and at the SEC's Regional Offices,  75 Park Place,
New York,  NY, and the Everett  McKinley  Dirksen  Building,  219 South Dearborn
Street, Chicago, IL.
    

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE: 
To  the  extent  and  only  to the  extent  that  any  statement  in a  document
incorporated  by reference  into this  Prospectus is modified or superseded by a
statement in this  Prospectus or in a later-filed  document,  such  statement is
hereby deemed so modified or superseded and not part of this Prospectus.

We furnish you without charge a copy of any or all of the documents incorporated
by reference in this Prospectus,  including any exhibits to such documents which
have been specifically  incorporated by reference. We do so upon receipt of your
written or oral request.  Please  address your request to American  Skandia Life
Assurance Corporation, Attention: Galaxy Annuity Customer Service, P.O. Box 883,
Shelton, Connecticut, 06484. Our phone number is 1-(800) 444-3970.

CONTRACT EXPENSE SUMMARY:  The summary provided below includes  information
regarding  the  expenses  for your  Annuity,  for the  Sub-accounts  and for the
underlying  mutual fund  portfolios.  

     More detail regarding the expenses of the underlying mutual fund portfolios
may be found  either in the  prospectus  for that  mutual  fund or in the annual
report of that mutual fund.
   
     The expenses of our Sub-accounts  (not those of the underlying  mutual fund
portfolios  in which  our  Sub-accounts  invest)  are the same no  matter  which
Sub-account you choose. Therefore,  these expenses are only shown once below. In
certain states, premium taxes may be applicable.
    

     Your Transaction Expenses

Sales Load                                                                   $0

Set-up Fee                                    $25 deducted from the initial
                                          Purchase Payment if less than $10,000

Annual Maintenance Fee                   Smaller of $30 or 2% of Account Value,
                                     applicable only if at the Valuation Period
                                  such fee is payable, the Account Value of the
                                                   Annuity is less than $50,000

Tax Charges               nt on the requirements of the applicable jurisdiction

Transfer Fee        $10 for each transfer after the twelfth in any Annuity Year

         Annual Expenses of the Sub-accounts 
         (as a percentage of average daily net assets)

Mortality and Expense Risk Charges                                         0.40%
Administration Charge                                                      0.15%
Total Annual Expenses of the Sub-accounts                                  0.55%

<PAGE>
         Underlying Mutual Fund Portfolio Annual Expenses 
          (as a percentage of average net assets)

<TABLE>
<CAPTION>
                                       Manage-         Manage-                                        Total          Total
                                        ment            ment           Other          Other          Annual         Annual
                                         Fee             Fee         Expenses       Expenses        Expenses       Expenses
                                        after          without         after         without          after         without
                                         any             any            any            any             any            any
                                     applicable      applicable     applicable     applicable      applicable     applicable
                                     reimburse-      reimburse-     reimburse-     reimburse-      reimburse-     reimburse-
                                        ment            ment           ment           ment            ment           ment
- ------------------------------------------------------------------------------------------------------------

The Galaxy VIP Fund
       

<S>                                     <C>             <C>            <C>            <C>             <C>            <C>  
   Money Market                         0.13%           0.40%          0.57%          0.71%           0.70%          1.11%
   Equity                               0.73%           0.75%          0.67%          0.49%           1.40%          1.24%
   High Quality Bond                    0.14%           0.55%          0.76%          1.02%           0.90%          1.57%
   Asset Allocation                     0.47%           0.75%          0.93%          0.79%           1.40%          1.54%
</TABLE>

   
The underlying mutual fund portfolio  information was provided by the underlying
mutual funds. The Company has not independently verified such information.
    

The expenses of the underlying mutual fund portfolios either are currently being
partially  reimbursed or may be partially  reimbursed in the future.  Management
Fees,  Other  Expenses  and Total Annual  Expenses are provided  above on both a
reimbursed and not reimbursed  basis,  if applicable.  See the  prospectuses  or
statements of additional information of the underlying mutual funds for details.

EXPENSE  EXAMPLES:  The examples which follow are designed to assist you in
understanding  the  various  costs  and  expenses  you  will  bear  directly  or
indirectly  if you  maintain  Account  Value in the  Sub-accounts.  The examples
reflect expenses of our Sub-accounts, as well as those for the underlying mutual
fund portfolios.

The examples shown assume that: (a) fees and expenses remain constant; (b) there
are no  withdrawals  of Account Value during the period shown;  (c) there are no
transfers or other transactions subject to a fee during the period shown; (d) no
tax  charge  applies;  and  (e)  the  expenses  throughout  the  period  for the
underlying  mutual fund portfolios will be the lower of the expenses without any
applicable  reimbursement  or expenses  after any applicable  reimbursement,  as
shown in the section entitled Contract Expense Summary.

THE  EXAMPLES  ARE  ILLUSTRATIVE   ONLY  -  THEY  SHOULD  NOT  BE  CONSIDERED  A
REPRESENTATION  OF PAST OR FUTURE  EXPENSES OF THE  UNDERLYING  MUTUAL  FUNDS OR
THEIR  PORTFOLIOS - ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
Sub-accounts are referred to below by their specific names.

         Examples (amounts shown are rounded to the nearest dollar)

Whether or not you  surrender  your  Annuity at the end of the  applicable  time
period  or begin  taking  annuity  payments  at such  time,  you  would  pay the
following expenses on a $1,000 investment, assuming 5% annual return on assets:
<TABLE>
<CAPTION>

Sub-accounts                                                                                After:
<S>                                                               <C>             <C>               <C>             <C>    
                                                                  1 yr.           3 yrs.            5 yrs.          10 yrs.

         If your  initial  Purchase  Payment  is at least  $10,000,  so that the
set-up  fee does not apply,  and at the end of each  period  shown your  Account
Value is $50,000 or higher, so that the maintenance fee does not apply:

GAL Money Market                                                    13               40                69             152
GAL Equity                                                          20               62               106             228
GAL High Quality Bond                                               15               46                79             174
GAL Asset Allocation                                                20               62               106             228



<PAGE>


         If your  initial  Purchase  Payment  is at least  $10,000,  so that the
set-up  fee does not apply,  and at the end of each  period  shown your  Account
Value is below $50,000, so that the maintenance fee applies:

GAL Money Market                                                    14               44                76             165
GAL Equity                                                          21               66               113             241
GAL High Quality Bond                                               16               50                86             187
GAL Asset Allocation                                                21               66               113             241

         If your initial Purchase  Payment is below $10,000,  so that the set-up
fee applies,  and at the end of each period  shown your  Account  Value is below
$50,000, so that the maintenance fee applies:

GAL Money Market                                                    22               59                98             203
GAL Equity                                                          29               80               134             278
GAL High Quality Bond                                               24               65               108             224
GAL Asset Allocation                                                29               80               134             278
</TABLE>

CONDENSED FINANCIAL INFORMATION: The Unit Prices and number of Units in the
Sub-account are shown below, as is the yield information on the GAL Sub-account.

         Unit Prices And Numbers of UnitsUnit  Prices And Numbers of Units:  The
following table shows: (a) the Unit Price as of the dates shown for the Units in
each of the  Sub-accounts of Separate  Account E being offered  pursuant to this
Prospectus;  and (b) the number of Units outstanding in each such Sub-account as
of the dates shown. Each Sub-account  became operational in 1993. The portfolios
in  which  a  particular  Sub-account  invests  may or may  not  have  commenced
operations prior to the date such Sub-account  became  operational.  The initial
offering price for each Sub-account was $10.00.
<TABLE>
<CAPTION>

                                                                        Sub-account

                                                    GAL                                GAL               GAL
                                                   Money              GAL         High Quality          Asset
                                                  Market            Equity            Bond           Allocation
                                                  (1993)            (1993)           (1993)            (1993)
No. of Units
<S>     <C>   <C>                              <C>              <C>                 <C>             <C>      
  as of 12/31/95                               1,350,072        2,119,810           830,395         1,136,906
  as of 12/31/94                               1,257,546        1,818,564           811,254         1,037,131
  as of 12/31/93                               1,063,152        1,246,452           929,546         1,126,518

Unit Price
  as of 12/31/95                                  $11.06           $13.44            $12.04            $13.12
  as of 12/31/94                                   10.56            10.66              9.88             10.20
  as of 12/31/93                                   10.22            10.36             10.55             10.48
</TABLE>

         Yields On Money Market  Sub-accountYields  On Money Market Sub-account:
Shown below are the current and effective  yields for a  hypothetical  contract.
The  yield  is  calculated  based on the  performance  of the GAL  Money  Market
Sub-account  during the last seven days of the calendar year ending prior to the
date  of  this  Prospectus.  At the  beginning  of the  seven  day  period,  the
hypothetical  contract  had a balance of one Unit.  The  current  and  effective
yields reflect the recurring  charges against the Sub-account.  Please note that
current and effective yield information will fluctuate. This information may not
provide a basis for  comparisons  with  deposits in banks or other  institutions
which  pay a fixed  yield  over a  stated  period  of time,  or with  investment
companies which do not serve as underlying funds for variable annuities.
<TABLE>
<CAPTION>

                      Sub-account                       Current Yield                     Effective Yield
<S>                                                         <C>                                  <C>  
                 GAL Money Market                           6.11%                                6.30%
</TABLE>

INVESTMENT  OPTIONS:  We currently  offer  multiple  variable  and, in most
jurisdictions, fixed investment options.

     Variable  Investment  Options:  During the  accumulation  phase, we offer a
number of  Sub-accounts  as investment  options.  These are all  Sub-accounts of
American  Skandia  Life  Assurance  Corporation  Separate  Account E  ("Separate
Account E"). Each of these  Sub-accounts  invests  exclusively in one underlying
mutual  fund  portfolio  of The  Galaxy  VIP  Fund.  The  Sub-accounts  and  the
portfolios in which they invest are as follows:

       Sub-Account                          Underlying Mutual Fund Portfolio

       GAL Money Market                               Money Market Portfolio
       GAL Equity                                           Equity Portfolio
       GAL High Quality Bond                      High Quality Bond Portfolio
       GAL Asset Allocation                       Asset Allocation Portfolio

We  may  make  other   underlying   mutual  funds   available  by  creating  new
Sub-accounts. Additionally, new portfolios may be made available by the creation
of new  Sub-accounts  from time to time.  Such a new  portfolio of an underlying
mutual  fund  will  be  disclosed  in its  prospectus.  However,  addition  of a
portfolio  does not  require  us to create a new  Sub-account  to invest in that
portfolio.  We may take other  actions in  relation to the  Sub-accounts  and/or
Separate Account E (see "Modifications").

The Galaxy VIP Fund is registered  under the Investment  Company Act of 1940, as
amended  (the  "1940  Act") as an  open-end  diversified  management  investment
company. It was established as a Massachusetts business trust under an Agreement
and Declaration of Trust dated May 27, 1992. As of the date of this  Prospectus,
The Galaxy VIP Fund's  portfolios  offered pursuant to this Prospectus are those
shown above. The trustees or directors,  as applicable,  of an underlying mutual
fund may add, eliminate or substitute  portfolios from time to time.  Generally,
each portfolio issues a separate class of shares.  The Agreement and Declaration
of Trust permits the trustees to issue an unlimited number of full or fractional
shares of each class of stock.

The investment objectives,  policies,  charges,  operations, the attendant risks
and other  details  pertaining  to each  underlying  mutual fund  portfolio  are
described in the prospectus of the  underlying  mutual fund and the statement of
additional  information for such  underlying  mutual fund. Also included in such
information is the investment policy of each mutual fund portfolio regarding the
acceptable  ratings  by  recognized  rating  services  for bonds and other  debt
obligations. There can be no guarantee that any underlying mutual fund portfolio
will meet its investment objectives.

Shares of the underlying mutual fund may be available to variable life insurance
and variable annuity separate  accounts of other insurance  companies.  Possible
consequences  of this  multiple  availability  are  discussed in the  subsection
entitled Resolving Material Conflicts.

The prospectus for any underlying  mutual fund or funds being  considered by you
should  be read in  conjunction  herewith.  A copy  of  each  prospectus  may be
obtained  without  charge from us by calling  Galaxy  Annuity  Customer  Service
1-800-444-3970  or writing to P.O. Box 883,  Attention:  Galaxy Annuity Customer
Service, Shelton, Connecticut, 06484-0883.

     Fixed Investment Options:  For the payout phase you may elect fixed annuity
payments based on our then current annuity rates. The discussion below describes
the fixed investment options in the accumulation phase.

As of the date of this  Prospectus we offer in most  jurisdictions  in which the
Annuity is available Fixed  Allocations with Guarantee  Periods of 1, 2, 3, 5, 7
and 10 years. No Fixed  Allocations  were available to Annuities issued prior to
March 30, 1994.  Each such Fixed  Allocation is accounted for  separately.  Each
Fixed Allocation earns a fixed rate of interest  throughout a set period of time
called a Guarantee Period. Multiple Fixed Allocations are permitted,  subject to
our  allocation  rules.  The  duration of a Guarantee  Period may be the same or
different from the duration of the Guarantee  Periods of any of your prior Fixed
Allocations.

We may  or may  not be  able  to  obtain  approval  in  the  future  in  certain
jurisdictions of individual or group annuity  contracts that include the type of
Fixed  Allocations  offered  pursuant to this  Prospectus.  If such  approval is
obtained,  we will take those steps  needed to offer such Fixed  Allocations  to
purchasers to whom Annuities were issued prior to the date of such approval.

To the  extent  permitted  by law,  we  reserve  the  right at any time to offer
Guarantee  Periods with  durations  that differ from those which were  available
when your  Annuity  was  issued.  We also  reserve the right at any time to stop
accepting  new  allocations,  transfers or renewals  for a particular  Guarantee
Period.  Such an action may have an impact on the MVA (see "Account Value of the
Fixed Allocations").

A Guarantee Period for a Fixed Allocation  begins: (a) when all or part of a Net
Purchase  Payment is allocated for that particular  Guarantee  Period;  (b) upon
transfer of any of your Account Value to a Fixed  Allocation for that particular
Guarantee  Period;  or (c)  when a  Guarantee  Period  attributable  to a  Fixed
Allocation "renews" after its Maturity Date.

We declare the rates of interest applicable during the various Guarantee Periods
offered.  Declared  rates are  effective  annual rates of interest.  The rate of
interest  applicable  to a  Fixed  Allocation  is the  one in  effect  when  its
Guarantee Period begins. The rate is guaranteed throughout the Guarantee Period.
We inform you of the interest rate applicable to a Fixed Allocation,  as well as
its Maturity Date,  when we confirm the  allocation.  We declare  interest rates
applicable to new Fixed Allocations from time-to-time.  Any new Fixed Allocation
in an existing Annuity is credited  interest at a rate not less than the rate we
are then crediting to Fixed  Allocations for the same Guarantee  Period selected
by new Annuity purchasers in the same class.

The interest  rates we credit are subject to a minimum.  We may declare a higher
rate. The minimum is based on both an index and a reduction to the interest rate
determined according to the index.

The  index is based on the  published  rate  for  certificates  of  indebtedness
(bills,  notes or bonds,  depending on the term of  indebtedness)  of the United
States Treasury at the most recent Treasury  auction held at least 30 days prior
to the beginning of the applicable Fixed Allocation's Guarantee Period. The term
(length of time from issuance to maturity) of the  certificates  of indebtedness
upon  which  the  index is based is the same as the  duration  of the  Guarantee
Period. If no certificates of indebtedness are available for such term, the next
shortest  term is used.  If the  United  States  Treasury's  auction  program is
discontinued, we will substitute indexes which in our opinion are comparable. If
required,  implementation of such substitute indexes will be subject to approval
by the  Securities and Exchange  Commission and the Insurance  Department of the
jurisdiction  in which your  Annuity was  delivered.  (For  Annuities  issued as
certificates of  participation  in a group contract,  it is our expectation that
approval of only the  jurisdiction  in which such group  contract was  delivered
applies.)

The reduction  used in determining  the minimum  interest rate is one percent of
interest (1.00%).

Where  required by the laws of a  particular  jurisdiction,  a specific  minimum
interest rate, compounded yearly, will apply should the index less the reduction
be less than the specific minimum interest rate applicable to that jurisdiction.

WE MAY CHANGE THE INTEREST  RATES WE CREDIT NEW FIXED  ALLOCATIONS  AT ANY TIME.
Any such  change  does not  have an  impact  on the  rates  applicable  to Fixed
Allocations  with  Guarantee  Periods that began prior to such change.  However,
such  a  change  will  affect  the  MVA  (see   "Account   Value  of  the  Fixed
Allocations").

We have no specific formula for determining the interest rates we declare. Rates
may differ  between  classes and between  types of annuities we offer,  even for
guarantees  of the same  duration  starting  at the same  time.  We  expect  our
interest  rate  declarations  for  Fixed  Allocations  to  reflect  the  returns
available on the type of investments  we make to support the various  classes of
annuities  supported by the assets in Separate  Account D. However,  we may also
take into  consideration in determining  rates such factors  including,  but not
limited to, the durations  offered by the  annuities  supported by the assets in
Separate  Account D,  regulatory  and tax  requirements,  the  liquidity  of the
secondary   markets  for  the  type  of   investments   we  make,   commissions,
administrative expenses, investment expenses, our mortality and expense risks in
relation to Fixed  Allocations,  general  economic trends and  competition.  OUR
MANAGEMENT MAKES THE FINAL DETERMINATION AS TO INTEREST RATES TO BE CREDITED. WE
CANNOT PREDICT THE RATES WE WILL DECLARE IN THE FUTURE.

OPERATIONS OF THE SEPARATE  ACCOUNTS:  In the  accumulation  phase,  assets
supporting Account Values are held in our Separate Account D or Separate Account
E established  under the laws of the State of  Connecticut.  Separate  Account E
consists of multiple Sub-accounts.  In the payout phase, assets supporting fixed
annuity payments and any adjustable  annuity payments we make available are held
in our general account.

Separate  Accounts:  We are the  legal  owner  of  assets  in the  separate
accounts.  Income,  gains and  losses,  whether  or not  realized,  from  assets
allocated to these separate  accounts,  are credited to or charged  against each
such separate account in accordance with the terms of the annuities supported by
such  assets  without  regard  to our  other  income,  gains or losses or to the
income,  gain or losses in any other of our separate accounts.  We will maintain
assets in each separate  account with a total market value at least equal to the
reserve  and other  liabilities  we must  maintain  in  relation  to the annuity
obligations  supported  by such  assets.  These  assets may only be charged with
liabilities which arise from such annuities.  This may include Annuities offered
pursuant  to this  Prospectus  or certain  other  annuities  we may  offer.  The
investments  made by  separate  accounts  are  subject  to the  requirements  of
applicable state laws.  These  investment  requirements may differ between those
for separate  accounts  supporting  variable  obligations and those for separate
accounts supporting fixed obligations.

Separate Account E: Separate Account E is registered with the SEC under the
1940 Act as a unit investment trust, which is a type of investment company. This
does  not  involve  any  supervision  by the  SEC of  the  investment  policies,
management  or  practices  of  Separate  Account  E.  As of  the  date  of  this
Prospectus,  we offer four Sub-accounts,  each of which invests only in a single
corresponding  portfolio  of The  Galaxy  VIP  Fund.  You will  find  additional
information  about the underlying  mutual fund  portfolios in the prospectus for
such fund.  Portfolios  added to the  underlying  mutual  fund may or may not be
offered through added Sub-accounts.

Sub-accounts  are permitted to invest in  underlying  mutual funds or portfolios
that we  consider  suitable.  We also  reserve  the  right to add  Sub-accounts,
eliminate  Sub-accounts,  to combine  Sub-accounts,  or to substitute underlying
mutual funds or portfolios of underlying mutual funds.

Values and benefits based on allocations to the Sub-accounts  will vary with the
investment  performance of the underlying  mutual funds or fund  portfolios,  as
applicable.  We do not guarantee the investment results of any Sub-account,  nor
is there any assurance that the Account Value allocated to the Sub-accounts will
equal the amounts  allocated to the  Sub-accounts  as of any time other than the
Valuation Period of such allocation. You bear the entire investment risk.

     Separate  Account  D: In the  accumulation  phase,  assets  supporting  our
obligations  based on Fixed Allocations are held in Separate Account D, which is
a "non-unitized"  separate  account.  Such obligations are based on the interest
rates we  credit to Fixed  Allocations  and the  terms of the  Annuities.  These
obligations  do not  depend  on the  investment  performance  of the  assets  in
Separate  Account  D.  Separate  Account D was  established  by us  pursuant  to
Connecticut law.

There are no discrete  units in Separate  Account D. No party with rights  under
any annuity nor any group contract owner  participates in the investment gain or
loss from  assets  belonging  to Separate  Account D. Such gain or loss  accrues
solely  to us.  We retain  the risk  that the  value of the  assets in  Separate
Account D may drop below the reserves and other  liabilities  we must  maintain.
Should the value of the assets in Separate  Account D drop below the reserve and
other  liabilities  we must maintain in relation to the  annuities  supported by
such  assets,  we will  transfer  assets  from our  general  account to Separate
Account  D to make up the  difference.  We have  the  right to  transfer  to our
general account any assets of Separate  Account D in excess of such reserves and
other liabilities.  We maintain assets in Separate Account D supporting a number
of annuities we offer.
       

If you  surrender,  withdraw or transfer  Account Value from a Fixed  Allocation
before the end of its  Guarantee  Period,  you bear the risk inherent in the MVA
(see  "Account  Value of the Fixed  Allocations").  The Account Value of a Fixed
Allocation is guaranteed on its Maturity Date (and,  where  required by law, the
30 days prior to the Maturity Date) to be its then current Interim Value.

We operate  Separate  Account D in a fashion  designed  to meet the  obligations
created by Fixed  Allocations.  Factors  affecting these operations  include the
following:

         (1) The State of New York,  which is one of the  jurisdictions in which
we are  licensed  to do  business,  requires  that  we meet  certain  "matching"
requirements.  These  requirements  address the matching of the durations of the
assets with the durations of  obligations  supported by such assets.  We believe
these matching requirements are designed to control an insurer's ability to risk
investing in long-term assets to support short term interest rate guarantees. We
also believe this limitation  controls an insurer's ability to offer unrealistic
rate guarantees.

         (2) We  employ an  investment  strategy  designed  to limit the risk of
default.  Some of the guidelines of our current investment strategy for Separate
Account D include, but are not limited to the following:

                  (a) Investments may be made in cash; debt securities issued by
the United States Government or its agencies and instrumentalities; money market
instruments;  short,  intermediate and long-term corporate obligations;  private
placements; asset-backed obligations; and municipal bonds.

   
                  (b) At the time of purchase,  fixed income securities will be
in one of the top four generic  lettered rating  classifications  as 
established by Standard & Poor's, Moody's Investor Services, Inc. or any 
Nationally Recognized Statistical Rating Organization ("NRSRO").
    

We are not obligated to invest according to the aforementioned guidelines or any
other  strategy  except  as may be  required  by  Connecticut  and  other  state
insurance laws.

         (3) We have the sole discretion to employ  investment  managers that we
believe are qualified,  experienced and reputable to manage Separate  Account D.
We currently employ  investment  managers for Separate Account D including,  but
not limited to, Fleet  Investment  Advisors Inc. Each manager is responsible for
investment  management of different portions of Separate Account D. From time to
time additional  investment  managers may be employed or investment managers may
cease  being  employed.  We are under no  obligation  to employ  any  investment
manager(s).

         (4) The assets in  Separate  Account D are  accounted  for at their  
market value, rather than at book value.

         (5) We are  obligated by law to maintain  our capital and  surplus,  as
well as our reserves,  at the levels required by applicable  state insurance law
and regulation.

INSURANCE  ASPECTS  OF THE  ANNUITY:  As an  insurance  company we bear the
insurance  risk inherent in the Annuity.  This includes the risks that mortality
and expenses exceed our expectations, and the investment and re-investment risks
in relation to the assets  supporting  obligations  not based on the  investment
performance of a separate  account.  We are subject to regulation  that requires
reserving and other practices in a manner that minimizes the insurance risk (see
"Regulation").

CHARGES  ASSESSED OR ASSESSABLE  AGAINST THE ANNUITY:  The Annuity  charges
which are assessed or may be  assessable  under  certain  circumstances  are the
set-up fee, the  maintenance  fee, a charge for taxes and a transfer fee.  These
charges are allocated  according to our rules.  The maintenance fee and transfer
charge are not assessed if no Account Value is maintained in the Sub-accounts at
the time such fee or charge is payable.  However,  we make  certain  assumptions
regarding  maintenance  and  transfer  expenses as part of the  overall  expense
assumptions   used  in  determining  the  interest  rates  we  credit  to  Fixed
Allocations.  Charges  are  also  assessed  against  the  Sub-accounts  and  the
underlying  mutual funds. We also may charge you for special  services,  such as
dollar  cost  averaging,  Systematic  Withdrawals,  Minimum  Distributions,  and
additional reports. As of the date of this prospectus,  we do not charge you for
any special services.

     Set-Up Fee: We charge a $25.00 set-up fee if your initial  Purchase Payment
is less than $10,000. Certain representations regarding the set-up fee are found
in the section entitled Administration Charge.

     Maintenance  Fee: A  maintenance  fee  equaling the smaller of $30 or 2% of
your then  current  Account  Value is deducted  from the  Account  Values in the
Sub-accounts  annually and upon surrender if your Account Value at the Valuation
Period  such  fee is  payable  is less  than  $50,000.  Certain  representations
regarding the maintenance fee are found in the section  entitled  Administration
Charge.

Tax  Charges:  In several  states a tax is payable.  We will
deduct the amount of tax payable, if any, from your Purchase Payments if the tax
is then incurred or from your Account Value when applied under an annuity option
if the  tax is  incurred  at that  time.  The  amount  of the  tax  varies  from
jurisdiction to jurisdiction.  It may also vary depending on whether the Annuity
qualifies for certain treatment under the Code. In each jurisdiction,  the state
legislature  may change the amount of any current  tax, may decide to impose the
tax, eliminate it, or change the time it becomes payable. In those jurisdictions
imposing  such a tax, the tax rates  currently in effect range up to 3 1/2%.  In
addition to state taxes,  local taxes may also apply. The amounts of these taxes
may exceed those for state taxes.

Transfer Fee: We charge $10.00 for each transfer after the
twelfth  in any  Annuity  Year.  However,  the fee is only  charged  if there is
Account  Value  in at  least  one  Sub-account  immediately  subsequent  to such
transfer.

Allocation Of Annuity Charges:  Any applicable  set-up fee is deducted from
your  initial  Purchase  Payment.  The  transfer  fee is  assessed  against  the
Sub-accounts in which you maintain Account Value immediately  subsequent to such
transfer.  The transfer fee is allocated on a pro-rata  basis in relation to the
Account  Values in such  Sub-accounts  as of the  Valuation  Period for which we
price the  applicable  transfer.  Tax  charges are  assessed  against the entire
Purchase  Payment  or Account  Value as  applicable.  The  maintenance  fee,  if
applicable, is assessed against the Sub-accounts on a pro-rata basis in relation
to the Account Values in each  Sub-account as of the Valuation  Period for which
we price the fee. The  maintenance  fee, if  applicable,  is used in calculating
Surrender Value.

CHARGES  ASSESSED  AGAINST THE ASSETS:  There are charges  assessed against
assets in the  Sub-accounts.  These  charges are described  below.  There are no
charges deducted from the Fixed  Allocations.  The factors we use in determining
the  interest  rates we credit  Fixed  Allocations  are  described  above in the
subsection  entitled "Fixed  Investment  Options".  No charges are deducted from
assets supporting fixed or adjustable  annuity  payments.  The factors we use in
determining fixed or adjustable  annuity payments  include,  but are not limited
to, our expected investment returns, costs, risks and profit targets. We reserve
the right to assess a charge against the Sub-accounts and the Fixed  Allocations
equal to any taxes which may be imposed upon the separate accounts.

     Administration  Charge:  We assess each  Sub-account,  on a daily basis, an
administration  charge.  The charge is 0.15% per year of the average daily total
value of such Sub-account.

We assess the  administration  charge and the maintenance fee,  described in the
subsection entitled  Maintenance Fee, at amounts we believe necessary to recover
the actual costs of maintaining and  administering  the Account Values allocated
to the Sub-accounts and Separate Account E itself. The administration charge and
maintenance  fee can be increased  only for Annuities  issued  subsequent to the
effective date of any such change.

A  relationship   does  not  necessarily   exist  between  the  portion  of  the
administration  charge, the set-up fee and the maintenance fee attributable to a
particular Annuity and the expenses  attributable to that Annuity.  However,  we
believe the total administration  charges made against the Sub-accounts will not
be greater than the total  anticipated  costs.  Types of expenses which might be
incurred  include,  but  are  not  necessarily  limited  to,  the  expenses  of:
developing  and  maintaining a computer  support  system for  administering  the
Account Values in the Sub-accounts and Separate Account E itself,  preparing and
delivering   confirmations  and  quarterly   statements,   processing  transfer,
withdrawal  and  surrender  requests,   responding  to  Participant   inquiries,
reconciling  and depositing  cash  receipts,  calculating  and monitoring  daily
values of each Sub-account, reporting for the Sub-accounts, including quarterly,
semi-annual and annual reports,  and mailing and tabulation of shareholder proxy
solicitations.

From time to time we may reduce the amount of the set-up  fee,  maintenance  fee
and/or  the  administration  charge.  We may do so when  Annuities  are  sold to
individuals  or a group of  individuals  in a manner  that  reduces  maintenance
and/or administrative  expenses. We would consider such factors as: (a) the size
and type of group; (b) the number of Annuities  purchased by a Participant;  (c)
the amount of Purchase  Payments;  and/or (d) other  transactions  where set-up,
maintenance and/or administration expenses are likely to be reduced.

Any  elimination of the set-up fee,  maintenance  fee and/or the  administration
charge or any reduction of such charges will not  discriminate  unfairly between
Annuity  purchasers.  We will not  make  any  changes  to  these  charges  where
prohibited by law.

     Mortality and Expense Risk Charges:  The mortality risk charge is 0.30% per
year and the expense risk charge is 0.10% per year.  These  charges are assessed
in combination  each day against each  Sub-account at the rate of 0.40% per year
of the average daily total value of each Sub-account.

With respect to the mortality risk charge, we assume the risk that the mortality
experience under the Annuities may be less favorable than our assumptions.  This
could  arise for a number of  reasons,  such as when  persons  upon whose  lives
annuity  payments  are  based  live  longer  than we  anticipated,  or when  the
Sub-accounts  decline in value resulting in losses in paying death benefits.  If
our mortality  assumptions prove to be inadequate,  we will absorb any resulting
loss.  Conversely,   if  the  actual  experience  is  more  favorable  than  our
assumptions,  then we will benefit  from the gain.  We also assume the risk that
the administration charge may be insufficient to cover our actual administration
costs. If we realize a profit from the mortality and expense risk charges,  such
profit may be used to recover sales expenses incurred.

CHARGES OF THE UNDERLYING MUTUAL FUNDS: The underlying mutual fund assesses
various charges for investment  management and investment  advisory fees.  These
charges  generally  differ between the portfolios  within the underlying  mutual
fund. You will find additional  details in the fund prospectus and the statement
of additional information.

PURCHASING ANNUITIES: You may purchase an Annuity for various purposes. You
must meet our requirements  before we issue an Annuity and it takes effect.  You
have a "free-look"  period during which you may return your Annuity for a refund
amount which may be less or more than your Purchase Payment,  except in specific
circumstances.

     Uses Of The  Annuity:  The  Annuity  may be  issued in  connection  with or
purchased as a funding vehicle for certain retirement plans designed to meet the
requirements of various sections of the Code. These include, but are not limited
to: (a) Sections 401  (corporate,  association,  or  self-employed  individuals'
retirement  plans);  (b) Section 403(b)  (tax-sheltered  annuities  available to
employees  of certain  qualifying  employers);  and (c) Section 408  (individual
retirement  accounts and individual  retirement  annuities - "IRAs";  Simplified
Employee Pensions).  We may require additional  information regarding such plans
before we issue an Annuity to be used in connection with such retirement  plans.
We may also restrict or change certain  rights and benefits,  if in our opinion,
such  restrictions  or  changes  are  necessary  for your  Annuity to be used in
connection  with  such  retirement  plans.  The  Annuity  may  also  be  used in
connection  with plans that do not qualify  under the sections of the Code noted
above.

     Application  And Initial  Payment:  Where allowed by law, you must meet our
underwriting requirements and forward a Purchase Payment if you seek to purchase
an Annuity.  One requirement is that, at the time of issue of your Annuity,  you
must be a customer of one or more  subsidiaries of Fleet Financial  Group,  Inc.
These  requirements  may also include a properly  completed  Application.  Where
permitted by law, we may issue an Annuity  without  completion of an Application
for certain classes of Annuities. The minimum initial Purchase Payment we accept
is $5,000,  unless  you  authorize  the use of bank  drafting  to make  Purchase
Payments (see "Bank  Drafting").  Our Office must give you prior approval before
we accept a Purchase  Payment  that  would  result in the  Account  Value of all
annuities  you maintain  with us exceeding  $500,000.  We confirm each  Purchase
Payment  in  writing.  Multiple  annuities  purchased  from us  within  the same
calendar  year may be treated for tax purposes as if they were a single  annuity
(see "Certain Tax Considerations").

We reserve  the right to  allocate  your  initial  Net  Purchase  Payment to the
investment options up to two business days after we receive,  at our Office, all
of our  requirements  for issuing the Annuity as applied  for. We may retain the
Purchase  Payment  and not  allocate  the initial  Net  Purchase  Payment to the
investment  options for up to five  business days while we attempt to obtain all
such requirements. We will try to reach you or any other party from whom we need
any information or materials.  If the  requirements  cannot be fulfilled  within
that time,  we will (a)  attempt to inform you of the delay,  and (b) return the
amount of the Purchase Payment, unless you specifically consent to our retaining
it until  all our  requirements  are met.  Once our  requirements  are met,  the
initial Net Purchase  Payment is applied to the  investment  options  within two
business days.  Once we accept your Purchase  Payment and our  requirements  are
met, we issue an Annuity.

     Bank Drafting:  You may make Purchase  Payments to your Annuity using bank
drafting, but only for allocations to variable investment options.  However, you
must pay at least one prior Purchase Payment by check. We will accept an initial
Purchase Payment lower than our standard minimum Purchase Payment requirement of
$5,000 if you also furnish bank drafting  instructions that provide amounts that
will meet a $1,000  minimum  Purchase  Payment  requirement to be paid within 12
months.  We will accept an initial Purchase Payment in an amount as low as $100,
but it  must be  accompanied  by a bank  drafting  authorization  form  allowing
monthly Purchase Payments of at least $75.

   
     Periodic Purchase Payments: We may, from time-to-time,  offer opportunities
to make Purchase  Payments  automatically  on a periodic  basis,  subject to our
rules. These  opportunities may include,  but are not limited to, certain salary
reduction programs agreed to by an employer.  As of the date of this Prospectus,
we only  agree to accept  Purchase  Payments  on such a basis if: (a) we receive
your  request In Writing for a salary  reduction  program and we agree to accept
Purchase  Payments  on this  basis;  (b) the  allocations  are only to  variable
investment  options  or  the  frequency  and  number  of  allocations  to  fixed
investment options is limited in accordance with our rules; and (c) the total of
Purchase  Payments in the first  Annuity Year is scheduled to equal at least our
then  current  minimum  requirements.  We may also  require an initial  Purchase
Payment to be submitted by check or wire before agreeing to such a program.  Our
minimum  requirements  may  differ  based on the usage of the  Annuity,  such as
whether it is being used in conjunction with certain retirement plans.
    

     Right to Return  the  Annuity:  You have the right to  return  the  Annuity
within twenty-one days of receipt or longer where required by law. The period in
which you can take this  action is known as a  "free-look"  period.  To exercise
your right to return the Annuity during the "free-look"  period, you must return
the Annuity.  The amount to be refunded is the then current  Account  Value plus
any tax charge deducted. This is the "standard refund". We return the greater of
the "standard  refund" or the Purchase  Payment received less any withdrawals if
necessary  to  meet  Federal   requirements   for  IRAs  or  certain  state  law
requirements.  We tell you how we determine  the amount  payable  under any such
right at the time we issue your Annuity.

For  annuities  subject to New York law  notice  given by mail and return of the
Annuity  by mail are  effective  on being  postmarked,  properly  addressed  and
postage  prepaid.  If the Annuity is returned to the agent,  other than by mail,
the  effective  date of surrender of the Annuity will be the date the Annuity is
received by the agent.  The amount  payable as to any amounts  allocated  to the
variable  investment  options equals the Account Value as of the date postmarked
or returned to the agent. If you choose to allocate any portion of your Purchase
Payment to the variable investment options,  you bear the investment risk during
this  period.  The  amount  payable  as to any  amounts  allocated  to the fixed
investment  options  equals the  greater of (i) the  Purchase  Payment  less any
withdrawals,  or (ii) the current  Account  Value of the Annuity on the date the
cancellation request is either postmarked or returned to the agent.

     Allocation  of Net  Purchase  Payments:  All  allocations  of Net  Purchase
Payments  are  subject  to  our  allocation  rules  (see  "Allocation   Rules").
Allocation of the portion of the initial  Purchase  Payment and any Net Purchase
Payments received during the "free-look" period that you wish to allocate to any
Sub-accounts are subject to an additional  allocation rule if state law requires
return of at least your  Purchase  Payments  should you return the Annuity under
such "free-look"  provision.  If such state law applies to your Annuity:  (a) we
allocate  any portion of any such Net  Purchase  Payments  that you indicate you
wish to go into the Sub-accounts to the GAL Money Market Sub-account; and (b) at
the end of such "free-look" period we reallocate Account Value according to your
then most recent allocation instructions to us, subject to our allocation rules.
However, where permitted by law in such jurisdictions, we will allocate such Net
Purchase  Payments  according  to  your  instructions,   without  any  temporary
allocation to the GAL Money Market  Sub-account,  if you execute a return waiver
("Return  Waiver").  Under the Return Waiver, you waive your right to the return
of the greater of the "standard  refund" or the Purchase  Payments received less
any withdrawals . Instead,  you are only entitled to the return of the "standard
refund" (see "Right to Return the Annuity").

     Balanced  Investment  Program:  We offer a balanced  investment  program in
relation to your initial Purchase  Payment,  if Fixed  Allocations are available
under your  Annuity.  If you choose  this  program,  we commit a portion of your
initial Net Purchase  Payment as a Fixed Allocation for the Guarantee Period you
select.  This Fixed Allocation will have grown pre-tax to equal the exact amount
of your entire  initial  Purchase  Payment at the end of its  initial  Guarantee
Period,  if no amounts are transferred or withdrawn from such Fixed  Allocation.
The  rest  of your  initial  Net  Purchase  Payment  is  invested  in the  other
investment options you select.

     Participant,  Annuitant  and  Beneficiary  Designations:  You make  certain
designations that apply to the Annuity if issued. These designations are subject
to our rules and to various  regulatory or statutory  requirements  depending on
the use of the Annuity.  These designations include a Participant,  a contingent
Participant,  an  Annuitant,  a  Contingent  Annuitant,  a  Beneficiary,  and  a
contingent  Beneficiary.  Certain designations are required, as indicated below.
Such designations will be revocable unless you indicate  otherwise or we endorse
your Annuity to indicate that such  designation  is  irrevocable to meet certain
regulatory or statutory requirements.

Some of the tax  implications  of  various  designations  are  discussed  in the
section  entitled  "Certain Tax  Considerations".  However,  there are other tax
issues than those  addressed  in that  section,  including,  but not limited to,
estate and  inheritance  tax issues.  You should  consult  with a competent  tax
counselor  regarding the tax  implications of various  designations.  You should
also consult with a competent  legal advisor as to the  implications  of certain
designations  in relation to an estate,  bankruptcy,  community  property  where
applicable and other matters.

A Participant must be named. You may name more than one Participant.  If you do,
all rights  reserved  to  Participants  are then held  jointly.  We require  the
consent In Writing of all joint  Participants  for any  transaction for which we
require the written consent of  Participants.  Where required by law, we require
the consent In Writing of the spouse of any person with a vested  interest in an
Annuity.  Naming  someone  other  than the  payor  of any  Purchase  Payment  as
Participant may have gift, estate or other tax implications.

You may name a  contingent  Participant,  where  allowed by law.  However,  this
designation takes effect only on or after the Annuity Date.

You must name an Annuitant.  We do not accept a designation of joint Annuitants.
Where allowed by law, you may name one or more Contingent Annuitants.  There may
be adverse tax consequences if a Contingent  Annuitant succeeds an Annuitant and
the  Annuity is owned by a trust that is neither tax exempt nor does not qualify
for preferred  treatment under certain sections of the Code, such as Section 401
(a  "non-qualified"  trust).  In  general,  the Code is  designed to prevent the
benefit  of tax  deferral  from  continuing  for  long  periods  of  time  on an
indefinite  basis.  Continuing the benefit of tax deferral by naming one or more
Contingent  Annuitants when the Annuity is owned by a non-qualified  trust might
be deemed an  attempt  to extend  the tax  deferral  for an  indefinite  period.
Therefore,  adverse tax treatment  may depend on the terms of the trust,  who is
named  as  Contingent   Annuitant,   as  well  as  the   particular   facts  and
circumstances.  You should  consult your tax advisor  before naming a Contingent
Annuitant  if you expect to use an Annuity in such a fashion.  Where  allowed by
law, you must name Contingent  Annuitants according to our rules when an Annuity
is used as a funding vehicle for certain  retirement  plans designed to meet the
requirements of Section 401 of the Code.

You may name more than one primary and more than one contingent  Beneficiary and
if you do, the  proceeds  will be paid in equal  shares to the  survivors in the
appropriate  beneficiary class,  unless you have requested otherwise In Writing.
If the primary  Beneficiary  dies before  death  proceeds  become  payable,  the
proceeds will become payable to the contingent Beneficiary. If no Beneficiary is
alive at the time of the death upon which death  proceeds  become  payable or in
the absence of any  Beneficiary  designation,  the proceeds  will vest in you or
your estate.

ACCOUNT VALUE AND SURRENDER VALUE: In the  accumulation  phase your Annuity
has an Account Value.  Your total Account Value is the sum of your Account Value
in each  investment  option.  Surrender  Value  is the  Account  Value  less any
applicable maintenance fee.

     Account  Value  in  the  Sub-accounts:  We  determine  your  Account  Value
separately  for  each  Sub-account.  To  determine  the  Account  Value  in each
Sub-account we multiply the Unit Price as of the Valuation  Period for which the
calculation is being made times the number of Units  attributable to you in that
Sub-account  as of that  Valuation  Period.  The method we use to determine Unit
Prices is shown in the Statement of Additional Information.

The number of Units  attributable to you in a Sub-account is the number of Units
you purchased less the number transferred or withdrawn.  We determine the number
of Units involved in any transaction specified in dollars by dividing the dollar
value of the transaction by the Unit Price of the effected Sub-account as of the
Valuation Period applicable to such transaction.

     Account Value of the Fixed  Allocations:  We determine the Account Value of
each Fixed Allocation  separately.  A Fixed  Allocation's  Account Value as of a
particular  date is determined  by  multiplying  its then current  Interim Value
times the MVA.

A formula is used to  determine  the MVA. The formula is applied  separately  to
each Fixed  Allocation.  Values and time durations used in the formula are as of
the date for which the Account Value is being determined. The formula is:

                      [(1+I) / (1+J+0.0010)]N/12

                                where:

            I is the interest rate being credited to the Fixed Allocation;

            J is the  interest  rate for your class of  annuities  for new
            Fixed Allocations with Guarantee Periods of durations equal to
            the number of years  (rounded to the next higher  integer when
            occurring on other than an anniversary of the beginning of the
            Fixed   Allocation's   Guarantee  Period)  remaining  in  such
            Guarantee Period;

            N is the number of months  (rounded to the next higher integer
            when  occurring  on other  than a monthly  anniversary  of the
            beginning of the Guarantee Period) remaining in such Guarantee
            Period.

   
The formula  that  applies if amounts are  surrendered  pursuant to the right to
return the Annuity is [(1 + I)/(1 + J)]N/12.
    

No MVA applies in determining a Fixed Allocation's Account Value on its Maturity
Date,  and, where required by law, the 30 days prior to the Maturity Date. If we
are not offering a Guarantee Period with a duration equal to the number of years
remaining in a Fixed Allocation's  Guarantee Period, we calculate a rate for "J"
above using a specific  formula.  This formula is described in the  Statement of
Additional Information.

Our Current  Rates are expected to be sensitive to interest  rate  fluctuations,
thereby  making each MVA equally  sensitive  to such  changes.  There would be a
downward  adjustment  when the  applicable  Current  Rate plus 0.10  percent  of
interest  exceeds  the  rate  credited  to a  Fixed  Allocation  and  an  upward
adjustment  when the  applicable  Current  Rate is more  than  0.10  percent  of
interest  lower  than the rate being  credited  to a Fixed  Allocation.  See the
Statement of Additional Information for an illustration of how the MVA works.

RIGHTS,  BENEFITS  AND  SERVICES:  The  Annuity  provides  various  rights,
benefits and services  subsequent  to its issuance and your  decision to keep it
beyond the free-look period. A number of these rights, benefits and services, as
well as some of the  rules  and  conditions  to  which  they  are  subject,  are
described below and on the following pages. These rights,  benefits and services
include,  but are not limited to: (a) making additional  Purchase Payments;  (b)
changing  revocable  designations;   (c)  transferring  Account  Values  between
investment options; (d) receiving lump sum payments,  Systematic  Withdrawals or
Minimum Distributions,  annuity payments and death benefits; (e) transferring or
assigning your Annuity;  (f) exercising certain voting rights in relation to the
underlying  mutual fund  portfolio  in which the  Sub-accounts  invest;  and (g)
receiving  reports.  These  rights,   benefits  and  services  may  be  limited,
eliminated  or altered  when an  Annuity  is  purchased  in  conjunction  with a
qualified plan. We may require presentation of proper identification,  including
a personal  identification  number  ("PIN") issued by us, prior to accepting any
instruction by telephone. To the extent permitted by law or regulation,  neither
we nor any person  authorized  by us will be  responsible  for any claim,  loss,
liability or expense in connection with a telephone transfer if we or such other
person acted on  telephone  transfer  instructions  in good faith in reliance on
your telephone transfer  authorization and on reasonable  procedures to identify
persons so authorized through  verification  methods which may include a request
for your Social  Security  number or a personal  identification  number (PIN) as
issued by us. We may be liable  for  losses due to  unauthorized  or  fraudulent
instructions should we not follow such reasonable procedures.

   
     Additional  Purchase  Payments:  The  minimum for any  additional  Purchase
Payment is $500,  unless we  authorize  lower  payments  pursuant  to a periodic
Purchase  Payment  Program  (see  "Periodic  Purchase  Payments")  or less where
required by law. If payments are made by salary  deduction,  the minimum payment
is  $50.00.  Additional  Purchase  Payments  may be paid at any time  before the
Annuity  Date.  Subject to our  allocation  rules,  we allocate  additional  Net
Purchase Payments  according to your most recent  instructions for allocation of
Net Purchase Payments.
    

     Changing Revocable  Designations:  Unless you indicated that a prior choice
was irrevocable or your Annuity has been endorsed to limit certain changes,  you
may request to change  Participant,  Annuitant and  Beneficiary  designations by
sending a request In Writing. Where allowed by law, such changes will be subject
to our acceptance.  Some of the changes we will not accept include,  but are not
limited to: (a) a new Participant  subsequent to the death of the Participant or
the first of any joint  Participants to die,  except where a  spouse-Beneficiary
has become the  Participant  as a result of an  Participant's  death;  (b) a new
Participant  or  Annuitant  who does not  meet  our  then  current  underwriting
guidelines;  (c) a new  Annuitant  subsequent to the Annuity Date if the annuity
option selected  includes a life  contingency;  and (d) a new Annuitant prior to
the Annuity Date if the Annuity is owned by an entity.

   
     Allocation Rules: In the accumulation phase, you may maintain Account Value
in all four currently available Sub-accounts.  Currently,  you may also maintain
an unlimited  number of Fixed  Allocations.  We reserve the right, to the extent
permitted by law, to limit the number of fixed allocations or the amount you may
allocate to any Fixed  Allocation.  Should you request a transaction  that would
leave less than any minimum amount we then require in an investment  option,  we
reserve the right,  to the extent  permitted  by law, to add the balance of your
Account  Value  in  the  applicable  Sub-account  or  Fixed  Allocation  to  the
transaction and close out your balance in that investment option.
    

Withdrawals of any type are taken pro-rata from the investment  options based on
the then current  Account  Values in such  investment  options unless we receive
instructions  from you prior to such  withdrawal.  For this  purpose  only,  the
Account Value in all your then current Fixed  Allocations is deemed to be in one
investment option. If you transfer or withdraw Account Value from multiple Fixed
Allocations  and do not provide  instructions  indicating the Fixed  Allocations
from which  Account Value should be taken:  (a) we transfer  Account Value first
from the Fixed  Allocation with the shortest amount of time remaining to the end
of its  Guarantee  Period,  and then  from the  Fixed  Allocation  with the next
shortest amount of time remaining to the end of its Guarantee Period,  etc.; and
(b) if there are multiple Fixed Allocations with the same amount of time left in
each Guarantee  Period,  as between such Fixed Allocations we first take Account
Value from the Fixed Allocation that had the shorter Guarantee Period.

     Transfers: In the accumulation phase you may transfer Account Value between
investment  options,  subject to our allocation rules (see "Allocation  Rules").
Transfers  are not  subject  to  taxation  (see  "Transfers  Between  Investment
Options").  We charge $10.00 for each transfer  after the twelfth in any Annuity
Year,  including transfers transacted as part of a dollar cost averaging program
(see  "Dollar  Cost  Averaging")  or  any  rebalancing,   market  timing,  asset
allocation or similar program which you authorize to be employed on your behalf.
Renewals or transfers of Account Value from a Fixed Allocation at the end of its
Guarantee  Period are not subject to the transfer  charge and are not counted in
determining  whether other  transfers may be subject to the transfer charge (see
"Renewals").  Your transfer  request must be In Writing or meet our requirements
for accepting instructions we receive over the phone.

Where  permitted,  we reserve the right to limit the number of  transfers in any
Annuity Year for all existing or new Participants.  We also reserve the right to
limit the number of  transfers  in any  Annuity  Year or to refuse any  transfer
request  for a  Participant  or certain  Participants  if we believe  that:  (a)
excessive  trading by such  Participant or Participants  or a specific  transfer
request or group of  transfer  requests  may have a  detrimental  effect on Unit
Values  or the  share  prices  of the  underlying  mutual  funds;  or (b) we are
informed  by one or more of the  underlying  mutual  funds that the  purchase or
redemption  of shares is to be  restricted  because  of  excessive  trading or a
specific  transfer or group of transfers is deemed to have a detrimental  effect
on share prices of affected underlying mutual funds.


   
To the extent  permitted by law, we may request up to 2 business  days notice of
any  transfer  into or out of a Fixed  Allocation  if the  market  value of such
transfer is at least $1,000,000.00.
    

In order to help you determine  whether you wish to transfer Account Values to a
Fixed  Allocation,  you may obtain our Current Rates by writing us or calling us
at 1-800-444-3970.

Where  permitted  by law, we may accept your  authorization  of a third party to
transfer Account Values on your behalf,  subject to our rules. We may suspend or
cancel such  acceptance  at any time.  We notify you of any such  suspension  or
cancellation.  We may restrict the investment  options that will be available to
you for transfers or allocations of Net Purchase  Payments  during any period in
which you authorize such third party to act on your behalf.  We give you, and/or
the third  party you  authorize  prior  notification  of any such  restrictions.
However,  we will not enforce such a  restriction  if we are  provided  evidence
satisfactory  to us that:  (a) such third party has been appointed by a court of
competent  jurisdiction to act on your behalf;  or (b) such third party has been
appointed by you to act on your behalf for all your financial affairs.

We or an affiliate of ours may provide  administrative or other support services
to independent  third parties you authorize to conduct  transfers on your behalf
or  who  provide  recommendations  as to  how  your  Account  Values  should  be
allocated.  This includes,  but is not limited to,  transferring  Account Values
between  investment  options in accordance  with various  investment  allocation
strategies such third party may employ,  or transferring  Account Values between
investment options in accordance with market timing strategies  employed by such
third parties.  Such  independent  third parties may or may not be appointed our
agents for the sale of Annuities. However, we do not engage any third parties to
offer  investment  allocation  services  of any type,  so that  persons or firms
offering such services do so independent from any agency  relationship  they may
have with us for the sale of Annuities.  We therefore take no responsibility for
the investment allocations and transfers transacted on your behalf by such third
parties or any investment allocation recommendations made by such persons. We do
not currently charge you extra for providing these support services.

