FORM 485BPOS

Objective

Investment Type

Adviser

Wilshire Variable Insurance Trust 2015 ETF Fund⁽²⁾

High current income/Capital appreciation

The Wilshire VIT Funds are advised by Wilshire Associates Incorporated.

Variable Deferred Annuity Contract Issued By Horace Mann Life Insurance Company Separate Account Flexible Premium Contract for Individuals

This prospectus offers a Variable annuity Contract to individuals. The Contract is issued by Horace Mann Life Insurance Company (“HMLIC”) as a flexible premium Contract. It is issued in connection with retirement plans or arrangements, which may qualify for special tax treatment under the Internal Revenue Code of 1986 as amended (“IRC”) or as a non-qualified annuity Contract. The investment choices under the Contracts are a fixed account that credits a specified guaranteed interest rate, and the HMLIC Separate Account. You can allocate Your Net Premiums and Your Contract’s cash value to the fixed account or to the HMLIC Separate Account which invests through each of its Subaccounts (sometimes referred to as Variable Investment Options) in a corresponding Underlying Fund. The Underlying Funds are:

Lifecycle Funds

Wilshire Variable Insurance Trust 2015 ETF Fund

Wilshire Variable Insurance Trust 2025 ETF Fund

Wilshire Variable Insurance Trust 2035 ETF Fund

Large Company Stock Funds

Large Value

Davis Value Portfolio

T. Rowe Price Equity Income Portfolio VIP II

Wilshire Large Company Value Portfolio (Investment Class)⁽¹⁾

Large Core

Dow Jones Wilshire 5000 Index Portfolio (Investment Class)⁽¹⁾

Fidelity VIP Growth & Income Portfolio SC 2

Fidelity VIP Index 500 Portfolio SC 2

Wilshire VIT Equity Fund

Large Growth

AllianceBernstein VPS Large Cap Growth Portfolio

Fidelity VIP Growth Portfolio SC 2

Wilshire Large Company Growth Portfolio (Investment Class)⁽¹⁾

Mid-Size Company Stock Funds

Mid Value

AllianceBernstein VPS Small/Mid Cap Value Portfolio

Ariel Fund^®⁽¹⁾

Ariel Appreciation Fund^®⁽¹⁾⁽²⁾

Mid Core

Fidelity VIP Mid Cap Portfolio SC 2

Rainier Small/Mid Cap Equity Portfolio⁽¹⁾

Mid Growth

Delaware VIP Growth Opportunities Series — Service Class

Putnam VT Vista Fund (IB Shares)

Wells Fargo Advantage VT Discovery Fund^sm

Small Company Stock Funds

Small Value

Royce Capital Fund Small-Cap Portfolio

Wilshire Small Company Value Portfolio (Investment Class)⁽¹⁾

Small Core

Dreyfus Investment Portfolios: Small Cap Stock Index Portfolio — Service Shares

Goldman Sachs VIT Structured Small Cap Equity Fund⁽²⁾

Neuberger Berman Genesis Fund — Advisor Class⁽¹⁾

Small Growth

AllianceBernstein VPS Small Cap Growth Portfolio

Delaware VIP Trend Series — Service Class

Wilshire VIT Small Cap Growth Fund

International Stock Funds

Fidelity VIP Overseas Portfolio SC 2

Wilshire VIT International Equity Fund

Specialty

Wilshire VIT Socially Responsible Fund

Real Estate

Delaware VIP REIT Series (Service Class)

Bond Funds

Fidelity VIP High Income Portfolio SC 2

Fidelity VIP Investment Grade Bond Portfolio SC 2

Wilshire VIT Income Fund

Balanced Fund

Wilshire VIT Balanced Fund

Money Market

T. Rowe Price Prime Reserve Portfolio


⁽¹⁾	These Subaccounts are not available as Variable Investment Options in Non-Qualified Contracts.

⁽²⁾	On and after May 1, 2008, Contract Owners generally may not begin or increase premium payment allocations or make new transfers to the following Subaccounts. However, if Contract Owners are currently participating in the dollar cost averaging program or the rebalancing program with allocations to the following Subaccounts, they may continue the program(s), but may not begin or increase allocations to the following Subaccounts. Additionally, if they are currently allocating Net Premium to the following Subaccounts, Contract Owners may continue those allocations.

Ariel Appreciation Fund

Goldman Sachs VIT Structured Small Cap Equity Fund

Trademarks used in this document are owned by and used with the permission of the appropriate company.

We provide a premium bonus rider under versions of the Contract with a 9-year surrender charge period. This bonus feature provides for a credit equal to two percent (2%) of Net Premium We receive at Our Home Office during the first Contract Year. Electing this bonus feature may be beneficial to You only if You own the Contract a sufficient length of time. Electing this option will result in the surrender charge period being increased from 5 to 9 years in length. Electing this option will not cause the mortality and expense risk fee to increase, nor will it increase surrender charges during the Contract’s first 5 years. However, during years 6-9 of the surrender charge period, the amount of the premium bonus may be more than offset by the surrender charges associated with the bonus.

This prospectus sets forth the information an investor should know before purchasing or making additional premium payments to a Contract and should be kept for future reference. Additional information about the HMLIC Separate Account has been filed with the Securities and Exchange Commission in a Statement of Additional Information, dated May 1, 2009. The Statement of Additional Information is incorporated by reference and is available upon request, without charge. You may obtain the Statement of Additional Information by writing to Horace Mann Life Insurance Company, P.O. Box 4657, Springfield, Illinois 62708-4657, by sending a telefacsimile (FAX) transmission to (877) 832-3785 or by telephoning (800) 999-1030 (toll-free). The table of contents of the Statement of Additional Information appears at the end of this prospectus.

The Securities and Exchange Commission maintains a website (www.sec.gov) that contains the Statement of Additional Information, material incorporated by reference, and other information that the HMLIC Separate Account files electronically with the Securities and Exchange Commission.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THIS SECURITY OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE ANNUITIES OFFERED BY HMLIC ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY. THEY ARE NOT DEPOSITS OF, OBLIGATIONS OF OR GUARANTEED BY ANY BANK. THEY INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.

Horace Mann Investors, Inc., the distributor of the Contracts, is a member of the Securities Investor Protection Corporation (SIPC). Visit www.sipc.org, call 1-202-371-8300 or write to SIPC at 805 15th Street, N.W. Suite 800, Washington, D.C. 20005-2215 for information about SIPC, including the SIPC brochure.

The date of this prospectus is May 1, 2009.

Table of Contents


	Page
Definitions		4
Summary		6
Fee Tables and Example		9
Contract Owner Transaction Expenses		9
Periodic Fees and Expenses		9
Optional Rider Charges		9
Total Annual Underlying Fund Operating Expenses		10
Example		10
Condensed Financial Information		11
Horace Mann Life Insurance Company, the Fixed Account, the Separate Account, and the Underlying Funds		11
Horace Mann Life Insurance Company		11
The Fixed Account		11
The Separate Account		11
The Underlying Funds		11
Separate Account Pricing Agreement		14
Payments We Receive		14
The Contract		16
Contract Owners’ Rights		16
Purchasing the Contract		16
Canceling the Contract		16
Premium Payments		16
Amount and Frequency of Premium Payments		16
Allocation of Net Premiums		16
Accumulation Units and Accumulation Unit Value		16
Transactions		17
Transfers		17
Dollar Cost Averaging		17
Rebalancing		18
Changes to Premium Allocations		18
Market Timing		18
Surrender or Withdrawal Before Commencement of Annuity Period		19
Payments We Make		20
Confirmations		20
Deductions and Expenses		20
Premium Taxes		21
Surrender Charges		21
Annual Maintenance Fee		21
Mortality and Expense Risk Fee		21
Charges for Optional Riders		21
Operating Expenses of the Underlying Funds		22
Death Benefit		22
Death Benefit Proceeds		22
Guaranteed Minimum Death Benefit Riders		22
Annuity Payments		23
Annuity Payment Options		24
Other Payout Options		25
Amount of Fixed and Variable Annuity Payments		25
Annuity Unit Value		25
Misstatement of Age or Sex		25
Tax Consequences		26
Separate Account		26
Owner Control		26
General Requirements		26
Withdrawals		26
Premature Distribution Tax		26
Annuity Payments		26
Non-Natural Person		26
Required Distributions Upon the Death of the Contract Owner		26
Taxation of Death Benefit Proceeds		27
Contract Transactions		27
Multiple Contracts		27
Federal Estate Taxes		27
Generation-skipping Transfer Tax		27
Annuity Purchases by Nonresident Aliens and Foreign Corporations		27
Foreign Tax Credits		27
Taxation of Qualified Plans		27
Contribution Limitations and General Requirements Applicable for Qualified Plans		27
Contract Transactions		30
Premature Distribution Tax		30
Required Minimum Distributions		30
Withholding		31
Possible Tax Law Changes		31
Other Information		31
Distribution of the Contract		31
Forms Availability		32
Table of Contents for the Statement of Additional Information		32
Appendix A: Death Benefit Examples		33
Appendix B: Condensed Financial Information		34

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF, OR SOLICITATION OF AN OFFER TO ACQUIRE, ANY INTEREST OR PARTICIPATION IN THE CONTRACT OFFERED BY THIS PROSPECTUS IN ANY STATE TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH STATE.

Definitions

Account Value: The sum of the Fixed Account Value and the Variable Account Value.

Accumulation Unit: A unit of measurement used to determine the value of a Contract Owner’s interest in a Subaccount before Annuity Payments begin.

Accumulation Unit Value: The value of an Accumulation Unit on any Valuation Date.

Annuitant: The natural person whose life determines the Annuity Payments made under a Contract.

Annuitized Value: The amount applied to purchase annuity payments. It is equal to the Account Value on the Annuity Date, less any applicable premium tax.

Annuity Date: The date Annuity Payments begin. The criteria for setting an Annuity Date are set forth in Your Contract, and the anticipated Annuity Date is shown on the Annuity Data pages of Your Contract.

In addition, Qualified Plans often place certain limitations upon election of an Annuity Date. Generally, distributions under Qualified Plans (except Roth IRAs) must begin by April 1 following the calendar year in which the Contract Owner reaches age 701/2. See “Tax Consequences — Required Minimum Distributions.”

Annuity Payments: A series of payments that may be for life; for life with a guaranteed number of payments; for the joint lifetimes of the Annuitant and another person, and thereafter, during the lifetime of the survivor; or for some fixed period. A fixed annuity payout arrangement provides a series of payments that will be equal in amount throughout the annuity period, except in the case of certain joint and survivor Annuity Payment options. A fixed annuity payout arrangement does not participate in the investment experience of any Subaccount. A Variable annuity payout arrangement provides a series of payments that vary in amount.

Annuity Period: The period during which Annuity Payments are made to the Annuitant or the last surviving joint Annuitant, if any.

Annuity Unit: A unit of measurement used in determining the amount of a Variable Annuity Payment during the Annuity Period.

Annuity Unit Value: The value of an Annuity Unit on any Valuation Date.

Contract: The individual flexible premium deferred Variable annuity contract this prospectus offers.

Contract Anniversary: The same day and month as the Issue Date of Your Contract for each succeeding year of Your Contract.

Contract Owner (You, Your): The individual or entity to whom the Contract is issued.

Contract Year: A period of twelve months beginning on the date a Contract is issued and each anniversary of that date.

FINRA: The Financial Industry Regulatory Authority was created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange.

Fixed Account Value: The dollar value of the fixed account under the Contract before Annuity Payments begin.

HMLIC, We, Us, Our: Horace Mann Life Insurance Company.

Home Office: The mailing address and telephone number of Our Home Office are: P.O. Box 4657, Springfield, Illinois 62708-4657; (800) 999-1030. Our street address is 1 Horace Mann Plaza, Springfield, Illinois 62715-00001.

Issue Date: The date when Your Contract becomes effective.

Investment Options: The fixed account and the Underlying Funds in which the Subaccounts invest.

Net Premium: Each premium payment paid to HMLIC under the Contract, less any applicable premium taxes.

Non-Qualified Contract: A Contract that is not a Qualified Plan.

Proof of Death: (1) A completed claimant’s statement as provided by Us; and (2a) a certified copy of the death certificate or (2b) any other proof of death satisfactory to Us, including, but not limited to, a certified copy of a decree of a court of competent jurisdiction certifying death, or a written statement by a medical doctor who attended the deceased at the time of death; and (3) any additional forms, documentation, and written payment instructions necessary to process a death benefit claim, in a form satisfactory to Us.

Qualified Plan: The term “Qualified Plan” in this prospectus will be used to describe the following contracts: IRC Section 403(b) tax sheltered annuity (“403(b) Contract”); IRC Section 408 individual retirement annuity (“traditional IRA”); IRC Section 408A Roth IRA (“Roth IRA”); IRC Section 408(p) SIMPLE retirement annuity (“SIMPLE”); IRC Section 408(k) simplified employee pension (“SEP”); IRC Section 457(b) eligible governmental plan annuity (“457(b) Contract”); and IRC 401 qualified annuity.

Separate Account: The Horace Mann Life Insurance Company Separate Account, a segregated Variable investment account consisting of Subaccounts each of which invests in a corresponding Underlying Fund. The Separate Account was established by HMLIC under Illinois law and is registered as a unit investment trust under the Investment Company Act of 1940.

Subaccount: A division of the Separate Account, that invests in shares of a corresponding Underlying Fund. Certain Subaccounts are not available for investment under Non-Qualified Contracts.

Summary

This summary is intended to provide a brief overview of the more significant aspects of the Contract. Certain Contract features described in this prospectus may not be available in all states. More detailed information about the material rights and features under the Contract can be found elsewhere in this prospectus and in the Separate Account Statement of Additional Information. Terms and conditions may be modified as required by law in the State in which the application is signed. Such variations are described in the Contract. This prospectus is intended to serve as a disclosure document that focuses on the Variable portion of the Contract only. For information regarding the fixed portion, refer to the Contract.

Detailed information about the Underlying Funds is contained in each Underlying Fund’s prospectus and in each Underlying Fund Statement of Additional Information.

The expenses for the Underlying Funds, including advisory and management fees, are found in each Underlying Fund’s prospectus.

What is the “Separate Account?”

The Separate Account segregates assets dedicated to the Variable portion of the Contract offered herein. The Separate Account is registered with the Securities and Exchange Commission under the Investment Company Act of 1940 as a unit investment trust. The Separate Account consists of Subaccounts, each investing in shares of a corresponding Underlying Fund.

Who may purchase the Contract offered by this prospectus?

Individuals may purchase the Variable flexible premium annuity. The Contract is designed for individuals seeking long-term tax-deferred accumulation of funds. Purchasing the Contract as an investment vehicle for a qualified retirement plan does not provide any additional tax advantage beyond that already available through the qualified plan.

The Contract is offered and sold by HMLIC through its licensed life insurance sales personnel. These insurance sales personnel are registered representatives of Horace Mann Investors, Inc. (“HM Investors”). In addition, the Contract may be offered and sold through independent agents and other broker-dealers. HM Investors is a broker-dealer registered under the Securities and Exchange Act of 1934. HMLIC has entered into a distribution agreement with HM Investors. HM Investors is a member of FINRA.

What are my investment choices?

You may invest Your money in up to 24 Investment Options (including the Fixed Account) at any one time. Certain Subaccounts are not available for investment under Non-Qualified Contracts.


	(a)	Separate Account

Includes Subaccounts, each of which invests in one of the following Underlying Funds:

Lifecycle Funds

Wilshire Variable Insurance Trust 2015 ETF Fund

Wilshire Variable Insurance Trust 2025 ETF Fund

Wilshire Variable Insurance Trust 2035 ETF Fund

Large Company Stock Funds

Large Value

Davis Value Portfolio

T. Rowe Price Equity Income Portfolio VIP II

Wilshire Large Company Value Portfolio (Investment Class)⁽¹⁾

Large Core

Dow Jones Wilshire 5000 Index Portfolio (Investment Class)⁽¹⁾

Fidelity VIP Growth & Income Portfolio SC 2

Fidelity VIP Index 500 Portfolio SC 2

Wilshire VIT Equity Fund

Large Growth

AllianceBernstein VPS Large Cap Growth Portfolio

Fidelity VIP Growth Portfolio SC 2

Wilshire Large Company Growth Portfolio (Investment Class)⁽¹⁾

Mid-Size Company Stock Funds

Mid Value

AllianceBernstein VPS Small/Mid Cap Value Portfolio

Ariel Fund^®⁽¹⁾

Ariel Appreciation Fund^®⁽¹⁾⁽²⁾

Mid Core

Fidelity VIP Mid Cap Portfolio SC 2

Rainier Small/Mid Cap Equity Portfolio⁽¹⁾

Mid Growth

Delaware VIP Growth Opportunities Series — Service Class

Putnam VT Vista Fund (IB Shares)

Wells Fargo Advantage VT Discovery Fund^SM

Small Company Stock Funds

Small Value

Royce Capital Fund Small-Cap Portfolio

Wilshire Small Company Value Portfolio (Investment Class)⁽¹⁾

Small Core

Dreyfus Investment Portfolios: Small Cap Stock Index Portfolio — Service Shares

Goldman Sachs VIT Structured Small Cap Equity Fund⁽²⁾

Neuberger Berman Genesis Fund — Advisor Class⁽¹⁾

Small Growth

AllianceBernstein VPS Small Cap Growth Portfolio

Delaware VIP Trend Series — Service Class

Wilshire VIT Small Cap Growth Fund

International Stock Funds

Fidelity VIP Overseas Portfolio SC 2

Wilshire VIT International Equity Fund

Specialty

Wilshire VIT Socially Responsible Fund

Real Estate

Delaware VIP REIT Series (Service Class)

Bond Funds

Fidelity VIP High Income Portfolio SC 2

Fidelity VIP Investment Grade Bond
Portfolio SC 2

Wilshire VIT Income Fund

Balanced Fund

Wilshire VIT Balanced Fund

Money Market

T. Rowe Price Prime Reserve Portfolio


⁽¹⁾	These Subaccounts are not available as Variable Investment Options in Non-Qualified Contracts.

⁽²⁾	On and after May 1, 2008, Contract Owners generally may not begin or increase premium payment allocations or make new transfers to the following Subaccounts. However, if Contract Owners are currently participating in the dollar cost averaging program or the rebalancing program with allocations to the following Subaccounts, they may continue the program(s), but may not begin or increase allocations to the following Subaccounts. Additionally, if they are currently allocating Net Premium to the following Subaccounts, Contract Owners may continue those allocations.

Ariel Appreciation Fund

Goldman Sachs VIT Structured Small Cap Equity Fund


	(b)	Fixed Account — You also may direct Your money to the fixed account and receive a guaranteed rate of return.

When can I transfer between accounts?

At any time before the Contract’s Annuity Date, You may transfer amounts from one Subaccount to another, and to and from the fixed account of the Contract, subject to certain restrictions. The dollar cost averaging program permits You to systematically transfer (on a quarterly, semi-annual, or annual basis) a fixed dollar amount between the fixed account and Variable Investment Options and within the Variable Investment Options. The dollar cost averaging program is only available before the Annuity Date. For complete details see “The Contract — Transactions.”

May I withdraw all or part of the Contract value before the Annuity Date?

Unless restricted by the Internal Revenue Code of 1986, as amended (“IRC”), or Your employer’s Plan Document, if applicable, You may at any time before the Annuity Date surrender Your Contract in whole or withdraw in part for cash. Surrenders and withdrawals may be subject to Surrender Charges as described in “Deductions and Expenses — Surrender Charges.” In any Contract Year, You may withdraw a portion of Your Account Value without incurring a Surrender Charge. You may have to pay federal income taxes and a penalty tax on any money You surrender or partially withdraw from Your Contract.

What are the charges or deductions?

The Contract may be subject to deductions for applicable state or local government premium taxes. Premium taxes presently range from 0% to 3.5%.

We will deduct a mortality and expense risk fee (M&E Fee) of 1.25% (annual rate) from the Subaccounts. This fee is computed on a daily basis.

We will deduct an annual maintenance fee from Your Account Value on each Contract Anniversary; we will deduct a proportionate amount of this fee upon surrender of Your Contract. This fee may not exceed $25. We will waive this fee if the Account Value equals or exceeds $25,000 at the time the fee is assessed.

We may deduct a Surrender Charge against surrenders and withdrawals. The Surrender Charge is a percentage of the Account Value withdrawn or surrendered. For withdrawals from the Variable Account, the Surrender Charge is deducted from the Contract Owner’s value in the Subaccount(s) from which the withdrawal is made. See “The Contract — Transactions — Surrender or Withdrawal Before Commencement of Annuity Period.”

What charges will I pay on an annual basis if I elect optional riders?

Guaranteed Minimum Death Benefit Rider — Annual Step-up — You may elect this optional death benefit at the time of Contract issue for an additional charge. If You elect this rider, You will pay 0.20%*. We deduct these charges from the Variable Account as a percentage of the Variable Account Value and compute them on a daily basis. The charge for this rider will continue until the Contract is terminated or You annuitize the Account Value.

Guaranteed Minimum Death Benefit Rider — 5% Accumulation — You may elect this optional death benefit at the time of Contract issue for an additional charge. If You elect this rider, You will pay 0.30%*. We deduct these charges from the Variable Account as a percentage of the Variable Account Value and compute them on a daily basis. The charge for this rider will continue until the Contract is terminated or You annuitize the Account Value.


*	If You purchase both the Guaranteed Minimum Death Benefit Rider — Annual Step-up and the Guaranteed Minimum Death Benefit Rider — 5% Accumulation at Contract issue, then, for the life of Your Contract, the total annual charge for both riders will be 0.40% of the average Variable Account Value.

Premium bonus rider — this option provides for a credit equal to two percent (2%) of Net Premium We receive at Our Home Office during the first Contract Year. This option must be elected at the time of Contract issue and electing this option will result in the surrender charge period being increased from 5 to 9 years in length. Electing this option will not cause the mortality and expense risk fee to increase, nor will it increase surrender charges during the Contract’s first 5 years. However, during years 6-9 of the surrender charge period, the amount of the premium bonus may be more than offset by the surrender charges associated with the bonus. We may use any proceeds from surrender

charges associated with the bonus to recoup the amount of any premium bonus paid.

What are the federal income tax consequences of investing in this Contract?

Amounts contributed through salary reduction (other than amounts designated as Roth contributions), employer contributions, or deductible amounts in the case of traditional IRAs are not taxed at the time of contribution. Earnings are also not taxed as they accumulate within the annuity Contract. Except for qualified distributions from Roth IRAs or after-tax contributions, Contract benefits will be taxable as ordinary income when received in accordance with Section 72 of the IRC.

The IRC provides penalties for premature distributions under annuity contracts and various retirement plans. Values may not be withdrawn from 403(b), 457(b), and certain 401(a) Contracts, except under certain circumstances. See “Tax Consequences.” These Contracts might not be suitable for short-term investment. See “The Contract — Transactions — Surrender or Withdrawal Before Commencement of Annuity Period.”

If I receive my Contract and am dissatisfied, may I return it?

You may return the Contract to HMLIC within 30 days of receipt of the Contract. HMLIC will refund the greater of (1) the premium payments made for the Contract, less any withdrawals and any outstanding loan balance, or (2) the Account Value minus any applicable premium bonus as of the date the returned Contract was received. We will pay the refund within 10 calendar days after we receive the Contract. Upon return of the Contract, it will be deemed void.

When can I begin receiving Annuity Payments, and what options are available?

Payments will begin on the Annuity Date set by the terms of Your Contract. Variable Annuity Payments are made only in monthly installments. Various Annuity Payment options are available under the Contract.

Annuity Payments may be fixed or Variable or a combination of fixed and Variable payments. The following options are available for receiving Annuity Payments: Life Annuity with payments guaranteed for periods of Life Only, 10, 15 or 20 years; Joint and Survivor Annuity; and Payments for a Specified Period.

The IRC may restrict or penalize certain early distributions from Qualified Plans, and the IRC also generally requires that distributions from Qualified Plans (other than Roth IRAs) begin by April 1 following the calendar year in which the Contract Owner reaches age 701/2. See “Tax Consequences — Taxation of Contract Benefits.”

Fee Tables and Example

The following tables describe the fees and expenses that You may pay when buying, owning and surrendering the Contract. The first table describes the fees and expenses that You will pay at the time that You buy the Contract, surrender the Contract or transfer cash value between Investment Options. State premium taxes may also be deducted.

To determine the Contract You own, look in the bottom left-hand corner of Your Contract for the form number. This prospectus applies to all HMLIC contracts with a form number of IC-452 immediately followed by any combination of 3 letters and/or numbers.

Contract Owner Transaction Expenses:⁽¹⁾


Surrender Charges (as a percentage of amount surrendered, if applicable)

The Surrender Charge declines to zero over time — after 5 years, or after 9 years if the premium bonus rider applies to Your Contract.


Surrender Charges	Surrender Charge%
During Contract Year	9 Year		5 Year

1		8.0%		8.0%
2		7.5%		7.5%
3		7.0%		7.0%
4		6.0%		6.0%
5		5.0%		5.0%
6		4.0%		0.0%
7		3.0%		0.0%
8		2.0%		0.0%
9		1.0%		0.0%
Thereafter		0.0%		0.0%

We guarantee that the aggregate Surrender Charge will never exceed 9% of Your total net purchase payments to a Subaccount.

Periodic Fees and Expenses

The next table describes the fees and expenses that You will pay periodically during the time that You own the Contract, not including Underlying Fund fees and expenses. This table reflects the charges You would pay if You did not select any optional Riders.


Annual Maintenance Fee⁽²⁾	$	25
Separate Account Annual Expenses (as a percentage of average Variable Account Value)
Mortality and Expense Risk Fee		1.25	%
Total Separate Account Annual Expenses		1.25	%

Optional Rider Charges (as a percentage of average Variable Account Value)


Guaranteed Minimum Death Benefit Rider — Annual Step-up	0.20	%⁽³⁾⁽⁴⁾
Guaranteed Minimum Death Benefit Rider — 5% Accumulation	0.30	%⁽³⁾⁽⁴⁾
Premium bonus rider	0.00	%

For information concerning compensation paid for the sale of the Contracts, see “Other Information — Distribution of the Contract.”

The next item shows the lowest and highest total operating expenses charged by the Underlying Funds for the fiscal year ended December 31, 2008. More detail concerning each Underlying Fund’s fees and expenses is contained in the prospectus for each Underlying Fund.


⁽¹⁾	Any premium taxes relating to this contract will be deducted from the premium or deducted from the Annuitized Value, when applicable. Such premium taxes and the time of deduction of those taxes will be determined by the Contract Owner’s current place of residence. Premium taxes currently range from 0% to 3.5%.


⁽²⁾	We deduct a pro rata portion of this fee upon the surrender of the Contract. We currently waive the annual maintenance fee if the Account Value equals or exceeds $25,000 at the time the fee is assessed.


⁽³⁾	If You purchase both the Guaranteed Minimum Death Benefit Rider-Annual Step — up and the Guaranteed Minimum Death Benefit Rider — 5% Accumulation at Contract issue, then, for the life of Your Contract, the total annual charge for both riders will be 0.40% of the average Variable Account Value.


⁽⁴⁾	HMLIC will not issue Contracts for which the sum of the mortality and expense risk fee and the charges against the Variable Account for any permissible combination of optional riders You select exceeds 2.40% of average Variable Account Value.


Total Annual Underlying Fund Operating Expenses⁽¹⁾	Lowest		Highest

(expenses that are deducted from Underlying Fund assets, including management fees, distribution and/or service (12b-1) fees and other expenses)		0.35%		2.74%

The table showing the range of expenses for the Underlying Funds takes into account the expenses of the Lifecycle Funds and the Wilshire VIT Balanced Fund, each of which is a “fund of funds.” A “fund of funds” purchases shares of other funds (each an “Acquired Fund”). Each “fund of funds” has its own set of operating expenses, as does each of the Acquired Funds in which it invests. In determining the range of Underlying Fund expenses, We have taken into account the information received from each Lifecycle Fund or the Balanced Fund on the combined actual expenses for each such “fund of funds,” which include the pro rata portion of the fees and expenses incurred indirectly by a Lifecycle Fund or the Balanced Fund as a result of its investment in shares of one or more Acquired Funds. See the prospectus for the Lifecycle Funds or the Balanced Fund for a presentation of the applicable Acquired Fund fees and expenses.

Example

This Example is intended to help You compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include Contract Owner transaction expenses, the Annual Maintenance fee, Separate Account annual expenses and Underlying Fund fees and expenses. This example includes the highest cost of any combination of available riders.

The Example assumes that You invest $10,000 in the Contract for the time periods indicated. The Example also assumes that Your investment has a 5% return each year, assumes the highest fees and expenses of any of the Underlying Funds as of December 31, 2008, without reflecting the impact of any Underlying Fund fee or expense waivers, and that a 9-year surrender charge period applies to Your Contract. Although Your actual costs may be higher or lower, based on these assumptions Your costs would be:

If You surrender Your Contract at the end of the applicable time period:


1 Year		3 Years		5 Years		10 Years
$	1,262	$	2,090	$	2,821	$	4.659

If You do NOT surrender or if You annuitize Your Contract at the end of the applicable time period:


1 Year		3 Years		5 Years		10 Years
$	460	$	1,384	$	2,313	$	4,659

Please remember that the Example is simply an illustration and does not represent past or future expenses. Your actual expenses may be higher or lower than those shown. Similarly, Your rate of return may be more or less than the 5% assumed in the Example.

⁽¹⁾

The portfolio expenses used to prepare this table were provided to HMLIC by the Underlying Funds. HMLIC has not independently verified such information. The expenses shown are those for the year ended December 31, 2008. Current or future expenses may be greater or less than those shown. These numbers do not reflect any waivers currently in place. The Underlying Funds may impose a redemption fee on certain transactions and these are not reflected above. Please see “Transactions-Market Timing” for a discussion of these fees.

Condensed Financial Information

Tables showing the Accumulation Unit Value information for each Subaccount of the Separate Account available under the Contracts are presented in “Appendix B : Condensed Financial Information.”

Financial statements of the Separate Account and of HMLIC are available with the Statement of Additional Information. A copy of the Statement of Additional Information and of the financial statements may be obtained without charge by mailing a written request to HMLIC, P.O. Box 4657, Springfield, Illinois 62708-4657, by sending a telefacsimile (FAX) transmission request to (877) 832-3785 or by telephoning (800) 999-1030 (toll-free).

Horace Mann Life Insurance Company,
The Fixed Account,
The Separate Account and
The Underlying Funds

Horace Mann Life Insurance Company

HMLIC, located at 1 Horace Mann Plaza, Springfield, Illinois 62715-0001 (Our Home Office), is an Illinois stock life insurance company organized in 1949. HMLIC is licensed to do business in 48 states and in the District of Columbia. HMLIC writes individual and group life insurance and annuity contracts on a nonparticipating basis.

HMLIC is an indirect wholly-owned subsidiary of Horace Mann Educators Corporation, a publicly-held insurance holding company traded on the NYSE.

The Fixed Account

The fixed account is part of HMLIC’s general account. We use general account assets to support our insurance and annuity obligations other than those funded by separate accounts. Subject to applicable law, HMLIC has sole discretion over the investment of the assets of the fixed account. HMLIC bears the full investment risk for all amounts contributed to the fixed account. HMLIC guarantees that the amounts allocated to the fixed account under the Contracts will be credited interest daily at an annual effective interest rate as specified in Your Contract. We will determine any interest rate credited in excess of the guaranteed rate at our sole discretion. For additional information about the fixed account, see Your Contract. The fixed account has not been registered with the Securities and Exchange Commission, and the staff of the Securities and Exchange Commission has not reviewed the disclosure in this prospectus relating to the fixed account.

The Separate Account

On October 9, 1965, HMLIC established the Separate Account under Illinois law. The Separate Account is registered with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940 (“1940 Act”). The Separate Account and each Subaccount are administered and accounted for as a part of the business of HMLIC. However, the income, gains and losses, whether or not realized, of each Subaccount are credited to or charged against the amounts allocated to that Subaccount, in accordance with the terms of the Contract and without regard to other income, gains or losses of the remaining Subaccounts or of HMLIC. The assets of the Separate Account may not be charged with liabilities arising out of any other business of HMLIC. All obligations arising under the Contract, including the promise to make Annuity Payments, are general corporate obligations of HMLIC. Accordingly, all of HMLIC’s assets are available to meet its obligations and expenses under the Contract. While HMLIC is obligated to make payments under the Contract, the amounts of Variable Annuity Payments are not guaranteed.

The Separate Account is divided into Subaccounts. HMLIC uses the assets of each Subaccount to buy shares of a corresponding Underlying Fund based on Contract Owner instructions.

The Underlying Funds

Each of the Underlying Funds is registered with the Securities and Exchange Commission (“SEC”) as a diversified open-end management investment company under the 1940 Act. This registration does not involve supervision of the management or investment practices or policies of the Underlying Funds by the SEC.

The Underlying Funds are listed below along with their primary investment objectives and the adviser to each Underlying Fund. There is no assurance that any of the Funds will achieve its stated objective. Detailed information on the Underlying Funds can be found in the current prospectus for each Underlying Fund. Prospectuses for the Underlying Funds should be read carefully in conjunction with this prospectus before investing. A copy of each Underlying Fund prospectus may be obtained without charge from HMLIC by calling (800) 999-1030 (toll-free), sending a telefacsimile (FAX) transmission to (877) 832-3785, or writing to HMLIC, P.O. Box 4657, Springfield, IL 62708-4657. You also may access the prospectuses on HMLIC’s website at www.horacemann.com in the “Annuity” link.


Name	Objective	Investment Type	Adviser


Wilshire Variable Insurance Trust 2025 ETF Fund⁽²⁾	High current income/Capital appreciation	Lifecycle	The Wilshire VIT Funds are advised by Wilshire Associates Incorporated.

Wilshire Variable Insurance Trust 2035 ETF Fund⁽²⁾	High current income/Capital appreciation	Lifecycle	The Wilshire VIT Funds are advised by Wilshire Associates Incorporated.

Davis Value Portfolio	Long-term capital growth	Large value	The Davis Value Portfolio is a series of the Davis Variable Account Fund and is advised by Davis Selected Advisers, L.P.

T. Rowe Price Equity Income Portfolio VIP II	Long-term Capital appreciation	Large value	The T. Rowe Price Equity Income Portfolio VIP II is advised by T. Rowe Price Associates.

Wilshire Large Company Value Portfolio (Investment Class)⁽¹⁾	Long-term capital growth	Large value	The Wilshire Mutual Funds are advised by Wilshire Associates Incorporated.

Dow Jones Wilshire 5000 Index Portfolio (Investor Class)⁽¹⁾	Capital growth	Large core	The Wilshire Mutual Funds are advised by Wilshire Associates Incorporated.

Fidelity VIP Growth & Income Portfolio SC2	Current income/Capital growth	Large core	The Fidelity VIP Growth and Income Portfolio is a series of the Fidelity VIP Series and is advised by Fidelity Management & Research Co.

Fidelity VIP Index 500 Portfolio SC2	Long-term capital growth	Large core	The Fidelity VIP Index 500 Portfolio is a series of the Fidelity VIP Series and is advised by Fidelity Management & Research Co. The Fidelity VIP Index 500 is managed by Geode, a subadvisor to the fund.

Wilshire VIT Equity Fund	Long-term capital growth	Large core	The Wilshire VIT Funds are advised by Wilshire Associates Incorporated.

AllianceBernstein VPS Large Cap Growth Portfolio	Long-term capital growth	Large growth	The AllianceBernstein Large Cap Growth Portfolio is a series of the AllianceBernstein Variable Products Series Fund and is advised by AllianceBernstein L.P.

Fidelity VIP Growth Portfolio SC2	Capital growth	Large growth	The Fidelity VIP Growth Portfolio is a series of the Fidelity VIP Series and is advised by Fidelity Management & Research Co.

Wilshire Large Company Growth Portfolio⁽¹⁾	Long-term capital growth	Large growth	The Wilshire Mutual Funds are advised by Wilshire Associates Incorporated.

AllianceBernstein VPS Small/Mid Cap Value Portfolio	Long-term capital growth	Medium value	The AllianceBernstein Variable Products Series Fund, Inc. Small/Mid Cap Value Portfolio is advised by AllianceBernstein L.P.

Ariel Appreciation Fund^{^®(1)(3)}	Long-term capital growth	Medium value	The Ariel Appreciation Fund is advised by Ariel Investments, LLC.

Ariel Fund^{^®(1)}	Long-term capital growth	Small value	The Ariel Fund is advised by Ariel Investments, LLC.

Fidelity VIP Mid Cap Portfolio SC2	Long-term capital growth	Medium core	The Fidelity VIP Mid Cap Portfolio is a series of the Fidelity VIP Series and is advised by Fidelity Management & Research Co.

Rainier Small/Mid Cap Equity Portfolio⁽¹⁾	Long-term capital growth	Medium core	The Rainier Small/Mid Cap Equity Portfolio is advised by Rainier Investment Management, Inc.


Name	Objective	Investment Type	Adviser


The Delaware VIP Growth Opportunities Series — Service Shares	Long-term capital growth	Medium growth	The Delaware VIP Growth Opportunities Series is advised by Delaware Management Company, a series of Delaware Management Business Trust, which is an indirectly wholly-owned subsidiary of Delaware Management Holdings, Inc.

Putnam VT Vista Fund (IB Shares)	Capital appreciation	Medium growth	Putnam VT Vista Fund is a series of the Putnam Variable Trust and is advised by Putnam Management.

Wells Fargo Advantage VT Discovery Fund^sm	Long-term capital appreciation	Medium growth	The Wells Fargo Advantage Discovery Fund is advised by Wells Capital Management.

Royce Capital Fund Small-Cap Portfolio	Long-term capital growth	Small value	The Royce Capital Fund Small-Cap Portfolio is advised by Royce & Associated, LLC.

Wilshire Small Company Value Portfolio (Investment Class)⁽¹⁾	Long-term capital growth	Small value	The Wilshire Mutual Funds are advised by Wilshire Associates Incorporated.

Dreyfus Investment Portfolios: Small Cap Stock Index Portfolio — Service Shares	Long-term capital growth	Small core	The Dreyfus Investment Portfolio: Small Cap Stock Portfolio is advised by The Dreyfus Corporation.

Goldman Sachs VIT Structured Small Cap Equity Fund⁽³⁾	Long-term capital growth	Small core	The Goldman Sachs VIT Structured Small Cap Equity Fund is a series of the Goldman Sachs Variable Insurance Trust and is advised by Goldman Sachs Asset Management, L.P.

Neuberger Berman Genesis Fund — Advisor Class⁽¹⁾	Capital growth	Small core	Neuberger Berman Genesis Fund — Advisor Class is advised by Neuberger Berman Management Inc. and subadvised by Neuberger Berman, LLC.

AllianceBernstein VPS Small Cap Growth Portfolio	Long-term capital growth	Small growth	The AllianceBernstein VPS Small Cap Growth Portfolio is advised by AllianceBernstein L.P.

Delaware VIP Trend Series — Service Class	Long-term capital growth	Small growth	The Delaware VIP Trend Series is advised by Delaware Management Company, a series of Delaware Management Business Trust, which is an indirectly wholly-owned subsidiary of Delaware Management Holdings, Inc.

Wilshire VIT Small Cap Growth Fund	Long-term capital growth	Small growth	The Wilshire VIT Funds are advised by Wilshire Associates Incorporated.

Fidelity VIP Overseas Portfolio SC2	Long-term capital growth	International	The Fidelity VIP Overseas Portfolio is a series of the Fidelity VIP Series and is advised by Fidelity Management & Research Co.

Wilshire VIT International Equity Fund	Long-term capital growth	International	The Wilshire VIT Funds are advised by Wilshire Associates Incorporated.

Wilshire VIT Socially Responsible Fund	Long-term capital growth	Specialty	The Wilshire VIT Funds are advised by Wilshire Associates Incorporated.

Delaware VIP REIT Series — Service Class	Long-term total return/Capital Appreciation	Real Estate	The Delaware VIP REIT Series is advised by Delaware Management Company, a series of Delaware Management Business Trust, which is indirectly wholly-owned subsidiary of Delaware Management Holdings, Inc.

Fidelity VIP High Income Portfolio SC2	High current income/Capital growth	Bond	The Fidelity VIP High Income Portfolio is a series of the Fidelity VIP Series and is advised by Fidelity Management & Research Co.


Name	Objective	Investment Type	Adviser


Fidelity VIP Investment Grade Bond Portfolio SC2	Current income	Bond	The Fidelity VIP Investment Grade Bond Portfolio is a series of the Fidelity VIP Series and is advised by Fidelity Management & Research Co.

Wilshire VIT Income Fund	Current income	Bond	The Wilshire VIT Funds are advised by Wilshire Associates Incorporated.

Wilshire VIT Balanced Fund⁽²⁾	Capital growth/Current income	Balanced	The Wilshire VIT Funds are advised by Wilshire Associates Incorporated.

T. Rowe Price Prime Reserve Portfolio	Current income/Preservation of capital	Money Market	The T. Rowe Price Prime Reserve Portfolio is advised by T. Rowe Price Associates.


⁽¹⁾	These Subaccounts are not available as Variable Investment Options in Non-Qualified Contracts.

⁽²⁾	Each of these Underlying Funds is considered a “fund of funds.” This means that the Underlying Fund purchases shares of other funds. A fund of funds may have higher expenses than funds investing directly in debt and equity securities.

⁽³⁾	On and after May 1, 2008, Contract Owners generally may not begin or increase premium payment allocations or make new transfers to the following Subaccounts. However, if Contract Owners are currently participating in the dollar cost averaging program or the rebalancing program with allocations to the following Subaccounts, they may continue the program(s), but may not begin or increase allocations to the following Subaccounts. Additionally, if they are currently allocating Net Premium to the following Subaccounts, Contract Owners may continue those allocations.

Ariel Appreciation Fund

Goldman Sachs VIT Structured Small Cap Equity Fund

The Underlying Funds may sell shares to separate accounts established by other insurance companies to support variable annuity contracts and variable life insurance policies or qualified retirement plans, or to certain pension and retirement plans qualifying under Section 401 of the IRC. It is possible that, in the future, material conflicts could arise as a result of such “mixed and shared” investing.

The investment objectives and policies of certain Underlying Funds are similar to the investment objectives and policies of other mutual funds that may be managed by the same investment adviser or manager. The investment results of the Underlying Funds may differ from the results of these other mutual funds. There can be no guarantee, and no representation is made, that the investment results of any of the Underlying Funds will be comparable to the investment results of any other mutual fund, even if the other mutual fund has the same investment adviser or manager.

Selection of Underlying Funds. We select the Underlying Funds offered through the Separate Account based on several criteria, including asset class coverage, the strength of the adviser’s or sub-adviser’s reputation and tenure, brand recognition, performance, and the capability and qualifications of each investment firm. Another factor We consider during the selection process is whether the Underlying Fund, its adviser or sub-adviser or an affiliate will make payments to Us or Our affiliates. (For additional information on these arrangements, see “Payments We Receive.”) We review the Underlying Funds periodically and may remove an Underlying Fund or limit its availability for new Net Purchase Payments and/or transfers of account value if We determine, in consultation with the plan sponsor, that the Underlying Fund no longer meets one or more of the selection criteria, and/or if the Underlying Fund has not attracted significant allocations from Contract Owners. We do not provide investment advice and do not recommend or endorse any particular Underlying Fund. You bear the risk of any decline in Your Variable Account Value resulting from the performance of the Underlying Funds You have chosen.

Separate Account Pricing Agreement. Effective April 15, 2005 HMLIC entered into an agreement with State Street Bank and Trust Company (“State Street”), a national banking association located at 801 Pennsylvania Avenue, Kansas City, MO 64105, to calculate the daily Accumulation Unit Value for each Subaccount and to maintain certain required accounting records.

Payments We Receive. As described above, an Underlying Fund or an investment adviser or sub-adviser of an Underlying Fund (or its affiliates) may make payments to Us and/or certain of Our affiliates. For certain Underlying Funds, some or all such payments may be made from 12b-1 fees or service fees that are deducted from the Underlying Fund assets. In a “fund of funds” situation, We and/or certain of Our affiliates may receive 12b-1 fees on assets in the funds within the fund of funds. In such cases, We (and Our affiliates) do not also receive 12b-1 fees from the fund of funds for those same assets. Other payments may be derived, in whole or in part, from the advisory fee deducted from Underlying Fund assets. Contract Owners, through their indirect investment in the Underlying Funds, bear the costs of these advisory fees (see the prospectuses for the Underlying Funds for more information). The amount of payments We (or Our affiliates) receive generally is based on a percentage of assets of the Underlying Fund attributable to the Contracts and certain other variable insurance products that We issue. These percentages differ and some Underlying Funds or their advisers or sub-advisers (or their affiliates) may pay Us more than others. These percentages currently range up to 0.50%.

In addition, We receive payments from Wilshire Associates Incorporated as a result of Our involvement in developing and launching the Wilshire Variable Insurance Trust Lifecycle Funds (“Lifecycle Funds”). These payments are derived from the advisory fees deducted from Lifecycle Fund assets, which are paid by all investors in the Lifecycle Funds, including Contract Owners who elect to allocate Net Premium or Account Value to one or more Lifecycle Funds.

Proceeds from certain of these payments may be used for any corporate purpose, including payment of expenses that We and/or Our affiliates incur in promoting, marketing and administering the Contracts, and that We, in the role as an intermediary, incur in promoting, marketing and administering the Underlying Funds. We and Our affiliates may profit from these payments.

Addition, Deletion, or Substitution of Underlying Funds. We do not guarantee that each Underlying Fund will always be available for investment through the Contract. We reserve the right, subject to compliance with applicable law, to add new underlying funds or classes of underlying funds, close existing Underlying Funds or classes of Underlying Funds, or substitute shares of a different underlying fund for Underlying Fund shares that are held by a Subaccount. New or substitute underlying funds may have different fees and expenses and their availability may be limited to certain classes of purchasers. We will not add, delete or substitute any shares attributable to Your interest in a Subaccount without notice to You and prior approval of the SEC and any state governmental agency, to the extent required by the 1940 Act or other applicable law.

We also may establish or add new Subaccounts, remove existing Subaccounts, or combine Subaccounts. We also reserve the right to deregister the Separate Account, or to operate the Separate Account in another form permitted by law.

Voting Rights

We are the legal owner of the Underlying Fund shares held in the Separate Account and have the right to vote on all matters submitted to the Underlying Fund shareholders. Nevertheless, unless otherwise restricted by the retirement plan under which the Contract is issued, each Contract Owner has the right to instruct HMLIC with respect to voting his or her interest in the shares of the Underlying Funds held by the Separate Account at all shareholder meetings.

Before a vote of Underlying Fund shareholders, Contract Owners will receive various materials, such as proxy materials and voting instruction forms, that relate to voting Underlying Fund shares. The number of votes that may be cast by a Contract Owner is based on the number of units owned as of the record date of the shareholder meeting.

We will vote all of the shares We own, including those for which We have received no instructions and those attributable to investment by HMLIC, in proportion to the vote by Contract Owners who allocate or transfer amounts to the Subaccounts, as long as such action is required by law. Therefore, the outcome of the vote could be decided by a few Contract Owners who provide timely voting instructions. Should federal securities laws, regulations, or interpretations change, We may elect to vote Underlying Fund shares in Our own right. If required by state insurance officials, or if permitted under federal regulation, We may disregard certain Contract Owner voting instructions under certain circumstances.

The Contract

Contract Owners’ Rights

The Contract will be issued as a retirement plan on a qualified basis as defined in the IRC or as a Non-Qualified Contract. Annuity contracts and Qualified Plans are subject to certain tax restrictions. See “Tax Consequences.”

To participate in a Qualified Plan, the Contract Owner may be required to forego certain rights granted by the Contract and should refer to the provisions of his or her Contract, the provisions of the plan or trust instrument and/or applicable provisions of the IRC.

Unless otherwise provided by law, and subject to the terms of any governing plan or trust, or to the rights of any irrevocable beneficiary, the Contract Owner may exercise all privileges of ownership, as defined in the Contract. These privileges include the right during the period specified in the Contract to change the beneficiary, and to agree to a modification of the Contract terms. No designation or change in designation of a beneficiary will take effect unless We receive written request therefor at Our Home Office. The request will take effect as of the date We receive it, subject to payment or other action taken by Us before Your request was received. An assignment of ownership of a Contract issued under a Qualified Plan is generally prohibited. A Non-Qualified Contract may be assigned by giving Us written notice. We reserve the right, except to the extent prohibited by applicable laws, regulations, or actions of a State Insurance Commissioner, to require that the assignment will be effective only upon acceptance by Us, and to refuse assignments at any time on a non-discriminatory basis.

This prospectus describes only the variable portions of the Contract. On the Annuity Date, the Contract Owner has certain rights to acquire fixed annuity options. See the Contract for details regarding fixed Annuity Payments.

Purchasing the Contract

To purchase a Contract, You must complete an application bearing all requested signatures and a suitability form. For 457(b) and 401 Contracts the employer will purchase the Contract on behalf of the employee but the employee will be required to complete an application and suitability form.

Applications are to be sent along with Your premium payment, to Our Home Office. If Your application is complete, Your initial premium payment has been received at Our Home Office and is considered a suitable sale, We will issue Your Contract within two business days of its receipt, and credit Your initial Net Premium to Your Contract. We deem receipt to occur on a Valuation Date if We receive Your properly completed application and premium payment at Our Home Office before 3:00 p.m. Central Time. If received after 3:00 p.m. Central Time, We deem receipt to occur on the following Valuation Date.

If an incomplete application is received, HMLIC will promptly request additional information needed to process the application. The initial premium payment will be held in a suspense account, without interest, for a period not exceeding five business days. If the necessary information is not received within these five business days HMLIC will return the initial premium payment, unless otherwise directed by the applicant.

We generally will not issue You a Contract if the Annuitant is older than age 85 on the date the Contract would take effect. Under certain circumstances, however, We may issue Contracts above this maximum issue age.

Although We do not anticipate delays in Our receipt and processing of applications or premium payment requests, We may experience such delays to the extent agents fail to forward applications and premium payments to Our Home Office on a timely basis.

Canceling the Contract

You have the right to cancel a Contract for any reason within 30 days after You receive the Contract. To cancel a Contract, You must provide written notice of cancellation and return the Contract to Us at Our Home Office, or to the agent who sold it, within this “free look period.” HMLIC will refund the greater of: (1) the premium payments made for the Contract, less any withdrawals and any outstanding loan balance; or (2) the Account Value minus any applicable premium bonus as of the date the returned Contract was received. We will pay the refund within 10 calendar days after we receive the Contract. Upon return of the Contract, it will be deemed void.

Premium Payments

Amount and Frequency of Premium Payments — Net Premium payments allocated to the Separate Account will be applied at the applicable Accumulation Unit Value next determined following receipt in good form. The minimum purchase payment for the Contract is $25 per month or $300 per year. HMLIC offers a 2% premium bonus under Contracts to which the premium bonus rider applies. The Surrender Charge period is 9 years for Contracts with that rider. There is no additional charge for the rider.

The IRC limits the amounts which may be contributed to Qualified Plans. See “Tax Consequences — Contribution Limitations and General Requirements for Qualified Plans.”

Allocation of Net Premiums — When You complete Your application, You will give Us instructions on how to allocate Your Net Premium payments among the fixed account and/or the available Subaccounts. The amount You direct to a particular Subaccount or to the fixed account must be in whole number percentages from 1% to 100% of the Net Premium payment. If You make additional premium payments, We will allocate the Net Premiums in the same manner as Your initial Net Premium payment. A request to change the allocation of premium payments will be effective on the Valuation Date of receipt of the request by HMLIC’s Home Office unless a future date is requested. The Contract Owner may request a change of allocation at any time.

Accumulation Units and Accumulation Unit Value — Net Premiums allocated to the Separate Account are credited on the basis of Accumulation Unit Value. The number of Accumulation Units purchased by Net Premium payments is determined by dividing the dollar amount credited to each

Subaccount by the applicable Accumulation Unit Value next determined following receipt of the payment at Our Home Office. The value of an Accumulation Unit is affected by the investment experience of the Underlying Fund, expenses and the deduction of certain charges under the Contract.

Accumulation Units are valued on each Valuation Date. If We receive Your premium payment before 3:00 p.m. Central Time (or before the close of the New York Stock Exchange, if earlier), We will process the order using the applicable Subaccount Accumulation Unit Value determined at the close of that Valuation Day. If We receive Your premium payment at or after 3:00 p.m. Central Time (or at or after the close of the New York Stock Exchange, if earlier), We will process the order using the applicable Subaccount Accumulation Unit Value determined at the close of the next Valuation Date.

The Accumulation Unit Value of a Subaccount for any Valuation Period is equal to:


	•	the net asset value of the corresponding Underlying Fund attributable to the Accumulation Units at the end of the Valuation Period;

	•	plus the amount of any income or capital gain distributions made by the Underlying Fund during the Valuation Period;

	•	minus the dollar amount of the mortality and expense risk fee and applicable rider charges we deduct for each day in the Valuation Period;

	•	divided by the total number of Accumulation Units outstanding at the end of the Valuation Period.

Transactions

The information in this section of the prospectus sets forth specific information and documentation that must be received by Us at our Home Office in order to process requests for certain types of transactions. In addition to the specific requirements set forth below, Your instructions must be sufficiently clear so that We do not need to exercise any discretion to follow such instructions; and We must receive all of the information and supporting legal documentation We require in order to effect the transaction.

Transfers — Subject to certain restrictions, You may transfer amounts from one Subaccount to another, and to and from the fixed account of the Contract, at any time before the Annuity Date. We reserve the right to limit transfers from the fixed account to the Subaccounts before the Annuity Date as follows:


	•	No more than 25% of the Fixed Account Value can be transferred to one or more Subaccounts during a 365 day period.

	•	Any request to transfer the total Fixed Account Value to one or more Subaccounts will be transferred over a four-year period. No more than 25% of the amount will be transferred in any year before the final transfer.

We may not accept or We may defer transfers at any time that We are unable to purchase or redeem shares of an Underlying Fund. We reserve the right to terminate the transfer privilege at any time for all Contract Owners. We also reserve the right to restrict or terminate the transfer privilege for any specific Contract Owner if in Our opinion We determine the Contract Owner to be using the Contract for the purposes of market timing or for any other purpose that We, in our sole discretion, determine to be potentially detrimental to other shareholders of an Underlying Fund. See the “Market Timing” section below.

You may transfer value from one existing Investment Option into as many as 10 other Investment Options. The minimum amount that can be transferred is $100 or the entire dollar value of the Subaccount(s), whichever is less. A transfer may not leave a Subaccount balance or fixed account balance of less than $100.

A Contract Owner may elect to transfer funds between Subaccounts and the fixed account by submitting a written request to Our Home Office, by sending a telefacsimile (FAX) transmission request to (877) 832-3785, by telephoning (217) 789-2500 or (800) 999-1030 (toll-free), or by accessing Our website at www.horacemann.com and looking in the “Account Access” section.

Caution: Telephone and computer systems may not always be available. Any telephone or computer systems, whether Yours, Your service provider’s, Your agent’s, or Our’s, can experience outages or slowdowns for a variety of reasons. These outages may delay or prevent Our processing of Your transaction request. If You experience technical difficulties or problems, You should make your transaction request in writing to Our Home Office. You also should protect Your validating information, because self-service options will be available to anyone who provides Your validating information. We will not be able to verify that the person providing electronic transfer instructions via automated telephone or online systems and providing validating information is You or is authorized by You.

Depending on the means used to request a transfer, the request must: (1) be signed by the Contract Owner or, for telephone and website transactions, accompanied by validating information, (2) include the name of the Contract Owner and the Contract number, and (3) specifically state the dollar amount (not available for website transactions), a whole percentage, or the number of Accumulation Units to be transferred. The request also must specify the Subaccounts from which and to which the transfer is to be made. Transfers are effective on the Valuation Date of receipt of the request (in a form acceptable to Us) at Our Home Office unless a future date is requested. See “Other Information — Forms Availability.”

On and after May 1, 2008, no new transfers are allowed to the following Subaccounts:

Ariel Appreciation Fund

Goldman Sachs VIT Structured Small Cap Equity Fund

Dollar Cost Averaging — Dollar cost averaging is a systematic method of investing in which securities are purchased at regular intervals in fixed dollar amounts so that the cost of the securities is averaged over time and possibly over various market cycles. Dollar cost averaging transfers are

completed by periodically transferring equal amounts of money. You may preschedule a series of transfers between Investment Options to take advantage of dollar cost averaging. You may select from a 3-month, 6-month or 12-month period to complete the dollar cost averaging program. HMLIC reserves the right to limit the number of Investment Options and which Investment Options are available for the dollar cost averaging program. You may request dollar cost averaging by submitting a written request to Horace Mann Life Insurance Company at P.O. Box 4657, Springfield, Illinois 62708-4657, by calling (800) 999-1030 (toll-free), or by telefacsimile (FAX) transmission to (877) 832-3785. This option is only available before the Annuity Date.

The transfers will begin on the Valuation Date of receipt of the request in HMLIC’s Home Office (in a form acceptable to Us) and will continue on this day each period until the program is completed. If the original request is received on the 29th, 30th or 31st of the month, all subsequent transfers will be processed as of the 28th of the month. If You should decide to cancel an existing dollar cost averaging program, You must notify HMLIC’s Home Office either by writing to P.O. Box 4657, Springfield, Illinois 62708-4657, by calling (800) 999-1030 (toll-free), or by telefacsimile (FAX) transmission to (877) 832-3785.

Because the values of the Subaccounts from which the transfers may occur may decrease over time, the dollar cost averaging program may conclude earlier than scheduled. In addition, the last dollar cost averaging transfer may be for less than all prior transfers. Finally, the value of a Subaccount may increase and result in a balance remaining at the end of the period selected.

All requests must identify the Contract Owner’s name and Contract number, specify the Investment Options to be utilized and the amounts to be taken from each, and include proper authorization, such as a signature on a form or validating information if using the telephone.

On and after May 1, 2008, no new dollar cost averaging programs are allowed to start to the following Subaccounts:

Ariel Appreciation Fund

Goldman Sachs VIT Structured Small Cap Equity Fund

Rebalancing — Rebalancing is the periodic adjusting of Investment Option balances to maintain a pre-established asset allocation strategy. You may request a rebalancing of Your Account Value either once or on a periodic basis.

For periodic rebalancing requests, You may select from a quarterly, semiannual or annual period. Rebalancing is continuous for the period(s) selected unless changed or discontinued by the Contract Owner. HMLIC reserves the right to limit the number of Investment Options and which Investment Options are available for the rebalancing program. HMLIC also reserves the right to require a minimum account value of no greater than $5,000 before a request for rebalancing is approved. You may request rebalancing by submitting a written request to Horace Mann Life Insurance Company at P.O. Box 4657, Springfield, Illinois 62708-4657, by calling (800) 999-1030 (toll-free), or by telefacsimile (FAX) transmission to (877) 832-3785.

Rebalancing will begin on the Valuation Date of receipt of the request (in a form acceptable to Us) in Our Home Office. For periodic rebalancing requests, subsequent rebalancing of Your Account Value will continue to occur on the same calendar day of each scheduled month. If the original request is received on the 29th, 30th or 31st of the month, all subsequent rebalancing of Your Account Value will be processed as of the 28th of the month. If You should decide to cancel an existing rebalancing program, You must notify Our Home Office either by writing to P.O. Box 4657, Springfield, Illinois 62708-4657, by calling (800) 999-1030 (toll-free), or by telefacsimile (FAX) transmission to (877) 832-3785.

All requests must identify the Contract Owner’s name and Contract number, specify the Investment Options to be utilized and the percentage to be maintained in each option, and include proper authorization, such as a signature on a form or validating information if using the telephone.

On and after May 1, 2008, no new rebalancing programs are allowed to start to the following Subaccounts:

Ariel Appreciation Fund

Goldman Sachs VIT Structured Small Cap Equity Fund

Changes to Premium Allocations — A Contract Owner may elect to change the allocation of future Net Premium payments at any time by mailing a written request to HMLIC at P.O. Box 4657, Springfield, Illinois 62708-4657, by calling (800) 999-1030 (toll-free), by telefacsimile (FAX) transmission to (877) 832-3785, or by accessing Our website at www.horacemann.com and looking in the “Account Access” section. Depending on the means used to request a change, the request must: (1) be signed by the Contract Owner or, for telephone and website transactions, be accompanied by validating information, (2) include the Contract Owner’s name and Contract number, and (3) specify the new allocation percentage for the fixed account and/or for each Subaccount (in whole percentages). Allocations made to the fixed account or to one or more Subaccounts must total 100%. Changes in allocation instructions are effective on the Valuation Date of receipt of the request by Our Home Office unless a later date is requested. See “Other Information — Forms Availability.”

On and after May 1, 2008, existing Contracts are not allowed to begin or increase allocations to the following Subaccounts:

Ariel Appreciation Fund

Goldman Sachs VIT Structured Small Cap Equity Fund

Market Timing — The Contract and the Subaccounts are not designed for ‘market timing’ through frequent transfers or transfers that are large in relation to the total assets of the Underlying Fund. HMLIC discourages and does not accommodate frequent transfers among the Subaccounts or between the Subaccounts and the fixed account. Trading strategies that seek to benefit from short-term price fluctuations or price irregularities cause disruption to the Underlying Funds’ investment strategies, with potential resulting harm to performance and increased trading costs or Underlying Fund expenses, and are thereby potentially harmful to Underlying Fund shareholders, generally and

Contract Owners and their Contract performance, more specifically.

If We determine, in Our sole discretion, that Your transfer patterns among the Subaccounts reflect a market timing strategy, We will take action to protect the other Contract Owners and/or terminate the Contract. In making these determinations, We may consider the combined transfer activity of Contracts that we believe are under common ownership, control or direction. HMLIC does not include transfers made pursuant to dollar cost averaging or rebalancing when considering whether to take action. HMLIC applies its market timing policies and procedures uniformly to all owners of a particular Contract. For example, Underlying Funds may assess a redemption fee (which we reserve the right to collect) on shares held for a relatively short period of time. Such action will include requiring future transfer requests under the Contract to be submitted with an original signature via U.S. Mail for a finite period of time or for the duration of the Contract. If this restriction is imposed, We will reverse within one business day any transaction inadvertently processed that is not in compliance with the restriction. You will receive written confirmation of any such reversal. If HMLIC determines that You are engaging in a pattern of transfers that reflects a market timing strategy or is potentially harmful to other Contract Owners, it will notify You in writing of any restrictions.

The detection and deterrence of market timing involves judgments that are inherently subjective. Our ability to detect such activity may be limited by operational and technological systems, as well as our ability to predict strategies employed by others to avoid detection. Accordingly, there is no assurance that We will deter all market timing activity. Therefore, Contract owners may be subject to the risks described above.

The Underlying Funds may have their own policies and procedures with respect to frequent purchases and redemptions of their shares, which are described in the Underlying Fund prospectuses. Such policies and procedures may be more or less restrictive than HMLIC’s policies and procedures. As a result, We may not have the contractual obligation or the operational capacity to apply the frequent trading policies and procedures of the Underlying Funds. However, We reserve the right to defer or restrict transfers at any time that We are unable to purchase or redeem shares of any of the Underlying Funds, including any refusal or restriction on purchases or redemptions as a result of the frequent trading policies and procedures of the Underlying Funds. HMLIC also reserves the right to implement and administer redemption fees imposed by one or more of the Underlying Funds. The prospectuses of the Underlying Funds include more details on the ability of the Underlying Funds to refuse or restrict purchases or redemptions of their shares.

Contract Owners should be aware that We are required to provide to an Underlying Fund, promptly upon request, certain information about the trading activity of individual Contract Owners, and to restrict or prohibit further purchases or transfers by specific Contract Owners identified by the Underlying Fund as violating the frequent trading policies established for that Underlying Fund.

Surrender or Withdrawal Before Commencement of Annuity Period — Account Value may only be withdrawn from 403(b), 457(b) or 401 Contracts under certain circumstances. (See “Tax Consequences.”) However, if not restricted by the IRC or applicable retirement plan under which the Contract is issued, You may surrender the Contract or withdraw part of Your Account Value for cash before Annuity Payments begin. Any partial withdrawal is subject to a $100 minimum and may not reduce the Contract Owner’s interest in a Subaccount to less than $100.

The surrender or partial withdrawal of Variable Account Value (rollover, exchange, etc.) is determined on the basis of the Accumulation Unit Value next computed following the receipt of a valid request for surrender or partial withdrawal in Our Home Office. A surrender or partial withdrawal may result in adverse federal income tax consequences to the Contract Owner. These consequences include current taxation of payments received, and may include penalty taxes resulting from premature distribution. (See “Tax Consequences.”)

A Contract Owner eligible to surrender or request a partial withdrawal may elect to do so by submitting a signed, HMLIC form to HMLIC at Our Home Office at P.O. Box 4657, Springfield, Illinois 62708-4657. The kind of HMLIC form to be used will depend on whether any proceeds from the withdrawal/surrender are to be sent to any party other than the Contract Owner. A Contract Owner may request a HMLIC withdrawal/surrender form by writing to P.O. Box 4657, Springfield, Illinois 62708-4657 or by calling 800-999-1030 or by accessing Our secure website at www.horacemann.com. Depending on the volume of transaction requests received at Our Home Office, We may take up to 5 business days following Our receipt of a request for a withdrawal/surrender form to mail the form. Telefacsimile (FAX) transmissions and photocopies of the withdrawal/surrender request will be accepted only if all withdrawal/surrender proceeds are to be sent to the Contract Owner and the request, if sent by FAX, is sent to (877) 832-3785. Telefacsimile (FAX) transmissions and photocopies of the withdrawal/surrender request will not be accepted if any proceeds of the withdrawal/surrender are not to be sent to the Contract Owner. See “Tax Consequences” and “Other Information — Forms Availability.”

Withdrawals and surrenders will be processed either on a Valuation Date specified by You in a request, provided the Valuation Date specified occurs on or after receipt of the request at Our Home Office, or on the Valuation Date of such receipt of a valid request at Our Home Office.

For Your protection, We will send a confirmation letter on all address changes. If You have requested an address change within 15 days prior to Your surrender or withdrawal request, We will hold Your request until We have acquired confirmation of the correct address. Upon receipt of Your confirmation of the address, We will consider the surrender or withdrawal request to be received in good form.

Surrenders and withdrawals from any Subaccount are subject to the Surrender Charges shown below. There are 2 Surrender Charge periods available under this contract. Both are shown below. The charges applicable to Your Contract will

depend on how You completed the application and are printed on Your Contract data pages.


Surrender Charges	Surrender Charge%
During Contract Year	9 Year		5 Year

1		8.0%		8.0%
2		7.5%		7.5%
3		7.0%		7.0%
4		6.0%		6.0%
5		5.0%		5.0%
6		4.0%		0.0%
7		3.0%		0.0%
8		2.0%		0.0%
9		1.0%		0.0%
Thereafter		0.0%		0.0%

Surrender Charges are applied to surrenders and withdrawals based on the effective date of the Contract and not on the date the premium payment is made.

The applicable withdrawal charge will be deducted from the amount withdrawn and the balance paid to You. For example, a request to withdraw $3,000 at a 4% Surrender Charge will result in a surrender charge of $3000 × 4% = $120, which will be deducted from the withdrawal and the balance of $2,880 would be paid to You. Any taxes withheld will reduce the dollar amount of the distribution received. When You wish to receive a certain amount after the deduction of any surrender charges or applicable taxes, this is called a net withdrawal. We will determine what the total withdrawal and applicable charges would be to result in a desired net withdrawal when possible. In order for You to receive a net withdrawal of $3,000 in this example, we would need to withdraw $3,125 from your account, raising the surrender charge to $3,125 × 4% = $125 with the balance of $3,000 paid to You.

The Surrender Charge is assessed on the basis of the amount surrendered or withdrawn from the Subaccount(s), but will never exceed 9% of Your total Net Premium payments to a Subaccount during the lifetime of the Contract. For example, if a Contract Owner’s Subaccount value is $12,000 and Net Premium payments to date equal $10,000 and the Contract Owner surrenders the Contract, then the Surrender Charge may not exceed 9% of $10,000 ($900).

If premium taxes are deducted before surrender or withdrawal, any reduction of HMLIC’s premium tax liability resulting from the surrender or withdrawal will be to HMLIC’s benefit.

If You request a withdrawal for hardship purposes from Your 403(b) Contract or from Your employer’s 401(k) plan using the safe harbor regulations of the IRC, You may be suspended from making contributions to this and all other plans of Your employer for six months (or an additional period of time as may be provided in Your plan document). You should consult with Your plan administrator for further guidance before making a hardship withdrawal. After the six-month period (or other applicable period) is completed, You may resume making contributions.

Payments We Make — HMLIC ordinarily completes a transaction within seven calendar days after receipt of a proper request to transfer, surrender, partially withdraw or commence Annuity Payments. The value of a Contract is determined as of the Valuation Date on which a valid transaction request is received. However, determination of Account Value and processing the transaction may be deferred for: (1) any period during which the NYSE is closed for other than customary weekend or holiday closings, or during which trading on the NYSE is restricted by the Securities and Exchange Commission; (2) any period when the SEC determines that an emergency exists that makes it not reasonably practicable to sell securities or to fairly determine Accumulation Unit Values or Annuity Unit Values; or (3) any other period designated by the Securities and Exchange Commission to protect persons with interests in the Separate Account.

We reserve the right to defer payment of amounts from the fixed account for up to six months after receipt of Your written request, but only after We have made a written request and received written approval of the insurance department of the state in which this Contract was delivered. We will pay interest on any payment deferred for 30 days or more at the applicable interest rate.

If You have submitted a check or draft to Our Home Office, We have the right to defer payment of surrenders, withdrawals, death benefit proceeds, or payments under a settlement option until the check or draft has been honored.

If mandated under applicable law, We may be required to reject a premium payment and/or block a Contract Owner’s account and thereby refuse to pay any request for transfers, withdrawals, surrenders, loans (if applicable), or death benefits until instructions are received from the appropriate regulators. We also may be required to provide additional information about a Contract Owner or a Contract Owner’s account to governmental regulators.

Confirmations — HMLIC mails written confirmations of premium payments to Contract Owners on a quarterly basis within five business days following the end of each calendar quarter. Written confirmations of transfers, changes in allocations, withdrawals and surrenders are mailed to Contract Owners within seven calendar days of the date the transaction occurred.

If a Contract Owner believes that the confirmation statement contains an error, the Contract Owner should notify HMLIC as soon as possible after receipt of the confirmation statement. Notice may be provided by writing to HMLIC, P.O. Box 4657, Springfield, Illinois 62708-4657, by sending a telefacsimile (FAX) transmission to (877) 832-3785, or by telephoning (800) 999-1030 (toll free).

Deductions and Expenses — We make certain charges and deductions under the Contract. These charges and deductions compensate Us for: services and benefits We provide; costs and expenses We incur; and risks We assume. The fees and charges deducted under the Contract may result in a profit to Us.

Services and Benefits We Provide


	•	the death benefit, and cash benefits under the Contract


	•	Investment Options, including Net Premium allocations
	•	administration of elective options
	•	the distribution of reports to Contract Owners
	•	Annuity Payment options

Costs and expenses We incur:


	•	costs associated with processing applications and with issuing and administering the Contract
	•	overhead and other expenses for providing services and benefits, sales and marketing expenses, including compensation paid in connection with the sale of the Contracts
	•	other costs of doing business, such as collecting premium payments, maintaining records, effecting transactions, and paying federal, state and local premium, and other taxes and fees

Risks We assume:


	•	that the costs of providing the services and benefits under the Contracts exceed the charges We deduct

Waiver, Reduction or Elimination of deductions and expenses

We may reduce, waive or eliminate any of the deductions or expenses for Contracts sold under a particular Qualified Plan. Any such reduction will reflect the differences we expect in distribution costs or services meant to be defrayed by such charges. Factors we consider for a reduction, waiver or elimination of deductions or expenses include, but are not limited to, the following:


	•	The number of participants under the Qualified Plan;
	•	The type and nature of the Qualified Plan;
	•	The expected level of assets and/or cash flow under the Qualified Plan;
	•	Our agents’ involvement in sales activities;
	•	Our sales-related expenses;
	•	Distribution provisions under the Qualified Plan;
	•	The Qualified Plan’s purchase of one or more other variable annuity contracts from us and the features of those contracts;
	•	The level of employer involvement in determining eligibility for distributions under the Contract; and
	•	Our assessment of financial risk to Us relating to withdrawals.

We will not reduce, waive or eliminate any deduction or expense in a manner that is unfairly discriminatory against any person.

We may also apply different deduction and expense provisions in Contracts issued to employees or members of certain employer groups or associations which have negotiated the Contract terms on behalf of their employees or members. We will offer any resulting deduction or expense uniformly to all employees or members in the group.

Premium Taxes — Certain state and local governments levy a premium tax, currently between 0 and 3.5%. Any premium taxes relating to the Contract will be deducted from the premium payments or the Annuitized Value, when applicable. The amount of such premium taxes, if any, and the time of deduction of those taxes will be determined by the Contract Owner’s current place of residence.

Surrender Charges — If You make a withdrawal or surrender under the Contract, HMLIC will assess a charge to compensate it for the cost of selling the Contract.

Withdrawals may not be made from 403(b), 457(b), and certain Section 401(a) Contracts, except under certain circumstances. (See “Tax Consequences.”) However, if not restricted by the IRC or applicable retirement plan under which the Contract is issued, a Contract Owner may surrender the Contract in whole or withdraw a portion of the Account Value for cash before Annuity Payments begin.

HMLIC reserves the right to waive either a portion or the whole Surrender Charge in some situations. In some situations, You may make a withdrawal with no Surrender Charge. Please see Your Contract for further details. For further information regarding surrender or withdrawals see “The Contract-Transactions-Surrender or Withdrawal Before Commencement of Annuity Period.”

Annual Maintenance Fee — We will deduct an annual maintenance fee of no more than $25 from each Contract on the Contract anniversary date. This fee will be waived if the Account Value equals or exceeds $25,000 at the time the fee is assessed. We will deduct a proportionate amount of the annual maintenance fee upon the surrender of this Contract. If the Contract Owner has multiple deferred annuity contracts or certificates with Us, We will combine the values of all such contracts/certificates to determine whether the $25,000 value has been met. When multiple contracts are issued to accommodate multiple sources of funds, such as employee versus employer, We will deduct only one annual maintenance fee per year.

The annual maintenance fee ceases when You apply the Annuitized Value to an Annuity Payment option. The annual maintenance fee is intended to reimburse HMLIC for actual expenses incurred in administering the Contract. We do not expect to profit from such fee and assume the risk that this annual maintenance fee may be insufficient to cover the actual costs of administering the Contract.

Mortality and Expense Risk Fee (“M&E Fee”) — For assuming mortality and expense risk, We apply an asset charge to the Subaccounts. This fee may not exceed the annual rate of 1.25% of the daily net assets of the Separate Account (0.45% for mortality risk, and 0.80% for expense risk; these may vary from time to time); however, We reserve the right to change the fee (subject to the 1.25% ceiling) in the future. The fee is computed on a daily basis.

Charges for Optional Riders — Guaranteed Minimum Death Benefit Rider — Annual Step-up — The Contract Owner may elect this optional death benefit at the time of Contract issue for an additional charge. Contract Owners who elect this rider each will pay 0.20% of the Variable Account Value on an annual basis*. The charge for this rider will continue until the Contract is terminated or You annuitize the Account Value.

Guaranteed Minimum Death Benefit Rider — 5% Accumulation — The Contract Owner may elect this optional death benefit at the time of Contract issue for an additional charge. Contract Owners who elect this rider each will pay 0.30% of the Variable Account Value on an annual basis*. The charge for this rider will continue until the Contract is terminated or You annuitize the Account Value.


*	If You purchase both the Guaranteed Minimum Death Benefit Rider — Annual Step-up and the Guaranteed Minimum Death Benefit Rider — 5% Accumulation at Contract issue, then, for the life of Your Contract, the total annual charge for both riders will be 0.40% of the average Variable Account Value.

Premium Bonus Rider — This option provides for a credit equal to two percent (2%) of Net Premium We receive at Our Home Office during the first Contract Year. Electing this option will result in the surrender charge period being increased from 5 to 9 — years in length. Electing this option will not cause the mortality and expense risk fee to increase, nor will it increase surrender charges during the Contract’s first five years. However, during years 6-9 of the surrender charge period, the amount of the premium bonus may be more than offset by the surrender charges associated with the bonus. We may use any proceeds from surrender charges associated with the bonus to recoup the amount of any premium bonus paid.

Operating Expenses of the Underlying Funds — The deductions from and expenses paid out of the assets of the Underlying Funds are described in each Underlying Fund’s prospectus.

Death Benefit

Death Benefit Proceeds

If a Contract Owner dies (or the sole Annuitant dies and the sole Contract Owner is not a natural person) before the Annuity Date and while the Contract is in force, We will pay a death benefit to the beneficiary designated by the Contract Owner. The death benefit is determined for each beneficiary as of the date Proof of Death is received by HMLIC from such beneficiary. Proof of Death includes a certified death certificate or other satisfactory evidence of death, a completed claimant’s statement and any additional forms, documentation, and written payment instructions necessary to process a death benefit claim, in a form satisfactory to Us.

The beneficiary will receive the greatest of:


	1.	the Account Value; or

	2.	the Net Premium paid, less an adjustment for any withdrawals and an adjustment for any outstanding loan balance, or

	3.	the death benefit provided in any rider attached to the Contract.

At the option of the beneficiary, We will pay all or part of the death benefit proceeds to the beneficiary under one of the Annuity Payment options described under “Annuity Payments — Annuity Payment Options.” If the form of Annuity Payment selected requires that payment be made by HMLIC after the death of the beneficiary, payments will be made to a payee designated by the beneficiary or, if no subsequent payee has been designated, to the beneficiary’s estate.

Guaranteed Minimum Death Benefit Riders

In addition to the standard death benefit included in the Contract, the Contract Owner may add the optional death benefits described below for an additional cost. These riders may not be available in all states.

Guaranteed Minimum Death Benefit — Annual Step-up — The Contract Owner may elect this optional death benefit at the time of Contract issue for an additional charge.

Death Benefit under this rider

Before the Annuity Date, the death benefit is equal to the greatest of:


	1.	the death benefit as described in the Contract; or

	2.	the death benefit provided in any other rider attached to the Contract; or

	3.	the Step-Up Death Benefit described in the Guaranteed Minimum Death Benefit Step-Up Rider.

Step-Up Death Benefit

The Step-Up Death Benefit is based on a series of calculations of Step-Up Anniversary Value. The Step-Up Death Benefit is equal to the greatest Step-Up Anniversary Value attained from this series of calculations, adjusted by any outstanding loan balance as set forth below.

HMLIC calculates the Step-Up Anniversary Value for every Contract Anniversary before the oldest Contract Owner’s attainment of age 81, including the Contract Anniversary immediately following the oldest Contract Owner’s attainment of age 80, or when HMLIC receives Proof of Death, whichever is earlier.

For Contracts with a loan endorsement, the Step-Up Anniversary Value for a given Contract Anniversary is equal to the “Total Accumulation Value” (as defined in the loan endorsement) as of that Contract anniversary increased by any subsequent Net Premium received, and decreased by any adjustments for any subsequent withdrawals. The Step-Up Death Benefit will be adjusted by any outstanding loan balance at the time HMLIC receives Proof of Death of any Contract Owner or the sole Annuitant if the sole Contract Owner is not a natural person. We will determine any adjustment for any subsequent withdrawal by dividing the withdrawal amount by the “Total Accumulation Value” immediately before the withdrawal and multiplying the resulting fraction by the Step-Up Anniversary Value immediately before the withdrawal. For Contracts without a loan endorsement, the Step-Up Anniversary Value for a given Contract Anniversary is equal to the Account Value as of that Contract Anniversary increased by any subsequent Net Premium received, and decreased by any adjustments for any subsequent withdrawals. We will determine any adjustment for any subsequent withdrawal by dividing the withdrawal amount by the Account Value immediately before the

withdrawal and multiplying the resulting fraction by the Step-Up Anniversary Value immediately before the withdrawal. We will calculate the Death Benefit when We receive Proof of Death of any Contract Owner (or the sole Annuitant, if the sole Contract Owner is not a natural person).

Rider charge

Any charge for this rider is guaranteed not to increase after this rider has been issued.

We will deduct any Variable Account charge for this Rider from Your Variable Account Value and any Fixed Account charge from Your Fixed Account Value.

Rider restrictions

We reserve the right to restrict allocations or transfers to the fixed account or any of the Subaccounts.

Termination of this rider

This rider cannot be terminated by the Contract Owner after the Issue Date. This rider terminates upon the earliest of:


	a.	when the Contract Owner applies the Annuitized Value to an annuity option under the Contract; or

	b.	the date the Contract terminates as a result of surrender of the Contract or death of the Contract Owner (or the sole Annuitant, if the sole Contract Owner is not a natural person).

Guaranteed Minimum Death Benefit — 5% Accumulation — The Contract Owner may elect this optional death benefit at the time of Contract issue for an additional charge.