     Renewals:  A renewal is a transaction  that occurs  automatically as of the
last day of a Fixed Allocation's  Guarantee Period unless we receive alternative
instructions.  This day as to each Fixed Allocation is called its Maturity Date.
As of the end of a  Maturity  Date,  the  Fixed  Allocation's  Guarantee  Period
"renews"  and a new  Guarantee  Period  of the  same  duration  as the one  just
completed begins. However, the renewal will not occur if the Maturity Date is on
the date we apply your Account  Value to  determine  the annuity  payments  that
begin on the Annuity Date (see "Annuity Payments").

As an  alternative  to a  renewal,  you may  transfer  all or part of that Fixed
Allocation's  Account Value to a different Fixed  Allocation or you may transfer
such Account Value to one or more Sub-accounts, subject to our allocation rules.
To accomplish  this, we must receive  instructions  from you In Writing at least
two  business  days before the Maturity  Date.  No MVA applies to transfers of a
Fixed  Allocation's  Account Value  occurring as of its Maturity Date, and where
required by law,  the 30 days prior to the Maturity  Date.  An MVA will apply in
determining the Account Value of a Fixed Allocation at the time annuity payments
are  determined,  unless the Maturity Date of such Fixed  Allocation is the 15th
day before the Annuity Date (see "Annuity Payments").

At least 30 days prior to a Maturity  Date,  or  earlier if  required  by law or
regulation,  we inform you of the Guarantee  Periods available as of the date of
such  notice.  We do not  provide  a similar  notice  if the Fixed  Allocation's
Guarantee Period is of less than a year's  duration.  Such notice may include an
example of the rates we are then crediting new Fixed  Allocations as of the date
such notice is prepared. The rates actually credited to a Fixed Allocation as of
the date of any renewal or transfer immediately  subsequent to the Maturity Date
may be more or less than any rates quoted in such notice.

If your Fixed  Allocation's  then ending Guarantee Period is no longer available
for new allocations and renewals or you choose a different Guarantee Period that
is no longer  available on the date  following the Maturity Date, we will try to
reach you so you may make another choice. If we cannot reach you, we will assign
the next shortest Guarantee Period then currently  available for new allocations
and renewals to that Fixed Allocation.

     Dollar Cost Averaging:  We offer dollar cost averaging in the  accumulation
phase.  Dollar cost  averaging  is a program  designed  to provide for  regular,
approximately  level  investments over time. You may choose to transfer earnings
only, principal plus earnings or a flat dollar amount. We make no guarantee that
a dollar cost  averaging  program  will result in a profit or protect  against a
loss in a declining  market.  You may select this program by  submitting to us a
request In Writing. You may cancel your participation in this program In Writing
or  by  phone  if  you  have  previously   authorized  our  acceptance  of  such
instructions.

Dollar cost averaging is available from any of the investment  options we choose
to make available for such a program. Your Annuity must have an Account Value of
not less than  $25,000  at the time we accept  your  request  for a dollar  cost
averaging  program.  Transfers under a dollar cost averaging program are counted
in  determining  the  applicability  of the transfer fee (see  "Transfers").  We
reserve the right to limit the  investment  options into which Account Value may
be  transferred as part of a dollar cost  averaging  program.  As of the date of
this prospectus, we currently do not permit dollar cost averaging programs where
Account Value is transferred to Fixed Allocations.  We also reserve the right to
charge a  processing  fee for this  service.  Should we  suspend  or cancel  the
offering of this service,  such suspension or  cancellation  will not affect any
dollar cost  averaging  programs  then in effect.  Dollar cost  averaging is not
available while an asset  allocation or market timing type of program is used in
connection with your Annuity.

Dollar cost averaging from Fixed Allocations are subject to the following rules:
(a) you may only use  Fixed  Allocations  with  Guarantee  Periods  of 1, 2 or 3
years;  (b)  such a  program  may  only be  selected  in  conjunction  with  and
simultaneous  to a new or  renewing  Fixed  Allocation;  (c) only  averaging  of
earnings only or principal plus earnings is permitted;  (d) a program  averaging
principal  plus earnings from a Fixed  Allocation  must be designed to last that
Fixed  Allocation's  entire current Guarantee Period;  (e) dollar cost averaging
transfers  from a Fixed  Allocation  are not subject to the MVA; and (f) you may
not  simultaneously  use Account Value in any Fixed Allocation to participate in
dollar  cost   averaging   and  receive   Systematic   Withdrawals   or  Minimum
Distributions  from such Fixed  Allocation  (see  "Systematic  Withdrawals"  and
"Minimum Distributions").

     Distributions:  Distributions  available  from  your  Annuity  during  the
accumulation   phase  include   surrender,   partial   withdrawals,   Systematic
Withdrawals,  Minimum Distributions (in relation to qualified plans) and a death
benefit.  In the payout phase we pay annuity payments.  Distributions  from your
Annuity  generally are subject to taxation,  and may be subject to a tax penalty
as  well  (see  "Certain  Tax  Considerations").  You  may  wish  to  consult  a
professional  tax advisor  for tax advice  prior to  exercising  any right to an
elective  distribution.  During the accumulation  phase, any distribution  other
than a death benefit: (a) must occur prior to any death that would cause a death
benefit to become  payable;  and (b) will occur  subsequent  to our receipt of a
completed request In Writing.

     Surrender:  Surrender of your Annuity for its Surrender  Value is permitted
during the  accumulation  phase.  Your Annuity  must  accompany  your  surrender
request.

     Partial  Withdrawals:  You may withdraw part of your Surrender  Value.  The
minimum partial  withdrawal is $100. The Surrender Value that must remain in the
Annuity  as of the date of this  transaction  is  $1,000.  If the  amount of the
partial withdrawal request exceeds the maximum amount available,  we reserve the
right to treat your request as one for a full surrender.

   
     Systematic  Withdrawals:  We offer Systematic Withdrawals of earnings only,
principal plus earnings or a flat dollar  amount.  Systematic  Withdrawals  from
Fixed  Allocations  are  limited  to  earnings  accrued  after  the  program  of
Systematic  Withdrawals  begins, or payments of fixed dollar amounts that do not
exceed such earnings. A program of Systematic  Withdrawals begins on the date we
accept,  at our Office,  your request for such a program.  You may choose at any
time to begin such a program if  withdrawals  are to come  solely  from  Account
Value maintained in the Sub-accounts.
    

A Systematic  Withdrawal  from a Fixed  Allocation is not subject to the MVA. We
calculate the Fixed Allocation's credited interest since the prior withdrawal as
A minus B, plus C, where:

         A   is the Interim Value of the applicable Fixed Allocation as of the 
             date of the Systematic Withdrawal;

   
         B   is the Interim Value of the applicable  Fixed  Allocation as of the
             later of the beginning of its then current  Guarantee Period or the
             beginning of the Systematic Withdrawal program; and

         C   is the total of all partial or free  withdrawals  and any transfers
             from such Fixed  Allocation since the later of the beginning of its
             then current  Guarantee  Period or the beginning of the  Systematic
             Withdrawal program.
    

We offer Systematic Withdrawals on a monthly,  quarterly,  semi-annual or annual
basis. You may not simultaneously  receive  Systematic  Withdrawals from a Fixed
Allocation  and  participate  in a dollar  cost  averaging  program  under which
Account Value is transferred  from the same Fixed  Allocation  (see "Dollar Cost
Averaging").  Systematic  Withdrawals are not available while you are taking any
Minimum Distributions (see "Minimum Distributions").

The Surrender Value of your Annuity must be at least $25,000 when we accept your
request for a program of Systematic Withdrawals. The minimum for each Systematic
Withdrawal is $100. For any scheduled Systematic  Withdrawal other than the last
that does not meet this minimum, we reserve the right to defer such a withdrawal
and add the amount  that would have been  withdrawn  to the amount that is to be
withdrawn at the next Systematic Withdrawal.

We reserve  the right to charge a  processing  fee for this  service.  Should we
suspend  or  cancel  offering   Systematic   Withdrawals,   such  suspension  or
cancellation will not affect any Systematic Withdrawal programs then in effect.

     Minimum  Distributions:   You  may  elect  to  have  us  calculate  Minimum
Distributions  annually  if your  Annuity  is being used for  certain  qualified
purposes  under the  Code.  We  calculate  such  amounts  assuming  the  Minimum
Distribution  amount is based solely on the value of your Annuity.  The required
Minimum  Distribution amounts applicable to your particular situation may depend
on other annuities,  savings or investments of which we are unaware, so that the
required amount may be greater than the Minimum Distribution amount we calculate
based on the value of your  Annuity.  We  reserve  the right to charge a fee for
each annual  calculation.  Minimum  Distributions  are not  available if you are
taking Systematic Withdrawals (see "Systematic  Withdrawals").  You may elect to
have  Minimum  Distributions  paid  out  monthly,  quarterly,  semi-annually  or
annually.

Each Minimum  Distribution will be taken from the investment options you select.
However,  the  portion of any  Minimum  Distribution  that can be taken from any
Fixed  Allocations  may not exceed the then current  ratio  between your Account
Value in all Fixed Allocations you maintain and your total Account Value. No MVA
applies to any portion of Minimum  Distributions  taken from Fixed  Allocations.
Minimum Distributions are not available from any Fixed Allocations if such Fixed
Allocation  is being used in a dollar cost  averaging  program (see "Dollar Cost
Averaging").

     Death Benefit:  In the accumulation  phase, a death benefit is payable. If
the  Annuity is owned by one or more  natural  persons,  it is payable  upon the
first  death of such  Participants.  If the  Annuity is owned by an entity,  the
death benefit is payable upon the  Annuitant's  death (if there is no Contingent
Annuitant). For applicable deaths occurring prior to age 85 of the deceased, the
death benefit is the greater of (a) or (b), where:  (a) is your Account Value in
any Sub-accounts  plus the Interim Value of your Fixed  Allocations;  and (b) is
the  minimum  death  benefit.  The  minimum  death  benefit is the total of each
Purchase Payment less the total of all  withdrawals,  of any type. Where allowed
by law, for applicable deaths occurring on or after age 85 of the deceased,  the
death benefit is the Account Value.

The  amount of the death  benefit  is  determined  as of the date we  receive In
Writing "due proof of death".  The following  constitutes  "due proof of death":
(a)(i) a  certified  copy of a death  certificate,  (ii) a  certified  copy of a
decree of a court of competent jurisdiction as to the finding of death, or (iii)
any other proof satisfactory to us; (b) all  representations we require or which
are mandated by applicable  law or regulation in relation to the death claim and
the payment of death  proceeds;  and (c) any applicable  election of the mode of
payment of the death benefit, if not previously elected by the Participant.  The
death  benefit  is  reduced by any  annuity  payments  made prior to the date we
receive In Writing such due proof of death.

If the death benefit  becomes payable prior to the Annuity Date due to the death
of the Participant and the Beneficiary is the Participant's spouse, then in lieu
of  receiving  the death  benefit,  such  Participant's  spouse  may elect to be
treated as a Participant and continue the Annuity.

In the event of your death,  the benefit must be  distributed  within:  (a) five
years of the date of death;  or (b) over a period not extending  beyond the life
expectancy of the Beneficiary or over the life of the Beneficiary.  Distribution
after your death to be paid under (b) above,  must  commence  within one year of
the date of death.

If the Annuitant  dies before the Annuity Date,  the  Contingent  Annuitant will
become the Annuitant.  If the  Participant is one or more natural  persons,  the
oldest of any such Participants not named as the Annuitant  immediately  becomes
the  Contingent  Annuitant  if: (a) the  Contingent  Annuitant  predeceases  the
Annuitant; or (b) if you do not designate a Contingent Annuitant.

In the payout  phase,  we continue to pay any "certain"  payments  (payments not
contingent on the continuance of any life) to the Beneficiary  subsequent to the
death of the Annuitant. For Annuities issued subsequent to our implementation of
a change, we do not guarantee any commutation rights unless required by law. For
Annuities  issued prior to  implementation  of such change,  we will commute any
remaining  "certain"  payments  and pay a lump sum if  elected by you or, in the
absence of  specific  instructions  by you,  by the  Beneficiary.  To the extent
permitted  by law,  we will  commute  any  "certain"  payments  pursuant to such
Annuities  using the same  interest  rate  assumed in  determining  the  annuity
payments then due.

In the payout phase,  we distribute  any payments due subsequent to the death of
any  Participant  at least as  rapidly as under the  method of  distribution  in
effect as of the date of such Participant's death.

     Annuity  Payments:  Annuity  payments  can be  guaranteed  for life,  for a
certain  period,  or for a certain  period  and life.  We make  available  fixed
payments,  and as of the date of this Prospectus,  adjustable payments (payments
which may or may not be changed on specified  adjustment  dates based on annuity
purchase rates we are then making available to annuities of the same class).  We
may or may not be making adjustable  annuities available on the Annuity Date. To
the extent  there is any tax basis in the  annuity,  a portion  of each  annuity
payment is treated  for tax  purposes  as a return of such basis  until such tax
basis is  exhausted.  The amount  deemed such a return of basis is determined in
accordance with the requirements of the Code (see "Certain Tax Considerations").

You may choose an Annuity Date,  an annuity  option and the frequency of annuity
payments  when you  purchase  an  Annuity,  or at a later  date.  Your choice of
Annuity  Date and  annuity  option may be limited  depending  on your use of the
Annuity and the applicable jurisdiction. Subject to our rules, you may choose an
Annuity  Date,  option and  frequency  of  payments  suitable  to your needs and
circumstances.  You should consult with competent tax and financial  advisors as
to the appropriateness of any such choice. For annuities subject to New York and
Pennsylvania  law, the Annuity Date may not exceed the first day of the calendar
month following the Annuitant's 85th birthday.

You may change your choices at any time up to 30 days before the earlier of: (a)
the date we would have applied your Account  Value to an annuity  option had you
not made the  change;  or (b) the date we will  apply your  Account  Value to an
annuity option in relation to the new Annuity Date you are then  selecting.  You
must request  this change In Writing.  The Annuity Date must be the first or the
fifteenth day of a calendar month.

In the absence of an election In Writing:  (a) the Annuity Date is the first day
of the calendar month first following the later of the Annuitant's 85th birthday
or the  fifth  anniversary  of our  receipt  at our  Office of your  request  to
purchase an Annuity;  and (b) where allowed by law, fixed monthly  payments will
commence under option 2, described below,  with 10 years certain.  For Annuities
subject to New York law,  in the  absence of an  election  In  Writing:  (a) the
Annuity Date is the first day of the calendar  month  following the  Annuitant's
85th  birthday;  and (b) fixed monthly  payments  will commence  under Option 2,
described  below,  with 10 years  certain.  The  amount  to be  applied  is your
Annuity's  Account  Value  15  business  days  prior  to the  Annuity  Date.  In
determining  your annuity  payments,  we credit  interest using our then current
crediting rate for this purpose, which is not less than 3% of interest per year,
between the date Account  Value is applied to an annuity  option and the Annuity
Date. Annuity options in addition to those shown are available with our consent.
The minimum  initial  amount  payable is the minimum  initial  annuity amount we
allow  under  our then  current  rules.  Should  you wish to  receive a lump sum
payment,  you must request to surrender  your Annuity  prior to the Annuity Date
(see  "Surrender").  The 3% interest rate noted above is 4% for Annuities issued
prior to the date we implemented this change.

You may elect to have any amount of the proceeds due to the Beneficiary  applied
under  any of the  options  described  below.  Except  where a lower  amount  is
required by law, the minimum monthly annuity payment is $50.

If you have not made an election prior to proceeds becoming due, the Beneficiary
may  elect to  receive  the death  benefit  under  one of the  annuity  options.
However, if you made an election, the Beneficiary may not alter such election.

For purposes of the annuity options  described  below, the term "key life" means
the  person  or  persons  upon  whose  life  any  payments  dependent  upon  the
continuation of life are based.

         (1) Option 1 - Payments for Life: Under this option,  income is payable
periodically  prior to the  death  of the key  life,  terminating  with the last
payment  due  prior to such  death.  Since no  minimum  number  of  payments  is
guaranteed,  this option  offers the maximum  level of periodic  payments of the
annuity  options.  It is possible  that only one payment  will be payable if the
death of the key life occurs before the date the second  payment was due, and no
other payments nor death benefits would be payable.

         (2)  Option 2 -  Payments  for Life with 10,  15, or 20 Years  Certain:
Under this option,  income is payable  periodically  for 10, 15, or 20 years, as
selected,  and thereafter  until the death of the key life.  Should the death of
the key life occur before the end of the period selected, the remaining payments
are paid to the Beneficiary to the end of such period.

         (3) Option 3 - Payments Based on Joint Lives: Under this option, income
is  payable  periodically  during  the  joint  lifetime  of two key  lives,  and
thereafter during the remaining lifetime of the survivor,  ceasing with the last
payment  prior to the  survivor's  death.  No  minimum  number  of  payments  is
guaranteed  under this  option.  It is possible  that only one  payment  will be
payable  if the death of all the key lives  occurs  before  the date the  second
payment was due, and no other payments nor death benefits would be payable.

         (4) Option 4 - Payments for a Certain Period: Under this option, income
is payable  periodically for a specified number of years. The number of years is
subject to our then  current  rules.  Should the payee die before the end of the
specified number of years, the remaining payments are paid to the Beneficiary to
the end of such period.  Note that under this option,  payments are not based on
how  long we  expect  any key  life to  live.  Therefore,  that  portion  of the
mortality  risk  charge  assessed  to cover the risk that key lives  outlive our
expectations provides no benefit to a Participant selecting this option.

   
The first payment varies according to the annuity options and payment  frequency
selected.  The first periodic  payment is determined by multiplying  the Account
Value  (expressed  in  thousands  of dollars) as of the close of business on the
fifteenth day preceding the Annuity Date,  plus interest at not less than 3% per
year from such date to the  Annuity  Date,  by the amount of the first  periodic
payment per $1,000 of value  obtained  from our  annuity  rates for that type of
annuity and for the  frequency of payment  selected.  Our rates will not be less
than our guaranteed  minimum rates.  These guaranteed  minimum rates are derived
from the 1983a  Individual  Annuity  Mortality Table with ages set back one year
for males and two years for females and with an assumed  interest rate of 3% per
annum.  Where required by law or regulation,  such annuity table will have rates
that do not differ according to the gender of the key life. Otherwise, the rates
will differ  according  to the gender of the key life.  The 3% rates noted above
are 4% for annuities issued prior to the date we implemented the change.
    

     Qualified Plan Withdrawal Limitations: The Annuities are endorsed such that
there are surrender or withdrawal  limitations  when used in relation to certain
retirement plans for employees which qualify under various sections of the Code.
These  limitations  do  not  affect  certain  roll-overs  or  exchanges  between
qualified  plans.  Distribution of amounts  attributable to  contributions  made
pursuant to a salary reduction  agreement (as defined in Code section 403(b), or
attributable  to transfers to a tax sheltered  annuity from a custodial  account
(as defined in Code section  403(b)(7)),  is restricted to the  employee's:  (a)
separation  from  service;  (b) death;  (c)  disability  (as  defined in Section
72(m)(7)  of the Code);  (d)  reaching  age 59 1/2;  or (e)  hardship.  Hardship
withdrawals  are  restricted  to  amounts   attributable  to  salary   reduction
contributions,  and do not  include  investment  results.  In  the  case  of tax
sheltered annuities,  these limitations do not apply to certain salary reduction
contributions made and investment results earned prior to dates specified in the
Code.  In addition,  the  limitation on hardship  withdrawals  does not apply to
salary reduction contributions made and investment results earned prior to dates
specified  in the Code  which have been  transferred  from  custodial  accounts.
Rollovers  from the  types of plans  noted to  another  qualified  plan or to an
individual  retirement account or individual  retirement annuity are not subject
to the limitations noted. Certain distributions,  including rollovers,  that are
not transferred directly to the trustee of another qualified plan, the custodian
of an individual  retirement  account or the issuer of an individual  retirement
annuity may be subject to automatic 20% withholding for Federal income tax. This
may  also  trigger   withholding  for  state  income  taxes  (see  "Certain  Tax
Considerations").  With respect to the  restrictions  on  withdrawals  set forth
above,  the Company is relying upon a no-action  letter dated  November 28, 1988
from the staff of the Securities and Exchange Commission to the American Council
of Life Insurance  with respect to annuities  issued under Section 403(b) of the
Code, the requirements of which have been complied with by the Company.

     Pricing  of  Transfers  and   Distributions:   We  "price"   transfers  and
distributions on the dates indicated below.

         (1) We price  "scheduled"  transfers and  distributions  as of the date
such transactions are so scheduled.  "Scheduled"  transactions include transfers
under  a  dollar  cost  averaging  program,   Systematic  Withdrawals,   Minimum
Distributions,  transfers previously scheduled with us at our Office pursuant to
any on-going asset allocation or similar program, and annuity payments.

         (2) We price "unscheduled"  transfers and partial withdrawals as of the
date we receive In Writing  at our  Office the  request  for such  transactions.
"Unscheduled"  transfers include any transfers processed in conjunction with any
market  timing,  asset  allocation or similar  program which you authorize to be
employed  on  your  behalf.  "Unscheduled"  transfers  received  pursuant  to an
authorization  to accept transfers over the phone are priced as of the Valuation
Period we receive the request at our Office for such transactions.

         (3) We price surrenders and death benefits as of the date we receive at
our Office all materials we require for such transactions and such materials are
satisfactory to us (see "Surrenders" and "Death Benefits").

The pricing of transfers and distributions  involving  Sub-accounts includes the
determination  of the  applicable  Unit  Price  for  the  Units  transferred  or
distributed.   The  pricing  of  transfers  and  distributions  involving  Fixed
Allocations includes the determination of any applicable MVA. Any applicable MVA
alters the amount  available when all the Account Value in a Fixed Allocation is
being  transferred  or  distributed.  Any  applicable  MVA  alters the amount of
Interim  Value  needed  when  only a  portion  of the  Account  Value  is  being
transferred  or  distributed.  Unit Prices may change each  Valuation  Period to
reflect the investment  performance of the  Sub-accounts.  The MVA applicable to
each Fixed  Allocation  changes  once each month and also each time we declare a
different  rate for new Fixed  Allocations.  Payment  is subject to our right to
defer transactions for a limited period (see "Deferral of Transactions").

     Voting  Rights:  You have  voting  rights in  relation  to  Account  Value
maintained  in the  Sub-accounts.  You do not have voting  rights in relation to
Account  Value  maintained in any Fixed  Allocations  or in relation to fixed or
adjustable annuity payments.

We will vote shares of the  underlying  mutual funds or  portfolios in which the
Sub-accounts  invest in the manner directed by Participants.  Participants  give
instructions  equal to the number of shares represented by the Sub-account Units
attributable to their Annuity.

We will vote the shares  attributable to assets held in the Sub-accounts  solely
for us rather than on behalf of  Participants,  or any share as to which we have
not received  instructions,  in the same manner and proportion as the shares for
which  we  have  received  instructions.  We  will  do so  separately  for  each
Sub-account  from various classes that may invest in the same underlying  mutual
fund portfolio.

The  number  of  votes  for an  underlying  mutual  fund  or  portfolio  will be
determined as of the record date for such underlying mutual fund or portfolio as
chosen by its board of trustees or board of directors,  as  applicable.  We will
furnish Participants with proper forms and proxies to enable them to instruct us
how to vote.

You may  instruct us how to vote on the  following  matters:  (a) changes to the
board of  trustees  or board of  directors,  as  applicable;  (b)  changing  the
independent  accountant;  (c)  approval  of changes to the  investment  advisory
agreement or adoption of a new investment advisory agreement;  (d) any change in
the fundamental  investment policy; and (e) any other matter requiring a vote of
the shareholders.

With  respect  to  approval  of changes to the  investment  advisory  agreement,
approval of a new  investment  advisory  agreement or any change in  fundamental
investment policy, only Participants  maintaining Account Value as of the record
date  in a  Sub-account  investing  in the  applicable  underlying  mutual  fund
portfolio  will  instruct  us  how  to  vote  on  the  matter,  pursuant  to the
requirements of Rule 18f-2 under the Investment Company Act of 1940.

     Transfers, Assignments or Pledges: Generally, your rights in an Annuity may
be  transferred,  assigned,  or pledged  for loans at any time.  However,  these
rights may be limited depending on your use of the Annuity.  These  transactions
may be subject to income  taxes and  certain  penalty  taxes (see  "Certain  Tax
Considerations").  You may  transfer,  assign or pledge  your  rights to another
person at any time,  prior to any death upon which the death benefit is payable.
You must request a transfer or provide us a copy of the assignment In Writing. A
transfer or  assignment is subject to our  acceptance.  Prior to receipt of this
notice,  we will not be deemed to know of or be obligated  under any  assignment
prior to our receipt and acceptance thereof. We assume no responsibility for the
validity or sufficiency of any assignment.

   
     Reports to You: We mail to Owners,  at their last known  address of record,
any  statements and reports  required by applicable  law or  regulation.  Owners
should  therefore  give  us  prompt  notice  of any  address  change.  We send a
confirmation  statement  to Owners  each time a  transaction  is made  affecting
Account Value, such as making additional Purchase Payments, transfers, exchanges
or  withdrawals.  Quarterly  statements  are also mailed  detailing the activity
affecting your Annuity during the calendar quarter.  You may request  additional
reports.  We  reserve  the right to  charge  up to $50 for each such  additional
report.  Instead of immediately  confirming  transactions  made pursuant to some
type of periodic transfer program (such as a dollar cost averaging program) or a
periodic Purchase Payment program,  such as a salary reduction  arrangement,  we
may confirm such  transactions  in quarterly  statements.  You should review the
information in these  statements  carefully.  All errors or corrections  must be
reported to us at our Office  immediately  to assure  proper  crediting  to your
Annuity. For transactions for which we immediately send confirmations, we assume
all  transactions  are accurate  unless you notify us  otherwise  within 30 days
after the date of the transaction.  For transactions  that are only confirmed on
the quarterly  statement,  we assume all  transactions  are accurate  unless you
notify us within 30 days of the end of the calendar quarter. We may also send to
Owners each year an annual report and a semi-annual report containing  financial
statements  for the  applicable  Sub-accounts,  as of  December  31 and June 30,
respectively.
    

     SALE OF THE ANNUITIES:  American  Skandia  Marketing,  Incorporated  ("ASM,
Inc."),   formerly  Skandia  Life  Equity  Sales  Corporation,   a  wholly-owned
subsidiary  of American  Skandia  Investment  Holding  Corporation,  acts as the
principal  underwriter of the Annuities.  ASM, Inc.'s principal business address
is One Corporate Drive, Shelton, Connecticut 06484. ASM, Inc. is a member of the
National Association of Securities Dealers, Inc. ("NASD").

     Distribution:  ASM,  Inc.  will enter  into  distribution  agreements  with
certain broker-dealers  registered under the Securities and Exchange Act of 1934
or with entities  which may otherwise  offer the Annuities  that are exempt from
such  registration.  Under such distribution  agreements such  broker-dealers or
eligible   entities  may  offer  Annuities  to  persons  or  entities  who  have
established an account with the broker-dealer or eligible entity.  Such eligible
persons also will be customers of one or more  subsidiaries  of Fleet  Financial
Group,  Inc.  The  investment  advisor  of the  underlying  mutual  fund,  Fleet
Investment  Advisors,  Inc., is a subsidiary of Fleet Financial  Group,  Inc. In
certain  cases,  the  broker-dealer  may also be an affiliate of the  investment
advisor of the underlying mutual fund. ASM, Inc. may offer Annuities directly to
potential purchasers.

     Advertising: We may advertise certain information regarding the performance
of the investment options.  Details on how we calculate performance measures for
the  Sub-accounts  are found in the  Statement of Additional  Information.  This
performance  information  may help you review the  performance of the investment
options  and  provide  a  basis  for  comparison  with  other  annuities.   This
information  may be less useful when comparing the performance of the investment
options with other savings or investment  vehicles.  Such other  investments may
not provide  some of the  benefits  of  annuities,  or may not be  designed  for
long-term investment purposes. Additionally other savings or investment vehicles
may not be treated like annuities under the Code.

The information we may advertise regarding the Fixed Allocations may include the
then  current  interest  rates  we  are  crediting  to  new  Fixed  Allocations.
Information  on  Current  Rates  will  be as  of  the  date  specified  in  such
advertisement.  Rates will be included in advertisements to the extent permitted
by law. Given that the actual rates applicable to any Fixed Allocation are as of
the  date of any such  Fixed  Allocation's  Guarantee  Period  begins,  the rate
credited  to a Fixed  Allocation  may be more or less  than  those  quoted in an
advertisement.

Performance  information on the  Sub-accounts is based on past  performance only
and is no  indication of future  performance.  Performance  of the  Sub-accounts
should  not  be  considered  a   representation   of  the  performance  of  such
Sub-accounts in the future. Performance of the Sub-accounts is not fixed. Actual
performance will depend on the type,  quality and, for some of the Sub-accounts,
the  maturities  of the  investments  held by the  underlying  mutual  funds  or
portfolios  and  upon  prevailing  market  conditions  and the  response  of the
underlying  mutual fund portfolios to such conditions.  Actual  performance will
also depend on changes in the expenses of the underlying mutual fund portfolios.
Such changes are reflected,  in turn, in the Sub-accounts  which invests in such
underlying mutual fund portfolios.  In addition,  the amount of charges assessed
against each Sub-account will affect performance.

Advertisements   we  distribute   may  also  compare  the   performance  of  our
Sub-accounts  with:  (a) certain  unmanaged  market  indices,  including but not
limited to the Dow Jones  Industrial  Average,  the  Standard & Poor's 500,  the
Shearson  Lehman Bond Index,  the Frank Russell  non-U.S.  Universal  Mean,  the
Morgan Stanley Capital  International  Index of Europe, Asia and Far East Funds,
and the Morgan  Stanley  Capital  International  World  Index;  and/or (b) other
management investment companies with investment objectives similar to the mutual
fund or portfolio  underlying the Sub-accounts being compared.  This may include
the  performance  ranking  assigned by various  publications,  including but not
limited to the Wall Street Journal,  Forbes, Fortune, Money, Barron's,  Business
Week, USA Today and  statistical  services,  including but not limited to Lipper
Analytical  Services Mutual Funds Survey,  Lipper Annuity and Closed End Survey,
the Variable Annuity Research Data Survey,  SEI,  Morningstar Mutual Fund Source
Book and the Morningstar Variable Annuity/Life Source Book.

American  Skandia Life Assurance  Corporation  may advertise its rankings and/or
ratings by independent financial ratings services. Such rankings may help you in
evaluating our ability to meet our obligations in relation to Fixed Allocations,
pay minimum death benefits,  pay annuity payments or administer Annuities.  Such
rankings  and  ratings do not reflect or relate to the  performance  of Separate
Account E.

CERTAIN TAX  CONSIDERATIONS:  The  following is a brief  summary of certain
Federal income tax laws as they are currently interpreted. No one can be certain
that the laws or  interpretations  will  remain  unchanged  or that  agencies or
courts  will  always  agree  as to how  the  tax  law or  regulations  are to be
interpreted.  This  discussion  is not  intended as tax advice.  You may wish to
consult  a  professional  tax  advisor  for tax  advice  as to  your  particular
situation.

     Our Tax Considerations: We are taxed as a life insurance company under Part
I, subchapter L, of the Code.

     Tax Considerations Relating to Your Annuity: Section 72 of the Code governs
the  taxation  of  annuities  in  general.  Taxation  of an  annuity  is largely
dependent upon: (a) whether it is used in a qualified  pension or profit sharing
plan or other retirement  arrangement  eligible for special  treatment under the
Code;  and (b) the status of the  beneficial  participant as either a natural or
non-natural  person (when the annuity is not used in a retirement  plan eligible
for special tax treatment).  Non-natural persons include  corporations,  trusts,
and partnerships,  except where these entities own an annuity for the benefit of
a natural person. Natural persons are individuals.

     Non-natural  Persons:  Any  increase  during a tax year in the  value of an
annuity if not used in a retirement  plan eligible for special  treatment  under
the Code is currently  includible  in the gross income of a  non-natural  person
that is the contractholder. There are exceptions if an annuity is held by: (a) a
structured  settlement  company;  (b) an employer  with  respect to a terminated
pension plan; (c) entities  other than  employers,  such as a trust,  holding an
annuity as an agent for a natural person;  or (d) a decedent's  estate by reason
of the death of the decedent.

     Natural   Persons:   Increases   in  the  value  of  an  annuity  when  the
contractholder  is a natural person  generally are not taxed until  distribution
occurs.  Distribution  can be in a lump sum payment or in annuity payments under
the annuity option  elected.  Certain other  transactions  may be deemed to be a
distribution.  The  provisions  of  Section  72 of  the  Code  concerning  these
distributions are summarized briefly below.

     Distributions: Distributions received before the annuity payments begin are
treated as being derived  first from "income on the contract" and  includible in
gross income. The amount of the distribution  exceeding "income on the contract"
is not  included in gross  income.  "Income on the  contract"  for an annuity is
computed by  subtracting  from the value of all "related  contracts"  (our term,
discussed below) the taxpayer's "investment in the contract": an amount equal to
total  purchase   payments  for  all  "related   contracts"  less  any  previous
distributions or portions of such  distributions  from such "related  contracts"
not includible in gross income.  "Investment in the contract" may be affected by
whether an annuity or any "related contract" was purchased as part of a tax-free
exchange of life insurance or annuity contracts under Section 1035 of the Code.

"Related  contracts" may mean all annuity  contracts or certificates  evidencing
participation  in a  group  annuity  contract  for  which  the  taxpayer  is the
beneficial  owner and  which are  issued  by the same  insurer  within  the same
calendar year,  irrespective of the named annuitants.  It is clear that "related
contracts"  include  contracts prior to when annuity  payments  begin.  However,
there may be circumstances under which "related contracts" may include contracts
recognized  as immediate  annuities  under state  insurance law or annuities for
which annuity payments have begun. In a ruling addressing the applicability of a
penalty on  distributions,  the Internal  Revenue Service treated  distributions
from a contract  recognized as an immediate  annuity  under state  insurance law
like  distributions  from a deferred  annuity.  The situation  addressed by such
ruling included the fact that: (a) the immediate  annuity was obtained  pursuant
to an exchange of  contracts;  and (b) the purchase  payments for the  exchanged
contract were  contributed more than one year prior to the first annuity payment
payable under the immediate annuity.  This ruling also may or may not imply that
annuity  payments  from a deferred  annuity on or after its annuity  date may be
treated the same as  distributions  prior to the annuity  date if such  deferred
annuity  was:  (a) obtained  pursuant to an exchange of  contracts;  and (b) the
purchase payments for the exchanged  contract were made or may be deemed to have
been made more than one year prior to the first annuity payment.

If "related  contracts"  include  immediate  annuities  or  annuities  for which
annuity  payments have begun,  then "related  contracts"  would have to be taken
into  consideration  in determining  the taxable portion of each annuity payment
(as  outlined  in  the  "Annuity  Payments"  subsection  below)  as  well  as in
determining the taxable portion of distributions from an annuity or any "related
contracts"  before  annuity  payments  have  begun.  We  cannot  guarantee  that
immediate annuities or annuities for which annuity payments have begun could not
be deemed to be "related  contracts".  You are  particularly  cautioned  to seek
advice from your own tax advisor on this matter.

     Assignments  and Pledges:  Any  assignment  or pledge of any portion of the
value of an  annuity  before  annuity  payments  have  begun  are  treated  as a
distribution  subject to taxation under the distribution  rules set forth above.
Any gain in an  annuity  subsequent  to the  assignment  or  pledge of an entire
annuity while such  assignment or pledge remains in effect is treated as "income
on the contract" in the year in which it is earned. For annuities not issued for
use as  qualified  plans  (see  "Tax  Considerations  When  Using  Annuities  in
Conjunction with Qualified  Plans"),  the cost basis of the annuity is increased
by the amount of any assignment or pledge  includible in gross income.  The cost
basis is not  affected  by any  repayment  of any loan for which the  annuity is
collateral or by payment of any interest thereon.

     Penalty on Distributions:  Subject to certain exceptions,  any distribution
is subject to a penalty  equal to 10% of the amount  includible in gross income.
This  penalty  does  not  apply  to  certain   distributions,   including:   (a)
distributions made on or after the taxpayer's age 59 1/2; (b) distributions made
on or after the death of the holder of the contract, or, where the holder of the
contract is not a natural person, the death of the annuitant;  (c) distributions
attributable to the taxpayer's  becoming disabled;  (d) distributions  which are
part of a scheduled series of substantially equal periodic payments for the life
(or life expectancy) of the taxpayer (or the joint lives of the taxpayer and the
taxpayer's  Beneficiary);  (e)  distributions  of amounts which are allocable to
"investments  in the contract" made prior to August 14, 1982; (f) payments under
an immediate annuity as defined in the Code; (g) distributions under a qualified
funding asset under Code Section 130(d);  or (h)  distributions  from an annuity
purchased by an employer on the termination of a qualified  pension plan that is
held by the employer until the employee separates from service.

Any modification,  other than by reason of death or disability, of distributions
which are part of a scheduled series of substantially equal periodic payments as
noted in (d),  above,  that occur before the  taxpayer's  age 59 1/2 or within 5
years of the first of such scheduled  payments will result in the requirement to
pay the taxes that would have been due had the payments  been treated as subject
to tax in the years received,  plus interest for the deferral period.  It is our
understanding  that the Internal  Revenue  Service does not consider a scheduled
series of  distributions  to  qualify  under  (d),  above,  if the holder of the
annuity  retains the right to modify such  distributions  at will,  even if such
right is not exercised, or, for a variable annuity, if the distributions are not
based on a  substantially  equal  number of Units,  rather than a  substantially
equal dollar amount.

The  Internal  Revenue  Service has ruled that the  exception to the 10% penalty
described  above for  "non-qualified"  immediate  annuities as defined under the
Code  may not  apply to  annuity  payments  under a  contract  recognized  as an
immediate  annuity under state insurance law obtained pursuant to an exchange of
contracts if: (a) purchase payments for the exchanged  contract were contributed
or  deemed to be  contributed  more  than one year  prior to the  first  annuity
payment payable under the immediate annuity;  and (b) the annuity payments under
the immediate annuity do not meet the requirements of any other exception to the
10%  penalty.  This  ruling may or may not imply that the  exception  to the 10%
penalty may not apply to annuity  payments paid  pursuant to a deferred  annuity
obtained  pursuant to an exchange of contract if: (a) purchase  payments for the
exchanged contract were contributed or may be deemed to be contributed more than
one year prior to the first  annuity  payment  pursuant to the deferred  annuity
contract;  or (b) the annuity  payments  pursuant to the deferred annuity do not
meet the requirements of any other exception to the 10% penalty.

     Annuity  Payments:  The taxable  portion of each payment is determined by a
formula which  establishes the ratio that  "investment in the contract" bears to
the total  value of  annuity  payments  to be made.  However,  the total  amount
excluded under this ratio is limited to the  "investment  in the contract".  The
formula differs between fixed and variable annuity  payments.  Where the annuity
payments  cease  because of the death of the person upon whose life payments are
based and, as of the date of death, the amount of annuity payments excluded from
taxable  income by the  exclusion  ratio does not exceed the  investment  in the
contract,  then the remaining portion of unrecovered  investment is allowed as a
deduction in the tax year of such death.

     Gifts:  The gift of an annuity  to other  than the  spouse of the  contract
holder (or former spouse incident to a divorce) is treated for tax purposes as a
distribution.

     Tax Free  Exchanges:  Section  1035 of the Code  permits  certain  tax-free
exchanges of a life insurance,  annuity or endowment contract for an annuity. If
an annuity is obtained by a tax-free  exchange of a life  insurance,  annuity or
endowment  contract  purchased prior to August 14, 1982, then any  distributions
other  than  as  annuity  payments  which  do  not  exceed  the  portion  of the
"investment in the contract"  (purchase  payments made into the other  contract,
less prior  distributions) prior to August 14, 1982, are not included in taxable
income.  In all other  respects,  the  general  provisions  of the Code apply to
distributions from annuities obtained as part of such an exchange.

     Transfers Between Investment Options:  Transfers between investment options
are not subject to taxation.  The Treasury Department may promulgate  guidelines
under  which a  variable  annuity  will not be  treated  as an  annuity  for tax
purposes if persons  with  ownership  rights  have  excessive  control  over the
investments  underlying  such variable  annuity.  Such guidelines may or may not
address  the number of  investment  options or the number of  transfers  between
investment  options  offered under a variable  annuity.  It is not known whether
such guidelines,  if in fact promulgated,  would have retroactive  effect. It is
also not known  what  effect,  if any,  such  guidelines  may have on  transfers
between  the  investment  options  of  the  Annuity  offered  pursuant  to  this
Prospectus.  We will take any action, including modifications to your Annuity or
the Sub-accounts, required to comply with such guidelines if promulgated.

     Generation-Skipping Transfers: Under the Code certain taxes may be due when
all or part of an annuity  is  transferred  to or a death  benefit is paid to an
individual two or more generations younger than the contract holder. These taxes
tend to apply to transfers of  significantly  large  dollar  amounts.  We may be
required to determine  whether a transaction must be treated as a direct skip as
defined in the Code and the amount of the resulting tax. If so required, we will
deduct  from your  Annuity  or from any  applicable  payment  to be treated as a
direct skip any amount we are required to pay as a result of the transaction.

     Diversification:  Section  817(h)  of the  Code  provides  that a  variable
annuity  contract,  in order to qualify as an annuity,  must have an "adequately
diversified" segregated asset account (including investments in a mutual fund by
the segregated asset account of insurance companies).  The Treasury Department's
regulations  prescribe the  diversification  requirements  for variable  annuity
contracts.  We believe the underlying  mutual fund portfolios should comply with
the terms of these regulations.

     Federal  Income Tax  Withholding:  Section  3405 of the Code  provides  for
Federal  income  tax  withholding  on the  portion  of a  distribution  which is
includible in the gross income of the recipient.  Amounts to be withheld  depend
upon the  nature  of the  distribution.  However,  under  most  circumstances  a
recipient  may elect not to have income  taxes  withheld  or have  income  taxes
withheld at a different rate by filing a completed election form with us.

Certain distributions,  including rollovers,  from most retirement plans, may be
subject to automatic 20%  withholding  for Federal  income taxes.  This will not
apply to: (a) any portion of a distribution paid as Minimum  Distributions;  (b)
direct transfers to the trustee of another  retirement  plan; (c)  distributions
from an individual  retirement  account or individual  retirement  annuity;  (d)
distributions made as substantially equal periodic payments for the life or life
expectancy  of the  participant  in the  retirement  plan  or the  life  or life
expectancy of such participant and his or her designated  beneficiary under such
plan; and (e) certain other  distributions  where  automatic 20% withholding may
not apply.

     Tax  Considerations  When Using  Annuities in  Conjunction  with  Qualified
Plans:  There are various  types of qualified  plans for which an annuity may be
suitable.  Benefits  under a qualified  plan may be subject to that plan's terms
and conditions  irrespective  of the terms and conditions of any annuity used to
fund such  benefits  ("qualified  contract").  We have  provided  below  general
descriptions  of the types of qualified  plans in conjunction  with which we may
issue an Annuity.  These  descriptions  are not  exhaustive  and are for general
informational  purposes  only.  We are not obligated to make or continue to make
new  Annuities  available  for use with all the types of  qualified  plans shown
below.

The tax rules regarding  qualified  plans are complex.  The application of these
rules depend on individual facts and circumstances. Before purchasing an Annuity
for use in funding a qualified  plan,  you should  obtain  competent tax advice,
both as to the tax treatment and suitability of such an investment.

Qualified  contracts include special provisions  changing or restricting certain
rights and benefits otherwise available to non-qualified  annuities.  You should
read your  Annuity  carefully  to review any such  changes or  limitations.  The
changes and limitations may include,  but may not be limited to, restrictions on
ownership, transferability, assignability, contributions, distributions, as well
as reductions to the minimum  allowable  purchase payment for an annuity and any
subsequent   annuity  you  may  purchase  for  use  as  a  qualified   contract.
Additionally,  various  penalty and excise taxes may apply to  contributions  or
distributions made in violation of applicable limitations.

     Individual  Retirement  Programs:  Eligible  individuals  may  maintain  an
individual retirement account or individual retirement annuity ("IRA").  Subject
to  limitations,  contributions  of certain amounts may be deductible from gross
income.  Purchasers of IRAs are to receive a special disclosure document,  which
describes  limitations  on  eligibility,   contributions,   transferability  and
distributions.  It also describes the conditions under which  distributions from
IRAs and other qualified plans may be rolled over or transferred  into an IRA on
a  tax-deferred  basis.  Eligible  employers  that meet  specified  criteria may
establish  simplified employee pensions for employees using the employees' IRAs.
These  arrangements are known as SEP-IRAs.  Employer  contributions  that may be
made to SEP-IRAs  are larger than the amounts that may be  contributed  to other
IRAs, and may be deductible to the employer.

   
     Tax  Sheltered  Annuities:  A tax sheltered  annuity  ("TSA") under Section
403(b) of the Code is a contract  into which  contributions  may be made for the
benefit of their employees by certain qualifying  employers:  public schools and
certain charitable, educational and scientific organizations. Such contributions
are not taxable to the employee until  distributions  are made from the TSA. The
Code   imposes   limits   on   contributions,   transfers   and   distributions.
Nondiscrimination requirements apply as well.
    

     Corporate Pension and Profit-sharing  Plans:  Annuities may be used to fund
employee   benefits  of  various   retirement  plans  established  by  corporate
employers.  Contributions  to such plans are not taxable to the  employee  until
distributions are made from the retirement plan. The Code imposes limitations on
contributions and  distributions.  The tax treatment of distributions is subject
to  special  provisions  of the  Code,  and also  depends  on the  design of the
specific   retirement   plan.   There  are  also  special   requirements  as  to
participation, nondiscrimination, vesting and nonforfeitability of interests.

     H.R. 10 Plans:  Annuities  may also be used to fund  benefits of retirement
plans  established  by  self-employed   individuals  for  themselves  and  their
employees.  These are commonly known as "H.R. 10 Plans" or "Keogh Plans".  These
plans are subject to most of the same types of limitations  and  requirements as
retirement plans established by corporations. However, the exact limitations and
requirements may differ from those for corporate plans.

     Tax Treatment of Distributions from Qualified Annuities:  A 10% penalty tax
applies to the  taxable  portion of a  distribution  from a  qualified  contract
unless one of the following  exceptions  apply to such  distribution:  (a) it is
part of a properly  executed  transfer to another IRA, an individual  retirement
account  or  another  eligible  qualified  plan;  (b) it  occurs on or after the
taxpayer's  age 59 1/2; (c) it is  subsequent  to the death or disability of the
taxpayer (for this purpose  disability is as defined in Section  72(m)(7) of the
Code);  (d) it is part of substantially  equal periodic  payments to be paid not
less  frequently than annually for the taxpayer's life or life expectancy or for
the  joint  lives  or  life  expectancies  of  the  taxpayer  and  a  designated
beneficiary;  (e) it is  subsequent  to a  separation  from  service  after  the
taxpayer  attains  age 55;  (f) it does  not  exceed  the  employee's  allowable
deduction in that tax year for medical care;  and (g) it is made to an alternate
payee pursuant to a qualified  domestic  relations order. The exceptions  stated
above in (e), (f) and (g) do not apply to IRAs.

   
     Section 457 Plans:  Under  Section 457 of the Code,  deferred  compensation
plans  established by  governmental  and certain other tax exempt  employers for
their employees may invest in annuity contracts.  The Code limits  contributions
and distributions,  and imposes eligibility  requirements as well. Contributions
are not taxable to employees  until  distributed  from the plan.  However,  plan
assets  remain the property of the employer and are subject to the claims of the
employer's   general   creditors   until  such  assets  are  made  available  to
participants or their beneficiaries.
    

OTHER MATTERS:  Outlined below are certain miscellaneous matters you should 
know before investing in an Annuity.

   
     Deferral of Transactions:  We may defer any distribution or transfer from a
Fixed Allocation or an annuity payout for a period not to exceed the lesser of 6
months or the period  permitted by law. If we defer a  distribution  or transfer
from any Fixed  Allocation  or any annuity  payout for more than thirty days, or
less where  required by law, we pay interest at the minimum rate required by law
but not less than 3%, or at least 4% if required by your  contract,  per year on
the amount deferred.  We may defer payment of proceeds of any distribution  from
any  Sub-account or any transfer from a Sub-account for a period not to exceed 7
calendar days from the date the  transaction  is effected.  Any deferral  period
begins on the date such  distribution  or  transfer  would  otherwise  have been
transacted (see "Pricing of Transfers and Distributions").
    

All procedures,  including  payment,  based on the valuation of the Sub-accounts
may be postponed  during the period:  (1) the New York Stock  Exchange is closed
(other than  customary  holidays or  weekends)  or trading on the New York Stock
Exchange  is   restricted  as  determined  by  the  SEC;  (2)  the  SEC  permits
postponement  and so orders;  or (3) the SEC determines that an emergency exists
making valuation or disposal of securities not reasonably practical.

   
     Resolving Material Conflicts:  Underlying mutual funds or portfolios may be
available  to  registered  separate  accounts  offering  either or both life and
annuity  contracts of insurance  companies not  affiliated  with us. We also may
offer life insurance  and/or annuity  contracts  that offer  different  variable
investment  options from those offered  under this Annuity,  but which invest in
the same underlying mutual funds or portfolios.  It is possible that differences
might arise  between our  Separate  Account E and one or more  accounts of other
insurance  companies which participate in a portfolio.  It is also possible that
differences  might arise  between a  Sub-account  offered under this Annuity and
variable  investment  options offered under different life insurance policies or
annuities  we offer,  even though such  different  variable  investment  options
invest in the same  underlying  mutual fund or portfolio.  In some cases,  it is
possible that the differences could be considered "material  conflicts".  Such a
"material  conflict"  could  also arise due to changes in the law (such as state
insurance law or Federal tax law) which affect either these  different  life and
annuity separate accounts or differing life insurance policies and annuities. It
could also arise by reason of differences in voting instructions of persons with
voting rights under our policies and/or  annuities and those of other companies,
persons  with voting  rights  under  annuities  and those with rights under life
policies,  or persons  with  voting  rights  under one of our life  policies  or
annuities  with those under other life policies or annuities we offer.  It could
also arise for other  reasons.  We will monitor events so we can identify how to
respond to such conflicts. If such a conflict occurs, we will take the necessary
action  to  protect  persons  with  voting  rights  under our life  policies  or
annuities  vis-a-vis those with rights under life policies or annuities  offered
by other insurance  companies.  We will also take the necessary  action to treat
equitably  persons  with voting  rights  under this Annuity and any persons with
voting rights under any other life policy or annuity we offer.
    

     Modification:  We  reserve  the right to any or all of the  following:  (a)
combine a Sub-account with other Sub-accounts; (b) combine Separate Account E or
a portion  thereof  with  other  "unitized"  separate  accounts;  (c)  terminate
offering certain  Guarantee Periods for new or renewing Fixed  Allocations;  (d)
combine  Separate Account D with other  "non-unitized"  separate  accounts;  (e)
deregister Separate Account E under the 1940 Act; (f) operate Separate Account E
as a  management  investment  company  under the 1940 Act or in any  other  form
permitted by law; (g) make changes  required by any change in the Securities Act
of 1933,  the  Exchange  Act of 1934 or the 1940 Act;  (h) make changes that are
necessary  to maintain the tax status of your  Annuity  under the Code;  and (i)
make changes  required by any change in other  Federal or state laws relating to
retirement annuities or annuity contracts.

Also, from time to time, we may make additional  Sub-accounts  available to you.
These  Sub-accounts  will invest in  underlying  mutual funds or  portfolios  of
underlying mutual funds we believe to be suitable for the Annuity. We may or may
not make a new  Sub-account  available to invest in any new  portfolio of one of
the current underlying mutual funds should such a portfolio be made available to
Separate Account E.

We may eliminate  Sub-accounts,  combine two or more  Sub-accounts or substitute
one or more new  underlying  mutual funds or  portfolios  for the one in which a
Sub-account  is  invested.  Substitutions  may be  necessary  if we  believe  an
underlying  mutual fund or portfolio no longer suits the purpose of the Annuity.
This may  happen  due to a change  in laws or  regulations,  or a change  in the
investment objectives or restrictions of an underlying mutual fund or portfolio,
or because the  underlying  mutual fund or portfolio is no longer  available for
investment,  or for some other reason.  We would obtain prior  approval from the
insurance  department  of our state of domicile,  if so required by law,  before
making such a  substitution,  deletion or  addition.  We also would obtain prior
approval  from  the SEC so long as  required  by  law,  and any  other  required
approvals before making such a substitution, deletion or addition.

We  reserve  the  right to  transfer  assets of  Separate  Account  E,  which we
determine  to be  associated  with the class of  contracts to which your Annuity
belongs,  to another "unitized"  separate account.  We also reserve the right to
transfer  assets of Separate  Account D which we determine to be associated with
the class of contracts to which your annuity belongs, to another  "non-unitized"
separate  account.  We notify you (and/or any payee during the payout  phase) of
any  modification  to your  Annuity.  We may endorse your Annuity to reflect the
change.