Death benefit under this rider

Before the Annuity Date, the death benefit is equal to the greatest of:


	1.	the death benefit as described in the Contract; or

	2.	the death benefit provided in any other rider attached to the Contract; or

	3.	the Accumulation Death Benefit described in the Guaranteed Minimum Death Benefit-Accumulation Rider.

Accumulation Death Benefit

This rider provides an Accumulation Death Benefit as follows:

On the Issue Date, the Accumulation Death Benefit is equal to the initial Net Premium received. The Accumulation Death Benefit is increased by any subsequent Net Premium received, decreased by any adjustments for withdrawals, and is accumulated at the following interest rates:


	1.	5 percent before or upon the Contract Anniversary immediately following the oldest Contract Owner’s attainment of age 80 depending on the option elected by the Contract Owner at the time of issue.

	2.	0 percent thereafter.

For Contracts without a loan endorsement, an adjustment for any withdrawal is determined by dividing the withdrawal amount by the Account Value immediately before the withdrawal and multiplying the resulting fraction by the Accumulation Death Benefit immediately before the withdrawal.

For Contracts with a loan endorsement, an adjustment for any withdrawal is determined by dividing the withdrawal amount by the Total Accumulation Value (as defined in the loan endorsement) immediately before the withdrawal and multiplying the resulting fraction by the Accumulation Death Benefit immediately before the withdrawal.

We will calculate the death benefit when We receive Proof of Death of any Contract Owner or the sole Annuitant, if the sole Contract Owner is not a natural person. We also will adjust the Accumulation Death Benefit by any outstanding loan balance at that time.

Maximum Accumulation Death Benefit value

The amount of the Accumulation Death Benefit shall not exceed an amount equal to 200 percent of Net Premium, less any adjustments for withdrawals, and less an adjustment for any outstanding loan balance as of the date We receive Proof of Death.

Rider charge

Any charge for this rider is guaranteed not to increase after the rider has been issued.

We will deduct any Variable Account charge for this Rider from Your Variable Account Value and any Fixed Account charge from Your Fixed Account Value.

Rider restrictions

We reserve the right to restrict allocations or transfers to the fixed account or any of the Subaccounts.

Termination of this rider

This rider cannot be terminated by the Contract Owner after the Issue Date. This rider terminates upon the earliest of:


	a.	when the Contract Owner applies the Annuitized Value to an annuity option; or

	b.	the date the Contract terminates as a result of surrender of the Contract or death of the Contract Owner (or the sole Annuitant, if the sole Contract Owner is not a natural person).

Annuity Payments

Qualified Plans often place certain limitations upon election of an Annuity Date. Generally, distributions under Qualified Plans (except Roth IRAs) must begin by April 1 following the calendar year in which the Contract Owner reaches age 701/2. (See “Tax Consequences — Taxation of Contract Benefits.”)

The Contract provides for fixed or Variable Annuity Payment options or a combination of both. The Contract Owner may elect to have Annuity Payments made under any one or more of the options described below or may elect a lump sum payment. To begin receiving Annuity Payments You must submit a properly completed request form to Our Home Office. If We do not receive Your written election of an Annuity Payment option at Our Home Office at least 30 days before the anticipated Annuity Date, the Annuity Payment option will be the Life Annuity with Payments Guaranteed for 10 Years which is payable on a Variable basis for any value in a Subaccount.

For variable Annuity Payment options we will process the request so that the Annuity Payments begin as of the first of the month following the month of receipt of Your request unless a later Valuation Date is requested and approved by HMLIC. For fixed Annuity Payment options we will process the request so that the Annuity Payments begin as of the date requested except the 29th, 30th or 31st of the month. If You elect a fixed payment option, We will transfer Your Variable Account Value to the fixed account on the Valuation Date Your request is received in Our Home Office. In addition, if You elect a Variable payment option, We will transfer Your Fixed Account Value to the Variable Account on the Valuation Date we receive Your request in Our Home Office. Your Net Premium allocation(s) will be changed to the fixed account or Variable Account, depending on the type of Annuity Payment option elected. Not all Subaccount(s) may be available for Annuity Payments. Generally, at the time an Annuity Payment option is selected, a Contract Owner must elect whether to withhold for federal and state income taxes. (See “Other Information — Forms Availability” and “Tax Consequences.”)

In general, the longer Annuity Payments are guaranteed, the lower the amount of each payment. Fixed Annuity Payments remain level, except in the case of certain joint and survivor Annuity Payment options, and are paid in monthly, quarterly, semiannual, and annual installments. Variable Annuity Payments will vary in amount and are paid only on a monthly basis. If the Annuitized Value to be applied under any one fixed or Variable Annuity Payment option is less than $2,000 or if the option chosen would provide Annuity Payments less than $20 per month at the Annuity Date, then the Contract value may be paid in a lump sum.

Annuity Payment Options

The following Annuity Payment options are available on a Variable basis unless otherwise stated.

Life Annuity with Payments Guaranteed for Life Only, 10, 15, or 20 Years — Annuity Payments are made to the Contract Owner beginning with the Annuity Date. The Annuity Payments will be based upon the number of guaranteed payments selected, and the age and sex of the Annuitant on the Annuity Date. Payments for this Annuity Payment option will continue as long as the Annuitant lives, or until all guaranteed payments have been made, whichever is later.

Guaranteed Annuity Payments cannot extend beyond the life expectancy of the Annuitant, as defined by the IRC. If the Contract Owner dies before all Annuity Payments have been made, the remaining Annuity Payments will be paid to the Beneficiary(ies) as scheduled.

If the Annuitant dies before all guaranteed Annuity Payments have been made, the remaining guaranteed Annuity Payments will be paid to the Contract Owner, if living, otherwise to the Beneficiary(ies) as scheduled.

After the Annuity Date, this Annuity Payment option cannot be changed and withdrawals cannot be made.

Payments for a Specified Period — Annuity Payments are made to the Contract Owner beginning with the Annuity Date and continue for the specified period of time as elected. The specified period can be as short as five years or as long as 30 years, so long as the payments extend beyond the Surrender Charge period. This option is available on a fixed payment basis only.

Annuity Payments cannot extend beyond the life expectancy of the Annuitant, as defined by the IRC. If the Contract Owner dies before all Annuity Payments have been made, the remaining Annuity Payments will be paid to the Beneficiary(ies) as scheduled.

If the Annuitant dies before all Annuity Payments have been made, the remaining Annuity Payments will be paid to the Contract Owner, if living, otherwise to the Beneficiary(ies) as scheduled.

After the Annuity Date, the Contract Owner may change this Annuity Payment option, or withdraw a portion of the Annuitized Value applied to this option or surrender this option. Any change or withdrawal the Contract Owner makes may affect any subsequent Annuity Payments and may have tax consequences. Surrender Charges may apply. If the Contract Owner surrenders the Annuitized Value applied to this Annuity Payment option, Annuity Payments will cease and the Contract will terminate. Thereafter, HMLIC will be free of any liability for the terminated Contract.

Joint And Survivor Annuity — Payments are made to the Contract Owner beginning with the Annuity Date. The Annuity Payments will be based upon the specific survivor option selected, and the age and sex of the two Annuitants on the Annuity Date.

The available survivor options are to pay during the lifetime of the survivor (1) 50 percent, (2) two-thirds, or (3) 100 percent of the Annuity Payments paid (or the number of Annuity Units) while both Annuitants were living. Upon the death of one Annuitant, the selected survivor option percentage will be applied to determine the remaining payments during the lifetime of the survivor. Upon the death of the survivor, Annuity Payments cease. If the Contract Owner dies while at least one Annuitant is living, the remaining Annuity Payments will be paid to the Beneficiary(ies) as scheduled. After the Annuity Date, this Annuity Payment option cannot be changed and withdrawals cannot be made.

Other Payout Options

If the Contract Owner does not wish to elect one or more of the Annuity Payment options described above, the Contract Owner may:


	a.	receive the proceeds in a lump sum less any applicable Surrender Charges, or

	b.	leave the Contract with HMLIC and receive the value under any applicable required minimum distribution requirements of IRC Section 401(a)(9), see “Taxation of Qualified Plans — Required Minimum Distributions,” or


	c.	elect any other payout option that HMLIC makes available.

Amount of Fixed and Variable Annuity Payments

The Annuitized Value will be applied to purchase the Annuity Payment option You select. The Annuitized Value applied to purchase Variable Annuity Payments will be allocated to the Subaccount(s) as the Contract Owner instructs. Not all Subaccount(s) may be available for Annuity Payments. The first monthly annuity payment purchased per $1,000 applied to each Subaccount under a Variable Annuity Payment option will be the same amount as the initial guaranteed monthly Annuity Payment purchased per $1,000 applied to the corresponding fixed annuity option.

Fixed Annuity Payments — Except in the case of certain joint and survivor Annuity Payment options, the amount of each fixed Annuity Payment will not change. Higher Annuity Payments may be made at the sole discretion of HMLIC.

Variable Annuity Payments — If You choose to receive Variable Annuity Payments, the dollar amount of Your payment will depend upon: (1) Your Annuitized Value that is applied to purchase Variable Annuity Payments on the Annuity Date; (2) the assumed interest rate for the Contract (here, 2%); and (3) the performance of the Variable Investment Options You selected. The amount of the first monthly Variable Annuity Payment will vary with the form of Annuity Payment option selected and the age(s) of the Annuitant(s).

The first monthly Variable Annuity Payment is used to calculate the number of Variable Annuity Units for each subsequent monthly Annuity Payment. The number of Variable Annuity Units remains constant over the payment period except when a joint and survivor Annuity Payment option is chosen. In those cases, the number of Variable Annuity Units will be reduced upon the death of either Annuitant to the survivor percentage elected.

The amount of monthly Annuity Payments following the first Variable Annuity Payment varies from month to month. Annuity Payments are determined each month by multiplying the Variable Annuity Units by the applicable Variable Annuity Unit Value at the date of payment.

Annuity Unit Value

The Annuity Unit Value for the Wilshire VIT Equity Fund, Wilshire VIT Balanced Fund and Wilshire VIT Income Fund Subaccounts was set at $10.00 as of the date amounts first were allocated to provide Annuity Payments. The Annuity Unit Value for the T. Rowe Price Equity Income Portfolio VIP II, AllianceBernstein VPS Small/Mid Cap Value Portfolio, AllianceBernstein VPS. Small Cap Growth Portfolio, T. Rowe Price Prime Reserve Portfolio, Wilshire Variable Insurance Trust 2015 ETF Fund, Wilshire Variable Insurance Trust 2025 ETF Fund, and Wilshire Variable Insurance Trust 2035 ETF Fund was established at $10 on May 1, 2006. The Annuity Unit Value for the Delaware VIP REIT Series and the Dreyfus Investment Portfolio: Small Cap Stock Index Portfolio was established at $10 on June 1, 2008 and May 1, 2008 respectively. The Annuity Unit Value for all other Subaccounts was established at $10.00 on March 1, 2005.


	•	The current Variable Annuity Unit Value is equal to the prior Variable Annuity Unit Value on the Valuation Date when Annuity Payments were last determined, multiplied by the applicable net investment factor. This factor is computed by dividing (1) the net asset value of a share of the Underlying Fund on the current Valuation Date, plus any dividends or other distributions, by (2) the net asset value of a share of the Underlying Fund on the Valuation Date of the preceding Valuation Period, and multiplying this result by the investment multiplier. The investment multiplier is one divided by the sum of one plus the assumed interest rate and the mortality and expense risk fee, adjusted to a monthly rate.
	•	If the net investment factor is equal to one, then monthly payments from that Subaccount will remain level. If the net investment factor is greater than one, the monthly payments from that Subaccount will increase. Conversely, if the net investment factor is less than one, the payments from that Subaccount will decrease.

Not all Subaccounts may be available for Annuity Payments.

Misstatement of Age or Sex

If any age or sex has been misstated, We will pay annuity payments in the amount which would have been paid at the correct age and sex. We will deduct any overpayments We have made, including interest, from future payments. We will pay any under payments, including interest, in a lump sum to the Contract Owner if living, otherwise to the beneficiary(ies). The interest rate will be equal to the guaranteed interest rate after the Annuity Date, as indicated on the Annuity Data pages of the Contract. We may pay interest in excess of the guaranteed amount. This interest may vary from time to time and is not guaranteed.

Tax Consequences

The following discussion of federal income tax consequences is only a brief summary and is not intended as tax advice. The tax rules governing the provisions of annuity contracts and Qualified Plans are extremely complex, often difficult to comprehend and may be changed at any time. This discussion does not address special rules, prior tax laws, or state tax laws. A Contract Owner or a prospective Contract Owner should consult a qualified and competent tax advisor before taking any action that could have tax consequences.

In addition, a Contract Owner or a prospective Contract Owner considering purchase of an annuity contract for a qualified retirement plan should understand that purchasing the Contract as an investment vehicle for the qualified plan does not provide any additional tax advantage beyond that already available through the qualified plan.

Separate Account — The operations of the Separate Account form part of the operations of HMLIC; however, the Internal Revenue Code (IRC) provides that no federal income tax will be payable by HMLIC on the investment income and capital gains of the Separate Account if certain conditions are met. Provided the investments of the Underlying Funds continue to meet the diversification requirements of IRC Section 817(h), the Contract Owner will not pay federal income tax on the investment income and capital gains under a Contract until Annuity Payments begin or a surrender or withdrawal is made.

Owner Control — In certain circumstances, owners of variable annuity contracts have been considered for federal income tax purposes to be the owners of the assets of the separate account supporting their contracts because of their ability to exercise investment control over those assets. When this is the case, the Contract Owners have been currently taxed on income and gains attributable to the variable account assets.

General Requirements

Investment earnings credited to the Contract Owner’s account are generally not taxable until such amounts are distributed as defined by the IRC. Contributions made on a pretax basis in certain Qualified Plans may also be tax-deferred.

Withdrawals — When a withdrawal from a Non-Qualified Contract occurs, the amount received will be treated as ordinary income subject to tax up to the amount of income in the Contract. The income in the Contract is the excess (if any) of the total Accumulation Value immediately before the distribution over the Contract Owner’s investment in the Contract (generally, the premiums or other consideration paid for the Contract that have already been taxed, reduced by any amount previously distributed from the Contract that was not subject to tax) at that time. In the case of a withdrawal of all of the balance of the Contract (a surrender), the amount received generally will be taxable only to the extent it exceeds the Contract Owner’s investment in the Contract. If the Contract is a Qualified Plan, amounts withdrawn are subject to tax based upon the ratio of income in the Contract to the total Accumulation Value immediately before the distribution.

Premature Distribution Tax — In the case of a distribution from a Contract, there may be imposed an additional tax (penalty tax) equal to ten percent of the amount treated as income. In general, however, there is no penalty tax on distributions:


	•	made on or after the taxpayer reaches age 591/2;
	•	made on or after the death of a Contract Owner;
	•	attributable to the taxpayer becoming disabled; or
	•	made as part of a series of substantially equal periodic payments for the life (or life expectancy) of the taxpayer.

Other exceptions may be applicable under certain circumstances and special rules may be applicable in connection with the exceptions enumerated above. You should consult a tax adviser with regard to exceptions from the penalty tax.

Annuity Payments — Although tax consequences may vary depending on the payout option elected under an annuity Contract, some or all of each Annuity Payment is generally taxed as ordinary income, while a portion may not be taxed. The non-taxable portion of an Annuity Payment, if any, is generally determined in a manner that is designed to allow You to recover Your investment in the Contract ratably on a tax-free basis over the expected stream of Annuity Payments, as determined when Annuity Payments start. Once Your investment in the Contract has been fully recovered, however, the full amount of each Annuity Payment is subject to tax as ordinary income.

Non-Natural Person — If a non-natural person (e.g., a corporation or a trust) owns a Contract, the taxpayer generally must include in income any increase in the excess of the account value over the investment in the Contract (generally, the premiums or other consideration paid for the Contract that have already been taxed) during the taxable year. There are some exceptions to this rule and a prospective Contract Owner that is not a natural person should discuss these with a tax adviser.

Required Distributions Upon the Death of the Contract Owner — Under IRC Section 72(s), a Non-Qualified Contract will not be treated as an annuity Contract for federal income tax purposes if it does not contain certain provisions specifying how any Contract Owner’s interest in the Contract will be distributed in the event of the death of that Contract Owner. Specifically, Section 72(s) requires that (a) if any owner dies on or after the annuity starting date, but prior to the time the entire interest in the contract has been distributed, the entire interest in the contract will be distributed at least as rapidly as under the method of distribution being used as of the date of such owner’s death; and (b) if any owner dies prior to the annuity starting date, the entire interest in the contract will be distributed within five years after the date of such owner’s death. These requirements will be considered satisfied as to any portion of a Contract Owner’s interest which is payable to or for the benefit of a designated beneficiary and which is distributed over the life of such designated beneficiary or over a period not extending

beyond the life expectancy of that beneficiary, provided that such distributions begin within one year of the owner’s death. The designated beneficiary refers to a natural person designated by the Contract Owner as a beneficiary and to whom ownership of the Contract passes by reason of death. However, if the designated beneficiary is the surviving spouse of the deceased owner, the Contract may be continued with the surviving spouse as the new owner.

Taxation of Death Benefit Proceeds — Amounts may be distributed from a Contract because of Your death or the death of the Annuitant. Generally, such amounts are includible in the income of the recipient as follows: (i) if distributed in a lump sum, they are taxed in the same manner as withdrawals from the Contract, or (ii) if distributed under a payout option, they are taxed in the same way as Annuity Payments.

Contract Transactions — A transfer or assignment of ownership of a Contract, the designation of an Annuitant, the selection of certain maturity dates, or the exchange of a Contract may result in certain tax consequences to You that are not discussed herein. A Contract Owner contemplating any such transaction should consult a tax advisor as to the tax consequences.

Multiple Contracts

All non-qualified deferred annuity contracts that are issued by Us (or Our affiliates) to the same Contract Owner during any calendar year are treated as one annuity contract for purposes of determining the amount includible in such Contract Owner’s income when a taxable distribution occurs.

Federal Estate Taxes

While no attempt is being made to discuss the federal estate tax implications of the Contract, purchasers of annuity contracts should keep in mind that the value of an annuity contract owned by a decedent and payable to a beneficiary by virtue of surviving the decedent is included in the decedent’s gross estate. Depending on the terms of the annuity contract, the value of the annuity included in the gross estate may be the value of the lump sum payment payable to the designated beneficiary or the actuarial value of the payments to be received by the beneficiary. Consult an estate planning advisor for more information.

Generation-Skipping Transfer Tax

Under certain circumstances, the IRC may impose a “generation skipping transfer tax” when all or part of an annuity contract is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Contract Owner. Regulations issued under the IRC may require us to deduct the tax from Your Contract, or from any applicable payment, and pay it directly to the Internal Revenue Service.

Annuity Purchases by Nonresident Aliens and Foreign Corporations

The discussion above provides general information regarding U.S. federal income tax consequences to annuity contract purchasers who/that are U.S. citizens or residents. Annuity contract purchasers who/that are not U.S. citizens or residents will generally be subject to U.S. federal withholding tax on taxable distributions from annuity contracts at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the annuity contract purchaser’s country of citizenship or residence. Prospective annuity contract purchasers are advised to consult with a qualified tax adviser regarding U.S., state, and foreign taxation with respect to an annuity contract purchase.

Foreign Tax Credits

We may benefit from any foreign tax credits attributable to taxes paid by certain Underlying Funds to foreign jurisdictions to the extent permitted under federal tax law.

Taxation of Qualified Plans

Qualified Plans have additional tax consequences. The tax rules applicable to participants in a Qualified Plan (as defined in this prospectus) vary according to the type of plan and according to the terms and conditions of the specific plan. The information provided here regarding the tax consequences of Qualified Plans is intended to be only general in nature. You should consult with Your tax adviser for the application of these rules to Your specific facts before purchasing an annuity Contract for a qualified retirement plan. Purchasing an annuity Contract as an investment vehicle for a qualified retirement plan does not provide any additional tax advantage to that already available through the qualified plan.

Optional death benefits in some cases may exceed the greater of the premium payments or Contract value. Such a death benefit could be characterized as an incidental benefit, the amount of which is limited in any 401 plan or 403(b) plan. Because an optional death benefit may exceed this limitation, anyone using a Contract in connection with such plans should consult a tax adviser before purchasing an optional death benefit rider.

Contribution Limitations and General Requirements Applicable To Qualified Plans

Contributions made to Qualified Plans are generally not taxed at the time of the contribution. This includes salary reductions made under a salary reduction agreement and nonelective contributions made by Your employer. The exceptions to this are contributions to Roth IRA’s, the amount of salary reductions designated as a Roth contribution by You, and traditional IRA contributions determined to not be deductible if certain conditions are not met, These contributions are all taxed in the year of the contribution. All contributions to Qualified Plans are subject to annual limitations imposed by the IRC and discussed below for each type of Qualified Plan. Employer contributions are subject to additional limitations and are not discussed here. Further, investment earnings credited to the Contract Owner’s account are generally not subject to tax until such amounts are distributed as defined by the IRC. Distributions of investment earnings attributable to amounts from a Roth IRA or a designated Roth account may be tax free if certain conditions are met.

Section 403(b) Tax-Deferred Annuity — A Section 403(b) tax-deferred (or tax-sheltered) annuity Contract is available for employees of public schools and certain organizations tax-exempt under Section 501(c)(3). Salary reduction contributions are limited to the lesser of $16,500 in 2009 or 100% of income. A special catch-up contribution is available to certain Contract Owners who have 15 years of service with his or her current employer. Additional catch-up amounts, $5,500 in 2009, may be contributed if the Contract Owner is age 50 or older. Both the maximum salary reduction contribution and additional amount if You are age 50 or older are indexed for inflation after 2009. Employer contributions are allowed with additional limitations under the Qualified Plan rules. Contributions may be subject to FICA (Social Security and Medicare) tax. If permitted by Your plan, some or all of your salary reduction contributions may be treated as Designated Roth contributions (Roth 403(b). Roth 403(b) contributions are salary reduction contributions that are irrevocably designated by You as not being excludable from income. Roth 403(b) contributions and related earnings will be accounted for separately. Contributions and earnings are not included in the Annuitant’s income until distributed with the exception of Roth 403(b) contributions which are included in income in the year contributed. Distributions from Section 403(b) annuities generally cannot be made until the Annuitant attains age 591/2. However, exceptions to this rule include severance from employment, death, disability and hardship and, generally, the balance in the Contract as of December 31, 1988. Section 403(b) annuity Contract accumulations may be eligible for a tax-free rollover to an eligible retirement plan. Section 403(b) annuities are subject to the required minimum distribution rules.

Section 408 Traditional IRA — Annual contributions (other than rollover contributions) to a traditional IRA are limited to $5,000 in 2009 for both an individual and the spouse. Additional catch-up contributions, up to $1,000 in 2009, may be made if the Contract Owner is age 50 or older. Both the annual and catch-up contribution limits are indexed for inflation after 2009. Contribution limits to a traditional IRA are coordinated with Roth IRA contributions. Contributions cannot be made after age 701/2 (this limitation does not apply to Roth IRAs). The amount of any annual contribution that will be deductible from gross income is based upon the individual’s compensation, coverage under a retirement plan and marital status. For 2009, if the owner of the traditional IRA Contract is an active participant in another eligible retirement plan the deduction phases out when adjusted gross income (“AGI”) is between $55,000 and $65,000 for single filers and between $89,000 and $109,000 for married individuals filing jointly and between $0 and $10,000 for married filing separately. If the owner is not an active participant in a Qualified Plan but the owner’s spouse is, the deduction phases out when AGI is between $166,000 and $176,000. Traditional IRA accumulations may be eligible for a tax-free rollover to another eligible retirement plan or transfer to another traditional IRA. Traditional IRAs are subject to required minimum distribution rules.

Simplified Employee Pension (SEP) — If the Contract is used for a SEP IRA plan and the Contract Owner has elected to make traditional IRA contributions, the same limitations regarding maximum contributions and deductibility apply as those described above under traditional IRAs. If the SEP is offered under a salary reduction basis (SARSEP), the limitation for salary reduction contributions is $16,500 in 2009. The additional catch-up amount if the individual is age 50 or older also applies, $5,500 in 2009. Both the annual and catch-up contributions are indexed for inflation after 2009. New SARSEPs are not permitted after 1996, however, those in effect before 1997 may continue. Employer contributions are allowed subject to additional limitations and must be coordinated with other eligible retirement plan limitations. SEP IRA plans are subject to certain minimum participation and nondiscrimination requirements. Contributions and earnings are not includable in income until distributed. Rollover and required minimum distribution rules apply the same as for traditional IRAs.

Savings Incentive Match Plan For Employees (SIMPLE IRA) — If the Contract is used for a SIMPLE IRA, the salary reduction limitation is $11,500 for 2009 (indexed for inflation after 2009). As with traditional IRAs, additional contributions are allowed for individual’s age 50 and older, $2,500 for 2009. Employer contributions are also required and are coordinated with other Qualified Plan contribution limitations. SIMPLE IRAs can accept rollovers only from other SIMPLE IRAs. Rollovers from SIMPLE IRAs are similar to traditional IRAs except that rollovers during the first two years of participation are limited to other SIMPLE IRAs. Required minimum distribution rules apply the same as for traditional IRAs.

Roth IRAS — Annual contributions to a Roth IRA are limited to $5,000 for 2009 for both the individual and the spouse. An additional catch-up contribution is allowed if the individual is age 50 or older, $1,000 for 2009. Both the annual and catch-up contribution limits are indexed for inflation after 2009. Contributions to a traditional IRA are coordinated with Roth IRA contributions. The annual contribution has additional limitations based upon the Contract Owner’s income and marital status. The annual contribution maximum is phased out when AGI is between $105,000 and $120,000 for single taxpayers and those taxpayers filing Head of Household, between $166,000 and $176,000 for married taxpayers filing jointly and between $0 and $10,000 for married taxpayers filing separate. Contributions to a Roth IRA are not deductible and if the Contract Owner has held any Roth IRA for more than five years, certain qualified distributions are not includable in income (e.g., distributions made to a Contract Owner reaching age 591/2 or becoming disabled). Traditional IRAs, SEP IRAs and SIMPLE IRAs (after 2 years of participation in a SIMPLE IRA) and other retirement plans can generally be converted to a Roth IRA if the Contract Owner’s AGI is $100,000 or less and the Contract Owner is not married and filing a separate return. However, the converted amount is includable in income in the year of conversion. The $100,000 income and married filing separate limitations will not apply to conversions made in 2010 and after. In addition, the amount includable in income for a conversion made in 2010 can be deferred to 2011 and 2012. Roth IRAs can only be rolled over to other Roth IRAs. If certain requirements are met, it may be possible to recharacterize a Roth IRA contribution as a traditional IRA

contribution. Roth IRAs are not subject to the required minimum distribution rules.

Section 457(b) Eligible Governmental Plan — A Section 457(b) deferred compensation plan is available for employees of eligible state or local governments. Salary reduction amounts are limited to the lesser of $16,500 for 2009 or 100% of includable compensation. Additional catch-up amounts may be contributed if the Contract Owner is age 50 or older, $5,500 for 2009. Both the maximum salary reduction amount and additional amount if You are age 50 or older are indexed for inflation after 2009. A special catch-up contribution is allowed in the three years of employment before attaining normal retirement age. Contributions and earnings are not included in the Annuitant’s income until distributed. Distributions are not generally allowed until the Contract Owner reaches age 701/2 except for severance from employment or for an unforeseeable emergency or severe financial hardship. Section 457(b) annuity contract accumulations can be rolled over or transferred to other Section 457(b) eligible governmental plan contracts or an eligible retirement plan. Section 457(b) annuity contracts are subject to the required minimum distribution rules.

Section 401 — Section 401 permits employers to establish various types of retirement plans (e.g., pension, profit sharing, 401(k) plans) for their employees. Retirement plans established in accordance with Section 401 may permit the purchase of annuity contracts to provide benefits under the plan. In order for a retirement plan to be considered qualified under Section 401 it must: meet certain minimum standards with respect to participation, coverage and vesting; not discriminate in favor of highly compensated employees; provide contributions or benefits that do not exceed certain limitations; prohibit the use of plan assets for purposes other than the exclusive benefit of the plan participant and their beneficiaries covered by the plan; comply with certain minimum distribution requirements; provide for certain spousal survivor benefits; and comply with numerous other qualification requirements. A retirement plan qualified under Section 401 may be funded with employer contributions, employee contributions or a combination of both. Employee contributions may be made pre-tax (under a salary reduction agreement) or on an after-tax basis. If permitted by your plan, some or all of salary reduction contributions made to 401(k) plans may be treated as Designated Roth contributions (Roth 401(k)). Roth 401(k) contributions are salary reduction contributions that are irrevocably designated by You as not being excludable from income. Roth 401(k) contributions are includable in income in the year contributed. Distributions are generally not allowed prior to retirement and Your should consult Your employer’s plan or with a tax advisor for additional information.

Designated Roth Accounts — Section 403(b) and 401(k) plans are allowed to establish Designated Roth accounts within their plans. If this feature is included in the plan, the Annuitant can designate some or all of his/her salary reduction contributions as Designated Roth contributions. As a result, the Designated Roth contribution will be includible in the Annuitant’s income in the year of the contribution and be subject to all wage withholding requirements.

The Designated Roth contribution combined with other salary reduction contributions are subject to the limits discussed above. Designated Roth contributions are also subject to the same distribution restrictions as all other contributions to the plan.

Rollovers — A rollover (or direct rollover) is a tax-free distribution (cash or other assets) from an eligible retirement plan followed by a contribution to another eligible retirement plan. Distributions that include amounts already included in income (after-tax) can be rolled over but must occur via a direct rollover with separate accounting in the new retirement plan. A direct rollover is a transaction in which no payment or distribution of funds is made to the contract owner or other payee. Distributions that are properly rolled over are not includable in income until they are ultimately paid out of the new Contract. For Section 403(b), 457(b) and 401 annuities only amounts eligible for distribution can be rolled over.

Amounts under a Section 401 plan can be rolled over to another Section 401 plan, a traditional IRA, a Section 403(a) annuity, a Section 403(b) tax-deferred annuity or an eligible Section 457(b) governmental plan (provided it agrees to separate accounting).

Amounts under a traditional IRA can be rolled over to another traditional IRA, a Section 401 plan, a Section 403(a) annuity, a Section 403(b) tax-deferred annuity or an eligible Section 457(b) governmental plan (provided it agrees to separate accounting), although non-deductible contributions in a traditional IRA can only be rolled over into another IRA.

Amounts under a Section 403(b) tax-deferred annuity can be rolled over to a traditional IRA, a Section 401 plan, a Section 403(a) annuity, a Section 403(b) tax-deferred annuity or an eligible Section 457(b) governmental plan (provided it agrees to separate accounting).

Amounts under a SIMPLE IRA can only be rolled over to another SIMPLE IRA during the first two years of participation. Thereafter, a SIMPLE IRA can be rolled over tax-free to a traditional IRA, a qualified Section 401 plan, a Section 403(b) plan, or a Section 457(b) plan (provided it agrees to separate accounting).

Amounts related to Designated Roth contributions in a Section 403(b) or 401(k) plan may be rolled over to another Section 403(b) or 401(k) plan that allows Designated Roth contributions or to a Roth IRA.

Amounts under a Roth IRA can generally only be rolled over to another Roth IRA.

A distribution from Designated Roth accounts may only be rolled over to a 403(b) or 401(k) plan that allows Designated Roth contributions or to a Roth IRA.

If the beneficiary is not the spouse, the beneficiary may make a direct rollover to an individual retirement account or Roth individual retirement account if from a decedent’s Roth 403(b) or Roth 401(k), which is subject to the inherited IRA minimum distribution rules.

In addition to the tax-free rollovers discussed above, a taxable rollover of distributions from 401, 403(b) tax deferred annuities, and 457(b) eligible governmental plans can be made to a Roth IRA, subject to Your income and marital status as well as any restrictions in Your employer’s plan.

Transfers And Exchanges

For Qualified Plans with the exception of a Section 403(b) tax deferred annuities, a trustee-to-trustee or issuer-to-issuer transfer is a tax-free transfer from one Qualified Plan to a similar Qualified Plan that does not involve a distribution. Amounts that are properly transferred are not includable in income until they are ultimately paid out of the Contract.

Exchanges of Non-Qualified Contracts are an assignment of the accumulation in the Contract to another issuer and if properly completed are not includable in income until they are ultimately paid out of the Contract.

For a Section 403(b) tax deferred annuity a transfer is the movement of all or some portion of the balance in the 403(b) annuity from one employer’s 403(b) plan to another employer’s 403(b) plan and an exchange is the movement of all or some portion of the balance in a 403(b) annuity between investment providers in the same employer’s 403(b) plan. You should consult with your tax advisor for additional guidance on transfers and exchanges.

Taxation Of Contract Benefits — Amounts contributed as salary reductions (excluding amounts in Designated Roth accounts), and nonelective employer contributions are not taxed at the time of contribution. Earnings on these amounts are also not taxed as they accumulate. Benefits from Contracts containing only pre-tax contributions and related earnings will be taxed as ordinary income when received. Benefits from Contracts containing both pre-tax and post-tax contributions and related earnings will be taxed as ordinary income and on a prorata basis in accordance with the IRC Section 72 rules regarding Qualified Plans. Benefits from Contracts containing and attributable to amounts from Designated Roth accounts will only be taxed to the extent there are earnings and the distribution is not a qualified distribution. If the distribution is a qualified distribution earnings are not taxed. A distribution from a Designated Roth account in a 403(b) or 401(k) contract is considered qualified if it is made more than five years after establishment of the Designated Roth account and made on or after the Annuitant attains age 591/2, dies or becomes disabled.

Loans, if not made within certain terms of the IRC, will be treated as distributions. Loans from Sections 401(k) 403(b) and 457(b) plans will generally not be treated as distributions if the terms require repayment within five years (except loans to acquire a home); the loans have substantially level payments over the term of the loan; the loans do not exceed $50,000 and the loans are evidenced by a legally enforceable agreement. Loans are not allowed for IRAs, SEPs, SIMPLEs and Roth IRAs.

Qualified distributions from a Roth IRA are not taxable. A qualified distribution is any distribution made at least five years after issuance of the owner’s first Roth IRA and made after attainment of age 591/2, as the result of death or disability, or as a qualified first-time homebuyer distribution. In addition, a client may receive a distribution of after-tax contributions at any time.

Contract Transactions — A transfer or assignment of ownership of a Qualified Plan is generally prohibited, and the tax consequences of doing so are not discussed herein. The selection of certain maturity dates or the exchange of a Contract may result in certain tax consequences to You that are also not discussed herein. A Contract Owner contemplating any such or transaction should consult a tax advisor as to the tax consequences.

Premature Distribution Tax — An additional tax (penalty tax) may also apply to premature distributions from a Qualified Plan. A premature distribution is generally any distribution made before the Contract Owner reaches age 591/2. The penalty tax is 10% of the amount of the payment that is includable in income. The penalty tax increases to 25% for distributions from a SIMPLE IRA if made within the first two years of participation. The penalty tax does not apply to conversions of traditional IRAs to Roth IRA’s and most distributions from Section 457(b) plans. Certain payments may be exempt from the penalty tax depending on the type of Qualified Plan such as payments made: 1) after age 591/2, 2) as the result of death or disability, 3) that are part of a series of substantially equal periodic payments over the life or life expectancy of the owner or the joint lives or joint life expectancy of the owner and beneficiary, 4) after separation from service and attainment of age 55, 5) for medical care, 6) under a qualified domestic relations order (QDRO), 7) to correct excess contributions or salary reductions and 8) in limited circumstances, to a reservist called to active duty after September 11, 2001. If the Contract is a traditional IRA or Roth IRA, exception 4) and 6) listed above do not apply. In addition, for a traditional IRA or Roth IRA there are additional exceptions, which include a payment, made: 1) for reimbursement of health insurance while the Contract Owner was unemployed, 2) for qualified education expenses, and 3) for a qualified first-time home purchase.

Required Minimum Distribution Excise Tax — If the amount distributed from a Qualified Plan is less than the required minimum distribution for the year (discussed below), the Contract Owner is generally subject to a non-deductible excise tax of 50% on the difference between the required minimum distribution and the amount actually distributed.

Required Minimum Distributions — The Contract Owner of a Qualified Plan (other than a Roth IRA) is generally required to take certain required minimum distributions during the Contract Owner’s life and the beneficiary designated by the Contract Owner is required to take the balance of the Contract value within certain specified periods following the Contract Owner’s death. Roth IRAs are not subject to the lifetime required minimum distribution requirements but are subject to the after-death distributions requirements described below.

The Contract Owner must take the first required distribution by the required beginning date and subsequent required distributions by December 31 of each year thereafter. Payments must be made over the life or life expectancy of the

Contract Owner or the joint lives or joint life expectancy of the Contract Owner and the beneficiary. The amount of the required minimum distribution depends upon the Contract value and the applicable life expectancy. The required beginning date for traditional IRAs, SEPs, and SIMPLE IRAs is no later than April 1 of the calendar year following the calendar year in which the Contract Owner attains age 701/2. The required beginning date for Section 401(a) plans, Section 403(b) annuities, and Section 457(b) plans is the later of April 1 of the calendar year following the calendar year in which the Contract Owner attains age 701/2 or retires.

If You have any of the optional death benefit features and are taking withdrawals rather than Annuity Payments to satisfy the minimum distribution requirements, the value of this feature may need to be included in calculating the amount required to be distributed. Consult a tax advisor.

Upon the death of the Contract Owner, the beneficiary must take distributions under one of the following two rules.


	1.	If the Contract Owner dies on or after the required beginning date and has designated a beneficiary, any remaining balance will continue to be distributed at least as rapidly as was payable under required minimum distributions.

	2.	If the Contract Owner dies before the required beginning date, the balance must be distributed by December 31 of the calendar year containing the fifth anniversary of the Contract Owner’s death. If the Contract value is payable to a beneficiary other than a spouse, it may be paid over the life expectancy of that beneficiary, provided distributions begin by December 31 of the calendar year following the year of the Contract Owner’s death. If the beneficiary is the spouse, the spouse may defer payments until the end of the calendar year in which the Contract Owner would have reached age 701/2 or treat the IRA as his or her own and roll over the Contract to a traditional IRA or any other eligible retirement plan. If the beneficiary is not the spouse, the beneficiary may make a direct rollover to an IRA that meets the IRS requirements of an ‘inherited IRA’.

Required minimum distributions for 2009 have been suspended by the Worker, Retiree, and Employer Recovery Act of 2008. However, 2008 required minimum distributions delayed until 2009 are still required to be distributed by April 1, 2009.

Withholding — Mandatory federal income tax is generally required to be withheld at the rate of 20% on distributions from Qualified Plans. Exceptions to this rule include: distributions from traditional IRAs or Roth IRAs; non-taxable distributions; a direct rollover or direct transfer to an eligible retirement plan; periodic payments over the Contract Owner’s life expectancy or the joint life expectancy of the Contract Owner and the beneficiary; periodic payments over a period of ten years or more; required minimum distributions; and hardship distributions.

For all amounts not subject to the mandatory 20% withholding except Roth IRAs, federal income tax is generally required to be withheld unless the Contract Owner elects not to have federal income tax withheld. For periodic payments (Annuity Payments), the withholding is calculated like wage withholding. For all other payments withholding is at a rate of 10%. For periodic payments, HMLIC will notify the Contract Owner at least annually of his or her right to revoke the election not to have federal income tax withheld. State and/or local tax withholding may also apply.

Possible Tax Law Changes

Although the likelihood of legislative or regulatory changes is uncertain, there is always the possibility that the tax treatment of the Contract could change by legislation, regulation or otherwise. Consult a tax advisor with respect to legislative or regulatory developments and their effect on the Contract.

We have the right to modify the Contract in response to legislative or regulatory changes that could otherwise diminish the favorable tax treatment that Contract Owners currently receive. We make no guarantee regarding the tax status of any Contract and do not intend the above discussion as tax advice.

Other Information

Distribution of the Contract — The Contracts are offered and sold by HMLIC through its licensed life insurance sales personnel who are also registered representatives of HM Investors. In addition, the Contracts may be offered and sold through independent agents and other broker-dealers. HMLIC has entered into a distribution agreement with its affiliate, HM Investors, principal underwriter of the Separate Account. HM Investors, located at One Horace Mann Plaza, Springfield, Illinois 62715-0001, is a broker-dealer registered under the Securities Exchange Act of 1934. HM Investors is a member of the FINRA and is a wholly-owned subsidiary of Horace Mann Educators Corporation. Sales commissions are paid by HMLIC to HM Investors and other broker-dealers and range from 1.00% to 11.00% of premium payments received. No specific charge is assessed directly to Contract Owners or to the Separate Account to cover the commissions and endorsement-related payments. We do intend to recover the amount of these commissions and other sales expenses and incentives we pay, however, through the fees and charges collected under the Contract and other corporate revenue.