     Misstatement  of Age or Sex:  If there has been a  misstatement  of the age
and/or sex of any person upon whose life annuity  payments or the minimum  death
benefit are based,  we make  adjustments to conform to the facts.  As to annuity
payments:  (a) any  underpayments  by us will be  remedied  on the next  payment
following  correction;  and (b) any  overpayments  by us will be charged against
future amounts payable by us under your Annuity.

     Ending the Offer: We may limit or discontinue offering Annuities.  Existing
Annuities will not be affected by any such action.

     Indemnification:  Insofar as indemnification  for liabilities arising under
the  Securities  Act of 1933 may be permitted to directors,  officers or persons
controlling the registrant pursuant to the foregoing provisions,  the registrant
has been informed that in the opinion of the Securities and Exchange  Commission
such  indemnification  is against  public  policy as expressed in the Act and is
therefore unenforceable.

     Legal Proceedings:  As of the date of this Prospectus,  neither we nor ASM,
Inc. were involved in any litigation outside of the ordinary course of business,
and know of no material claims.
                                                               
   
     THE  COMPANY:  American  Skandia  Life  Assurance  Corporation  is a  stock
insurance company domiciled in Connecticut with licenses in all 50 states. It is
a wholly owned subsidiary of American Skandia  Investment  Holding  Corporation,
whose  indirect  parent is Skandia  Insurance  Company  Ltd.  Skandia  Insurance
Company  Ltd.  is part of a  group  of  companies  whose  predecessor  commenced
operations  in  1855.  Two  of  our  affiliates,   American  Skandia  Marketing,
Incorporated,   and  American  Skandia   Information   Services  and  Technology
Corporation,  may undertake certain administrative  functions on our behalf. Our
affiliate, American Skandia Investment Services, Incorporated, currently acts as
the  investment  manager to the American  Skandia  Trust.  We  currently  engage
Skandia  Investment  Management,  Inc., an affiliated  whose indirect  parent is
Skandia Insurance  Company Ltd., as investment  manager for our general account.
We are under no  obligation  to  engage or  continue  to engage  any  investment
manager.

     During 1995,  Skandia Vida,  S.A. de C.V. was formed by the ultimate parent
Skandia Insurance Company Ltd. The Company owns 99.9% ownership in Skandia Vida,
S.A. de C.V. which is a life insurance company domiciled in Mexico. This Mexican
life  insurer  is a start up company  with  expectations  of  selling  long term
savings product within Mexico.  Total shareholders' equity of Skandia Vida, S.A.
de C.V. is $881,648 at December 31, 1995.

     Lines of  Business:  The  Company is in the  business  of  issuing  annuity
policies,  and has been so since its  business  inception  in 1988.  The Company
currently offers the following annuity products:  a) certain deferred  annuities
that are  registered  with the  Securities  and Exchange  Commission,  including
variable annuities and fixed interest rate annuities that include a market value
adjustment  feature;  b) certain  other fixed  deferred  annuities  that are not
registered  with the  Securities  and  Exchange  Commission;  and c)  fixed  and
adjustable  immediate  annuities.  We may, in the future, offer other annuities,
life insurance and other forms of insurance.

     Selected   Financial  Data:  The  following  selected  financial  data  are
qualified by reference to, and should be read in conjunction with, the financial
statements,  including related notes thereto,  and "Management's  Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this  Prospectus.  The  selected  financial  data as of and for each of the five
years ended December 31, 1995,  1994,  1993, 1992 and 1991 has not been audited.
The selected financial data has been derived from the full financial  statements
for the years ended  December 31,  1995,  1994,  1993,  1992 and 1991 which were
presented in accordance with generally accepted accounting  principles and which
were  audited by  Deloitte & Touche  LLP,  independent  auditors,  whose  report
thereon is included herein.

<TABLE>
<CAPTION>
Income Statement Data:


                                                        1995             1994             1993           1992          1991
                                                        ----             -----            ----           ----          ----
Revenues:
<S>                                                <C>            <C>              <C>             <C>             <C>       
Net investment income                              $ 1,600,674    $  1,300,217     $    692,758    $   892,053     $  723,253
Annuity premium income                                       0          70,000          101,643      1,304,629      2,068,452
Annuity charges and fees*                           38,837,358      24,779,785       11,752,984      4,846,134      1,335,079
Net realized capital gains (losses)                     36,774          (1,942)         330,024        195,848          4,278
Fee income                                           6,205,719       2,111,801          938,336        125,179              0
Other income                                            64,882          24,550            1,269         15,119         45,010
                                                   -----------    ------------      -----------     ----------     ----------
Total revenues                                     $46,745,407    $ 28,284,411      $13,817,014     $7,378,962     $4,176,072
                                                   ===========     ===========      ===========     ==========     ==========

Benefits and Expenses:
Return credited to contractowners                   10,612,858        (516,730)         252,132        560,243        235,470
Cost of minimum death benefit reinsurance            2,056,606               0                0              0              0
Annuity benefits                                       555,421         369,652          383,515        276,997        107,536
Increase/(decrease) in annuity policy reserves      (6,778,756)      5,766,003        1,208,454      1,331,278      2,045,722
Underwriting, acquisition and
   other insurance expenses                         35,970,524      18,942,720        9,547,951     11,338,765      7,294,400
Interest expense                                     6,499,414       3,615,845          187,156              0              0
                                                 -------------     -----------      -----------    -----------     ----------  
Total benefits and expenses                        $48,916,067    $ 28,177,490      $11,579,208    $13,507,283     $9,683,128
                                                 =============     ===========      ===========    ===========     ==========

Income tax                                       $     397,360    $   247,429     $    182,965    $          0     $        0
                                                 =============    ============     ===========    ============     ==========

Net income (loss)                                $  (2,568,020)   $    140,508)    $  2,054,841   $ (6,128,321)   ($5,507,056
                                                 ==============   =============    ============   ============    ===========




Balance Sheet Data:
Total Assets                                    $5,021,012,890  $2,864,416,329   $1,558,548,537   $552,345,206   $239,435,675
                                                ==============  ==============   ==============   ============   ============

Surplus Notes                                     $103,000,000    $ 69,000,000   $   20,000,000   $          0   $          0
                                                  ============     ===========   ==============   ============   ============

Shareholder's Equity                               $59,713,00     $ 52,205,524   $   52,387,687   $ 46,332,846   $ 14,292,772
                                                   ==========     ============   ==============   ============   ============

</TABLE>

*On annuity sales of $1,628,486,000, $1,372,874,000, $890,640,000, $287,596,000,
and $141,017,000  during the years ended December 31, 1995, 1994, 1993, 1992 and
1991,   respectively,    with   contractowner   assets   under   management   of
$4,704,044,001,  $2,661,161,000,  $1,437,554,000, $495,176,000, and $217,425,000
as of December 31, 1995, 1994, 1993, 1992, and 1991, respectively.

The  above  selected  financial  data  should  be read in  conjunction  with the
financial statements and the notes thereto.

    Management's  Discussion  and  Analysis  of  Financial  Condition  and
Results of Operations

     Results of Operation:  The Company's  long term business plan was developed
reflecting  the current sales and marketing  approach.  Annuity sales  increased
19%, 54% and 210% in 1995, 1994 and 1993, respectively. The Company continues to
show  significant  growth in sales volume and increased  market share within the
variable annuity industry. Total assets grew 75%, 84% and 182% in 1995, 1994 and
1993,  respectively.  These  increases  were a direct result of the  substantial
sales volume increasing separate account assets and deferred  acquisition costs.
Liabilities grew 76%, 87%, and 198% in 1995, 1994 and 1993,  respectively,  as a
result of the reserves  required for the increased  sales activity and borrowing
during 1995,  1994 and 1993.  The  borrowing  is needed to fund the  acquisition
costs of the Company's variable annuity business.

     The Company experienced a net loss after tax in 1995 and 1994, which was in
excess of plan. The 1995 result was related to higher than  anticipated  expense
levels  and  additional  reserving  requirements  on our market  value  adjusted
annuities.  The increase in expenses was primarily attributable to improving our
service infrastructure and marketing related costs.

     The 1994 loss is a result of  additional  reserving of  approximately  $4.6
million to cover the minimum  death benefit  exposure in the  Company's  annuity
contracts  along with higher than expected  general  expenses  relative to sales
volume.  The  additional  reserve may be required from time to time,  within the
variable  annuity  market place,  and is a result of volatility in the financial
markets  as it relates  to the  underlying  separate  account  investments.  The
Company achieved profits in 1993 of $2 million which was expected.
         
     Increasing   volume  of  annuity  sales  results  in  higher  assets  under
management. The fees realized on assets under management has resulted in annuity
charges  and  fees to  increase  57%,  111% and  143% in  1995,  1994 and  1993,
respectively.

     Net investment income increased 23% and 88% in 1995 and 1994, respectively,
and decreased 22% in 1993.  The increase in 1995 is a result of a higher average
level of Company  bonds and  short-term  investments.  The increase in 1994 is a
result of an increase in the Company's bonds and short-term  investments,  which
were  $33.6   million  and  $29.1   million  at  December  31,  1994  and  1993,
respectively.  The  decrease  in  1993 is a  result  of the  need  to  liquidate
investments to support the cash needs required to fund the acquisition  costs on
the variable annuity business.

     Fee  income  has  increased  194%,  125% and 650% in 1995,  1994 and  1993,
respectively, as a result of income from transfer agency type activities.
              
     Annuity  benefits  represent  payments on annuity  contracts with mortality
risks,   this  being  the  immediate   annuity  with  life   contingencies   and
supplementary contracts with life contingencies.

     Increase in annuity policy  reserves  represent  change in reserves for the
immediate  annuity with life  contingencies,  supplementary  contracts with life
contingencies and minimum death benefit. During 1995 the Company entered into an
agreement to reinsure the guaranteed  minimum death benefit  exposure on most of
the variable annuity contracts. The costs associated with reinsuring the minimum
death  benefit  reserve  approximates  the change in the minimum  death  benefit
reserve during 1995,  thereby  having no significant  effect on the statement of
operations.  The significant  increase in 1994 reflects the required increase in
the minimum death benefit reserve on variable annuity  contracts.  This increase
covers the escalating death benefit in the product which was further enhanced as
a result of poor performance of the underlying  mutual funds within the variable
annuity contract.

     Return credited to contractowners  represents  revenues on the variable and
market value  adjusted  annuities  offset by the benefit  payments and change in
reserves  required on this business.  Also included are the benefit payments and
change in reserves on immediate annuity contracts without significant  mortality
risks.  In 1995, the Company earned a lower than  anticipated  separate  account
investment  return on the  market  value  adjusted  contracts  in support of the
benefits  and  required  reserves.  In  addition,  the 1995  result  includes an
increase in the required reserves associated with this product.

     The result for 1994 was better than  anticipated  due to  separate  account
investment return on the market value adjusted  contracts being in excess of the
benefits and required reserves.
                                              
     Underwriting,  acquisition and other insurance expenses for 1995 is made up
of $62.8 million of commissions and $42.2 million of general  expenses offset by
the net  capitalization  of deferred  acquisition  costs totaling $69.2 million.
This compares to the same period last year of $46.2 million of  commissions  and
$26.2 million of general expenses offset by the net  capitalization  of deferred
acquisition costs totaling $53.7 million.

     Underwriting, acquisition and other insurance expenses in 1993 were made up
of $36.7 million of commissions and $19.3 million of general  expenses offset by
the net capitalization of deferred acquisition costs totaling $46.3 million.

     Interest expense  increased $2.9 million and $3.4 million in 1995 and 1994,
respectively,  as a result  of  Surplus  Notes  totaling  $103  million  and $69
million, at 1995 and 1994, respectively.

     Liquidity and Capital Resources: The liquidity requirement of ASLAC was met
by cash from insurance operations, investment activities and borrowings from its
parent.

     As previously  stated,  the Company had significant growth during 1995. The
sales  volume of $1.628  billion  was  primarily  (approximately  80%)  variable
annuities which carry a contingent  deferred sales charge.  This type of product
causes a temporary  cash  strain in that 100% of the  proceeds  are  invested in
separate accounts supporting the product leaving a cash (but not capital) strain
caused by the acquisition  cost for the new business.  This cash strain required
the Company to look  beyond the  insurance  operations  and  investments  of the
Company.  During 1995,  the Company  borrowed an additional $34 million from its
parent in the form of  Surplus  Notes and  extended  the  reinsurance  agreement
(which  was  initiated  in 1993  and  1994)  along  with  entering  into a third
reinsurance  agreement with a large reinsurer in support of its cash needs.  The
reinsurance agreements are modified coinsurance arrangements where the reinsurer
shares in the experience of a specific book of business.  The income and expense
items presented above are net of reinsurance.

     The  Company  is  reviewing   various  options  to  fund  the  cash  strain
anticipated from the acquisition costs on the coming years' sales volume.

     The tremendous  growth of this young  organization  has depended on capital
support from its parent.

     As of December 31, 1995 and December  31,  1994,  shareholder's  equity was
$59,713,000 and $52,205,524  respectively,  which includes the carrying value of
the  state  insurance  licenses  in the  amount  of  $4,862,500  and  $5,012,500
respectively.

     ASLAC  has long  term  surplus  notes  with  its  parent  and a short  term
borrowing with an affiliate. No dividends have been paid to its parent company.

                
     Segment  Information:  As of the date of this  Prospectus,  we offered only
variable and fixed deferred annuities and immediate annuities.

     Reinsurance:  The Company  cedes  reinsurance  under  modified  coinsurance
arrangements.  The  reinsurance  arrangements  provide  additional  capacity for
growth in supporting  the cash flow strain from the Company's  variable  annuity
business. The reinsurance is effected under quota share contracts.

     Effective  January 1, 1995, the Company  reinsured certain mortality risks.
These risks result from the  guaranteed  minimum  death  benefit  feature in the
variable annuity products.

     The effect of the reinsurance agreements on the Company's operations was to
reduce  annuity  charges  and fee  income,  death  benefit  expense,  and policy
reserves.

     Such ceded reinsurance does not relieve the Company from its obligations to
policyholders.  The Company remains liable to its  policyholders for the portion
reinsured to the extent that any reinsurer does not meet the obligations assumed
under the reinsurance agreement.

     Surplus  Notes:  During  1995,  the Company  received  $34 million from its
parent in exchange for three surplus  notes.  The amounts were $10 million,  $15
million  and  $9  million,   at  interest  rates  of  7.52%,  7.49%  and  7.47%,
respectively.  Interest  expense  for these notes was $83,281 for the year ended
December 31, 1995.

     During 1994,  the Company  received $49 million from its parent in exchange
for four surplus notes,  two in the amount of $10 million,  one in the amount of
$15 million and one in the amount of $14  million,  at interest  rates of 7.28%,
7.90%,  9.13% and 9.78%,  respectively.  Interest  expense  for these  notes was
$4,319,612  and  $1,618,504  for the years  ended  December  31,  1995 and 1994,
respectively.

     During 1993,  the Company  received $20 million from its parent in exchange
for a  surplus  note in the  amount of $20  million  at a 6.84%  interest  rate.
Interest  expense for this note was  $1,387,000,  $1,387,000 and $11,400 for the
years ended December 31, 1995, 1994 and 1993, respectively.

     Payment of interest and  repayment of  principal  for these notes  requires
approval by the Commissioner of the State of Connecticut.  In 1995, approval was
granted for the payment of surplus note interest with the stipulation that it be
funded through a capital contribution from the Parent.

     Reserves: We are obligated to carry on our statutory books, as liabilities,
actuarial  reserves  to meet our  obligations  on  outstanding  annuity  or life
insurance contracts. This is required by the life insurance laws and regulations
in the  jurisdictions  in which  we do  business.  Such  reserves  are  based on
mortality  and/or  morbidity  tables in  general  use in the United  States.  In
general,  reserves are computed amounts that, with additions from premiums to be
received,  and with  interest on such  reserves  compounded  at certain  assumed
rates,  are expected to be  sufficient to meet our policy  obligations  at their
maturities if death occurs in accordance with the mortality tables employed.  In
the accompanying  Financial Statements these reserves for policy obligations are
determined in accordance with generally accepted  accounting  principles and are
included in the  liabilities  of our separate  accounts and the general  account
liabilities for future benefits of annuity or life insurance contracts we issue.

     Competition: We are engaged in a business that is highly competitive due to
the large  number of insurance  companies  and other  entities  competing in the
marketing and sale of insurance  products.  There are approximately  2300 stock,
mutual and other types of insurers in the life insurance  business in the United
States.

     Employees:  As of December 31, 1995, we had 198 direct salaried  employees.
An affiliate,  American Skandia Information Services and Technology Corporation,
which  provides  services  almost  exclusively  to us,  had 67  direct  salaried
employees.

     Regulation: We are organized as a Connecticut stock life insurance company,
and are  subject  to  Connecticut  law  governing  insurance  companies.  We are
regulated and supervised by the Connecticut  Commissioner of Insurance. By March
1 of every  year,  we must  prepare  and  file an  annual  statement,  in a form
prescribed by the Connecticut Insurance Department,  which covers our operations
for the  preceding  calendar  year,  and must prepare and file our  statement of
financial  condition as of December 31 of such year. The Commissioner and his or
her  agents  have the  right at all times to  review  or  examine  our books and
assets.  A full  examination  of our operations  will be conducted  periodically
according to the rules and  practices of the National  Association  of Insurance
Commissioners ("NAIC"). We are subject to the insurance laws and various federal
and state  securities laws and regulations and to regulatory  agencies,  such as
the Securities and Exchange  Commission (the "SEC") and the Connecticut  Banking
Department, which administer those laws and regulations.

We can be assessed up to prescribed  limits for policyholder  losses incurred by
insolvent  insurers  under the insurance  guaranty fund laws of most states.  We
cannot predict or estimate the amount any such future assessments we may have to
pay. However,  the insurance  guaranty laws of most states provide for deferring
payment or  exempting  a company  from  paying  such an  assessment  if it would
threaten such insurer's financial strength.

Several states,  including  Connecticut,  regulate insurers and their affiliates
under insurance holding company laws and regulations. This applies to us and our
affiliates.  Under  such  laws,  inter-company  transactions,  such as  dividend
payments to parent  companies and  transfers of assets,  may be subject to prior
notice and approval, depending on factors such as the size of the transaction in
relation to the financial position of the companies.

Currently,  the federal  government  does not directly  regulate the business of
insurance.  However, federal legislative,  regulatory and judicial decisions and
initiatives  often have  significant  effects on our business.  Types of changes
that are most likely to affect our business include changes to: (a) the taxation
of life insurance  companies;  (b) the tax treatment of insurance products;  (c)
the  securities  laws,  particularly  as they  relate to  insurance  and annuity
products;  (d) the "business of insurance" exemption from many of the provisions
of the anti-trust  laws; (e) the barriers  preventing most banks from selling or
underwriting  insurance:  and (f) any initiatives  directed toward improving the
solvency  of  insurance  companies.   We  would  also  be  affected  by  federal
initiatives  that have impact on the ownership of or investment in United States
companies by foreign companies or investors.

     Executive Officers and Directors:

     Our executive officers,  directors and certain significant employees, their
ages,  positions  with us and principal  occupations  are indicated  below.  The
immediately  preceding  work  experience  is provided for officers that have not
been  employed by us or an  affiliate  for at least five years as of the date of
this Prospectus.



<PAGE>

<TABLE>
<CAPTION>

<S> <C>                                                       <C>                           <C>    
Name/                                                         Position with American Skandia
Age                                                            Life Assurance Corporation                       Principal Occupation

Alan Blank                                                    Employee                                           Vice President and,
47                                                                                                           National Sales Manager:
                                                                                                                    American Skandia
                                                                                                             Marketing, Incorporated

    Mr. Blank joined us in 1994.  He previously held the position of Vice-Chairman at Liberty Securities.

<FN>
Gordon C. Boronow*                                            President                                                President and
43                                                            and Chief                                     Chief Operating Officer:
                                                              Operating Officer,                               American Skandia Life
                                                              Director (since July, 1991)                      Assurance Corporation
</FN>

Nancy F. Brunetti                                             Senior Vice President,            Senior Vice President, Business and
34                                                            Business and Application                      Application Development:
                                                              Development                                      American Skandia Life
                                                              Director (since February, 1996)                  Assurance Corporation

     Ms. Brunetti joined us in 1992.  She previously held the position of Senior Business Analyst at Monarch Life Insurance Company.

Malcolm M. Campbell                                           Director (since April, 1991)                   Director of Operations,
40                                                                                                           Assurance and Financial
                                                                                                                  Services Division:
                                                                                                      Skandia Insurance Company Ltd.
<FN>

Jan R. Carendi*                                               Chief Executive                           Executive Vice President and
51                                                            Officer and                      Member of Corporate Management Group:
                                                              Chairman of the                         Skandia Insurance Company Ltd.
                                                              Board of Directors
                                                              Director (since May, 1988)
</FN>

Lincoln R. Collins                                            Senior Vice President,                         Senior Vice President,
                                                              Product Management                                 Product Management:
35                                                            Director (since February, 1996)                  American Skandia Life
                                                                                                               Assurance Corporation

Henrik Danckwardt                                             Director (since July, 1991)                        Director of Finance
42                                                                                                               and Administration,
                                                                                                             Assurance and Financial
                                                                                                                  Services Division:
                                                                                                      Skandia Insurance Company Ltd.

Wade A. Dokken                                                Director (since July, 1991)                                  Director:
36                                                            and Employee                                     American Skandia Life
                                                                                                              Assurance Corporation;
                                                                                                  President, Chief Operating Officer
                                                                                                        and Chief Marketing Officer:
                                                                                            American Skandia Marketing, Incorporated

N. David Kuperstock                                           Vice President,                                        Vice President,
44                                                            Product Development                               Product Development:
                                                                                                               American Skandia Life
                                                                                                               Assurance Corporation

Thomas M. Mazzaferro                                          Executive Vice President and              Executive Vice President and
43                                                            Chief Financial Officer,                      Chief Financial Officer:
                                                              Director (since October, 1994)                   American Skandia Life
                                                                                                               Assurance Corporation

Dianne B. Michael                                             Senior Vice President,                          Senior Vice President,
41                                                            Customer Service                                     Customer Service:
                                                              Director (since February, 1996)                  American Skandia Life
                                                                                                               Assurance Corporation

     Ms. Michael joined us in 1995.  She previously held the position of Vice President with J. P. Morgan Investment Management Inc.

Gunnar Moberg                                                 Director (since November, 1994)        Director - Marketing and Sales,
41                                                                                                          Assurances and Financial
                                                                                                                  Services Division:
                                                                                                      Skandia Insurance Company Ltd.

M. Patricia Paez                                              Assistant Vice President                      Assistant Vice President
35                                                            and Corporate Secretary                       and Corporate Secretary:
                                                                                                              American Skandia Life
                                                                                                              Assurance Corporation

Don Thomas Peck                                               Employee                                               Vice President,
52                                                                                                           National Sales Manager:
                                                                                                                   American Skandia
                                                                                                             Marketing, Incorporated

   Mr. Peck joined us in 1995.  He previously held the position of Regional Vice President with MFS Financial Services Inc.

Rodney D. Runestad                                            Vice President and                                  Vice President and
46                                                            Valuation Actuary                                   Valuation Actuary:
                                                                                                               American Skandia Life
                                                                                                               Assurance Corporation

Hayward Sawyer                                                Employee                                            Vice President and
51                                                                                                           National Sales Manager:
                                                                                                                    American Skandia
                                                                                                             Marketing, Incorporated

    Mr. Sawyer joined us in 1994.  He previously held the position of Regional Vice President with AIM Distributors, Inc.

Todd L. Slade                                                 Vice President,                                        Vice President,
38                                                            Applications Development                     Applications Development:
                                                                                                               American Skandia Life
                                                                                                               Assurance Corporation

Anders O. Soderstrom                                          Director (since October, 1994)                          President and
36                                                                                                          Chief Operating Officer:
                                                                                                        American Skandia Information
                                                                                                 Services and Technology Corporation

Amanda C. Sutyak                                              Executive Vice President                      Executive Vice President
38                                                            and Deputy Chief                                      and Deputy Chief
                                                              Operating Officer,                                  Operating Officer:
                                                              Director (since July, 1991)                      American Skandia Life
                                                                                                               Assurance Corporation

C. Ake Svensson                                               Treasurer,                                   Vice President, Treasurer
45                                                            Director (since December, 1994)              and Corporate Controller:
                                                                                                         American Skandia Investment
                                                                                                                 Holding Corporation

    Mr. Svensson joined us in 1994.  He previously held the position of Senior Vice President with Nordenbanken.

Bayard F. Tracy                                               Senior Vice President,                          Senior Vice President,
48                                                            Institutional Sales,                Institutional Sales and Marketing:
                                                              Director (since October, 1994)                   American Skandia Life
                                                                                                               Assurance Corporation
</TABLE> 
Executive Compensation

     Summary   Compensation  Table:  The  summary  table  below  summarizes  the
compensation  payable  to our Chief  Executive  Officer  and to the most  highly
compensated of our executive  officers whose  compensation  exceeded $100,000 in
the fiscal year immediately preceding the date of this Prospectus.
<TABLE>
<CAPTION>
               <S>                               <C>             <C>             <C>           <C>   
               Name and Principal                                 Annual         Annual        Other Annual
               Position                          Year             Salary          Bonus        Compensation

               Jan R. Carendi                    1995            $200,315
               Chief Executive Officer           1994             170,569
                                                 1993             214,121

               Gordon C. Boronow                 1995            $157,620
               President & Chief                 1994             129,121
                 Operating Officer               1993             123,788

               Lincoln R. Collins                1995            $156,550
               Senior Vice President             1994              92,700
                 Product Management              1993              72,100

               N. David Kuperstock               1995            $133,120
               Vice President, Product           1994             103,000
                 Development                     1993              88,864

               Bayard F. Tracy                   1995            $168,052
               Senior Vice President             1994             127,050
                 Institutional Sales             1993             123,363
</TABLE>
    Long-Term  Incentive  Plans - Awards in the Last Fiscal Year: The following
table provides  information  regarding our long-term  incentive plan.  Units are
awarded to executive officers and other personnel. The table shows units awarded
to our Chief Executive Officer and the most highly  compensated of our executive
officers whose  compensation  exceeded  $100,000 in the fiscal year  immediately
preceding  the date of this  Prospectus.  This  program  is  designed  to induce
participants  to remain with the company  over long periods of time and to tie a
portion of their  compensation  to the fortunes of the company.  Currently,  the
program  consists of multiple  plans.  A new plan may be  instituted  each year.
Participants  are  awarded  units  at  the  beginning  of  a  plan.   Generally,
participants  must remain  employed by the company or its affiliates at the time
such units are payable in order to receive any  payments  under the plan.  There
are certain exceptions, such as in cases of retirement or death.

     Changes in the value of units reflect  changes in the  "embedded  value" of
the company.  "Embedded  value" is the net asset value of the company (valued at
market value and not including the present  value of future  profits),  plus the
present  value of the  anticipated  future  profits  (valued  pursuant  to state
insurance  law) on its  existing  contracts.  Units  will not have any value for
participants  if  the  embedded  value  does  not  increase  by  certain  target
percentages  during the first four years of a plan. The target  percentages  may
differ between each plan. Any amounts available under a plan are paid out in the
fifth through eighth years of a plan.  Payments will be postponed if the payment
would exceed 20% of any profit (as determined  under state insurance law) earned
by the company in the prior fiscal year or 30% of the individual's  current year
salary.  The amount to be received by a  participant  at the time any payment is
due will be the then  current  number of units  payable  multiplied  by the then
current value of such units.



<PAGE>

<TABLE>
<CAPTION>
                                                                             ---------Estimated Future Payouts---------
       Name                Number of Units    Period Until Payout        Threshold          Target          Maximum
                                   (#)                                      ($)              ($)               ($)
               <S>                        <C>         <C>                    <C>            <C>          <C> 
                                            Number    Period until                   Estimated Future Payouts
               Name                       of Units        Payout             Threshold      Target       Maximum

               Jan R. Carendi              120,000        Various                            $648,060

               Gordon C. Boronow           110,000        Various                            $561,558

               Lincoln R. Collins           36,750        Various                            $198,807

               N. David Kuperstock          32,000        Various                            $200,968

               Bayard E. Tracy              52,500        Various                            $286,263
</TABLE>
    Compensation  of Directors:  The following  directors  were  compensated as
shown below in 1995:

Malcolm M. Campbell   $4,000                    Gunnar Moberg    $2,500      
Henrik Danckwardt     $4,000              

     Compensation   Committee   Interlocks   and  Insider   Participation:   The
compensation  committee  of our  board of  directors  as of  December  31,  1995
consisted of Malcolm M. Campbell and Henrik Danckwardt.
    

CONTENTS OF THE STATEMENT OF ADDITIONAL  INFORMATION:  The  following  are the 
contents of the  Statement of Additional Information:

         (1)      General   Information   Regarding   American  Skandia  Life  
                  Assurance Corporation

         (2)      Principal Underwriter

         (3)      Calculation of Performance Data

         (4)      Unit Price Determinations

         (5)      Calculating the Market Value Adjustment

         (6)      Independent Auditors

         (7)      Legal Experts

         (8)      Financial Statements for Separate Account E

FINANCIAL STATEMENTSFINANCIAL  STATEMENTS: The financial statements which follow
are those of American  Skandia Life  Assurance  Corporation  for the years ended
December  31,  1995,  1994 and  1993,  respectively.  Financial  statements  for
Separate Account E are found in the Statement of Additional Information.

<PAGE>
                                   APPENDIXES


     APPENDIX  A  FINANCIAL  STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE
                  CORPORATION




     APPENDIX B   SHORT  DESCRIPTIONS  OF THE UNDERLYING  MUTUAL FUNDS'
                  PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES


<PAGE>


- --------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------


                                   APPENDIX A

       FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION





INDEPENDENT AUDITORS' REPORT




To the Board of Directors and Shareholder of
     American Skandia Life Assurance Corporation
Shelton, Connecticut


We have audited the accompanying  consolidated statements of financial condition
of American  Skandia Life Assurance  Corporation (a  wholly-owned  subsidiary of
Skandia  Insurance  Company  Ltd.) as of  December  31,  1995 and 1994,  and the
related consolidated  statements of operations,  shareholder's  equity, and cash
flows for each of the three years in the period ended  December 31, 1995.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the consolidated financial position of American Skandia Life
Assurance  Corporation  as of December 31, 1995 and 1994, and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1995 in conformity with generally accepted accounting principles.





DELOITTE & TOUCHE LLP
New York, New York
March 14, 1996
 

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION

          (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)


                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>

                                                                                          AS OF DECEMBER 31,
                                                                                   1995                       1994
                                                                           ---------------------      ----------------------

ASSETS

Investments:
<S>                                                                      <C>                        <C>
   Fixed maturities - at amortized cost                                  $           10,112,705     $             9,621,865
   Investment in mutual funds - at market value                                       1,728,875                     840,637
   Short-term investments - at amortized cost                                        15,700,000                  24,000,000
                                                                           ---------------------      ----------------------

Total investments                                                                    27,541,580                  34,462,502

Cash and cash equivalents                                                            13,146,384                  23,909,463
Accrued investment income                                                               194,074                     173,654
Fixed assets                                                                             82,434                           0
Deferred acquisition costs                                                          270,222,383                 174,009,609
Reinsurance receivable                                                                1,988,042                           0
Receivable from affiliates                                                              860,991                     459,960
Income tax receivable                                                                   563,850                           0
State insurance licenses                                                              4,862,500                   5,012,500
Other assets                                                                          1,589,006                   1,261,513
Separate account assets                                                           4,699,961,646               2,625,127,128
                                                                           ---------------------      ----------------------

              Total Assets                                               $        5,021,012,890     $         2,864,416,329
                                                                           =====================      ======================


LIABILITIES AND SHAREHOLDER'S EQUITY

LIABILITIES:
Reserve for future contractowner benefits                                $           30,493,018     $            11,422,381
Annuity policy reserves                                                              19,386,490                  24,054,255
Income tax payable                                                                            0                      36,999
Accounts payable and accrued expenses                                                32,816,517                  31,753,380
Payable to affiliates                                                                   314,699                     261,552
Payable to reinsurer                                                                 64,995,470                  40,105,406
Short-term borrowing-affiliate                                                       10,000,000                  10,000,000
Surplus notes                                                                       103,000,000                  69,000,000
Deferred contract charges                                                               332,050                     449,704
Separate account liabilities                                                      4,699,961,646               2,625,127,128
                                                                           ---------------------      ----------------------

              Total Liabilities                                                   4,961,299,890               2,812,210,805
                                                                           ---------------------      ----------------------

SHAREHOLDER'S EQUITY:
Common stock, $80 par, 25,000 shares
  authorized, issued and outstanding                                                  2,000,000                   2,000,000
Additional paid-in capital                                                           81,874,666                  71,623,932
Unrealized investment gains and losses                                                  111,359                    (41,655)
Foreign currency translation                                                          (328,252)                           0
Accumulated deficit                                                                (23,944,773)                (21,376,753)
                                                                           ---------------------      ----------------------

              Total Shareholder's Equity                                             59,713,000                  52,205,524
                                                                           ---------------------      ----------------------

              Total Liabilities and Shareholder's                        $        5,021,012,890     $         2,864,416,329
Equity
                                                                           =====================      ======================
</TABLE>
                 See notes to consolidated financial statements

                                       10


                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
          (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                                     FOR THE YEAR ENDED DECEMBER 31,
                                                                            1995                1994                 1993
                                                                       ----------------    ----------------     ---------------

REVENUES:
<S>                                                                  <C>                 <C>                  <C>
Annuity charges and fees                                             $      38,837,358   $      24,779,785    $     11,752,984
Fee Income                                                                   6,205,719           2,111,801             938,336
Net investment income                                                        1,600,674           1,300,217             692,758
Annuity premium income                                                               0              70,000             101,643
Net realized capital gains/(losses)                                             36,774             (1,942)             330,024
Other                                                                           64,882              24,550               1,269
                                                                       ----------------    ----------------     ---------------

     Total Revenues                                                         46,745,407          28,284,411          13,817,014
                                                                       ----------------    ----------------     ---------------


BENEFITS AND EXPENSES:
Benefits:
  Annuity benefits                                                             555,421             369,652             383,515
  Increase/(decrease) in annuity policy reserves                           (6,778,756)           5,766,003           1,208,454
  Cost of minimum death benefit reinsurance                                  2,056,606                   0                   0
  Return credited to contractowners                                         10,612,858           (516,730)             252,132
                                                                       ----------------    ----------------     ---------------

                                                                             6,446,129           5,618,925           1,844,101
                                                                       ----------------    ----------------     ---------------

Expenses:
  Underwriting, acquisition and other insurance expenses                    35,820,524          18,792,720           9,397,951
  Amortization of state insurance licenses                                     150,000             150,000             150,000
  Interest expense                                                           6,499,414           3,615,845             187,156
                                                                       ----------------    ----------------     ---------------

                                                                            42,469,938          22,558,565           9,735,107
                                                                       ----------------    ----------------     ---------------

     Total Benefits and Expenses                                            48,916,067          28,177,490          11,579,208
                                                                       ----------------    ----------------     ---------------

Income (loss) from operations before federal income taxes                  (2,170,660)             106,921           2,237,806

     Income tax                                                                397,360             247,429             182,965
                                                                       ----------------    ----------------     ---------------

Net income (loss)                                                    $     (2,568,020)   $       (140,508)    $      2,054,841
                                                                       ================    ================     ===============

</TABLE>
                 See notes to consolidated financial statements

                                     


                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
         (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                 CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
                                                                             FOR THE YEAR ENDED DECEMBER 31,
                                                                         1995               1994                1993
                                                                  -----------------    ---------------     ---------------

<S>                                                             <C>                  <C>                 <C>
Common stock, balance at beginning and end of year              $        2,000,000   $      2,000,000    $      2,000,000
                                                                  -----------------    ---------------     ---------------

Additional paid-in capital:
  Balance at beginning of year                                          71,623,932         71,623,932          67,623,932
  Additional contributions                                              10,250,734                  0           4,000,000
                                                                  -----------------    ---------------     ---------------

  Balance at end of year                                                81,874,666         71,623,932          71,623,932
                                                                  -----------------    ---------------     ---------------

Unrealized investment gains and losses:
  Balance at beginning of year                                            (41,655)                  0                   0
  Change in unrealized investment gains and losses                         153,014           (41,655)                   0
                                                                  -----------------    ---------------     ---------------

  Balance at end of year                                                   111,359           (41,655)                   0
                                                                  -----------------    ---------------     ---------------

Foreign currency translation:
  Balance at beginning of year                                                   0                  0                   0
  Change in foreign currency translation                                 (328,252)                  0                   0
                                                                  -----------------    ---------------     ---------------

  Balance at end of year                                                 (328,252)                  0                   0
                                                                  -----------------    ---------------     ---------------

Accumulated deficit:
  Balance at beginning of year                                        (21,376,753)       (21,236,245)        (23,291,086)
  Net income (loss)                                                    (2,568,020)          (140,508)           2,054,841
                                                                  -----------------    ---------------     ---------------

  Balance at end of year                                              (23,944,773)       (21,376,753)        (21,236,245)
                                                                  -----------------    ---------------     ---------------


      TOTAL SHAREHOLDER'S EQUITY                                $       59,713,000   $     52,205,524    $     52,387,687
                                                                  =================    ===============     ===============

</TABLE>
                 See notes to consolidated financial statements

                                      
<PAGE>
                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
         (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                  FOR THE YEAR ENDED DECEMBER 31,
                                                                            1995                 1994                 1993
                                                                      ------------------  -------------------   -----------------
CASH FLOW FROM OPERATING ACTIVITIES:

<S>                                                                 <C>                   <C>                   <C>
  Net income (loss)                                                 $       (2,568,020)   $        (140,508)    $      2,054,841
  Adjustments  to  reconcile  net  income  (loss) to net cash
    used in  operating activities:
      (Decrease)/increase in annuity policy reserves                        (4,667,765)            6,004,603           4,223,289
      Decrease in policy and contract claims                                          0                    0            (52,400)
      Amortization of bond discount                                              23,449               21,964               6,754
      Amortization of state insurance licenses                                  150,000              150,000             150,000
      (Decrease)/increase in due to/from affiliates                           (347,884)              256,779           (397,125)
      Change in income tax payable/receivable                                 (600,849)               36,999                   0
      Increase in other assets                                                (409,927)            (742,041)           (220,172)
      (Increase)/decrease in accrued investment income                         (20,420)             (44,847)             154,902
      Change in reinsurance receivable                                      (1,988,042)                    0                   0
      Increase in accounts payables and accrued expenses                      1,063,137           13,396,502          14,005,962
      Change in deferred acquisition costs                                 (96,212,774)         (83,986,073)        (57,387,042)
      Change in deferred contract charges                                     (117,654)             (71,117)              13,898
      Change in foreign currency translation                                  (328,252)                    0                   0
      Realized (gain)/loss on sale of investments                              (36,774)                1,942           (330,024)
                                                                      ------------------  -------------------   -----------------

  Net cash used in operating activities                                   (106,061,775)         (65,115,797)        (37,777,117)
                                                                      ------------------  -------------------   -----------------

CASH FLOW FROM INVESTING ACTIVITIES:

  Purchase of fixed maturity investments                                      (614,289)          (1,989,120)         (6,847,630)
  Proceeds from the maturity of fixed maturity investments                      100,000            2,010,000                   0
  Proceeds from the sale of fixed maturity investments                                0                    0          10,971,574
  Purchase of shares in mutual funds                                        (1,566,194)            (922,822)                   0
  Proceeds from sale of shares in mutual funds                                  867,744               38,588                   0
  Purchase of short-term investments                                      (202,700,000)        (513,100,000)     (1,207,575,307)
  Sale of short-term investments                                            211,000,000          508,500,000       1,202,333,907
  Investments in separate accounts                                      (1,609,415,439)      (1,365,775,177)       (890,125,018)
                                                                      ------------------  -------------------   -----------------

  Net cash used in investing activities                                 (1,602,328,178)      (1,371,238,531)       (891,242,474)
                                                                      ------------------  -------------------   -----------------

CASH FLOW FROM FINANCING ACTIVITIES:

  Capital contributions from parent                                          10,250,734                    0           4,000,000
  Surplus notes                                                              34,000,000           49,000,000          20,000,000
  Short-term borrowing                                                                0                    0          10,000,000
  Increase in payable to reinsurer                                           24,890,064           28,555,190          11,550,216
  Proceeds from annuity sales                                             1,628,486,076        1,372,873,747         890,639,947
                                                                      ------------------  -------------------   -----------------

  Net cash provided by financing activities                               1,697,626,874        1,450,428,937         936,190,163
                                                                      ------------------  -------------------   -----------------

Net increase/(decrease) in cash and cash equivalents                       (10,763,079)           14,074,609           7,170,572

Cash and cash equivalents at beginning of year                               23,909,463            9,834,854           2,664,282
                                                                      ------------------  -------------------   -----------------

Cash and cash equivalents at end of year                            $        13,146,384 $         23,909,463  $        9,834,854
                                                                      ==================  ===================   =================

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Income taxes paid                                                   $           995,496 $            161,398  $          169,339
                                                                      ==================  ===================   =================

Interest paid                                                       $           540,319 $            557,639  $          111,667
                                                                      ==================  ===================   =================
</TABLE>

                 See notes to consolidated financial statements


                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

                   Notes to Consolidated Financial Statements


1.       BUSINESS OPERATIONS

         American  Skandia  Life  Assurance  Corporation  (the  "Company")  is a
         wholly-owned   subsidiary  of  American  Skandia   Investment   Holding
         Corporation (the "Parent"),  which in turn is a wholly-owned subsidiary
         of Skandia Insurance Company Ltd., a Swedish corporation.

         The Company  develops  annuity products and issues its products through
         its  affiliated  broker/dealer  company,  American  Skandia  Marketing,
         Incorporated.  The Company  currently  issues variable,  fixed,  market
         value adjusted and immediate annuities.

         During 1995, Skandia Vida, S.A. de C.V. was formed by the ultimate
         parent Skandia Insurance Company Ltd.  The Company owns 99.9% ownership
         in Skandia Vida, S.A. de C.V. which is a life insurance company
         domiciled in Mexico.  This Mexican life insurer is a start up company
         with expectations of selling long term savings product within Mexico.


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


         A.       Basis of Reporting
                  ------------------

                  The accompanying  consolidated  financial statements have been
                  prepared in  conformity  with  generally  accepted  accounting
                  principles.  Intercompany  transactions and balances have been
                  eliminated in consolidation.

         B.       Investments
                  -----------

                  The Company has classified  its fixed maturity  investments as
                  held to  maturity as the Company has the ability and intent to
                  hold those  investments  to  maturity.  Such  investments  are
                  carried at amortized cost.

                  The Company has  classified  its mutual  fund  investments  as
                  available  for sale.  Such  investments  are carried at market
                  value and changes in unrealized  gains and losses are reported
                  as a component of shareholder's equity.

                  Short-term investments are reported at cost which approximates
                  market value.

                  Realized  gains and  losses on  disposal  of  investments  are
                  determined  by the  specific  identification  method  and  are
                  included in revenues.

                  The Company adopted Statement of Financial Accounting
                  Standards (SFAS) No. 115, "Accounting for Certain Investments
                  in Debt and Equity Securities", effective January 1, 1994. The
                  adoption of SFAS No. 115 had no impact on the Company's
                  financial statements.

                                      

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)


         C.       Cash Equivalents
                  ----------------

                  The  Company   considers   all  highly  liquid  time  deposits
                  purchased  with a maturity of three  months or less to be cash
                  equivalents.

         D.       State Insurance Licenses
                  ------------------------

                  Licenses to do  business  in all states have been  capitalized
                  and  reflected  at  the  purchase  price  of $6  million  less
                  accumulated  amortization.  The cost of the  licenses is being
                  amortized over 40 years.

         E.       Fixed Assets
                  ------------

                  Fixed Assets consisting of furniture,  equipment and leasehold
                  improvements are carried at cost and depreciated on a straight
                  line basis over a period of three to five  years.  Accumulated
                  depreciation  at December  31,  1995 and related  depreciation
                  expense for the year ended December 31, 1995 was $3,749.

         F.       Recognition of Revenue and Contract Benefits
                  --------------------------------------------

                  Annuity  contracts  without  significant  mortality  risk,  as
                  defined  by   Financial   Accounting   Standard  No.  97,  are
                  classified as  investment  contracts  (variable,  market value
                  adjusted  and  certain  immediate  annuities)  and those  with
                  mortality risk  (immediate  annuities) as insurance  products.
                  The policy of revenue  and  contract  benefit  recognition  is
                  described below.

                  Revenues for  variable  annuity  contracts  consist of charges
                  against contractowner account values for mortality and expense
                  risks and  administration  fees and an annual  maintenance fee
                  per contract.  Benefit reserves for variable annuity contracts
                  represent the account value of the contracts, and are included
                  in the separate account liabilities.

                  Revenues for market value adjusted annuity  contracts  consist
                  of  separate  account  investment  income  reduced  by benefit
                  payments  and change in reserves  in support of  contractowner
                  obligations,  all of which is included  in return  credited to
                  contractowners. Benefit reserves for these contracts represent
                  the account  value of the  contracts,  and are included in the
                  general account liability for future contractowner benefits to
                  the extent in excess of the separate account liabilities.

                  Revenues  for  immediate   annuity   contracts   without  life
                  contingencies  consist of net investment income.  Revenues for
                  immediate annuity contracts with life contingencies consist of
                  single premium payments  recognized as annuity  considerations
                  when received.  Benefit reserves for these contracts are based
                  on the  Society  of  Actuaries  1983 - a Table with an assumed
                  interest rate of 8.25%.

                  Annuity   sales  were   $1,628,486,000,   $1,372,874,000   and
                  $890,640,000  for 1995, 1994 and 1993,  respectively.  Annuity
                  contract   assets  under   management   were   $4,704,044,000,
                  $2,661,161,000  and  $1,437,554,000 at December 31, 1995, 1994
                  and 1993, respectively.

                                       

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         G.       Deferred Acquisition Costs
                  --------------------------

                  The costs of acquiring new  business,  which vary with and are
                  primarily related to the production of new business, are being
                  amortized in relation to the present value of estimated  gross
                  profits.  These costs  include  commissions,  cost of contract
                  issuance,   and  certain  selling   expenses  that  vary  with
                  production.  Details of the deferred acquisition costs for the
                  years ended December 31 follow:

<TABLE>
<CAPTION>

                                                              1995             1994              1993
                                                              ----             ----              ----

<S>                                                        <C>             <C>                 <C>
                  Balance at beginning of year             $174,009,609    $ 90,023,536        $32,636,494

                  Acquisition costs deferred
                  during the year                           106,063,698      85,801,180         59,676,296

                  Acquisition costs amortized
                  during the year                             9,850,924       1,815,107          2,289,254
                                                          -------------  ---------------     -------------

                  Balance at end of year                   $270,222,383    $174,009,609        $90,023,536
                                                           ============    =============       ===========
</TABLE>

         H.       Deferred Contract Charges
                  -------------------------

                  Certain  contracts are assessed a front-end fee at the time of
                  issue.  These fees are  deferred and  recognized  in income in
                  relation to the present  value of estimated  gross  profits of
                  the  related  contracts.  Details  of  the  deferred  contract
                  charges for the years ended December 31 follow:
<TABLE>
<CAPTION>

                                                               1995              1994             1993
                                                               ----              ----             ----

<S>                                                            <C>              <C>               <C>
                  Balance at beginning of year                 $449,704         $520,821          $506,923

                  Contract charges deferred
                  during the year                                21,513           87,114           144,537

                  Contract charges amortized
                  during the year                               139,167          158,231           130,639
                                                              ---------        ---------         ---------

                  Balance at end of year                       $332,050         $449,704          $520,821
                                                               ========         ========          ========

</TABLE>
                                      


                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)


         I.       Separate Accounts
                  -----------------

                  Assets  and  liabilities  in  Separate  Account  are  shown as
                  separate  captions in the consolidated  statement of financial
                  condition.  The assets consist of long-term bonds, investments
                  in mutual funds and  short-term  securities,  all of which are
                  carried at market value.

                  Included in Separate  Account  liabilities is $586,233,752 and
                  $259,556,863  at  December  31,  1995 and 1994,  respectively,
                  relating to annuity contracts for which the  contractholder is
                  guaranteed a fixed rate of return.  Separate Account assets of
                  $588,835,051  and  $269,488,557 at December 31, 1995 and 1994,
                  respectively,  consisting  of  long  term  bonds,  short  term
                  securities, transfers due from general account and cash are in
                  support  of these  annuity  contracts,  as  pursuant  to state
                  regulation.

         J.       Income taxes
                  ------------

                  The Company is included in the consolidated federal income tax
                  return with all Skandia Insurance Company Ltd. subsidiaries in
                  the U.S.  The  federal  and  state  income  tax  provision  is
                  computed on a separate  return  basis in  accordance  with the
                  provisions of the Internal Revenue Code, as amended.  Prior to
                  1995, the Company filed a separate federal income tax return.

         K.       Translation of Foreign Currency
                  -------------------------------

                  The  financial  position  and  results  of  operations  of the
                  Company's foreign operations are measured using local currency
                  as the  functional  currency.  Assets and  liabilities  of the
                  operations  are  translated  at the exchange rate in effect at
                  each  year-end.  Statements  of operations  and  shareholder's
                  equity  accounts are translated at the average rate prevailing
                  during the year. Translation  adjustments arising from the use
                  of differing exchange rates from period to period are included
                  in shareholder's equity.

         L.       Estimates
                  ---------

                  The  preparation  of financial  statements in conformity  with
                  generally  accepted   accounting   principles   requires  that
                  management  make  estimates  and  assumptions  that affect the
                  reported  amount of assets and  liabilities at the date of the
                  financial  statements and the reported amounts of revenues and
                  expenses  during the reporting  period.  The more  significant
                  estimates and assumptions are related to deferred  acquisition
                  costs  and  involve  policy  lapses,   investment  return  and
                  maintenance  expenses.  Actual results could differ from those
                  estimates.

                                       


                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         M.       Reinsurance
                  -----------

                  The Company  cedes  reinsurance  under  modified  co-insurance
                  arrangements. The reinsurance arrangements provides additional
                  capacity  for growth in  supporting  the cash flow strain from
                  the Company's  variable annuity  business.  The reinsurance is
                  effected under quota share contracts.

                  Effective  January  1, 1995,  the  Company  reinsured  certain
                  mortality  risks.  These  risks  result  from  the  guaranteed
                  minimum  death  benefit   feature  in  the  variable   annuity
                  products.

3.       INVESTMENTS

         The carrying value (amortized cost), gross unrealized gains (losses) 
         and estimated market value of investments in fixed maturities by 
         category as of December 31, 1995 and 1994 are shown below.  All 
         securities held at December 31, 1995 are publicly traded.

         Investments in fixed  maturities as of December 31, 1995 consist of the
         following:
<TABLE>
<CAPTION>
         <S>                           <C>               <C>                 <C>                    <C>  
                                                            Gross               Gross
                                       Amortized         Unrealized          Unrealized              Market
                                         Cost               Gains              Losses                 Value
         U.S. Government
         Obligations                   $ 4,304,731         $183,201              $1,778             $4,486,154

         Obligations of
         State and Political
         Subdivisions                      256,095                0               3,165                252,930

         Corporate
         Securities                      5,551,879           13,252                 346              5,564,785
                                     -------------       ----------            --------           ------------

         Totals                        $10,112,705         $196,453              $5,289            $10,303,869
                                       ===========         ========              ======            ===========
</TABLE>

         The amortized cost and market value of fixed maturities, by contractual
         maturity, at December 31, 1995 are shown below.
<TABLE>
<CAPTION>
         <S>                                         <C>                             <C>   
                                                        Amortized                        Market
                                                          Cost                            Value

         Due in one year or less                     $    379,319                    $    393,745

         Due after one through five years               6,358,955                       6,519,880

         Due after five through ten years               3,374,431                       3,390,244
                                                     ------------                   -------------

                                                      $10,112,705                     $10,303,869
                                                      ===========                     ===========
</TABLE>
                                       


                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)


         Investments in fixed  maturities as of December 31, 1994 consist of the
         following:
<TABLE>
<CAPTION>
         <S>                           <C>               <C>                 <C>                    <C>
                                                           Gross               Gross
                                       Amortized         Unrealized          Unrealized              Market
                                         Cost               Gains              Losses                 Value
         U.S. Government
         Obligations                    $3,796,390           $2,119            $156,759             $3,641,750

         Obligations of
         State and Political
         Subdivisions                      261,852                0               9,156                252,696

         Corporate
         Securities                      5,563,623                0             547,023              5,016,600
                                       -----------       ----------           ---------            -----------

         Totals                         $9,621,865           $2,119            $712,938             $8,911,046
                                        ==========           ======            ========             ==========
</TABLE>
         Proceeds from maturities and sales of fixed maturity investments during
         1995,  1994  and  1993,  were  $100,000,  $2,010,000  and  $10,971,574,
         respectively.