Association Endorsements and Relationships — HMLIC or an affiliate has relationships with certain national, State and local education associations or educator groups. Certain associations endorse or sponsor various insurance products of HMLIC or an affiliate. Neither HMLIC nor any of its affiliates pays any consideration solely in exchange for product endorsements or sponsorships. HMLIC or an affiliate does pay various associations or groups for certain special functions, advertising, and similar services, including but not limited to the following:


	•	Providing HMLIC and/or an affiliate with access to and opportunities to market its products to association members;
	•	Allowing HMLIC or an affiliate to sponsor and promote scholarship and awards programs;


	•	Allowing HMLIC or an affiliate to sponsor and/or attend (and market its products at) association meetings, conferences, or conventions; and
	•	Allowing HMLIC or an affiliate to conduct workshops for association members.

Legal Proceedings — HMLIC, like other life insurance companies, is involved on occasion in lawsuits. Although the outcome of any litigation cannot be predicted with certainty, HMLIC believes that no pending or threatened lawsuits are likely to have a material adverse effect on the Separate Account, on the ability of HM Investors to perform under its principal underwriting agreement, or on HMLIC’s ability to meet its obligations under the Contract.

Modification of the Contract — The Contract provides that it may be modified by HMLIC to maintain continued compliance with applicable state and federal laws. Contract Owners will be notified of any modification. Only officers designated by HMLIC may modify the terms of the Contract.

Registration Statement — A registration statement has been filed with the SEC under the Securities Act of 1933 with respect to the Contract. This prospectus summarizes the material rights granted under and features of the Contract. For a complete statement of the terms thereof, reference is made to the Contract and these instruments as filed. This prospectus does not contain all information set forth in the registration statement, its amendments and exhibits.

Communications to Contract Owners — To ensure receipt of communications, Contract Owners must notify HMLIC of address changes. Notice of a change in address may be sent to Horace Mann Life Insurance Company, Annuity Customer Service, P.O. Box 4657, Springfield, Illinois 62708-4657, by sending a telefacsimile (FAX) transmission to (877) 832-3785 or by calling (800) 999-1030 (toll-free).

HMLIC will attempt to locate Contract Owners for whom no current address is on file. In the event HMLIC is unable to locate a Contract Owner, HMLIC may be forced to surrender the value of the Contract to the Contract Owner’s last known state of residence in accordance with the state’s abandoned property laws.

Contract Owner Inquiries — A toll-free number, (800) 999-1030, is available to telephone HMLIC’s Annuity Customer Service Department. Written questions should be sent to Horace Mann Life Insurance Company, Annuity Customer Service, P.O. Box 4657, Springfield, Illinois 62708-4657 or by accessing HMLIC’s website at www.horacemann.com and sending a message through the “Message Center” in the “Account Access” section.

Forms Availability — Specific forms are available from HMLIC to aid the Contract Owner in effecting many transactions allowed under the Contract. These forms may be obtained by calling the Annuity Customer Service Department toll-free at (800) 999-1030.

Investor Information from FINRA — Information about HM Investors and Your agent is available from FINRA at www.finra.org or by calling (800) 289-9999 (toll-free).

Table of Contents for the Statement of Additional Information

A copy of the Statement of Additional Information providing more detailed information about the Separate Account is available, without charge, upon request. The Table of Contents of this Statement of Additional Information follows:


Topic	Page

General Information and History		1
Tax Status of the Contracts		1
Underwriter		2
Independent Registered Public Accounting Firm		2
Financial Statements		2

To receive, without charge, a copy of the Statement of Additional Information for the Separate Account, please complete the following request form and mail it to the address indicated below, or send it by telefacsimile (FAX) transmission to (877) 832-3785, or telephone (800) 999-1030 (toll-free) to request a copy.

Horace Mann Life Insurance Company
P.O. Box 4657
Springfield, Illinois 62708-4657

Please provide free of charge the following information:

Statement of Additional Information dated May 1, 2009 for the Separate Account

Please Mail the above document to:

(Name)

(Address)

(City/State/Zip)

Appendix A: Death Benefit Examples

5% Accumulation Guaranteed Minimum Death Benefit (“GMDB”) example

Assume the following:


	•	There is an initial Net Premium of $100,000
	•	There is a withdrawal on the 3rd contract anniversary of $25,000. The account value immediately before the withdrawal is $125,000.
	•	We are calculating the death benefit on the 5th contract anniversary. The account value at that time is $101,000.
	•	The are no loans on the contract.
	•	The client has not yet attained age 81.
	•	No other GMDB rider was selected.

The accumulation GMDB value at issue is equal to the initial Net Premium.

$100,000

The accumulation GMDB value immediately before the withdrawal is the initial Net Premium accumulated at 5% interest for 3 years:

$100,000 × 1.05³ = $115,763

The withdrawal adjustment is the withdrawal amount divided by the account value immediately before the withdrawal and multiplied by the accumulation GMDB value immediately before the withdrawal:

$25,000 ¸ $125,000 × $115,763 = $23,153

The accumulation GMDB value immediately following the withdrawal is the accumulation GMDB value immediately before the withdrawal less the withdrawal adjustment:

$115,763 – $23,153 = $92,610

The accumulation GMDB value on the 5th contract anniversary is the accumulation GMDB value immediately following the withdrawal accumulated at 5% interest for 2 years:

$92,610 × 1.05² = $102,103

The return of premium death benefit on the 5th contract anniversary is the initial Net Premium less a withdrawal adjustment:

$100,000 – ($25,000 ¸ $125,000 × $100,000) = $80,000

The death benefit is the greatest of the accumulation GMDB, the return of premium death benefit, and the account value.

Max [$102,103, $80,000, $101,000] = $102,103

Annual Step-up Guaranteed Minimum Death Benefit (“GMDB”) example

Assume the following:


	•	There is an initial Net Premium of $100,000
	•	The account value on the 1st contract anniversary is $90,000.
	•	The account value on the 2nd contract anniversary is $120,000.
	•	There is a withdrawal during the 3rd contract year of $25,000. The account value immediately before the withdrawal is $125,000.
	•	The account value on the 3rd contract anniversary is $105,000.
	•	We are calculating the death benefit during the 4th contract year. The account value at that time is $101,000.
	•	The are no loans on the contract.
	•	The client has not yet attained age 81.
	•	No other GMDB rider was selected.

The step-up anniversary value for the 1st contract anniversary projected to the date of death is the account value on the 1st contract anniversary less an adjustment for the subsequent withdrawal:

$90,000 – ($25,000 ¸ $125,000 × $90,000) = $72,000

The step-up anniversary value for the 2nd contract anniversary projected to the date of death is the account value on the 2nd contract anniversary less an adjustment for the subsequent withdrawal:

$120,000 – ($25,000 ¸ $125,000 × $120,000) = $96,000

The step-up anniversary value for the 3rd contract anniversary projected to the date of death is the account value on the 3rd contract anniversary:

$105,000

The step-up GMDB is equal to the maximum of these values:

Max [$72,000, $96,000, $105,000] = $105,000

The return of premium death benefit at the date of death is the initial Net Premium less a withdrawal adjustment:

$100,000 – ($25,000 ¸ $125,000 × $100,000) = $80,000

The death benefit is the greatest of the step-up GMDB, the return of premium death benefit, and the account value.

Max [$105,000, $80,000, $101,000] = $105,000

Appendix B: Condensed Financial Information

The following schedule includes accumulation unit values for the periods indicated. This data has been taken from the Separate Account financial statements. The information should be read in conjunction with the financial statements of the Separate Account and the related notes that are included in the Statement of Additional Information.

The Separate Account was established in 1965. The following information is taken from the Separate Account financial statements. The financial statements and reports are contained in the Annual Report for the Separate Account and are incorporated herein by reference and may be obtained by calling or writing HMLIC. The Wilshire VIT Equity Fund commenced operations on May 21, 1957. The Wilshire VIT Balanced Fund and the Income Fund each commenced operations on January 1, 1983. The Wilshire VIT Small Cap Growth Fund , Wilshire VIT International Equity Fund and Wilshire VIT Socially Responsible Fund each commenced operations on March 10, 1997. The Dow Jones Wilshire 5000 Index Portfolio and the Wilshire Large Company Growth Portfolio were added to the Separate Account on May 1, 2000. The Ariel Fund and the Ariel Appreciation Fund were added to the Separate Account on May 1, 2001. The Delaware VIP Growth Opportunities Series — Service Class, Royce Capital Fund Small-Cap Portfolio, Lord Abbett Series Fund Growth Opportunities Portfolio, Goldman Sachs VIT Structured Small Cap Equity Fund, Delaware VIP Trend Series — Service Class and Dreyfus Investment Portfolio: Mid Cap Stock Portfolio — Service Shares were added to the Separate Account on June 1, 2004. The T. Rowe Price Equity Income Portfolio VIP II, AllianceBernstein VPS Small/Mid Cap Value Portfolio, AllianceBernstein VPS Small Cap Growth Portfolio, T. Rowe Price Prime Reserve Portfolio, Wilshire Variable Insurance Trust 2015 ETF Fund, Wilshire Variable Insurance Trust 2025 ETF Fund, and Wilshire Variable Insurance Trust 2035 ETF Fund were added to the Separate Account on May 1, 2006. The Dreyfus Investment Portfolios: Small Cap Stock Index Portfolio was added on May 1, 2008 and the Delaware VIP REIT Series was added on June 2, 2008. All other Underlying Funds not specified above were added to the Separate Account on August 9, 2000.

1.25 M & E


			Accumulation
			Unit Value			Accumulation Unit		Accumulation Units
			Beginning of			Value End of		Outstanding End of
Subaccount	Year Ended		Period			Period		Period

AllianceBernstein VPS Large Cap Growth Portfolio		12/31/2008	$	28.85		$	17.15		1,094,183
		12/31/2007		25.71			28.85		1,050,301
		12/31/2006		26.20			25.71		1,022,282
		12/31/2005		23.10			26.20		886,468
		12/31/2004		21.58			23.10		778,032
		12/31/2003		17.71			21.58		647,349
		12/31/2002		25.94			17.71		499,185
		12/31/2001		31.81			25.94		344,424
		12/31/2000		40.86	*		31.81		127,242

AllianceBernstein VPS Small/Mid Cap Value Portfolio		12/31/2008	$	19.29		$	12.25		72,556
		12/31/2007		19.24			19.29		49,542
		12/31/2006		18.44	*		19.24		14,224

AllianceBernstein VPS Small Cap Growth Portfolio		12/31/2008	$	14.89		$	8.00		53,591
		12/31/2007		13.26			14.89		25,958
		12/31/2006		14.00	*		13.26		5,079

Ariel Fund^®⁽¹⁾		12/31/2008	$	57.34		$	29.32		586,887
		12/31/2007		59.06			57.34		575,988
		12/31/2006		54.19			59.06		564,283
		12/31/2005		54.37			54.19		533,763
		12/31/2004		45.13			54.37		449,239
		12/31/2003		35.69			45.13		346,642
		12/31/2002		38.11			35.69		236,427
		12/31/2001		34.63	*		38.11		61,005


			Accumulation
			Unit Value			Accumulation Unit		Accumulation Units
			Beginning of			Value End of		Outstanding End of
Subaccount	Year Ended		Period			Period		Period

Ariel Appreciation Fund^®⁽¹⁾⁽²⁾		12/31/2008	$	52.05		$	30.48		926,357
		12/31/2007		53.45			52.05		946,862
		12/31/2006		48.77			53.45		939,718
		12/31/2005		47.99			48.77		894,108
		12/31/2004		42.96			47.99		744,074
		12/31/2003		33.20			42.96		565,684
		12/31/2002		37.51			33.20		380,634
		12/31/2001		34.01	*		37.51		105,004

Davis Value Portfolio		12/31/2008	$	14.62		$	8.62		931,625
		12/31/2007		14.15			14.62		822,784
		12/31/2006		12.45			14.15		757,258
		12/31/2005		11.52			12.45		658,602
		12/31/2004		10.39			11.52		569,355
		12/31/2003		8.10			10.39		455,070
		12/31/2002		9.80			8.10		364,544
		12/31/2001		11.08			9.80		321,139
		12/31/2000		11.55	*		11.08		132,825

Delaware VIP Growth Opportunities Service Class		12/31/2008	$	20.10		$	11.78		78,138
		12/31/2007		18.06			20.10		66,843
		12/31/2006		17.24			18.06		54,586
		12/31/2005		15.70			17.24		29,062
		12/31/2004		14.31	*		15.70		11,013

Delaware VIP Trend Series Service Class		12/31/2008	$	36.50		$	19.16		25,940
		12/31/2007		33.45			36.50		19,740
		12/31/2006		31.56			33.45		13,832
		12/31/2005		30.25			31.56		8,908
		12/31/2004		28.68	*		30.25		1,560

Fidelity VIP Growth Portfolio		12/31/2008	$	44.41		$	23.12		1,276,568
		12/31/2007		35.50			44.41		1,148,690
		12/31/2006		33.72			35.50		1,080,962
		12/31/2005		32.37			33.72		1,031,956
		12/31/2004		31.78			32.37		924,998
		12/31/2003		24.28			31.78		735,345
		12/31/2002		35.27			24.28		568,965
		12/31/2001		43.48			35.27		390,031
		12/31/2000		53.19	*		43.48		161,281

Fidelity VIP Growth & Income Portfolio		12/31/2008	$	18.62		$	10.69		1,163,412
		12/31/2007		16.85			18.62		1,046,349
		12/31/2006		15.12			16.85		973,169
		12/31/2005		14.25			15.12		821,349
		12/31/2004		13.68			14.25		683,112
		12/31/2003		11.22			13.68		484,327
		12/31/2002		13.66			11.22		323,437
		12/31/2001		15.20			13.66		211,580
		12/31/2000		16.04	*		15.20		54,943


			Accumulation
			Unit Value			Accumulation Unit		Accumulation Units
			Beginning of			Value End of		Outstanding End of
Subaccount	Year Ended		Period			Period		Period

Fidelity VIP High Income Portfolio		12/31/2008	$	10.96		$	8.11		571,931
		12/31/2007		10.82			10.96		565,701
		12/31/2006		9.87			10.82		422,299
		12/31/2005		9.77			9.87		321,144
		12/31/2004		9.04			9.77		218,819
		12/31/2003		7.23			9.04		156,838
		12/31/2002		7.08			7.23		83,910
		12/31/2001		8.15			7.08		52,829
		12/31/2000		9.92	*		8.15		31,556

Fidelity VIP Index 500 Portfolio		12/31/2008	$	166.55		$	103.43		392,649
		12/31/2007		160.32			166.55		376,661
		12/31/2006		140.61			160.32		351,103
		12/31/2005		136.18			140.61		313,854
		12/31/2004		124.96			136.18		262,595
		12/31/2003		98.76			124.96		201,115
		12/31/2002		128.98			98.76		143,919
		12/31/2001		148.95			128.98		89,888
		12/31/2000		169.89	*		148.95		34,085

Fidelity VIP Investment Grade Bond Portfolio		12/31/2008	$	16.52		$	15.76		1,184,659
		12/31/2007		16.07			16.52		1,187,080
		12/31/2006		15.62			16.07		1,100,484
		12/31/2005		15.52			15.62		1,007,448
		12/31/2004		15.09			15.52		857,504
		12/31/2003		14.56			15.09		765,200
		12/31/2002		13.39			14.56		578,933
		12/31/2001		12.54			13.39		240,969
		12/31/2000		12.03	*		12.54		21,897

Fidelity VIP Mid Cap Portfolio		12/31/2008	$	42.51		$	25.37		1,253,195
		12/31/2007		37.31			42.51		1,199,517
		12/31/2006		33.61			37.31		1,168,356
		12/31/2005		28.84			33.61		1,057,318
		12/31/2004		23.42			28.84		909,123
		12/31/2003		17.15			23.42		765,087
		12/31/2002		19.30			17.15		644,149
		12/31/2001		20.25			19.30		529,851
		12/31/2000		20.04	*		20.25		233,156

Fidelity VIP Overseas Portfolio		12/31/2008	$	30.37		$	16.82		1,446,180
		12/31/2007		26.27			30.37		1,188,249
		12/31/2006		22.58			26.27		979,081
		12/31/2005		19.25			22.58		774,482
		12/31/2004		17.20			19.25		604,561
		12/31/2003		12.17			17.20		407,324
		12/31/2002		15.50			12.17		293,133
		12/31/2001		19.91			15.50		200,060
		12/31/2000		23.33	*		19.91		71,864

Goldman Sachs VIT Structured Small Cap Equity Fund⁽²⁾		12/31/2008	$	14.37		$	9.37		127,188
		12/31/2007		17.43			14.37		110,600
		12/31/2006		15.72			17.43		88,542
		12/31/2005		15.00			15.72		57,784
		12/31/2004		13.12	*		15.00		16,830


			Accumulation
			Unit Value			Accumulation Unit		Accumulation Units
			Beginning of			Value End of		Outstanding End of
Subaccount	Year Ended		Period			Period		Period

Neuberger Berman Genesis Fund⁽¹⁾		12/31/2008	$	40.32		$	26.69		937,614
		12/31/2007		33.60			40.32		863,942
		12/31/2006		31.80			33.60		824,657
		12/31/2005		27.76			31.80		738,382
		12/31/2004		23.74			27.76		592,938
		12/31/2003		18.30			23.74		472,551
		12/31/2002		19.14			18.30		369,727
		12/31/2001		17.35			19.14		204,094
		12/31/2000		15.88	*		17.35		15,000

Putnam VT Vista Fund		12/31/2008	$	16.00		$	8.61		429,198
		12/31/2007		15.61			16.00		423,487
		12/31/2006		14.99			15.61		427,913
		12/31/2005		13.53			14.99		437,342
		12/31/2004		11.55			13.53		417,950
		12/31/2003		8.78			11.55		405,260
		12/31/2002		12.82			8.78		354,292
		12/31/2001		19.52			12.82		312,576
		12/31/2000		24.81	*		19.52		149,430

Rainier Small/Mid Cap Equity Portfolio⁽¹⁾		12/31/2008	$	55.09		$	27.88		479,194
		12/31/2007		45.92			55.09		429,859
		12/31/2006		40.54			45.92		389,183
		12/31/2005		34.93			40.54		339,335
		12/31/2004		30.13			34.93		278,917
		12/31/2003		20.86			30.13		230,482
		12/31/2002		26.41			20.86		182,294
		12/31/2001		27.84			26.41		129,167
		12/31/2000		30.31	*		27.84		52,763

Royce Capital Fund Small Cap Portfolio		12/31/2008	$	11.14		$	8.01		635,368
		12/31/2007		11.52			11.14		505,535
		12/31/2006		10.09			11.52		371,543
		12/31/2005		9.41			10.09		244,500
		12/31/2004		8.17	*		9.41		85,206

T. Rowe Price Equity Income Portfolio VIP II		12/31/2008	$	25.89		$	16.30		179,843
		12/31/2007		25.44			25.89		93,841
		12/31/2006		23.12	*		25.44		19,054

T. Rowe Price Prime Reserve Portfolio		12/31/2008	$	1.06		$	1.08		5,052,384
		12/31/2007		1.02			1.06		1,821,574
		12/31/2006		1.00	*		1.02		776,113

Wells Fargo Advantage Discovery Fund (formerly Strong Mid Cap)		12/31/2008	$	19.45		$	10.69		675,612
		12/31/2007		16.10			19.45		606,124
		12/31/2006		14.21			16.10		566,905
		12/31/2005		16.94	*		14.21		571,068
		12/31/2004		14.39			16.94		455,021
		12/31/2003		10.86			14.39		424,282
		12/31/2002		17.61			10.86		351,842
		12/31/2001		25.76			17.61		264,967
		12/31/2000		36.15	*		25.76		130,119


			Accumulation
			Unit Value			Accumulation Unit		Accumulation Units
			Beginning of			Value End of		Outstanding End of
Subaccount	Year Ended		Period			Period		Period

Dow Jones Wilshire 5000 Index Portfolio Investment⁽¹⁾		12/31/2008	$	12.10		$	7.52		1,262,690
		12/31/2007		11.70			12.10		1,144,141
		12/31/2006		10.34			11.70		1,035,532
		12/31/2005		9.92			10.34		886,643
		12/31/2004		9.03			9.92		687,189
		12/31/2003		7.06			9.03		472,140
		12/31/2002		9.07			7.06		317,084
		12/31/2001		10.38			9.07		184,599
		12/31/2000		12.16	*		10.38		36,476

Wilshire Large Co. Growth Portfolio Investment⁽¹⁾		12/31/2008	$	39.13		$	22.48		490,423
		12/31/2007		34.06			39.13		455,744
		12/31/2006		32.86			34.06		420,405
		12/31/2005		30.67			32.86		360,477
		12/31/2004		29.11			30.67		284,345
		12/31/2003		23.31			29.11		204,673
		12/31/2002		30.17			23.31		142,169
		12/31/2001		36.63			30.17		84,544
		12/31/2000		45.85	*		36.63		15,529

Wilshire Large Co. Value Portfolio Investment⁽¹⁾		12/31/2008	$	29.44		$	17.01		1,078,702
		12/31/2007		30.42			29.44		1,006,488
		12/31/2006		25.99			30.42		925,411
		12/31/2005		24.09			25.99		834,983
		12/31/2004		21.60			24.09		686,425
		12/31/2003		17.02			21.60		576,488
		12/31/2002		20.82			17.02		443,150
		12/31/2001		21.34			20.82		253,308
		12/31/2000		20.06	*		21.34		23,157

Wilshire Small Co. Growth Portfolio Investment⁽¹⁾		12/31/2008	$	24.30		$	14.59		135,420
		12/31/2007		22.69			24.30		134,021
		12/31/2006		20.67			22.69		140,208
		12/31/2005		20.20			20.67		143,219
		12/31/2004		17.47			20.20		112,451
		12/31/2003		12.91			17.47		84,432
		12/31/2002		15.19			12.91		58,508
		12/31/2001		15.87			15.19		25,816
		12/31/2000		17.80	*		15.87		7,467

Wilshire Small Co. Value Portfolio Investment⁽¹⁾		12/31/2007	$	27.65		$	18.36		142,449
		12/31/2007		29.00			27.65		153,631
		12/31/2006		24.54			29.00		145,709
		12/31/2005		23.32			24.54		142,596
		12/31/2004		19.44			23.32		129,769
		12/31/2003		14.43			19.44		114,100
		12/31/2002		15.88			14.43		111,169
		12/31/2001		13.72			15.88		77,121
		12/31/2000		12.34	*		13.72		5,681

Wilshire VIT 2015 ETF Fund		12/31/2008	$	10.83		$	8.09		1,347,691
		12/31/2007		10.46			10.83		676,295
		12/31/2006		9.98	*		10.46		179,111


			Accumulation
			Unit Value			Accumulation Unit		Accumulation Units
			Beginning of			Value End of		Outstanding End of
Subaccount	Year Ended		Period			Period		Period

Wilshire VIT 2025 ETF Fund		12/31/2008	$	10.86		$	7.70		968,800
		12/31/2007		10.52			10.86		509,965
		12/31/2006		9.97	*		10.52		101,522

Wilshire VIT 2035 ETF Fund		12/31/2008	$	10.86		$	7.17		834,498
		12/31/2007		10.49			10.86		236,039
		12/31/2006		9.96	*		10.49		27,795

Wilshire VIT Balanced Fund		12/31/2008	$	22.96		$	16.63		8,892,355
		12/31/2007		22.55			22.96		10,080,198
		12/31/2006		20.46			22.55		11,010,276
		12/31/2005		19.87			20.46		12,018,094
		12/31/2004		18.59			19.87		13,033,346
		12/31/2003		15.74			18.59		13,967,082
		12/31/2002		17.38			15.74		14,684,684
		12/31/2001		17.42			17.38		16,148,759
		12/31/2000		17.27			17.42		17,434,293
		12/31/1999		18.90			17.27		22,591,194

Wilshire VIT Equity Fund		12/31/2008	$	26.17		$	15.47		9,083,835
		12/31/2007		25.93			26.17		10,027,045
		12/31/2006		22.45			25.93		10,978,177
		12/31/2005		21.47			22.45		12,143,394
		12/31/2004		19.74			21.47		13,354,870
		12/31/2003		15.67			19.74		14,334,218
		12/31/2002		19.69			15.67		15,070,307
		12/31/2001		20.82			19.69		16,474,940
		12/31/2000		21.92			20.82		17,693,804
		12/31/1999		24.34			21.92		22,490,546

Wilshire VIT Income Fund		12/31/2008	$	18.00		$	16.66		1,334,895
		12/31/2007		17.49			18.00		1,230,297
		12/31/2006		17.03			17.49		1,245,617
		12/31/2005		16.91			17.03		1,260,463
		12/31/2004		16.32			16.91		1,201,525
		12/31/2003		15.39			16.32		1,128,161
		12/31/2002		14.27			15.39		1,105,681
		12/31/2001		13.27			14.27		896,686
		12/31/2000		12.24			13.27		806,285
		12/31/1999		13.24			12.24		1,032,770

Wilshire VIT International Equity Fund		12/31/2008	$	16.66		$	9.26		2,802,578
		12/31/2007		15.51			16.66		2,877,828
		12/31/2006		12.69			15.51		2,897,834
		12/31/2005		11.67			12.69		2,985,537
		12/31/2004		10.68			11.67		3,034,963
		12/31/2003		8.16			10.68		3,018,220
		12/31/2002		10.46			8.16		2,911,478
		12/31/2001		14.39			10.46		2,877,968
		12/31/2000		17.52			14.39		2,621,364
		12/31/1999		12.13			17.52		1,298,573


			Accumulation
			Unit Value		Accumulation Unit		Accumulation Units
			Beginning of		Value End of		Outstanding End of
Subaccount	Year Ended		Period		Period		Period

Wilshire VIT Small Cap Growth Fund		12/31/2008	$	15.06	$	7.97		3,133,067
		12/31/2007		13.38		15.06		3,318,273
		12/31/2006		12.17		13.38		3,585,367
		12/31/2005		11.88		12.17		3,884,610
		12/31/2004		11.52		11.88		4,241,664
		12/31/2003		7.33		11.52		4,454,821
		12/31/2002		12.16		7.33		4,309,422
		12/31/2001		17.54		12.16		4,343,366
		12/31/2000		19.76		17.54		4,245,836
		12/31/1999		12.38		19.76		2,731,955

Wilshire VIT Socially Responsible Fund		12/31/2008	$	19.74	$	11.63		3,586,901
		12/31/2007		20.53		19.74		3,955,740
		12/31/2006		17.25		20.53		4,147,538
		12/31/2005		16.61		17.25		4,346,986
		12/31/2004		14.85		16.61		4,566,563
		12/31/2003		11.70		14.85		4,696,964
		12/31/2002		13.70		11.70		4,762,269
		12/31/2001		14.96		13.70		4,931,921
		12/31/2000		13.81		14.96		4,744,087
		12/31/1999		12.99		13.81		4,001,791


*	Inception price on date Underlying Fund was added to the Separate Account.


⁽¹⁾	These Subaccounts are not available as Variable Investment Options in Non-Qualified Contracts.

⁽²⁾	On or after May 1, 2008, Contract Owners generally may not begin or increase premium payment allocations or make new transfers to the following Subaccounts. However, if Contract Owners are currently participating in the dollar cost averaging program or the rebalancing program with allocations to the following Subaccounts, they may continue the program(s), but may not begin or increase allocations to the following Subaccounts. Additionally, if they are currently allocating Net Premium to the following Subaccounts, Contract Owners may continue those allocations.

Ariel Appreciation Fund

Goldman Sachs VIT Structured Small Cap Equity Fund

TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY


TOPICPAGE
General Information and History			1
Tax Status of the Contracts			1
Underwriter			2
Independent Registered Public Accounting Firm			2
Financial Statements			2
EX-99.9
EX-99.10

Horace Mann Life Insurance Company (“HMLIC”) sponsors the Horace Mann Life Insurance Company Separate Account (the “Separate Account”). HMLIC is a wholly-owned subsidiary of Allegiance Life Insurance Company, whose business is to engage in the business of insurance. HMLIC is an indirect wholly-owned subsidiary of Horace Mann Educators Corporation (“HMEC”), a publicly-held insurance holding company traded on the New York Stock Exchange.

TAX STATUS OF THE CONTRACTS

Tax law imposes several requirements that variable annuities must satisfy in order to receive the tax treatment normally accorded to annuity contracts.

Diversification Requirements—The Internal Revenue Code (“Code”) requires that the investments of the Separate Account be “adequately diversified” in order for the Contracts to be treated as annuity contracts for federal income tax purposes. The Separate Account intends to comply with these diversification requirements.

Contract Owner Control—In certain circumstances, owners of variable annuity contracts have been considered for federal income tax purposes to be the owners of the assets of the separate account supporting their contracts due to their ability to direct their investments to particular subaccounts of a separate account. When this is the case, the contract owners have been currently taxed on income and gains attributable to the variable account assets. There is limited guidance in this area, and some features of Our Contracts, such as the flexibility of a Contract Owner to allocate premium payments and transfer amounts among the investment divisions of the Separate Account, have not been explicitly addressed in published rulings. While we believe that the Contracts do not give Contract Owners investment control over Separate Account assets, we reserve the right to modify the Contracts as necessary to prevent a Contract Owner from being treated as the owner of the Separate Account assets supporting the Contract.

Required Distributions—To be treated as an annuity contract for federal income tax purposes, Section 72(s) of the Code requires any Non-Qualified contract to contain certain provisions specifying how interest in the Non-Qualified contract will be distributed in the event of the death of any owner of the Non-Qualified contract. Specifically, Section 72(s) requires that (a) if any Contract Owner dies on or after the annuity starting date, but before the time the entire interest in the contract has been distributed, the entire interest in the contract will be distributed at least as rapidly as under the method of distribution being used as of the date of such contract owner’s death; and (b) if any contract owner dies before the annuity starting date, the entire interest in the contract will be distributed within five years after the date of such contract owner’s death. These requirements will be considered satisfied as to any portion of a contract owner’s interest which is payable to or for the benefit of a designated beneficiary and which is distributed over the life of such designated beneficiary or over a period not extending beyond the life expectancy of that beneficiary, provided that such distributions begin within one year of the contract owner’s death. The designated beneficiary refers to a natural person designated by the contract owner as a beneficiary and to whom the death benefit is payable. However, if the designated beneficiary is the surviving spouse of the deceased contract owner, the contract may be continued with the surviving spouse as the new contract owner.

Contracts providing non-qualified retirement annuities (i.e., Contracts sold independently of any formal retirement or pension plan) contain provisions that are intended to comply with these Code requirements, although no regulations interpreting these requirements have yet been issued. We intend to review such provisions and modify them if necessary to assure that they comply with the applicable requirements when such requirements are clarified by regulation or otherwise. Other rules may apply to Contracts sold as investment vehicles for qualified retirement plans and are discussed further in the accompanying prospectus.

UNDERWRITER

HMLIC offers and sells the Contracts on a continuous basis through its licensed life insurance sales personnel who are also registered representatives of Horace Mann Investors, Inc. (“HM Investors”), a broker/dealer registered with the Securities and Exchange Commission and a member of FINRA. HM Investors serves as principal underwriter of the Separate Account. HM Investors is located at One Horace Mann Plaza, Springfield, Illinois 62715-0001. HM Investors is an affiliate of HMLIC and a wholly-owned subsidiary of HMEC.

HMLIC contracts with HM Investors to distribute the variable Contracts of HMLIC. The Contracts also may be offered and sold through independent agents and other, unaffiliated broker-dealers that have entered into selling agreements with HMLIC and HM Investors. (HM Investors and such unaffiliated broker-dealers shall be referred to herein collectively as “selling firms.”). HM Investors passes through any commissions it receives for sales of the Contract to its registered representatives and to other selling firms for their sales of the Contract.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The financial statements of the Separate Account as of December 31, 2008, and for the periods disclosed in the financial statements, and those financial statements and schedules of Horace Mann Life Insurance Company as of December 31, 2008 and 2007, and for each of the three years in the period ended December 31, 2008, appearing herein have been audited by KPMG LLP, independent registered public accounting firm, as set forth in their respective reports thereon appearing elsewhere herein, and are included in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. The principal business address of KPMG LLP is 303 East Wacker Drive, Chicago, Illinois 60601.

The KPMG LLP report dated April 29, 2009, of Horace Mann Life Insurance Company includes explanatory language that states that Horace Mann Life Insurance Company prepared the statutory financial statements using statutory accounting practices prescribed or permitted by the Illinois Department of Financial and Professional Regulation—Division of Insurance, which practices differ from accounting principles generally accepted in the United States of America. Accordingly, the KPMG LLP audit report states that the statutory financial statements are not presented fairly in conformity with accounting principles generally accepted in the United States of America and further states that those statements are presented fairly, in all material respects, in conformity with statutory accounting practices.

FINANCIAL STATEMENTS

Audited financial statements of HMLIC and of the Separate Account are included herein. The financial statements for HMLIC should be considered only as bearing upon the ability of HMLIC to meet its obligations under the Contracts.

Report of Independent Registered Public Accounting Firm

The Contract Owners

Horace Mann Life Insurance Company Separate Account and

The Board of Directors and Stockholder

Horace Mann Life Insurance Company:

We have audited the accompanying statements of net assets for each of the sub-accounts, listed in Note 1, comprising the Horace Mann Life Insurance Company Separate Account (the Account) as of December 31, 2008, and the related statements of operations for the year then ended, the statement of changes in net assets for each of the years or periods in the two-year period then ended and the financial highlights for each of the years or periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement and financial highlight presentation. Our procedures included confirmation of securities owned as of December 31, 2008, by correspondence with the third party administrator of the underlying sub-accounts. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the respective sub-accounts fo the Horace Mann Life Insurance Company Separate Account as of December 31, 2008, and the results of its operations for the year ended and the financial highlights for each of the years or periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.

KPMG LLP

Chicago, Illinois

April 29, 2009

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY

SEPARATE ACCOUNT

STATEMENT OF NET ASSETS

DECEMBER 31, 2008


	ALLIANCE			ALLIANCE			ALLIANCE
	BERNSTEIN			BERSTEIN			BERSTEIN															DELAWARE
	VPS LARGE CAP			VPS SMALL/MID			VPS SMALL						ARIEL			CREDIT SUISSE			DAVIS			VIP GROWTH
	GROWTH			CAP VALUE			CAP GROWTH			ARIEL			APPRECIATION			U.S. EQUITY FLEX I			VALUE			OPPORTUNITIES
	PORTFOLIO			PORTFOLIO			PORTFOLIO			FUND			FUND			PORTFOLIO			PORTFOLIO			SERVICE CLASS


ASSETS

Investments at market value	$	20,099,299		$	1,078,565		$	495,480		$	18,352,661		$	30,199,392		$	2,122,754		$	8,864,063		$	1,084,299



TOTAL ASSETS	$	20,099,299		$	1,078,565		$	495,480		$	18,352,661		$	30,199,392		$	2,122,754		$	8,864,063		$	1,084,299



NET ASSETS

Net Assets (Indefinite units authorized)

Active Contract Owners		20,099,299			1,078,565			495,480			18,352,661			30,199,392			2,122,754			8,864,063			1,084,299

Retired Contract Owners		-			-			-			-			-			-			-			-



TOTAL NET ASSETS	$	20,099,299		$	1,078,565		$	495,480		$	18,352,661		$	30,199,392		$	2,122,754		$	8,864,063		$	1,084,299



Total units		1,170,219			87,935			61,861			625,151			989,534			180,757			1,025,090			91,894

Blended unit value (Net assets divided by total units held)	$	17.18		$	12.27		$	8.01		$	29.36		$	30.52		$	11.74		$	8.65		$	11.80

INVESTMENTS

Cost of investments	$	25,583,662		$	1,764,293		$	779,777		$	35,458,711		$	54,108,168		$	2,672,173		$	12,893,384		$	1,744,139

Unrealized appreciation (depreciation) on investments	$	(5,484,363	)	$	(685,728	)	$	(284,297	)	$	(17,106,050	)	$	(23,908,776	)	$	(549,419	)	$	(4,029,321	)	$	(659,840	)

Number of shares in underlying mutual funds		1,114,769			109,277			59,986			777,654			1,386,566			209,966			1,073,131			98,842

Total Net Assets Represented by:

Number of units outstanding:

M&E Rate .0000		5			-			-			6			2			8			17			-
M&E Rate .0029		-			-			-			-			-			-			-			-

M&E Rate .0039		-			-			-			-			-			-			-			-
M&E Rate .0095		73,572			15,047			7,502			37,198			60,944			4,470			88,678			10,665
M&E Rate .0125		1,094,183			72,556			53,591			586,887			926,357			176,279			931,625			78,138

M&E Rate .0145		1,158			240			169			304			234			-			3,038			1,826
M&E Rate .0155		711			41			127			132			429			-			1,017			146

M&E Rate .0165		590			51			472			624			1,568			-			715			1,119
Retired Payout		-			-			-			-			-			-			-			-

Accumulation Unit Value (Net Assets Divided by units outstanding)

M&E Rate .0000	$	19.01		$	0.00		$	0.00		$	32.20		$	33.59		$	13.02		$	9.63		$	0.00

M&E Rate .0029	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00
M&E Rate .0039	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0095	$	17.49		$	12.34		$	8.07		$	29.98		$	31.16		$	12.00		$	8.91		$	11.94
M&E Rate .0125	$	17.15		$	12.25		$	8.00		$	29.32		$	30.48		$	11.74		$	8.62		$	11.78

M&E Rate .0145	$	17.33		$	12.18		$	7.94		$	26.96		$	29.11		$	0.00		$	8.82		$	11.97
M&E Rate .0155	$	17.27		$	12.14		$	7.93		$	26.88		$	29.03		$	0.00		$	8.79		$	11.96

M&E Rate .0165	$	17.24		$	12.10		$	7.91		$	26.81		$	28.93		$	0.00		$	8.77		$	11.90
Retired Payout	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

See accompanying notes to the financial statements.

F-1

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY

SEPARATE ACCOUNT

STATEMENT OF NET ASSETS

DECEMBER 31, 2008


										DREYFUS SMALL						FIDELITY			FIDELITY						FIDELITY
							DREYFUS			CAP STOCK			FIDELITY			VIP GROWTH			VIP HIGH			FIDELITY			VIP INVESTMENT
	DELAWARE VIP			DELAWARE VIP			MIDCAP STOCK			INDEX			VIP GROWTH			& INCOME			INCOME			VIP INDEX 500			GRADE BOND
	REIT SERIES			TREND SERIES			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO


ASSETS

Investments at market value	$	393,784		$	617,905		$	583,155		$	57,261		$	31,529,187		$	13,547,219		$	5,221,797		$	43,727,911		$	21,290,055



TOTAL ASSETS	$	393,784		$	617,905		$	583,155		$	57,261		$	31,529,187		$	13,547,219		$	5,221,797		$	43,727,911		$	21,290,055



NET ASSETS

Net Assets (Indefinite units authorized)

Active Contract Owners		393,784			617,905			583,155			57,261			31,529,187			13,547,219			5,221,797			43,727,911			21,290,055

Retired Contract Owners		-			-			-			-			-			-			-			-			-



TOTAL NET ASSETS	$	393,784		$	617,905		$	583,155		$	57,261		$	31,529,187		$	13,547,219		$	5,221,797		$	43,727,911		$	21,290,055



Total units		59,864			32,161			48,269			5,570			1,361,726			1,265,493			647,474			422,964			1,349,135

Blended unit value (Net assets divided by total units held)	$	6.58		$	19.21		$	12.08		$	10.28		$	23.15		$	10.71		$	8.06		$	103.38		$	15.78

INVESTMENTS

Cost of investments	$	506,020		$	1,149,293		$	1,166,268		$	69,092		$	42,920,732		$	21,073,489		$	7,935,081		$	57,607,606		$	22,785,014

Unrealized appreciation (depreciation) on investments	$	(112,236	)	$	(531,388	)	$	(583,113	)	$	(11,831	)	$	(11,391,545	)	$	(7,526,270	)	$	(2,713,284	)	$	(13,879,695	)	$	(1,494,959	)

Number of shares in underlying mutual funds		59,484			38,048			74,572			5,527			1,352,604			1,566,151			1,342,363			443,938			1,832,192

Total Net Assets Represented by:

Number of units outstanding:

M&E Rate .0000		-			-			-			-			1,700			3,173			20			331			16
M&E Rate .0029		-			-			-			-			-			-			-			-			-

M&E Rate .0039		-			-			-			-			-			-			-			-			-
M&E Rate .0095		9,739			5,445			4,531			872			79,110			91,252			61,904			29,386			158,718
M&E Rate .0125		49,878			25,940			43,738			4,656			1,276,568			1,163,412			571,931			392,649			1,184,659

M&E Rate .0145		203			438			-			14			1,336			4,056			3,353			177			2,050
M&E Rate .0155		23			130			-			14			1,373			1,673			4,960			155			1,102

M&E Rate .0165		21			208			-			14			1,639			1,927			5,306			266			2,590
Retired Payout		-			-			-			-			-			-			-			-			-

Accumulation Unit Value (Net Assets Divided by units outstanding):

M&E Rate .0000	$	0.00		$	0.00		$	0.00		$	0.00		$	26.86		$	11.85		$	8.99		$	114.68		$	17.47
M&E Rate .0029	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0039	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0095	$	6.59		$	19.41		$	12.23		$	10.28		$	23.63		$	10.95		$	8.34		$	102.75		$	16.10
M&E Rate .0125	$	6.58		$	19.16		$	12.07		$	10.28		$	23.12		$	10.69		$	8.11		$	103.43		$	15.76

M&E Rate .0145	$	6.56		$	19.47		$	0.00		$	10.22		$	22.75		$	9.91		$	4.98		$	101.74		$	12.13
M&E Rate .0155	$	6.56		$	19.45		$	0.00		$	10.23		$	22.65		$	9.88		$	4.96		$	102.10		$	12.10

M&E Rate .0165	$	6.56		$	19.42		$	0.00		$	10.23		$	22.61		$	9.86		$	4.95		$	100.94		$	12.06
Retired Payout	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

See accompanying notes to the financial statements.