<TABLE>
<CAPTION>

         Gross gains and gross losses realized were as follows:

         <S>               <C>                     <C>   
                                  Gross                 Gross
                                  Gains                Losses
                                  -----                ------
                                  
         1995              $           0           $         0

         1994              $           0           $         0

         1993                   $329,000           $         0

</TABLE>
                                       19


                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         The  cost,   gross  unrealized  gains  (losses)  and  market  value  of
         investments  in mutual  funds at  December  31, 1995 and 1994 are shown
         below:
<TABLE>
<CAPTION>
        <S>                          <C>                 <C>                 <C>                <C>   
                                                            Gross               Gross
                                                         Unrealized          Unrealized          Market
                                         Cost               Gains              Losses             Value

         1995                        $1,617,516            $111,686           $     327         $1,728,875
                                     ==========            ========           =========         ==========

         1994                        $  882,292            $  4,483           $  46,138         $  840,637
                                     ==========            ========           =========         ==========
</TABLE>

         Proceeds from sales of investments in mutual funds during 1995 and 1994
were $867,744 and $38,588.

         Mutual fund gross gains and gross losses were as follows:
<TABLE>
<CAPTION>
         <S>                     <C>                   <C>
                                  Gross                 Gross
                                  Gains                Losses
                                  -----                ------

         1995                    $65,236               $28,462
                                 =======               =======

         1994                   $    510               $ 2,452
                                ========               =======
</TABLE>

4.       NET INVESTMENT INCOME

         Additional  information  with respect to net investment  income for the
         years ended December 31, 1995, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
                                                       1995                    1994                    1993
                                                       ----                    ----                    ----
<S>                                                <C>                     <C>                       <C>     
         Fixed Maturities                          $   629,743             $   616,987               $409,552
         Mutual Funds                                   59,895                  12,049                      0
         Short-Term Investments                        256,351                 142,421                394,545
         Cash and Cash Equivalents                     730,581                 633,298                 15,034
         Interest on Policy Loans                        4,025                   1,275                  1,015
                                                 -------------           -------------             ----------

         Total Investment Income                     1,680,595               1,406,030                820,146

         Investment Expenses                            79,921                 105,813                127,388
                                                  ------------             -----------              ---------

         Net investment income                      $1,600,674              $1,300,217               $692,758
                                                    ==========              ==========               ========
</TABLE>
                                       

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

5.       INCOME TAXES

         Deferred  income  taxes  reflect the net tax  effects of (a)  temporary
         differences  between the carrying amounts of assets and liabilities for
         financial  reporting  purposes  and the  amounts  used for  income  tax
         purposes, and (b) operating loss and tax credit carryforwards.  The tax
         effects of  significant  items  comprising  the Company's  deferred tax
         balance as of December 31, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
                                                                    1995                  1994
                                                                    ----                  ----
         Deferred Tax (Liabilities):
<S>                                                             <C>                   <C>          
             Deferred acquisition costs                         ($57,399,960)         ($37,885,053)
             Payable to reinsurer                                (19,802,861)          (12,754,591)
             Unrealized investment gains and losses                  (38,976)               14,579
             Other                                                  (308,304)             (214,505)
                                                              --------------        --------------

             Total                                              ($77,550,101)         ($50,839,570)
                                                                ------------          ------------

         Deferred Tax Assets:
             Deferred contract charge                          $     116,218         $     157,396
             Net separate account liabilities                     72,024,094            51,637,155
             Reserve for future contractowner benefits            10,672,556             3,997,833
             Net operating loss carryforward                               0             1,813,670
             AMT credit carryforward                                 286,094                     0
             Foreign exchange translation                            114,888                     0
             Other                                                 3,661,104               878,030
                                                                ------------         -------------

             Total                                               $86,874,954           $58,484,084
                                                                 -----------           -----------

             Net before valuation allowance                     $  9,324,853          $  7,644,514

             Valuation allowance                                  (9,324,853)           (7,644,514)
                                                                ------------          ------------

             Net deferred tax balance                      $               0     $               0
                                                           -----------------     -----------------
</TABLE>

         The significant components of federal tax expense are as follows:
<TABLE>
<CAPTION>
                                                              1995               1994               1993
                                                              ----               ----               ----

<S>                                                       <C>                  <C>                <C>     
         Current tax expense                              $   394,648          $184,771           $182,965

         Deferred tax benefit:
             (exclusive of the effects of
             the change in valuation allowance)            (1,680,339)         (365,288)          (404,480)

         Change in valuation allowance                      1,680,339           365,288            404,480
                                                          -----------        ----------          ---------

         Total deferred tax expense                                 0                 0                  0
                                                         ------------        ----------          ---------

         Total income tax expense                        $    394,648          $184,771           $182,965

                                                         ============          ========           ========
</TABLE>
                                       

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         The state income tax expense was $2,712 and $62,658 for the years ended
         1995 and 1994, respectively.

         The federal income tax expense was different  from the amount  computed
         by applying  the federal  statutory  tax rate of 35% to pre-tax  income
         from continuing operations as follows:
<TABLE>
<CAPTION>
                                                               1995              1994               1993
                                                               ----              ----               ----
<S>                                                        <C>                 <C>              <C>       
         Income (loss) before taxes                        ($2,170,660)        $106,921         $2,237,806
             Income tax rate                                        35%              35%                35%
                                                           ------------       ----------        -----------

         Tax expense at federal
             statutory income tax rate                        (759,731)          37,422            783,232

         Tax effect of:

             Permanent tax differences                        (253,101)         (82,188)            63,535

             Difference between financial
                statement and taxable income                 2,986,464        3,161,331          2,414,254

             Utilization of net operating
                loss carryforwards                          (1,487,144)      (3,116,565)        (3,261,021)

             Utilization of AMT credits                        (91,840)               0                  0

         Alternative minimum tax                                     0          184,771            182,965
                                                        --------------      -----------        -----------

         Income tax expense                                $   394,648       $  184,771         $  182,965
                                                           ===========       ==========         ==========
</TABLE>

6.       RELATED PARTY TRANSACTIONS

         Certain operating costs (including  personnel,  rental of office space,
         furniture,  and equipment) and investment expenses have been charged to
         the  Company  at cost by  American  Skandia  Information  Services  and
         Technology  Corporation,  an  affiliated  company;  and  likewise,  the
         Company has charged  operating  costs to  American  Skandia  Investment
         Services,  Incorporated,  an affiliated  company.  Income  received for
         these items was  $396,573,  $248,799  and  $146,134 for the years ended
         December 31, 1995, 1994 and 1993,  respectively.  The total cost to the
         Company for these items was $12,687,337,  $8,524,840 and $3,537,566 for
         the years ended December 31, 1995, 1994 and 1993, respectively. Amounts
         receivable from  affiliates  under this  arrangement  were $857,156 and
         $317,285  as of  December  31,  1995 and  1994,  respectively.  Amounts
         payable to affiliates under this arrangement were $304,525 and $261,552
         as of December 31, 1995 and 1994, respectively.

                                       

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

7.       LEASES

         The Company leases office space under a lease agreement  established in
         1989 with an  affiliate  (American  Skandia  Information  Services  and
         Technology Corporation).  The lease expense for 1995, 1994 and 1993 was
         $1,265,771, $961,080 and $280,363,  respectively.  Future minimum lease
         payments  per year and in  aggregate  as of  December  31,  1995 are as
         follows:

                           1996                               1,178,550
                           1997                               1,178,550
                           1998                               1,178,550
                           1999                               1,178,550
                           2000 and thereafter                6,831,312
                                                            -----------

                           Total                            $11,545,512
                                                            ===========

8.       RESTRICTED ASSETS

         In  order  to  comply  with  certain   state   insurance   departments'
         requirements, the Company maintains bonds/notes on deposit with various
         states. The carrying value of these deposits amounted to $3,267,357 and
         $3,410,135  as of December  31,  1995,  and 1994,  respectively.  These
         deposits  are  required  to  be  maintained   for  the   protection  of
         contractowners within the individual states.

9.       RETAINED EARNINGS AND DIVIDEND RESTRICTIONS

         Statutory basis shareholder's equity was $132,493,899,  $95,001,971 and
         $60,666,243 at December 31, 1995, 1994 and 1993, respectively.

         The statutory  basis net income (loss) was  ($7,183,003),  ($9,789,297)
         and  $387,695 for the years ended  December  31,  1995,  1994 and 1993,
         respectively.

         Under state insurance laws, the maximum amount of dividends that can be
         paid  shareholders  without  prior  approval  of  the  state  insurance
         departments is subject to  restrictions  relating to statutory  surplus
         and net gain from  operations.  At December 31, 1995, no amounts may be
         distributed without prior approval.

10.      EMPLOYEE BENEFITS

         In 1989, the Company  established a 401(k) plan for which substantially
         all  employees  are  eligible.  Company  contributions  to this plan on
         behalf of the participants were $627,161, $431,559 and $250,039 for the
         years ended December 31, 1995, 1994 and 1993, respectively.

         The Company has a long-term  incentive  plan where units are awarded to
         executive  officers  and  other  personnel.  The  program  consists  of
         multiple  plans.  A  new  plan  is  instituted  each  year.  Generally,
         participants  must remain  employed by the Company or its affiliates at
         the time such units are payable in order to receive any payments  under
         the plan. The accrued  liability  representing the value of these units
         is  $4,600,831  and  $1,564,407  as of  December  31,  1995  and  1994,
         respectively.
                                       

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         In 1994, the Company established a deferred  compensation plan which is
         available to the internal field marketing  staff and certain  officers.
         Company  contributions to this plan on behalf of the participants  were
         $139,209 in 1995 and $106,882 in 1994.

11.      REINSURANCE

         The effect of the  reinsurance  agreements on the Company's  operations
         was to reduce annuity charges and fee income, death benefit expense and
         policy reserves. The effect of reinsurance for the years ended December
         31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
                                                     1995
- ----------------------------------------------------------------------------------------------
         <S>               <C>                     <C>                      <C> 
                                Annuity            Change in Annuity         Return Credited
                           Charges and Fees         Policy Reserves         to Contractowners
                           ----------------         ---------------         -----------------

         Gross                $50,334,280            ($4,790,714)             $10,945,831
         Ceded                 11,496,922               1,988,042                 332,973
                            -------------            -------------          -------------
         Net                  $38,837,358            ($6,778,756)             $10,612,858
                              ===========            ===========              ===========
</TABLE>

                                1994                      1993
                           ----------------        ----------------
                                Annuity                 Annuity
                           Charges and Fees        Charges and Fees
                           ----------------        ----------------

         Gross                $30,116,166             $12,446,277
         Ceded                  5,336,381                  693,293
                            -------------            -------------
         Net                  $24,779,785             $11,752,984
                              ===========             ===========


         Such  ceded   reinsurance   does  not  relieve  the  Company  from  its
         obligations  to  policyholders.  The  Company  remains  liable  to  its
         policyholders  for  the  portion  reinsured  to  the  extent  that  any
         reinsurer does not meet the  obligations  assumed under the reinsurance
         agreements.

                                      


                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

12.      SURPLUS NOTES

         During 1995, the Company received $34 million from its parent in 
         exchange for three surplus notes.  The amounts were $10 million, $15
         million and $9 million, at interest rates of 7.52%, 7.49% and 7.47%, 
         respectively.  Interest expense for these notes was $83,281 for the 
         year ended December 31, 1995.

         During  1994,  the  Company  received  $49  million  from its parent in
         exchange for four surplus notes, two in the amount of $10 million,  one
         in the amount of $15 million and one in the amount of $14  million,  at
         interest rates of 7.28%, 7.90%, 9.13% and 9.78%, respectively. Interest
         expense for these notes was  $4,319,612  and  $1,618,504  for the years
         ended December 31, 1995 and 1994, respectively.

         During  1993,  the  Company  received  $20  million  from its parent in
         exchange  for a surplus  note in the  amount of $20  million at a 6.84%
         interest  rate.   Interest   expense  for  this  note  was  $1,387,000,
         $1,387,000 and $11,400 for the years ended December 31, 1995,  1994 and
         1993, respectively.

         Payment of interest and repayment of principal for these notes requires
         approval  by the  Commissioner  of the State of  Connecticut.  In 1995,
         approval was granted for the payment of surplus note  interest with the
         stipulation that it be funded through a capital  contribution  from the
         Parent.

13.      SHORT-TERM BORROWING

         During 1993, the Company received a $10 million loan from Skandia AB, a
         Swedish affiliate. Upon the last renewal the loan became payable to the
         Parent  rather than  Skandia AB. The loan  matures on March 6, 1996 and
         bears interest at 6.75.%. The total interest expense to the Company was
         $709,521,  $569,618 and $149,861 for the years ended December 31, 1995,
         1994 and 1993, respectively,  of which $219,375 and $50,174 was payable
         as of December 31, 1995 and 1994, respectively.

14.      CONTRACT WITHDRAWAL PROVISIONS

         Approximately  98% of the Company's  separate  account  liabilities are
         subject to  discretionary  withdrawal  with market value  adjustment by
         contractholders.  Separate  account  assets which are carried at market
         value are adequate to pay such withdrawals  which are generally subject
         to surrender  charges  ranging from 7.5% to 1% for contracts  held less
         than 7 years.

                                       


                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

15.      QUARTERLY FINANCIAL DATA (UNAUDITED)

         The  following  table  summarizes   information  with  respect  to  the
         operations of the Company.
<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                                             ------------------
                1995                              March 31            June 30         September 30       December 31
                ----                              --------            -------         ------------       -----------

         Premiums and other insurance
<S>                                             <C>                   <C>              <C>               <C>        
            revenues                            $  8,891,903          $10,066,478      $11,960,530       $14,189,048
         Net investment income                       551,690              434,273          293,335           321,376
         Net realized capital gains (losses)         (16,082)                (370)          44,644             8,582
                                               -------------     ----------------   --------------   ---------------
         Total revenues                         $  9,427,511          $10,500,381      $12,298,509       $14,519,006
                                                ============          ===========      ===========       ===========

         Benefits and expenses                   $11,438,798         $  9,968,595      $11,600,587       $15,908,087
                                                 ===========         ============      ===========       ===========

         Net income (loss)                      ($ 2,026,688)       $     531,486    $     678,312       ($1,751,130)
                                                 ============       =============    =============       ===========

                                                                             Three Months Ended
                1994                              March 31            June 30         September 30       December 31
                ----                              --------            -------         ------------       -----------
         Premiums and other insurance
            revenues                              $5,594,065           $6,348,777       $7,411,686        $7,631,608
         Net investment income                       252,914              336,149          264,605           446,549
         Net realized capital gains (losses)               0              (30,829)          25,914             2,973
                                            -----------------       -------------    --------------    -------------
         Total revenues                           $5,846,979           $6,654,097       $7,702,205        $8,081,130
                                                  ==========           ==========       ==========        ==========

         Benefits and expenses                    $5,701,460           $7,883,829       $8,157,535        $6,434,666
                                                  ==========           ==========       ==========        ==========

         Net income (loss)                       $   104,636          ($1,257,768)       ($503,793)       $1,516,417
                                                 ============         ===========        =========        ==========
</TABLE>








<PAGE>


                                   APPENDIX B

                            SHORT DESCRIPTIONS OF THE
     UNDERLYING MUTUAL FUNDS' PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES

The investment  objectives for the portfolios of each underlying mutual fund are
in bold face.  Please refer to the prospectus of the underlying  mutual fund for
more complete details and risk factors applicable to certain portfolios.

                                 Galaxy VIP Fund

GAL Money Market Fund: The Money Market Fund's  investment  objective is to seek
as high a level of current income as is consistent  with liquidity and stability
of  principal.  The Fund seeks to achieve its  objective  by investing in "money
market"  instruments  that are determined by the  investment  adviser to present
minimal credit risk and meet certain rating  criteria.  Instruments  that may be
purchased by the Money Market Fund include  obligations  of domestic and foreign
banks  (including  negotiable  certificates  of  deposit,   non-negotiable  time
deposits,   savings  deposits,  and  bankers'  acceptances);   commercial  paper
(including  variable and floating rate notes);  obligations issued or guaranteed
by the U.S.  Government,  its  agencies  or  instrumentalities;  and  repurchase
agreements issued by financial  institutions  such as banks and  broker/dealers.
These  instruments have remaining  maturities of thirteen months or less (except
for certain variable and floating rate notes and securities  underlying  certain
repurchase agreements).

In accordance with a rule promulgated by the Securities and Exchange Commission,
the Money  Market  Fund will  purchase  only  those  instruments  which meet the
applicable quality requirements  described below. The Money Market Fund will not
purchase a security (other than a U.S. Government  security) unless the security
or the issuer with respect to comparable securities (i) is rated by at least two
nationally recognized statistical rating organizations ("Rating  Organizations")
(such as S&P or Moody's) in the highest category for short-term debt securities,
(ii) is rated by the only Rating  Organization  that has issued a rating in such
Rating  Organization's  highest  category for  short-term  debt, or (iii) if not
rated, the security is determined to be of comparable quality. Determinations of
comparable quality will be made in accordance with procedures established by the
Board of Trustees.

GAL Equity Fund:  The Equity Fund's  investment  objective is to seek  long-term
growth by investing in companies  that the Fund's  investment  adviser  believes
have above-average earnings potential.  The Fund seeks to achieve its investment
objective by investing,  under normal market and economic  conditions,  at least
75% of its total assets in a broadly diversified  portfolio of equity securities
such as common stock,  preferred  stock,  common stock  warrants and  securities
convertible into common stock of companies that the investment  adviser believes
will increase future  earnings to a level above the average  earnings of similar
issuers.  Such  companies  often  retain their  earnings to finance  current and
future growth and, for this reason, generally pay little or no dividends. Equity
securities in which the Fund invests are selected based on analyses of trends in
industries and companies,  earning power, growth features,  quality and depth of
management,  marketing and manufacturing skills,  financial conditions and other
investment criteria. By investing in convertible securities,  the Fund will seek
the opportunity,  through the conversion  feature, to participate in the capital
appreciation of the common stock into which the securities are convertible.

All debt obligations, including convertible bonds, purchased by the Fund will be
rated at the time of purchase in one of the four highest  rating  categories  by
S&P (AAA, AA, A and BBB) or Moody's (Aaa, Aa, A and Baa) or, if not rated,  will
be determined to be of an equivalent  quality by the  investment  adviser.  Debt
securities  rated BBB by S&P or Baa by Moody's are  generally  considered  to be
investment grade securities  although they may have speculative  characteristics
and changes in economic conditions or circumstances are more likely to lead to a
weakened  capacity to make principal and interest  payments than is the case for
higher grade debt obligations.

The Equity Fund may invest indirectly in foreign securities through the purchase
of  American  Depository   Receipts("ADRs")  and  European  Depository  Receipts
("EDRs").  In  addition,  the Fund may  invest in  securities  issued by foreign
branches of U.S. banks and foreign banks, Canadian commercial paper and Canadian
securities  listed  on a  national  securities  exchange,  and  Europaper  (U.S.
dollar-denominated commercial paper of foreign issuers). The Fund may also write
covered call options.

As a temporary  defensive  measure,  the Fund may invest  without  limitation in
cash,  "money market"  instruments and  obligations  issued or guaranteed by the
U.S.  Government,  its agencies and  instrumentalities at such times and in such
proportions as, in the opinion of the investment  adviser,  prevailing market or
economic conditions warrant.

GAL Asset Allocation Fund: The investment objective of the Asset Allocation Fund
is to seek a high total return by providing  both a current level of income that
is greater than that  provided by the popular  stock market  averages as well as
long-term  growth in the value of the Fund's  assets.  The Fund seeks to achieve
its  investment  objective and at the same time reduce  volatility by allocating
its assets among  short-term  obligations,  common  stock,  preferred  stock and
bonds.  The  proportion of the Fund's  assets  invested in each type of security
will  vary  from  time  to  time  as  a  result  of  the  investment   adviser's
interpretation of economic and market conditions.  However,  at least 25% of the
Fund's  total  assets  will at all  times be  invested  in  fixed-income  senior
securities,  including debt  securities and preferred  stocks.  Debt  securities
purchased  by the Fund will be rated at the time of  purchase in one of the four
highest rating categories by S&P (AAA, AA, A and BBB) or Moody's (Aaa, Aa, A and
Baa) (or which,  if unrated,  are determined by the investment  adviser to be of
comparable  quality).  Debt  securities  rated BBB by S&P or Baa by Moody's  are
generally  considered to be investment grade  securities  although they may have
speculative  characteristics and changes in economic conditions or circumstances
are more likely to lead to a weakened  capacity to make  principal  and interest
payments than is the case for higher grade debt obligations. In selecting common
stock for purchase by the Fund,  the  investment  adviser will analyze trends in
industries and companies,  earning power, growth features,  quality and depth of
management,  marketing and manufacturing skills,  financial conditions and other
investment criteria.

The Asset  Allocation  Fund may also  invest  up to 20% of its  total  assets in
foreign  securities,  either  directly or indirectly  through ADRs and EDRs. The
Fund may write  covered  call  options,  purchase  asset-backed  securities  and
mortgage-backed   securities   and  enter   into   foreign   currency   exchange
transactions.

As a temporary  defensive  measure,  the Fund may invest  without  limitation in
cash,  "money market"  instruments and  obligations  issued or guaranteed by the
U.S.  Government,  its agencies and  instrumentalities at such times and in such
proportions as, in the opinion of the investment adviser,  prevailing market and
economic conditions warrant.

Investments  in  foreign  securities  involve  higher  costs  for the Fund  than
investments in U.S.  securities,  including higher  transaction costs as well as
the  imposition in some cases of additional  taxes by foreign  governments.  For
example,  fixed commissions on foreign stock exchanges are generally higher than
the negotiated commissions on U.S. exchanges and the Fund may be subject in some
cases to withholding and/or transfer taxes. In addition, foreign investments may
include  additional risks associated with currency exchange rates, less complete
financial  information about the issuers,  less market liquidity,  and political
instability. Future political and economic developments, the possible imposition
of withholding taxes on interest income, the possible seizure or nationalization
of foreign holdings,  the possible  establishment of exchange  controls,  or the
adoption of other governmental restrictions,  might adversely affect the payment
of principal and interest on foreign obligations.

Although  the Asset  Allocation  Fund may invest in  securities  denominated  in
foreign  currencies,  the Fund values its  securities  and other  assets in U.S.
dollars.  As a result,  the net asset value of the Fund's  shares may  fluctuate
with U.S.  dollar  exchange  rates as well as with  price  changes of the Fund's
securities in the various local markets and currencies. Thus, an increase in the
value of the U.S.  dollar compared to the currencies in which the Fund makes its
investments  could  reduce the effect of  increases  and  magnify  the effect of
decreases  in the  price  of the  Fund's  securities  in  their  local  markets.
Conversely,  a decrease in the value of the U.S.  dollar will have the  opposite
effect of  magnifying  the  effect  of  increases  and  reducing  the  effect of
decreases  in the prices of the Fund's  securities  in their local  markets.  In
addition to favorable and unfavorable currency exchange-rate  developments,  the
Fund is subject to the possible  imposition of exchange  control  regulations or
freezes on convertibility of currency.

GAL High Quality Bond Fund: The High Quality Bond Fund's investment objective is
to seek a high level of current income  consistent with prudent risk of capital.
The Fund  invests  its  assets  in  corporate  debt  obligations  such as bonds,
debentures,   obligations   convertible   into  common  stock,   "money  market"
instruments such as bank obligations and commercial paper, in obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities,  and in
debt  obligations of  supranational  entities.  Supranational  entities  include
international  organizations designated or supported by governmental entities to
promote  economic   reconstruction  or  development  and  international  banking
institutions  and related  government  agencies.  Examples of these  include The
International Bank for Reconstruction and Development  ("World Bank"), The Asian
Development  Bank  and  The  InterAmerican   Development  Bank.  Obligations  of
supranational  entities may be supported by appropriated but unpaid  commitments
of their member countries, and there is no assurance that these commitments will
be  undertaken  or met in the future.  The failure by a member  country to honor
such commitments could adversely affect the payment of principal and interest on
these obligations.  The Fund may also invest,  from time to time, in obligations
issued by state and local governmental  issuers  ("Municipal  Securities").  The
purchase  of  Municipal  Securities  may be  advantageous  when,  as a result of
prevailing economic, regulatory or other circumstances,  the performance of such
securities,  on a pretax basis,  is comparable to that of corporate or U.S. debt
obligations.  The High  Quality Bond Fund may enter into  interest  rate futures
contracts to hedge against changes in market values of fixed-income  instruments
that the Fund  holds or intends to  purchase.  At least 65% of the Fund's  total
assets will be invested in  non-convertible  bonds.  Any common  stock  received
through  the  conversion  of  convertible  debt  obligations  will be sold in an
orderly manner as soon as possible.

Under normal market and economic  conditions,  the Fund will invest at least 80%
of its assets in high quality debt  obligations  that are rated,  at the time of
purchase, within the two highest ratings of S&P (AAA and AA) or Moody's (Aaa and
Aa) (or which,  if unrated,  are determined by the  investment  adviser to be of
comparable  quality)  and in  obligations  issued  or  guaranteed  by  the  U.S.
Government,   its  agencies  or  instrumentalities   and  other  "money  market"
instruments.  Unrated  securities will be determined to be of comparable quality
to high  quality debt  obligations  if, among other  things,  other  outstanding
obligations of the issuers of such securities are rated AA or A-2/P-2 or better.
When, in the opinion of the investment  adviser, a defensive  investment posture
is warranted,  the Fund may invest  temporarily  and without  limitation in high
quality, short-term "money market" instruments.

The Fund may also invest up to 5% of its total assets in dollar-denominated high
quality debt obligations of U.S.  companies issued outside the United States. In
addition,  the Fund may  acquire  high  quality  obligations  issued by Canadian
Provincial  Governments  which are similar to U.S.  Municipal  Securities except
that the income  derived  therefrom is fully subject to U.S.  Federal  taxation.
These instruments are denominated in either Canadian or U.S. dollars and have an
established over-the-counter market in the United States.

The Fund seeks to provide a current yield greater than that generally  available
from a portfolio of high quality short-term  obligations.  The High Quality Bond
Fund's average weighted maturity will vary from time to time depending on, among
other things,  current market and economic conditions and the comparative yields
on instruments with different maturities.  The Fund adjusts its average weighted
maturity and its holdings of corporate and U.S.  Government debt securities in a
manner  consistent  with the  investment  adviser's  assessment  of  prospective
changes in  interest  rates.  The  success  of this  strategy  depends  upon the
investment adviser's ability to predict changes in interest rates.

The value of the Fund's portfolio  securities will generally vary inversely with
changes in prevailing  interest rates.  The high quality credit criteria applied
to the selection of portfolio  securities  are intended to reduce  adverse price
changes due to credit considerations.


                  This prospectus  contains a short  description of the contents
                  of the Statement of Additional Information. You have the right
                  to receive from us such  Statement of Additional  Information.
                  To do so, please complete the following, detach it and forward
                  it to us at:

                   American Skandia Life Assurance Corporation
                   Attention: Galaxy Annuity Customer Service
                                  P.O. Box 883
                           Shelton, Connecticut 06484

================================================================================
              PLEASE SEND ME A STATEMENT OF  ADDITIONAL  INFORMATION  THAT  
              CONTAINS  FURTHER  DETAILS ABOUT THE GALAXY ANNUITY.(05/96)
================================================================================
================================================================================



              ---------------------------------------------------------------
================================================================================
================================================================================
                                              (print your name)



              ----------------------------------------------------------------
                                                  (address)



              ---------------------------------------------------------------
                                            (city/state/zip code)

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




<PAGE>


ADDITIONAL  INFORMATION:   Inquiries  will  be  answered  by  calling  your
representative or by writing to:

                      AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                  P.O. Box 883
                              Shelton, Connecticut 06484

Issued by:                                                         Serviced by:

AMERICAN SKANDIA LIFE                                     AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION                                     ASSURANCE CORPORATION
One Corporate Drive                                                P.O. Box 883
Shelton, Connecticut 06484                           Shelton, Connecticut 06484
Telephone: 1-800-444-3970                            Telephone:  1-800-444-3970

                                                                 Distributed by:

                     AMERICAN SKANDIA MARKETING, INCORPORATED
                              One Corporate Drive
                           Shelton, Connecticut 06484
                            Telephone: (203) 926-1888

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.  Other Expenses of Issuance and Distribution:  Not Applicable.

Item 14. Indemnification of Directors and Officers: Under Section 33-320a of the
Connecticut  General  Statutes,  the  Registrant  must  indemnify  a director or
officer  against  judgments,  fines,  penalties,  amounts paid in settlement and
reasonable expenses including attorneys' fees, for actions brought or threatened
to be brought  against him in his capacity as a director or officer when certain
disinterested  parties  determine that he acted in good faith and in a manner he
reasonably  believed  to be in the  best  interests  of the  Registrant.  In any
criminal  action or proceeding,  it also must be determined that the director or
officer  had no reason to believe  his conduct  was  unlawful.  The  director or
officer  must also be  indemnified  when he is  successful  on the merits in the
defense of a proceeding or in circumstances  where a court determines that he is
fairly and  reasonable  entitled to be  indemnified,  and the court approves the
amount. In shareholder derivative suits, the director or officer must be finally
adjudged  not to have  breached  this  duty to the  Registrant  or a court  must
determine that he is fairly and reasonably  entitled to be indemnified  and must
approve the amount.  In a claim based upon the director's or officer's  purchase
or sale of the  Registrants'  securities,  the  director  or officer  may obtain
indemnification   only  if  a  court   determines  that,  in  view  of  all  the
circumstances,  he is fairly and reasonably  entitled to be indemnified and then
for such amount as the court shall  determine.  The By-Laws of American  Skandia
Life Assurance  Corporation  ("ASLAC") also provide  directors and officers with
rights of indemnification, consistent with Connecticut Law.

The foregoing statements are subject to the provisions of Section 33-320a.

Directors  and officers of ASLAC and American  Skandia  Marketing,  Incorporated
("ASM,  Inc."),  formerly  Skandia  Life Equity Sales  Corporation,  can also be
indemnified  pursuant to Indemnity  Agreements between each director and officer
and American Skandia Investment  Holding  Corporation,  a corporation  organized
under  the laws of the  state  of  Delaware.  The  provisions  of the  Indemnity
Agreement are governed by Section 45 of the General Corporation Law of the State
of Delaware.

The  directors and officers of ASLAC and ASM, Inc. are covered under a directors
and officers  liability  insurance  policy issued by an  unaffiliated  insurance
company and an insurance policy issued to Skandia  Insurance Company Ltd., their
ultimate  parent.  Such policy will reimburse ASLAC or ASM, Inc., as applicable,
for any payments  that it shall make to directors  and officers  pursuant to law
and, subject to certain exclusions  contained in the policy,  will pay any other
costs,  charges  and  expenses,  settlements  and  judgments  arising  from  any
proceeding  involving  any  director  or  officer  of  ASLAC  or ASM,  Inc.,  as
applicable, in his or her past or present capacity as such.

     Item 15. Recent Sales of Unregistered Securities:  ASLAC has not offered or
sold any unregistered securities.

     Item 16. Exhibits and Financial Statement Schedules:

<TABLE>
<CAPTION>
<S>     <C>                                                                                     <C>        <C>       <C>
         Exhibits                                                                                                    Page

1        Underwriting agreement (Incorporated by reference to Post-Effective Amendment No. 1 to Registration
         Statement No. 33-26122, filed March 1, 1990).

2        Plan of acquisition, reorganization, arrangement, liquidation or succession                       Not applicable

3        Articles of incorporation and by-laws (Incorporated by reference to Pre-Effective Amendment No. 2 to
         Registration Statement No. 33-19363, filed July 27, 1988).

4        Instruments defining the rights of security holders, including indentures (Incorporated by reference to
         initial Registration Statement No. 33-67614, filed August 17, 1993).

5        Opinion re legality.                                                                   (Included as Exhibit 23b)

6 - 9                                                                                                      Not applicable

10       Material contracts (Investment Management Agreements)

         (a)    Agreement with Fleet Investment Advisors, Inc. (Incorporated by reference to initial Registration
                Statement No. 33-86918, filed December 1, 1994).

         (b)    Agreement with J. P. Morgan Investment Management Inc. (Incorporated by reference to Post-Effective
                Amendment No. 5 to Registration Statement No. 33-26122, filed April 23, 1991).

11 - 22                                                                                                    Not applicable

23       Consents of experts and counsel

         23a    Consent of Deloitte & Touche LLP.
         23b    Opinion & consent of Werner & Kennedy.

24       Power of Attorney

         (a)    For Directors Boronow, Campbell, Carendi,  Danckwardt,  Dokken and Sutyak - incorporated by reference
                to Post-Effective Amendment No. 10 to Registration Statement No. 33-19363, filed February 28, 1992
   
(i) Filed via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration
Statement No. 333-00941, filed April 26, 1996
    

         (b)    For  Directors  Mazzaferro,  Moberg,  Soderstrom  and Tracy  incorporated  by  reference  to  initial
                Registration Statement No. 33-86918, filed December 1, 1994
   
(i) Filed via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration
Statement No. 333-00941, filed April 26, 1996
    

         (c)    For Director  Svensson  incorporated  by reference to initial  Registration  Statement No.  33-88360,
                filed January 10, 1995
   
(i) Filed via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration
Statement No. 333-00941, filed April 26, 1996
    

         (d)    For Directors Brunetti, Collins and Michael incorporated by reference to initial Registration
                Statement No. 333-00941, filed February 15, 1996

- ---------------------------------------------------------------------------------------------------------------------------
25 - 28                                                                                                    Not applicable
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

Item 17.  Undertakings:  The undersigned Registrant hereby undertakes:

(1) To file,  during  any  period  in which  offers  or sales  are  being  made,
post-effective amendments to this registration statement:

     (i) To  include  any  prospectus  required  by  section  10  (a)(3)  of the
Securities Act of 1933;

     (ii) To reflect in the  prospectus  any facts or events  arising  after the
effective date of the registration  statement (or the most recent post-effective
amendment  thereof)  which,  individually  or  in  the  aggregate,  represent  a
fundamental  change in the information set forth in the registration  statement;
and

     (iii) To  include  any  material  information  with  respect to the plan of
distribution  not  previously  disclosed  in the  registration  statement or any
material change to such information in the registration statement.

(2) That, for the purpose of determining  any liability under the Securities Act
of  1933,  each  such  post-effective  amendment  shall  be  deemed  to be a new
registration statement relating the securities offered therein, and the offering
of such  securities  at that time  shall be deemed to be the  initial  bona fide
offering thereof.

(3) To remove from  registration by means of a  post-effective  amendment any of
the securities  being  registered  which remain unsold at the termination of the
offering.

(4)  The  undersigned   Registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
Registrant's  annual  report  pursuant to section  13(a) or section 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee  benefit  plan's  annual  report  pursuant  to  section  15(d)  of  the
Securities  Exchange  Act of 1934)  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(5) Insofar as indemnification  for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
Registrant pursuant to the foregoing  provisions,  or otherwise,  the Registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the Registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

- --------------------------------------------------------------------------------
LEGAL EXPERTS:  Counsel with respect to Federal laws and regulations  applicable
to the issue and sale of the  Annuities and with respect to  Connecticut  law is
Werner & Kennedy, 1633 Broadway, New York, New York 10019.


                                   SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  registration  statement  to be signed  on its  behalf by the
undersigned,  thereunto  duly  authorized,  in the  City of  Shelton,  State  of
Connecticut, on April 26, 1996.

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                   Registrant


By:/s/ M. Patricia Paez                             Attest:/s/ Diana D. Steigauf
M. Patricia Paez, Corporate Secretary                          Diana D. Steigauf

<TABLE>
<CAPTION>
Pursuant to the  requirements of the Securities Act of 1933,  this  Registration
Statement has been signed below by the following  persons in the  capacities and
on the date indicated.

Signature                                               Title                              Date
<S>                 <C>                                                                <C> 

                                             (Principal Executive Officer)


           Jan R. Carendi*                        Chief Executive Officer,          April 26, 1996
           Jan R. Carendi                    Chairman of the Board and Director

                              (Principal Financial Officer and Principal Accounting Officer)


   /s/ Thomas M. Mazzaferro                  Executive Vice President and            April 26, 1996
        Thomas M. Mazzaferro                       Chief Financial Officer


                              (Board of Directors)


          Jan. R. Carendi*                           Gordon C. Boronow*                Malcolm M. Campbell*
           Jan. R. Carendi                            Gordon C. Boronow                 Malcolm M. Campbell

         Henrik Danckwardt*                           Amanda C. Sutyak*                   Wade A. Dokken*
          Henrik Danckwardt                           Amanda C. Sutyak                    Wade A. Dokken

       Thomas M. Mazzaferro**                          Gunnar Moberg**                   Bayard F. Tracy**
        Thomas M. Mazzaferro                            Gunnar Moberg                     Bayard F. Tracy

        Anders Soderstrom**                          C. Ake Svensson***                 Lincoln R. Collins****
          Anders Soderstrom                           C. Ake Svensson                   Lincoln R. Collins

Nancy F. Brunetti****                                                                  Dianne B. Michael****
Nancy F. Brunetti                                                                        Dianne B. Michael


                    */**/***/****By: /s/M. Patricia Paez
                                        M. Patricia Paez

<FN>
*Pursuant to Powers of Attorney previously filed with Post-Effective Amendment No. 10 to Registration Statement No. 33-19363
      **Pursuant to Powers of Attorney previously filed with the initial filing of Registration Statement No. 33-86918.
      ***Pursuant to Power of Attorney previously filed with the initial filing of Registration Statement No. 33-88630.
                   ****Pursuant to Powers of Attorney filed with the initial filing of Registration Statement No. 333-00941.
</FN>
</TABLE>

                                    Exhibits

Exhibit 23a                  Consent of Deloitte & Touche LLP

Exhibit 23b                  Opinion & Consent of Werner & Kennedy
[{"type": "S-1", "sequence": "1", "description": "GAL2 S1", "secsgml_size_bytes": 321394}]
{"company-data": {"conformed-name": "AMERICAN SKANDIA LIFE ASSURANCE CORP/CT", "cik": "0000881453", "assigned-sic": "6399", "irs-number": "061241288", "state-of-incorporation": "CT", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-02867", "film-number": "96551546"}, "business-address": {"street1": "ONE CORP DR", "city": "SHELTON", "state": "CT", "zip": "06484", "phone": "2039261888"}, "mail-address": {"street1": "ONE CORPORATE DRIVE", "city": "SHELTON", "state": "CT", "zip": "06484"}}
Filed with the Securities and Exchange Commission on April 26, 1996

                            Registration No.333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-1

            Registration Statement Under The Securities Act of 1933*

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
             (Exact name of registrant as specified in its charter)

                                   CONNECTICUT
         (State or other jurisdiction of incorporation or organization)

                                       63
            (Primary Standard Industrial Classification Code Number)

                                   06-1241288
                      (I.R.S. Employer Identification No.)

         ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484 (203) 926-1888
   (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                      M. PATRICIA PAEZ, CORPORATE SECRETARY
                 ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484
        (203) 926-1888 (Name, address, including zip code, and telephone
               number, including area code, of agent for service)

                                    Copy To:

                              JOHN T. BUCKLEY, ESQ.
                                WERNER & KENNEDY
             1633 Broadway, New York, New York 10019 (212) 408-6900
             -------------------------------------------------------

Approximate date of commencement of proposed sale to the public: May 1, 1996 or
 as soon as practical after the effective date of this Registration Statement

If any of the securities  being  registered on this form are to be offered on a
delayed or continuous  basis pursuant to Rule 415 under the Securities Act of
1933 check the following:  X.
                           --

                         Calculation of Registration Fee
=================================================================================================================================
            Title of each                                 Proposed              Proposed
              class of                                     maximum               maximum
             securities              Amount               offering              aggregate             Amount of
                to be                 to be                 price               offering            registration
             registered            registered             per unit               price**                 fee
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Annuity Contracts                                                        $10,000,000.00       $3448.00                   
    
- ---------------------------------------------------------------------------------------------------------------------------------
*The prospectus  contained in this  Registration  Statement also relates to
annuity  contracts  which are  covered by our  earlier  registration  statement,
including Registration File Numbers 33-67614 and 33-89674.
- --------------------------------------------------------------------------------
**The proposed  aggregate offering price is estimated solely for determining the
registration  fee. The amount to be registered and the proposed maximum offering
price per unit are not  applicable  since  these  securities  are not  issued in
predetermined amounts or units.
================================================================================
Registrant  hereby amends this  Registration  Statement on such date or dates as
may be necessary to delay its effective date until the  registrant  shall file a
further amendment which  specifically  states that this  Registration  Statement
shall  thereafter  become effective in accordance with the provisions of Section
8(a) of the Securities  Act of 1933 or until the  Registration  Statement  shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
- --------------------------------------------------------------------------------
Gal2
- --------------------------------------------------------------------------------

           CROSS REFERENCE SHEET PURSUANT TO REGULATION S-K, ITEM 501
S-1 Item No.                                                                                    Prospectus Heading

1.       Forepart of the Registration Statement and            Facing Page, Cross Reference Sheet, Outside Front Cover Page
         Outside Front Cover Page of Prospectus

2.       Inside Front Cover and Outside Back Cover of Prospectus           Available Information, Incorporation of Certain
                                                                                Documents by Reference, Reports to You,
                                                                                Table of Contents

3.       Summary Information, Risk Factors and Ratio of Earnings                Highlights, Cover Page, Separate Account D,
         to Fixed Charges                                                                  Insurance Aspects of the Annuity

4.       Use of Proceeds                                    Fixed Investment Options, Separate Accounts, Separate Account D

5.       Determination of the Offering Price                                                       Fixed Investment Options

6.       Dilution                                                                                            Not applicable

7.       Selling Security Holders                                                                            Not applicable

8.       Plan of Distribution                                                                         Sale of the Annuities

9.       Description of the Securities to be Registered         Investment Options, Purchasing Annuities, Account Value and
                                                                             Surrender Value, Rights, Benefits and Services

10.      Interest of named Expert and Counsel                                                                Not applicable

11.      Information with Respect to the Registrant                                                             The Company

12.      Disclosure of Commission Position on Indemnification for                                           Indemnification
         Securities Act Liabilities
                                                                                                            Part II Heading

13.      Other Expenses of Issuance                                                              Other Expenses of Issuance
         and Distribution                                                                                  and Distribution

14.      Indemnification of Directors and Officers                                Indemnification of Directors and Officers

15.      Recent Sales of Unregistered Securities                                    Recent Sales of Unregistered Securities

16.      Exhibits and Financial Statement Schedules                              Exhibits and Financial Statement Schedules

17.      Undertakings                                                                                          Undertakings
This  Prospectus  describes a type of annuity (the  "Annuity")  being offered by
American Skandia Life Assurance Corporation ("we", "our" or "us"), One Corporate
Drive, Shelton, Connecticut, 06484. This flexible premium Annuity may be offered
as individual annuity contracts or as interests in a group annuity. The Table of
Contents starts on Page 4.  Definitions  applicable to this Prospectus  start on
page 6. The highlights of this offering are described  beginning on Page 8. This
Prospectus  contains a detailed discussion of matters you should consider before
purchasing  this Annuity.  A Statement of Additional  Information has been filed
with the  Securities  and Exchange  Commission  and is available from us without
charge upon request. The contents of the Statement of Additional Information are
described on Page 40. The Annuity or certain of its  investment  options may not
be  available  in all  jurisdictions.  Various  rights and  benefits  may differ
between jurisdictions to meet applicable laws and/or regulations.

A Purchase  Payment for this Annuity is assessed any  applicable tax charge (see
"Tax  Charges")  and set-up fee (see Set-Up  Fee).  It is then  allocated to the
investment options you select except in certain jurisdictions, where allocations
of Purchase Payments we receive during the "free-look" period that you direct to
any Sub-accounts are temporarily allocated to a money-market type of Sub-account
(see  "Allocation  of Net Purchase  Payments").  You may transfer  Account Value
between investment options (see "Investment  Options" and "Transfers").  Account
Value may be distributed as periodic annuity payments in a "payout phase".  Such
annuity payments can be guaranteed for life (see "Annuity Payments"). During the
"accumulation phase" (the period before any payout phase), you may surrender the
Annuity for its Surrender Value or make withdrawals (see "Distributions").  Such
distributions  may be subject to tax,  including a tax penalty.  A death benefit
may be payable during the accumulation phase (see "Death Benefit").

Account Value in the variable investment options increases or decreases daily to
reflect investment  performance and the deduction of charges.  No minimum amount
is guaranteed (see "Account Value in the Sub-accounts"). The variable investment
options are Sub-accounts of American Skandia Life Assurance Corporation Separate
Account E ("Separate Account E"). Each Sub-account currently invests exclusively
in one of the following portfolios of the Galaxy VIP Fund: (a) Money Market; (b)
Equity; (c) High Quality Bond; and (d) Asset Allocation.

   
In most  jurisdictions,  Account  Value may be allocated  to a fixed  investment
option during the accumulation  phase.  Account Value so allocated earns a fixed
rate of  interest  for a  specified  period of time  referred  to as a Guarantee
Period.  Guarantee  Periods of  different  durations  may be offered (see "Fixed
Investment  Options").  Such an allocation and the interest earned is guaranteed
by us only if held to its Maturity Date, and, where required by law, the 30 days
prior to the Maturity  Date.  You are  cautioned  that with respect to the Fixed
Investment  Options  during the  accumulation  phase,  we do not  guarantee  any
minimum  amount,  because the value may be  increased  or  decreased by a market
value  adjustment  (see  "Account  Value  of  the  Fixed  Allocations").  Assets
supporting  such  allocations  in the  accumulation  phase are held in  American
Skandia Life Assurance  Corporation  Separate  Account D ("Separate  Account D")
(see "Separate  Accounts" and "Separate  Account D"). Fixed allocations were not
available on Annuities solicited prior to March 30, 1994.
    
- --------------------------------------------------------------------------------
Annuities:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Are NOT FDIC  insured,  or insured  by the  Federal  Reserve  Board or any other
agency 
Are NOT Obligations of Fleet Bank or its affiliates
- --------------------------------------------------------------------------------
Are NOT guaranteed or endorsed by Fleet Bank or its affiliates
- --------------------------------------------------------------------------------
DO involve risks, including possible loss of principal amount invested
- --------------------------------------------------------------------------------
                             (continued on Page 2)

- --------------------------------------------------------------------------------
THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE  SECURITIES  COMMISSION  PASSED UPON THE  ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.  ANY  REPRESENTATION TO THE CONTRARY IS A CRIMINAL  OFFENSE.  PLEASE
READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------

                  FOR FURTHER INFORMATION CALL 1-800-444-3970.

     Prospectus  Dated: May 1, 1996     Statement of Additional  Information 
                                           Dated: May 1, 1996 
GA-PROS-(5/96)
We guarantee fixed annuity  payments.  We also guarantee any adjustable  annuity
payments we may make available (see "Annuity Payments").

Taxes on gains during the accumulation  phase may be deferred until you begin to
take  distributions  from your Annuity.  Distributions  before age 59 1/2 may be
subject to a tax penalty. In the payout phase, a portion of each annuity payment
may be  treated as a return of your  "investment  in the  contract"  until it is
completely  recovered.  Transfers between  investment options are not subject to
taxation.  The Annuity may also qualify for special tax treatment  under certain
sections of the Code  including,  but not limited to,  Sections 401, 403 and 408
(see "Certain Tax Considerations").

Broker-dealers   or  entities  which  may  offer  variable   annuities   without
registration  as  broker-dealers  may offer Annuities to persons or entities who
have  established an account with such  broker-dealer  or entity.  Such eligible
persons also will be customers of one or more  subsidiaries  of Fleet  Financial
Group,  Inc.  The  investment  advisor  of the  underlying  mutual  fund,  Fleet
Investment  Advisors,  Inc., is a subsidiary of Fleet Financial  Group,  Inc. In
certain  cases,  the  broker-dealer  may also be an affiliate of the  investment
advisor of the underlying mutual fund.

                       (This page has been purposely left blank.)
TABLE OF CONTENTS
DEFINITIONS........................................................................................................................6
HIGHLIGHTS.........................................................................................................................8
AVAILABLE INFORMATION.............................................................................................................10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................................................................10
CONTRACT EXPENSE SUMMARY..........................................................................................................10
EXPENSE EXAMPLES..................................................................................................................11
CONDENSED FINANCIAL INFORMATION...................................................................................................12
   Unit Prices And Numbers of Units...............................................................................................12
   Yields On Money Market Sub-account.............................................................................................12
INVESTMENT OPTIONS................................................................................................................12
   Variable Investment Options....................................................................................................12
   Fixed Investment Options.......................................................................................................13
OPERATIONS OF THE SEPARATE ACCOUNTS...............................................................................................14
   Separate Accounts..............................................................................................................14
   Separate Account  E............................................................................................................14
   Separate Account D.............................................................................................................15
INSURANCE ASPECTS OF THE ANNUITY..................................................................................................16
CHARGES ASSESSED OR ASSESSABLE AGAINST THE ANNUITY................................................................................16
   Set-Up Fee.....................................................................................................................16
   Maintenance Fee................................................................................................................16
   Tax Charges....................................................................................................................16
   Transfer Fee...................................................................................................................16
   Allocation Of Annuity Charges..................................................................................................16
CHARGES ASSESSED AGAINST THE ASSETS...............................................................................................16
   Administration Charge..........................................................................................................16
   Mortality and Expense Risk Charges.............................................................................................17
CHARGES OF THE UNDERLYING MUTUAL FUNDS............................................................................................17
PURCHASING ANNUITIES..............................................................................................................17
   Uses Of The Annuity............................................................................................................17
   Application And Initial Payment................................................................................................17
   Bank Drafting..................................................................................................................18
   Periodic Purchase Payments.....................................................................................................18
   Right to Return the Annuity....................................................................................................18
   Allocation of Net Purchase Payments............................................................................................18
   Balanced Investment Program....................................................................................................18
   Participant, Annuitant and Beneficiary Designations............................................................................19
ACCOUNT VALUE AND SURRENDER VALUE.................................................................................................19
   Account Value in the Sub-accounts..............................................................................................19
   Account Value of the Fixed Allocations.........................................................................................19
RIGHTS, BENEFITS AND SERVICES.....................................................................................................20
   Additional Purchase Payments...................................................................................................20
   Changing Revocable Designations................................................................................................20
   Allocation Rules...............................................................................................................21
   Transfers......................................................................................................................21
     Renewals.....................................................................................................................22
     Dollar Cost Averaging........................................................................................................22
   Distributions..................................................................................................................22
     Surrender....................................................................................................................22
     Partial Withdrawals..........................................................................................................23
     Systematic Withdrawals.......................................................................................................23
     Minimum Distributions........................................................................................................23
     Death Benefit................................................................................................................23
     Annuity Payments.............................................................................................................24
     Qualified Plan Withdrawal Limitations........................................................................................25
   Pricing of Transfers and Distributions.........................................................................................26
   Voting Rights..................................................................................................................26
   Transfers, Assignments or Pledges..............................................................................................26
   Reports to You.................................................................................................................27
SALE OF THE ANNUITIES.............................................................................................................27
   Distribution...................................................................................................................27
   Advertising....................................................................................................................27
CERTAIN TAX CONSIDERATIONS........................................................................................................28
   Our Tax Considerations.........................................................................................................28
   Tax Considerations Relating to Your Annuity....................................................................................28
     Non-natural Persons..........................................................................................................28
     Natural Persons..............................................................................................................28
     Distributions................................................................................................................28
     Assignments and Pledges......................................................................................................29
     Penalty on Distributions.....................................................................................................29
     Annuity Payments.............................................................................................................29
     Gifts........................................................................................................................29
     Tax Free Exchanges...........................................................................................................29
     Transfers Between Investment Options.........................................................................................29
     Generation-Skipping Transfers................................................................................................30
     Diversification..............................................................................................................30
     Federal Income Tax Withholding...............................................................................................30
   Tax Considerations When Using Annuities in Conjunction with Qualified Plans....................................................30
     Individual Retirement Programs...............................................................................................30
     Tax Sheltered Annuities......................................................................................................30
     Corporate Pension and Profit-sharing Plans...................................................................................31
     H.R. 10 Plans................................................................................................................31
     Tax Treatment of Distributions from Qualified Annuities......................................................................31
     Section 457 Plans............................................................................................................31
OTHER MATTERS.....................................................................................................................31
   Deferral of Transactions.......................................................................................................31
   Resolving Material Conflicts...................................................................................................31
   Modification...................................................................................................................32
   Misstatement of Age or Sex.....................................................................................................32
   Ending the Offer...............................................................................................................32
   Indemnification................................................................................................................32
   Legal Proceedings..............................................................................................................32
THE COMPANY............................................................................................                           32
   Lines of Business..............................................................................................................33
   Selected Financial Data........................................................................................................33
   Management's Discussion and Analysis of Financial Condition and Results of Operations..........................................34
     Results of Operations........................................................................................................34
     Liquidity and Capital Resources..............................................................................................34
     Segment Information..........................................................................................................34
   Reinsurance....................................................................................................................34
   Surplus Notes..................................................................................................................34
   Reserves.......................................................................................................................34
   Competition....................................................................................................................34
   Employees......................................................................................................................34
   Regulation.....................................................................................................................35
   Executive Officers and Directors...............................................................................................35
   Executive Compensation.........................................................................................................37
     Summary Compensation Table...................................................................................................37
     Long-Term Incentive Plans - Awards in the Last Fiscal Year...................................................................38
     Compensation of Directors....................................................................................................39
     Compensation Committee Interlocks and Insider Participation..................................................................39
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION...............................................................................39
FINANCIAL STATEMENTS..............................................................................................................39
APPENDIX A  FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION..................................................40
APPENDIX B  SHORT DESCRIPTIONS OF THE UNDERLYING MUTUAL FUNDS' PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES.......................40
DEFINITIONS:  The  following are key terms used in this  Prospectus.  Other
terms are defined in this Prospectus as they appear.

ACCOUNT  VALUE  is the  value of each  allocation  to a  Sub-account  or a Fixed
Allocation prior to the Annuity Date, plus any earnings, and/or less any losses,
distributions  and  charges  thereon,  and/or any  applicable  maintenance  fee.
Account Value is determined  separately for each  Sub-account and for each Fixed
Allocation, and then totaled to determine Account Value for your entire Annuity.
Account  Value of each Fixed  Allocation  on other than such Fixed  Allocation's
Maturity Date may be calculated using a market value adjustment.

ANNUITANT is the person upon whose life your Annuity is written.

ANNUITY is the type of annuity being offered pursuant to this Prospectus.  It is
also, if issued,  your individual  Annuity,  or with respect to a group Annuity,
the  certificate  evidencing  your  participation  in a group  Annuity.  It also
represents an account we set up and maintain to track our obligations to you.

ANNUITY DATE is the date annuity payments are to commence.

ANNUITY YEARS are continuous  12-month periods  commencing on the Issue Date and
each anniversary of the Issue Date.

APPLICATION  is the enrollment  form or  application  form we may require you to
submit for an Annuity.

BENEFICIARY is a person designated as the recipient of the death benefit.

CODE is the Internal Revenue Code of 1986, as amended from time to time.

CONTINGENT  ANNUITANT  is the  person  named  to  become  the  Annuitant  on the
Annuitant's death prior to the Annuity Date.

CURRENT RATES are the interest rates we offer to credit to Fixed Allocations for
the duration of newly beginning  Guarantee  Periods under this Annuity.  Current
Rates are contained in a schedule of rates  established  by us from time to time
for the  Guarantee  Periods  then  being  offered.  We may  establish  different
schedules for different classes and for different annuities.

FIXED  ALLOCATION  is an  allocation  of Account  Value that is to be credited a
fixed rate of interest for a specified  Guarantee Period during the accumulation
phase and is to be supported by assets in Separate Account D.

GUARANTEE PERIOD is a period of time during the accumulation  phase during which
we credit a fixed rate of interest on a Fixed Allocation.

IN WRITING is in a written form satisfactory to us and filed at the Office.

INTERIM  VALUE is,  as of any  particular  date,  the  initial  value of a Fixed
Allocation  plus all  interest  credited  thereon,  less the sum of all previous
transfers and withdrawals of any type from such Fixed Allocation of such Interim
Value and interest thereon from the date of each withdrawal or transfer.

ISSUE DATE is the effective date of your Annuity.

MVA is a market value  adjustment used in the  determination of Account Value of
each Fixed Allocation as of a date other than such Fixed  Allocation's  Maturity
Date, and, where required by law, the 30 days prior to the Maturity Date.

MATURITY DATE is the last day in a Guarantee Period.

MINIMUM  DISTRIBUTIONS  are minimum  amounts that must be distributed  each year
from an Annuity if used in relation to certain qualified plans under the Code.

NET PURCHASE PAYMENT is a Purchase Payment less any applicable  charge for taxes
and any applicable set-up fee.

OFFICE is our business office, American Skandia Life Assurance Corporation,
One Corporate Drive, P.O. Box 883, Shelton, Connecticut 06484.

PARTICIPANT  is either an eligible  entity or person  named as having  ownership
rights in relation to an Annuity issued as a certificate  evidencing interest in
a group annuity contract. An Annuity may be issued as an individual contract. If
so, the  rights,  benefits  and  requirements  of and the events  relating  to a
Participant,  as described in this Prospectus,  will be the rights, benefits and
requirements  of and events  relating to the person or entity  designated as the
owner in such contract.

PURCHASE  PAYMENT is a cash  consideration  you give to us for  certain  rights,
privileges and benefits provided under an Annuity according to its terms.

SUB-ACCOUNT  is a  division  of  Separate  Account  E.  We use  Sub-accounts  to
calculate variable benefits under this Annuity.

SURRENDER  VALUE is the value of your Annuity  available upon surrender prior to
the  Annuity  Date.  It  equals  the  Account  Value as of the date we price the
surrender less any applicable maintenance fee.

SYSTEMATIC  WITHDRAWAL  is one of a plan of periodic  withdrawals  of  Surrender
Value during the accumulation phase. Such a plan is subject to our rules.

UNIT is a measure used to calculate your Account Value in a Sub-account prior to
the Annuity Date.

UNIT  PRICE is used for  calculating:  (a) the  number of Units  allocated  to a
Sub-account;  and (b) the value of transactions  into or out of a Sub-account or
benefits based on Account Value in a Sub-account prior to the Annuity Date. Each
Sub-account  has its own Unit  Price  which will vary each  Valuation  Period to
reflect the investment experience of that Sub-account.

VALUATION  DAY is every day the New York Stock  Exchange  is open for trading or
any other day that the Securities and Exchange  Commission requires mutual funds
or unit investment trusts to be valued.

VALUATION  PERIOD is the period of time between the close of business of the New
York Stock Exchange on successive Valuation Days.

   
"We",  "us",  "our", or "the Company" means American Skandia Life Assurance
Corporation.
    

"You" or "your" means the Participant.
HIGHLIGHTS:  The  following  are only the  highlights  of the Annuity being
offered pursuant to this Prospectus.  A more detailed  description follows these
highlights.

     (1)......Investment  Options: We currently offer multiple variable
investment  options in the accumulation  phase. Each of these investment options
is a  Sub-account  which  invests  exclusively  in a portfolio of an  underlying
mutual fund. As of the date of this Prospectus,  we offer four Sub-accounts each
of which  invests  exclusively  in one  portfolio  of the Galaxy  VIP Fund.  The
available  portfolios  of the Galaxy VIP Fund are as follows:  (a) Money  Market
Fund;  (b) Equity Fund;  (c) High Quality  Bond Fund;  and (d) Asset  Allocation
Fund. In the payout phase,  you may elect fixed  annuity  payments  based on our
then current  annuity  rates.  For more  information,  see the section  entitled
Investment Options.

In most jurisdictions, we also offer the option during the accumulation phase of
earning one or more fixed rates of interest on all or a portion of your  Account
Value.  As of the  date  of this  Prospectus,  we  offered  the  option  to make
allocations  that could be  guaranteed  interest  rates for 1, 2, 3, 5, 7 and 10
years. Each such Fixed Allocation earns the fixed interest rate applicable as of
the date of such  allocation.  The interest rate credited to a Fixed  Allocation
does not change during its Guarantee  Period.  You may maintain  multiple  Fixed
Allocations.  From  time-to-time we declare Current Rates for Fixed  Allocations
beginning a new Guarantee Period. The rates we declare are subject to a minimum,
but we may declare  higher  rates.  The minimum is  determined in relation to an
index that we do not control.

The end of a  Guarantee  Period for a specific  Fixed  Allocation  is called its
Maturity Date. At that time, the Guarantee Period normally "renews" and we begin
crediting interest for a new Guarantee Period lasting the same amount of time as
the one just ended.  That Fixed  Allocation  then earns interest  during the new
Guarantee  Period at a rate that is not less than the one then  being  earned by
Fixed  Allocations  for that Guarantee  Period by new Annuity  purchasers in the
same class. You also may choose a different Guarantee Period from among those we
are then currently  making available or you may transfer that Account Value to a
variable Sub-account.

In the payout  phase,  you may elect fixed  annuity  payments  based on our then
current annuity rates. We also may make available adjustable annuity rates.

For  more  information,   see  the  section  entitled  Investment  Options,
including the following  subsections:  (a) Variable Investment Options;  and (b)
Fixed Investment Options.

     (2)......Operations  of the Separate Accounts:  In the accumulation  phase,
the assets  supporting  guarantees we make in relation to Fixed  Allocations are
held in our  Separate  Account  D. This is a  "non-unitized"  separate  account.
However,  values and benefits  calculated on the basis of Fixed  Allocations are
guaranteed by our general  account  assets.  In the payout phase,  fixed annuity
payments and any  adjustable  annuity  payments we may make  available  are also
guaranteed by our general account,  but the assets  supporting such payments are
not held in Separate Account D.

In the accumulation  phase, the assets  supporting the Account Values maintained
in the  Sub-accounts  are held in our  Separate  Account E. Values and  benefits
based on these Sub-accounts are not guaranteed and will vary with the investment
performance of the underlying mutual fund portfolios. In the payout phase, fixed
annuity payments, and any adjustable annuity payments we may make available, are
guaranteed by our general account.

For more  information,  see the  section  entitled  Operations  of the  Separate
Accounts,  including  the  following  subsections:  (a) Separate  Accounts;  (b)
Separate Account E; and (c) Separate Account D.

     (3)......Insurance  Aspects of the  Annuity:  There are  insurance
risks which we bear in relation to the Annuity.  For more  information,  see the
section entitled Insurance Aspects of the Annuity.

     (4)......Charges  Assessed or Assessable  Against the Annuity:  The Annuity
charges which are assessed or may be assessable under certain  circumstances are
the set-up  fee,  the  maintenance  fee, a charge for taxes and a transfer  fee.
These  charges  are  allocated  according  to our rules.  We may also charge for
certain special services. For more information, see the section entitled Charges
Assessed or Assessable Against the Annuity, including the following subsections:
(a) Set-Up Fee; (b) Maintenance Fee; (c) Tax Charges;  (d) Transfer Fee; and (e)
Allocation of Annuity Charges.

     (5)......Charges  Assessed Against the Assets: The charges assessed against
assets in the Sub-accounts are the  administration  charge and the mortality and
expense risk charges.  There are no charges deducted from the assets  supporting
Fixed  Allocations.  For more  information,  see the  section  entitled  Charges
Assessed  Against  the  Assets,   including  the  following   subsections:   (a)
Administration Charge; and (b) Mortality and Expense Risk Charges.

     (6)......Charges Of The Underlying Mutual Funds: The underlying mutual fund
assesses  various  charges,  including  charges for  investment  management  and
investment  advisory fees.  These charges  generally  differ between  portfolios
within the underlying mutual fund. You will find additional details in each fund
prospectus and its statement of additional information.

   
     (7)......Purchasing  Annuities:  Annuities are available for multiple uses,
including as a funding vehicle for various retirement programs which qualify for
special  treatment  under  the  Code.  We  may  require  a  properly   completed
Application,  an acceptable Purchase Payment,  and any other materials under our
underwriting  rules  before we agree to issue an Annuity.  You have the right to
return an Annuity within a "free-look"  period if you are not satisfied with it.
In most  jurisdictions,  the initial Purchase Payment and any Purchase  Payments
received  during  the  "free-look"  period  are  allocated   according  to  your
instructions.  In jurisdictions that require a "free-look"  provision such that,
if the Annuity is returned  under that  provision,  we must return at least your
Purchase  Payments less any withdrawals,  we temporarily  allocate such Purchase
Payments to the GAL Money  Market  Sub-account.  Where  permitted by law in such
jurisdictions,  we  will  allocate  such  Purchase  Payments  according  to your
instructions,   without  any  temporary  allocation  to  the  GAL  Money  Market
Sub-account,  if you  execute a return  waiver.  We offer a balanced  investment
program in relation to your initial Purchase Payment.  Certain designations must
be made,  including a Participant  and an  Annuitant.  You may also make certain
other  designations  that apply to the  Annuity if  issued.  These  designations
include, a contingent Participant, a Contingent Annuitant (Contingent Annuitants
may be required in conjunction with certain uses of the Annuity), a Beneficiary,
and a contingent  Beneficiary.  See the section entitled  Purchasing  Annuities,
including the following  subsections:  (a) Uses of the Annuity;  (b) Application
and Initial Payment;  (c) Bank Drafting;  (d) Periodic  Purchase  Payments;  (e)
Right to Return the  Annuity;  (f)  Allocation  of Net  Purchase  Payments;  (g)
Balanced  Investment  Program;  and (h)  Participant,  Annuitant and Beneficiary
Designations.
    

     (8)......Account  Value and Surrender Value: In the accumulation phase your
Annuity has an Account Value.  Your total Account Value as of a particular  date
is the  sum of  your  Account  Value  in  each  Sub-account  and in  each  Fixed
Allocation. Surrender Value is the Account Value less any applicable maintenance
fee. To determine  your Account Value in each  Sub-account  we multiply the Unit
Price as of the Valuation  Period for which the  calculation is being made times
the number of Units attributable to you in that Sub-account as of that Valuation
Period.  We  also  determine  your  Account  Value  separately  for  each  Fixed
Allocation.  A Fixed  Allocation's  Account  Value  as of a  particular  date is
determined by multiplying  its then current  Interim Value times the MVA. No MVA
applies to a Fixed  Allocation as of its Maturity  Date,  and, where required by
law,  the 30 days prior to the  Maturity  Date.  For more  information,  see the
section  entitled  Account  Value and Surrender  Value,  including the following
subsections:  (a) Account  Value in the  Sub-accounts;  and (b) Account Value of
Fixed Allocations.

   
     (9)......Rights,  Benefits  and  Services:  You have a number of rights and
benefits  under an Annuity once issued.  We also  currently  provide a number of
services to Participants.  These rights,  benefits and services are subject to a
number of rules and conditions. These rights, benefits and services include, but
are not limited to, those  described in this  Prospectus.  We accept  additional
Purchase  Payments during the  accumulation  phase. You may use bank drafting to
make Purchase Payments. We support certain Periodic Purchase Payments subject to
our rules.  You may change  revocable  designations.  You may  transfer  Account
Values between  investment  options.  Transfers in excess of 12 per Annuity Year
are subject to a fee. We offer  dollar cost  averaging  during the  accumulation
phase (see "Dollar Cost Averaging").  During the accumulation  phase,  surrender
and  partial  withdrawals  are  available.  In the  accumulation  phase we offer
Systematic  Withdrawals  and, for  Annuities  used in qualified  plans,  Minimum
Distributions.  We offer fixed annuity options, and may offer adjustable annuity
options,  that can guarantee  payments for life. In the  accumulation  phase,  a
death  benefit may be payable.  You may transfer or assign your  Annuity  unless
such rights are limited in conjunction with certain uses of the Annuity. You may
exercise  certain  voting  rights in  relation  to the  underlying  mutual  fund
portfolios  in which the  Sub-accounts  invest.  You have the  right to  receive
certain reports periodically.
    

For  additional  information,  see the section  entitled  Rights,  Benefits  and
Services including the following subsections:  (a) Additional Purchase Payments;
(b) Changing Revocable  Designations;  (c) Allocation Rules; (d) Transfers;  (e)
Renewals;  (f)  Dollar  Cost  Averaging;  (g)  Distributions   (including:   (i)
Surrender; (ii) Partial Withdrawals;  (iii) Systematic Withdrawals; (iv) Minimum
Distributions;  (v) Death Benefit;  (vi) Annuity  Payments;  and (vii) Qualified
Plan Withdrawal  Limitations);  (h) Pricing of Transfers and Distributions;  (i)
Voting Rights; (j) Transfers, Assignments and Pledges; and (k) Reports to You.

   
     (10).....The  Company:  American  Skandia Life  Assurance  Corporation is a
wholly owned  subsidiary of American  Skandia  Investment  Holding  Corporation,
whose  indirect  parent is Skandia  Insurance  Company  Ltd.  Skandia  Insurance
Company Ltd. is a Swedish company that holds a number of insurance  companies in
many countries.  The  predecessor to Skandia  Insurance  Company Ltd.  commenced
operations in 1855. For more  information,  see the section entitled The Company
and the following  subsections:  (a) Lines of Business;  (b) Selected  Financial
Data;  (c)  Management's  Discussion  and  Analysis of Financial  Condition  and
Results of Operations (including: (i) Results of Operations;  (ii) Liquidity and
Capital  Resources;  and  (iii)  Segment  Information);   (d)  Reinsurance;  (e)
Reserves; (f) Competition; (g) Employees; (h) Regulation; (i) Executive Officers
and  Directors;   and  (j)  Executive  Compensation   (including:   (i)  Summary
Compensation  Table;  (ii) Long Term Incentive  Plans-Awards  in the Last Fiscal
Year;  (iii)  Compensation  of  Directors;   and  (iv)  Compensation   Committee
Interlocks and Insider Participation).

     AVAILABLE  INFORMATION:  A Statement of Additional Information is available
from us without  charge  upon  request.  It  includes  further  information,  as
described in the section of this Prospectus  entitled "Contents of the Statement
of Additional Information". You may obtain a copy of the Statement of Additional
Information by filling in the coupon at the end of the Prospectus and sending it
(or  a  written  request)  to  American  Skandia  Life  Assurance   Corporation,
Attention:  Galaxy Annuity Customer Service,  P.O. Box 883,  Shelton,  CT 06484.
This  Prospectus  is part of the  registration  statements  we  filed  with  the
Securities and Exchange  Commission ("SEC") regarding this offering.  Additional
information  on  us  and  this  offering  is  available  in  those  registration
statements and the exhibits thereto. You may obtain copies of these materials at
the prescribed rates from the SEC's Public Reference  Section,  450 Fifth Street
N.W.,  Washington,  D.C.,  20549.  You may inspect  and copy those  registration
statements and the exhibits thereto at the SEC's public reference  facilities at
the above address,  Rm. 1024, and at the SEC's Regional Offices,  75 Park Place,
New York,  NY, and the Everett  McKinley  Dirksen  Building,  219 South Dearborn
Street, Chicago, IL.
    

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE: 
To  the  extent  and  only  to the  extent  that  any  statement  in a  document
incorporated  by reference  into this  Prospectus is modified or superseded by a
statement in this  Prospectus or in a later-filed  document,  such  statement is
hereby deemed so modified or superseded and not part of this Prospectus.

We furnish you without charge a copy of any or all of the documents incorporated
by reference in this Prospectus,  including any exhibits to such documents which
have been specifically  incorporated by reference. We do so upon receipt of your
written or oral request.  Please  address your request to American  Skandia Life
Assurance Corporation, Attention: Galaxy Annuity Customer Service, P.O. Box 883,
Shelton, Connecticut, 06484. Our phone number is 1-(800) 444-3970.

CONTRACT EXPENSE SUMMARY:  The summary provided below includes  information
regarding  the  expenses  for your  Annuity,  for the  Sub-accounts  and for the
underlying  mutual fund  portfolios.  

     More detail regarding the expenses of the underlying mutual fund portfolios
may be found  either in the  prospectus  for that  mutual  fund or in the annual
report of that mutual fund.
   
     The expenses of our Sub-accounts  (not those of the underlying  mutual fund
portfolios  in which  our  Sub-accounts  invest)  are the same no  matter  which
Sub-account you choose. Therefore,  these expenses are only shown once below. In
certain states, premium taxes may be applicable.
    

     Your Transaction Expenses

Sales Load                                                                   $0

Set-up Fee                                    $25 deducted from the initial
                                          Purchase Payment if less than $10,000

Annual Maintenance Fee                   Smaller of $30 or 2% of Account Value,
                                     applicable only if at the Valuation Period
                                  such fee is payable, the Account Value of the
                                                   Annuity is less than $50,000

Tax Charges               nt on the requirements of the applicable jurisdiction

Transfer Fee        $10 for each transfer after the twelfth in any Annuity Year

         Annual Expenses of the Sub-accounts 
         (as a percentage of average daily net assets)

Mortality and Expense Risk Charges                                         0.40%
Administration Charge                                                      0.15%
Total Annual Expenses of the Sub-accounts                                  0.55%
Underlying Mutual Fund Portfolio Annual Expenses 
          (as a percentage of average net assets)
Manage-         Manage-                                        Total          Total
                                        ment            ment           Other          Other          Annual         Annual
                                         Fee             Fee         Expenses       Expenses        Expenses       Expenses
                                        after          without         after         without          after         without
                                         any             any            any            any             any            any
                                     applicable      applicable     applicable     applicable      applicable     applicable
                                     reimburse-      reimburse-     reimburse-     reimburse-      reimburse-     reimburse-
                                        ment            ment           ment           ment            ment           ment
- ------------------------------------------------------------------------------------------------------------

The Galaxy VIP Fund
Money Market                         0.13%           0.40%          0.57%          0.71%           0.70%          1.11%
   Equity                               0.73%           0.75%          0.67%          0.49%           1.40%          1.24%
   High Quality Bond                    0.14%           0.55%          0.76%          1.02%           0.90%          1.57%
   Asset Allocation                     0.47%           0.75%          0.93%          0.79%           1.40%          1.54%
The underlying mutual fund portfolio  information was provided by the underlying
mutual funds. The Company has not independently verified such information.
    

The expenses of the underlying mutual fund portfolios either are currently being
partially  reimbursed or may be partially  reimbursed in the future.  Management
Fees,  Other  Expenses  and Total Annual  Expenses are provided  above on both a
reimbursed and not reimbursed  basis,  if applicable.  See the  prospectuses  or
statements of additional information of the underlying mutual funds for details.

EXPENSE  EXAMPLES:  The examples which follow are designed to assist you in
understanding  the  various  costs  and  expenses  you  will  bear  directly  or
indirectly  if you  maintain  Account  Value in the  Sub-accounts.  The examples
reflect expenses of our Sub-accounts, as well as those for the underlying mutual
fund portfolios.

The examples shown assume that: (a) fees and expenses remain constant; (b) there
are no  withdrawals  of Account Value during the period shown;  (c) there are no
transfers or other transactions subject to a fee during the period shown; (d) no
tax  charge  applies;  and  (e)  the  expenses  throughout  the  period  for the
underlying  mutual fund portfolios will be the lower of the expenses without any
applicable  reimbursement  or expenses  after any applicable  reimbursement,  as
shown in the section entitled Contract Expense Summary.

THE  EXAMPLES  ARE  ILLUSTRATIVE   ONLY  -  THEY  SHOULD  NOT  BE  CONSIDERED  A
REPRESENTATION  OF PAST OR FUTURE  EXPENSES OF THE  UNDERLYING  MUTUAL  FUNDS OR
THEIR  PORTFOLIOS - ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
Sub-accounts are referred to below by their specific names.

         Examples (amounts shown are rounded to the nearest dollar)

Whether or not you  surrender  your  Annuity at the end of the  applicable  time
period  or begin  taking  annuity  payments  at such  time,  you  would  pay the
following expenses on a $1,000 investment, assuming 5% annual return on assets:
Sub-accounts                                                                                After:
1 yr.           3 yrs.            5 yrs.          10 yrs.

         If your  initial  Purchase  Payment  is at least  $10,000,  so that the
set-up  fee does not apply,  and at the end of each  period  shown your  Account
Value is $50,000 or higher, so that the maintenance fee does not apply:

GAL Money Market                                                    13               40                69             152
GAL Equity                                                          20               62               106             228
GAL High Quality Bond                                               15               46                79             174
GAL Asset Allocation                                                20               62               106             228
If your  initial  Purchase  Payment  is at least  $10,000,  so that the
set-up  fee does not apply,  and at the end of each  period  shown your  Account
Value is below $50,000, so that the maintenance fee applies:

GAL Money Market                                                    14               44                76             165
GAL Equity                                                          21               66               113             241
GAL High Quality Bond                                               16               50                86             187
GAL Asset Allocation                                                21               66               113             241

         If your initial Purchase  Payment is below $10,000,  so that the set-up
fee applies,  and at the end of each period  shown your  Account  Value is below
$50,000, so that the maintenance fee applies:

GAL Money Market                                                    22               59                98             203
GAL Equity                                                          29               80               134             278
GAL High Quality Bond                                               24               65               108             224
GAL Asset Allocation                                                29               80               134             278
CONDENSED FINANCIAL INFORMATION: The Unit Prices and number of Units in the
Sub-account are shown below, as is the yield information on the GAL Sub-account.

         Unit Prices And Numbers of UnitsUnit  Prices And Numbers of Units:  The
following table shows: (a) the Unit Price as of the dates shown for the Units in
each of the  Sub-accounts of Separate  Account E being offered  pursuant to this
Prospectus;  and (b) the number of Units outstanding in each such Sub-account as
of the dates shown. Each Sub-account  became operational in 1993. The portfolios
in  which  a  particular  Sub-account  invests  may or may  not  have  commenced
operations prior to the date such Sub-account  became  operational.  The initial
offering price for each Sub-account was $10.00.
Sub-account

                                                    GAL                                GAL               GAL
                                                   Money              GAL         High Quality          Asset
                                                  Market            Equity            Bond           Allocation
                                                  (1993)            (1993)           (1993)            (1993)
No. of Units
as of 12/31/95                               1,350,072        2,119,810           830,395         1,136,906
  as of 12/31/94                               1,257,546        1,818,564           811,254         1,037,131
  as of 12/31/93                               1,063,152        1,246,452           929,546         1,126,518

Unit Price
  as of 12/31/95                                  $11.06           $13.44            $12.04            $13.12
  as of 12/31/94                                   10.56            10.66              9.88             10.20
  as of 12/31/93                                   10.22            10.36             10.55             10.48
Yields On Money Market  Sub-accountYields  On Money Market Sub-account:
Shown below are the current and effective  yields for a  hypothetical  contract.
The  yield  is  calculated  based on the  performance  of the GAL  Money  Market
Sub-account  during the last seven days of the calendar year ending prior to the
date  of  this  Prospectus.  At the  beginning  of the  seven  day  period,  the
hypothetical  contract  had a balance of one Unit.  The  current  and  effective
yields reflect the recurring  charges against the Sub-account.  Please note that
current and effective yield information will fluctuate. This information may not
provide a basis for  comparisons  with  deposits in banks or other  institutions
which  pay a fixed  yield  over a  stated  period  of time,  or with  investment
companies which do not serve as underlying funds for variable annuities.
Sub-account                       Current Yield                     Effective Yield
GAL Money Market                           6.11%                                6.30%
INVESTMENT  OPTIONS:  We currently  offer  multiple  variable  and, in most
jurisdictions, fixed investment options.

     Variable  Investment  Options:  During the  accumulation  phase, we offer a
number of  Sub-accounts  as investment  options.  These are all  Sub-accounts of
American  Skandia  Life  Assurance  Corporation  Separate  Account E  ("Separate
Account E"). Each of these  Sub-accounts  invests  exclusively in one underlying
mutual  fund  portfolio  of The  Galaxy  VIP  Fund.  The  Sub-accounts  and  the
portfolios in which they invest are as follows:

       Sub-Account                          Underlying Mutual Fund Portfolio

       GAL Money Market                               Money Market Portfolio
       GAL Equity                                           Equity Portfolio
       GAL High Quality Bond                      High Quality Bond Portfolio
       GAL Asset Allocation                       Asset Allocation Portfolio

We  may  make  other   underlying   mutual  funds   available  by  creating  new
Sub-accounts. Additionally, new portfolios may be made available by the creation
of new  Sub-accounts  from time to time.  Such a new  portfolio of an underlying
mutual  fund  will  be  disclosed  in its  prospectus.  However,  addition  of a
portfolio  does not  require  us to create a new  Sub-account  to invest in that
portfolio.  We may take other  actions in  relation to the  Sub-accounts  and/or
Separate Account E (see "Modifications").

The Galaxy VIP Fund is registered  under the Investment  Company Act of 1940, as
amended  (the  "1940  Act") as an  open-end  diversified  management  investment
company. It was established as a Massachusetts business trust under an Agreement
and Declaration of Trust dated May 27, 1992. As of the date of this  Prospectus,
The Galaxy VIP Fund's  portfolios  offered pursuant to this Prospectus are those
shown above. The trustees or directors,  as applicable,  of an underlying mutual
fund may add, eliminate or substitute  portfolios from time to time.  Generally,
each portfolio issues a separate class of shares.  The Agreement and Declaration
of Trust permits the trustees to issue an unlimited number of full or fractional
shares of each class of stock.

The investment objectives,  policies,  charges,  operations, the attendant risks
and other  details  pertaining  to each  underlying  mutual fund  portfolio  are
described in the prospectus of the  underlying  mutual fund and the statement of
additional  information for such  underlying  mutual fund. Also included in such
information is the investment policy of each mutual fund portfolio regarding the
acceptable  ratings  by  recognized  rating  services  for bonds and other  debt
obligations. There can be no guarantee that any underlying mutual fund portfolio
will meet its investment objectives.

Shares of the underlying mutual fund may be available to variable life insurance
and variable annuity separate  accounts of other insurance  companies.  Possible
consequences  of this  multiple  availability  are  discussed in the  subsection
entitled Resolving Material Conflicts.

The prospectus for any underlying  mutual fund or funds being  considered by you
should  be read in  conjunction  herewith.  A copy  of  each  prospectus  may be
obtained  without  charge from us by calling  Galaxy  Annuity  Customer  Service
1-800-444-3970  or writing to P.O. Box 883,  Attention:  Galaxy Annuity Customer
Service, Shelton, Connecticut, 06484-0883.

     Fixed Investment Options:  For the payout phase you may elect fixed annuity
payments based on our then current annuity rates. The discussion below describes
the fixed investment options in the accumulation phase.

As of the date of this  Prospectus we offer in most  jurisdictions  in which the
Annuity is available Fixed  Allocations with Guarantee  Periods of 1, 2, 3, 5, 7
and 10 years. No Fixed  Allocations  were available to Annuities issued prior to
March 30, 1994.  Each such Fixed  Allocation is accounted for  separately.  Each
Fixed Allocation earns a fixed rate of interest  throughout a set period of time
called a Guarantee Period. Multiple Fixed Allocations are permitted,  subject to
our  allocation  rules.  The  duration of a Guarantee  Period may be the same or
different from the duration of the Guarantee  Periods of any of your prior Fixed
Allocations.

We may  or may  not be  able  to  obtain  approval  in  the  future  in  certain
jurisdictions of individual or group annuity  contracts that include the type of
Fixed  Allocations  offered  pursuant to this  Prospectus.  If such  approval is
obtained,  we will take those steps  needed to offer such Fixed  Allocations  to
purchasers to whom Annuities were issued prior to the date of such approval.

To the  extent  permitted  by law,  we  reserve  the  right at any time to offer
Guarantee  Periods with  durations  that differ from those which were  available
when your  Annuity  was  issued.  We also  reserve the right at any time to stop
accepting  new  allocations,  transfers or renewals  for a particular  Guarantee
Period.  Such an action may have an impact on the MVA (see "Account Value of the
Fixed Allocations").

A Guarantee Period for a Fixed Allocation  begins: (a) when all or part of a Net
Purchase  Payment is allocated for that particular  Guarantee  Period;  (b) upon
transfer of any of your Account Value to a Fixed  Allocation for that particular
Guarantee  Period;  or (c)  when a  Guarantee  Period  attributable  to a  Fixed
Allocation "renews" after its Maturity Date.

We declare the rates of interest applicable during the various Guarantee Periods
offered.  Declared  rates are  effective  annual rates of interest.  The rate of
interest  applicable  to a  Fixed  Allocation  is the  one in  effect  when  its
Guarantee Period begins. The rate is guaranteed throughout the Guarantee Period.
We inform you of the interest rate applicable to a Fixed Allocation,  as well as
its Maturity Date,  when we confirm the  allocation.  We declare  interest rates
applicable to new Fixed Allocations from time-to-time.  Any new Fixed Allocation
in an existing Annuity is credited  interest at a rate not less than the rate we
are then crediting to Fixed  Allocations for the same Guarantee  Period selected
by new Annuity purchasers in the same class.

The interest  rates we credit are subject to a minimum.  We may declare a higher
rate. The minimum is based on both an index and a reduction to the interest rate
determined according to the index.

The  index is based on the  published  rate  for  certificates  of  indebtedness
(bills,  notes or bonds,  depending on the term of  indebtedness)  of the United
States Treasury at the most recent Treasury  auction held at least 30 days prior
to the beginning of the applicable Fixed Allocation's Guarantee Period. The term
(length of time from issuance to maturity) of the  certificates  of indebtedness
upon  which  the  index is based is the same as the  duration  of the  Guarantee
Period. If no certificates of indebtedness are available for such term, the next
shortest  term is used.  If the  United  States  Treasury's  auction  program is
discontinued, we will substitute indexes which in our opinion are comparable. If
required,  implementation of such substitute indexes will be subject to approval
by the  Securities and Exchange  Commission and the Insurance  Department of the
jurisdiction  in which your  Annuity was  delivered.  (For  Annuities  issued as
certificates of  participation  in a group contract,  it is our expectation that
approval of only the  jurisdiction  in which such group  contract was  delivered
applies.)

The reduction  used in determining  the minimum  interest rate is one percent of
interest (1.00%).

Where  required by the laws of a  particular  jurisdiction,  a specific  minimum
interest rate, compounded yearly, will apply should the index less the reduction
be less than the specific minimum interest rate applicable to that jurisdiction.

WE MAY CHANGE THE INTEREST  RATES WE CREDIT NEW FIXED  ALLOCATIONS  AT ANY TIME.
Any such  change  does not  have an  impact  on the  rates  applicable  to Fixed
Allocations  with  Guarantee  Periods that began prior to such change.  However,
such  a  change  will  affect  the  MVA  (see   "Account   Value  of  the  Fixed
Allocations").

We have no specific formula for determining the interest rates we declare. Rates
may differ  between  classes and between  types of annuities we offer,  even for
guarantees  of the same  duration  starting  at the same  time.  We  expect  our
interest  rate  declarations  for  Fixed  Allocations  to  reflect  the  returns
available on the type of investments  we make to support the various  classes of
annuities  supported by the assets in Separate  Account D. However,  we may also
take into  consideration in determining  rates such factors  including,  but not
limited to, the durations  offered by the  annuities  supported by the assets in
Separate  Account D,  regulatory  and tax  requirements,  the  liquidity  of the
secondary   markets  for  the  type  of   investments   we  make,   commissions,
administrative expenses, investment expenses, our mortality and expense risks in
relation to Fixed  Allocations,  general  economic trends and  competition.  OUR
MANAGEMENT MAKES THE FINAL DETERMINATION AS TO INTEREST RATES TO BE CREDITED. WE
CANNOT PREDICT THE RATES WE WILL DECLARE IN THE FUTURE.

OPERATIONS OF THE SEPARATE  ACCOUNTS:  In the  accumulation  phase,  assets
supporting Account Values are held in our Separate Account D or Separate Account
E established  under the laws of the State of  Connecticut.  Separate  Account E
consists of multiple Sub-accounts.  In the payout phase, assets supporting fixed
annuity payments and any adjustable  annuity payments we make available are held
in our general account.

Separate  Accounts:  We are the  legal  owner  of  assets  in the  separate
accounts.  Income,  gains and  losses,  whether  or not  realized,  from  assets
allocated to these separate  accounts,  are credited to or charged  against each
such separate account in accordance with the terms of the annuities supported by
such  assets  without  regard  to our  other  income,  gains or losses or to the
income,  gain or losses in any other of our separate accounts.  We will maintain
assets in each separate  account with a total market value at least equal to the
reserve  and other  liabilities  we must  maintain  in  relation  to the annuity
obligations  supported  by such  assets.  These  assets may only be charged with
liabilities which arise from such annuities.  This may include Annuities offered
pursuant  to this  Prospectus  or certain  other  annuities  we may  offer.  The
investments  made by  separate  accounts  are  subject  to the  requirements  of
applicable state laws.  These  investment  requirements may differ between those
for separate  accounts  supporting  variable  obligations and those for separate
accounts supporting fixed obligations.

Separate Account E: Separate Account E is registered with the SEC under the
1940 Act as a unit investment trust, which is a type of investment company. This
does  not  involve  any  supervision  by the  SEC of  the  investment  policies,
management  or  practices  of  Separate  Account  E.  As of  the  date  of  this
Prospectus,  we offer four Sub-accounts,  each of which invests only in a single
corresponding  portfolio  of The  Galaxy  VIP  Fund.  You will  find  additional
information  about the underlying  mutual fund  portfolios in the prospectus for
such fund.  Portfolios  added to the  underlying  mutual  fund may or may not be
offered through added Sub-accounts.

Sub-accounts  are permitted to invest in  underlying  mutual funds or portfolios
that we  consider  suitable.  We also  reserve  the  right to add  Sub-accounts,
eliminate  Sub-accounts,  to combine  Sub-accounts,  or to substitute underlying
mutual funds or portfolios of underlying mutual funds.

Values and benefits based on allocations to the Sub-accounts  will vary with the
investment  performance of the underlying  mutual funds or fund  portfolios,  as
applicable.  We do not guarantee the investment results of any Sub-account,  nor
is there any assurance that the Account Value allocated to the Sub-accounts will
equal the amounts  allocated to the  Sub-accounts  as of any time other than the
Valuation Period of such allocation. You bear the entire investment risk.

     Separate  Account  D: In the  accumulation  phase,  assets  supporting  our
obligations  based on Fixed Allocations are held in Separate Account D, which is
a "non-unitized"  separate  account.  Such obligations are based on the interest
rates we  credit to Fixed  Allocations  and the  terms of the  Annuities.  These
obligations  do not  depend  on the  investment  performance  of the  assets  in
Separate  Account  D.  Separate  Account D was  established  by us  pursuant  to
Connecticut law.

There are no discrete  units in Separate  Account D. No party with rights  under
any annuity nor any group contract owner  participates in the investment gain or
loss from  assets  belonging  to Separate  Account D. Such gain or loss  accrues
solely  to us.  We retain  the risk  that the  value of the  assets in  Separate
Account D may drop below the reserves and other  liabilities  we must  maintain.
Should the value of the assets in Separate  Account D drop below the reserve and
other  liabilities  we must maintain in relation to the  annuities  supported by
such  assets,  we will  transfer  assets  from our  general  account to Separate
Account  D to make up the  difference.  We have  the  right to  transfer  to our
general account any assets of Separate  Account D in excess of such reserves and
other liabilities.  We maintain assets in Separate Account D supporting a number
of annuities we offer.
       

If you  surrender,  withdraw or transfer  Account Value from a Fixed  Allocation
before the end of its  Guarantee  Period,  you bear the risk inherent in the MVA
(see  "Account  Value of the Fixed  Allocations").  The Account Value of a Fixed
Allocation is guaranteed on its Maturity Date (and,  where  required by law, the
30 days prior to the Maturity Date) to be its then current Interim Value.

We operate  Separate  Account D in a fashion  designed  to meet the  obligations
created by Fixed  Allocations.  Factors  affecting these operations  include the
following:

         (1) The State of New York,  which is one of the  jurisdictions in which
we are  licensed  to do  business,  requires  that  we meet  certain  "matching"
requirements.  These  requirements  address the matching of the durations of the
assets with the durations of  obligations  supported by such assets.  We believe
these matching requirements are designed to control an insurer's ability to risk
investing in long-term assets to support short term interest rate guarantees. We
also believe this limitation  controls an insurer's ability to offer unrealistic
rate guarantees.

         (2) We  employ an  investment  strategy  designed  to limit the risk of
default.  Some of the guidelines of our current investment strategy for Separate
Account D include, but are not limited to the following:

                  (a) Investments may be made in cash; debt securities issued by
the United States Government or its agencies and instrumentalities; money market
instruments;  short,  intermediate and long-term corporate obligations;  private
placements; asset-backed obligations; and municipal bonds.

   
                  (b) At the time of purchase,  fixed income securities will be
in one of the top four generic  lettered rating  classifications  as 
established by Standard & Poor's, Moody's Investor Services, Inc. or any 
Nationally Recognized Statistical Rating Organization ("NRSRO").
    

We are not obligated to invest according to the aforementioned guidelines or any
other  strategy  except  as may be  required  by  Connecticut  and  other  state
insurance laws.

         (3) We have the sole discretion to employ  investment  managers that we
believe are qualified,  experienced and reputable to manage Separate  Account D.
We currently employ  investment  managers for Separate Account D including,  but
not limited to, Fleet  Investment  Advisors Inc. Each manager is responsible for
investment  management of different portions of Separate Account D. From time to
time additional  investment  managers may be employed or investment managers may
cease  being  employed.  We are under no  obligation  to employ  any  investment
manager(s).

         (4) The assets in  Separate  Account D are  accounted  for at their  
market value, rather than at book value.

         (5) We are  obligated by law to maintain  our capital and  surplus,  as
well as our reserves,  at the levels required by applicable  state insurance law
and regulation.

INSURANCE  ASPECTS  OF THE  ANNUITY:  As an  insurance  company we bear the
insurance  risk inherent in the Annuity.  This includes the risks that mortality
and expenses exceed our expectations, and the investment and re-investment risks
in relation to the assets  supporting  obligations  not based on the  investment
performance of a separate  account.  We are subject to regulation  that requires
reserving and other practices in a manner that minimizes the insurance risk (see
"Regulation").

CHARGES  ASSESSED OR ASSESSABLE  AGAINST THE ANNUITY:  The Annuity  charges
which are assessed or may be  assessable  under  certain  circumstances  are the
set-up fee, the  maintenance  fee, a charge for taxes and a transfer fee.  These
charges are allocated  according to our rules.  The maintenance fee and transfer
charge are not assessed if no Account Value is maintained in the Sub-accounts at
the time such fee or charge is payable.  However,  we make  certain  assumptions
regarding  maintenance  and  transfer  expenses as part of the  overall  expense
assumptions   used  in  determining  the  interest  rates  we  credit  to  Fixed
Allocations.  Charges  are  also  assessed  against  the  Sub-accounts  and  the
underlying  mutual funds. We also may charge you for special  services,  such as
dollar  cost  averaging,  Systematic  Withdrawals,  Minimum  Distributions,  and
additional reports. As of the date of this prospectus,  we do not charge you for
any special services.

     Set-Up Fee: We charge a $25.00 set-up fee if your initial  Purchase Payment
is less than $10,000. Certain representations regarding the set-up fee are found
in the section entitled Administration Charge.

     Maintenance  Fee: A  maintenance  fee  equaling the smaller of $30 or 2% of
your then  current  Account  Value is deducted  from the  Account  Values in the
Sub-accounts  annually and upon surrender if your Account Value at the Valuation
Period  such  fee is  payable  is less  than  $50,000.  Certain  representations
regarding the maintenance fee are found in the section  entitled  Administration
Charge.

Tax  Charges:  In several  states a tax is payable.  We will
deduct the amount of tax payable, if any, from your Purchase Payments if the tax
is then incurred or from your Account Value when applied under an annuity option
if the  tax is  incurred  at that  time.  The  amount  of the  tax  varies  from
jurisdiction to jurisdiction.  It may also vary depending on whether the Annuity
qualifies for certain treatment under the Code. In each jurisdiction,  the state
legislature  may change the amount of any current  tax, may decide to impose the
tax, eliminate it, or change the time it becomes payable. In those jurisdictions
imposing  such a tax, the tax rates  currently in effect range up to 3 1/2%.  In
addition to state taxes,  local taxes may also apply. The amounts of these taxes
may exceed those for state taxes.

Transfer Fee: We charge $10.00 for each transfer after the
twelfth  in any  Annuity  Year.  However,  the fee is only  charged  if there is
Account  Value  in at  least  one  Sub-account  immediately  subsequent  to such
transfer.

Allocation Of Annuity Charges:  Any applicable  set-up fee is deducted from
your  initial  Purchase  Payment.  The  transfer  fee is  assessed  against  the
Sub-accounts in which you maintain Account Value immediately  subsequent to such
transfer.  The transfer fee is allocated on a pro-rata  basis in relation to the
Account  Values in such  Sub-accounts  as of the  Valuation  Period for which we
price the  applicable  transfer.  Tax  charges are  assessed  against the entire
Purchase  Payment  or Account  Value as  applicable.  The  maintenance  fee,  if
applicable, is assessed against the Sub-accounts on a pro-rata basis in relation
to the Account Values in each  Sub-account as of the Valuation  Period for which
we price the fee. The  maintenance  fee, if  applicable,  is used in calculating
Surrender Value.

CHARGES  ASSESSED  AGAINST THE ASSETS:  There are charges  assessed against
assets in the  Sub-accounts.  These  charges are described  below.  There are no
charges deducted from the Fixed  Allocations.  The factors we use in determining
the  interest  rates we credit  Fixed  Allocations  are  described  above in the
subsection  entitled "Fixed  Investment  Options".  No charges are deducted from
assets supporting fixed or adjustable  annuity  payments.  The factors we use in
determining fixed or adjustable  annuity payments  include,  but are not limited
to, our expected investment returns, costs, risks and profit targets. We reserve
the right to assess a charge against the Sub-accounts and the Fixed  Allocations
equal to any taxes which may be imposed upon the separate accounts.

     Administration  Charge:  We assess each  Sub-account,  on a daily basis, an
administration  charge.  The charge is 0.15% per year of the average daily total
value of such Sub-account.

We assess the  administration  charge and the maintenance fee,  described in the
subsection entitled  Maintenance Fee, at amounts we believe necessary to recover
the actual costs of maintaining and  administering  the Account Values allocated
to the Sub-accounts and Separate Account E itself. The administration charge and
maintenance  fee can be increased  only for Annuities  issued  subsequent to the
effective date of any such change.

A  relationship   does  not  necessarily   exist  between  the  portion  of  the
administration  charge, the set-up fee and the maintenance fee attributable to a
particular Annuity and the expenses  attributable to that Annuity.  However,  we
believe the total administration  charges made against the Sub-accounts will not
be greater than the total  anticipated  costs.  Types of expenses which might be
incurred  include,  but  are  not  necessarily  limited  to,  the  expenses  of:
developing  and  maintaining a computer  support  system for  administering  the
Account Values in the Sub-accounts and Separate Account E itself,  preparing and
delivering   confirmations  and  quarterly   statements,   processing  transfer,
withdrawal  and  surrender  requests,   responding  to  Participant   inquiries,
reconciling  and depositing  cash  receipts,  calculating  and monitoring  daily
values of each Sub-account, reporting for the Sub-accounts, including quarterly,
semi-annual and annual reports,  and mailing and tabulation of shareholder proxy
solicitations.

From time to time we may reduce the amount of the set-up  fee,  maintenance  fee
and/or  the  administration  charge.  We may do so when  Annuities  are  sold to
individuals  or a group of  individuals  in a manner  that  reduces  maintenance
and/or administrative  expenses. We would consider such factors as: (a) the size
and type of group; (b) the number of Annuities  purchased by a Participant;  (c)
the amount of Purchase  Payments;  and/or (d) other  transactions  where set-up,
maintenance and/or administration expenses are likely to be reduced.

Any  elimination of the set-up fee,  maintenance  fee and/or the  administration
charge or any reduction of such charges will not  discriminate  unfairly between
Annuity  purchasers.  We will not  make  any  changes  to  these  charges  where
prohibited by law.

     Mortality and Expense Risk Charges:  The mortality risk charge is 0.30% per
year and the expense risk charge is 0.10% per year.  These  charges are assessed
in combination  each day against each  Sub-account at the rate of 0.40% per year
of the average daily total value of each Sub-account.

With respect to the mortality risk charge, we assume the risk that the mortality
experience under the Annuities may be less favorable than our assumptions.  This
could  arise for a number of  reasons,  such as when  persons  upon whose  lives
annuity  payments  are  based  live  longer  than we  anticipated,  or when  the
Sub-accounts  decline in value resulting in losses in paying death benefits.  If
our mortality  assumptions prove to be inadequate,  we will absorb any resulting
loss.  Conversely,   if  the  actual  experience  is  more  favorable  than  our
assumptions,  then we will benefit  from the gain.  We also assume the risk that
the administration charge may be insufficient to cover our actual administration
costs. If we realize a profit from the mortality and expense risk charges,  such
profit may be used to recover sales expenses incurred.

CHARGES OF THE UNDERLYING MUTUAL FUNDS: The underlying mutual fund assesses
various charges for investment  management and investment  advisory fees.  These
charges  generally  differ between the portfolios  within the underlying  mutual
fund. You will find additional  details in the fund prospectus and the statement
of additional information.

PURCHASING ANNUITIES: You may purchase an Annuity for various purposes. You
must meet our requirements  before we issue an Annuity and it takes effect.  You
have a "free-look"  period during which you may return your Annuity for a refund
amount which may be less or more than your Purchase Payment,  except in specific
circumstances.

     Uses Of The  Annuity:  The  Annuity  may be  issued in  connection  with or
purchased as a funding vehicle for certain retirement plans designed to meet the
requirements of various sections of the Code. These include, but are not limited
to: (a) Sections 401  (corporate,  association,  or  self-employed  individuals'
retirement  plans);  (b) Section 403(b)  (tax-sheltered  annuities  available to
employees  of certain  qualifying  employers);  and (c) Section 408  (individual
retirement  accounts and individual  retirement  annuities - "IRAs";  Simplified
Employee Pensions).  We may require additional  information regarding such plans
before we issue an Annuity to be used in connection with such retirement  plans.
We may also restrict or change certain  rights and benefits,  if in our opinion,
such  restrictions  or  changes  are  necessary  for your  Annuity to be used in
connection  with  such  retirement  plans.  The  Annuity  may  also  be  used in
connection  with plans that do not qualify  under the sections of the Code noted
above.

     Application  And Initial  Payment:  Where allowed by law, you must meet our
underwriting requirements and forward a Purchase Payment if you seek to purchase
an Annuity.  One requirement is that, at the time of issue of your Annuity,  you
must be a customer of one or more  subsidiaries of Fleet Financial  Group,  Inc.
These  requirements  may also include a properly  completed  Application.  Where
permitted by law, we may issue an Annuity  without  completion of an Application
for certain classes of Annuities. The minimum initial Purchase Payment we accept
is $5,000,  unless  you  authorize  the use of bank  drafting  to make  Purchase
Payments (see "Bank  Drafting").  Our Office must give you prior approval before
we accept a Purchase  Payment  that  would  result in the  Account  Value of all
annuities  you maintain  with us exceeding  $500,000.  We confirm each  Purchase
Payment  in  writing.  Multiple  annuities  purchased  from us  within  the same
calendar  year may be treated for tax purposes as if they were a single  annuity
(see "Certain Tax Considerations").

We reserve  the right to  allocate  your  initial  Net  Purchase  Payment to the
investment options up to two business days after we receive,  at our Office, all
of our  requirements  for issuing the Annuity as applied  for. We may retain the
Purchase  Payment  and not  allocate  the initial  Net  Purchase  Payment to the
investment  options for up to five  business days while we attempt to obtain all
such requirements. We will try to reach you or any other party from whom we need
any information or materials.  If the  requirements  cannot be fulfilled  within
that time,  we will (a)  attempt to inform you of the delay,  and (b) return the
amount of the Purchase Payment, unless you specifically consent to our retaining
it until  all our  requirements  are met.  Once our  requirements  are met,  the
initial Net Purchase  Payment is applied to the  investment  options  within two
business days.  Once we accept your Purchase  Payment and our  requirements  are
met, we issue an Annuity.

     Bank Drafting:  You may make Purchase  Payments to your Annuity using bank
drafting, but only for allocations to variable investment options.  However, you
must pay at least one prior Purchase Payment by check. We will accept an initial
Purchase Payment lower than our standard minimum Purchase Payment requirement of
$5,000 if you also furnish bank drafting  instructions that provide amounts that
will meet a $1,000  minimum  Purchase  Payment  requirement to be paid within 12
months.  We will accept an initial Purchase Payment in an amount as low as $100,
but it  must be  accompanied  by a bank  drafting  authorization  form  allowing
monthly Purchase Payments of at least $75.

   
     Periodic Purchase Payments: We may, from time-to-time,  offer opportunities
to make Purchase  Payments  automatically  on a periodic  basis,  subject to our
rules. These  opportunities may include,  but are not limited to, certain salary
reduction programs agreed to by an employer.  As of the date of this Prospectus,
we only  agree to accept  Purchase  Payments  on such a basis if: (a) we receive
your  request In Writing for a salary  reduction  program and we agree to accept
Purchase  Payments  on this  basis;  (b) the  allocations  are only to  variable
investment  options  or  the  frequency  and  number  of  allocations  to  fixed
investment options is limited in accordance with our rules; and (c) the total of
Purchase  Payments in the first  Annuity Year is scheduled to equal at least our
then  current  minimum  requirements.  We may also  require an initial  Purchase
Payment to be submitted by check or wire before agreeing to such a program.  Our
minimum  requirements  may  differ  based on the usage of the  Annuity,  such as
whether it is being used in conjunction with certain retirement plans.
    