F-2

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY

SEPARATE ACCOUNT

STATEMENT OF NET ASSETS

DECEMBER 31, 2008


													LORD ABBETT
							GOLDMAN SACHS			J.P. MORGAN			SERIES FUND			NEUBERGER						RAINIER			ROYCE CAPITAL
	FIDELITY			FIDELITY			VIT STRUCTURED			INSURANCE TRUST			GROWTH			BERMAN			PUTNAM			SMALL/MID CAP			FUND
	VIP MID CAP			VIP OVERSEAS			SMALL CAP EQUITY			U.S. EQUITY			OPPORTUNITIES			GENESIS			VT VISTA			EQUITY			SMALL-CAP
	PORTFOLIO			PORTFOLIO			FUND			PORTFOLIO			PORTFOLIO			FUND			FUND			PORTFOLIO			PORTFOLIO


ASSETS

Investments at market value	$	34,008,276		$	26,925,968		$	1,303,227		$	13,856,776		$	1,204,312		$	27,416,110		$	3,962,689		$	14,730,527		$	5,772,683



TOTAL ASSETS	$	34,008,276		$	26,925,968		$	1,303,227		$	13,856,776		$	1,204,312		$	27,416,110		$	3,962,689		$	14,730,527		$	5,772,683



NET ASSETS

Net Assets (Indefinite units authorized)

Active Contract Owners		34,008,276			26,894,977			1,303,227			13,856,776			1,204,312			27,416,110			3,962,689			14,730,527			5,772,683

Retired Contract Owners		-			30,991			-			-			-			-			-			-			-



TOTAL NET ASSETS	$	34,008,276		$	26,925,968		$	1,303,227		$	13,856,776		$	1,204,312		$	27,416,110		$	3,962,689		$	14,730,527		$	5,772,683



Total units		1,339,005			1,599,063			139,157			1,387,930			113,111			1,026,006			459,438			527,636			719,426

Blended unit value (Net assets divided by total units held)	$	25.40		$	16.84		$	9.37		$	9.98		$	10.65		$	26.72		$	8.63		$	27.92		$	8.02

INVESTMENTS

Cost of investments	$	51,542,325		$	42,264,672		$	2,345,904		$	17,037,269		$	1,713,589		$	37,358,843		$	5,495,446		$	22,567,924		$	8,636,423

Unrealized appreciation (depreciation) on investments	$	(17,534,049	)	$	(15,338,704	)	$	(1,042,677	)	$	(3,180,493	)	$	(509,277	)	$	(9,942,733	)	$	(1,532,757	)	$	(7,837,397	)	$	(2,863,740	)

Number of shares in underlying mutual funds		1,876,837			2,230,818			186,709			1,345,317			121,893			1,513,030			476,857			731,043			899,172

Total Net Assets Represented by:

Number of units outstanding:

M&E Rate .0000		126			9			-			12			-			12			8			7			-
M&E Rate .0029		-			-			-			-			-			-			-			-			-

M&E Rate .0039		-			-			-			-			-			-			-			-			-
M&E Rate .0095		80,647			140,583			10,179			74,420			12,777			85,290			29,288			46,500			79,673
M&E Rate .0125		1,253,195			1,446,180			127,188			1,313,498			100,334			937,614			429,198			479,194			635,368

M&E Rate .0145		3,219			4,485			957			-			-			1,415			712			373			1,826
M&E Rate .0155		695			1,406			328			-			-			920			156			726			1,823

M&E Rate .0165		1,123			3,832			505			-			-			755			76			836			736
Retired Payout		-			2,568			-			-			-			-			-			-			-

Accumulation Unit Value (Net Assets Divided by units outstanding):

M&E Rate .0000	$	28.12		$	18.58		$	0.00		$	11.05		$	0.00		$	29.57		$	9.91		$	30.88		$	0.00
M&E Rate .0029	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0039	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0095	$	25.98		$	17.25		$	9.50		$	10.23		$	10.78		$	27.15		$	8.83		$	28.55		$	8.12
M&E Rate .0125	$	25.37		$	16.82		$	9.37		$	9.97		$	10.63		$	26.69		$	8.61		$	27.88		$	8.01

M&E Rate .0145	$	22.93		$	14.98		$	8.28		$	0.00		$	0.00		$	23.77		$	7.99		$	22.70		$	7.65
M&E Rate .0155	$	22.86		$	14.94		$	8.25		$	0.00		$	0.00		$	23.74		$	7.97		$	22.66		$	7.63

M&E Rate .0165	$	22.83		$	14.88		$	8.24		$	0.00		$	0.00		$	23.64		$	7.95		$	22.58		$	7.61
Retired Payout	$	0.00		$	12.07		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

See accompanying notes to the financial statements.

F-3

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY

SEPARATE ACCOUNT

STATEMENT OF NET ASSETS

DECEMBER 31, 2008


																		DOW JONES			DOW JONES			WILSHIRE
				T. ROWE PRICE			T. ROWE PRICE			T. ROWE PRICE		WELLS FARGO			WELLS FARGO			WILSHIRE			WILSHIRE 5000			LARGE CO.
	T. ROWE PRICE			SMALL-CAP			SMALL-CAP			PRIME		ADVANTAGE VT			ADVANTAGE VT			5000 INDEX			INDEX			GROWTH
	EQUITY INCOME			STOCK FUND			VALUE FUND			RESERVES		DISCOVERY			OPPORTUNITY			PORTFOLIO			PORTFOLIO			PORTFOLIO
	PORTFOLIO VIP II			ADVISOR CLASS			ADVISOR CLASS			PORTFOLIO		FUND			FUND			INSTITUTIONAL			INVESTMENT			INSTITUTIONAL


ASSETS

Investments at market value	$	3,485,050		$	9,735,440		$	12,029,462		$	6,610,699	$	7,756,479		$	5,376,556		$	12,723,239		$	10,693,791		$	13,508,340



TOTAL ASSETS	$	3,485,050		$	9,735,440		$	12,029,462		$	6,610,699	$	7,756,479		$	5,376,556		$	12,723,239		$	10,693,791		$	13,508,340



NET ASSETS

Net Assets (Indefinite units authorized)

Active Contract Owners		3,485,050			9,735,440			12,029,462			6,610,699		7,708,959			5,376,556			12,723,239			10,693,791			13,508,340

Retired Contract Owners		-			-			-			-		47,520			-			-			-			-



TOTAL NET ASSETS	$	3,485,050		$	9,735,440		$	12,029,462		$	6,610,699	$	7,756,479		$	5,376,556		$	12,723,239		$	10,693,791		$	13,508,340



Total units		213,595			357,317			345,700			6,137,607		724,582			243,591			1,644,347			1,417,569			580,659

Blended unit value (Net assets divided by total units held)	$	16.32		$	27.25		$	34.80		$	1.08	$	10.70		$	22.07		$	7.74		$	7.54		$	23.26

INVESTMENTS

Cost of investments	$	5,298,447		$	13,879,706		$	15,260,762		$	6,610,699	$	9,743,543		$	9,732,385		$	15,863,932		$	14,022,075		$	20,916,593

Unrealized appreciation (depreciation) on investments	$	(1,813,397	)	$	(4,144,266	)	$	(3,231,300	)	$	-	$	(1,987,064	)	$	(4,355,829	)	$	(3,140,693	)	$	(3,328,284	)	$	(7,408,253	)

Number of shares in underlying mutual funds		243,539			502,345			514,301			6,610,698		693,162			529,189			1,658,823			1,394,235			651,947

Total Net Assets Represented by:

Number of units outstanding:

M&E Rate .0000		-			8			10			-		3,313			7			6			17			1
M&E Rate .0029		-			-			-			-		-			-			-			-			-

M&E Rate .0039		-			-			-			-		-			-			-			-			-
M&E Rate .0095		31,007			14,388			10,522			942,413		39,442			5,816			6,705			145,687			1,787
M&E Rate .0125		179,843			342,921			335,168			5,052,384		675,612			237,768			1,637,636			1,262,690			578,871

M&E Rate .0145		1,262			-			-			33,638		259			-			-			1,291			-
M&E Rate .0155		677			-			-			25,217		619			-			-			6,711			-

M&E Rate .0165		806			-			-			83,955		1,090			-			-			1,173			-
Retired Payout		-			-			-			-		4,247			-			-			-			-

Accumulation Unit Value (Net Assets Divided by units outstanding):

M&E Rate .0000	$	0.00		$	30.17		$	38.57		$	0.00	$	11.19		$	24.42		$	8.64		$	8.38		$	25.39
M&E Rate .0029	$	0.00		$	0.00		$	0.00		$	0.00	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0039	$	0.00		$	0.00		$	0.00		$	0.00	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0095	$	16.42		$	27.82		$	35.57		$	1.08	$	10.81		$	22.52		$	7.93		$	7.75		$	23.85
M&E Rate .0125	$	16.30		$	27.22		$	34.77		$	1.08	$	10.69		$	22.06		$	7.74		$	7.52		$	23.26

M&E Rate .0145	$	16.21		$	0.00		$	0.00		$	1.07	$	10.76		$	0.00		$	0.00		$	7.67		$	0.00
M&E Rate .0155	$	16.19		$	0.00		$	0.00		$	1.07	$	10.73		$	0.00		$	0.00		$	7.65		$	0.00

M&E Rate .0165	$	16.13		$	0.00		$	0.00		$	1.06	$	10.71		$	0.00		$	0.00		$	7.63		$	0.00
Retired Payout	$	0.00		$	0.00		$	0.00		$	0.00	$	11.19		$	0.00		$	0.00		$	0.00		$	0.00

See accompanying notes to the financial statements.

F-4

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY

SEPARATE ACCOUNT

STATEMENT OF NET ASSETS

DECEMBER 31, 2008


	WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE
	LARGE CO. GROWTH			LARGE CO. VALUE			SMALL CO. GROWTH			SMALL CO. VALUE			VIT 2015			VIT 2025			VIT 2035
	PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			MODERATE			MODERATE			MODERATE
	INVESTMENT			INVESTMENT			INVESTMENT			INVESTMENT			FUND			FUND			FUND


ASSETS

Investments at market value	$	12,368,298		$	20,103,855		$	2,164,411		$	2,874,752		$	13,439,577		$	8,836,127		$	6,704,682



TOTAL ASSETS	$	12,368,298		$	20,103,855		$	2,164,411		$	2,874,752		$	13,439,577		$	8,836,127		$	6,704,682



NET ASSETS

Net Assets (Indefinite units authorized)

Active Contract Owners		12,368,298			20,103,855			2,164,411			2,845,491			13,439,577			8,836,127			6,704,682

Retired Contract Owners		-			-			-			29,261			-			-			-



TOTAL NET ASSETS	$	12,368,298		$	20,103,855		$	2,164,411		$	2,874,752		$	13,439,577		$	8,836,127		$	6,704,682



Total units		548,865			1,180,637			147,707			157,778			1,660,001			1,146,385			934,629

Blended unit value (Net assets divided by total units held)	$	22.53		$	17.03		$	14.65		$	18.22		$	8.10		$	7.71		$	7.17

INVESTMENTS

Cost of investments	$	19,254,791		$	38,892,379		$	3,675,176		$	4,795,884		$	16,157,919		$	11,944,937		$	8,505,571

Unrealized appreciation (depreciation) on investments	$	(6,886,493	)	$	(18,788,524	)	$	(1,510,765	)	$	(1,921,132	)	$	(2,718,342	)	$	(3,108,810	)	$	(1,800,889	)

Number of shares in underlying mutual funds		614,726			2,006,372			223,365			263,015			1,675,758			1,171,900			939,031

Total Net Assets Represented by:

Number of units outstanding:

M&E Rate .0000		4			10			11			16			-			-			-
M&E Rate .0029		-			-			-			-			-			-			-

M&E Rate .0039		-			-			-			-			-			-			-
M&E Rate .0095		57,161			97,532			12,276			11,459			243,318			165,236			70,878
M&E Rate .0125		490,423			1,078,702			135,420			142,449			1,347,691			968,800			834,498

M&E Rate .0145		806			1,504			-			313			36,004			4,548			15,439
M&E Rate .0155		234			1,406			-			45			4,329			4,065			5,162

M&E Rate .0165		237			1,483			-			819			28,659			3,736			8,652
Retired Payout		-			-			-			2,677			-			-			-

Accumulation Unit Value (Net Assets Divided by units outstanding):

M&E Rate .0000	$	24.97		$	18.82		$	16.59		$	20.34		$	0.00		$	0.00		$	0.00
M&E Rate .0029	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0039	$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0095	$	23.01		$	17.42		$	15.37		$	18.68		$	8.15		$	7.76		$	7.22
M&E Rate .0125	$	22.48		$	17.01		$	14.59		$	18.36		$	8.09		$	7.70		$	7.17

M&E Rate .0145	$	23.50		$	13.81		$	0.00		$	13.03		$	8.03		$	7.65		$	7.13
M&E Rate .0155	$	23.47		$	13.77		$	0.00		$	13.00		$	8.02		$	7.64		$	7.11

M&E Rate .0165	$	23.43		$	13.73		$	0.00		$	12.95		$	8.00		$	7.62		$	7.10
Retired Payout	$	0.00		$	0.00		$	0.00		$	10.93		$	0.00		$	0.00		$	0.00

See accompanying notes to the financial statements.

F-5

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY

SEPARATE ACCOUNT

STATEMENT OF NET ASSETS

DECEMBER 31, 2008


	WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE VIT			WILSHIRE VIT			WILSHIRE VIT
	VIT BALANCED			VIT EQUITY			VIT INCOME			INTERNATIONAL			SMALL CAP			SOCIALLY
	FUND			FUND			FUND			EQUITY FUND			GROWTH FUND			RESPONSIBLE FUND



ASSETS

Investments at market value	$	150,607,364		$	147,989,855		$	24,667,907		$	26,837,394		$	25,299,484		$	42,492,650



TOTAL ASSETS	$	150,607,364		$	147,989,855		$	24,667,907		$	26,837,394		$	25,299,484		$	42,492,650



NET ASSETS

Net Assets (Indefinite units authorized)

Active Contract Owners		149,767,589			147,087,800			24,513,914			26,837,394			25,299,484			42,492,650

Retired Contract Owners		839,775			902,055			153,993			-			-			-



TOTAL NET ASSETS	$	150,607,364		$	147,989,855		$	24,667,907		$	26,837,394		$	25,299,484		$	42,492,650



Total units		9,066,753			9,547,087			1,484,744			2,895,747			3,172,868			3,652,756

Blended unit value (Net assets divided by total units held)	$	16.61		$	15.50		$	16.61		$	9.27		$	7.97		$	11.63

INVESTMENTS

Cost of investments	$	200,497,861		$	247,755,048		$	28,225,394		$	35,555,493		$	40,983,278		$	68,910,730

Unrealized appreciation (depreciation) on investments	$	(49,890,497	)	$	(99,765,193	)	$	(3,557,487	)	$	(8,718,099	)	$	(15,683,794	)	$	(26,418,080	)

Number of shares in underlying mutual funds		11,702,255			10,945,989			2,318,408			2,965,441			2,911,310			5,076,756

Total Net Assets Represented by:

Number of units outstanding:

M&E Rate .0000		10,302			3,385			16			1,771			447			2,439
M&E Rate .0029		-			248,705			-			-			-			-

M&E Rate .0039		-			77,772			-			-			-			-
M&E Rate .0095		93,333			65,924			127,641			86,876			37,987			58,575
M&E Rate .0125		8,892,355			9,083,835			1,334,895			2,802,578			3,133,067			3,586,901

M&E Rate .0145		3,438			365			3,498			2,271			404			1,457
M&E Rate .0155		702			151			3,324			713			234			104

M&E Rate .0165		1,372			230			897			1,538			729			3,280
Retired Payout		65,251			66,720			14,473			-			-			-

Accumulation Unit Value (Net Assets Divided by units outstanding):

M&E Rate .0000	$	18.44		$	17.16		$	18.49		$	10.27		$	8.85		$	12.89
M&E Rate .0029	$	0.00		$	16.75		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0039	$	0.00		$	16.61		$	0.00		$	0.00		$	0.00		$	0.00

M&E Rate .0095	$	17.05		$	15.86		$	17.08		$	9.50		$	8.17		$	11.92
M&E Rate .0125	$	16.63		$	15.47		$	16.66		$	9.26		$	7.97		$	11.63

M&E Rate .0145	$	15.17		$	15.39		$	12.09		$	9.53		$	8.35		$	10.99
M&E Rate .0155	$	15.13		$	15.32		$	12.00		$	9.55		$	8.34		$	10.87

M&E Rate .0165	$	15.09		$	15.29		$	12.03		$	9.49		$	8.63		$	10.84
Retired Payout	$	12.87		$	13.52		$	10.64		$	0.00		$	0.00		$	0.00

See accompanying notes to the financial statements.

F-6

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF OPERATIONS

DECEMBER 31, 2008


				ALLIANCE			ALLIANCE												CREDIT
	ALLIANCE			BERNSTEIN			BERNTEIN												SUISSE						DELAWARE
	BERNSTEIN			VPS SMALL/MID			VPS SMALL						ARIEL			COHEN & STEERS			U.S. EQUITY			DAVIS			VIP GROWTH
	VPS LARGE CAP			CAP VALUE			CAP GROWTH			ARIEL			APPRECIATION			VIF REALTY			FLEX I			VALUE			OPPORTUNITIES
	GROWTH PORTFOLIO			PORTFOLIO			PORTFOLIO			FUND			FUND			FUND, INC.			PORTFOLIO			PORTFOLIO			SERVICE CLASS



INVESTMENT INCOME

DIVIDEND INCOME DISTRIBUTION	$	-		$	4,885		$	-		$	289,688		$	252,319		$	-		$	2,393		$	130,953		$	-



NET INVESTMENT INCOME		-			4,885			-			289,688			252,319			-			2,393			130,953			-



REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

CAPITAL GAIN DISTRIBUTION		-			115,053			-			-			3,634,168			-			-			233,214			174,157

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(275,155	)		(41,739	)		(9,638	)		(362,277	)		(556,588	)		(655,414	)		15,559			275,867			(43,421	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(12,732,487	)		(581,929	)		(298,652	)		(16,643,440	)		(24,048,142	)		959,221			(1,162,115	)		(6,260,561	)		(842,255	)



NET GAIN (LOSS) ON INVESTMENTS		(13,007,642	)		(508,615	)		(308,290	)		(17,005,717	)		(20,970,562	)		303,807			(1,146,556	)		(5,751,480	)		(711,519	)



EXPENSES

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(308,795	)		(13,492	)		(5,906	)		(319,736	)		(503,274	)		(14,673	)		(33,948	)		(133,141	)		(16,945	)



TOTAL EXPENSES		(308,795	)		(13,492	)		(5,906	)		(319,736	)		(503,274	)		(14,673	)		(33,948	)		(133,141	)		(16,945	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING

FROM OPERATIONS	$	(13,316,437	)	$	(517,222	)	$	(314,196	)	$	(17,035,765	)	$	(21,221,517	)	$	289,134		$	(1,178,111	)	$	(5,753,668	)	$	(728,464	)

See accompanying notes to the financial statements.

F-7

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF OPERATIONS

DECEMBER 31, 2008


										DREYFUS SMALL						FIDELITY			FIDELITY						FIDELITY
							DREYFUS			CAP STOCK			FIDELITY			VIP GROWTH			VIP HIGH			FIDELITY			VIP INVESTMENT
	DELAWARE VIP			DELAWARE VIP			MIDCAP STOCK			INDEX			VIP GROWTH			& INCOME			INCOME			VIP INDEX 500			GRADE BOND
	REIT SERIES			TREND SERIES			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO



INVESTMENT INCOME

DIVIDEND INCOME DISTRIBUTION	$	-		$	-		$	6,110		$	-		$	285,932		$	191,048		$	581,051		$	1,172,987		$	896,301



NET INVESTMENT INCOME		-			-			6,110			-			285,932			191,048			581,051			1,172,987			896,301



REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

CAPITAL GAIN DISTRIBUTION		-			154,990			121,488			-			-			1,922,593			-			616,142			18,070

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(3,485	)		(18,353	)		(56,150	)		(253	)		60,599			16,437			(188,319	)		(6,135	)		(329,884	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(112,236	)		(629,342	)		(455,564	)		(11,831	)		(27,274,126	)		(11,448,039	)		(2,152,528	)		(27,013,751	)		(1,378,793	)



NET GAIN (LOSS) ON INVESTMENTS		(115,721	)		(492,705	)		(390,226	)		(12,084	)		(27,213,527	)		(9,509,009	)		(2,340,847	)		(26,403,744	)		(1,690,607	)



EXPENSES

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(1,551	)		(9,543	)		(9,428	)		(209	)		(524,367	)		(210,189	)		(76,167	)		(665,769	)		(257,557	)



TOTAL EXPENSES		(1,551	)		(9,543	)		(9,428	)		(209	)		(524,367	)		(210,189	)		(76,167	)		(665,769	)		(257,557	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING

FROM OPERATIONS	$	(117,272	)	$	(502,248	)	$	(393,544	)	$	(12,293	)	$	(27,451,962	)	$	(9,528,150	)	$	(1,835,963	)	$	(25,896,526	)	$	(1,051,863	)

See accompanying notes to the financial statements.

F-8

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF OPERATIONS

DECEMBER 31, 2008


													LORD ABBETT												ROYCE
							GOLDMAN SACHS			J.P. MORGAN			SERIES FUND			NEUBERGER						RAINIER			CAPITAL
	FIDELITY			FIDELITY			VIT STRUCTURED			INSURANCE TRUST			GROWTH			BERMAN			PUTNAM			SMALL/MID			FUND
	VIP MID CAP			VIP OVERSEAS			SMALL CAP EQUITY			U.S. EQUITY			OPPORTUNITIES			GENESIS			VT VISTA			CAP EQUITY			SMALL-CAP
	PORTFOLIO			PORTFOLIO			FUND			PORTFOLIO			PORTFOLIO			FUND			FUND			PORTFOLIO			PORTFOLIO



INVESTMENT INCOME

DIVIDEND INCOME DISTRIBUTION	$	113,452		$	953,510		$	11,763		$	242,856		$	-		$	-		$	-		$	-		$	46,304



NET INVESTMENT INCOME		113,452			953,510			11,763			242,856			-			-			-			-			46,304



REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

CAPITAL GAIN DISTRIBUTION		7,633,237			4,014,459			2,968			-			23,862			1,557,046			-			3,182			595,274

NET REALIZED GAIN (LOSS) ON INVESTMENTS		739,182			195,984			(151,780	)		75,313			12,580			856,519			134,592			354,014			(16,652	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(30,249,735	)		(24,523,551	)		(487,796	)		(7,477,005	)		(775,037	)		(15,494,639	)		(3,366,195	)		(13,585,712	)		(2,674,694	)



NET GAIN (LOSS) ON INVESTMENTS		(21,877,316	)		(20,313,108	)		(636,608	)		(7,401,692	)		(738,595	)		(13,081,074	)		(3,231,603	)		(13,228,516	)		(2,096,072	)



EXPENSES

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(536,593	)		(402,922	)		(18,954	)		(209,853	)		(18,566	)		(414,334	)		(68,235	)		(249,179	)		(76,374	)



TOTAL EXPENSES		(536,593	)		(402,922	)		(18,954	)		(209,853	)		(18,566	)		(414,334	)		(68,235	)		(249,179	)		(76,374	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING

FROM OPERATIONS	$	(22,300,457	)	$	(19,762,520	)	$	(643,799	)	$	(7,368,689	)	$	(757,161	)	$	(13,495,408	)	$	(3,299,838	)	$	(13,477,695	)	$	(2,126,142	)

See accompanying notes to the financial statements.

F-9

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF OPERATIONS

DECEMBER 31, 2008


				T. ROWE			T. ROWE			T. ROWE									DOW JONES			DOW JONES			WILSHIRE
	T. ROWE			PRICE			PRICE			PRICE			WELLS FARGO			WELLS FARGO			WILSHIRE 5000			WILSHIRE 5000			LARGE CO.
	PRICE			SMALL-CAP			SMALL-CAP			PRIME			ADVANTAGE VT			ADVANTAGE VT			INDEX			INDEX			GROWTH
	EQUITY INCOME			STOCK FUND			VALUE FUND			RESERVES			DISCOVERY			OPPORTUNITY			PORTFOLIO			PORTFOLIO			PORTFOLIO
	PORTFOLIO VIP II			ADVISOR CLASS			ADVISOR CLASS			PORTFOLIO			FUND			FUND			INSTITUTIONAL			INVESTMENT			INSTITUTIONAL



INVESTMENT INCOME

DIVIDEND INCOME DISTRIBUTION	$	81,002		$	-		$	99,431		$	131,274		$	-		$	153,773		$	239,961		$	184,632		$	-



NET INVESTMENT INCOME		81,002			-			99,431			131,274			-			153,773			239,961			184,632			-



REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

CAPITAL GAIN DISTRIBUTION		90,778			328,544			838,065			-			-			1,815,048			-			-			258,528

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(105,897	)		154,751			456,874			(2	)		192,020			(103,908	)		(32,073	)		129,391			(823,376	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(1,605,946	)		(5,496,800	)		(6,418,707	)		(1	)		(6,147,937	)		(5,527,309	)		(7,727,705	)		(6,402,237	)		(9,308,086	)



NET GAIN (LOSS) ON INVESTMENTS		(1,621,065	)		(5,013,505	)		(5,123,768	)		(3	)		(5,955,917	)		(3,816,169	)		(7,759,778	)		(6,272,846	)		(9,872,934	)



EXPENSES

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(39,129	)		(151,906	)		(189,998	)		(60,008	)		(127,445	)		(94,828	)		(205,699	)		(158,824	)		(229,444	)



TOTAL EXPENSES		(39,129	)		(151,906	)		(189,998	)		(60,008	)		(127,445	)		(94,828	)		(205,699	)		(158,824	)		(229,444	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING

FROM OPERATIONS	$	(1,579,192	)	$	(5,165,411	)	$	(5,214,335	)	$	71,263		$	(6,083,362	)	$	(3,757,224	)	$	(7,725,516	)	$	(6,247,038	)	$	(10,102,378	)

See accompanying notes to the financial statements.

F-10

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF OPERATIONS

DECEMBER 31, 2008


	WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE
	LARGE CO. GROWTH			LARGE CO. VALUE			SMALL CO. GROWTH			SMALL CO. VALUE			VIT 2010			VIT 2010			VIT 2010			VIT 2015			VIT 2025
	PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			AGGRESSIVE			CONSERVATIVE			MODERATE			MODERATE			MODERATE
	INVESTMENT			INVESTMENT			INVESTMENT			INVESTMENT			FUND			FUND			FUND			FUND			FUND



INVESTMENT INCOME

DIVIDEND INCOME DISTRIBUTION	$	-		$	410,635		$	-		$	35,632		$	37,195		$	37,370		$	80,295		$	263,159		$	227,506



NET INVESTMENT INCOME		-			410,635			-			35,632			37,195			37,370			80,295			263,159			227,506



REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

CAPITAL GAIN DISTRIBUTION		242,093			823			121,005			610			30,741			24,203			46,455			178,185			178,955

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(3,555	)		(802,861	)		(3,650	)		(191,433	)		(371,152	)		(279,272	)		(731,683	)		(129,158	)		(36,968	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(8,838,151	)		(13,359,198	)		(1,508,504	)		(1,236,817	)		(3,404	)		(6,630	)		(25,350	)		(2,769,373	)		(3,169,872	)



NET GAIN (LOSS) ON INVESTMENTS		(8,599,613	)		(14,161,236	)		(1,391,149	)		(1,427,640	)		(343,815	)		(261,699	)		(710,578	)		(2,720,346	)		(3,027,885	)



EXPENSES

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(192,322	)		(310,448	)		(34,033	)		(42,727	)		(10,119	)		(13,374	)		(26,087	)		(110,230	)		(97,100	)



TOTAL EXPENSES		(192,322	)		(310,448	)		(34,033	)		(42,727	)		(10,119	)		(13,374	)		(26,087	)		(110,230	)		(97,100	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING

FROM OPERATIONS	$	(8,791,935	)	$	(14,061,049	)	$	(1,425,182	)	$	(1,434,735	)	$	(316,739	)	$	(237,703	)	$	(656,370	)	$	(2,567,417	)	$	(2,897,479	)

See accompanying notes to the financial statements.

F-11

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF OPERATIONS

DECEMBER 31, 2008


	WILSHIRE			WILSHIRE															WILSHIRE VIT			WILSHIRE VIT			WILSHIRE VIT
	VIT 2035			VIT 2045			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE VIT			SHORT TERM			SMALL CAP			SOCIALLY
	MODERATE			MODERATE			VIT BALANCED			VIT EQUITY			VIT INCOME			INTERNATIONAL			INVESTMENT			GROWTH			RESPONSIBLE
	FUND			FUND			FUND			FUND			FUND			EQUITY FUND			FUND			FUND			FUND



INVESTMENT INCOME

DIVIDEND INCOME DISTRIBUTION	$	116,671		$	59,722		$	12,203,994		$	1,815,706		$	1,324,961		$	587,376		$	223,373		$	-		$	842,409



NET INVESTMENT INCOME		116,671			59,722			12,203,994			1,815,706			1,324,961			587,376			223,373			-			842,409



REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

CAPITAL GAIN DISTRIBUTION		110,387			77,817			11,559,488			461,412			572,461			-			2,367			-			3,659,677

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(60,821	)		(1,124,956	)		(133,809	)		(5,613,678	)		(292,611	)		798,665			(196,902	)		(1,172,370	)		(97,887	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(1,803,964	)		9,998			(82,041,255	)		(100,674,532	)		(3,123,365	)		(22,267,448	)		34,841			(21,340,331	)		(34,416,184	)



NET GAIN (LOSS) ON INVESTMENTS		(1,754,398	)		(1,037,141	)		(70,615,576	)		(105,826,798	)		(2,843,515	)		(21,468,783	)		(159,694	)		(22,512,701	)		(30,854,394	)



EXPENSES

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(50,068	)		(20,308	)		(2,279,395	)		(2,473,421	)		(274,107	)		(457,514	)		(33,488	)		(436,004	)		(726,737	)



TOTAL EXPENSES		(50,068	)		(20,308	)		(2,279,395	)		(2,473,421	)		(274,107	)		(457,514	)		(33,488	)		(436,004	)		(726,737	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING

FROM OPERATIONS	$	(1,687,795	)	$	(997,727	)	$	(60,690,977	)	$	(106,484,513	)	$	(1,792,661	)	$	(21,338,921	)	$	30,191		$	(22,948,705	)	$	(30,738,722	)

See accompanying notes to the financial statements.

F-12

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

DECEMBER 31, 2008


	ALLIANCE			ALLIANCE			ALLIANCE
	BERNSTEIN			BERNSTEIN			BERNSTEIN
	VPS LARGE CAP			VPS SMALL/MID			VPS SMALL						ARIEL			COHEN & STEERS			CREDIT SUISSE			DAVIS			DELAWARE
	GROWTH			CAP VALUE			CAP GROWTH			ARIEL			APPRECIATION			VIF REALTY			U.S. EQUITY FLEX I			VALUE			VIP GROWTH
	PORTFOLIO			PORTFOLIO			PORTFOLIO			FUND			FUND			FUND, INC.			PORTFOLIO			PORTFOLIO			OPPORTUNITIES



OPERATIONS

NET INVESTMENT INCOME	$	-		$	4,885		$	-		$	289,688		$	252,319		$	-		$	2,393		$	130,953		$	-

CAPITAL GAIN DISTRIBUTION		-			115,053			-			-			3,634,168			-			-			233,214			174,157

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(275,155	)		(41,739	)		(9,638	)		(362,277	)		(556,588	)		(655,414	)		15,559			275,867			(43,421	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(12,732,487	)		(581,929	)		(298,652	)		(16,643,440	)		(24,048,142	)		959,221			(1,162,115	)		(6,260,561	)		(842,255	)

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(308,795	)		(13,492	)		(5,906	)		(319,736	)		(503,274	)		(14,673	)		(33,948	)		(133,141	)		(16,945	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(13,316,437	)		(517,222	)		(314,196	)		(17,035,765	)		(21,221,517	)		289,134			(1,178,111	)		(5,753,668	)		(728,464	)



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		3,467,165			324,423			202,369			3,527,742			5,087,794			364,335			242,506			1,648,527			229,013

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(428	)		(65	)		(19	)		(544	)		(715	)		(18	)		(23	)		(277	)		(24	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		3,466,737			324,358			202,350			3,527,198			5,087,079			364,317			242,483			1,648,250			228,989

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		(993,455	)		108,854			40,021			(1,543,517	)		(2,643,891	)		(267,602	)		(146,689	)		(158,941	)		(50,091	)

TRANSFERS FROM (TO) OTHER DIVISIONS		(102,765	)		99,861			118,151			(416,421	)		(1,563,581	)		(4,113,436	)		(112,876	)		865,987			75,544

PAYMENTS TO CONTRACT OWNERS		(1,353,983	)		(60,163	)		(8,763	)		(1,781,804	)		(2,604,590	)		(42,569	)		(138,601	)		(874,071	)		(58,236	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(37,584	)		(800	)		(250	)		(7,674	)		(21,882	)		(625	)		(725	)		(10,098	)		(725	)

SURRENDER CHARGES (NOTE 1)		(14,147	)		(445	)		(181	)		(13,736	)		(24,067	)		(990	)		(336	)		(6,843	)		(1,819	)

MORTALITY GUARANTEE ADJUSTMENT		-			-			-			-			-			-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		964,803			471,665			351,328			(235,954	)		(1,770,932	)		(4,060,905	)		(156,744	)		1,464,284			193,662



TOTAL INCREASE (DECREASE) IN NET ASSETS		(12,351,634	)		(45,557	)		37,132			(17,271,719	)		(22,992,449	)		(3,771,771	)		(1,334,855	)		(4,289,384	)		(534,802	)

NET ASSETS:

BEGINNING OF PERIOD 2008		32,450,933			1,124,122			458,348			35,624,380			53,191,841			3,771,771			3,457,609			13,153,447			1,619,101



END OF PERIOD		20,099,299			1,078,565			495,480			18,352,661			30,199,392			-			2,122,754			8,864,063			1,084,299

See accompanying notes to the financial statements.

F-13

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

DECEMBER 31, 2008


										DREYFUS
										SMALL CAP						FIDELITY			FIDELITY						FIDELITY
							DREYFUS			STOCK			FIDELITY			VIP GROWTH			VIP HIGH			FIDELITY			VIP INVESTMENT
	DELAWARE VIP			DELAWARE VIP			MIDCAP STOCK			INDEX			VIP GROWTH			& INCOME			INCOME			VIP INDEX 500			GRADE BOND
	REIT SERIES			TREND SERIES			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO



OPERATIONS

NET INVESTMENT INCOME	$	-		$	-		$	6,110		$	-		$	285,932		$	191,048		$	581,051		$	1,172,987		$	896,301

CAPITAL GAIN DISTRIBUTION		-			154,990			121,488			-			-			1,922,593			-			616,142			18,070

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(3,485	)		(18,353	)		(56,150	)		(253	)		60,599			16,437			(188,319	)		(6,135	)		(329,884	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(112,236	)		(629,342	)		(455,564	)		(11,831	)		(27,274,126	)		(11,448,039	)		(2,152,528	)		(27,013,751	)		(1,378,793	)

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(1,551	)		(9,543	)		(9,428	)		(209	)		(524,367	)		(210,189	)		(76,167	)		(665,769	)		(257,557	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(117,272	)		(502,248	)		(393,544	)		(12,293	)		(27,451,962	)		(9,528,150	)		(1,835,963	)		(25,896,526	)		(1,051,863	)



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		115,179			182,014			113,439			19,723			6,242,747			2,629,607			961,983			6,853,517			2,724,366

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(4	)		(15	)		(4	)		(1	)		(459	)		(661	)		(32	)		(574	)		(325	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		115,175			181,999			113,435			19,722			6,242,288			2,628,946			961,951			6,852,943			2,724,041

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		126,030			(31,051	)		(18,910	)		2,303			(410,509	)		(515,190	)		(379,406	)		(2,214,595	)		(768,011	)

TRANSFERS FROM (TO) OTHER DIVISIONS		280,735			48,642			(27,365	)		54,076			1,295,899			520,503			(265,813	)		360,499			(52,188	)

PAYMENTS TO CONTRACT OWNERS		(10,733	)		(36,231	)		(24,223	)		(6,478	)		(2,503,590	)		(939,863	)		(333,231	)		(2,933,033	)		(2,186,406	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(150	)		(125	)		(398	)		(50	)		(74,217	)		(33,650	)		(9,825	)		(92,941	)		(43,917	)

SURRENDER CHARGES (NOTE 1)		(1	)		(299	)		(542	)		(19	)		(19,584	)		(12,269	)		(6,074	)		(30,246	)		(16,659	)

MORTALITY GUARANTEE ADJUSTMENT		-			-			-			-			-			-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		511,056			162,935			41,997			69,554			4,530,287			1,648,477			(32,398	)		1,942,627			(343,140	)



TOTAL INCREASE (DECREASE) IN NET ASSETS		393,784			(339,313	)		(351,547	)		57,261			(22,921,675	)		(7,879,673	)		(1,868,361	)		(23,953,899	)		(1,395,003	)

NET ASSETS:

BEGINNING OF PERIOD		-			957,218			934,702			-			54,450,862			21,426,892			7,090,158			67,681,810			22,685,058



END OF PERIOD		393,784			617,905			583,155			57,261			31,529,187			13,547,219			5,221,797			43,727,911			21,290,055

See accompanying notes to the financial statements.

F-14

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

DECEMBER 31, 2008


													LORD ABBETT												ROYCE
							GOLDMAN SACHS			J.P. MORGAN			SERIES FUND			NEUBERGER						RAINIER			CAPITAL
	FIDELITY			FIDELITY			VIT STRUCTURED			INSURANCE TRUST			GROWTH			BERMAN			PUTNAM			SMALL/MID			FUND
	VIP MID CAP			VIP OVERSEAS			SMALL CAP EQUITY			U.S. EQUITY			OPPORTUNITIES			GENESIS			VT VISTA			CAP EQUITY			SMALL-CAP
	PORTFOLIO			PORTFOLIO			FUND			PORTFOLIO			PORTFOLIO			FUND			FUND			PORTFOLIO			PORTFOLIO



OPERATIONS

NET INVESTMENT INCOME	$	113,452		$	953,510		$	11,763		$	242,856		$	-		$	-		$	-		$	-		$	46,304

CAPITAL GAIN DISTRIBUTION		7,633,237			4,014,459			2,968			-			23,862			1,557,046			-			3,182			595,274

NET REALIZED GAIN (LOSS) ON INVESTMENTS		739,182			195,984			(151,780	)		75,313			12,580			856,519			134,592			354,014			(16,652	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(30,249,735	)		(24,523,551	)		(487,796	)		(7,477,005	)		(775,037	)		(15,494,639	)		(3,366,195	)		(13,585,712	)		(2,674,694	)

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(536,593	)		(402,922	)		(18,954	)		(209,853	)		(18,566	)		(414,334	)		(68,235	)		(249,179	)		(76,374	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(22,300,457	)		(19,762,520	)		(643,799	)		(7,368,689	)		(757,161	)		(13,495,408	)		(3,299,838	)		(13,477,695	)		(2,126,142	)



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		4,921,609			5,899,434			290,197			2,039,842			206,208			4,073,533			581,536			2,832,802			1,323,344

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(728	)		(753	)		(13	)		(259	)		(29	)		(319	)		(46	)		(217	)		(120	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		4,920,881			5,898,681			290,184			2,039,583			206,179			4,073,214			581,490			2,832,585			1,323,224

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		(2,533,701	)		(158,271	)		(5,534	)		(794,873	)		(72,707	)		(1,658,763	)		(260,268	)		(658,070	)		(73,342	)

TRANSFERS FROM (TO) OTHER DIVISIONS		1,389,306			2,585,804			(70,121	)		(404,768	)		(63,327	)		2,175,821			(66,489	)		663,053			442,943

PAYMENTS TO CONTRACT OWNERS		(2,231,106	)		(1,620,613	)		(40,949	)		(821,630	)		(69,881	)		(1,836,105	)		(274,963	)		(894,646	)		(347,941	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(36,013	)		(38,054	)		(950	)		(30,103	)		(934	)		(51,648	)		(1,890	)		(12,929	)		(6,782	)

SURRENDER CHARGES (NOTE 1)		(15,519	)		(16,164	)		(1,343	)		(9,202	)		(940	)		(11,840	)		(1,903	)		(7,356	)		(8,278	)

MORTALITY GUARANTEE ADJUSTMENT		-			(631	)		-			-			-			-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		1,493,848			6,650,752			171,287			(20,993	)		(1,610	)		2,690,679			(24,023	)		1,922,637			1,329,824



TOTAL INCREASE (DECREASE) IN NET ASSETS		(20,806,609	)		(13,111,768	)		(472,512	)		(7,389,682	)		(758,771	)		(10,804,729	)		(3,323,861	)		(11,555,058	)		(796,318	)

NET ASSETS:

BEGINNING OF PERIOD		54,814,885			40,037,736			1,775,739			21,246,458			1,963,083			38,220,839			7,286,550			26,285,585			6,569,001



END OF PERIOD	$	34,008,276		$	26,925,968		$	1,303,227		$	13,856,776		$	1,204,312		$	27,416,110		$	3,962,689		$	14,730,527		$	5,772,683

See accompanying notes to the financial statements.

F-15

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF CHANGES IN NET ASSETS

DECEMBER 31, 2008


	T. ROWE			T. ROWE			T. ROWE			T. ROWE									DOW JONES			DOW JONES			WILSHIRE
	PRICE			PRICE			PRICE			PRICE			WELLS FARGO			WELLS FARGO			WILSHIRE 5000			WILSHIRE 5000			LARGE CO.
	EQUITY			SMALL-CAP			SMALL-CAP			PRIME			ADVANTAGE VT			ADVANTAGE VT			INDEX			INDEX			GROWTH
	INCOME			STOCK FUND			VALUE FUND			RESERVES			DISCOVERY			OPPORTUNITY			PORTFOLIO			PORTFOLIO			PORTFOLIO
	PORTFOLIO VIP II			ADVISOR CLASS			ADVISOR CLASS			PORTFOLIO			FUND			FUND			INSTITUTIONAL			INVESTMENT			INSTITUTIONAL



OPERATIONS

NET INVESTMENT INCOME	$	81,002		$	-		$	99,431		$	131,274		$	-		$	153,773		$	239,961		$	184,632		$	-

CAPITAL GAIN DISTRIBUTION		90,778			328,544			838,065			-			-			1,815,048			-			-			258,528

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(105,897	)		154,751			456,874			(2	)		192,020			(103,908	)		(32,073	)		129,391			(823,376	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(1,605,946	)		(5,496,800	)		(6,418,707	)		(1	)		(6,147,937	)		(5,527,309	)		(7,727,705	)		(6,402,237	)		(9,308,086	)

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(39,129	)		(151,906	)		(189,998	)		(60,008	)		(127,445	)		(94,828	)		(205,699	)		(158,824	)		(229,444	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(1,579,192	)		(5,165,411	)		(5,214,335	)		71,263			(6,083,362	)		(3,757,224	)		(7,725,516	)		(6,247,038	)		(10,102,378	)



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		1,151,101			1,103,034			1,200,470			560,917			1,561,736			523,267			1,145,081			1,967,219			1,443,256

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(21	)		(176	)		(220	)		(103	)		(104	)		(85	)		(158	)		(263	)		(376	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		1,151,080			1,102,858			1,200,250			560,814			1,561,632			523,182			1,144,923			1,966,956			1,442,880

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		332,969			(700,224	)		(1,185,747	)		1,184,186			(391,989	)		(455,263	)		(777,945	)		(480,123	)		(1,201,229	)

TRANSFERS FROM (TO) OTHER DIVISIONS		744,802			(430,940	)		(599,936	)		4,689,714			893,552			(186,851	)		139,332			(194,750	)		(215,621	)

PAYMENTS TO CONTRACT OWNERS		(92,422	)		(821,579	)		(1,018,993	)		(2,285,740	)		(705,759	)		(565,846	)		(1,231,989	)		(489,566	)		(943,081	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(7,425	)		(4,826	)		(13,399	)		(7,876	)		(8,177	)		(4,242	)		(6,853	)		(32,049	)		(9,139	)

SURRENDER CHARGES (NOTE 1)		(1,644	)		(4,184	)		(3,120	)		(4,255	)		(1,999	)		(652	)		-			(5,962	)		-

MORTALITY GUARANTEE ADJUSTMENT		-			-			-			-			(1,421	)		-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		2,127,360			(858,895	)		(1,620,945	)		4,136,843			1,345,839			(689,672	)		(732,532	)		764,506			(926,190	)



TOTAL INCREASE (DECREASE) IN NET ASSETS		548,168			(6,024,306	)		(6,835,280	)		4,208,106			(4,737,523	)		(4,446,896	)		(8,458,048	)		(5,482,532	)		(11,028,568	)

NET ASSETS:

BEGINNING OF PERIOD		2,936,882			15,759,746			18,864,742			2,402,593			12,494,002			9,823,452			21,181,287			16,176,323			24,536,908



END OF PERIOD	$	3,485,050		$	9,735,440		$	12,029,462		$	6,610,699		$	7,756,479		$	5,376,556		$	12,723,239		$	10,693,791		$	13,508,340

See accompanying notes to the financial statements.

F-16

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF CHANGES IN NET ASSETS

DECEMBER 31, 2008


	WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE
	LARGE CO. GROWTH			LARGE CO. VALUE			SMALL CO. GROWTH			SMALL CO. VALUE			VIT 2010			VIT 2010			VIT 2010			VIT 2015			VIT 2025
	PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			AGGRESSIVE			CONSERVATIVE			MODERATE			MODERATE			MODERATE
	INVESTMENT			INVESTMENT			INVESTMENT			INVESTMENT			FUND			FUND			FUND			FUND			FUND



OPERATIONS

NET INVESTMENT INCOME	$	-		$	410,635		$	-		$	35,632		$	37,195		$	37,370		$	80,295		$	263,159		$	227,506

CAPITAL GAIN DISTRIBUTION		242,093			823			121,005			610			30,741			24,203			46,455			178,185			178,955

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(3,555	)		(802,861	)		(3,650	)		(191,433	)		(371,152	)		(279,272	)		(731,683	)		(129,158	)		(36,968	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(8,838,151	)		(13,359,198	)		(1,508,504	)		(1,236,817	)		(3,404	)		(6,630	)		(25,350	)		(2,769,373	)		(3,169,872	)

MORTALITY AND EXPENSE

RISK CHARGE (NOTE 1)		(192,322	)		(310,448	)		(34,033	)		(42,727	)		(10,119	)		(13,374	)		(26,087	)		(110,230	)		(97,100	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(8,791,935	)		(14,061,049	)		(1,425,182	)		(1,434,735	)		(316,739	)		(237,703	)		(656,370	)		(2,567,417	)		(2,897,479	)



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		2,242,772			3,630,335			282,652			501,970			226,636			263,123			464,759			3,206,898			4,189,411

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(291	)		(518	)		(32	)		(125	)		-			(7	)		(130	)		(177	)		(2,296	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		2,242,481			3,629,817			282,620			501,845			226,636			263,116			464,629			3,206,721			4,187,115

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		(389,807	)		(493,543	)		(107,458	)		(229,198	)		(132,688	)		(24,327	)		(202,496	)		527,905			556,274

TRANSFERS FROM (TO) OTHER DIVISIONS		(138,797	)		(49,269	)		(74,774	)		(264,002	)		(798,402	)		(997,715	)		(1,824,015	)		4,559,688			510,995

PAYMENTS TO CONTRACT OWNERS		(724,429	)		(1,482,672	)		(142,507	)		(252,583	)		(11,866	)		(24,281	)		(127,969	)		(402,519	)		(96,239	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(30,528	)		(19,748	)		(1,004	)		(1,946	)		(1,559	)		(1,400	)		(2,019	)		(10,850	)		(21,917	)

SURRENDER CHARGES (NOTE 1)		(8,572	)		(9,795	)		(770	)		(976	)		(149	)		(879	)		(973	)		(11,914	)		(3,564	)

MORTALITY GUARANTEE ADJUSTMENT		-			-			-			(630	)		-			-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		950,348			1,574,790			(43,893	)		(247,490	)		(718,028	)		(785,486	)		(1,692,843	)		7,869,031			5,132,664



TOTAL INCREASE (DECREASE) IN NET ASSETS		(7,841,587	)		(12,486,259	)		(1,469,075	)		(1,682,225	)		(1,034,767	)		(1,023,189	)		(2,349,213	)		5,301,614			2,235,185



NET ASSETS:

BEGINNING OF PERIOD		20,209,885			32,590,114			3,633,486			4,556,977			1,034,767			1,023,189			2,349,213			8,137,963			6,600,942



END OF PERIOD	$	12,368,298		$	20,103,855		$	2,164,411		$	2,874,752			-			-			-		$	13,439,577		$	8,836,127

See accompanying notes to the financial statements.

F-17

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF CHANGES IN NET ASSETS

DECEMBER 31, 2008


	WILSHIRE			WILSHIRE												WILSHIRE VIT			WILSHIRE VIT			WILSHIRE VIT			WILSHIRE VIT
	VIT 2035			VIT 2045			WILSHIRE			WILSHIRE			WILSHIRE			INTERNATIONAL			SHORT TERM			SMALL CAP			SOCIALLY
	MODERATE			MODERATE			VIT BALANCED			VIT EQUITY			VIT INCOME			EQUITY			INVESTMENT			GROWTH			RESPONSIBLE
	FUND			FUND			FUND			FUND			FUND			FUND			FUND			FUND			FUND



OPERATIONS

NET INVESTMENT INCOME	$	116,671		$	59,722		$	12,203,994		$	1,815,706		$	1,324,961		$	587,376		$	223,373		$	-		$	842,409

CAPITAL GAIN DISTRIBUTION		110,387			77,817			11,559,488			461,412			572,461			-			2,367			-			3,659,677

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(60,821	)		(1,124,956	)		(133,809	)		(5,613,678	)		(292,611	)		798,665			(196,902	)		(1,172,370	)		(97,887	)

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(1,803,964	)		9,998			(82,041,255	)		(100,674,532	)		(3,123,365	)		(22,267,448	)		34,841			(21,340,331	)		(34,416,184	)

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(50,068	)		(20,308	)		(2,279,395	)		(2,473,421	)		(274,107	)		(457,514	)		(33,488	)		(436,004	)		(726,737	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(1,687,795	)		(997,727	)		(60,690,977	)		(106,484,513	)		(1,792,661	)		(21,338,921	)		30,191			(22,948,705	)		(30,738,722	)



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		2,896,318			1,380,411			7,577,803			9,050,940			2,228,327			3,315,959			250,643			2,710,431			4,091,871

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(226	)		(47	)		(1,732	)		(1,722	)		(339	)		(403	)		(360	)		(514	)		(738	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		2,896,092			1,380,364			7,576,071			9,049,218			2,227,988			3,315,556			250,283			2,709,917			4,091,133

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		381,160			2,958			(15,088,379	)		(12,725,975	)		(1,315,534	)		(1,592,502	)		436,386			(1,882,107	)		(4,489,228	)

TRANSFERS FROM (TO) OTHER DIVISIONS		2,036,477			(1,794,835	)		(2,278,842	)		(4,004,794	)		2,798,633			(569,970	)		(2,727,653	)		(844,128	)		(2,168,669	)

PAYMENTS TO CONTRACT OWNERS		(94,757	)		(114,656	)		(14,459,212	)		(14,175,295	)		(1,826,618	)		(2,282,773	)		(1,074,826	)		(2,235,613	)		(3,663,560	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(27,399	)		(17,365	)		(116,122	)		(147,395	)		(30,083	)		(30,410	)		(4,115	)		(19,905	)		(49,219	)

SURRENDER CHARGES (NOTE 1)		(5,968	)		(6,038	)		(14,430	)		(4,570	)		(7,131	)		(5,243	)		(2,242	)		(1,767	)		(7,051	)

MORTALITY GUARANTEE ADJUSTMENT		-			-			(13,021	)		16,876			(928	)		-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		5,185,605			(549,572	)		(24,393,935	)		(21,991,935	)		1,846,327			(1,165,342	)		(3,122,167	)		(2,273,603	)		(6,286,594	)



TOTAL INCREASE (DECREASE) IN NET ASSETS		3,497,810			(1,547,299	)		(85,084,912	)		(128,476,448	)		53,666			(22,504,263	)		(3,091,976	)		(25,222,308	)		(37,025,316	)

NET ASSETS:

BEGINNING OF PERIOD		3,206,872			1,547,299			235,692,276			276,466,303			24,614,241			49,341,657			3,091,976			50,521,792			79,517,966



END OF PERIOD	$	6,704,682			-		$	150,607,364		$	147,989,855		$	24,667,907		$	26,837,394			-		$	25,299,484		$	42,492,650

See accompanying notes to the financial statements.

F-18

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

DECEMBER 31, 2007


				ALLIANCE			ALLIANCE
	ALLIANCE			BERNSTEIN			BERNSTEIN												CREDIT SUISSE
	BERNSTEIN			VPS SMALL/MID			VPS SMALL						ARIEL			COHEN & STEERS			U.S. EQUITY			DAVIS			DELAWARE
	VPS LARGE CAP			CAP VALUE			CAP GROWTH			ARIEL			APPRECIATION			VIF REALTY			FLEX I			VALUE			VIP GROWTH
	GROWTH PORTFOLIO			PORTFOLIO			PORTFOLIO			FUND			FUND			FUND, INC.			PORTFOLIO			PORTFOLIO			OPPORTUNITIES



OPERATIONS

NET INVESTMENT INCOME	$	-		$	5,977		$	-		$	113,644		$	282,624		$	35,991		$	-		$	152,634		$	-

CAPITAL GAIN DISTRIBUTION		-			55,898			-			3,138,446			4,983,170			134,986			-			523,903			-

NET REALIZED GAIN (LOSS) ON INVESTMENTS		(88,741	)		15,557			9,659			581,559			812,680			36,645			115,996			429,296			46,943

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		3,952,890			(123,810	)		8,988			(4,450,666	)		(6,818,101	)		(1,046,027	)		(130,892	)		(562,283	)		110,792

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(372,245	)		(9,910	)		(3,051	)		(466,673	)		(692,712	)		(38,992	)		(46,661	)		(155,278	)		(17,897	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		3,491,904			(56,288	)		15,596			(1,083,690	)		(1,432,339	)		(877,397	)		(61,557	)		388,272			139,838



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		3,730,157			401,735			124,469			4,351,617			6,481,295			1,503,376			276,135			1,621,599			285,346

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(466	)		(8	)		(17	)		(704	)		(883	)		(62	)		(26	)		(97	)		(19	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		3,729,691			401,727			124,452			4,350,913			6,480,412			1,503,314			276,109			1,621,502			285,327

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		(161,189	)		259,078			76,837			(356,535	)		(861,119	)		714,821			(119,681	)		339,888			21,352

TRANSFERS FROM (TO) OTHER DIVISIONS		(616,026	)		248,943			177,355			(286,956	)		(731,972	)		735,464			(173,748	)		236,267			27,911

PAYMENTS TO CONTRACT OWNERS		(2,190,885	)		(25,244	)		(13,945	)		(2,956,691	)		(4,444,089	)		(119,612	)		(295,726	)		(1,107,934	)		(31,762	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(27,492	)		(225	)		(225	)		(15,578	)		(32,653	)		(875	)		(519	)		(9,149	)		(550	)

SURRENDER CHARGES (NOTE 1)		(15,549	)		(538	)		(86	)		(28,261	)		(38,681	)		(861	)		(1,126	)		(8,168	)		(1,430	)

MORTALITY GUARANTEE ADJUSTMENT		-			-			-			-			-			-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		718,550			883,741			364,388			706,892			371,898			2,832,251			(314,691	)		1,072,406			300,848



TOTAL INCREASE (DECREASE) IN NET ASSETS		4,210,454			827,453			379,984			(376,798	)		(1,060,441	)		1,954,854			(376,248	)		1,460,678			440,686

NET ASSETS:

BEGINNING OF PERIOD		28,240,479			296,669			78,364			36,001,178			54,252,282			1,816,917			3,833,857			11,692,769			1,178,415



END OF PERIOD	$	32,450,933		$	1,124,122		$	458,348		$	35,624,380		$	53,191,841		$	3,771,771		$	3,457,609		$	13,153,447		$	1,619,101

See accompanying notes to the financial statements.

F-19

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

DECEMBER 31, 2007


										FIDELITY			FIDELITY						FIDELITY
				DREYFUS			FIDELITY			VIP GROWTH			VIP HIGH			FIDELITY			VIP INVESTMENT			FIDELITY			FIDELITY
	DELAWARE VIP			MIDCAP STOCK			VIP GROWTH			& INCOME			INCOME			VIP INDEX 500			GRADE BOND			VIP MID CAP			VIP OVERSEAS
	TREND SERIES			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO



OPERATIONS

NET INVESTMENT INCOME	$	-		$	2,842		$	174,932		$	277,489		$	580,628		$	2,105,689		$	848,901		$	255,827		$	1,031,146

CAPITAL GAIN DISTRIBUTION		4,826			111,104			34,096			768,081			-			-			-			4,513,664			2,043,568

NET REALIZED GAIN (LOSS) ON INVESTMENTS		10,133			(3,023	)		87,867			312,835			(1,559	)		417,373			(197,355	)		1,390,325			568,876

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		52,938			(97,991	)		10,751,508			813,133			(451,580	)		643,433			215,454			1,069,641			1,577,967

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(9,630	)		(11,772	)		(579,627	)		(242,726	)		(75,899	)		(803,001	)		(261,558	)		(638,458	)		(420,305	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		58,267			1,160			10,468,776			1,928,812			51,590			2,363,494			605,442			6,590,999			4,801,252



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED

PAYMENTS RECEIVED		168,499			134,367			6,029,533			2,488,135			1,178,700			7,949,820			2,956,183			5,199,167			5,572,500

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(8	)		(7	)		(487	)		(237	)		(80	)		(663	)		(362	)		(728	)		(457	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		168,491			134,360			6,029,046			2,487,898			1,178,620			7,949,157			2,955,821			5,198,439			5,572,043

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		50,739			(37,149	)		371,402			257,471			505,646			584,817			1,204,139			146,531			1,656,759

TRANSFERS FROM (TO) OTHER DIVISIONS		81,873			(4,039	)		634,839			218,105			433,173			527,692			198,616			(19,205	)		1,839,800

PAYMENTS TO CONTRACT OWNERS		(29,846	)		(82,932	)		(3,645,010	)		(1,458,009	)		(349,957	)		(4,291,016	)		(2,670,540	)		(3,839,903	)		(2,285,638	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(350	)		(250	)		(68,627	)		(36,248	)		(5,325	)		(94,843	)		(18,516	)		(40,218	)		(46,324	)

SURRENDER CHARGES (NOTE 1)		(706	)		(1,625	)		(20,770	)		(11,711	)		(5,633	)		(35,889	)		(24,550	)		(21,040	)		(18,771	)

MORTALITY GUARANTEE ADJUSTMENT		-			-			-			-			-			-			-			-			(44	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		270,201			8,365			3,300,880			1,457,506			1,756,524			4,639,918			1,644,970			1,424,604			6,717,825



TOTAL INCREASE (DECREASE) IN NET ASSETS		328,468			9,525			13,769,656			3,386,318			1,808,114			7,003,412			2,250,412			8,015,603			11,519,077

NET ASSETS:

BEGINNING OF PERIOD		628,750			925,177			40,681,206			18,040,574			5,282,044			60,678,398			20,434,646			46,799,282			28,518,659



END OF PERIOD	$	957,218		$	934,702		$	54,450,862		$	21,426,892		$	7,090,158		$	67,681,810		$	22,685,058		$	54,814,885		$	40,037,736

See accompanying notes to the financial statements.

F-20

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

DECEMBER 31, 2007


							LORD ABBETT									RAINIER			ROYCE
	GOLDMAN SACHS			J.P. MORGAN			SERIES FUND			NEUBERGER						SMALL/MID			CAPITAL						T. ROWE PRICE
	VIT STRUCTURED			INSURANCE TRUST			GROWTH			BERMAN			PUTNAM			CAP			FUND			T. ROWE PRICE			SMALL-CAP
	SMALL CAP			U.S. EQUITY			OPPORTUNITIES			GENESIS			VT VISTA			EQUITY			SMALL-CAP			EQUITY INCOME			STOCK FUND
	EQUITY FUND			PORTFOLIO			PORTFOLIO			FUND			FUND			PORTFOLIO			PORTFOLIO			PORTFOLIO VIP II			ADVISOR CLASS



OPERATIONS

NET INVESTMENT INCOME	$	7,535		$	235,764		$	-		$	76,027		$	-		$	-		$	3,431		$	33,275		$	-

CAPITAL GAIN DISTRIBUTION		195,357			-			161,339			5,532,336			-			2,924,425			298,467			156,309			1,471,889

NET REALIZED GAIN (LOSS) ON INVESTMENTS		1,372			229,204			39,190			856,978			285,925			668,186			81,083			23,672			399,374

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(532,102	)		(96,006	)		150,435			140,143			(9,848	)		732,846			(611,457	)		(232,311	)		(2,157,484	)

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(22,529	)		(267,386	)		(22,052	)		(419,442	)		(90,850	)		(289,857	)		(75,055	)		(22,635	)		(209,062	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(350,367	)		101,576			328,912			6,186,042			185,227			4,035,600			(303,531	)		(41,690	)		(495,283	)



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		416,757			2,316,093			204,137			3,963,170			727,785			2,824,542			1,335,566			993,746			1,316,255

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(18	)		(271	)		(33	)		(325	)		(50	)		(231	)		(127	)		(15	)		(217	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		416,739			2,315,822			204,104			3,962,845			727,735			2,824,311			1,335,439			993,731			1,316,038

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		130,541			(407,781	)		(32,719	)		(52,268	)		37,219			352,071			437,556			787,383			(410,709	)

TRANSFERS FROM (TO) OTHER DIVISIONS		(19,990	)		(376,943	)		(48,292	)		34,633			(155,018	)		884,526			342,409			796,409			(301,173	)

PAYMENTS TO CONTRACT OWNERS		(100,230	)		(1,557,149	)		(123,444	)		(2,219,351	)		(680,429	)		(1,527,568	)		(286,746	)		(186,607	)		(1,176,691	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(150	)		(31,393	)		(755	)		(21,769	)		(2,199	)		(26,582	)		(2,016	)		(966	)		(5,856	)

SURRENDER CHARGES (NOTE 1)		(3,422	)		(13,731	)		(2,967	)		(17,491	)		(3,809	)		(9,615	)		(4,359	)		(841	)		(4,255	)

MORTALITY GUARANTEE ADJUSTMENT		-			-			-			-			-			-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		423,488			(71,175	)		(4,073	)		1,686,599			(76,501	)		2,497,143			1,822,283			2,389,109			(582,646	)



TOTAL INCREASE (DECREASE) IN NET ASSETS		73,121			30,401			324,839			7,872,641			108,726			6,532,743			1,518,752			2,347,419			(1,077,929	)

NET ASSETS:

BEGINNING OF PERIOD		1,702,618			21,216,057			1,638,244			30,348,198			7,177,824			19,752,842			5,050,249			589,463			16,837,675



END OF PERIOD	$	1,775,739		$	21,246,458		$	1,963,083		$	38,220,839		$	7,286,550		$	26,285,585		$	6,569,001		$	2,936,882		$	15,759,746

See accompanying notes to the financial statements.

F-21

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF CHANGES IN NET ASSETS

DECEMBER 31, 2007


	T. ROWE			T. ROWE									DOW JONES			DOW JONES			WILSHIRE			WILSHIRE			WILSHIRE
	PRICE			PRICE			WELLS FARGO			WELLS FARGO			WILSHIRE 5000			WILSHIRE 5000			LARGE CO.			LARGE CO.			LARGE CO.
	SMALL-CAP			PRIME			ADVANTAGE VT			ADVANTAGE VT			INDEX			INDEX			GROWTH			GROWTH			VALUE
	VALUE FUND			RESERVES			DISCOVERY			OPPORTUNITY			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO
	ADVISOR CLASS			PORTFOLIO			FUND			FUND			INSTITUTIONAL			INVESTMENT			INSTITUTIONAL			INVESTMENT			INVESTMENT



OPERATIONS

NET INVESTMENT INCOME	$	78,896		$	82,161		$	-		$	62,552		$	356,415		$	223,790		$	-		$	-		$	325,554

CAPITAL GAIN DISTRIBUTION		2,264,788			-			-			1,465,848			-			-			3,945,236			3,309,923			7,037,710

NET REALIZED GAIN (LOSS) ON INVESTMENTS		1,065,735			-			253,837			182,233			185,007			296,905			(260,875	)		180,370			240,766

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(3,398,040	)		-			1,908,990			(1,042,236	)		525,362			148,133			(718	)		(738,694	)		(8,344,318	)

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(253,802	)		(20,563	)		(136,543	)		(127,939	)		(271,584	)		(186,683	)		(296,557	)		(223,424	)		(400,535	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		(242,423	)		61,598			2,026,284			540,458			795,200			482,145			3,387,086			2,528,175			(1,140,823	)



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		1,466,776			595,513			1,242,988			678,466			1,365,418			2,173,376			1,653,804			2,788,153			4,526,019

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(262	)		(1	)		(92	)		(101	)		(196	)		(232	)		(539	)		(259	)		(594	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		1,466,514			595,512			1,242,896			678,365			1,365,222			2,173,144			1,653,265			2,787,894			4,525,425

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		(531,286	)		1,740,856			64,536			(260,116	)		(668,800	)		358,532			(804,656	)		(12,022	)		688,353

TRANSFERS FROM (TO) OTHER DIVISIONS		(698,484	)		1,396,263			396,089			(302,366	)		206,406			(23,489	)		(366,955	)		(206,359	)		316,429

PAYMENTS TO CONTRACT OWNERS		(1,772,133	)		(2,369,926	)		(861,055	)		(900,769	)		(1,904,873	)		(1,003,799	)		(2,179,891	)		(1,114,753	)		(2,518,989	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(14,105	)		(1,325	)		(7,795	)		(5,212	)		(6,953	)		(31,267	)		(7,033	)		(27,599	)		(37,588	)

SURRENDER CHARGES (NOTE 1)		(6,014	)		(565	)		(1,355	)		(2,218	)		-			(10,061	)		-			(14,529	)		(17,717	)

MORTALITY GUARANTEE ADJUSTMENT		-			-			109			-			-			-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		(1,555,508	)		1,360,815			833,425			(792,316	)		(1,008,998	)		1,463,060			(1,705,270	)		1,412,632			2,955,913



TOTAL INCREASE (DECREASE) IN NET ASSETS		(1,797,931	)		1,422,413			2,859,709			(251,858	)		(213,798	)		1,945,205			1,681,816			3,940,807			1,815,090

NET ASSETS:

BEGINNING OF PERIOD		20,662,673			980,180			9,634,293			10,075,310			21,395,085			14,231,118			22,855,092			16,269,078			30,775,024



END OF PERIOD	$	18,864,742		$	2,402,593		$	12,494,002		$	9,823,452		$	21,181,287		$	16,176,323		$	24,536,908		$	20,209,885		$	32,590,114

See accompanying notes to the financial statements.

F-22

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF CHANGES IN NET ASSETS

DECEMBER 31, 2007


	WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE
	SMALL CO. GROWTH			SMALL CO. VALUE			VIT 2010			VIT 2010			VIT 2010			VIT 2015			VIT 2025			VIT 2035			VIT 2045
	PORTFOLIO			PORTFOLIO			AGGRESSIVE			CONSERVATIVE			MODERATE			MODERATE			MODERATE			MODERATE			MODERATE
	INVESTMENT			INVESTMENT			FUND			FUND			FUND			FUND			FUND			FUND			FUND



OPERATIONS

NET INVESTMENT INCOME	$	-		$	28,566		$	374		$	11,345		$	4,329		$	35,415		$	19,823		$	1,120		$	-

CAPITAL GAIN DISTRIBUTION		389,281			395,611			2,694			1,967			1,693			25,262			16,195			3,770			3,916

NET REALIZED GAIN (LOSS) ON INVESTMENTS		165,158			63,806			8,474			20,857			9,430			54,814			21,709			16,702			9,525

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		(256,494	)		(666,714	)		(2,575	)		(3,760	)		17,540			(2,179	)		15,844			(6,866	)		(18,395	)

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(44,918	)		(58,980	)		(6,422	)		(10,705	)		(15,950	)		(59,124	)		(41,984	)		(18,406	)		(10,312	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		253,027			(237,711	)		2,545			19,704			17,042			54,188			31,587			(3,680	)		(15,266	)



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		335,991			547,749			303,056			342,818			659,132			2,940,274			3,482,384			2,130,845			1,045,147

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(45	)		(109	)		-			(7	)		(82	)		(97	)		(988	)		(91	)		(34	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		335,946			547,640			303,056			342,811			659,050			2,940,177			3,481,396			2,130,754			1,045,113

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		(124,552	)		42,550			420,336			402,865			961,174			1,992,529			1,061,811			535,580			148,092

TRANSFERS FROM (TO) OTHER DIVISIONS		(64,183	)		10,209			192,092			109,386			518,252			1,734,241			795,192			271,693			114,714

PAYMENTS TO CONTRACT OWNERS		(335,391	)		(343,455	)		(35,577	)		(303,697	)		(108,797	)		(506,939	)		(130,672	)		(41,629	)		(29,436	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(918	)		(2,530	)		(800	)		(475	)		(800	)		(2,925	)		(6,400	)		(6,550	)		(3,825	)

SURRENDER CHARGES (NOTE 1)		(1,356	)		(628	)		(1,428	)		(13	)		(1,370	)		(8,354	)		(3,775	)		(3,178	)		(977	)

MORTALITY GUARANTEE ADJUSTMENT		-			74			-			-			-			-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		(190,454	)		253,860			877,679			550,877			2,027,509			6,148,729			5,197,552			2,886,670			1,273,681



TOTAL INCREASE (DECREASE) IN NET ASSETS		62,573			16,149			880,224			570,581			2,044,551			6,202,917			5,229,139			2,882,990			1,258,415



NET ASSETS:

BEGINNING OF PERIOD		3,570,913			4,540,828			154,543			452,608			304,662			1,935,046			1,371,803			323,882			288,884



END OF PERIOD	$	3,633,486		$	4,556,977		$	1,034,767		$	1,023,189		$	2,349,213		$	8,137,963		$	6,600,942		$	3,206,872		$	1,547,299

See accompanying notes to the financial statements.

F-23

2008 ANNUAL REPORT

HORACE MANN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT

STATEMENT OF CHANGES IN NET ASSETS

DECEMBER 31, 2007


	WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE VIT			WILSHIRE VIT			WILSHIRE VIT			WILSHIRE VIT
	VIT BALANCED			VIT EQUITY			VIT INCOME			INTERNATIONAL			SHORT TERM			SMALL CAP			SOCIALLY
	FUND			FUND			FUND			EQUITY FUND			INVESTMENT FUND			GROWTH FUND			RESPONSIBLE FUND



OPERATIONS

NET INVESTMENT INCOME	$	-		$	1,616,819		$	1,064,822		$	434,508		$	106,516		$	-		$	963,484

CAPITAL GAIN DISTRIBUTION		-			29,295,772			34,952			2,552,535			-			-			4,784,565

NET REALIZED GAIN (LOSS) ON INVESTMENTS		3,076,527			3,632,777			(1,810	)		1,271,265			61,177			(447,151	)		1,707,614

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS		4,672,214			(27,321,228	)		(94,918	)		(215,270	)		(23,245	)		7,043,716			(9,456,794	)

MORTALITY AND EXPENSE RISK CHARGE (NOTE 1)		(3,074,135	)		(3,577,735	)		(295,029	)		(609,032	)		(37,220	)		(633,603	)		(1,080,749	)



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		4,674,606			3,646,405			708,017			3,434,006			107,228			5,962,962			(3,081,880	)



CONTRACT OWNERS’ TRANSACTIONS

GROSS STIPULATED PAYMENTS RECEIVED		9,810,428			11,525,082			2,334,124			3,944,868			373,443			3,136,575			5,428,421

SALES AND ADMINISTRATIVE EXPENSES (NOTE 1)		(1,985	)		(2,106	)		(403	)		(488	)		(188	)		(646	)		(796	)



NET CONSIDERATION RECEIVED ON ANNUITY CONTRACTS		9,808,443			11,522,976			2,333,721			3,944,380			373,255			3,135,929			5,427,625

NET TRANSFER FROM (TO) FIXED ACCUMULATION ACCOUNT		(4,999,650	)		(7,130,956	)		(54,177	)		(550,968	)		646,281			(1,507,894	)		(1,690,708	)

TRANSFERS FROM (TO) OTHER DIVISIONS		(2,625,890	)		(4,799,488	)		(5,233	)		208,250			355,421			(1,114,589	)		(1,102,254	)

PAYMENTS TO CONTRACT OWNERS		(23,394,375	)		(26,361,249	)		(2,665,348	)		(3,798,779	)		(1,399,304	)		(4,470,071	)		(6,255,532	)

ANNUAL MAINTENANCE CHARGE (NOTE 1)		(84,673	)		(177,113	)		(17,471	)		(42,313	)		(2,203	)		(28,039	)		(80,666	)

SURRENDER CHARGES (NOTE 1)		(15,255	)		(10,597	)		(8,604	)		(5,131	)		(1,975	)		(2,646	)		(6,030	)

MORTALITY GUARANTEE ADJUSTMENT		5,072			(40,718	)		(2,365	)		-			-			-			-



NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CONTRACT OWNERS’ TRANSACTIONS		(21,306,328	)		(26,997,145	)		(419,477	)		(244,561	)		(28,525	)		(3,987,310	)		(3,707,565	)



TOTAL INCREASE (DECREASE) IN NET ASSETS		(16,631,722	)		(23,350,740	)		288,540			3,189,445			78,703			1,975,652			(6,789,445	)

NET ASSETS:

BEGINNING OF PERIOD		252,323,998			299,817,043			24,325,701			46,152,212			3,013,273			48,546,140			86,307,411



END OF PERIOD	$	235,692,276		$	276,466,303		$	24,614,241		$	49,341,657		$	3,091,976		$	50,521,792		$	79,517,966

See accompanying notes to the financial statements.

F-24


HORACE MANN LIFE INSURANCE COMPANY	2008 ANNUAL REPORT

SEPARATE ACCOUNT

Notes to the Financial Statements

December 31, 2008 and 2007

1. NATURE OF SEPARATE ACCOUNT – Horace Mann Life Insurance Company — Separate Account (“the Separate Account”), a unit investment trust registered under the Investment Company Act of 1940, was established by Horace Mann Life Insurance Company (HMLIC) to fund variable annuity contracts. All assets are invested in shares of AllianceBernstein VPS Large Cap Growth Portfolio, AllianceBernstein VPS Small/Mid Cap Value Portfolio, AllianceBernstein VPS Small Cap Growth Portfolio, Ariel Fund, Ariel Appreciation Fund, Credit Suisse U.S. Equity Flex I Portfolio, Davis Value Portfolio, Delaware VIP Growth Opportunities Service Class, Delaware VIP REIT Series, Delaware VIP Trend Series, Dreyfus Midcap Stock Portfolio, Dreyfus Small Cap Stock Index Portfolio, Fidelity VIP Growth Portfolio, Fidelity VIP Growth & Income Portfolio, Fidelity VIP High Income Portfolio, Fidelity VIP Index 500 Portfolio, Fidelity VIP Investment Grade Bond Portfolio, Fidelity VIP Mid Cap Portfolio, Fidelity VIP Overseas Portfolio, Goldman Sachs VIT Structured Small Cap Equity Fund, J.P. Morgan Insurance Trust U.S. Equity Portfolio, Lord Abbett Series Fund Growth Opportunities Portfolio, Neuberger Berman Genesis Fund, Putnam VT Vista Fund, Rainier Small/Mid Cap Equity Portfolio, Royce Capital Fund Small-Cap Portfolio, T. Rowe Price Equity Income Portfolio VIP II, T. Rowe Price Small-Cap Stock Fund Advisor Class, T. Rowe Price Small-Cap Value Fund Advisor Class, T. Rowe Price VIP Prime Reserves Portfolio, Wells Fargo Advantage VT Discovery Fund, Wells Fargo Advantage VT Opportunity Fund (formerly Strong Opportunity Fund), Dow Jones Wilshire 5000 Index Portfolio-Institutional, Dow Jones Wilshire 5000 Index Portfolio Investment, Wilshire Large Co. Growth Portfolio-Institutional, Wilshire Large Co. Growth Portfolio-Investment, Wilshire Large Co. Value Portfolio-Investment, Wilshire Small Co. Growth Portfolio-Investment, Wilshire Small Co. Value Portfolio-Investment, Wilshire VIT 2015 Moderate Fund, Wilshire VIT 2025 Moderate Fund, Wilshire VIT 2035 Moderate Fund, Wilshire VIT Balanced Fund, Wilshire VIT Equity Fund, Wilshire VIT Income Fund, Wilshire VIT International Equity Fund, Wilshire VIT Small Cap Growth Fund, and Wilshire VIT Socially Responsible Fund. The funds collectively are referred to as “Funds.”

Effective April 30, 2008 Cohen & Steers VIF Realty Fund, Inc. was closed and assets were transferred to T. Rowe VIP Prime Reserves Portfolio. Effective December 19, 2008 the Wilshire VIT 2010 Aggressive Fund, Wilshire VIT 2010 Conservative Fund, and Wilshire VIT 2010 Moderate Fund were closed and assets were transferred into the Wilshire VIT 2015 Moderate Fund. The Wilshire VIT 2045 Moderate Fund was closed and assets were transferred to the Wilshire VIT 2035 Moderate Fund. Wilshire VIT Short-Term Investment Fund was closed and assets were transferred to Wilshire VIT Income Fund.

Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from HMLIC’s other assets and liabilities. The portion of the Separate Accounts assets applicable to the variable annuity contracts is not chargeable with liabilities arising out of any other business HMLIC may conduct.

2. SIGNIFICANT ACCOUNTING POLICIES – Effective January 1, 2008, the Separate Account adopted SFAS No. 157, “Fair Value Measurements”, which provides a framework for measuring fair value in accordance with GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No. 157 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Adoption of SFAS No. 157 had no financial impact on the company.

The carrying amount of the assets approximate fair value. The fair value of the financial assets were measured using the accumulated unit value method (Level 2 inputs - inputs that are observable or can be corroborated by observable market data for the assets). Transactions are recorded on a trade date basis. Income from dividends, and gains from realized gain distributions, are recorded on the ex-distribution date.

The Investment income of the Separate Account is included in the tax return of HMLIC; however, no tax accrues on income attributable to tax-deferred annuities which comprise the majority of the Account contracts. Income attributable to non tax-deferred annuities is not significant.

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

3. EXPENSES AND RELATED PARTY TRANSACTIONS – Certain specified amounts, as described in the annuity contracts, are paid to HMLIC to cover death benefits, surrender charges, and maintenance charges.

For assuming mortality and expense risk, HMLIC applies an asset charge to the Separate Account. The fee for mortality and expense risk may not exceed the annual rate of 1.25% of the daily net assets of the Separate Account (0.45% for mortality risk, and 0.80% for expense risk; these may vary from time to time); however, HMLIC reserves the right to change the fee (subject to the 1.25% ceiling) in the future. The fee is computed on a daily basis.