     Right to Return  the  Annuity:  You have the right to  return  the  Annuity
within twenty-one days of receipt or longer where required by law. The period in
which you can take this  action is known as a  "free-look"  period.  To exercise
your right to return the Annuity during the "free-look"  period, you must return
the Annuity.  The amount to be refunded is the then current  Account  Value plus
any tax charge deducted. This is the "standard refund". We return the greater of
the "standard  refund" or the Purchase  Payment received less any withdrawals if
necessary  to  meet  Federal   requirements   for  IRAs  or  certain  state  law
requirements.  We tell you how we determine  the amount  payable  under any such
right at the time we issue your Annuity.

For  annuities  subject to New York law  notice  given by mail and return of the
Annuity  by mail are  effective  on being  postmarked,  properly  addressed  and
postage  prepaid.  If the Annuity is returned to the agent,  other than by mail,
the  effective  date of surrender of the Annuity will be the date the Annuity is
received by the agent.  The amount  payable as to any amounts  allocated  to the
variable  investment  options equals the Account Value as of the date postmarked
or returned to the agent. If you choose to allocate any portion of your Purchase
Payment to the variable investment options,  you bear the investment risk during
this  period.  The  amount  payable  as to any  amounts  allocated  to the fixed
investment  options  equals the  greater of (i) the  Purchase  Payment  less any
withdrawals,  or (ii) the current  Account  Value of the Annuity on the date the
cancellation request is either postmarked or returned to the agent.

     Allocation  of Net  Purchase  Payments:  All  allocations  of Net  Purchase
Payments  are  subject  to  our  allocation  rules  (see  "Allocation   Rules").
Allocation of the portion of the initial  Purchase  Payment and any Net Purchase
Payments received during the "free-look" period that you wish to allocate to any
Sub-accounts are subject to an additional  allocation rule if state law requires
return of at least your  Purchase  Payments  should you return the Annuity under
such "free-look"  provision.  If such state law applies to your Annuity:  (a) we
allocate  any portion of any such Net  Purchase  Payments  that you indicate you
wish to go into the Sub-accounts to the GAL Money Market Sub-account; and (b) at
the end of such "free-look" period we reallocate Account Value according to your
then most recent allocation instructions to us, subject to our allocation rules.
However, where permitted by law in such jurisdictions, we will allocate such Net
Purchase  Payments  according  to  your  instructions,   without  any  temporary
allocation to the GAL Money Market  Sub-account,  if you execute a return waiver
("Return  Waiver").  Under the Return Waiver, you waive your right to the return
of the greater of the "standard  refund" or the Purchase  Payments received less
any withdrawals . Instead,  you are only entitled to the return of the "standard
refund" (see "Right to Return the Annuity").

     Balanced  Investment  Program:  We offer a balanced  investment  program in
relation to your initial Purchase  Payment,  if Fixed  Allocations are available
under your  Annuity.  If you choose  this  program,  we commit a portion of your
initial Net Purchase  Payment as a Fixed Allocation for the Guarantee Period you
select.  This Fixed Allocation will have grown pre-tax to equal the exact amount
of your entire  initial  Purchase  Payment at the end of its  initial  Guarantee
Period,  if no amounts are transferred or withdrawn from such Fixed  Allocation.
The  rest  of your  initial  Net  Purchase  Payment  is  invested  in the  other
investment options you select.

     Participant,  Annuitant  and  Beneficiary  Designations:  You make  certain
designations that apply to the Annuity if issued. These designations are subject
to our rules and to various  regulatory or statutory  requirements  depending on
the use of the Annuity.  These designations include a Participant,  a contingent
Participant,  an  Annuitant,  a  Contingent  Annuitant,  a  Beneficiary,  and  a
contingent  Beneficiary.  Certain designations are required, as indicated below.
Such designations will be revocable unless you indicate  otherwise or we endorse
your Annuity to indicate that such  designation  is  irrevocable to meet certain
regulatory or statutory requirements.

Some of the tax  implications  of  various  designations  are  discussed  in the
section  entitled  "Certain Tax  Considerations".  However,  there are other tax
issues than those  addressed  in that  section,  including,  but not limited to,
estate and  inheritance  tax issues.  You should  consult  with a competent  tax
counselor  regarding the tax  implications of various  designations.  You should
also consult with a competent  legal advisor as to the  implications  of certain
designations  in relation to an estate,  bankruptcy,  community  property  where
applicable and other matters.

A Participant must be named. You may name more than one Participant.  If you do,
all rights  reserved  to  Participants  are then held  jointly.  We require  the
consent In Writing of all joint  Participants  for any  transaction for which we
require the written consent of  Participants.  Where required by law, we require
the consent In Writing of the spouse of any person with a vested  interest in an
Annuity.  Naming  someone  other  than the  payor  of any  Purchase  Payment  as
Participant may have gift, estate or other tax implications.

You may name a  contingent  Participant,  where  allowed by law.  However,  this
designation takes effect only on or after the Annuity Date.

You must name an Annuitant.  We do not accept a designation of joint Annuitants.
Where allowed by law, you may name one or more Contingent Annuitants.  There may
be adverse tax consequences if a Contingent  Annuitant succeeds an Annuitant and
the  Annuity is owned by a trust that is neither tax exempt nor does not qualify
for preferred  treatment under certain sections of the Code, such as Section 401
(a  "non-qualified"  trust).  In  general,  the Code is  designed to prevent the
benefit  of tax  deferral  from  continuing  for  long  periods  of  time  on an
indefinite  basis.  Continuing the benefit of tax deferral by naming one or more
Contingent  Annuitants when the Annuity is owned by a non-qualified  trust might
be deemed an  attempt  to extend  the tax  deferral  for an  indefinite  period.
Therefore,  adverse tax treatment  may depend on the terms of the trust,  who is
named  as  Contingent   Annuitant,   as  well  as  the   particular   facts  and
circumstances.  You should  consult your tax advisor  before naming a Contingent
Annuitant  if you expect to use an Annuity in such a fashion.  Where  allowed by
law, you must name Contingent  Annuitants according to our rules when an Annuity
is used as a funding vehicle for certain  retirement  plans designed to meet the
requirements of Section 401 of the Code.

You may name more than one primary and more than one contingent  Beneficiary and
if you do, the  proceeds  will be paid in equal  shares to the  survivors in the
appropriate  beneficiary class,  unless you have requested otherwise In Writing.
If the primary  Beneficiary  dies before  death  proceeds  become  payable,  the
proceeds will become payable to the contingent Beneficiary. If no Beneficiary is
alive at the time of the death upon which death  proceeds  become  payable or in
the absence of any  Beneficiary  designation,  the proceeds  will vest in you or
your estate.

ACCOUNT VALUE AND SURRENDER VALUE: In the  accumulation  phase your Annuity
has an Account Value.  Your total Account Value is the sum of your Account Value
in each  investment  option.  Surrender  Value  is the  Account  Value  less any
applicable maintenance fee.

     Account  Value  in  the  Sub-accounts:  We  determine  your  Account  Value
separately  for  each  Sub-account.  To  determine  the  Account  Value  in each
Sub-account we multiply the Unit Price as of the Valuation  Period for which the
calculation is being made times the number of Units  attributable to you in that
Sub-account  as of that  Valuation  Period.  The method we use to determine Unit
Prices is shown in the Statement of Additional Information.

The number of Units  attributable to you in a Sub-account is the number of Units
you purchased less the number transferred or withdrawn.  We determine the number
of Units involved in any transaction specified in dollars by dividing the dollar
value of the transaction by the Unit Price of the effected Sub-account as of the
Valuation Period applicable to such transaction.

     Account Value of the Fixed  Allocations:  We determine the Account Value of
each Fixed Allocation  separately.  A Fixed  Allocation's  Account Value as of a
particular  date is determined  by  multiplying  its then current  Interim Value
times the MVA.

A formula is used to  determine  the MVA. The formula is applied  separately  to
each Fixed  Allocation.  Values and time durations used in the formula are as of
the date for which the Account Value is being determined. The formula is:

                      [(1+I) / (1+J+0.0010)]N/12

                                where:

            I is the interest rate being credited to the Fixed Allocation;

            J is the  interest  rate for your class of  annuities  for new
            Fixed Allocations with Guarantee Periods of durations equal to
            the number of years  (rounded to the next higher  integer when
            occurring on other than an anniversary of the beginning of the
            Fixed   Allocation's   Guarantee  Period)  remaining  in  such
            Guarantee Period;

            N is the number of months  (rounded to the next higher integer
            when  occurring  on other  than a monthly  anniversary  of the
            beginning of the Guarantee Period) remaining in such Guarantee
            Period.

   
The formula  that  applies if amounts are  surrendered  pursuant to the right to
return the Annuity is [(1 + I)/(1 + J)]N/12.
    

No MVA applies in determining a Fixed Allocation's Account Value on its Maturity
Date,  and, where required by law, the 30 days prior to the Maturity Date. If we
are not offering a Guarantee Period with a duration equal to the number of years
remaining in a Fixed Allocation's  Guarantee Period, we calculate a rate for "J"
above using a specific  formula.  This formula is described in the  Statement of
Additional Information.

Our Current  Rates are expected to be sensitive to interest  rate  fluctuations,
thereby  making each MVA equally  sensitive  to such  changes.  There would be a
downward  adjustment  when the  applicable  Current  Rate plus 0.10  percent  of
interest  exceeds  the  rate  credited  to a  Fixed  Allocation  and  an  upward
adjustment  when the  applicable  Current  Rate is more  than  0.10  percent  of
interest  lower  than the rate being  credited  to a Fixed  Allocation.  See the
Statement of Additional Information for an illustration of how the MVA works.

RIGHTS,  BENEFITS  AND  SERVICES:  The  Annuity  provides  various  rights,
benefits and services  subsequent  to its issuance and your  decision to keep it
beyond the free-look period. A number of these rights, benefits and services, as
well as some of the  rules  and  conditions  to  which  they  are  subject,  are
described below and on the following pages. These rights,  benefits and services
include,  but are not limited to: (a) making additional  Purchase Payments;  (b)
changing  revocable  designations;   (c)  transferring  Account  Values  between
investment options; (d) receiving lump sum payments,  Systematic  Withdrawals or
Minimum Distributions,  annuity payments and death benefits; (e) transferring or
assigning your Annuity;  (f) exercising certain voting rights in relation to the
underlying  mutual fund  portfolio  in which the  Sub-accounts  invest;  and (g)
receiving  reports.  These  rights,   benefits  and  services  may  be  limited,
eliminated  or altered  when an  Annuity  is  purchased  in  conjunction  with a
qualified plan. We may require presentation of proper identification,  including
a personal  identification  number  ("PIN") issued by us, prior to accepting any
instruction by telephone. To the extent permitted by law or regulation,  neither
we nor any person  authorized  by us will be  responsible  for any claim,  loss,
liability or expense in connection with a telephone transfer if we or such other
person acted on  telephone  transfer  instructions  in good faith in reliance on
your telephone transfer  authorization and on reasonable  procedures to identify
persons so authorized through  verification  methods which may include a request
for your Social  Security  number or a personal  identification  number (PIN) as
issued by us. We may be liable  for  losses due to  unauthorized  or  fraudulent
instructions should we not follow such reasonable procedures.

   
     Additional  Purchase  Payments:  The  minimum for any  additional  Purchase
Payment is $500,  unless we  authorize  lower  payments  pursuant  to a periodic
Purchase  Payment  Program  (see  "Periodic  Purchase  Payments")  or less where
required by law. If payments are made by salary  deduction,  the minimum payment
is  $50.00.  Additional  Purchase  Payments  may be paid at any time  before the
Annuity  Date.  Subject to our  allocation  rules,  we allocate  additional  Net
Purchase Payments  according to your most recent  instructions for allocation of
Net Purchase Payments.
    

     Changing Revocable  Designations:  Unless you indicated that a prior choice
was irrevocable or your Annuity has been endorsed to limit certain changes,  you
may request to change  Participant,  Annuitant and  Beneficiary  designations by
sending a request In Writing. Where allowed by law, such changes will be subject
to our acceptance.  Some of the changes we will not accept include,  but are not
limited to: (a) a new Participant  subsequent to the death of the Participant or
the first of any joint  Participants to die,  except where a  spouse-Beneficiary
has become the  Participant  as a result of an  Participant's  death;  (b) a new
Participant  or  Annuitant  who does not  meet  our  then  current  underwriting
guidelines;  (c) a new  Annuitant  subsequent to the Annuity Date if the annuity
option selected  includes a life  contingency;  and (d) a new Annuitant prior to
the Annuity Date if the Annuity is owned by an entity.

   
     Allocation Rules: In the accumulation phase, you may maintain Account Value
in all four currently available Sub-accounts.  Currently,  you may also maintain
an unlimited  number of Fixed  Allocations.  We reserve the right, to the extent
permitted by law, to limit the number of fixed allocations or the amount you may
allocate to any Fixed  Allocation.  Should you request a transaction  that would
leave less than any minimum amount we then require in an investment  option,  we
reserve the right,  to the extent  permitted  by law, to add the balance of your
Account  Value  in  the  applicable  Sub-account  or  Fixed  Allocation  to  the
transaction and close out your balance in that investment option.
    

Withdrawals of any type are taken pro-rata from the investment  options based on
the then current  Account  Values in such  investment  options unless we receive
instructions  from you prior to such  withdrawal.  For this  purpose  only,  the
Account Value in all your then current Fixed  Allocations is deemed to be in one
investment option. If you transfer or withdraw Account Value from multiple Fixed
Allocations  and do not provide  instructions  indicating the Fixed  Allocations
from which  Account Value should be taken:  (a) we transfer  Account Value first
from the Fixed  Allocation with the shortest amount of time remaining to the end
of its  Guarantee  Period,  and then  from the  Fixed  Allocation  with the next
shortest amount of time remaining to the end of its Guarantee Period,  etc.; and
(b) if there are multiple Fixed Allocations with the same amount of time left in
each Guarantee  Period,  as between such Fixed Allocations we first take Account
Value from the Fixed Allocation that had the shorter Guarantee Period.

     Transfers: In the accumulation phase you may transfer Account Value between
investment  options,  subject to our allocation rules (see "Allocation  Rules").
Transfers  are not  subject  to  taxation  (see  "Transfers  Between  Investment
Options").  We charge $10.00 for each transfer  after the twelfth in any Annuity
Year,  including transfers transacted as part of a dollar cost averaging program
(see  "Dollar  Cost  Averaging")  or  any  rebalancing,   market  timing,  asset
allocation or similar program which you authorize to be employed on your behalf.
Renewals or transfers of Account Value from a Fixed Allocation at the end of its
Guarantee  Period are not subject to the transfer  charge and are not counted in
determining  whether other  transfers may be subject to the transfer charge (see
"Renewals").  Your transfer  request must be In Writing or meet our requirements
for accepting instructions we receive over the phone.

Where  permitted,  we reserve the right to limit the number of  transfers in any
Annuity Year for all existing or new Participants.  We also reserve the right to
limit the number of  transfers  in any  Annuity  Year or to refuse any  transfer
request  for a  Participant  or certain  Participants  if we believe  that:  (a)
excessive  trading by such  Participant or Participants  or a specific  transfer
request or group of  transfer  requests  may have a  detrimental  effect on Unit
Values  or the  share  prices  of the  underlying  mutual  funds;  or (b) we are
informed  by one or more of the  underlying  mutual  funds that the  purchase or
redemption  of shares is to be  restricted  because  of  excessive  trading or a
specific  transfer or group of transfers is deemed to have a detrimental  effect
on share prices of affected underlying mutual funds.

   
To the extent  permitted by law, we may request up to 2 business  days notice of
any  transfer  into or out of a Fixed  Allocation  if the  market  value of such
transfer is at least $1,000,000.00.
    

In order to help you determine  whether you wish to transfer Account Values to a
Fixed  Allocation,  you may obtain our Current Rates by writing us or calling us
at 1-800-444-3970.

Where  permitted  by law, we may accept your  authorization  of a third party to
transfer Account Values on your behalf,  subject to our rules. We may suspend or
cancel such  acceptance  at any time.  We notify you of any such  suspension  or
cancellation.  We may restrict the investment  options that will be available to
you for transfers or allocations of Net Purchase  Payments  during any period in
which you authorize such third party to act on your behalf.  We give you, and/or
the third  party you  authorize  prior  notification  of any such  restrictions.
However,  we will not enforce such a  restriction  if we are  provided  evidence
satisfactory  to us that:  (a) such third party has been appointed by a court of
competent  jurisdiction to act on your behalf;  or (b) such third party has been
appointed by you to act on your behalf for all your financial affairs.

We or an affiliate of ours may provide  administrative or other support services
to independent  third parties you authorize to conduct  transfers on your behalf
or  who  provide  recommendations  as to  how  your  Account  Values  should  be
allocated.  This includes,  but is not limited to,  transferring  Account Values
between  investment  options in accordance  with various  investment  allocation
strategies such third party may employ,  or transferring  Account Values between
investment options in accordance with market timing strategies  employed by such
third parties.  Such  independent  third parties may or may not be appointed our
agents for the sale of Annuities. However, we do not engage any third parties to
offer  investment  allocation  services  of any type,  so that  persons or firms
offering such services do so independent from any agency  relationship  they may
have with us for the sale of Annuities.  We therefore take no responsibility for
the investment allocations and transfers transacted on your behalf by such third
parties or any investment allocation recommendations made by such persons. We do
not currently charge you extra for providing these support services.

     Renewals:  A renewal is a transaction  that occurs  automatically as of the
last day of a Fixed Allocation's  Guarantee Period unless we receive alternative
instructions.  This day as to each Fixed Allocation is called its Maturity Date.
As of the end of a  Maturity  Date,  the  Fixed  Allocation's  Guarantee  Period
"renews"  and a new  Guarantee  Period  of the  same  duration  as the one  just
completed begins. However, the renewal will not occur if the Maturity Date is on
the date we apply your Account  Value to  determine  the annuity  payments  that
begin on the Annuity Date (see "Annuity Payments").

As an  alternative  to a  renewal,  you may  transfer  all or part of that Fixed
Allocation's  Account Value to a different Fixed  Allocation or you may transfer
such Account Value to one or more Sub-accounts, subject to our allocation rules.
To accomplish  this, we must receive  instructions  from you In Writing at least
two  business  days before the Maturity  Date.  No MVA applies to transfers of a
Fixed  Allocation's  Account Value  occurring as of its Maturity Date, and where
required by law,  the 30 days prior to the Maturity  Date.  An MVA will apply in
determining the Account Value of a Fixed Allocation at the time annuity payments
are  determined,  unless the Maturity Date of such Fixed  Allocation is the 15th
day before the Annuity Date (see "Annuity Payments").

At least 30 days prior to a Maturity  Date,  or  earlier if  required  by law or
regulation,  we inform you of the Guarantee  Periods available as of the date of
such  notice.  We do not  provide  a similar  notice  if the Fixed  Allocation's
Guarantee Period is of less than a year's  duration.  Such notice may include an
example of the rates we are then crediting new Fixed  Allocations as of the date
such notice is prepared. The rates actually credited to a Fixed Allocation as of
the date of any renewal or transfer immediately  subsequent to the Maturity Date
may be more or less than any rates quoted in such notice.

If your Fixed  Allocation's  then ending Guarantee Period is no longer available
for new allocations and renewals or you choose a different Guarantee Period that
is no longer  available on the date  following the Maturity Date, we will try to
reach you so you may make another choice. If we cannot reach you, we will assign
the next shortest Guarantee Period then currently  available for new allocations
and renewals to that Fixed Allocation.

     Dollar Cost Averaging:  We offer dollar cost averaging in the  accumulation
phase.  Dollar cost  averaging  is a program  designed  to provide for  regular,
approximately  level  investments over time. You may choose to transfer earnings
only, principal plus earnings or a flat dollar amount. We make no guarantee that
a dollar cost  averaging  program  will result in a profit or protect  against a
loss in a declining  market.  You may select this program by  submitting to us a
request In Writing. You may cancel your participation in this program In Writing
or  by  phone  if  you  have  previously   authorized  our  acceptance  of  such
instructions.

Dollar cost averaging is available from any of the investment  options we choose
to make available for such a program. Your Annuity must have an Account Value of
not less than  $25,000  at the time we accept  your  request  for a dollar  cost
averaging  program.  Transfers under a dollar cost averaging program are counted
in  determining  the  applicability  of the transfer fee (see  "Transfers").  We
reserve the right to limit the  investment  options into which Account Value may
be  transferred as part of a dollar cost  averaging  program.  As of the date of
this prospectus, we currently do not permit dollar cost averaging programs where
Account Value is transferred to Fixed Allocations.  We also reserve the right to
charge a  processing  fee for this  service.  Should we  suspend  or cancel  the
offering of this service,  such suspension or  cancellation  will not affect any
dollar cost  averaging  programs  then in effect.  Dollar cost  averaging is not
available while an asset  allocation or market timing type of program is used in
connection with your Annuity.

Dollar cost averaging from Fixed Allocations are subject to the following rules:
(a) you may only use  Fixed  Allocations  with  Guarantee  Periods  of 1, 2 or 3
years;  (b)  such a  program  may  only be  selected  in  conjunction  with  and
simultaneous  to a new or  renewing  Fixed  Allocation;  (c) only  averaging  of
earnings only or principal plus earnings is permitted;  (d) a program  averaging
principal  plus earnings from a Fixed  Allocation  must be designed to last that
Fixed  Allocation's  entire current Guarantee Period;  (e) dollar cost averaging
transfers  from a Fixed  Allocation  are not subject to the MVA; and (f) you may
not  simultaneously  use Account Value in any Fixed Allocation to participate in
dollar  cost   averaging   and  receive   Systematic   Withdrawals   or  Minimum
Distributions  from such Fixed  Allocation  (see  "Systematic  Withdrawals"  and
"Minimum Distributions").

     Distributions:  Distributions  available  from  your  Annuity  during  the
accumulation   phase  include   surrender,   partial   withdrawals,   Systematic
Withdrawals,  Minimum Distributions (in relation to qualified plans) and a death
benefit.  In the payout phase we pay annuity payments.  Distributions  from your
Annuity  generally are subject to taxation,  and may be subject to a tax penalty
as  well  (see  "Certain  Tax  Considerations").  You  may  wish  to  consult  a
professional  tax advisor  for tax advice  prior to  exercising  any right to an
elective  distribution.  During the accumulation  phase, any distribution  other
than a death benefit: (a) must occur prior to any death that would cause a death
benefit to become  payable;  and (b) will occur  subsequent  to our receipt of a
completed request In Writing.

     Surrender:  Surrender of your Annuity for its Surrender  Value is permitted
during the  accumulation  phase.  Your Annuity  must  accompany  your  surrender
request.

     Partial  Withdrawals:  You may withdraw part of your Surrender  Value.  The
minimum partial  withdrawal is $100. The Surrender Value that must remain in the
Annuity  as of the date of this  transaction  is  $1,000.  If the  amount of the
partial withdrawal request exceeds the maximum amount available,  we reserve the
right to treat your request as one for a full surrender.

   
     Systematic  Withdrawals:  We offer Systematic Withdrawals of earnings only,
principal plus earnings or a flat dollar  amount.  Systematic  Withdrawals  from
Fixed  Allocations  are  limited  to  earnings  accrued  after  the  program  of
Systematic  Withdrawals  begins, or payments of fixed dollar amounts that do not
exceed such earnings. A program of Systematic  Withdrawals begins on the date we
accept,  at our Office,  your request for such a program.  You may choose at any
time to begin such a program if  withdrawals  are to come  solely  from  Account
Value maintained in the Sub-accounts.
    

A Systematic  Withdrawal  from a Fixed  Allocation is not subject to the MVA. We
calculate the Fixed Allocation's credited interest since the prior withdrawal as
A minus B, plus C, where:

         A   is the Interim Value of the applicable Fixed Allocation as of the 
             date of the Systematic Withdrawal;

   
         B   is the Interim Value of the applicable  Fixed  Allocation as of the
             later of the beginning of its then current  Guarantee Period or the
             beginning of the Systematic Withdrawal program; and

         C   is the total of all partial or free  withdrawals  and any transfers
             from such Fixed  Allocation since the later of the beginning of its
             then current  Guarantee  Period or the beginning of the  Systematic
             Withdrawal program.
    

We offer Systematic Withdrawals on a monthly,  quarterly,  semi-annual or annual
basis. You may not simultaneously  receive  Systematic  Withdrawals from a Fixed
Allocation  and  participate  in a dollar  cost  averaging  program  under which
Account Value is transferred  from the same Fixed  Allocation  (see "Dollar Cost
Averaging").  Systematic  Withdrawals are not available while you are taking any
Minimum Distributions (see "Minimum Distributions").

The Surrender Value of your Annuity must be at least $25,000 when we accept your
request for a program of Systematic Withdrawals. The minimum for each Systematic
Withdrawal is $100. For any scheduled Systematic  Withdrawal other than the last
that does not meet this minimum, we reserve the right to defer such a withdrawal
and add the amount  that would have been  withdrawn  to the amount that is to be
withdrawn at the next Systematic Withdrawal.

We reserve  the right to charge a  processing  fee for this  service.  Should we
suspend  or  cancel  offering   Systematic   Withdrawals,   such  suspension  or
cancellation will not affect any Systematic Withdrawal programs then in effect.

     Minimum  Distributions:   You  may  elect  to  have  us  calculate  Minimum
Distributions  annually  if your  Annuity  is being used for  certain  qualified
purposes  under the  Code.  We  calculate  such  amounts  assuming  the  Minimum
Distribution  amount is based solely on the value of your Annuity.  The required
Minimum  Distribution amounts applicable to your particular situation may depend
on other annuities,  savings or investments of which we are unaware, so that the
required amount may be greater than the Minimum Distribution amount we calculate
based on the value of your  Annuity.  We  reserve  the right to charge a fee for
each annual  calculation.  Minimum  Distributions  are not  available if you are
taking Systematic Withdrawals (see "Systematic  Withdrawals").  You may elect to
have  Minimum  Distributions  paid  out  monthly,  quarterly,  semi-annually  or
annually.

Each Minimum  Distribution will be taken from the investment options you select.
However,  the  portion of any  Minimum  Distribution  that can be taken from any
Fixed  Allocations  may not exceed the then current  ratio  between your Account
Value in all Fixed Allocations you maintain and your total Account Value. No MVA
applies to any portion of Minimum  Distributions  taken from Fixed  Allocations.
Minimum Distributions are not available from any Fixed Allocations if such Fixed
Allocation  is being used in a dollar cost  averaging  program (see "Dollar Cost
Averaging").

     Death Benefit:  In the accumulation  phase, a death benefit is payable. If
the  Annuity is owned by one or more  natural  persons,  it is payable  upon the
first  death of such  Participants.  If the  Annuity is owned by an entity,  the
death benefit is payable upon the  Annuitant's  death (if there is no Contingent
Annuitant). For applicable deaths occurring prior to age 85 of the deceased, the
death benefit is the greater of (a) or (b), where:  (a) is your Account Value in
any Sub-accounts  plus the Interim Value of your Fixed  Allocations;  and (b) is
the  minimum  death  benefit.  The  minimum  death  benefit is the total of each
Purchase Payment less the total of all  withdrawals,  of any type. Where allowed
by law, for applicable deaths occurring on or after age 85 of the deceased,  the
death benefit is the Account Value.

The  amount of the death  benefit  is  determined  as of the date we  receive In
Writing "due proof of death".  The following  constitutes  "due proof of death":
(a)(i) a  certified  copy of a death  certificate,  (ii) a  certified  copy of a
decree of a court of competent jurisdiction as to the finding of death, or (iii)
any other proof satisfactory to us; (b) all  representations we require or which
are mandated by applicable  law or regulation in relation to the death claim and
the payment of death  proceeds;  and (c) any applicable  election of the mode of
payment of the death benefit, if not previously elected by the Participant.  The
death  benefit  is  reduced by any  annuity  payments  made prior to the date we
receive In Writing such due proof of death.

If the death benefit  becomes payable prior to the Annuity Date due to the death
of the Participant and the Beneficiary is the Participant's spouse, then in lieu
of  receiving  the death  benefit,  such  Participant's  spouse  may elect to be
treated as a Participant and continue the Annuity.

In the event of your death,  the benefit must be  distributed  within:  (a) five
years of the date of death;  or (b) over a period not extending  beyond the life
expectancy of the Beneficiary or over the life of the Beneficiary.  Distribution
after your death to be paid under (b) above,  must  commence  within one year of
the date of death.

If the Annuitant  dies before the Annuity Date,  the  Contingent  Annuitant will
become the Annuitant.  If the  Participant is one or more natural  persons,  the
oldest of any such Participants not named as the Annuitant  immediately  becomes
the  Contingent  Annuitant  if: (a) the  Contingent  Annuitant  predeceases  the
Annuitant; or (b) if you do not designate a Contingent Annuitant.

In the payout  phase,  we continue to pay any "certain"  payments  (payments not
contingent on the continuance of any life) to the Beneficiary  subsequent to the
death of the Annuitant. For Annuities issued subsequent to our implementation of
a change, we do not guarantee any commutation rights unless required by law. For
Annuities  issued prior to  implementation  of such change,  we will commute any
remaining  "certain"  payments  and pay a lump sum if  elected by you or, in the
absence of  specific  instructions  by you,  by the  Beneficiary.  To the extent
permitted  by law,  we will  commute  any  "certain"  payments  pursuant to such
Annuities  using the same  interest  rate  assumed in  determining  the  annuity
payments then due.

In the payout phase,  we distribute  any payments due subsequent to the death of
any  Participant  at least as  rapidly as under the  method of  distribution  in
effect as of the date of such Participant's death.

     Annuity  Payments:  Annuity  payments  can be  guaranteed  for life,  for a
certain  period,  or for a certain  period  and life.  We make  available  fixed
payments,  and as of the date of this Prospectus,  adjustable payments (payments
which may or may not be changed on specified  adjustment  dates based on annuity
purchase rates we are then making available to annuities of the same class).  We
may or may not be making adjustable  annuities available on the Annuity Date. To
the extent  there is any tax basis in the  annuity,  a portion  of each  annuity
payment is treated  for tax  purposes  as a return of such basis  until such tax
basis is  exhausted.  The amount  deemed such a return of basis is determined in
accordance with the requirements of the Code (see "Certain Tax Considerations").

You may choose an Annuity Date,  an annuity  option and the frequency of annuity
payments  when you  purchase  an  Annuity,  or at a later  date.  Your choice of
Annuity  Date and  annuity  option may be limited  depending  on your use of the
Annuity and the applicable jurisdiction. Subject to our rules, you may choose an
Annuity  Date,  option and  frequency  of  payments  suitable  to your needs and
circumstances.  You should consult with competent tax and financial  advisors as
to the appropriateness of any such choice. For annuities subject to New York and
Pennsylvania  law, the Annuity Date may not exceed the first day of the calendar
month following the Annuitant's 85th birthday.

You may change your choices at any time up to 30 days before the earlier of: (a)
the date we would have applied your Account  Value to an annuity  option had you
not made the  change;  or (b) the date we will  apply your  Account  Value to an
annuity option in relation to the new Annuity Date you are then  selecting.  You
must request  this change In Writing.  The Annuity Date must be the first or the
fifteenth day of a calendar month.

In the absence of an election In Writing:  (a) the Annuity Date is the first day
of the calendar month first following the later of the Annuitant's 85th birthday
or the  fifth  anniversary  of our  receipt  at our  Office of your  request  to
purchase an Annuity;  and (b) where allowed by law, fixed monthly  payments will
commence under option 2, described below,  with 10 years certain.  For Annuities
subject to New York law,  in the  absence of an  election  In  Writing:  (a) the
Annuity Date is the first day of the calendar  month  following the  Annuitant's
85th  birthday;  and (b) fixed monthly  payments  will commence  under Option 2,
described  below,  with 10 years  certain.  The  amount  to be  applied  is your
Annuity's  Account  Value  15  business  days  prior  to the  Annuity  Date.  In
determining  your annuity  payments,  we credit  interest using our then current
crediting rate for this purpose, which is not less than 3% of interest per year,
between the date Account  Value is applied to an annuity  option and the Annuity
Date. Annuity options in addition to those shown are available with our consent.
The minimum  initial  amount  payable is the minimum  initial  annuity amount we
allow  under  our then  current  rules.  Should  you wish to  receive a lump sum
payment,  you must request to surrender  your Annuity  prior to the Annuity Date
(see  "Surrender").  The 3% interest rate noted above is 4% for Annuities issued
prior to the date we implemented this change.

You may elect to have any amount of the proceeds due to the Beneficiary  applied
under  any of the  options  described  below.  Except  where a lower  amount  is
required by law, the minimum monthly annuity payment is $50.

If you have not made an election prior to proceeds becoming due, the Beneficiary
may  elect to  receive  the death  benefit  under  one of the  annuity  options.
However, if you made an election, the Beneficiary may not alter such election.

For purposes of the annuity options  described  below, the term "key life" means
the  person  or  persons  upon  whose  life  any  payments  dependent  upon  the
continuation of life are based.

         (1) Option 1 - Payments for Life: Under this option,  income is payable
periodically  prior to the  death  of the key  life,  terminating  with the last
payment  due  prior to such  death.  Since no  minimum  number  of  payments  is
guaranteed,  this option  offers the maximum  level of periodic  payments of the
annuity  options.  It is possible  that only one payment  will be payable if the
death of the key life occurs before the date the second  payment was due, and no
other payments nor death benefits would be payable.

         (2)  Option 2 -  Payments  for Life with 10,  15, or 20 Years  Certain:
Under this option,  income is payable  periodically  for 10, 15, or 20 years, as
selected,  and thereafter  until the death of the key life.  Should the death of
the key life occur before the end of the period selected, the remaining payments
are paid to the Beneficiary to the end of such period.

         (3) Option 3 - Payments Based on Joint Lives: Under this option, income
is  payable  periodically  during  the  joint  lifetime  of two key  lives,  and
thereafter during the remaining lifetime of the survivor,  ceasing with the last
payment  prior to the  survivor's  death.  No  minimum  number  of  payments  is
guaranteed  under this  option.  It is possible  that only one  payment  will be
payable  if the death of all the key lives  occurs  before  the date the  second
payment was due, and no other payments nor death benefits would be payable.

         (4) Option 4 - Payments for a Certain Period: Under this option, income
is payable  periodically for a specified number of years. The number of years is
subject to our then  current  rules.  Should the payee die before the end of the
specified number of years, the remaining payments are paid to the Beneficiary to
the end of such period.  Note that under this option,  payments are not based on
how  long we  expect  any key  life to  live.  Therefore,  that  portion  of the
mortality  risk  charge  assessed  to cover the risk that key lives  outlive our
expectations provides no benefit to a Participant selecting this option.

   
The first payment varies according to the annuity options and payment  frequency
selected.  The first periodic  payment is determined by multiplying  the Account
Value  (expressed  in  thousands  of dollars) as of the close of business on the
fifteenth day preceding the Annuity Date,  plus interest at not less than 3% per
year from such date to the  Annuity  Date,  by the amount of the first  periodic
payment per $1,000 of value  obtained  from our  annuity  rates for that type of
annuity and for the  frequency of payment  selected.  Our rates will not be less
than our guaranteed  minimum rates.  These guaranteed  minimum rates are derived
from the 1983a  Individual  Annuity  Mortality Table with ages set back one year
for males and two years for females and with an assumed  interest rate of 3% per
annum.  Where required by law or regulation,  such annuity table will have rates
that do not differ according to the gender of the key life. Otherwise, the rates
will differ  according  to the gender of the key life.  The 3% rates noted above
are 4% for annuities issued prior to the date we implemented the change.
    

     Qualified Plan Withdrawal Limitations: The Annuities are endorsed such that
there are surrender or withdrawal  limitations  when used in relation to certain
retirement plans for employees which qualify under various sections of the Code.
These  limitations  do  not  affect  certain  roll-overs  or  exchanges  between
qualified  plans.  Distribution of amounts  attributable to  contributions  made
pursuant to a salary reduction  agreement (as defined in Code section 403(b), or
attributable  to transfers to a tax sheltered  annuity from a custodial  account
(as defined in Code section  403(b)(7)),  is restricted to the  employee's:  (a)
separation  from  service;  (b) death;  (c)  disability  (as  defined in Section
72(m)(7)  of the Code);  (d)  reaching  age 59 1/2;  or (e)  hardship.  Hardship
withdrawals  are  restricted  to  amounts   attributable  to  salary   reduction
contributions,  and do not  include  investment  results.  In  the  case  of tax
sheltered annuities,  these limitations do not apply to certain salary reduction
contributions made and investment results earned prior to dates specified in the
Code.  In addition,  the  limitation on hardship  withdrawals  does not apply to
salary reduction contributions made and investment results earned prior to dates
specified  in the Code  which have been  transferred  from  custodial  accounts.
Rollovers  from the  types of plans  noted to  another  qualified  plan or to an
individual  retirement account or individual  retirement annuity are not subject
to the limitations noted. Certain distributions,  including rollovers,  that are
not transferred directly to the trustee of another qualified plan, the custodian
of an individual  retirement  account or the issuer of an individual  retirement
annuity may be subject to automatic 20% withholding for Federal income tax. This
may  also  trigger   withholding  for  state  income  taxes  (see  "Certain  Tax
Considerations").  With respect to the  restrictions  on  withdrawals  set forth
above,  the Company is relying upon a no-action  letter dated  November 28, 1988
from the staff of the Securities and Exchange Commission to the American Council
of Life Insurance  with respect to annuities  issued under Section 403(b) of the
Code, the requirements of which have been complied with by the Company.

     Pricing  of  Transfers  and   Distributions:   We  "price"   transfers  and
distributions on the dates indicated below.

         (1) We price  "scheduled"  transfers and  distributions  as of the date
such transactions are so scheduled.  "Scheduled"  transactions include transfers
under  a  dollar  cost  averaging  program,   Systematic  Withdrawals,   Minimum
Distributions,  transfers previously scheduled with us at our Office pursuant to
any on-going asset allocation or similar program, and annuity payments.

         (2) We price "unscheduled"  transfers and partial withdrawals as of the
date we receive In Writing  at our  Office the  request  for such  transactions.
"Unscheduled"  transfers include any transfers processed in conjunction with any
market  timing,  asset  allocation or similar  program which you authorize to be
employed  on  your  behalf.  "Unscheduled"  transfers  received  pursuant  to an
authorization  to accept transfers over the phone are priced as of the Valuation
Period we receive the request at our Office for such transactions.

         (3) We price surrenders and death benefits as of the date we receive at
our Office all materials we require for such transactions and such materials are
satisfactory to us (see "Surrenders" and "Death Benefits").

The pricing of transfers and distributions  involving  Sub-accounts includes the
determination  of the  applicable  Unit  Price  for  the  Units  transferred  or
distributed.   The  pricing  of  transfers  and  distributions  involving  Fixed
Allocations includes the determination of any applicable MVA. Any applicable MVA
alters the amount  available when all the Account Value in a Fixed Allocation is
being  transferred  or  distributed.  Any  applicable  MVA  alters the amount of
Interim  Value  needed  when  only a  portion  of the  Account  Value  is  being
transferred  or  distributed.  Unit Prices may change each  Valuation  Period to
reflect the investment  performance of the  Sub-accounts.  The MVA applicable to
each Fixed  Allocation  changes  once each month and also each time we declare a
different  rate for new Fixed  Allocations.  Payment  is subject to our right to
defer transactions for a limited period (see "Deferral of Transactions").

     Voting  Rights:  You have  voting  rights in  relation  to  Account  Value
maintained  in the  Sub-accounts.  You do not have voting  rights in relation to
Account  Value  maintained in any Fixed  Allocations  or in relation to fixed or
adjustable annuity payments.

We will vote shares of the  underlying  mutual funds or  portfolios in which the
Sub-accounts  invest in the manner directed by Participants.  Participants  give
instructions  equal to the number of shares represented by the Sub-account Units
attributable to their Annuity.

We will vote the shares  attributable to assets held in the Sub-accounts  solely
for us rather than on behalf of  Participants,  or any share as to which we have
not received  instructions,  in the same manner and proportion as the shares for
which  we  have  received  instructions.  We  will  do so  separately  for  each
Sub-account  from various classes that may invest in the same underlying  mutual
fund portfolio.

The  number  of  votes  for an  underlying  mutual  fund  or  portfolio  will be
determined as of the record date for such underlying mutual fund or portfolio as
chosen by its board of trustees or board of directors,  as  applicable.  We will
furnish Participants with proper forms and proxies to enable them to instruct us
how to vote.

You may  instruct us how to vote on the  following  matters:  (a) changes to the
board of  trustees  or board of  directors,  as  applicable;  (b)  changing  the
independent  accountant;  (c)  approval  of changes to the  investment  advisory
agreement or adoption of a new investment advisory agreement;  (d) any change in
the fundamental  investment policy; and (e) any other matter requiring a vote of
the shareholders.

With  respect  to  approval  of changes to the  investment  advisory  agreement,
approval of a new  investment  advisory  agreement or any change in  fundamental
investment policy, only Participants  maintaining Account Value as of the record
date  in a  Sub-account  investing  in the  applicable  underlying  mutual  fund
portfolio  will  instruct  us  how  to  vote  on  the  matter,  pursuant  to the
requirements of Rule 18f-2 under the Investment Company Act of 1940.

     Transfers, Assignments or Pledges: Generally, your rights in an Annuity may
be  transferred,  assigned,  or pledged  for loans at any time.  However,  these
rights may be limited depending on your use of the Annuity.  These  transactions
may be subject to income  taxes and  certain  penalty  taxes (see  "Certain  Tax
Considerations").  You may  transfer,  assign or pledge  your  rights to another
person at any time,  prior to any death upon which the death benefit is payable.
You must request a transfer or provide us a copy of the assignment In Writing. A
transfer or  assignment is subject to our  acceptance.  Prior to receipt of this
notice,  we will not be deemed to know of or be obligated  under any  assignment
prior to our receipt and acceptance thereof. We assume no responsibility for the
validity or sufficiency of any assignment.

   
     Reports to You: We mail to Owners,  at their last known  address of record,
any  statements and reports  required by applicable  law or  regulation.  Owners
should  therefore  give  us  prompt  notice  of any  address  change.  We send a
confirmation  statement  to Owners  each time a  transaction  is made  affecting
Account Value, such as making additional Purchase Payments, transfers, exchanges
or  withdrawals.  Quarterly  statements  are also mailed  detailing the activity
affecting your Annuity during the calendar quarter.  You may request  additional
reports.  We  reserve  the right to  charge  up to $50 for each such  additional
report.  Instead of immediately  confirming  transactions  made pursuant to some
type of periodic transfer program (such as a dollar cost averaging program) or a
periodic Purchase Payment program,  such as a salary reduction  arrangement,  we
may confirm such  transactions  in quarterly  statements.  You should review the
information in these  statements  carefully.  All errors or corrections  must be
reported to us at our Office  immediately  to assure  proper  crediting  to your
Annuity. For transactions for which we immediately send confirmations, we assume
all  transactions  are accurate  unless you notify us  otherwise  within 30 days
after the date of the transaction.  For transactions  that are only confirmed on
the quarterly  statement,  we assume all  transactions  are accurate  unless you
notify us within 30 days of the end of the calendar quarter. We may also send to
Owners each year an annual report and a semi-annual report containing  financial
statements  for the  applicable  Sub-accounts,  as of  December  31 and June 30,
respectively.
    

     SALE OF THE ANNUITIES:  American  Skandia  Marketing,  Incorporated  ("ASM,
Inc."),   formerly  Skandia  Life  Equity  Sales  Corporation,   a  wholly-owned
subsidiary  of American  Skandia  Investment  Holding  Corporation,  acts as the
principal  underwriter of the Annuities.  ASM, Inc.'s principal business address
is One Corporate Drive, Shelton, Connecticut 06484. ASM, Inc. is a member of the
National Association of Securities Dealers, Inc. ("NASD").

     Distribution:  ASM,  Inc.  will enter  into  distribution  agreements  with
certain broker-dealers  registered under the Securities and Exchange Act of 1934
or with entities  which may otherwise  offer the Annuities  that are exempt from
such  registration.  Under such distribution  agreements such  broker-dealers or
eligible   entities  may  offer  Annuities  to  persons  or  entities  who  have
established an account with the broker-dealer or eligible entity.  Such eligible
persons also will be customers of one or more  subsidiaries  of Fleet  Financial
Group,  Inc.  The  investment  advisor  of the  underlying  mutual  fund,  Fleet
Investment  Advisors,  Inc., is a subsidiary of Fleet Financial  Group,  Inc. In
certain  cases,  the  broker-dealer  may also be an affiliate of the  investment
advisor of the underlying mutual fund. ASM, Inc. may offer Annuities directly to
potential purchasers.

     Advertising: We may advertise certain information regarding the performance
of the investment options.  Details on how we calculate performance measures for
the  Sub-accounts  are found in the  Statement of Additional  Information.  This
performance  information  may help you review the  performance of the investment
options  and  provide  a  basis  for  comparison  with  other  annuities.   This
information  may be less useful when comparing the performance of the investment
options with other savings or investment  vehicles.  Such other  investments may
not provide  some of the  benefits  of  annuities,  or may not be  designed  for
long-term investment purposes. Additionally other savings or investment vehicles
may not be treated like annuities under the Code.

The information we may advertise regarding the Fixed Allocations may include the
then  current  interest  rates  we  are  crediting  to  new  Fixed  Allocations.
Information  on  Current  Rates  will  be as  of  the  date  specified  in  such
advertisement.  Rates will be included in advertisements to the extent permitted
by law. Given that the actual rates applicable to any Fixed Allocation are as of
the  date of any such  Fixed  Allocation's  Guarantee  Period  begins,  the rate
credited  to a Fixed  Allocation  may be more or less  than  those  quoted in an
advertisement.

Performance  information on the  Sub-accounts is based on past  performance only
and is no  indication of future  performance.  Performance  of the  Sub-accounts
should  not  be  considered  a   representation   of  the  performance  of  such
Sub-accounts in the future. Performance of the Sub-accounts is not fixed. Actual
performance will depend on the type,  quality and, for some of the Sub-accounts,
the  maturities  of the  investments  held by the  underlying  mutual  funds  or
portfolios  and  upon  prevailing  market  conditions  and the  response  of the
underlying  mutual fund portfolios to such conditions.  Actual  performance will
also depend on changes in the expenses of the underlying mutual fund portfolios.
Such changes are reflected,  in turn, in the Sub-accounts  which invests in such
underlying mutual fund portfolios.  In addition,  the amount of charges assessed
against each Sub-account will affect performance.

Advertisements   we  distribute   may  also  compare  the   performance  of  our
Sub-accounts  with:  (a) certain  unmanaged  market  indices,  including but not
limited to the Dow Jones  Industrial  Average,  the  Standard & Poor's 500,  the
Shearson  Lehman Bond Index,  the Frank Russell  non-U.S.  Universal  Mean,  the
Morgan Stanley Capital  International  Index of Europe, Asia and Far East Funds,
and the Morgan  Stanley  Capital  International  World  Index;  and/or (b) other
management investment companies with investment objectives similar to the mutual
fund or portfolio  underlying the Sub-accounts being compared.  This may include
the  performance  ranking  assigned by various  publications,  including but not
limited to the Wall Street Journal,  Forbes, Fortune, Money, Barron's,  Business
Week, USA Today and  statistical  services,  including but not limited to Lipper
Analytical  Services Mutual Funds Survey,  Lipper Annuity and Closed End Survey,
the Variable Annuity Research Data Survey,  SEI,  Morningstar Mutual Fund Source
Book and the Morningstar Variable Annuity/Life Source Book.

American  Skandia Life Assurance  Corporation  may advertise its rankings and/or
ratings by independent financial ratings services. Such rankings may help you in
evaluating our ability to meet our obligations in relation to Fixed Allocations,
pay minimum death benefits,  pay annuity payments or administer Annuities.  Such
rankings  and  ratings do not reflect or relate to the  performance  of Separate
Account E.

CERTAIN TAX  CONSIDERATIONS:  The  following is a brief  summary of certain
Federal income tax laws as they are currently interpreted. No one can be certain
that the laws or  interpretations  will  remain  unchanged  or that  agencies or
courts  will  always  agree  as to how  the  tax  law or  regulations  are to be
interpreted.  This  discussion  is not  intended as tax advice.  You may wish to
consult  a  professional  tax  advisor  for tax  advice  as to  your  particular
situation.

     Our Tax Considerations: We are taxed as a life insurance company under Part
I, subchapter L, of the Code.

     Tax Considerations Relating to Your Annuity: Section 72 of the Code governs
the  taxation  of  annuities  in  general.  Taxation  of an  annuity  is largely
dependent upon: (a) whether it is used in a qualified  pension or profit sharing
plan or other retirement  arrangement  eligible for special  treatment under the
Code;  and (b) the status of the  beneficial  participant as either a natural or
non-natural  person (when the annuity is not used in a retirement  plan eligible
for special tax treatment).  Non-natural persons include  corporations,  trusts,
and partnerships,  except where these entities own an annuity for the benefit of
a natural person. Natural persons are individuals.

     Non-natural  Persons:  Any  increase  during a tax year in the  value of an
annuity if not used in a retirement  plan eligible for special  treatment  under
the Code is currently  includible  in the gross income of a  non-natural  person
that is the contractholder. There are exceptions if an annuity is held by: (a) a
structured  settlement  company;  (b) an employer  with  respect to a terminated
pension plan; (c) entities  other than  employers,  such as a trust,  holding an
annuity as an agent for a natural person;  or (d) a decedent's  estate by reason
of the death of the decedent.

     Natural   Persons:   Increases   in  the  value  of  an  annuity  when  the
contractholder  is a natural person  generally are not taxed until  distribution
occurs.  Distribution  can be in a lump sum payment or in annuity payments under
the annuity option  elected.  Certain other  transactions  may be deemed to be a
distribution.  The  provisions  of  Section  72 of  the  Code  concerning  these
distributions are summarized briefly below.

     Distributions: Distributions received before the annuity payments begin are
treated as being derived  first from "income on the contract" and  includible in
gross income. The amount of the distribution  exceeding "income on the contract"
is not  included in gross  income.  "Income on the  contract"  for an annuity is
computed by  subtracting  from the value of all "related  contracts"  (our term,
discussed below) the taxpayer's "investment in the contract": an amount equal to
total  purchase   payments  for  all  "related   contracts"  less  any  previous
distributions or portions of such  distributions  from such "related  contracts"
not includible in gross income.  "Investment in the contract" may be affected by
whether an annuity or any "related contract" was purchased as part of a tax-free
exchange of life insurance or annuity contracts under Section 1035 of the Code.

"Related  contracts" may mean all annuity  contracts or certificates  evidencing
participation  in a  group  annuity  contract  for  which  the  taxpayer  is the
beneficial  owner and  which are  issued  by the same  insurer  within  the same
calendar year,  irrespective of the named annuitants.  It is clear that "related
contracts"  include  contracts prior to when annuity  payments  begin.  However,
there may be circumstances under which "related contracts" may include contracts
recognized  as immediate  annuities  under state  insurance law or annuities for
which annuity payments have begun. In a ruling addressing the applicability of a
penalty on  distributions,  the Internal  Revenue Service treated  distributions
from a contract  recognized as an immediate  annuity  under state  insurance law
like  distributions  from a deferred  annuity.  The situation  addressed by such
ruling included the fact that: (a) the immediate  annuity was obtained  pursuant
to an exchange of  contracts;  and (b) the purchase  payments for the  exchanged
contract were  contributed more than one year prior to the first annuity payment
payable under the immediate annuity.  This ruling also may or may not imply that
annuity  payments  from a deferred  annuity on or after its annuity  date may be
treated the same as  distributions  prior to the annuity  date if such  deferred
annuity  was:  (a) obtained  pursuant to an exchange of  contracts;  and (b) the
purchase payments for the exchanged  contract were made or may be deemed to have
been made more than one year prior to the first annuity payment.

If "related  contracts"  include  immediate  annuities  or  annuities  for which
annuity  payments have begun,  then "related  contracts"  would have to be taken
into  consideration  in determining  the taxable portion of each annuity payment
(as  outlined  in  the  "Annuity  Payments"  subsection  below)  as  well  as in
determining the taxable portion of distributions from an annuity or any "related
contracts"  before  annuity  payments  have  begun.  We  cannot  guarantee  that
immediate annuities or annuities for which annuity payments have begun could not
be deemed to be "related  contracts".  You are  particularly  cautioned  to seek
advice from your own tax advisor on this matter.