An annual contract maintenance charge of $25 is deducted from each contract unless the contract value equals or exceeds $10,000 to reimburse HMLIC for expenses incurred in administering the contract. The contract maintenance charge is assessed on the contract anniversary date. This charge may be reduced or eliminated on certain individual contracts and on some group plans. The annual maintenance charge is paid through a redemption of units and is deducted from the subaccount containing the greatest dollar amount or from the fixed portion of the contract when none of the variable subaccount(s) have any value. Charges for the annual maintenance charge cease on the maturity date. No annual maintenance charge is taken, in whole or in part, in the event of a complete surrender unless the surrender occurs on the contract anniversary date.

In certain circumstances in the event of a contract being surrendered or withdrawn from the subaccount, surrender charges are assessed by HMLIC and withheld from the proceeds of the withdrawals on the basis of the amount surrendered or withdrawn from the subaccount(s).

HMLIC contributed $281,070 and $390,424 in the form of bonus credits to the contract owner accounts for the year ended December 31, 2008 and 2007, respectively. These amounts are included in gross stipulated payments received on annuity contracts and are credited at the time the related purchase payment from the contract owner is received.

For the Year Ended December 31, 2008

4. PURCHASE AND SALES OF SEPARATE ACCOUNT FUND SHARES – During the year ended December 31, 2008 purchases and proceeds from sales of fund shares were as follows:


ACCOUNT DIVISION
	ALLIANCE		ALLIANCE
	BERNSTEIN		BERNSTEIN		ALLIANCE								CREDIT
	VPS LARGE		VPS SMALL/MID		BERNSTEIN								SUISSE				DELAWARE
	CAP		CAP		VPS SMALL				ARIEL		COHEN & STEERS		U.S. EQUITY		DAVIS		VIP GROWTH
	GROWTH		VALUE		CAP GROWTH		ARIEL		APPRECIATION		VIF REALTY		FLEX I		VALUE		OPPORTUNITIES
	PORTFOLIO		PORTFOLIO		PORTFOLIO		FUND		FUND		FUND, INC.		PORTFOLIO		PORTFOLIO		SERVICE CLASS


Purchases	$	5,631,233	$	458,230	$	874,106	$	5,834,402	$	10,939,143	$	791,353	$	275,478	$	3,777,911	$	651,259


Sales	$	5,250,380	$	122,446	$	337,735	$	6,462,680	$	9,883,450	$	5,522,344	$	448,218	$	1,806,735	$	343,806

F-25


HORACE MANN LIFE INSURANCE COMPANY	2008 ANNUAL REPORT

SEPARATE ACCOUNT

Notes to the Financial Statements (Continued)

December 31, 2008 and 2007

4. PURCHASE AND SALES OF SEPARATE ACCOUNT FUND SHARES


					DREYFUS		DREYFUS
					MIDCAP STOCK		SMALL				FIDELITY		FIDELITY
			DELAWARE VIP		PORTFOLIO		CAP STOCK		FIDELITY		VIP GROWTH &		VIP HIGH		FIDELITY		FIDELITY VIP
	DELAWARE VIP		TREND SERIES		SERVICE		INDEX		VIP GROWTH		INCOME		INCOME		VIP INDEX 500		INVESTMENT GRADE
	REIT SERIES		SERVICE CLASS		CLASS		PORTFOLIO		PORTFOLIO		PORTFOLIO		PORTFOLIO		PORTFOLIO		BOND PORTFOLIO


Purchases	$	542,125	$	473,208	$	282,050	$	79,653	$	12,162,600	$	6,786,639	$	2,202,729	$	13,206,249	$	6,348,197


Sales	$	36,104	$	183,179	$	178,033	$	10,561	$	7,810,149	$	3,218,272	$	1,918,562	$	10,146,397	$	6,364,407


					GOLDMAN				LORD
					SACHS VIT				ABBETT
					STRUCTURED		J.P. MORGAN		SERIES FUND		NEUBERGER				RAINIER		ROYCE CAPITAL
	FIDELITY		FIDELITY		SMALL CAP		INSURANCE TRUST		GROWTH		BERMAN		PUTNAM		SMALL/MID CAP		FUND
	VIP MID CAP		VIP OVERSEAS		EQUITY		U.S. EQUITY		OPPORTUNITIES		GENESIS		VT VISTA		EQUITY		SMALL-CAP
	PORTFOLIO		PORTFOLIO		FUND		PORTFOLIO		PORTFOLIO		FUND		FUND		PORTFOLIO		PORTFOLIO


Purchases	$	17,364,252	$	17,195,963	$	565,280	$	2,659,838	$	261,089	$	10,494,641	$	1,074,537	$	5,315,009	$	3,410,697


Sales	$	7,921,127	$	5,784,181	$	549,997	$	2,572,517	$	244,823	$	5,804,732	$	1,032,202	$	3,284,356	$	1,532,321


			T. ROWE PRICE		T. ROWE PRICE		T. ROWE PRICE		WELLS FARGO		WELLS FARGO		DOW JONES		DOW JONES		WILSHIRE
	T. ROWE PRICE		SMALL-CAP		SMALL-CAP		VIP PRIME		ADVANTAGE VT		ADVANTAGE VT		WILSHIRE 5000 INDEX		WILSHIRE 5000 INDEX		LARGE CO. GROWTH
	EQUITY INCOME		STOCK FUND		VALUE FUND		RESERVE		DISCOVERY		OPPORTUNITY		PORTFOLIO		PORTFOLIO		PORTFOLIO
	PORTFOLIO VIP II		ADVISOR CLASS		ADVISOR CLASS		PORTFOLIO		FUND		FUND		INSTITUTIONAL		INVESTMENT		INSTITUTIONAL


Purchases	$	2,937,275	$	1,637,693	$	2,265,576	$	10,409,096	$	3,275,422	$	2,618,759	$	2,359,754	$	3,016,188	$	2,149,317


Sales	$	783,161	$	2,165,200	$	2,682,150	$	6,200,990	$	1,865,007	$	1,538,347	$	3,090,096	$	2,096,483	$	3,869,799


	WILSHIRE		WILSHIRE		WILSHIRE		WILSHIRE		WILSHIRE		WILSHIRE		WILSHIRE		WILSHIRE		WILSHIRE
	LARGE CO. GROWTH		LARGE CO. VALUE		SMALL CO. GROWTH		SMALL CO. VALUE		VIT 2010		VIT 2010		VIT 2010		VIT 2015		VIT 2025
	PORTFOLIO		PORTFOLIO		PORTFOLIO		PORTFOLIO		AGGRESSIVE		CONSERVATIVE		MODERATE		MODERATE		MODERATE
	INVESTMENT		INVESTMENT		INVESTMENT		INVESTMENT		FUND		FUND		FUND		FUND		FUND


Purchases	$	3,353,136	$	6,414,536	$	459,008	$	785,594	$	364,798	$	612,533	$	1,034,737	$	10,387,120	$	6,220,036


Sales	$	2,356,573	$	5,541,597	$	419,579	$	1,231,001	$	1,396,161	$	1,629,093	$	3,358,600	$	2,316,132	$	814,979


	WILSHIRE		WILSHIRE										WILSHIRE VIT				WILSHIRE VIT
	VIT 2035		VIT 2045		WILSHIRE		WILSHIRE		WILSHIRE		WILSHIRE VIT		SHORT-TERM		WILSHIRE VIT		SOCIALLY
	MODERATE		MODERATE		VIT BALANCED		VIT EQUITY		VIT INCOME		INTERNATIONAL		INVESTMENT		SMALL CAP		RESPONSIBLE
	FUND		FUND		FUND		FUND		FUND		EQUITY FUND		FUND		GROWTH FUND		FUND


Purchases	$	5,692,619	$	1,665,413	$	33,777,058	$	13,446,621	$	8,718,800	$	5,557,498	$	1,993,417	$	3,277,761	$	9,903,171


Sales	$	390,845	$	3,222,711	$	36,820,715	$	41,248,537	$	5,541,768	$	5,794,313	$	5,120,241	$	7,159,739	$	12,512,302

5. CHANGE IN CONTRACT OWNERS’ ACCOUNT UNITS


ACCOUNT DIVISION
	ALLIANCE
	BERNSTEIN			ALLIANCE			ALLIANCE												CREDIT SUISSE						DELAWARE
	VPS LARGE CAP			BERNSTEIN			BERNSTEIN						ARIEL			COHEN & STEERS			U.S. EQUITY			DAVIS			VIP GROWTH
	GROWTH			VPS SMALL/MID CAP			VPS SMALL CAP			ARIEL			APPRECIATION			VIF REALTY			FLEX I			VALUE			OPPORTUNITIES
	PORTFOLIO			VALUE PORTFOLIO			GROWTH PORTFOLIO			FUND			FUND			FUND, INC.			PORTFOLIO			PORTFOLIO			SERVICE CLASS


Account units outstanding at 01/01/2007		1,097,550			15,417			5,910			608,764			1,013,931			114,737			206,652			824,648			65,145
Consideration received		137,069			19,458			8,568			70,262			116,699			99,408			14,511			110,692			14,430
Net transfers		(28,689	)		24,601			17,263			(10,298	)		(28,713	)		93,358			(15,286	)		38,968			2,519
Payments to contract owners		(82,168	)		(1,251	)		(987	)		(48,269	)		(81,227	)		(8,164	)		(15,598	)		(76,852	)		(1,717	)


Account units outstanding at 12/31/2007		1,123,762			58,225			30,754			620,459			1,020,690			299,339			190,279			897,456			80,377
Consideration received		153,040			20,008			17,752			81,762			120,729			29,100			15,947			138,940			14,576
Net transfers		(45,510	)		13,019			14,304			(38,116	)		(91,587	)		(324,806	)		(16,274	)		58,861			729
Payments to contract owners		(61,073	)		(3,317	)		(949	)		(38,954	)		(60,298	)		(3,633	)		(9,195	)		(70,167	)		(3,788	)
Account units outstanding


at 12/31/2008		1,170,219			87,935			61,861			625,151			989,534			-			180,757			1,025,090			91,894

F-26


HORACE MANN LIFE INSURANCE COMPANY	2008 ANNUAL REPORT

SEPARATE ACCOUNT

Notes to the Financial Statements (Continued)

December 31, 2008 and 2007

5. CHANGE IN CONTRACT OWNERS’ ACCOUNT UNITS


ACCOUNT DIVISION
				DELAWARE						DREYFUS						FIDELITY			FIDELITY						FIDELITY
	DELAWARE			VIP TREND			DREYFUS			SMALL CAP			FIDELITY			VIP GROWTH			VIP HIGH			FIDELITY			VIP INVESTMENT
	VIP REIT			SERIES			MIDCAP STOCK			STOCK INDEX			VIP GROWTH			& INCOME			INCOME			VIP INDEX 500			GRADE BOND
	SERIES			SERVICE CLASS			PORTFOLIO SERVICE			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO


Account units outstanding at 01/01/2007		-			18,746			45,145			-			1,145,122			1,069,015			489,090			378,781			1,269,944
Consideration received		-			4,605			6,259			-			151,527			138,804			107,788			47,639			182,359
Net transfers		-			3,704			(1,862	)		-			22,169			25,338			85,089			6,862			86,159
Payments to contract owners		-			(905	)		(4,008	)		-			(94,349	)		(84,008	)		(32,761	)		(26,652	)		(167,317	)


Account units outstanding at 12/31/2007		-			26,150			45,534			-			1,224,469			1,149,149			649,206			406,630			1,371,145
Consideration received		111,207			6,688			6,677			10,681			184,499			178,759			96,036			50,239			167,548
Net transfers		(45,132	)		626			(2,489	)		(4,128	)		25,490			2,110			(63,252	)		(12,052	)		(52,120	)
Payments to contract owners		(6,211	)		(1,303	)		(1,453	)		(983	)		(72,732	)		(64,525	)		(34,516	)		(21,853	)		(137,438	)
Account units outstanding


at 12/31/2008		59,864			32,161			48,269			5,570			1,361,726			1,265,493			647,474			422,964			1,349,135


ACCOUNT DIVISION
													LORD ABBETT
							GOLDMAN SACHS			J.P. MORGAN			SERIES FUND			NEUBERGER						RAINIER			ROYCE CAPITAL
	FIDELITY			FIDELITY			VIT STRUCTURED			INSURANCE TRUST			GROWTH			BERMAN			PUTNAM			SMALL/MID CAP			FUND
	VIP MID CAP			VIP OVERSEAS			SMALL CAP			U.S. EQUITY			OPPORTUNITIES			GENESIS			VT VISTA			EQUITY			SMALL-CAP
	PORTFOLIO			PORTFOLIO			EQUITY FUND			PORTFOLIO			PORTFOLIO			FUND			FUND			PORTFOLIO			PORTFOLIO


Account units outstanding at 01/01/2007		1,252,753			1,084,179			97,870			1,392,087			112,517			902,579			459,239			429,530			437,927
Consideration received		127,789			193,892			25,079			147,797			12,750			106,867			44,731			53,989			112,027
Net transfers		3,404			120,069			6,982			(49,637	)		(4,907	)		(1,172	)		(7,137	)		22,774			63,792
Payments to contract owners		(95,887	)		(81,602	)		(6,230	)		(101,811	)		(7,856	)		(61,134	)		(42,173	)		(29,899	)		(24,554	)


Account units outstanding at 12/31/2007		1,288,059			1,316,538			123,701			1,388,436			112,504			947,140			454,660			476,394			589,192
Consideration received		142,956			254,211			24,380			160,189			14,557			114,945			46,785			68,249			129,468
Net transfers		(28,582	)		98,426			(5,393	)		(93,029	)		(9,128	)		14,925			(21,105	)		3,876			37,277
Payments to contract owners		(63,428	)		(70,112	)		(3,531	)		(67,666	)		(4,822	)		(51,004	)		(20,902	)		(20,883	)		(36,511	)
Account units outstanding


at 12/31/2008		1,339,005			1,599,063			139,157			1,387,930			113,111			1,026,006			459,438			527,636			719,426


ACCOUNT DIVISION
				T.ROWE PRICE			T.ROWE PRICE			T.ROWE PRICE			WELLS FARGO			WELLS FARGO			DOW JONES			DOW JONES			WILSHIRE
	T. ROWE PRICE			SMALL-CAP			SMALL-CAP			VIP PRIME			ADVANTAGE VT			ADVANTAGE VT			WILSHIRE 5000 INDEX			WILSHIRE 5000 INDEX			LARGE CO. GROWTH
	EQUITY INCOME			STOCK FUND			VALUE FUND			RESERVES			DISCOVERY			OPPORTUNITY			PORTFOLIO			PORTFOLIO			PORTFOLIO
	PORTFOLIO VIP II			ADVISOR CLASS			ADVISOR CLASS			PORTFOLIO			FUND			FUND			INSTITUTIONAL			INVESTMENT			INSTITUTIONAL


Account units outstanding at 01/01/2007		23,175			393,280			411,647			957,241			598,291			284,629			1,785,898			1,212,494			652,993

Consideration received		37,495			29,945			28,234			572,767			67,787			18,063			109,213			177,974			43,655

Net transfers		59,728			(16,132	)		(23,602	)		3,014,851			23,872			(14,926	)		(36,404	)		27,356			(31,325	)

Payments to contract owners		(6,983	)		(26,912	)		(34,578	)		(2,280,591	)		(47,934	)		(24,280	)		(153,239	)		(86,029	)		(57,666	)



Account units outstanding at 12/31/2007		113,415			380,181			381,701			2,264,268			642,016			263,486			1,705,468			1,331,795			607,657

Consideration received		53,467			31,898			27,331			524,322			101,331			17,005			111,764			199,743			45,563

Net transfers		51,445			(31,222	)		(39,846	)		5,493,346			28,145			(19,392	)		(56,503	)		(60,818	)		(42,319	)

Payments to contract owners		(4,732	)		(23,540	)		(23,486	)		(2,144,329	)		(46,910	)		(17,508	)		(116,382	)		(53,151	)		(30,242	)

Account units outstanding



at 12/31/2008		213,595			357,317			345,700			6,137,607			724,582			243,591			1,644,347			1,417,569			580,659

F-27


HORACE MANN LIFE INSURANCE COMPANY	2008 ANNUAL REPORT

SEPARATE ACCOUNT

Notes to the Financial Statements (Continued)

December 31, 2008 and 2007

5. CHANGE IN CONTRACT OWNERS’ ACCOUNT UNITS


ACCOUNT DIVISION
	WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE
	LARGE CO. GROWTH			LARGE CO. VALUE			SMALL CO. GROWTH			SMALL CO. VALUE			VIT 2010			VIT 2010			VIT 2010			VIT 2015			VIT 2025
	PORTFOLIO			PORTFOLIO			PORTFOLIO			PORTFOLIO			AGGRESSIVE			CONSERVATIVE			MODERATE			MODERATE			MODERATE
	INVESTMENT			INVESTMENT			INVESTMENT			INVESTMENT			FUND			FUND			FUND			FUND			FUND


Account units outstanding at 01/01/2007		476,657			1,010,296			156,600			156,773			14,781			43,658			29,326			185,103			130,407
Consideration received		75,611			145,573			13,968			18,684			28,033			32,623			61,574			271,075			319,273
Net transfers		(5,608	)		32,581			(7,691	)		1,592			56,460			48,136			138,005			343,887			170,899
Payments to contract owners		(31,489	)		(82,939	)		(14,098	)		(11,766	)		(3,513	)		(28,467	)		(10,309	)		(48,673	)		(13,094	)


Account units outstanding at 12/31/2007		515,171			1,105,511			148,779			165,283			95,761			95,950			218,596			751,392			607,485
Consideration received		72,504			158,087			14,616			22,889			24,152			26,641			48,006			338,952			441,978
Net transfers		(14,830	)		(19,691	)		(8,742	)		(19,436	)		(118,245	)		(119,829	)		(253,610	)		614,215			110,239
Payments to contract owners		(23,980	)		(63,270	)		(6,946	)		(10,958	)		(1,668	)		(2,762	)		(12,992	)		(44,558	)		(13,317	)
Account units outstanding


at 12/31/2008		548,865			1,180,637			147,707			157,778			-			-			-			1,660,001			1,146,385


ACCOUNT DIVISION
	WILSHIRE			WILSHIRE															WILSHIRE VIT			WILSHIRE VIT			WILSHIRE VIT
	VIT 2035			VIT 2045			WILSHIRE			WILSHIRE			WILSHIRE			WILSHIRE VIT			SHORT-TERM			SMALL CAP			SOCIALLY
	MODERATE			MODERATE			VIT BALANCED			VIT EQUITY			VIT INCOME			INTERNATIONAL			INVESTMENT			GROWTH			RESPONSIBLE
	FUND			FUND			FUND			FUND			FUND			EQUITY FUND			FUND			FUND			FUND


Account units outstanding at 01/01/2007		30,894			27,488			11,192,957			11,536,345			1,392,269			2,973,151			263,769			3,626,620			4,202,774
Consideration received		195,339			94,984			425,337			437,033			133,262			239,296			32,152			215,599			257,928
Net transfers		73,443			23,542			(331,034	)		(440,504	)		(3,398	)		(19,402	)		85,608			(178,293	)		(132,198	)
Payments to contract owners		(4,666	)		(3,104	)		(1,018,436	)		(990,163	)		(153,169	)		(232,857	)		(120,158	)		(309,217	)		(302,119	)


Account units outstanding at 12/31/2007		295,010			142,910			10,268,824			10,542,711			1,368,964			2,960,188			261,371			3,354,709			4,026,385
Consideration received		330,164			160,734			391,367			438,477			130,851			258,466			21,102			245,244			259,908
Net transfers		324,872			(285,327	)		(872,101	)		(773,872	)		93,665			(153,346	)		(191,448	)		(229,961	)		(399,730	)
Payments to contract owners		(15,417	)		(18,317	)		(721,337	)		(660,229	)		(108,736	)		(169,561	)		(91,025	)		(197,124	)		(233,807	)
Account units outstanding


at 12/31/2008		934,629			-			9,066,753			9,547,087			1,484,744			2,895,747			-			3,172,868			3,652,756

F-28


HORACE MANN LIFE INSURANCE COMPANY	2008 ANNUAL REPORT

SEPARATE ACCOUNT

Notes to the Financial Statements (Continued)

December 31, 2008 and 2007


6.	FINANCIAL HIGHLIGHTS

For the Year Ended December 31, 2008


							Expense as a	Investment
					Net		% of Average	Income			Total
Account Division	Units		Value		Assets		Net Assets *	Ratio ***			Return **


AllianceBernstein VPS Large Cap Growth Portfolio		1,170,219		17.15 to 19.01		20,099,299	0.00% to 1.65%		0.00	%	(39.82)% to (40.74)%
AllianceBernstein VPS Small/Mid Cap Value Portfolio		87,935		12.10 to 12.34		1,078,565	0.95% to 1.65%		0.44	%	(36.33)% to (36.72)%
AllianceBernstein VPS Small Cap Growth Portfolio		61,861		7.91 to 8.07		495,480	0.95% to 1.65%		0.00	%	(46.13)% to (46.48)%
Ariel Fund		625,151		26.81 to 32.20		18,352,661	0.00% to 1.65%		1.07	%	(48.31)% to (49.05)%
Ariel Appreciation Fund		989,534		28.93 to 33.59		30,199,392	0.00% to 1.65%		0.61	%	(40.58)% to (41.65)%
Credit Suisse U.S. Equity Flex I Portfolio		180,757		11.74 to 13.02		2,122,754	0.00% to 1.25%		0.09	%	(34.57)% to (35.35)%
Davis Value Portfolio		1,025,090		8.62 to 9.63		8,864,063	0.00% to 1.65%		1.19	%	(40.30)% to (41.26)%
Delaware VIP Growth Opportunities Service Class		91,894		11.78 to 11.97		1,084,299	0.95% to 1.65%		0.00	%	(41.24)% to (41.64)%
Delaware VIP REIT Series		59,864		6.56 to 6.59		393,784	0.95% to 1.65%		0.00	%	(39.32)% to (39.59)%¹
Delaware VIP Trend Series Service Class		32,161		19.16 to 19.47		617,905	0.95% to 1.65%		0.00	%	(47.38)% to (47.68)%
Dreyfus Midcap Stock Portfolio Service Class		48,269		12.07 to 12.23		583,155	0.95% to 1.25%		0.81	%	(41.00)% to (41.12)%
Dreyfus Small Cap Stock Index Portfolio		5,570		10.22 to 10.28		57,261	0.95% to 1.65%		0.00	%	(29.88)% to (30.29)%²
Fidelity VIP Growth Portfolio		1,361,726		22.61 to 26.86		31,529,187	0.00% to 1.65%		0.67	%	(47.31)% to (48.13)%
Fidelity VIP Growth & Income Portfolio		1,265,493		9.86 to 11.85		13,547,219	0.00% to 1.65%		1.09	%	(41.88)% to (42.77)%
Fidelity VIP High Income Portfolio		647,474		4.95 to 8.99		5,221,797	0.00% to 1.65%		9.44	%	(25.15)% to (26.30)%
Fidelity VIP Index 500 Portfolio		422,964		100.94 to 114.68		43,727,911	0.00% to 1.65%		2.11	%	(37.16)% to (38.13)%
Fidelity VIP Investment Grade Bond Portfolio		1,349,135		12.06 to 17.47		21,290,055	0.00% to 1.65%		4.08	%	(3.48)% to (4.96)%
Fidelity VIP Mid Cap Portfolio		1,339,005		22.83 to 28.12		34,008,276	0.00% to 1.65%		0.26	%	(39.59)% to (40.53)%
Fidelity VIP Overseas Portfolio		1,599,063		12.07 to 18.58		26,925,968	0.00% to 1.65%		2.85	%	(43.96)% to (44.85)%
Goldman Sachs VIT Structured Small Cap Equity Fund		139,157		8.24 to 9.50		1,303,227	0.95% to 1.65%		0.76	%	(34.62)% to (35.04)%
J.P. Morgan Insurance Trust U.S. Equity Portfolio		1,387,930		9.97 to 11.05		13,856,776	0.00% to 1.25%		1.38	%	(33.95)% to (34.75)%
Lord Abbett Series Fund Growth Opportunities Portfolio		113,111		10.63 to 10.78		1,204,312	0.95% to 1.25%		0.00	%	(38.78)% to (38.98)%
Neuberger Berman Genesis Fund		1,026,006		23.64 to 29.57		27,416,110	0.00% to 1.65%		0.00	%	(33.02)% to (34.04)%
Putnam VT Vista Fund		459,438		7.95 to 9.91		3,962,689	0.00% to 1.65%		0.00	%	(45.52)% to (46.39)%
Rainier Small/Mid Cap Equity Portfolio		527,636		22.58 to 30.88		14,730,527	0.00% to 1.65%		0.00	%	(48.81)% to (49.60)%
Royce Capital Fund Small-Cap Portfolio		719,426		7.61 to 8.12		5,772,683	0.95% to 1.65%		0.75	%	(27.89)% to (28.34)%
T. Rowe Price Equity Income Portfolio VIP II		213,595		16.13 to 16.42		3,485,050	0.95% to 1.65%		2.52	%	(36.75)% to (37.26)%
T. Rowe Price Small-Cap Stock Fund Advisor Class		357,317		27.22 to 30.17		9,735,440	0.00% to 1.25%		0.00	%	(33.46)% to (34.28)%
T. Rowe Price Small-Cap Value Fund Advisor Class		345,700		34.77 to 38.57		12,029,462	0.00% to 1.25%		0.64	%	(28.73)% to (29.57)%
T. Rowe Price VIP Prime Reserves Portfolio		6,137,607		1.06 to 1.08		6,610,699	0.95% to 1.65%		2.91	%	1.90% to 0.95%
Wells Fargo Advantage VT Discovery Fund		724,582		10.69 to 11.19		7,756,479	0.00% to 1.65%		0.00	%	(44.36)% to (45.22)%
Wells Fargo Advantage VT Opportunity Fund		243,591		22.06 to 24.42		5,376,556	0.00% to 1.25%		2.02	%	(40.10)% to (40.81)%
Dow Jones Wilshire 5000 Index Portfolio Institutional		1,644,347		7.74 to 8.64		12,723,239	0.00% to 1.25%		1.42	%	(37.03)% to (37.68)%
Dow Jones Wilshire 5000 Index Portfolio Investment		1,417,569		7.52 to 8.38		10,693,791	0.00% to 1.65%		1.37	%	(37.09)% to (38.12)%
Wilshire Large Co. Growth Portfolio Institutional		580,659		23.26 to 25.39		13,508,340	0.00% to 1.25%		0.00	%	(41.81)% to (42.40)%
Wilshire Large Co. Growth Portfolio Investment		548,865		22.48 to 24.97		12,368,298	0.00% to 1.65%		0.00	%	(41.90)% to (42.76)%
Wilshire Large Co. Value Portfolio Investment		1,180,637		13.73 to 18.82		20,103,855	0.00% to 1.65%		1.56	%	(41.55)% to (42.48)%
Wilshire Small Co. Growth Portfolio Investment		147,707		14.59 to 16.59		2,164,411	0.00% to 1.25%		0.00	%	(39.21)% to (39.96)%
Wilshire Small Co. Value Portfolio Investment		157,778		10.93 to 20.34		2,874,752	0.00% to 1.65%		0.96	%	(32.78)% to (33.83)%
Wilshire VIT 2015 Moderate Fund		1,660,001		8.00 to 8.15		13,439,577	0.95% to 1.65%		2.44	%	(25.09)% to (25.58)%
Wilshire VIT 2025 Moderate Fund		1,146,385		7.62 to 7.76		8,836,127	0.95% to 1.65%		2.95	%	(28.87)% to (29.31)%
Wilshire VIT 2035 Moderate Fund		934,629		7.10 to 7.22		6,704,682	0.95% to 1.65%		2.35	%	(33.82)% to (34.20)%
Wilshire VIT Balanced Fund		9,066,753		12.87 to 18.44		150,607,364	0.00% to 1.65%		6.32	%	(26.68)% to (27.80)%
Wilshire VIT Equity Fund		9,547,087		13.52 to 17.16		147,989,855	0.00% to 1.65%		0.86	%	(40.18)% to (41.12)%
Wilshire VIT Income Fund		1,484,744		10.64 to 18.49		24,667,907	0.00% to 1.65%		5.38	%	(6.36)% to (7.82)%
Wilshire VIT International Equity Fund		2,895,747		9.26 to 10.27		26,837,394	0.00% to 1.65%		1.54	%	(43.70)% to (44.63)%
Wilshire VIT Small Cap Fund		3,172,868		7.97 to 8.85		25,299,484	0.00% to 1.65%		0.00	%	(46.43)% to (47.25)%
Wilshire VIT Socially Responsible Fund		3,652,756		10.84 to 12.89		42,492,650	0.00% to 1.65%		1.38	%	(40.41)% to (41.34)%


*		These ratios represent the annualized contract expenses of the active contract owners of the separate account, consisting primarily of mortality and expense charges, for the period indicated. The ratios include only those expenses that result in a direct reduction of unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded.

**		These amounts represent the total return for the period indicated, including changes in the fair value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.


***		These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccount invests.


¹		This fund became effective June 1, 2008 and the calculation reflects a seven month return.

²		This fund became effective May 1, 2008 and the calculation reflects an eight month return.

F-29


HORACE MANN LIFE INSURANCE COMPANY	2008 ANNUAL REPORT

SEPARATE ACCOUNT

Notes to the Financial Statements

December 31, 2008


6.	FINANCIAL HIGHLIGHTS

For the Year Ended December 31, 2007


							Expense as a	Investment
					Net		% of Average	Income			Total
Account Division	Units		Value		Assets		Net Assets *	Ratio ***			Return **


AllianceBernstein VPS Large Cap Growth Portfolio		1,123,762		29.09 to 31.59		32,450,933	0.00% to 1.65%		0.00	%	13.59% to 11.76%
AllianceBernstein VPS Small/Mid Cap Value Portfolio		58,225		19.12 to 19.38		1,124,122	0.95% to 1.65%		0.84	%	0.57% to (0.16)%
AllianceBernstein VPS Small Cap Growth Portfolio		30,754		14.78 to 14.98		458,348	0.95% to 1.65%		0.00	%	12.63% to 11.80%
Ariel Fund		620,459		52.62 to 62.29		35,624,380	0.00% to 1.65%		0.32	%	(1.70)% to (3.29)%
Ariel Appreciation Fund		1,020,690		49.58 to 56.53		53,191,841	0.00% to 1.65%		0.53	%	(1.38)% to (2.99)%
Cohen & Steers VIF Reality Fund, Inc.		299,339		11.93 to 12.64		3,771,771	0.95% to 1.65%		1.29	%	(20.25)% to (20.68)%
Credit Suisse U.S. Equity Flex I Portfolio		190,279		18.16 to 19.90		3,457,609	0.00% to 1.25%		0.00	%	(0.85)% to (2.05)%
Davis Value Portfolio		897,456		14.62 to 16.13		13,153,447	0.00% to 1.65%		1.23	%	4.54% to 2.89%
Delaware VIP Growth Opportunities Service Class		80,377		20.10 to 20.47		1,619,101	0.95% to 1.65%		0.00	%	11.65% to 10.88%
Delaware VIP Trend Series Service Class		26,150		36.50 to 37.15		957,218	0.95% to 1.65%		0.00	%	9.40% to 8.72%
Dreyfus Midcap Stock Portfolio Service Class		45,534		20.50 to 20.73		934,702	0.95% to 1.25%		0.31	%	0.44% to 0.10%
Fidelity VIP Growth Portfolio		1,224,469		43.59 to 50.98		54,450,862	0.00% to 1.65%		0.37	%	32.69% to 24.65%
Fidelity VIP Growth & Income Portfolio		1,149,149		17.23 to 20.39		21,426,892	0.00% to 1.65%		1.41	%	11.85% to 10.03%
Fidelity VIP High Income Portfolio		649,206		6.71 to 12.01		7,090,158	0.00% to 1.65%		9.39	%	2.47% to 0.90%
Fidelity VIP Index 500 Portfolio		406,630		163.16 to 182.49		67,681,810	0.00% to 1.65%		3.28	%	5.18% to 3.52%
Fidelity VIP Investment Grade Bond Portfolio		1,371,145		12.69 to 18.10		22,685,058	0.00% to 1.65%		3.94	%	4.08% to 2.34%
Fidelity VIP Mid Cap Portfolio		1,288,059		38.39 to 46.55		54,814,885	0.00% to 1.65%		0.50	%	15.34% to 13.48%
Fidelity VIP Overseas Portfolio		1,316,538		25.12 to 33.28		40,037,736	0.00% to 1.65%		3.01	%	17.05% to 15.15%
Goldman Sachs VIT Structured Small Cap Equity Fund		123,701		12.68 to 14.53		1,775,739	0.95% to 1.65%		0.43	%	(17.26)% to (17.82)%
J.P. Morgan Insurance Trust U.S. Equity Portfolio		1,388,436		15.28 to 16.73		21,246,458	0.00% to 1.25%		1.11	%	1.58% to 0.39%
Lord Abbett Series Fund Growth Opportunities Portfolio		112,504		17.42 to 17.61		1,963,083	0.95% to 1.25%		0.00	%	20.12% to 19.81%
Neuberger Berman Genesis Fund		947,140		35.84 to 44.15		38,220,839	0.00% to 1.65%		0.22	%	21.49% to 19.55%
Putnam VT Vista Fund		454,660		14.83 to 18.19		7,286,550	0.00% to 1.65%		0.00	%	7.70% to 2.20%
Rainier Small/Mid Cap Equity Portfolio		476,394		44.80 to 60.32		26,285,585	0.00% to 1.65%		0.00	%	21.42% to 19.53%
Royce Capital Fund Small-Cap Portfolio		589,192		10.62 to 11.26		6,569,001	0.95% to 1.65%		0.06	%	(3.01)% to (3.72)%
T. Rowe Price Equity Income Portfolio VIP II		113,415		25.71 to 25.96		2,936,882	0.95% to 1.65%		1.89	%	2.04% to 1.34%
T. Rowe Price Small-Cap Stock Fund Advisor Class		380,181		41.42 to 45.34		15,759,746	0.00% to 1.25%		0.00	%	(2.05)% to (3.18)%
T. Rowe Price Small-Cap Value Fund Advisor Class		381,701		49.37 to 54.12		18,864,742	0.00% to 1.25%		0.40	%	(0.20)% to (1.56)%
T. Rowe Price VIP Prime Reserves Portfolio		2,264,268		1.05 to 1.06		2,402,593	0.95% to 1.65%		4.86	%	3.92% to 2.94%
Wells Fargo Advantage VT Discovery Fund		642,016		19.45 to 20.11		12,494,002	0.00% to 1.65%		0.00	%	22.32% to 20.31%
Wells Fargo Advantage VT Opportunity Fund		263,486		37.27 to 40.77		9,823,452	0.00% to 1.25%		0.63	%	6.78% to 5.31%
Dow Jones Wilshire 5000 Index Portfolio Institutional		1,705,468		12.42 to 13.72		21,181,287	0.00% to 1.25%		1.67	%	5.78% to 3.67%
Dow Jones Wilshire 5000 Index Portfolio Investment		1,331,795		12.10 to 13.32		16,176,323	0.00% to 1.65%		1.47	%	4.80% to 3.09%
Wilshire Target Large Co. Growth Portfolio Institutional		607,657		40.38 to 43.63		24,536,908	0.00% to 1.25%		0.00	%	15.73% to 15.15%
Wilshire Target Large Co. Growth Portfolio Investment		515,171		39.13 to 42.98		20,209,885	0.00% to 1.65%		0.00	%	16.38% to 14.49%
Wilshire Target Large Co. Value Portfolio Investment		1,105,511		23.87 to 32.20		32,590,114	0.00% to 1.65%		1.03	%	(1.98)% to (3.59)%
Wilshire Target Small Co. Growth Portfolio Investment		148,779		24.30 to 27.29		3,633,486	0.00% to 1.25%		0.00	%	8.38% to 7.10%
Wilshire Target Small Co. Value Portfolio Investment		165,283		16.49 to 30.26		4,556,977	0.00% to 1.65%		0.63	%	(3.45)% to (5.05)%
Wilshire VIT 2010 Aggressive Fund		95,761		10.73 to 10.81		1,034,767	0.95% to 1.65%		0.06	%	3.44% to 2.98%
Wilshire VIT 2010 Conservative Fund		95,950		10.60 to 10.72		1,023,189	0.95% to 1.65%		1.54	%	3.18% to 2.51%
Wilshire VIT 2010 Moderate Fund		218,596		10.66 to 10.78		2,349,213	0.95% to 1.65%		0.33	%	3.65% to 3.00%
Wilshire VIT 2015 Moderate Fund		751,392		10.75 to 10.88		8,137,963	0.95% to 1.65%		0.70	%	3.92% to 3.17%
Wilshire VIT 2025 Moderate Fund		607,485		10.78 to 10.91		6,600,942	0.95% to 1.65%		0.50	%	3.61% to 2.86%
Wilshire VIT 2035 Moderate Fund		295,010		10.79 to 10.91		3,206,872	0.95% to 1.65%		0.06	%	3.90% to 3.15%
Wilshire VIT 2045 Moderate Fund		142,910		10.75 to 10.87		1,547,299	0.95% to 1.65%		0.00	%	3.33% to 2.67%
Wilshire VIT Balanced Fund – HM Shares		10,268,824		20.75 to 25.16		235,692,276	0.00% to 1.65%		0.00	%	3.08% to 1.41%
Wilshire VIT Equity Fund – HM Shares		10,542,711		22.97 to 28.69		276,466,303	0.00% to 1.65%		0.56	%	2.21% to 0.62%
Wilshire VIT Income Fund – HM Shares		1,368,964		12.30 to 19.75		24,614,241	0.00% to 1.65%		4.35	%	4.33% to 2.59%
Wilshire VIT International Equity Fund – HM Shares		2,960,188		16.66 to 18.24		49,341,657	0.00% to 1.65%		0.91	%	8.57% to 6.99%
Wilshire VIT Short-Term Investment Fund – HM Shares		261,371		11.08 to 12.96		3,091,976	0.00% to 1.65%		3.49	%	4.94% to 1.24%
Wilshire VIT Small Cap Fund – HM Shares		3,354,709		15.06 to 16.52		50,521,792	0.00% to 1.65%		0.00	%	14.01% to 12.05%
Wilshire VIT Socially Responsible Fund – HM Shares		4,026,385		18.48 to 21.63		79,517,966	0.00% to 1.65%		1.16	%	(2.66)% to (4.20)%


*		These ratios represent the annualized contract expenses of the active contract owners of the separate account, consisting primarily of mortality and expense charges, for the period indicated. The ratios include only those expenses that result in a direct reduction of unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded.

**		These amounts represent the total return for the period indicated, including changes in the fair value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.