     Assignments  and Pledges:  Any  assignment  or pledge of any portion of the
value of an  annuity  before  annuity  payments  have  begun  are  treated  as a
distribution  subject to taxation under the distribution  rules set forth above.
Any gain in an  annuity  subsequent  to the  assignment  or  pledge of an entire
annuity while such  assignment or pledge remains in effect is treated as "income
on the contract" in the year in which it is earned. For annuities not issued for
use as  qualified  plans  (see  "Tax  Considerations  When  Using  Annuities  in
Conjunction with Qualified  Plans"),  the cost basis of the annuity is increased
by the amount of any assignment or pledge  includible in gross income.  The cost
basis is not  affected  by any  repayment  of any loan for which the  annuity is
collateral or by payment of any interest thereon.

     Penalty on Distributions:  Subject to certain exceptions,  any distribution
is subject to a penalty  equal to 10% of the amount  includible in gross income.
This  penalty  does  not  apply  to  certain   distributions,   including:   (a)
distributions made on or after the taxpayer's age 59 1/2; (b) distributions made
on or after the death of the holder of the contract, or, where the holder of the
contract is not a natural person, the death of the annuitant;  (c) distributions
attributable to the taxpayer's  becoming disabled;  (d) distributions  which are
part of a scheduled series of substantially equal periodic payments for the life
(or life expectancy) of the taxpayer (or the joint lives of the taxpayer and the
taxpayer's  Beneficiary);  (e)  distributions  of amounts which are allocable to
"investments  in the contract" made prior to August 14, 1982; (f) payments under
an immediate annuity as defined in the Code; (g) distributions under a qualified
funding asset under Code Section 130(d);  or (h)  distributions  from an annuity
purchased by an employer on the termination of a qualified  pension plan that is
held by the employer until the employee separates from service.

Any modification,  other than by reason of death or disability, of distributions
which are part of a scheduled series of substantially equal periodic payments as
noted in (d),  above,  that occur before the  taxpayer's  age 59 1/2 or within 5
years of the first of such scheduled  payments will result in the requirement to
pay the taxes that would have been due had the payments  been treated as subject
to tax in the years received,  plus interest for the deferral period.  It is our
understanding  that the Internal  Revenue  Service does not consider a scheduled
series of  distributions  to  qualify  under  (d),  above,  if the holder of the
annuity  retains the right to modify such  distributions  at will,  even if such
right is not exercised, or, for a variable annuity, if the distributions are not
based on a  substantially  equal  number of Units,  rather than a  substantially
equal dollar amount.

The  Internal  Revenue  Service has ruled that the  exception to the 10% penalty
described  above for  "non-qualified"  immediate  annuities as defined under the
Code  may not  apply to  annuity  payments  under a  contract  recognized  as an
immediate  annuity under state insurance law obtained pursuant to an exchange of
contracts if: (a) purchase payments for the exchanged  contract were contributed
or  deemed to be  contributed  more  than one year  prior to the  first  annuity
payment payable under the immediate annuity;  and (b) the annuity payments under
the immediate annuity do not meet the requirements of any other exception to the
10%  penalty.  This  ruling may or may not imply that the  exception  to the 10%
penalty may not apply to annuity  payments paid  pursuant to a deferred  annuity
obtained  pursuant to an exchange of contract if: (a) purchase  payments for the
exchanged contract were contributed or may be deemed to be contributed more than
one year prior to the first  annuity  payment  pursuant to the deferred  annuity
contract;  or (b) the annuity  payments  pursuant to the deferred annuity do not
meet the requirements of any other exception to the 10% penalty.

     Annuity  Payments:  The taxable  portion of each payment is determined by a
formula which  establishes the ratio that  "investment in the contract" bears to
the total  value of  annuity  payments  to be made.  However,  the total  amount
excluded under this ratio is limited to the  "investment  in the contract".  The
formula differs between fixed and variable annuity  payments.  Where the annuity
payments  cease  because of the death of the person upon whose life payments are
based and, as of the date of death, the amount of annuity payments excluded from
taxable  income by the  exclusion  ratio does not exceed the  investment  in the
contract,  then the remaining portion of unrecovered  investment is allowed as a
deduction in the tax year of such death.

     Gifts:  The gift of an annuity  to other  than the  spouse of the  contract
holder (or former spouse incident to a divorce) is treated for tax purposes as a
distribution.

     Tax Free  Exchanges:  Section  1035 of the Code  permits  certain  tax-free
exchanges of a life insurance,  annuity or endowment contract for an annuity. If
an annuity is obtained by a tax-free  exchange of a life  insurance,  annuity or
endowment  contract  purchased prior to August 14, 1982, then any  distributions
other  than  as  annuity  payments  which  do  not  exceed  the  portion  of the
"investment in the contract"  (purchase  payments made into the other  contract,
less prior  distributions) prior to August 14, 1982, are not included in taxable
income.  In all other  respects,  the  general  provisions  of the Code apply to
distributions from annuities obtained as part of such an exchange.

     Transfers Between Investment Options:  Transfers between investment options
are not subject to taxation.  The Treasury Department may promulgate  guidelines
under  which a  variable  annuity  will not be  treated  as an  annuity  for tax
purposes if persons  with  ownership  rights  have  excessive  control  over the
investments  underlying  such variable  annuity.  Such guidelines may or may not
address  the number of  investment  options or the number of  transfers  between
investment  options  offered under a variable  annuity.  It is not known whether
such guidelines,  if in fact promulgated,  would have retroactive  effect. It is
also not known  what  effect,  if any,  such  guidelines  may have on  transfers
between  the  investment  options  of  the  Annuity  offered  pursuant  to  this
Prospectus.  We will take any action, including modifications to your Annuity or
the Sub-accounts, required to comply with such guidelines if promulgated.

     Generation-Skipping Transfers: Under the Code certain taxes may be due when
all or part of an annuity  is  transferred  to or a death  benefit is paid to an
individual two or more generations younger than the contract holder. These taxes
tend to apply to transfers of  significantly  large  dollar  amounts.  We may be
required to determine  whether a transaction must be treated as a direct skip as
defined in the Code and the amount of the resulting tax. If so required, we will
deduct  from your  Annuity  or from any  applicable  payment  to be treated as a
direct skip any amount we are required to pay as a result of the transaction.

     Diversification:  Section  817(h)  of the  Code  provides  that a  variable
annuity  contract,  in order to qualify as an annuity,  must have an "adequately
diversified" segregated asset account (including investments in a mutual fund by
the segregated asset account of insurance companies).  The Treasury Department's
regulations  prescribe the  diversification  requirements  for variable  annuity
contracts.  We believe the underlying  mutual fund portfolios should comply with
the terms of these regulations.

     Federal  Income Tax  Withholding:  Section  3405 of the Code  provides  for
Federal  income  tax  withholding  on the  portion  of a  distribution  which is
includible in the gross income of the recipient.  Amounts to be withheld  depend
upon the  nature  of the  distribution.  However,  under  most  circumstances  a
recipient  may elect not to have income  taxes  withheld  or have  income  taxes
withheld at a different rate by filing a completed election form with us.

Certain distributions,  including rollovers,  from most retirement plans, may be
subject to automatic 20%  withholding  for Federal  income taxes.  This will not
apply to: (a) any portion of a distribution paid as Minimum  Distributions;  (b)
direct transfers to the trustee of another  retirement  plan; (c)  distributions
from an individual  retirement  account or individual  retirement  annuity;  (d)
distributions made as substantially equal periodic payments for the life or life
expectancy  of the  participant  in the  retirement  plan  or the  life  or life
expectancy of such participant and his or her designated  beneficiary under such
plan; and (e) certain other  distributions  where  automatic 20% withholding may
not apply.

     Tax  Considerations  When Using  Annuities in  Conjunction  with  Qualified
Plans:  There are various  types of qualified  plans for which an annuity may be
suitable.  Benefits  under a qualified  plan may be subject to that plan's terms
and conditions  irrespective  of the terms and conditions of any annuity used to
fund such  benefits  ("qualified  contract").  We have  provided  below  general
descriptions  of the types of qualified  plans in conjunction  with which we may
issue an Annuity.  These  descriptions  are not  exhaustive  and are for general
informational  purposes  only.  We are not obligated to make or continue to make
new  Annuities  available  for use with all the types of  qualified  plans shown
below.

The tax rules regarding  qualified  plans are complex.  The application of these
rules depend on individual facts and circumstances. Before purchasing an Annuity
for use in funding a qualified  plan,  you should  obtain  competent tax advice,
both as to the tax treatment and suitability of such an investment.

Qualified  contracts include special provisions  changing or restricting certain
rights and benefits otherwise available to non-qualified  annuities.  You should
read your  Annuity  carefully  to review any such  changes or  limitations.  The
changes and limitations may include,  but may not be limited to, restrictions on
ownership, transferability, assignability, contributions, distributions, as well
as reductions to the minimum  allowable  purchase payment for an annuity and any
subsequent   annuity  you  may  purchase  for  use  as  a  qualified   contract.
Additionally,  various  penalty and excise taxes may apply to  contributions  or
distributions made in violation of applicable limitations.

     Individual  Retirement  Programs:  Eligible  individuals  may  maintain  an
individual retirement account or individual retirement annuity ("IRA").  Subject
to  limitations,  contributions  of certain amounts may be deductible from gross
income.  Purchasers of IRAs are to receive a special disclosure document,  which
describes  limitations  on  eligibility,   contributions,   transferability  and
distributions.  It also describes the conditions under which  distributions from
IRAs and other qualified plans may be rolled over or transferred  into an IRA on
a  tax-deferred  basis.  Eligible  employers  that meet  specified  criteria may
establish  simplified employee pensions for employees using the employees' IRAs.
These  arrangements are known as SEP-IRAs.  Employer  contributions  that may be
made to SEP-IRAs  are larger than the amounts that may be  contributed  to other
IRAs, and may be deductible to the employer.

   
     Tax  Sheltered  Annuities:  A tax sheltered  annuity  ("TSA") under Section
403(b) of the Code is a contract  into which  contributions  may be made for the
benefit of their employees by certain qualifying  employers:  public schools and
certain charitable, educational and scientific organizations. Such contributions
are not taxable to the employee until  distributions  are made from the TSA. The
Code   imposes   limits   on   contributions,   transfers   and   distributions.
Nondiscrimination requirements apply as well.
    

     Corporate Pension and Profit-sharing  Plans:  Annuities may be used to fund
employee   benefits  of  various   retirement  plans  established  by  corporate
employers.  Contributions  to such plans are not taxable to the  employee  until
distributions are made from the retirement plan. The Code imposes limitations on
contributions and  distributions.  The tax treatment of distributions is subject
to  special  provisions  of the  Code,  and also  depends  on the  design of the
specific   retirement   plan.   There  are  also  special   requirements  as  to
participation, nondiscrimination, vesting and nonforfeitability of interests.

     H.R. 10 Plans:  Annuities  may also be used to fund  benefits of retirement
plans  established  by  self-employed   individuals  for  themselves  and  their
employees.  These are commonly known as "H.R. 10 Plans" or "Keogh Plans".  These
plans are subject to most of the same types of limitations  and  requirements as
retirement plans established by corporations. However, the exact limitations and
requirements may differ from those for corporate plans.

     Tax Treatment of Distributions from Qualified Annuities:  A 10% penalty tax
applies to the  taxable  portion of a  distribution  from a  qualified  contract
unless one of the following  exceptions  apply to such  distribution:  (a) it is
part of a properly  executed  transfer to another IRA, an individual  retirement
account  or  another  eligible  qualified  plan;  (b) it  occurs on or after the
taxpayer's  age 59 1/2; (c) it is  subsequent  to the death or disability of the
taxpayer (for this purpose  disability is as defined in Section  72(m)(7) of the
Code);  (d) it is part of substantially  equal periodic  payments to be paid not
less  frequently than annually for the taxpayer's life or life expectancy or for
the  joint  lives  or  life  expectancies  of  the  taxpayer  and  a  designated
beneficiary;  (e) it is  subsequent  to a  separation  from  service  after  the
taxpayer  attains  age 55;  (f) it does  not  exceed  the  employee's  allowable
deduction in that tax year for medical care;  and (g) it is made to an alternate
payee pursuant to a qualified  domestic  relations order. The exceptions  stated
above in (e), (f) and (g) do not apply to IRAs.

   
     Section 457 Plans:  Under  Section 457 of the Code,  deferred  compensation
plans  established by  governmental  and certain other tax exempt  employers for
their employees may invest in annuity contracts.  The Code limits  contributions
and distributions,  and imposes eligibility  requirements as well. Contributions
are not taxable to employees  until  distributed  from the plan.  However,  plan
assets  remain the property of the employer and are subject to the claims of the
employer's   general   creditors   until  such  assets  are  made  available  to
participants or their beneficiaries.
    

OTHER MATTERS:  Outlined below are certain miscellaneous matters you should 
know before investing in an Annuity.

   
     Deferral of Transactions:  We may defer any distribution or transfer from a
Fixed Allocation or an annuity payout for a period not to exceed the lesser of 6
months or the period  permitted by law. If we defer a  distribution  or transfer
from any Fixed  Allocation  or any annuity  payout for more than thirty days, or
less where  required by law, we pay interest at the minimum rate required by law
but not less than 3%, or at least 4% if required by your  contract,  per year on
the amount deferred.  We may defer payment of proceeds of any distribution  from
any  Sub-account or any transfer from a Sub-account for a period not to exceed 7
calendar days from the date the  transaction  is effected.  Any deferral  period
begins on the date such  distribution  or  transfer  would  otherwise  have been
transacted (see "Pricing of Transfers and Distributions").
    

All procedures,  including  payment,  based on the valuation of the Sub-accounts
may be postponed  during the period:  (1) the New York Stock  Exchange is closed
(other than  customary  holidays or  weekends)  or trading on the New York Stock
Exchange  is   restricted  as  determined  by  the  SEC;  (2)  the  SEC  permits
postponement  and so orders;  or (3) the SEC determines that an emergency exists
making valuation or disposal of securities not reasonably practical.

   
     Resolving Material Conflicts:  Underlying mutual funds or portfolios may be
available  to  registered  separate  accounts  offering  either or both life and
annuity  contracts of insurance  companies not  affiliated  with us. We also may
offer life insurance  and/or annuity  contracts  that offer  different  variable
investment  options from those offered  under this Annuity,  but which invest in
the same underlying mutual funds or portfolios.  It is possible that differences
might arise  between our  Separate  Account E and one or more  accounts of other
insurance  companies which participate in a portfolio.  It is also possible that
differences  might arise  between a  Sub-account  offered under this Annuity and
variable  investment  options offered under different life insurance policies or
annuities  we offer,  even though such  different  variable  investment  options
invest in the same  underlying  mutual fund or portfolio.  In some cases,  it is
possible that the differences could be considered "material  conflicts".  Such a
"material  conflict"  could  also arise due to changes in the law (such as state
insurance law or Federal tax law) which affect either these  different  life and
annuity separate accounts or differing life insurance policies and annuities. It
could also arise by reason of differences in voting instructions of persons with
voting rights under our policies and/or  annuities and those of other companies,
persons  with voting  rights  under  annuities  and those with rights under life
policies,  or persons  with  voting  rights  under one of our life  policies  or
annuities  with those under other life policies or annuities we offer.  It could
also arise for other  reasons.  We will monitor events so we can identify how to
respond to such conflicts. If such a conflict occurs, we will take the necessary
action  to  protect  persons  with  voting  rights  under our life  policies  or
annuities  vis-a-vis those with rights under life policies or annuities  offered
by other insurance  companies.  We will also take the necessary  action to treat
equitably  persons  with voting  rights  under this Annuity and any persons with
voting rights under any other life policy or annuity we offer.
    

     Modification:  We  reserve  the right to any or all of the  following:  (a)
combine a Sub-account with other Sub-accounts; (b) combine Separate Account E or
a portion  thereof  with  other  "unitized"  separate  accounts;  (c)  terminate
offering certain  Guarantee Periods for new or renewing Fixed  Allocations;  (d)
combine  Separate Account D with other  "non-unitized"  separate  accounts;  (e)
deregister Separate Account E under the 1940 Act; (f) operate Separate Account E
as a  management  investment  company  under the 1940 Act or in any  other  form
permitted by law; (g) make changes  required by any change in the Securities Act
of 1933,  the  Exchange  Act of 1934 or the 1940 Act;  (h) make changes that are
necessary  to maintain the tax status of your  Annuity  under the Code;  and (i)
make changes  required by any change in other  Federal or state laws relating to
retirement annuities or annuity contracts.

Also, from time to time, we may make additional  Sub-accounts  available to you.
These  Sub-accounts  will invest in  underlying  mutual funds or  portfolios  of
underlying mutual funds we believe to be suitable for the Annuity. We may or may
not make a new  Sub-account  available to invest in any new  portfolio of one of
the current underlying mutual funds should such a portfolio be made available to
Separate Account E.

We may eliminate  Sub-accounts,  combine two or more  Sub-accounts or substitute
one or more new  underlying  mutual funds or  portfolios  for the one in which a
Sub-account  is  invested.  Substitutions  may be  necessary  if we  believe  an
underlying  mutual fund or portfolio no longer suits the purpose of the Annuity.
This may  happen  due to a change  in laws or  regulations,  or a change  in the
investment objectives or restrictions of an underlying mutual fund or portfolio,
or because the  underlying  mutual fund or portfolio is no longer  available for
investment,  or for some other reason.  We would obtain prior  approval from the
insurance  department  of our state of domicile,  if so required by law,  before
making such a  substitution,  deletion or  addition.  We also would obtain prior
approval  from  the SEC so long as  required  by  law,  and any  other  required
approvals before making such a substitution, deletion or addition.

We  reserve  the  right to  transfer  assets of  Separate  Account  E,  which we
determine  to be  associated  with the class of  contracts to which your Annuity
belongs,  to another "unitized"  separate account.  We also reserve the right to
transfer  assets of Separate  Account D which we determine to be associated with
the class of contracts to which your annuity belongs, to another  "non-unitized"
separate  account.  We notify you (and/or any payee during the payout  phase) of
any  modification  to your  Annuity.  We may endorse your Annuity to reflect the
change.

     Misstatement  of Age or Sex:  If there has been a  misstatement  of the age
and/or sex of any person upon whose life annuity  payments or the minimum  death
benefit are based,  we make  adjustments to conform to the facts.  As to annuity
payments:  (a) any  underpayments  by us will be  remedied  on the next  payment
following  correction;  and (b) any  overpayments  by us will be charged against
future amounts payable by us under your Annuity.

     Ending the Offer: We may limit or discontinue offering Annuities.  Existing
Annuities will not be affected by any such action.

     Indemnification:  Insofar as indemnification  for liabilities arising under
the  Securities  Act of 1933 may be permitted to directors,  officers or persons
controlling the registrant pursuant to the foregoing provisions,  the registrant
has been informed that in the opinion of the Securities and Exchange  Commission
such  indemnification  is against  public  policy as expressed in the Act and is
therefore unenforceable.

     Legal Proceedings:  As of the date of this Prospectus,  neither we nor ASM,
Inc. were involved in any litigation outside of the ordinary course of business,
and know of no material claims.
                                                               
   
     THE  COMPANY:  American  Skandia  Life  Assurance  Corporation  is a  stock
insurance company domiciled in Connecticut with licenses in all 50 states. It is
a wholly owned subsidiary of American Skandia  Investment  Holding  Corporation,
whose  indirect  parent is Skandia  Insurance  Company  Ltd.  Skandia  Insurance
Company  Ltd.  is part of a  group  of  companies  whose  predecessor  commenced
operations  in  1855.  Two  of  our  affiliates,   American  Skandia  Marketing,
Incorporated,   and  American  Skandia   Information   Services  and  Technology
Corporation,  may undertake certain administrative  functions on our behalf. Our
affiliate, American Skandia Investment Services, Incorporated, currently acts as
the  investment  manager to the American  Skandia  Trust.  We  currently  engage
Skandia  Investment  Management,  Inc., an affiliated  whose indirect  parent is
Skandia Insurance  Company Ltd., as investment  manager for our general account.
We are under no  obligation  to  engage or  continue  to engage  any  investment
manager.

     During 1995,  Skandia Vida,  S.A. de C.V. was formed by the ultimate parent
Skandia Insurance Company Ltd. The Company owns 99.9% ownership in Skandia Vida,
S.A. de C.V. which is a life insurance company domiciled in Mexico. This Mexican
life  insurer  is a start up company  with  expectations  of  selling  long term
savings product within Mexico.  Total shareholders' equity of Skandia Vida, S.A.
de C.V. is $881,648 at December 31, 1995.

     Lines of  Business:  The  Company is in the  business  of  issuing  annuity
policies,  and has been so since its  business  inception  in 1988.  The Company
currently offers the following annuity products:  a) certain deferred  annuities
that are  registered  with the  Securities  and Exchange  Commission,  including
variable annuities and fixed interest rate annuities that include a market value
adjustment  feature;  b) certain  other fixed  deferred  annuities  that are not
registered  with the  Securities  and  Exchange  Commission;  and c)  fixed  and
adjustable  immediate  annuities.  We may, in the future, offer other annuities,
life insurance and other forms of insurance.

     Selected   Financial  Data:  The  following  selected  financial  data  are
qualified by reference to, and should be read in conjunction with, the financial
statements,  including related notes thereto,  and "Management's  Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this  Prospectus.  The  selected  financial  data as of and for each of the five
years ended December 31, 1995,  1994,  1993, 1992 and 1991 has not been audited.
The selected financial data has been derived from the full financial  statements
for the years ended  December 31,  1995,  1994,  1993,  1992 and 1991 which were
presented in accordance with generally accepted accounting  principles and which
were  audited by  Deloitte & Touche  LLP,  independent  auditors,  whose  report
thereon is included herein.
Income Statement Data:

                                                        1995             1994             1993           1992          1991
                                                        ----             -----            ----           ----          ----
Revenues:
Net investment income                              $ 1,600,674    $  1,300,217     $    692,758    $   892,053     $  723,253
Annuity premium income                                       0          70,000          101,643      1,304,629      2,068,452
Annuity charges and fees*                           38,837,358      24,779,785       11,752,984      4,846,134      1,335,079
Net realized capital gains (losses)                     36,774          (1,942)         330,024        195,848          4,278
Fee income                                           6,205,719       2,111,801          938,336        125,179              0
Other income                                            64,882          24,550            1,269         15,119         45,010
                                                   -----------    ------------      -----------     ----------     ----------
Total revenues                                     $46,745,407    $ 28,284,411      $13,817,014     $7,378,962     $4,176,072
                                                   ===========     ===========      ===========     ==========     ==========

Benefits and Expenses:
Return credited to contractowners                   10,612,858        (516,730)         252,132        560,243        235,470
Cost of minimum death benefit reinsurance            2,056,606               0                0              0              0
Annuity benefits                                       555,421         369,652          383,515        276,997        107,536
Increase/(decrease) in annuity policy reserves      (6,778,756)      5,766,003        1,208,454      1,331,278      2,045,722
Underwriting, acquisition and
   other insurance expenses                         35,970,524      18,942,720        9,547,951     11,338,765      7,294,400
Interest expense                                     6,499,414       3,615,845          187,156              0              0
                                                 -------------     -----------      -----------    -----------     ----------  
Total benefits and expenses                        $48,916,067    $ 28,177,490      $11,579,208    $13,507,283     $9,683,128
                                                 =============     ===========      ===========    ===========     ==========

Income tax                                       $     397,360    $   247,429     $    182,965    $          0     $        0
                                                 =============    ============     ===========    ============     ==========

Net income (loss)                                $  (2,568,020)   $    140,508)    $  2,054,841   $ (6,128,321)   ($5,507,056
                                                 ==============   =============    ============   ============    ===========

Balance Sheet Data:
Total Assets                                    $5,021,012,890  $2,864,416,329   $1,558,548,537   $552,345,206   $239,435,675
                                                ==============  ==============   ==============   ============   ============

Surplus Notes                                     $103,000,000    $ 69,000,000   $   20,000,000   $          0   $          0
                                                  ============     ===========   ==============   ============   ============

Shareholder's Equity                               $59,713,00     $ 52,205,524   $   52,387,687   $ 46,332,846   $ 14,292,772
                                                   ==========     ============   ==============   ============   ============
*On annuity sales of $1,628,486,000, $1,372,874,000, $890,640,000, $287,596,000,
and $141,017,000  during the years ended December 31, 1995, 1994, 1993, 1992 and
1991,   respectively,    with   contractowner   assets   under   management   of
$4,704,044,001,  $2,661,161,000,  $1,437,554,000, $495,176,000, and $217,425,000
as of December 31, 1995, 1994, 1993, 1992, and 1991, respectively.

The  above  selected  financial  data  should  be read in  conjunction  with the
financial statements and the notes thereto.

    Management's  Discussion  and  Analysis  of  Financial  Condition  and
Results of Operations

     Results of Operation:  The Company's  long term business plan was developed
reflecting  the current sales and marketing  approach.  Annuity sales  increased
19%, 54% and 210% in 1995, 1994 and 1993, respectively. The Company continues to
show  significant  growth in sales volume and increased  market share within the
variable annuity industry. Total assets grew 75%, 84% and 182% in 1995, 1994 and
1993,  respectively.  These  increases  were a direct result of the  substantial
sales volume increasing separate account assets and deferred  acquisition costs.
Liabilities grew 76%, 87%, and 198% in 1995, 1994 and 1993,  respectively,  as a
result of the reserves  required for the increased  sales activity and borrowing
during 1995,  1994 and 1993.  The  borrowing  is needed to fund the  acquisition
costs of the Company's variable annuity business.

     The Company experienced a net loss after tax in 1995 and 1994, which was in
excess of plan. The 1995 result was related to higher than  anticipated  expense
levels  and  additional  reserving  requirements  on our market  value  adjusted
annuities.  The increase in expenses was primarily attributable to improving our
service infrastructure and marketing related costs.

     The 1994 loss is a result of  additional  reserving of  approximately  $4.6
million to cover the minimum  death benefit  exposure in the  Company's  annuity
contracts  along with higher than expected  general  expenses  relative to sales
volume.  The  additional  reserve may be required from time to time,  within the
variable  annuity  market place,  and is a result of volatility in the financial
markets  as it relates  to the  underlying  separate  account  investments.  The
Company achieved profits in 1993 of $2 million which was expected.
         
     Increasing   volume  of  annuity  sales  results  in  higher  assets  under
management. The fees realized on assets under management has resulted in annuity
charges  and  fees to  increase  57%,  111% and  143% in  1995,  1994 and  1993,
respectively.

     Net investment income increased 23% and 88% in 1995 and 1994, respectively,
and decreased 22% in 1993.  The increase in 1995 is a result of a higher average
level of Company  bonds and  short-term  investments.  The increase in 1994 is a
result of an increase in the Company's bonds and short-term  investments,  which
were  $33.6   million  and  $29.1   million  at  December  31,  1994  and  1993,
respectively.  The  decrease  in  1993 is a  result  of the  need  to  liquidate
investments to support the cash needs required to fund the acquisition  costs on
the variable annuity business.

     Fee  income  has  increased  194%,  125% and 650% in 1995,  1994 and  1993,
respectively, as a result of income from transfer agency type activities.
              
     Annuity  benefits  represent  payments on annuity  contracts with mortality
risks,   this  being  the  immediate   annuity  with  life   contingencies   and
supplementary contracts with life contingencies.

     Increase in annuity policy  reserves  represent  change in reserves for the
immediate  annuity with life  contingencies,  supplementary  contracts with life
contingencies and minimum death benefit. During 1995 the Company entered into an
agreement to reinsure the guaranteed  minimum death benefit  exposure on most of
the variable annuity contracts. The costs associated with reinsuring the minimum
death  benefit  reserve  approximates  the change in the minimum  death  benefit
reserve during 1995,  thereby  having no significant  effect on the statement of
operations.  The significant  increase in 1994 reflects the required increase in
the minimum death benefit reserve on variable annuity  contracts.  This increase
covers the escalating death benefit in the product which was further enhanced as
a result of poor performance of the underlying  mutual funds within the variable
annuity contract.

     Return credited to contractowners  represents  revenues on the variable and
market value  adjusted  annuities  offset by the benefit  payments and change in
reserves  required on this business.  Also included are the benefit payments and
change in reserves on immediate annuity contracts without significant  mortality
risks.  In 1995, the Company earned a lower than  anticipated  separate  account
investment  return on the  market  value  adjusted  contracts  in support of the
benefits  and  required  reserves.  In  addition,  the 1995  result  includes an
increase in the required reserves associated with this product.

     The result for 1994 was better than  anticipated  due to  separate  account
investment return on the market value adjusted  contracts being in excess of the
benefits and required reserves.
                                              
     Underwriting,  acquisition and other insurance expenses for 1995 is made up
of $62.8 million of commissions and $42.2 million of general  expenses offset by
the net  capitalization  of deferred  acquisition  costs totaling $69.2 million.
This compares to the same period last year of $46.2 million of  commissions  and
$26.2 million of general expenses offset by the net  capitalization  of deferred
acquisition costs totaling $53.7 million.

     Underwriting, acquisition and other insurance expenses in 1993 were made up
of $36.7 million of commissions and $19.3 million of general  expenses offset by
the net capitalization of deferred acquisition costs totaling $46.3 million.

     Interest expense  increased $2.9 million and $3.4 million in 1995 and 1994,
respectively,  as a result  of  Surplus  Notes  totaling  $103  million  and $69
million, at 1995 and 1994, respectively.

     Liquidity and Capital Resources: The liquidity requirement of ASLAC was met
by cash from insurance operations, investment activities and borrowings from its
parent.

     As previously  stated,  the Company had significant growth during 1995. The
sales  volume of $1.628  billion  was  primarily  (approximately  80%)  variable
annuities which carry a contingent  deferred sales charge.  This type of product
causes a temporary  cash  strain in that 100% of the  proceeds  are  invested in
separate accounts supporting the product leaving a cash (but not capital) strain
caused by the acquisition  cost for the new business.  This cash strain required
the Company to look  beyond the  insurance  operations  and  investments  of the
Company.  During 1995,  the Company  borrowed an additional $34 million from its
parent in the form of  Surplus  Notes and  extended  the  reinsurance  agreement
(which  was  initiated  in 1993  and  1994)  along  with  entering  into a third
reinsurance  agreement with a large reinsurer in support of its cash needs.  The
reinsurance agreements are modified coinsurance arrangements where the reinsurer
shares in the experience of a specific book of business.  The income and expense
items presented above are net of reinsurance.

     The  Company  is  reviewing   various  options  to  fund  the  cash  strain
anticipated from the acquisition costs on the coming years' sales volume.

     The tremendous  growth of this young  organization  has depended on capital
support from its parent.

     As of December 31, 1995 and December  31,  1994,  shareholder's  equity was
$59,713,000 and $52,205,524  respectively,  which includes the carrying value of
the  state  insurance  licenses  in the  amount  of  $4,862,500  and  $5,012,500
respectively.

     ASLAC  has long  term  surplus  notes  with  its  parent  and a short  term
borrowing with an affiliate. No dividends have been paid to its parent company.

                
     Segment  Information:  As of the date of this  Prospectus,  we offered only
variable and fixed deferred annuities and immediate annuities.

     Reinsurance:  The Company  cedes  reinsurance  under  modified  coinsurance
arrangements.  The  reinsurance  arrangements  provide  additional  capacity for
growth in supporting  the cash flow strain from the Company's  variable  annuity
business. The reinsurance is effected under quota share contracts.

     Effective  January 1, 1995, the Company  reinsured certain mortality risks.
These risks result from the  guaranteed  minimum  death  benefit  feature in the
variable annuity products.

     The effect of the reinsurance agreements on the Company's operations was to
reduce  annuity  charges  and fee  income,  death  benefit  expense,  and policy
reserves.

     Such ceded reinsurance does not relieve the Company from its obligations to
policyholders.  The Company remains liable to its  policyholders for the portion
reinsured to the extent that any reinsurer does not meet the obligations assumed
under the reinsurance agreement.

     Surplus  Notes:  During  1995,  the Company  received  $34 million from its
parent in exchange for three surplus  notes.  The amounts were $10 million,  $15
million  and  $9  million,   at  interest  rates  of  7.52%,  7.49%  and  7.47%,
respectively.  Interest  expense  for these notes was $83,281 for the year ended
December 31, 1995.

     During 1994,  the Company  received $49 million from its parent in exchange
for four surplus notes,  two in the amount of $10 million,  one in the amount of
$15 million and one in the amount of $14  million,  at interest  rates of 7.28%,
7.90%,  9.13% and 9.78%,  respectively.  Interest  expense  for these  notes was
$4,319,612  and  $1,618,504  for the years  ended  December  31,  1995 and 1994,
respectively.

     During 1993,  the Company  received $20 million from its parent in exchange
for a  surplus  note in the  amount of $20  million  at a 6.84%  interest  rate.
Interest  expense for this note was  $1,387,000,  $1,387,000 and $11,400 for the
years ended December 31, 1995, 1994 and 1993, respectively.

     Payment of interest and  repayment of  principal  for these notes  requires
approval by the Commissioner of the State of Connecticut.  In 1995, approval was
granted for the payment of surplus note interest with the stipulation that it be
funded through a capital contribution from the Parent.

     Reserves: We are obligated to carry on our statutory books, as liabilities,
actuarial  reserves  to meet our  obligations  on  outstanding  annuity  or life
insurance contracts. This is required by the life insurance laws and regulations
in the  jurisdictions  in which  we do  business.  Such  reserves  are  based on
mortality  and/or  morbidity  tables in  general  use in the United  States.  In
general,  reserves are computed amounts that, with additions from premiums to be
received,  and with  interest on such  reserves  compounded  at certain  assumed
rates,  are expected to be  sufficient to meet our policy  obligations  at their
maturities if death occurs in accordance with the mortality tables employed.  In
the accompanying  Financial Statements these reserves for policy obligations are
determined in accordance with generally accepted  accounting  principles and are
included in the  liabilities  of our separate  accounts and the general  account
liabilities for future benefits of annuity or life insurance contracts we issue.

     Competition: We are engaged in a business that is highly competitive due to
the large  number of insurance  companies  and other  entities  competing in the
marketing and sale of insurance  products.  There are approximately  2300 stock,
mutual and other types of insurers in the life insurance  business in the United
States.

     Employees:  As of December 31, 1995, we had 198 direct salaried  employees.
An affiliate,  American Skandia Information Services and Technology Corporation,
which  provides  services  almost  exclusively  to us,  had 67  direct  salaried
employees.

     Regulation: We are organized as a Connecticut stock life insurance company,
and are  subject  to  Connecticut  law  governing  insurance  companies.  We are
regulated and supervised by the Connecticut  Commissioner of Insurance. By March
1 of every  year,  we must  prepare  and  file an  annual  statement,  in a form
prescribed by the Connecticut Insurance Department,  which covers our operations
for the  preceding  calendar  year,  and must prepare and file our  statement of
financial  condition as of December 31 of such year. The Commissioner and his or
her  agents  have the  right at all times to  review  or  examine  our books and
assets.  A full  examination  of our operations  will be conducted  periodically
according to the rules and  practices of the National  Association  of Insurance
Commissioners ("NAIC"). We are subject to the insurance laws and various federal
and state  securities laws and regulations and to regulatory  agencies,  such as
the Securities and Exchange  Commission (the "SEC") and the Connecticut  Banking
Department, which administer those laws and regulations.

We can be assessed up to prescribed  limits for policyholder  losses incurred by
insolvent  insurers  under the insurance  guaranty fund laws of most states.  We
cannot predict or estimate the amount any such future assessments we may have to
pay. However,  the insurance  guaranty laws of most states provide for deferring
payment or  exempting  a company  from  paying  such an  assessment  if it would
threaten such insurer's financial strength.

Several states,  including  Connecticut,  regulate insurers and their affiliates
under insurance holding company laws and regulations. This applies to us and our
affiliates.  Under  such  laws,  inter-company  transactions,  such as  dividend
payments to parent  companies and  transfers of assets,  may be subject to prior
notice and approval, depending on factors such as the size of the transaction in
relation to the financial position of the companies.

Currently,  the federal  government  does not directly  regulate the business of
insurance.  However, federal legislative,  regulatory and judicial decisions and
initiatives  often have  significant  effects on our business.  Types of changes
that are most likely to affect our business include changes to: (a) the taxation
of life insurance  companies;  (b) the tax treatment of insurance products;  (c)
the  securities  laws,  particularly  as they  relate to  insurance  and annuity
products;  (d) the "business of insurance" exemption from many of the provisions
of the anti-trust  laws; (e) the barriers  preventing most banks from selling or
underwriting  insurance:  and (f) any initiatives  directed toward improving the
solvency  of  insurance  companies.   We  would  also  be  affected  by  federal
initiatives  that have impact on the ownership of or investment in United States
companies by foreign companies or investors.

     Executive Officers and Directors:

     Our executive officers,  directors and certain significant employees, their
ages,  positions  with us and principal  occupations  are indicated  below.  The
immediately  preceding  work  experience  is provided for officers that have not
been  employed by us or an  affiliate  for at least five years as of the date of
this Prospectus.
Name/                                                         Position with American Skandia
Age                                                            Life Assurance Corporation                       Principal Occupation

Alan Blank                                                    Employee                                           Vice President and,
47                                                                                                           National Sales Manager:
                                                                                                                    American Skandia
                                                                                                             Marketing, Incorporated

    Mr. Blank joined us in 1994.  He previously held the position of Vice-Chairman at Liberty Securities.
Gordon C. Boronow*                                            President                                                President and
43                                                            and Chief                                     Chief Operating Officer:
                                                              Operating Officer,                               American Skandia Life
                                                              Director (since July, 1991)                      Assurance Corporation
Nancy F. Brunetti                                             Senior Vice President,            Senior Vice President, Business and
34                                                            Business and Application                      Application Development:
                                                              Development                                      American Skandia Life
                                                              Director (since February, 1996)                  Assurance Corporation

     Ms. Brunetti joined us in 1992.  She previously held the position of Senior Business Analyst at Monarch Life Insurance Company.

Malcolm M. Campbell                                           Director (since April, 1991)                   Director of Operations,
40                                                                                                           Assurance and Financial
                                                                                                                  Services Division:
                                                                                                      Skandia Insurance Company Ltd.
Jan R. Carendi*                                               Chief Executive                           Executive Vice President and
51                                                            Officer and                      Member of Corporate Management Group:
                                                              Chairman of the                         Skandia Insurance Company Ltd.
                                                              Board of Directors
                                                              Director (since May, 1988)
Lincoln R. Collins                                            Senior Vice President,                         Senior Vice President,
                                                              Product Management                                 Product Management:
35                                                            Director (since February, 1996)                  American Skandia Life
                                                                                                               Assurance Corporation

Henrik Danckwardt                                             Director (since July, 1991)                        Director of Finance
42                                                                                                               and Administration,
                                                                                                             Assurance and Financial
                                                                                                                  Services Division:
                                                                                                      Skandia Insurance Company Ltd.

Wade A. Dokken                                                Director (since July, 1991)                                  Director:
36                                                            and Employee                                     American Skandia Life
                                                                                                              Assurance Corporation;
                                                                                                  President, Chief Operating Officer
                                                                                                        and Chief Marketing Officer:
                                                                                            American Skandia Marketing, Incorporated

N. David Kuperstock                                           Vice President,                                        Vice President,
44                                                            Product Development                               Product Development:
                                                                                                               American Skandia Life
                                                                                                               Assurance Corporation

Thomas M. Mazzaferro                                          Executive Vice President and              Executive Vice President and
43                                                            Chief Financial Officer,                      Chief Financial Officer:
                                                              Director (since October, 1994)                   American Skandia Life
                                                                                                               Assurance Corporation

Dianne B. Michael                                             Senior Vice President,                          Senior Vice President,
41                                                            Customer Service                                     Customer Service:
                                                              Director (since February, 1996)                  American Skandia Life
                                                                                                               Assurance Corporation

     Ms. Michael joined us in 1995.  She previously held the position of Vice President with J. P. Morgan Investment Management Inc.

Gunnar Moberg                                                 Director (since November, 1994)        Director - Marketing and Sales,
41                                                                                                          Assurances and Financial
                                                                                                                  Services Division:
                                                                                                      Skandia Insurance Company Ltd.

M. Patricia Paez                                              Assistant Vice President                      Assistant Vice President
35                                                            and Corporate Secretary                       and Corporate Secretary:
                                                                                                              American Skandia Life
                                                                                                              Assurance Corporation

Don Thomas Peck                                               Employee                                               Vice President,
52                                                                                                           National Sales Manager:
                                                                                                                   American Skandia
                                                                                                             Marketing, Incorporated

   Mr. Peck joined us in 1995.  He previously held the position of Regional Vice President with MFS Financial Services Inc.

Rodney D. Runestad                                            Vice President and                                  Vice President and
46                                                            Valuation Actuary                                   Valuation Actuary:
                                                                                                               American Skandia Life
                                                                                                               Assurance Corporation

Hayward Sawyer                                                Employee                                            Vice President and
51                                                                                                           National Sales Manager:
                                                                                                                    American Skandia
                                                                                                             Marketing, Incorporated

    Mr. Sawyer joined us in 1994.  He previously held the position of Regional Vice President with AIM Distributors, Inc.

Todd L. Slade                                                 Vice President,                                        Vice President,
38                                                            Applications Development                     Applications Development:
                                                                                                               American Skandia Life
                                                                                                               Assurance Corporation

Anders O. Soderstrom                                          Director (since October, 1994)                          President and
36                                                                                                          Chief Operating Officer:
                                                                                                        American Skandia Information
                                                                                                 Services and Technology Corporation

Amanda C. Sutyak                                              Executive Vice President                      Executive Vice President
38                                                            and Deputy Chief                                      and Deputy Chief
                                                              Operating Officer,                                  Operating Officer:
                                                              Director (since July, 1991)                      American Skandia Life
                                                                                                               Assurance Corporation

C. Ake Svensson                                               Treasurer,                                   Vice President, Treasurer
45                                                            Director (since December, 1994)              and Corporate Controller:
                                                                                                         American Skandia Investment
                                                                                                                 Holding Corporation

    Mr. Svensson joined us in 1994.  He previously held the position of Senior Vice President with Nordenbanken.

Bayard F. Tracy                                               Senior Vice President,                          Senior Vice President,
48                                                            Institutional Sales,                Institutional Sales and Marketing:
                                                              Director (since October, 1994)                   American Skandia Life
                                                                                                               Assurance Corporation
Executive Compensation

     Summary   Compensation  Table:  The  summary  table  below  summarizes  the
compensation  payable  to our Chief  Executive  Officer  and to the most  highly
compensated of our executive  officers whose  compensation  exceeded $100,000 in
the fiscal year immediately preceding the date of this Prospectus.
Name and Principal                                 Annual         Annual        Other Annual
               Position                          Year             Salary          Bonus        Compensation

               Jan R. Carendi                    1995            $200,315
               Chief Executive Officer           1994             170,569
                                                 1993             214,121

               Gordon C. Boronow                 1995            $157,620
               President & Chief                 1994             129,121
                 Operating Officer               1993             123,788

               Lincoln R. Collins                1995            $156,550
               Senior Vice President             1994              92,700
                 Product Management              1993              72,100

               N. David Kuperstock               1995            $133,120
               Vice President, Product           1994             103,000
                 Development                     1993              88,864

               Bayard F. Tracy                   1995            $168,052
               Senior Vice President             1994             127,050
                 Institutional Sales             1993             123,363
Long-Term  Incentive  Plans - Awards in the Last Fiscal Year: The following
table provides  information  regarding our long-term  incentive plan.  Units are
awarded to executive officers and other personnel. The table shows units awarded
to our Chief Executive Officer and the most highly  compensated of our executive
officers whose  compensation  exceeded  $100,000 in the fiscal year  immediately
preceding  the date of this  Prospectus.  This  program  is  designed  to induce
participants  to remain with the company  over long periods of time and to tie a
portion of their  compensation  to the fortunes of the company.  Currently,  the
program  consists of multiple  plans.  A new plan may be  instituted  each year.
Participants  are  awarded  units  at  the  beginning  of  a  plan.   Generally,
participants  must remain  employed by the company or its affiliates at the time
such units are payable in order to receive any  payments  under the plan.  There
are certain exceptions, such as in cases of retirement or death.

     Changes in the value of units reflect  changes in the  "embedded  value" of
the company.  "Embedded  value" is the net asset value of the company (valued at
market value and not including the present  value of future  profits),  plus the
present  value of the  anticipated  future  profits  (valued  pursuant  to state
insurance  law) on its  existing  contracts.  Units  will not have any value for
participants  if  the  embedded  value  does  not  increase  by  certain  target
percentages  during the first four years of a plan. The target  percentages  may
differ between each plan. Any amounts available under a plan are paid out in the
fifth through eighth years of a plan.  Payments will be postponed if the payment
would exceed 20% of any profit (as determined  under state insurance law) earned
by the company in the prior fiscal year or 30% of the individual's  current year
salary.  The amount to be received by a  participant  at the time any payment is
due will be the then  current  number of units  payable  multiplied  by the then
current value of such units.
---------Estimated Future Payouts---------
       Name                Number of Units    Period Until Payout        Threshold          Target          Maximum
                                   (#)                                      ($)              ($)               ($)
Number    Period until                   Estimated Future Payouts
               Name                       of Units        Payout             Threshold      Target       Maximum

               Jan R. Carendi              120,000        Various                            $648,060

               Gordon C. Boronow           110,000        Various                            $561,558

               Lincoln R. Collins           36,750        Various                            $198,807

               N. David Kuperstock          32,000        Various                            $200,968

               Bayard E. Tracy              52,500        Various                            $286,263
Compensation  of Directors:  The following  directors  were  compensated as
shown below in 1995:

Malcolm M. Campbell   $4,000                    Gunnar Moberg    $2,500      
Henrik Danckwardt     $4,000              

     Compensation   Committee   Interlocks   and  Insider   Participation:   The
compensation  committee  of our  board of  directors  as of  December  31,  1995
consisted of Malcolm M. Campbell and Henrik Danckwardt.
    

CONTENTS OF THE STATEMENT OF ADDITIONAL  INFORMATION:  The  following  are the 
contents of the  Statement of Additional Information:

         (1)      General   Information   Regarding   American  Skandia  Life  
                  Assurance Corporation

         (2)      Principal Underwriter

         (3)      Calculation of Performance Data

         (4)      Unit Price Determinations

         (5)      Calculating the Market Value Adjustment

         (6)      Independent Auditors

         (7)      Legal Experts

         (8)      Financial Statements for Separate Account E

FINANCIAL STATEMENTSFINANCIAL  STATEMENTS: The financial statements which follow
are those of American  Skandia Life  Assurance  Corporation  for the years ended
December  31,  1995,  1994 and  1993,  respectively.  Financial  statements  for
Separate Account E are found in the Statement of Additional Information.
APPENDIXES

     APPENDIX  A  FINANCIAL  STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE
                  CORPORATION

     APPENDIX B   SHORT  DESCRIPTIONS  OF THE UNDERLYING  MUTUAL FUNDS'
                  PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------

                                   APPENDIX A

       FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholder of
     American Skandia Life Assurance Corporation
Shelton, Connecticut

We have audited the accompanying  consolidated statements of financial condition
of American  Skandia Life Assurance  Corporation (a  wholly-owned  subsidiary of
Skandia  Insurance  Company  Ltd.) as of  December  31,  1995 and 1994,  and the
related consolidated  statements of operations,  shareholder's  equity, and cash
flows for each of the three years in the period ended  December 31, 1995.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the consolidated financial position of American Skandia Life
Assurance  Corporation  as of December 31, 1995 and 1994, and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1995 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, New York
March 14, 1996
 

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION

          (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
AS OF DECEMBER 31,
                                                                                   1995                       1994
                                                                           ---------------------      ----------------------

ASSETS

Investments:
Fixed maturities - at amortized cost                                  $           10,112,705     $             9,621,865
   Investment in mutual funds - at market value                                       1,728,875                     840,637
   Short-term investments - at amortized cost                                        15,700,000                  24,000,000
                                                                           ---------------------      ----------------------

Total investments                                                                    27,541,580                  34,462,502

Cash and cash equivalents                                                            13,146,384                  23,909,463
Accrued investment income                                                               194,074                     173,654
Fixed assets                                                                             82,434                           0
Deferred acquisition costs                                                          270,222,383                 174,009,609
Reinsurance receivable                                                                1,988,042                           0
Receivable from affiliates                                                              860,991                     459,960
Income tax receivable                                                                   563,850                           0
State insurance licenses                                                              4,862,500                   5,012,500
Other assets                                                                          1,589,006                   1,261,513
Separate account assets                                                           4,699,961,646               2,625,127,128
                                                                           ---------------------      ----------------------

              Total Assets                                               $        5,021,012,890     $         2,864,416,329
                                                                           =====================      ======================

LIABILITIES AND SHAREHOLDER'S EQUITY

LIABILITIES:
Reserve for future contractowner benefits                                $           30,493,018     $            11,422,381
Annuity policy reserves                                                              19,386,490                  24,054,255
Income tax payable                                                                            0                      36,999
Accounts payable and accrued expenses                                                32,816,517                  31,753,380
Payable to affiliates                                                                   314,699                     261,552
Payable to reinsurer                                                                 64,995,470                  40,105,406
Short-term borrowing-affiliate                                                       10,000,000                  10,000,000
Surplus notes                                                                       103,000,000                  69,000,000
Deferred contract charges                                                               332,050                     449,704
Separate account liabilities                                                      4,699,961,646               2,625,127,128
                                                                           ---------------------      ----------------------

              Total Liabilities                                                   4,961,299,890               2,812,210,805
                                                                           ---------------------      ----------------------

SHAREHOLDER'S EQUITY:
Common stock, $80 par, 25,000 shares
  authorized, issued and outstanding                                                  2,000,000                   2,000,000
Additional paid-in capital                                                           81,874,666                  71,623,932
Unrealized investment gains and losses                                                  111,359                    (41,655)
Foreign currency translation                                                          (328,252)                           0
Accumulated deficit                                                                (23,944,773)                (21,376,753)
                                                                           ---------------------      ----------------------

              Total Shareholder's Equity                                             59,713,000                  52,205,524
                                                                           ---------------------      ----------------------

              Total Liabilities and Shareholder's                        $        5,021,012,890     $         2,864,416,329
Equity
                                                                           =====================      ======================
See notes to consolidated financial statements

                                       10

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
          (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
                                                                            1995                1994                 1993
                                                                       ----------------    ----------------     ---------------

REVENUES:
Annuity charges and fees                                             $      38,837,358   $      24,779,785    $     11,752,984
Fee Income                                                                   6,205,719           2,111,801             938,336
Net investment income                                                        1,600,674           1,300,217             692,758
Annuity premium income                                                               0              70,000             101,643
Net realized capital gains/(losses)                                             36,774             (1,942)             330,024
Other                                                                           64,882              24,550               1,269
                                                                       ----------------    ----------------     ---------------

     Total Revenues                                                         46,745,407          28,284,411          13,817,014
                                                                       ----------------    ----------------     ---------------

BENEFITS AND EXPENSES:
Benefits:
  Annuity benefits                                                             555,421             369,652             383,515
  Increase/(decrease) in annuity policy reserves                           (6,778,756)           5,766,003           1,208,454
  Cost of minimum death benefit reinsurance                                  2,056,606                   0                   0
  Return credited to contractowners                                         10,612,858           (516,730)             252,132
                                                                       ----------------    ----------------     ---------------

                                                                             6,446,129           5,618,925           1,844,101
                                                                       ----------------    ----------------     ---------------

Expenses:
  Underwriting, acquisition and other insurance expenses                    35,820,524          18,792,720           9,397,951
  Amortization of state insurance licenses                                     150,000             150,000             150,000
  Interest expense                                                           6,499,414           3,615,845             187,156
                                                                       ----------------    ----------------     ---------------

                                                                            42,469,938          22,558,565           9,735,107
                                                                       ----------------    ----------------     ---------------

     Total Benefits and Expenses                                            48,916,067          28,177,490          11,579,208
                                                                       ----------------    ----------------     ---------------

Income (loss) from operations before federal income taxes                  (2,170,660)             106,921           2,237,806

     Income tax                                                                397,360             247,429             182,965
                                                                       ----------------    ----------------     ---------------

Net income (loss)                                                    $     (2,568,020)   $       (140,508)    $      2,054,841
                                                                       ================    ================     ===============
See notes to consolidated financial statements

                                     

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
         (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                 CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31,
                                                                         1995               1994                1993
                                                                  -----------------    ---------------     ---------------
Common stock, balance at beginning and end of year              $        2,000,000   $      2,000,000    $      2,000,000
                                                                  -----------------    ---------------     ---------------

Additional paid-in capital:
  Balance at beginning of year                                          71,623,932         71,623,932          67,623,932
  Additional contributions                                              10,250,734                  0           4,000,000
                                                                  -----------------    ---------------     ---------------

  Balance at end of year                                                81,874,666         71,623,932          71,623,932
                                                                  -----------------    ---------------     ---------------

Unrealized investment gains and losses:
  Balance at beginning of year                                            (41,655)                  0                   0
  Change in unrealized investment gains and losses                         153,014           (41,655)                   0
                                                                  -----------------    ---------------     ---------------

  Balance at end of year                                                   111,359           (41,655)                   0
                                                                  -----------------    ---------------     ---------------

Foreign currency translation:
  Balance at beginning of year                                                   0                  0                   0
  Change in foreign currency translation                                 (328,252)                  0                   0
                                                                  -----------------    ---------------     ---------------

  Balance at end of year                                                 (328,252)                  0                   0
                                                                  -----------------    ---------------     ---------------

Accumulated deficit:
  Balance at beginning of year                                        (21,376,753)       (21,236,245)        (23,291,086)
  Net income (loss)                                                    (2,568,020)          (140,508)           2,054,841
                                                                  -----------------    ---------------     ---------------

  Balance at end of year                                              (23,944,773)       (21,376,753)        (21,236,245)
                                                                  -----------------    ---------------     ---------------

      TOTAL SHAREHOLDER'S EQUITY                                $       59,713,000   $     52,205,524    $     52,387,687
                                                                  =================    ===============     ===============
See notes to consolidated financial statements
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
         (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,
                                                                            1995                 1994                 1993
                                                                      ------------------  -------------------   -----------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)                                                 $       (2,568,020)   $        (140,508)    $      2,054,841
  Adjustments  to  reconcile  net  income  (loss) to net cash
    used in  operating activities:
      (Decrease)/increase in annuity policy reserves                        (4,667,765)            6,004,603           4,223,289
      Decrease in policy and contract claims                                          0                    0            (52,400)
      Amortization of bond discount                                              23,449               21,964               6,754
      Amortization of state insurance licenses                                  150,000              150,000             150,000
      (Decrease)/increase in due to/from affiliates                           (347,884)              256,779           (397,125)
      Change in income tax payable/receivable                                 (600,849)               36,999                   0
      Increase in other assets                                                (409,927)            (742,041)           (220,172)
      (Increase)/decrease in accrued investment income                         (20,420)             (44,847)             154,902
      Change in reinsurance receivable                                      (1,988,042)                    0                   0
      Increase in accounts payables and accrued expenses                      1,063,137           13,396,502          14,005,962
      Change in deferred acquisition costs                                 (96,212,774)         (83,986,073)        (57,387,042)
      Change in deferred contract charges                                     (117,654)             (71,117)              13,898
      Change in foreign currency translation                                  (328,252)                    0                   0
      Realized (gain)/loss on sale of investments                              (36,774)                1,942           (330,024)
                                                                      ------------------  -------------------   -----------------

  Net cash used in operating activities                                   (106,061,775)         (65,115,797)        (37,777,117)
                                                                      ------------------  -------------------   -----------------

CASH FLOW FROM INVESTING ACTIVITIES:

  Purchase of fixed maturity investments                                      (614,289)          (1,989,120)         (6,847,630)
  Proceeds from the maturity of fixed maturity investments                      100,000            2,010,000                   0
  Proceeds from the sale of fixed maturity investments                                0                    0          10,971,574
  Purchase of shares in mutual funds                                        (1,566,194)            (922,822)                   0
  Proceeds from sale of shares in mutual funds                                  867,744               38,588                   0
  Purchase of short-term investments                                      (202,700,000)        (513,100,000)     (1,207,575,307)
  Sale of short-term investments                                            211,000,000          508,500,000       1,202,333,907
  Investments in separate accounts                                      (1,609,415,439)      (1,365,775,177)       (890,125,018)
                                                                      ------------------  -------------------   -----------------

  Net cash used in investing activities                                 (1,602,328,178)      (1,371,238,531)       (891,242,474)
                                                                      ------------------  -------------------   -----------------

CASH FLOW FROM FINANCING ACTIVITIES:

  Capital contributions from parent                                          10,250,734                    0           4,000,000
  Surplus notes                                                              34,000,000           49,000,000          20,000,000
  Short-term borrowing                                                                0                    0          10,000,000
  Increase in payable to reinsurer                                           24,890,064           28,555,190          11,550,216
  Proceeds from annuity sales                                             1,628,486,076        1,372,873,747         890,639,947
                                                                      ------------------  -------------------   -----------------

  Net cash provided by financing activities                               1,697,626,874        1,450,428,937         936,190,163
                                                                      ------------------  -------------------   -----------------

Net increase/(decrease) in cash and cash equivalents                       (10,763,079)           14,074,609           7,170,572

Cash and cash equivalents at beginning of year                               23,909,463            9,834,854           2,664,282
                                                                      ------------------  -------------------   -----------------

Cash and cash equivalents at end of year                            $        13,146,384 $         23,909,463  $        9,834,854
                                                                      ==================  ===================   =================

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Income taxes paid                                                   $           995,496 $            161,398  $          169,339
                                                                      ==================  ===================   =================

Interest paid                                                       $           540,319 $            557,639  $          111,667
                                                                      ==================  ===================   =================
See notes to consolidated financial statements

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

                   Notes to Consolidated Financial Statements

1.       BUSINESS OPERATIONS

         American  Skandia  Life  Assurance  Corporation  (the  "Company")  is a
         wholly-owned   subsidiary  of  American  Skandia   Investment   Holding
         Corporation (the "Parent"),  which in turn is a wholly-owned subsidiary
         of Skandia Insurance Company Ltd., a Swedish corporation.

         The Company  develops  annuity products and issues its products through
         its  affiliated  broker/dealer  company,  American  Skandia  Marketing,
         Incorporated.  The Company  currently  issues variable,  fixed,  market
         value adjusted and immediate annuities.

         During 1995, Skandia Vida, S.A. de C.V. was formed by the ultimate
         parent Skandia Insurance Company Ltd.  The Company owns 99.9% ownership
         in Skandia Vida, S.A. de C.V. which is a life insurance company
         domiciled in Mexico.  This Mexican life insurer is a start up company
         with expectations of selling long term savings product within Mexico.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A.       Basis of Reporting
                  ------------------

                  The accompanying  consolidated  financial statements have been
                  prepared in  conformity  with  generally  accepted  accounting
                  principles.  Intercompany  transactions and balances have been
                  eliminated in consolidation.

         B.       Investments
                  -----------

                  The Company has classified  its fixed maturity  investments as
                  held to  maturity as the Company has the ability and intent to
                  hold those  investments  to  maturity.  Such  investments  are
                  carried at amortized cost.

                  The Company has  classified  its mutual  fund  investments  as
                  available  for sale.  Such  investments  are carried at market
                  value and changes in unrealized  gains and losses are reported
                  as a component of shareholder's equity.

                  Short-term investments are reported at cost which approximates
                  market value.

                  Realized  gains and  losses on  disposal  of  investments  are
                  determined  by the  specific  identification  method  and  are
                  included in revenues.

                  The Company adopted Statement of Financial Accounting
                  Standards (SFAS) No. 115, "Accounting for Certain Investments
                  in Debt and Equity Securities", effective January 1, 1994. The
                  adoption of SFAS No. 115 had no impact on the Company's
                  financial statements.

                                      

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         C.       Cash Equivalents
                  ----------------

                  The  Company   considers   all  highly  liquid  time  deposits
                  purchased  with a maturity of three  months or less to be cash
                  equivalents.

         D.       State Insurance Licenses
                  ------------------------

                  Licenses to do  business  in all states have been  capitalized
                  and  reflected  at  the  purchase  price  of $6  million  less
                  accumulated  amortization.  The cost of the  licenses is being
                  amortized over 40 years.

         E.       Fixed Assets
                  ------------

                  Fixed Assets consisting of furniture,  equipment and leasehold
                  improvements are carried at cost and depreciated on a straight
                  line basis over a period of three to five  years.  Accumulated
                  depreciation  at December  31,  1995 and related  depreciation
                  expense for the year ended December 31, 1995 was $3,749.

         F.       Recognition of Revenue and Contract Benefits
                  --------------------------------------------

                  Annuity  contracts  without  significant  mortality  risk,  as
                  defined  by   Financial   Accounting   Standard  No.  97,  are
                  classified as  investment  contracts  (variable,  market value
                  adjusted  and  certain  immediate  annuities)  and those  with
                  mortality risk  (immediate  annuities) as insurance  products.
                  The policy of revenue  and  contract  benefit  recognition  is
                  described below.

                  Revenues for  variable  annuity  contracts  consist of charges
                  against contractowner account values for mortality and expense
                  risks and  administration  fees and an annual  maintenance fee
                  per contract.  Benefit reserves for variable annuity contracts
                  represent the account value of the contracts, and are included
                  in the separate account liabilities.

                  Revenues for market value adjusted annuity  contracts  consist
                  of  separate  account  investment  income  reduced  by benefit
                  payments  and change in reserves  in support of  contractowner
                  obligations,  all of which is included  in return  credited to
                  contractowners. Benefit reserves for these contracts represent
                  the account  value of the  contracts,  and are included in the
                  general account liability for future contractowner benefits to
                  the extent in excess of the separate account liabilities.

                  Revenues  for  immediate   annuity   contracts   without  life
                  contingencies  consist of net investment income.  Revenues for
                  immediate annuity contracts with life contingencies consist of
                  single premium payments  recognized as annuity  considerations
                  when received.  Benefit reserves for these contracts are based
                  on the  Society  of  Actuaries  1983 - a Table with an assumed
                  interest rate of 8.25%.

                  Annuity   sales  were   $1,628,486,000,   $1,372,874,000   and
                  $890,640,000  for 1995, 1994 and 1993,  respectively.  Annuity
                  contract   assets  under   management   were   $4,704,044,000,
                  $2,661,161,000  and  $1,437,554,000 at December 31, 1995, 1994
                  and 1993, respectively.

                                       

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         G.       Deferred Acquisition Costs
                  --------------------------

                  The costs of acquiring new  business,  which vary with and are
                  primarily related to the production of new business, are being
                  amortized in relation to the present value of estimated  gross
                  profits.  These costs  include  commissions,  cost of contract
                  issuance,   and  certain  selling   expenses  that  vary  with
                  production.  Details of the deferred acquisition costs for the
                  years ended December 31 follow:
1995             1994              1993
                                                              ----             ----              ----
Balance at beginning of year             $174,009,609    $ 90,023,536        $32,636,494

                  Acquisition costs deferred
                  during the year                           106,063,698      85,801,180         59,676,296

                  Acquisition costs amortized
                  during the year                             9,850,924       1,815,107          2,289,254
                                                          -------------  ---------------     -------------

                  Balance at end of year                   $270,222,383    $174,009,609        $90,023,536
                                                           ============    =============       ===========
H.       Deferred Contract Charges
                  -------------------------

                  Certain  contracts are assessed a front-end fee at the time of
                  issue.  These fees are  deferred and  recognized  in income in
                  relation to the present  value of estimated  gross  profits of
                  the  related  contracts.  Details  of  the  deferred  contract
                  charges for the years ended December 31 follow:
1995              1994             1993
                                                               ----              ----             ----
Balance at beginning of year                 $449,704         $520,821          $506,923

                  Contract charges deferred
                  during the year                                21,513           87,114           144,537

                  Contract charges amortized
                  during the year                               139,167          158,231           130,639
                                                              ---------        ---------         ---------

                  Balance at end of year                       $332,050         $449,704          $520,821
                                                               ========         ========          ========
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         I.       Separate Accounts
                  -----------------

                  Assets  and  liabilities  in  Separate  Account  are  shown as
                  separate  captions in the consolidated  statement of financial
                  condition.  The assets consist of long-term bonds, investments
                  in mutual funds and  short-term  securities,  all of which are
                  carried at market value.

                  Included in Separate  Account  liabilities is $586,233,752 and
                  $259,556,863  at  December  31,  1995 and 1994,  respectively,
                  relating to annuity contracts for which the  contractholder is
                  guaranteed a fixed rate of return.  Separate Account assets of
                  $588,835,051  and  $269,488,557 at December 31, 1995 and 1994,
                  respectively,  consisting  of  long  term  bonds,  short  term
                  securities, transfers due from general account and cash are in
                  support  of these  annuity  contracts,  as  pursuant  to state
                  regulation.

         J.       Income taxes
                  ------------

                  The Company is included in the consolidated federal income tax
                  return with all Skandia Insurance Company Ltd. subsidiaries in
                  the U.S.  The  federal  and  state  income  tax  provision  is
                  computed on a separate  return  basis in  accordance  with the
                  provisions of the Internal Revenue Code, as amended.  Prior to
                  1995, the Company filed a separate federal income tax return.

         K.       Translation of Foreign Currency
                  -------------------------------

                  The  financial  position  and  results  of  operations  of the
                  Company's foreign operations are measured using local currency
                  as the  functional  currency.  Assets and  liabilities  of the
                  operations  are  translated  at the exchange rate in effect at
                  each  year-end.  Statements  of operations  and  shareholder's
                  equity  accounts are translated at the average rate prevailing
                  during the year. Translation  adjustments arising from the use
                  of differing exchange rates from period to period are included
                  in shareholder's equity.

         L.       Estimates
                  ---------

                  The  preparation  of financial  statements in conformity  with
                  generally  accepted   accounting   principles   requires  that
                  management  make  estimates  and  assumptions  that affect the
                  reported  amount of assets and  liabilities at the date of the
                  financial  statements and the reported amounts of revenues and
                  expenses  during the reporting  period.  The more  significant
                  estimates and assumptions are related to deferred  acquisition
                  costs  and  involve  policy  lapses,   investment  return  and
                  maintenance  expenses.  Actual results could differ from those
                  estimates.

                                       

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         M.       Reinsurance
                  -----------

                  The Company  cedes  reinsurance  under  modified  co-insurance
                  arrangements. The reinsurance arrangements provides additional
                  capacity  for growth in  supporting  the cash flow strain from
                  the Company's  variable annuity  business.  The reinsurance is
                  effected under quota share contracts.

                  Effective  January  1, 1995,  the  Company  reinsured  certain
                  mortality  risks.  These  risks  result  from  the  guaranteed
                  minimum  death  benefit   feature  in  the  variable   annuity
                  products.

3.       INVESTMENTS

         The carrying value (amortized cost), gross unrealized gains (losses) 
         and estimated market value of investments in fixed maturities by 
         category as of December 31, 1995 and 1994 are shown below.  All 
         securities held at December 31, 1995 are publicly traded.

         Investments in fixed  maturities as of December 31, 1995 consist of the
         following:
Gross               Gross
                                       Amortized         Unrealized          Unrealized              Market
                                         Cost               Gains              Losses                 Value
         U.S. Government
         Obligations                   $ 4,304,731         $183,201              $1,778             $4,486,154

         Obligations of
         State and Political
         Subdivisions                      256,095                0               3,165                252,930

         Corporate
         Securities                      5,551,879           13,252                 346              5,564,785
                                     -------------       ----------            --------           ------------

         Totals                        $10,112,705         $196,453              $5,289            $10,303,869
                                       ===========         ========              ======            ===========
The amortized cost and market value of fixed maturities, by contractual
         maturity, at December 31, 1995 are shown below.
Amortized                        Market
                                                          Cost                            Value

         Due in one year or less                     $    379,319                    $    393,745

         Due after one through five years               6,358,955                       6,519,880

         Due after five through ten years               3,374,431                       3,390,244
                                                     ------------                   -------------

                                                      $10,112,705                     $10,303,869
                                                      ===========                     ===========
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         Investments in fixed  maturities as of December 31, 1994 consist of the
         following:
Gross               Gross
                                       Amortized         Unrealized          Unrealized              Market
                                         Cost               Gains              Losses                 Value
         U.S. Government
         Obligations                    $3,796,390           $2,119            $156,759             $3,641,750

         Obligations of
         State and Political
         Subdivisions                      261,852                0               9,156                252,696

         Corporate
         Securities                      5,563,623                0             547,023              5,016,600
                                       -----------       ----------           ---------            -----------

         Totals                         $9,621,865           $2,119            $712,938             $8,911,046
                                        ==========           ======            ========             ==========
Proceeds from maturities and sales of fixed maturity investments during
         1995,  1994  and  1993,  were  $100,000,  $2,010,000  and  $10,971,574,
         respectively.
Gross gains and gross losses realized were as follows:
Gross                 Gross
                                  Gains                Losses
                                  -----                ------
                                  
         1995              $           0           $         0

         1994              $           0           $         0

         1993                   $329,000           $         0
19

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         The  cost,   gross  unrealized  gains  (losses)  and  market  value  of
         investments  in mutual  funds at  December  31, 1995 and 1994 are shown
         below:
Gross               Gross
                                                         Unrealized          Unrealized          Market
                                         Cost               Gains              Losses             Value

         1995                        $1,617,516            $111,686           $     327         $1,728,875
                                     ==========            ========           =========         ==========

         1994                        $  882,292            $  4,483           $  46,138         $  840,637
                                     ==========            ========           =========         ==========
Proceeds from sales of investments in mutual funds during 1995 and 1994
were $867,744 and $38,588.

         Mutual fund gross gains and gross losses were as follows:
Gross                 Gross
                                  Gains                Losses
                                  -----                ------

         1995                    $65,236               $28,462
                                 =======               =======

         1994                   $    510               $ 2,452
                                ========               =======
4.       NET INVESTMENT INCOME

         Additional  information  with respect to net investment  income for the
         years ended December 31, 1995, 1994 and 1993 is as follows:
1995                    1994                    1993
                                                       ----                    ----                    ----
Fixed Maturities                          $   629,743             $   616,987               $409,552
         Mutual Funds                                   59,895                  12,049                      0
         Short-Term Investments                        256,351                 142,421                394,545
         Cash and Cash Equivalents                     730,581                 633,298                 15,034
         Interest on Policy Loans                        4,025                   1,275                  1,015
                                                 -------------           -------------             ----------

         Total Investment Income                     1,680,595               1,406,030                820,146

         Investment Expenses                            79,921                 105,813                127,388
                                                  ------------             -----------              ---------

         Net investment income                      $1,600,674              $1,300,217               $692,758
                                                    ==========              ==========               ========
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

5.       INCOME TAXES

         Deferred  income  taxes  reflect the net tax  effects of (a)  temporary
         differences  between the carrying amounts of assets and liabilities for
         financial  reporting  purposes  and the  amounts  used for  income  tax
         purposes, and (b) operating loss and tax credit carryforwards.  The tax
         effects of  significant  items  comprising  the Company's  deferred tax
         balance as of December 31, 1995 and 1994, are as follows:
1995                  1994
                                                                    ----                  ----
         Deferred Tax (Liabilities):
Deferred acquisition costs                         ($57,399,960)         ($37,885,053)
             Payable to reinsurer                                (19,802,861)          (12,754,591)
             Unrealized investment gains and losses                  (38,976)               14,579
             Other                                                  (308,304)             (214,505)
                                                              --------------        --------------

             Total                                              ($77,550,101)         ($50,839,570)
                                                                ------------          ------------

         Deferred Tax Assets:
             Deferred contract charge                          $     116,218         $     157,396
             Net separate account liabilities                     72,024,094            51,637,155
             Reserve for future contractowner benefits            10,672,556             3,997,833
             Net operating loss carryforward                               0             1,813,670
             AMT credit carryforward                                 286,094                     0
             Foreign exchange translation                            114,888                     0
             Other                                                 3,661,104               878,030
                                                                ------------         -------------

             Total                                               $86,874,954           $58,484,084
                                                                 -----------           -----------

             Net before valuation allowance                     $  9,324,853          $  7,644,514

             Valuation allowance                                  (9,324,853)           (7,644,514)
                                                                ------------          ------------

             Net deferred tax balance                      $               0     $               0
                                                           -----------------     -----------------
The significant components of federal tax expense are as follows:
1995               1994               1993
                                                              ----               ----               ----
Current tax expense                              $   394,648          $184,771           $182,965

         Deferred tax benefit:
             (exclusive of the effects of
             the change in valuation allowance)            (1,680,339)         (365,288)          (404,480)

         Change in valuation allowance                      1,680,339           365,288            404,480
                                                          -----------        ----------          ---------

         Total deferred tax expense                                 0                 0                  0
                                                         ------------        ----------          ---------

         Total income tax expense                        $    394,648          $184,771           $182,965

                                                         ============          ========           ========
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         The state income tax expense was $2,712 and $62,658 for the years ended
         1995 and 1994, respectively.

         The federal income tax expense was different  from the amount  computed
         by applying  the federal  statutory  tax rate of 35% to pre-tax  income
         from continuing operations as follows:
1995              1994               1993
                                                               ----              ----               ----
Income (loss) before taxes                        ($2,170,660)        $106,921         $2,237,806
             Income tax rate                                        35%              35%                35%
                                                           ------------       ----------        -----------

         Tax expense at federal
             statutory income tax rate                        (759,731)          37,422            783,232

         Tax effect of:

             Permanent tax differences                        (253,101)         (82,188)            63,535

             Difference between financial
                statement and taxable income                 2,986,464        3,161,331          2,414,254

             Utilization of net operating
                loss carryforwards                          (1,487,144)      (3,116,565)        (3,261,021)

             Utilization of AMT credits                        (91,840)               0                  0

         Alternative minimum tax                                     0          184,771            182,965
                                                        --------------      -----------        -----------

         Income tax expense                                $   394,648       $  184,771         $  182,965
                                                           ===========       ==========         ==========
6.       RELATED PARTY TRANSACTIONS

         Certain operating costs (including  personnel,  rental of office space,
         furniture,  and equipment) and investment expenses have been charged to
         the  Company  at cost by  American  Skandia  Information  Services  and
         Technology  Corporation,  an  affiliated  company;  and  likewise,  the
         Company has charged  operating  costs to  American  Skandia  Investment
         Services,  Incorporated,  an affiliated  company.  Income  received for
         these items was  $396,573,  $248,799  and  $146,134 for the years ended
         December 31, 1995, 1994 and 1993,  respectively.  The total cost to the
         Company for these items was $12,687,337,  $8,524,840 and $3,537,566 for
         the years ended December 31, 1995, 1994 and 1993, respectively. Amounts
         receivable from  affiliates  under this  arrangement  were $857,156 and
         $317,285  as of  December  31,  1995 and  1994,  respectively.  Amounts
         payable to affiliates under this arrangement were $304,525 and $261,552
         as of December 31, 1995 and 1994, respectively.

                                       

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

7.       LEASES

         The Company leases office space under a lease agreement  established in
         1989 with an  affiliate  (American  Skandia  Information  Services  and
         Technology Corporation).  The lease expense for 1995, 1994 and 1993 was
         $1,265,771, $961,080 and $280,363,  respectively.  Future minimum lease
         payments  per year and in  aggregate  as of  December  31,  1995 are as
         follows:

                           1996                               1,178,550
                           1997                               1,178,550
                           1998                               1,178,550
                           1999                               1,178,550
                           2000 and thereafter                6,831,312
                                                            -----------

                           Total                            $11,545,512
                                                            ===========

8.       RESTRICTED ASSETS

         In  order  to  comply  with  certain   state   insurance   departments'
         requirements, the Company maintains bonds/notes on deposit with various
         states. The carrying value of these deposits amounted to $3,267,357 and
         $3,410,135  as of December  31,  1995,  and 1994,  respectively.  These
         deposits  are  required  to  be  maintained   for  the   protection  of
         contractowners within the individual states.

9.       RETAINED EARNINGS AND DIVIDEND RESTRICTIONS

         Statutory basis shareholder's equity was $132,493,899,  $95,001,971 and
         $60,666,243 at December 31, 1995, 1994 and 1993, respectively.

         The statutory  basis net income (loss) was  ($7,183,003),  ($9,789,297)
         and  $387,695 for the years ended  December  31,  1995,  1994 and 1993,
         respectively.

         Under state insurance laws, the maximum amount of dividends that can be
         paid  shareholders  without  prior  approval  of  the  state  insurance
         departments is subject to  restrictions  relating to statutory  surplus
         and net gain from  operations.  At December 31, 1995, no amounts may be
         distributed without prior approval.

10.      EMPLOYEE BENEFITS

         In 1989, the Company  established a 401(k) plan for which substantially
         all  employees  are  eligible.  Company  contributions  to this plan on
         behalf of the participants were $627,161, $431,559 and $250,039 for the
         years ended December 31, 1995, 1994 and 1993, respectively.

         The Company has a long-term  incentive  plan where units are awarded to
         executive  officers  and  other  personnel.  The  program  consists  of
         multiple  plans.  A  new  plan  is  instituted  each  year.  Generally,
         participants  must remain  employed by the Company or its affiliates at
         the time such units are payable in order to receive any payments  under
         the plan. The accrued  liability  representing the value of these units
         is  $4,600,831  and  $1,564,407  as of  December  31,  1995  and  1994,
         respectively.
                                       

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

         In 1994, the Company established a deferred  compensation plan which is
         available to the internal field marketing  staff and certain  officers.
         Company  contributions to this plan on behalf of the participants  were
         $139,209 in 1995 and $106,882 in 1994.

11.      REINSURANCE

         The effect of the  reinsurance  agreements on the Company's  operations
         was to reduce annuity charges and fee income, death benefit expense and
         policy reserves. The effect of reinsurance for the years ended December
         31, 1995, 1994 and 1993 are as follows:
1995
- ----------------------------------------------------------------------------------------------
Annuity            Change in Annuity         Return Credited
                           Charges and Fees         Policy Reserves         to Contractowners
                           ----------------         ---------------         -----------------

         Gross                $50,334,280            ($4,790,714)             $10,945,831
         Ceded                 11,496,922               1,988,042                 332,973
                            -------------            -------------          -------------
         Net                  $38,837,358            ($6,778,756)             $10,612,858
                              ===========            ===========              ===========
1994                      1993
                           ----------------        ----------------
                                Annuity                 Annuity
                           Charges and Fees        Charges and Fees
                           ----------------        ----------------

         Gross                $30,116,166             $12,446,277
         Ceded                  5,336,381                  693,293
                            -------------            -------------
         Net                  $24,779,785             $11,752,984
                              ===========             ===========

         Such  ceded   reinsurance   does  not  relieve  the  Company  from  its
         obligations  to  policyholders.  The  Company  remains  liable  to  its
         policyholders  for  the  portion  reinsured  to  the  extent  that  any
         reinsurer does not meet the  obligations  assumed under the reinsurance
         agreements.

                                      

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

12.      SURPLUS NOTES

         During 1995, the Company received $34 million from its parent in 
         exchange for three surplus notes.  The amounts were $10 million, $15
         million and $9 million, at interest rates of 7.52%, 7.49% and 7.47%, 
         respectively.  Interest expense for these notes was $83,281 for the 
         year ended December 31, 1995.

         During  1994,  the  Company  received  $49  million  from its parent in
         exchange for four surplus notes, two in the amount of $10 million,  one
         in the amount of $15 million and one in the amount of $14  million,  at
         interest rates of 7.28%, 7.90%, 9.13% and 9.78%, respectively. Interest
         expense for these notes was  $4,319,612  and  $1,618,504  for the years
         ended December 31, 1995 and 1994, respectively.

         During  1993,  the  Company  received  $20  million  from its parent in
         exchange  for a surplus  note in the  amount of $20  million at a 6.84%
         interest  rate.   Interest   expense  for  this  note  was  $1,387,000,
         $1,387,000 and $11,400 for the years ended December 31, 1995,  1994 and
         1993, respectively.

         Payment of interest and repayment of principal for these notes requires
         approval  by the  Commissioner  of the State of  Connecticut.  In 1995,
         approval was granted for the payment of surplus note  interest with the
         stipulation that it be funded through a capital  contribution  from the
         Parent.

13.      SHORT-TERM BORROWING

         During 1993, the Company received a $10 million loan from Skandia AB, a
         Swedish affiliate. Upon the last renewal the loan became payable to the
         Parent  rather than  Skandia AB. The loan  matures on March 6, 1996 and
         bears interest at 6.75.%. The total interest expense to the Company was
         $709,521,  $569,618 and $149,861 for the years ended December 31, 1995,
         1994 and 1993, respectively,  of which $219,375 and $50,174 was payable
         as of December 31, 1995 and 1994, respectively.

14.      CONTRACT WITHDRAWAL PROVISIONS

         Approximately  98% of the Company's  separate  account  liabilities are
         subject to  discretionary  withdrawal  with market value  adjustment by
         contractholders.  Separate  account  assets which are carried at market
         value are adequate to pay such withdrawals  which are generally subject
         to surrender  charges  ranging from 7.5% to 1% for contracts  held less
         than 7 years.

                                       

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                          (a wholly-owned subsidiary of
                         Skandia Insurance Company Ltd.)

             Notes to Consolidated Financial Statements (continued)

15.      QUARTERLY FINANCIAL DATA (UNAUDITED)

         The  following  table  summarizes   information  with  respect  to  the
         operations of the Company.
Three Months Ended
                                                                             ------------------
                1995                              March 31            June 30         September 30       December 31
                ----                              --------            -------         ------------       -----------

         Premiums and other insurance
revenues                            $  8,891,903          $10,066,478      $11,960,530       $14,189,048
         Net investment income                       551,690              434,273          293,335           321,376
         Net realized capital gains (losses)         (16,082)                (370)          44,644             8,582
                                               -------------     ----------------   --------------   ---------------
         Total revenues                         $  9,427,511          $10,500,381      $12,298,509       $14,519,006
                                                ============          ===========      ===========       ===========

         Benefits and expenses                   $11,438,798         $  9,968,595      $11,600,587       $15,908,087
                                                 ===========         ============      ===========       ===========

         Net income (loss)                      ($ 2,026,688)       $     531,486    $     678,312       ($1,751,130)
                                                 ============       =============    =============       ===========

                                                                             Three Months Ended
                1994                              March 31            June 30         September 30       December 31
                ----                              --------            -------         ------------       -----------
         Premiums and other insurance
            revenues                              $5,594,065           $6,348,777       $7,411,686        $7,631,608
         Net investment income                       252,914              336,149          264,605           446,549
         Net realized capital gains (losses)               0              (30,829)          25,914             2,973
                                            -----------------       -------------    --------------    -------------
         Total revenues                           $5,846,979           $6,654,097       $7,702,205        $8,081,130
                                                  ==========           ==========       ==========        ==========

         Benefits and expenses                    $5,701,460           $7,883,829       $8,157,535        $6,434,666
                                                  ==========           ==========       ==========        ==========

         Net income (loss)                       $   104,636          ($1,257,768)       ($503,793)       $1,516,417
                                                 ============         ===========        =========        ==========
APPENDIX B

                            SHORT DESCRIPTIONS OF THE
     UNDERLYING MUTUAL FUNDS' PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES

The investment  objectives for the portfolios of each underlying mutual fund are
in bold face.  Please refer to the prospectus of the underlying  mutual fund for
more complete details and risk factors applicable to certain portfolios.

                                 Galaxy VIP Fund

GAL Money Market Fund: The Money Market Fund's  investment  objective is to seek
as high a level of current income as is consistent  with liquidity and stability
of  principal.  The Fund seeks to achieve its  objective  by investing in "money
market"  instruments  that are determined by the  investment  adviser to present
minimal credit risk and meet certain rating  criteria.  Instruments  that may be
purchased by the Money Market Fund include  obligations  of domestic and foreign
banks  (including  negotiable  certificates  of  deposit,   non-negotiable  time
deposits,   savings  deposits,  and  bankers'  acceptances);   commercial  paper
(including  variable and floating rate notes);  obligations issued or guaranteed
by the U.S.  Government,  its  agencies  or  instrumentalities;  and  repurchase
agreements issued by financial  institutions  such as banks and  broker/dealers.
These  instruments have remaining  maturities of thirteen months or less (except
for certain variable and floating rate notes and securities  underlying  certain
repurchase agreements).

In accordance with a rule promulgated by the Securities and Exchange Commission,
the Money  Market  Fund will  purchase  only  those  instruments  which meet the
applicable quality requirements  described below. The Money Market Fund will not
purchase a security (other than a U.S. Government  security) unless the security
or the issuer with respect to comparable securities (i) is rated by at least two
nationally recognized statistical rating organizations ("Rating  Organizations")
(such as S&P or Moody's) in the highest category for short-term debt securities,
(ii) is rated by the only Rating  Organization  that has issued a rating in such
Rating  Organization's  highest  category for  short-term  debt, or (iii) if not
rated, the security is determined to be of comparable quality. Determinations of
comparable quality will be made in accordance with procedures established by the
Board of Trustees.

GAL Equity Fund:  The Equity Fund's  investment  objective is to seek  long-term
growth by investing in companies  that the Fund's  investment  adviser  believes
have above-average earnings potential.  The Fund seeks to achieve its investment
objective by investing,  under normal market and economic  conditions,  at least
75% of its total assets in a broadly diversified  portfolio of equity securities
such as common stock,  preferred  stock,  common stock  warrants and  securities
convertible into common stock of companies that the investment  adviser believes
will increase future  earnings to a level above the average  earnings of similar
issuers.  Such  companies  often  retain their  earnings to finance  current and
future growth and, for this reason, generally pay little or no dividends. Equity
securities in which the Fund invests are selected based on analyses of trends in
industries and companies,  earning power, growth features,  quality and depth of
management,  marketing and manufacturing skills,  financial conditions and other
investment criteria. By investing in convertible securities,  the Fund will seek
the opportunity,  through the conversion  feature, to participate in the capital
appreciation of the common stock into which the securities are convertible.

All debt obligations, including convertible bonds, purchased by the Fund will be
rated at the time of purchase in one of the four highest  rating  categories  by
S&P (AAA, AA, A and BBB) or Moody's (Aaa, Aa, A and Baa) or, if not rated,  will
be determined to be of an equivalent  quality by the  investment  adviser.  Debt
securities  rated BBB by S&P or Baa by Moody's are  generally  considered  to be
investment grade securities  although they may have speculative  characteristics
and changes in economic conditions or circumstances are more likely to lead to a
weakened  capacity to make principal and interest  payments than is the case for
higher grade debt obligations.

The Equity Fund may invest indirectly in foreign securities through the purchase
of  American  Depository   Receipts("ADRs")  and  European  Depository  Receipts
("EDRs").  In  addition,  the Fund may  invest in  securities  issued by foreign
branches of U.S. banks and foreign banks, Canadian commercial paper and Canadian
securities  listed  on a  national  securities  exchange,  and  Europaper  (U.S.
dollar-denominated commercial paper of foreign issuers). The Fund may also write
covered call options.

As a temporary  defensive  measure,  the Fund may invest  without  limitation in
cash,  "money market"  instruments and  obligations  issued or guaranteed by the
U.S.  Government,  its agencies and  instrumentalities at such times and in such
proportions as, in the opinion of the investment  adviser,  prevailing market or
economic conditions warrant.

GAL Asset Allocation Fund: The investment objective of the Asset Allocation Fund
is to seek a high total return by providing  both a current level of income that
is greater than that  provided by the popular  stock market  averages as well as
long-term  growth in the value of the Fund's  assets.  The Fund seeks to achieve
its  investment  objective and at the same time reduce  volatility by allocating
its assets among  short-term  obligations,  common  stock,  preferred  stock and
bonds.  The  proportion of the Fund's  assets  invested in each type of security
will  vary  from  time  to  time  as  a  result  of  the  investment   adviser's
interpretation of economic and market conditions.  However,  at least 25% of the
Fund's  total  assets  will at all  times be  invested  in  fixed-income  senior
securities,  including debt  securities and preferred  stocks.  Debt  securities
purchased  by the Fund will be rated at the time of  purchase in one of the four
highest rating categories by S&P (AAA, AA, A and BBB) or Moody's (Aaa, Aa, A and
Baa) (or which,  if unrated,  are determined by the investment  adviser to be of
comparable  quality).  Debt  securities  rated BBB by S&P or Baa by Moody's  are
generally  considered to be investment grade  securities  although they may have
speculative  characteristics and changes in economic conditions or circumstances
are more likely to lead to a weakened  capacity to make  principal  and interest
payments than is the case for higher grade debt obligations. In selecting common
stock for purchase by the Fund,  the  investment  adviser will analyze trends in
industries and companies,  earning power, growth features,  quality and depth of
management,  marketing and manufacturing skills,  financial conditions and other
investment criteria.

The Asset  Allocation  Fund may also  invest  up to 20% of its  total  assets in
foreign  securities,  either  directly or indirectly  through ADRs and EDRs. The
Fund may write  covered  call  options,  purchase  asset-backed  securities  and
mortgage-backed   securities   and  enter   into   foreign   currency   exchange
transactions.

As a temporary  defensive  measure,  the Fund may invest  without  limitation in
cash,  "money market"  instruments and  obligations  issued or guaranteed by the
U.S.  Government,  its agencies and  instrumentalities at such times and in such
proportions as, in the opinion of the investment adviser,  prevailing market and
economic conditions warrant.

Investments  in  foreign  securities  involve  higher  costs  for the Fund  than
investments in U.S.  securities,  including higher  transaction costs as well as
the  imposition in some cases of additional  taxes by foreign  governments.  For
example,  fixed commissions on foreign stock exchanges are generally higher than
the negotiated commissions on U.S. exchanges and the Fund may be subject in some
cases to withholding and/or transfer taxes. In addition, foreign investments may
include  additional risks associated with currency exchange rates, less complete
financial  information about the issuers,  less market liquidity,  and political
instability. Future political and economic developments, the possible imposition
of withholding taxes on interest income, the possible seizure or nationalization
of foreign holdings,  the possible  establishment of exchange  controls,  or the
adoption of other governmental restrictions,  might adversely affect the payment
of principal and interest on foreign obligations.

Although  the Asset  Allocation  Fund may invest in  securities  denominated  in
foreign  currencies,  the Fund values its  securities  and other  assets in U.S.
dollars.  As a result,  the net asset value of the Fund's  shares may  fluctuate
with U.S.  dollar  exchange  rates as well as with  price  changes of the Fund's
securities in the various local markets and currencies. Thus, an increase in the
value of the U.S.  dollar compared to the currencies in which the Fund makes its
investments  could  reduce the effect of  increases  and  magnify  the effect of
decreases  in the  price  of the  Fund's  securities  in  their  local  markets.
Conversely,  a decrease in the value of the U.S.  dollar will have the  opposite
effect of  magnifying  the  effect  of  increases  and  reducing  the  effect of
decreases  in the prices of the Fund's  securities  in their local  markets.  In
addition to favorable and unfavorable currency exchange-rate  developments,  the
Fund is subject to the possible  imposition of exchange  control  regulations or
freezes on convertibility of currency.

GAL High Quality Bond Fund: The High Quality Bond Fund's investment objective is
to seek a high level of current income  consistent with prudent risk of capital.
The Fund  invests  its  assets  in  corporate  debt  obligations  such as bonds,
debentures,   obligations   convertible   into  common  stock,   "money  market"
instruments such as bank obligations and commercial paper, in obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities,  and in
debt  obligations of  supranational  entities.  Supranational  entities  include
international  organizations designated or supported by governmental entities to
promote  economic   reconstruction  or  development  and  international  banking
institutions  and related  government  agencies.  Examples of these  include The
International Bank for Reconstruction and Development  ("World Bank"), The Asian
Development  Bank  and  The  InterAmerican   Development  Bank.  Obligations  of
supranational  entities may be supported by appropriated but unpaid  commitments
of their member countries, and there is no assurance that these commitments will
be  undertaken  or met in the future.  The failure by a member  country to honor
such commitments could adversely affect the payment of principal and interest on
these obligations.  The Fund may also invest,  from time to time, in obligations
issued by state and local governmental  issuers  ("Municipal  Securities").  The
purchase  of  Municipal  Securities  may be  advantageous  when,  as a result of
prevailing economic, regulatory or other circumstances,  the performance of such
securities,  on a pretax basis,  is comparable to that of corporate or U.S. debt
obligations.  The High  Quality Bond Fund may enter into  interest  rate futures
contracts to hedge against changes in market values of fixed-income  instruments
that the Fund  holds or intends to  purchase.  At least 65% of the Fund's  total
assets will be invested in  non-convertible  bonds.  Any common  stock  received
through  the  conversion  of  convertible  debt  obligations  will be sold in an
orderly manner as soon as possible.

Under normal market and economic  conditions,  the Fund will invest at least 80%
of its assets in high quality debt  obligations  that are rated,  at the time of
purchase, within the two highest ratings of S&P (AAA and AA) or Moody's (Aaa and
Aa) (or which,  if unrated,  are determined by the  investment  adviser to be of
comparable  quality)  and in  obligations  issued  or  guaranteed  by  the  U.S.
Government,   its  agencies  or  instrumentalities   and  other  "money  market"
instruments.  Unrated  securities will be determined to be of comparable quality
to high  quality debt  obligations  if, among other  things,  other  outstanding
obligations of the issuers of such securities are rated AA or A-2/P-2 or better.
When, in the opinion of the investment  adviser, a defensive  investment posture
is warranted,  the Fund may invest  temporarily  and without  limitation in high
quality, short-term "money market" instruments.

The Fund may also invest up to 5% of its total assets in dollar-denominated high
quality debt obligations of U.S.  companies issued outside the United States. In
addition,  the Fund may  acquire  high  quality  obligations  issued by Canadian
Provincial  Governments  which are similar to U.S.  Municipal  Securities except
that the income  derived  therefrom is fully subject to U.S.  Federal  taxation.
These instruments are denominated in either Canadian or U.S. dollars and have an
established over-the-counter market in the United States.

The Fund seeks to provide a current yield greater than that generally  available
from a portfolio of high quality short-term  obligations.  The High Quality Bond
Fund's average weighted maturity will vary from time to time depending on, among
other things,  current market and economic conditions and the comparative yields
on instruments with different maturities.  The Fund adjusts its average weighted
maturity and its holdings of corporate and U.S.  Government debt securities in a
manner  consistent  with the  investment  adviser's  assessment  of  prospective
changes in  interest  rates.  The  success  of this  strategy  depends  upon the
investment adviser's ability to predict changes in interest rates.

The value of the Fund's portfolio  securities will generally vary inversely with
changes in prevailing  interest rates.  The high quality credit criteria applied
to the selection of portfolio  securities  are intended to reduce  adverse price
changes due to credit considerations.

                  This prospectus  contains a short  description of the contents
                  of the Statement of Additional Information. You have the right
                  to receive from us such  Statement of Additional  Information.
                  To do so, please complete the following, detach it and forward
                  it to us at:

                   American Skandia Life Assurance Corporation
                   Attention: Galaxy Annuity Customer Service
                                  P.O. Box 883
                           Shelton, Connecticut 06484

================================================================================
              PLEASE SEND ME A STATEMENT OF  ADDITIONAL  INFORMATION  THAT  
              CONTAINS  FURTHER  DETAILS ABOUT THE GALAXY ANNUITY.(05/96)
================================================================================
================================================================================

              ---------------------------------------------------------------
================================================================================
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                                              (print your name)

              ----------------------------------------------------------------
                                                  (address)

              ---------------------------------------------------------------
                                            (city/state/zip code)

================================================================================
ADDITIONAL  INFORMATION:   Inquiries  will  be  answered  by  calling  your
representative or by writing to:

                      AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                  P.O. Box 883
                              Shelton, Connecticut 06484

Issued by:                                                         Serviced by:

AMERICAN SKANDIA LIFE                                     AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION                                     ASSURANCE CORPORATION
One Corporate Drive                                                P.O. Box 883
Shelton, Connecticut 06484                           Shelton, Connecticut 06484
Telephone: 1-800-444-3970                            Telephone:  1-800-444-3970

                                                                 Distributed by:

                     AMERICAN SKANDIA MARKETING, INCORPORATED
                              One Corporate Drive
                           Shelton, Connecticut 06484
                            Telephone: (203) 926-1888

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.  Other Expenses of Issuance and Distribution:  Not Applicable.

Item 14. Indemnification of Directors and Officers: Under Section 33-320a of the
Connecticut  General  Statutes,  the  Registrant  must  indemnify  a director or
officer  against  judgments,  fines,  penalties,  amounts paid in settlement and
reasonable expenses including attorneys' fees, for actions brought or threatened
to be brought  against him in his capacity as a director or officer when certain
disinterested  parties  determine that he acted in good faith and in a manner he
reasonably  believed  to be in the  best  interests  of the  Registrant.  In any
criminal  action or proceeding,  it also must be determined that the director or
officer  had no reason to believe  his conduct  was  unlawful.  The  director or
officer  must also be  indemnified  when he is  successful  on the merits in the
defense of a proceeding or in circumstances  where a court determines that he is
fairly and  reasonable  entitled to be  indemnified,  and the court approves the
amount. In shareholder derivative suits, the director or officer must be finally
adjudged  not to have  breached  this  duty to the  Registrant  or a court  must
determine that he is fairly and reasonably  entitled to be indemnified  and must
approve the amount.  In a claim based upon the director's or officer's  purchase
or sale of the  Registrants'  securities,  the  director  or officer  may obtain
indemnification   only  if  a  court   determines  that,  in  view  of  all  the
circumstances,  he is fairly and reasonably  entitled to be indemnified and then
for such amount as the court shall  determine.  The By-Laws of American  Skandia
Life Assurance  Corporation  ("ASLAC") also provide  directors and officers with
rights of indemnification, consistent with Connecticut Law.

The foregoing statements are subject to the provisions of Section 33-320a.

Directors  and officers of ASLAC and American  Skandia  Marketing,  Incorporated
("ASM,  Inc."),  formerly  Skandia  Life Equity Sales  Corporation,  can also be
indemnified  pursuant to Indemnity  Agreements between each director and officer
and American Skandia Investment  Holding  Corporation,  a corporation  organized
under  the laws of the  state  of  Delaware.  The  provisions  of the  Indemnity
Agreement are governed by Section 45 of the General Corporation Law of the State
of Delaware.

The  directors and officers of ASLAC and ASM, Inc. are covered under a directors
and officers  liability  insurance  policy issued by an  unaffiliated  insurance
company and an insurance policy issued to Skandia  Insurance Company Ltd., their
ultimate  parent.  Such policy will reimburse ASLAC or ASM, Inc., as applicable,
for any payments  that it shall make to directors  and officers  pursuant to law
and, subject to certain exclusions  contained in the policy,  will pay any other
costs,  charges  and  expenses,  settlements  and  judgments  arising  from  any
proceeding  involving  any  director  or  officer  of  ASLAC  or ASM,  Inc.,  as
applicable, in his or her past or present capacity as such.

     Item 15. Recent Sales of Unregistered Securities:  ASLAC has not offered or
sold any unregistered securities.

     Item 16. Exhibits and Financial Statement Schedules:
Exhibits                                                                                                    Page

1        Underwriting agreement (Incorporated by reference to Post-Effective Amendment No. 1 to Registration
         Statement No. 33-26122, filed March 1, 1990).

2        Plan of acquisition, reorganization, arrangement, liquidation or succession                       Not applicable

3        Articles of incorporation and by-laws (Incorporated by reference to Pre-Effective Amendment No. 2 to
         Registration Statement No. 33-19363, filed July 27, 1988).

4        Instruments defining the rights of security holders, including indentures (Incorporated by reference to
         initial Registration Statement No. 33-67614, filed August 17, 1993).

5        Opinion re legality.                                                                   (Included as Exhibit 23b)

6 - 9                                                                                                      Not applicable

10       Material contracts (Investment Management Agreements)

         (a)    Agreement with Fleet Investment Advisors, Inc. (Incorporated by reference to initial Registration
                Statement No. 33-86918, filed December 1, 1994).

         (b)    Agreement with J. P. Morgan Investment Management Inc. (Incorporated by reference to Post-Effective
                Amendment No. 5 to Registration Statement No. 33-26122, filed April 23, 1991).

11 - 22                                                                                                    Not applicable

23       Consents of experts and counsel

         23a    Consent of Deloitte & Touche LLP.
         23b    Opinion & consent of Werner & Kennedy.

24       Power of Attorney

         (a)    For Directors Boronow, Campbell, Carendi,  Danckwardt,  Dokken and Sutyak - incorporated by reference
                to Post-Effective Amendment No. 10 to Registration Statement No. 33-19363, filed February 28, 1992
   
(i) Filed via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration
Statement No. 333-00941, filed April 26, 1996
    

         (b)    For  Directors  Mazzaferro,  Moberg,  Soderstrom  and Tracy  incorporated  by  reference  to  initial
                Registration Statement No. 33-86918, filed December 1, 1994
   
(i) Filed via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration
Statement No. 333-00941, filed April 26, 1996
    

         (c)    For Director  Svensson  incorporated  by reference to initial  Registration  Statement No.  33-88360,
                filed January 10, 1995
   
(i) Filed via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration
Statement No. 333-00941, filed April 26, 1996
    

         (d)    For Directors Brunetti, Collins and Michael incorporated by reference to initial Registration
                Statement No. 333-00941, filed February 15, 1996

- ---------------------------------------------------------------------------------------------------------------------------
25 - 28                                                                                                    Not applicable
- ---------------------------------------------------------------------------------------------------------------------------
Item 17.  Undertakings:  The undersigned Registrant hereby undertakes:

(1) To file,  during  any  period  in which  offers  or sales  are  being  made,
post-effective amendments to this registration statement:

     (i) To  include  any  prospectus  required  by  section  10  (a)(3)  of the
Securities Act of 1933;

     (ii) To reflect in the  prospectus  any facts or events  arising  after the
effective date of the registration  statement (or the most recent post-effective
amendment  thereof)  which,  individually  or  in  the  aggregate,  represent  a
fundamental  change in the information set forth in the registration  statement;
and

     (iii) To  include  any  material  information  with  respect to the plan of
distribution  not  previously  disclosed  in the  registration  statement or any
material change to such information in the registration statement.

(2) That, for the purpose of determining  any liability under the Securities Act
of  1933,  each  such  post-effective  amendment  shall  be  deemed  to be a new
registration statement relating the securities offered therein, and the offering
of such  securities  at that time  shall be deemed to be the  initial  bona fide
offering thereof.

(3) To remove from  registration by means of a  post-effective  amendment any of
the securities  being  registered  which remain unsold at the termination of the
offering.

(4)  The  undersigned   Registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
Registrant's  annual  report  pursuant to section  13(a) or section 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee  benefit  plan's  annual  report  pursuant  to  section  15(d)  of  the
Securities  Exchange  Act of 1934)  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(5) Insofar as indemnification  for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
Registrant pursuant to the foregoing  provisions,  or otherwise,  the Registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the Registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

- --------------------------------------------------------------------------------
LEGAL EXPERTS:  Counsel with respect to Federal laws and regulations  applicable
to the issue and sale of the  Annuities and with respect to  Connecticut  law is
Werner & Kennedy, 1633 Broadway, New York, New York 10019.

                                   SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  registration  statement  to be signed  on its  behalf by the
undersigned,  thereunto  duly  authorized,  in the  City of  Shelton,  State  of
Connecticut, on April 26, 1996.

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                   Registrant

By:/s/ M. Patricia Paez                             Attest:/s/ Diana D. Steigauf
M. Patricia Paez, Corporate Secretary                          Diana D. Steigauf
Pursuant to the  requirements of the Securities Act of 1933,  this  Registration
Statement has been signed below by the following  persons in the  capacities and
on the date indicated.

Signature                                               Title                              Date
(Principal Executive Officer)

           Jan R. Carendi*                        Chief Executive Officer,          April 26, 1996
           Jan R. Carendi                    Chairman of the Board and Director

                              (Principal Financial Officer and Principal Accounting Officer)

   /s/ Thomas M. Mazzaferro                  Executive Vice President and            April 26, 1996
        Thomas M. Mazzaferro                       Chief Financial Officer

                              (Board of Directors)

          Jan. R. Carendi*                           Gordon C. Boronow*                Malcolm M. Campbell*
           Jan. R. Carendi                            Gordon C. Boronow                 Malcolm M. Campbell

         Henrik Danckwardt*                           Amanda C. Sutyak*                   Wade A. Dokken*
          Henrik Danckwardt                           Amanda C. Sutyak                    Wade A. Dokken

       Thomas M. Mazzaferro**                          Gunnar Moberg**                   Bayard F. Tracy**
        Thomas M. Mazzaferro                            Gunnar Moberg                     Bayard F. Tracy

        Anders Soderstrom**                          C. Ake Svensson***                 Lincoln R. Collins****
          Anders Soderstrom                           C. Ake Svensson                   Lincoln R. Collins

Nancy F. Brunetti****                                                                  Dianne B. Michael****
Nancy F. Brunetti                                                                        Dianne B. Michael

                    */**/***/****By: /s/M. Patricia Paez
                                        M. Patricia Paez
*Pursuant to Powers of Attorney previously filed with Post-Effective Amendment No. 10 to Registration Statement No. 33-19363
      **Pursuant to Powers of Attorney previously filed with the initial filing of Registration Statement No. 33-86918.
      ***Pursuant to Power of Attorney previously filed with the initial filing of Registration Statement No. 33-88630.
                   ****Pursuant to Powers of Attorney filed with the initial filing of Registration Statement No. 333-00941.
Exhibits

Exhibit 23a                  Consent of Deloitte & Touche LLP

Exhibit 23b                  Opinion & Consent of Werner & Kennedy