***		These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccount invests.

F-30


HORACE MANN LIFE INSURANCE COMPANY	2008 ANNUAL REPORT

SEPARATE ACCOUNT

Notes to the Financial Statements (Continued)

December 31, 2008


6.	FINANCIAL HIGHLIGHTS

For the Year Ended December 31, 2006


							Expense as a	Investment
					Net		% of Average	Income			Total
Account Division	Units		Value		Assets		Net Assets *	Ratio ***			Return **


AllianceBernstein VPS Large Cap Growth Portfolio		1,097,550		25.71 to 27.81		28,240,479	0.00% to 1.65%		0.00	%	(0.64)% to (1.87)%
AllianceBernstein VPS Small/Mid Cap Value Portfolio		15,417		19.15 to 19.27		296,669	0.95% to 1.65%		0.01	%	6.75% to 5.78%+
AllianceBernstein VPS Small Cap Growth Portfolio		5,910		13.21 to 13.30		78,364	0.95% to 1.65%		0.00	%	(7.50)% to (8.46)%+
Ariel Fund		608,764		54.41 to 63.37		36,001,178	0.00% to 1.65%		0.00	%	10.36% to 8.99%
Ariel Appreciation Fund		1,013,931		51.11 to 57.32		54,252,282	0.00% to 1.65%		0.05	%	10.93% to 9.60%
Cohen & Steers VIF Reality Fund, Inc.		114,737		15.79 to 15.85		1,816,917	0.95% to 1.65%		4.65	%	34.45% to 33.75%+
Credit Suisse U.S. Equity Flex I Portfolio		206,652		18.54 to 20.07		3,833,857	0.00% to 1.25%		0.00	%	4.75% to 3.46%
Davis Value Portfolio		824,648		14.15 to 15.43		11,692,769	0.00% to 1.65%		0.82	%	15.06% to 13.65%
Delaware VIP Growth Opportunities Service Class		65,145		18.06 to 18.43		1,178,415	0.95% to 1.65%		0.00	%	5.08% to 4.76%
Delaware VIP Trend Series Service Class		18,746		33.45 to 34.16		628,750	0.95% to 1.65%		0.00	%	6.34% to 5.99%
Dreyfus Midcap Stock Portfolio Service Class		45,145		20.48 to 20.64		925,177	0.95% to 1.25%		0.18	%	6.67% to 6.39%
Fidelity VIP Growth Portfolio		1,145,122		34.97 to 38.42		40,681,206	0.00% to 1.65%		0.16	%	6.57% to 5.28%
Fidelity VIP Growth & Income Portfolio		1,069,015		15.66 to 18.23		18,040,574	0.00% to 1.65%		0.63	%	12.88% to 11.44%
Fidelity VIP High Income Portfolio		489,090		6.65 to 11.72		5,282,044	0.00% to 1.65%		8.65	%	11.09% to 9.63%
Fidelity VIP Index 500 Portfolio		378,781		157.61 to 173.50		60,678,398	0.00% to 1.65%		1.39	%	15.44% to 14.02%
Fidelity VIP Investment Grade Bond Portfolio		1,269,944		12.40 to 17.39		20,434,646	0.00% to 1.65%		3.63	%	4.13% to 2.88%
Fidelity VIP Mid Cap Portfolio		1,252,753		33.81 to 40.36		46,799,282	0.00% to 1.65%		0.17	%	12.42% to 11.01%
Fidelity VIP Overseas Portfolio		1,084,179		23.43 to 28.43		28,518,659	0.00% to 1.65%		0.61	%	17.77% to 16.34%
Goldman Sachs VIT Structured Small Cap Equity Fund		97,870		15.43 to 17.56		1,702,618	0.95% to 1.65%		0.84	%	11.21% to 10.88%
J.P. Morgan Insurance Trust U.S. Equity Portfolio		1,392,087		15.22 to 16.47		21,216,057	0.00% to 1.25%		0.97	%	16.56% to 15.13%
Lord Abbett Series Fund Growth Opportunities Portfolio		112,517		14.54 to 14.66		1,638,244	0.95% to 1.25%		0.00	%	6.85% to 6.52%
Neuberger Berman Genesis Fund		902,579		29.98 to 36.34		30,348,198	0.00% to 1.65%		0.64	%	7.01% to 5.66%
Putnam VT Vista Fund		459,239		14.51 to 16.89		7,177,824	0.00% to 1.65%		0.00	%	5.43% to 4.14%
Rainier Small/Mid Cap Equity Portfolio		429,530		37.48 to 49.68		19,752,842	0.00% to 1.65%		0.00	%	14.68% to 13.27%
Royce Capital Fund Small-Cap Portfolio		437,927		11.03 to 11.61		5,050,249	0.95% to 1.65%		0.08	%	14.50% to 14.17%
T. Rowe Price Equity Income Portfolio VIP II		23,175		25.37 to 25.44		589,463	0.95% to 1.65%		1.67	%	15.05% to 14.60%+
T. Rowe Price Small-Cap Stock Fund Advisor Class		393,280		42.78 to 46.29		16,837,675	0.00% to 1.25%		0.00	%	12.52% to 11.12%
T. Rowe Price Small-Cap Value Fund Advisor Class		411,647		50.15 to 54.23		20,662,673	0.00% to 1.25%		0.49	%	16.02% to 14.60%
T. Rowe Price VIP Prime Reserves Portfolio		957,241		1.02 to 1.02		980,180	0.95% to 1.65%		6.88	%	3.00% to 3.00%+
Wells Fargo Advantage VT Discovery Fund		598,291		16.10 to 16.44		9,634,293	0.00% to 1.65%		0.00	%	14.64% to 13.30%
Wells Fargo Advantage VT Opportunity Fund		284,629		35.39 to 38.18		10,075,310	0.00% to 1.25%		0.00	%	12.23% to 10.84%
Dow Jones Wilshire 5000 Index Portfolio Institutional		1,785,898		11.98 to 12.97		21,395,085	0.00% to 1.25%		1.17	%	14.68% to 13.23%
Dow Jones Wilshire 5000 Index Portfolio Investment		1,212,494		11.70 to 12.71		14,231,118	0.00% to 1.65%		0.95	%	14.40% to 13.15%
Wilshire Target Large Co. Growth Portfolio Institutional		652,993		35.00 to 37.89		22,855,092	0.00% to 1.25%		0.00	%	5.34% to 4.04%
Wilshire Target Large Co. Growth Portfolio Investment		476,657		34.06 to 36.93		16,269,078	0.00% to 1.65%		0.00	%	4.94% to 3.65%
Wilshire Target Large Co. Value Portfolio Investment		1,010,296		24.76 to 32.85		30,775,024	0.00% to 1.65%		0.86	%	18.51% to 17.05%
Wilshire Target Small Co. Growth Portfolio Investment		156,600		22.69 to 25.18		3,570,913	0.00% to 1.25%		0.00	%	11.07% to 9.77%
Wilshire Target Small Co. Value Portfolio Investment		156,773		18.77 to 31.34		4,540,828	0.00% to 1.65%		0.18	%	19.64% to 18.17%
Wilshire VIT 2010 Aggressive Fund		14,781		10.42 to 10.47		154,543	0.95% to 1.65%		0.00	%	7.52% to 6.77%+
Wilshire VIT 2010 Conservative Fund		43,658		10.34 to 10.39		452,608	0.95% to 1.65%		0.00	%	6.01% to 5.26%+
Wilshire VIT 2010 Moderate Fund		29,326		10.35 to 10.40		304,662	0.95% to 1.65%		0.00	%	6.31% to 5.56%+
Wilshire VIT 2015 Moderate Fund		185,103		10.42 to 10.47		1,935,046	0.95% to 1.65%		0.00	%	7.36% to 6.46%+
Wilshire VIT 2025 Moderate Fund		130,407		10.48 to 10.53		1,371,803	0.95% to 1.65%		0.00	%	8.43% to 7.67%+
Wilshire VIT 2035 Moderate Fund		30,894		10.46 to 10.50		323,882	0.95% to 1.65%		0.00	%	8.13% to 7.38%+
Wilshire VIT 2045 Moderate Fund		27,488		10.47 to 10.52		288,884	0.95% to 1.65%		0.00	%	8.43% to 7.68%+
Wilshire VIT Balanced Fund – HM Shares		11,192,957		20.13 to 24.40		252,323,998	0.00% to 1.65%		3.39	%	11.59% to 10.22%
Wilshire VIT Equity Fund – HM Shares		11,536,345		25.24 to 28.07		299,817,043	0.00% to 1.65%		0.91	%	16.96% to 15.50%
Wilshire VIT Income Fund – HM Shares		1,392,269		12.36 to 18.93		24,325,701	0.00% to 1.65%		4.10	%	4.01% to 2.70%
Wilshire VIT International Equity Fund – HM Shares		2,973,151		15.51 to 16.80		46,152,212	0.00% to 1.65%		0.77	%	23.80% to 22.22%
Wilshire VIT Short-Term Investment Fund – HM Shares		263,769		10.73 to 12.35		3,013,273	0.00% to 1.65%		3.88	%	5.20% to 3.92%
Wilshire VIT Small Cap Fund – HM Shares		3,626,620		13.38 to 14.60		48,546,140	0.00% to 1.65%		0.00	%	11.29% to 9.94%
Wilshire VIT Socially Responsible Fund – HM Shares		4,202,774		19.29 to 22.22		86,307,411	0.00% to 1.65%		1.18	%	20.56% to 19.01%


*		These ratios represent the annualized contract expenses of the active contract owners of the separate account, consisting primarily of mortality and expense charges, for the period indicated. The ratios include only those expenses that result in a direct reduction of unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded.

**		These amounts represent the total return for the period indicated, including changes in the fair value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.


***		These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccount invests.


+		These funds became available May 1, 2006 and the calculation reflects an eight month return.

F-31


HORACE MANN LIFE INSURANCE COMPANY	2008 ANNUAL REPORT

SEPARATE ACCOUNT

Notes to the Financial Statements (Continued)

December 31, 2008


6.	FINANCIAL HIGHLIGHTS

For the Year Ended December 31, 2005


							Expense as a	Investment
			Unit		Net		% of Average	Income			Total
Account Division	Units		Value		Assets		Net Assets *	Ratio ***			Return **


AllianceBernstein Large Growth Portfolio		939,736		26.20 to 27.99		24,631,711	0.00% to 1.25%		0.00	%	14.85% to 13.42%
Ariel Fund		575,997		54.19 to 57.42		31,246,811	0.00% to 1.25%		0.32	%	0.94% to (0.33)%
Ariel Appreciation Fund		960,327		48.77 to 51.67		46,884,762	0.00% to 1.25%		0.31	%	2.92% to 1.64%
Credit Suisse U.S. Equity Flex I Portfolio		231,016		17.92 to 19.16		4,141,603	0.00% to 1.25%		0.00	%	(2.68)% to (3.90)%
Davis Value Portfolio		715,147		12.45 to 13.41		8,923,632	0.00% to 1.25%		1.06	%	9.44% to 8.09%
Delaware VIP Growth Opportunities Service Class		31,967		17.24 to 17.32		551,397	0.95% to 1.25%		0.00	%	10.17% to 9.82%
Delaware VIP Trend Series Service Class		12,090		31.56 to 31.71		382,003	0.95% to 1.25%		0.00	%	4.62% to 4.31%
Dreyfus Midcap Stock Portfolio Service Shares		34,024		19.25 to 19.35		655,376	0.95% to 1.25%		0.26	%	7.91% to 7.59%
Fidelity VIP Growth Portfolio		1,089,993		33.72 to 36.05		36,781,835	0.00% to 1.25%		0.25	%	5.49% to 4.19%
Fidelity VIP Growth & Income Portfolio		900,219		15.12 to 16.15		13,629,896	0.00% to 1.25%		1.20	%	7.40% to 6.06%
Fidelity VIP High Income Portfolio		375,022		9.87 to 10.55		3,712,402	0.00% to 1.25%		14.65	%	2.33% to 1.04%
Fidelity VIP Index 500 Portfolio		334,313		138.47 to 150.30		46,968,476	0.00% to 1.25%		1.45	%	4.55% to 3.26%
Fidelity VIP Investment Grade Bond Portfolio		1,157,690		15.62 to 16.70		18,114,564	0.00% to 1.25%		3.28	%	1.91% to 0.63%
Fidelity VIP Mid Cap Portfolio		1,126,756		33.61 to 35.90		37,911,433	0.00% to 1.25%		0.00	%	18.02% to 16.56%
Fidelity VIP Overseas Portfolio		835,516		22.58 to 24.14		18,891,099	0.00% to 1.25%		0.42	%	18.78% to 17.31%
Goldman Sachs VIT Core Small Cap Equity Fund		61,281		15.72 to 15.79		963,337	0.95% to 1.25%		0.36	%	5.07% to 4.76%
J.P. Morgan Insurance Trust U.S. Equity Portfolio		1,345,469		13.22 to 14.13		17,808,996	0.00% to 1.25%		1.20	%	1.35% to 0.09%
Lord Abbett Series Fund Growth Opportunities		82,433		13.65 to 13.72		1,125,612	0.95% to 1.25%		0.00	%	3.64% to 3.33%
Neuberger Berman Genesis Fund		799,007		31.80 to 33.96		25,426,518	0.00% to 1.25%		0.00	%	15.96% to 14.56%
Putnam VT Vista Fund		469,180		14.99 to 16.02		7,039,902	0.00% to 1.25%		0.00	%	12.15% to 10.76%
Rainier Small/Mid Cap Equity Portfolio		369,897		40.54 to 43.32		15,017,827	0.00% to 1.25%		0.00	%	17.58% to 16.08%
Royce Capital Fund Small Cap Portfolio		279,287		10.09 to 10.14		2,820,851	0.95% to 1.25%		0.00	%	7.49% to 7.22%
T.Rowe Price Small-Cap Stock Fund Advisor Class		405,684		38.50 to 41.14		15,627,646	0.00% to 1.25%		0.00	%	8.23% to 6.89%
T.Rowe Price Small-Cap Value Fund Advisor Class		431,791		43.76 to 46.74		18,911,939	0.00% to 1.25%		0.24	%	8.57% to 7.22%
Wells Fargo Advantage VT Discovery Fund		598,950		14.21 to 14.34		8,515,158	0.00% to 1.25%		0.00	%	19.65% to 18.29%
Wells Fargo Advantage VT Opportunity Fund***		306,101		31.93 to 34.02		9,776,720	0.00% to 1.25%		0.00	%	7.88% to 6.55%
Dow Jones Wilshire 5000 Index Portfolio Institutional		1,800,173		10.58 to 11.31		19,043,024	0.00% to 1.25%		0.93	%	5.85% to 4.53%
Dow Jones Wilshire 5000 Index Portfolio Investment		1,024,037		10.34 to 11.11		10,624,267	0.00% to 1.25%		0.72	%	5.62% to 4.33%
Wilshire Target Large Co. Growth Portfolio Institutional		669,643		33.64 to 35.97		22,525,700	0.00% to 1.25%		0.00	%	8.84% to 7.49%
Wilshire Target Large Co. Growth Portfolio Investment		407,832		32.86 to 35.19		13,422,310	0.00% to 1.25%		0.00	%	8.45% to 7.11%
Wilshire Target Large Co. Value Portfolio Investment		899,541		25.99 to 27.72		23,406,192	0.00% to 1.25%		0.67	%	8.99% to 7.90%
Wilshire Target Small Co. Growth Portfolio Investment		158,782		20.67 to 22.67		3,296,749	0.00% to 1.25%		0.00	%	3.67% to 2.34%
Wilshire Target Small Co. Value Portfolio Investment		153,217		24.54 to 26.20		3,763,162	0.00% to 1.25%		0.00	%	6.53% to 5.25%
Wilshire VIT Balanced Fund – HM Shares		12,167,249		18.72 to 21.87		248,887,833	0.00% to 1.25%		0.00	%	4.29% to 2.99%
Wilshire VIT Equity Fund – HM Shares		12,756,334		22.34 to 24.00		286,909,697	0.00% to 1.25%		1.09	%	5.90% to 4.54%
Wilshire VIT Income Fund – HM Shares		1,385,915		12.40 to 18.20		23,579,038	0.00% to 1.25%		0.00	%	1.97% to 0.71%
Wilshire VIT International Equity Fund – HM Shares		3,047,443		12.69 to 13.57		38,685,199	0.00% to 1.25%		0.04	%	10.12% to 8.75%
Wilshire VIT Short-Term Investment Fund – HM Shares		258,893		10.34 to 11.74		2,846,173	0.00% to 1.25%		0.25	%	3.02% to 1.25%
Wilshire VIT Small Cap Fund – HM Shares		3,931,558		12.17 to 13.02		47,854,996	0.00% to 1.25%		0.00	%	3.73% to 2.44%
Wilshire VIT Socially Responsible Fund – HM Shares		4,394,862		17.25 to 18.43		75,809,394	0.00% to 1.25%		0.00	%	5.13% to 3.82%


*		These ratios represent the annualized contract expenses of the active contract owners of the separate account, consisting primarily of mortality and expense charges, for the period indicated. The ratios include only those expenses that result in a direct reduction of unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded.

**		These amounts represent the total return for the period indicated, including changes in the fair value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.


***		These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccount invests.

F-32


HORACE MANN LIFE INSURANCE COMPANY	2008 ANNUAL REPORT

SEPARATE ACCOUNT

Notes to the Financial Statements (Continued)

December 31, 2008

6. FINANCIAL HIGHLIGHTS

For the Year Ended December 31, 2004


								Investment
			Unit		Net		% of Average	Income			Total
Account Division	Units		Value		Assets		Net Assets *	Ratio ***			Return **


AllianceBernstein Large Growth Portfolio		818,599		23.10 to 24.37		18,913,881	0.00% to 1.25%		0.00	%	8.36% to 7.02%
Ariel Fund		486,122		54.37 to 56.89		26,452,998	0.00% to 1.25%		0.50	%	21.98% to 20.48%
Ariel Appreciation Fund		798,279		47.99 to 50.20		38,334,735	0.00% to 1.25%		0.48	%	13.12% to 11.70%
Credit Suisse U.S. Equity Flex I Portfolio		248,475		18.64 to 19.68		4,634,469	0.00% to 1.25%		0.00	%	10.83% to 9.48%
Davis Value Portfolio		612,231		11.52 to 12.26		7,064,779	0.00% to 1.25%		0.92	%	12.35% to 10.90%
Delaware VIP Growth Opportunities Service Class		11,064		15.70 to 15.72		173,702	0.95% to 1.25%		0.00	%	11.08% to 10.79%
Delaware VIP Trend Series Service Class		2,275		30.25 to 30.31		68,862	0.95% to 1.25%		0.00	%	11.33% to 10.98%
Dreyfus Midcap Stock Portfolio Service Shares		9,576		17.90 to 17.93		171,393	0.95% to 1.25%		2.43	%	13.18% to 12.84%
Fidelity VIP Growth Portfolio		974,205		32.37 to 34.17		31,546,843	0.00% to 1.25%		0.12	%	3.14% to 1.84%
Fidelity VIP Growth & Income Portfolio		757,537		14.25 to 15.04		10,812,187	0.00% to 1.25%		0.65	%	5.56% to 4.18%
Fidelity VIP High Income Portfolio		256,027		9.77 to 10.31		2,507,235	0.00% to 1.25%		6.95	%	9.37% to 8.07%
Fidelity VIP Index 500 Portfolio		277,917		133.70 to 143.78		37,811,520	0.00% to 1.25%		0.99	%	10.34% to 8.98%
Fidelity VIP Investment Grade Bond Portfolio		975,233		15.52 to 16.38		15,156,639	0.00% to 1.25%		5.66	%	4.22% to 2.87%
Fidelity VIP Mid Cap Portfolio		954,231		28.84 to 30.42		27,532,251	0.00% to 1.25%		0.00	%	24.63% to 23.12%
Fidelity VIP Overseas Portfolio		643,917		19.25 to 20.32		12,405,767	0.00% to 1.25%		0.82	%	13.33% to 11.92%
Goldman Sachs VIT Core Small Cap Equity Fund		17,423		15.00 to 15.03		261,401	0.95% to 1.25%		1.07	%	15.26% to 14.91%
J.P. Morgan Insurance Trust U.S. Equity Portfolio		1,143,649		13.21 to 13.94		15,116,981	0.00% to 1.25%		0.72	%	9.50% to 8.16%
Lord Abbett Series Fund Growth Opportunities		22,415		13.21 to 13.23		296,065	0.95% to 1.25%		0.02	%	10.23% to 9.88%
Neuberger Berman Genesis Fund		642,198		27.76 to 29.29		17,832,489	0.00% to 1.25%		0.22	%	18.38% to 16.92%
Putnam VT Vista Fund		447,977		13.53 to 14.28		6,067,620	0.00% to 1.25%		0.00	%	18.64% to 17.17%
Rainier Small/Mid Cap Equity Portfolio		303,239		34.93 to 36.84		10,602,737	0.00% to 1.25%		0.81	%	17.38% to 15.93%
Royce Capital Fund Small Cap Portfolio		93,281		9.41 to 9.43		878,383	0.95% to 1.25%		2.24	%	23.82% to 23.42%
Strong Mid Cap Growth Fund II		479,241		16.94 to 17.90		8,123,906	0.00% to 1.25%		0.00	%	19.14% to 17.70%
Strong Opportunity Fund II		317,641		29.96 to 31.54		9,521,371	0.00% to 1.25%		0.00	%	18.16% to 16.77%
T.Rowe Price Small-Cap Stock Fund Advisor Class		401,917		36.01 to 38.01		14,483,081	0.00% to 1.25%		0.59	%	18.45% to 17.01%
T.Rowe Price Small-Cap Value Fund Advisor Class		439,605		40.82 to 43.06		17,957,864	0.00% to 1.25%		0.66	%	25.46% to 23.91%
Dow Jones Wilshire 5000 Index Portfolio Institutional		1,924,243		10.12 to 10.68		19,478,297	0.00% to 1.25%		1.37	%	11.52% to 10.22%
Dow Jones Wilshire 5000 Index Portfolio Investment		787,993		9.92 to 10.52		7,833,095	0.00% to 1.25%		1.26	%	11.27% to 9.81%
Wilshire Target Large Co. Growth Portfolio Institutional		680,361		31.29 to 33.05		21,293,761	0.00% to 1.25%		0.45	%	7.08% to 5.75%
Wilshire Target Large Co. Growth Portfolio Investment		324,321		30.67 to 32.45		9,962,280	0.00% to 1.25%		0.11	%	6.94% to 5.37%
Wilshire Target Large Co. Value Portfolio Investment		729,103		24.09 to 25.43		17,633,502	0.00% to 1.25%		6.53	%	12.99% to 11.53%
Wilshire Target Small Co. Growth Portfolio Investment		121,774		20.20 to 21.86		2,471,845	0.00% to 1.25%		4.63	%	17.04% to 15.64%
Wilshire Target Small Co. Value Portfolio Investment		140,474		23.32 to 24.60		3,315,399	0.00% to 1.25%		12.16	%	21.40% to 19.95%
Wilshire VIT Balanced Fund – HM Shares		13,172,538		17.95 to 20.97		261,599,493	0.00% to 1.25%		2.52	%	8.21% to 6.86%
Wilshire VIT Equity Fund – HM Shares		14,024,912		21.34 to 22.67		301,633,499	0.00% to 1.25%		1.31	%	10.16% to 8.78%
Wilshire VIT Income Fund – HM Shares		1,300,042		12.16 to 17.85		21,963,766	0.00% to 1.25%		4.75	%	4.94% to 3.63%
Wilshire VIT International Equity Fund – HM Shares		3,099,530		11.67 to 12.32		36,179,259	0.00% to 1.25%		1.37	%	10.62% to 9.26%
Wilshire VIT Short-Term Investment Fund – HM Shares		270,993		10.11 to 11.45		2,940,774	0.00% to 1.25%		0.86	%	1.22% to (0.05)%
Wilshire VIT Small Cap Fund – HM Shares		4,302,146		11.88 to 12.55		51,123,355	0.00% to 1.25%		0.00	%	4.39% to 3.12%
Wilshire VIT Socially Responsible Fund – HM Shares		4,612,921		16.61 to 17.53		76,641,597	0.00% to 1.25%		1.36	%	13.27% to 11.86%


*		These ratios represent the annualized contract expenses of the active contract owners of the separate account, consisting primarily of mortality and expense charges, for the period indicated. The ratios include only those expenses that result in a direct reduction of unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded.

**		These amounts represent the total return for the period indicated, including changes in the fair value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented.


***		These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The recognition of investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccount invests.

F-33

Independent Auditors’ Report

The Board of Directors
Horace Mann Life Insurance Company:

We have audited the accompanying statutory statements of admitted assets, liabilities, and capital and surplus of Horace Mann Life Insurance Company (the Company) as of December 31, 2008 and 2007, and the related statutory statements of operations, capital and surplus and cash flow for each of the years in the three-year period ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As described more fully in Notes 1 and 8 to the financial statements, the Company prepared these financial statements using accounting practices prescribed or permitted by the Illinois Department of Financial and Professional Regulation — Division of Insurance, which practices differ from U.S. generally accepted accounting principles. The effects on the financial statements of the variances between the statutory basis of accounting and U.S. generally accepted accounting principles, although not reasonably determinable, are presumed to be material.

In our opinion, because of the effects of the matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with U.S. generally accepted accounting principles, the financial position of the Company as of December 31, 2008 and 2007, or the results of its operations or its cash flows for each of the years in the three-year period ended December 31, 2008.

Also, in our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities, and capital and surplus of the Company as of December 31, 2008 and 2007, and the results of its operations and its cash flow for each of the years in the three-year period ended December 31, 2008, on the basis of accounting described in Notes 1 and 8.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information included on the accompanying schedules is presented for purposes of additional analysis and is not a required part of the basic statutory financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic statutory financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

April 29, 2009

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

December 31, 2008, 2007, and 2006

(In thousands)

(1)

Background and Significant Accounting Policies

Organization

		Horace Mann Life Insurance Company (the Company), an Illinois domiciled company, markets and underwrites tax-qualified retirement annuities, individual life, group disability income, and group life insurance products primarily to K-12 teachers, administrators and other employees of public schools and their families.

		The Company is a subsidiary of Horace Mann Educators Corporation (HMEC), which indirectly owns 100% of the outstanding shares. The Company is a wholly owned subsidiary of Allegiance Life Insurance Company (ALIC). Other affiliated companies include Horace Mann Investors, Inc., Horace Mann Insurance Company, Teachers Insurance Company, Horace Mann Property & Casualty Insurance Company, Horace Mann Lloyds, and Horace Mann Service Corporation (HMSC). HMSC performs certain fiscal and administrative services for all the affiliated companies in the group.

		During 2008, 2007 and 2006, the Company has not participated in any business combinations nor discontinued any operations.

Basis of Presentation

The accompanying statutory financial statements have been prepared in conformity with the accounting practices prescribed or permitted by the Illinois Department of Financial and Professional Regulation — Division of Insurance and the National Association of Insurance Commissioners (NAIC), which differ materially in some respects from United States (U.S.) generally accepted accounting principles (GAAP) as more fully discussed in note 8. The state of Illinois has adopted the prescribed accounting practices as stated in NAIC SAP without modification. At December 31, 2008 and 2007 the Company has no material statutory accounting practices that differ from those of the state of Illinois or the NAIC accounting practices. The significant statutory accounting practices and the Company’s related accounting policies follow.

Investments

		Investments are valued in accordance with the requirements of the NAIC.

		Bonds, other than NAIC class 6, not backed by other loans are carried at amortized cost, adjusted for the amortization of premiums, accretion of discounts and any impairment. Premiums and discounts are amortized and accreted over the estimated lives of the related bonds based on the interest yield method. NAIC class 6 bonds are carried at lower of cost or NAIC fair value. Fair value is derived from the NAIC Valuation of Securities Manual for securities listed. Fair value of bonds not listed is determined considering factors including quality of issuer, interest rates, and maturity dates.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

		Loan-backed securities are stated at either amortized cost or the lower of amortized cost or fair value. Loan backed securities that have been assigned the NAIC category 6 designation are written down to the appropriate NAIC carrying value. The Company used a pricing service in determining the fair value of its loan-backed securities when NAIC fair value was not available. Prepayment assumptions were obtained from broker dealer survey values and are consistent with the current interest rate and economic environment. Significant changes in estimated cash flows from the original purchase assumptions for loan backed and structured securities are accounted for using the retrospective method. The Company had no negative yield situations requiring a change from the retrospective to prospective method.

		Common stocks are carried at NAIC fair value. Fair value is derived from the NAIC Valuation of Securities Manual for securities listed.

		Preferred stocks are carried at cost, less any impairment adjustments or at the lower of cost or fair value, depending on the NAIC designation of the security.

		Hybrid securities are investments structured to have characteristics of both stocks and bonds. Hybrid securities totaled $53,717 and $53,550 at December 31, 2008 and 2007, respectively, all of which were classified as preferred stock on the statutory statements of admitted assets, liabilities, and capital and surplus.

		Mortgage loans are carried at the unpaid principal balance less unamortized discount and were issued at a value of no more than 75% of the appraised value of the mortgaged property. No new mortgage loans were issued during 2008, 2007 and 2006. The Company did not reduce interest rates of any outstanding mortgage loans during 2008, 2007 and 2006. During 2008, 2007 and 2006, the Company had no non-performing mortgage loans or loans with past due interest or principal payments.

		Contract loans are carried at the unpaid principal balance.

		At December 31, 2008 and 2007, the Company had no investments in derivative financial instruments, joint ventures or partnerships, reverse mortgages, repurchase agreements and holds no loans or debt that has been restructured.

		The Company has elected to use the book value as of January 1, 1994 as the cost for applying the retrospective adjustment method to securities purchased prior to that date.

		Cash and short-term securities have a maturity of one year or less at the time of acquisition. Short-term investments are carried at amortized cost which approximates fair value.

		Interest income is recognized as earned. Investment income reflects amortization of premiums and accrual of discounts on an effective-yield basis.

		Net realized investment gains and losses are determined on the basis of specific identification on the trade date.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

		The Company’s methodology of assessing other-than-temporary impairments is based on security-specific facts and circumstances as of the date of the reporting period. Based on these facts, if management believes it is probable that amounts due will not be collected according to the contractual terms of a debt security, or if the Company does not have the intent to sell a debt or equity security with an unrealized loss until it matures or recovers in value, an other-than-temporary impairment is considered to have occurred. As a general rule, if the fair value of a debt security has fallen below 80% of book value, this security will be reviewed for an other-than-temporary impairment. Also as a general rule, if the fair value of an equity security has declined below cost, this security will be reviewed for an other-than-temporary impairment including an assessment of whether recovery in fair value is likely to occur within a reasonable period of time. Additionally, if events become known that call into question whether the security issuer has the ability to honor its contractual commitments, whether or not such security has been trading above an 80% fair value to book value relationship, such security holding will be evaluated to determine whether or not such security has suffered an other-than-temporary decline in value. With respect to fixed income securities involving securitized financial assets, a comparison is made of expected undiscounted cash flows to current book value to determine whether an other-than-temporary impairment has occurred.

		A decline in fair value below amortized cost is not assumed to be other-than-temporary for fixed maturity investments with unrealized losses due to changes in interest rates, spread widening or market illiquidity where there exists a reasonable expectation based on the Company’s consideration of all objective information available that the Company will recover all amounts due under the contractual terms of the security and the Company does not have the intent to sell. Management considers the following items: the length of time and the extent to which the fair value has been less than cost, the financial condition and short-term prospects of the issuer including any specific events that may influence the operations of the issuer, and the intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in value. Based on these facts, if management believes it is probable that amounts due will not be collected according to the contractual terms of a debt security, or if the Company has the intent to sell the investment before recovery of the cost of the investment, an other-than-temporary impairment shall be considered to have occurred resulting in a write-down of carrying value, with a realized investment loss charged to operations for the period. For loan-backed securities, the Company analyzes undiscounted cash flows on a quarterly basis to determine if additional other-than-temporary impairment write-downs are necessary.

Asset Valuation Reserve

The Asset Valuation Reserve (AVR) was calculated as prescribed and required by the NAIC. This reserve is maintained for the purpose of stabilizing surplus against the effects of fluctuations in the value of certain bond, stock, mortgage loan and real estate investments. Changes in the AVR reserve are charged or credited to surplus.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

Subprime Mortgage Related Risk Exposure

The Company has three securities with direct sub-prime exposure. One security is a collateralized debt obligation with original cost of $4,908, book adjusted carrying value of $329, fair value of $329 and other than temporary impairment losses to date of $4,290. The other two securities are AAA rated home equity asset-backed securities with a book adjusted carrying value of $3,492 and a fair value of $3,607. The characteristics of the Company’s sub-prime mortgage loan, a collateralized debt obligation, include the following: low average Fair Isaac Credit Organization (“FICO”) score (less than 650), high weighted average coupon relative to other mortgage-backed securities of similar loan age and issue date, high prepayment penalties, and a high percentage of hybrid loans or negative amortizing loans.

Aggregate Reserves

		Applicable state insurance laws require that the Company set up reserves in accordance with statutory regulations, carried as liabilities to meet future obligations under outstanding policies. These reserves are the amount that, with the additional premiums to be received and interest thereon compounded annually at certain rates, is calculated to be sufficient to meet the various policy and contract obligations as they occur.

		Premium deficiency reserves at December 31, 2008 and 2007 were $3,104 and $5,720, respectively.

		The Company waives deduction of deferred fractional premiums upon death of insured and returns any portion of the final premiums beyond the date of death. Surrender values are not promised in excess of the legally computed reserves.

		The tabular interest, tabular less actual reserve released and tabular cost have been determined by formula as prescribed in the annual statement instructions. Tabular interest on funds not involving life contingencies is determined as the sum of the products of each valuation rate of interest and the mean of the funds subject to such rate held at the beginning and end of the valuation year.

		Aggregate reserves for life policies, annuity contracts, and supplementary contracts with life contingencies are based on statutory mortality tables and interest assumptions using either the net level, or commissioners’ reserve valuation method or commissioners’ annuity reserve valuation method. The annuity reserves include the current declared interest rates through the valuation date.

Reserve for Supplementary Contracts Without Life Contingencies

This reserve represents the present value of future payments discounted with interest only. At December 31, 2008 and 2007 this liability was $127,139 and $136,602 respectively, based on average credited interest rates of 3.75% and 3.05% in 2008 and 2007, respectively and is included in “policyholder funds on deposit.”

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

Life Premiums

		Life premiums are reflected as earned on the coverage anniversary date. Annuity and supplementary contracts with life contingencies premiums are reflected as earned when collected. Accident and health premiums are reported as revenue when due and earned on a pro rata basis over the period covered by the policy.

		Deferred life premiums represent modal premiums (other than annual) to be billed in the year subsequent to the commencement of the policy year.

		Deferred and uncollected life insurance premiums and annuity considerations as of December 31, 2008, were as follows:


	Gross		Net of Loading

Ordinary new business	$	1,835	$	1,005
Ordinary renewal		39,364		45,746
Group life		139		139


Total	$	41,338	$	46,890

Mutual Fund Service Fee Income

The Company has a service agreement where the Company provides certain services to the Wilshire VIT Funds (Funds) necessary to coordinate the Funds activities with those of the separate account of the Company. For these services the Company receives a mutual fund service fee, accrued daily and paid to the Company monthly, based upon the combined assets for the Funds.

Fees From Sales of Partner Products

		The Company has programs to offer long-term care policies, variable universal life policies and fixed interest rate universal life insurance with three third-party vendors underwriting such insurance. Under these programs, the third-party vendors underwrite and bear the risk of these insurance policies and the Company receives a commission on the sale of that business.

		The Company has entered into a third-party vendor agreement with American Funds Distributors, Inc. (“AFD”) to market their retail mutual funds. In addition to retail mutual funds accounts, the Company’s agents can also offer a 529 college savings program and Coverdell Education Savings Accounts through this marketing alliance. The Company has also expanded its product offerings to include fixed indexed annuities and single premium immediate annuities through additional marketing alliances. These third-party vendors underwrite these accounts or contracts and the Company receives commissions on the sales of these products.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

Income Taxes

		The Company is included in the consolidated federal income tax return of its parent, ALIC, and its ultimate parent, HMEC and its subsidiaries. The tax sharing agreements between the Company and HMEC, as approved by the Board of Directors of the Company, provide that tax on operating income is charged to the Company as if it were filing a separate federal income tax return. The Company is reimbursed for any losses or tax credits to the extent utilized in the consolidated return. Intercompany tax balances are settled quarterly with a subsequent final annual settlement upon filing the consolidated federal income tax return.

		Federal income taxes are charged to operations based on current taxable income. Current year federal income tax expense or benefit is based on financial reporting income or loss adjusted for certain temporary differences, which are the result of dissimilar financial reporting and tax basis accounting methods. A deferred tax asset, for the tax effect of temporary differences between financial reporting and the tax basis of assets, is only reported as an admitted asset to the extent of the sum of federal income taxes paid in prior years that can be recovered through loss carrybacks from temporary differences that reverse within one year; gross deferred tax assets expected to be realized within one year but limited to 10% of adjusted surplus; and gross deferred tax liabilities. The change in net deferred income taxes is included directly in surplus.

		The Company records liabilities for potential tax contingencies where it is not probable that the position will be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based upon change in facts or law.

		The Company classifies all interest and penalties as income tax expense.

Acquisition Expenses

The cost of acquiring new business, principally commissions, underwriting salaries, and related expenses, is charged to expense as incurred.

Non-admitted Assets

Assets prescribed by the Illinois Insurance Code and the NAIC as “non-admitted” (principally non-admitted deferred tax assets) are charged to unassigned surplus.

Use of Estimates

The preparation of statutory financial statements requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the financial statements, and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

Correction of Immaterial Error

During 2008, the Company discovered that X-factors were incorrectly applied to the mortality tables past the end of the select period for the alternative minimum reserve calculation. As a result, the December 31, 2007 miscellaneous reserve for “Excess of valuation net premiums over corresponding gross premiums” reflected within Aggregate Life and Annuity Reserves was understated by $2,636. Liabilities and Capital and Surplus and Statutory Statements of Capital and Surplus have been adjusted in 2008 to correct this immaterial error.

Actuarial Valuation Basis Changes

		Three changes in reserve valuation bases were recorded by the Company during 2008 due to refinements in the reserve calculations. The first change was related to reserves calculated using “Excess of valuation net premiums over corresponding gross premiums”. In accordance with Section 8 of the Standard Valuation Law, deficiency reserves are calculated at the contract level. The 2007 deficiency reserves on supplemental benefits were recalculated by comparing net and gross premiums at the contract level instead of on a benefit level and the resulting decrease in Aggregate Life and Annuity Reserves due to this valuation basis change was $2,343.

		The Company also changed the mortality table used for the alternative minimum reserve calculation from the 2001 CSO composite mortality table to the tobacco-distinct 2001 CSO table for plans utilizing X-factors to more closely reflect the risk of the underlying business. The 2007 reserves were recalculated using the tobacco-distinct mortality table and the resulting decrease in Aggregate Life and Annuity Reserves was $1,675.

		There was also a change in the valuation basis for Supplementary Contracts with Life Contingencies recorded in Aggregate Life and Annuity reserves. Historically, the Company held the greater of the calculated statutory reserve and the GAAP reserve for the reported statutory reserve on supplemental contracts with life contingencies. Due to refinements in the reserve calculations implemented during 2008, the 2007 reserves were recalculated removing the GAAP reserve constraint and the resulting decrease due to the valuation basis change was $7,419.

		Liabilities and Capital and Surplus and Statutory Statements of Capital and Surplus were adjusted in 2008 to reflect these valuation basis changes.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

(2)

Investments

Net Investment Income

The components of net investment income were as follows:


	2008		2007		2006

Interest on bonds	$	181,946	$	173,074	$	165,463
Preferred stock income		7,200		4,094		562
Interest on mortgage loans		1,426		1,475		1,521
Interest on short-term investments		1,330		2,734		1,621
Interest on contract loans		6,130		5,826		5,430
Other investment income		1,121		1,120		843


Gross investment income		199,153		188,323		175,440
Investment expenses		4,454		3,274		2,972


Net investment income	$	194,699	$	185,049	$	172,468

The Company nonadmits investment income due and accrued if amounts are over 90 days past due. The Company had no amounts non-admitted at December 31, 2008 and 2007.

Net Realized Investment Gains (Losses) Net of Tax and Transfers to IMR

		Realized investment gains (losses) which result from changes in the overall level of interest rates, excluding securities whose NAIC rating classification at the end of the holding period is different from its NAIC rating classification at the beginning of the holding period by more than one NAIC rating classification, are transferred to IMR. Realized investment gains (losses) on most fixed income securities are transferred on an after tax basis to the IMR and amortized into operations over the average remaining lives of the assets sold.

		The IMR at December 31 is as follows:


	2008			2007			2006

Reserve balance, beginning of year	$	30,383		$	31,014		$	29,675
Current year capital (losses) gains, net of tax		(2,711	)		1,399			3,810
Amortization of IMR		(1,561	)		(2,030	)		(2,471	)

Reserve balance, end of year	$	26,111		$	30,383		$	31,014

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

Net realized investment gains (losses) reported in the statutory statements of operations net of tax and transfers to IMR were as follows:


	2008			2007			2006

Bonds	$	(39,422	)	$	(2,336	)	$	9,755
Common stocks		(1,259	)		—			—
Preferred stocks		(5,088	)		(642	)		—
Short-term		(1,074	)		—			—


Net realized investment gains (losses)		(46,843	)		(2,978	)		9,755

Less federal income tax expense		(2,211	)		413			2,180
Transferred to IMR		2,711			(1,399	)		(3,810	)


Net realized investment gains (losses) net of tax and transfers to IMR	$	(41,921	)	$	(4,790	)	$	3,765

Net realized losses were $41,921 in 2008 compared to net realized losses of $4,790 in 2007. The net losses were realized from recording of other-than-temporary impairment charges and ongoing investment portfolio management activity. The Company recorded other-than-temporary impairment write-downs of $42,333 in 2008 compared to $8,054 in 2007. The 2008 other-than-temporary impairment losses included $36,395 of bonds, $3,605 of preferred stocks, $1,259 of common stocks and $1,074 of the Reserve Fund money market fund. The bond impairments consisted of 29 issues with loss amounts ranging from less than $1 to $7,330. These were primarily comprised of financial institution securities, high yield bonds and CDO holdings. Total losses from Lehman Brothers issues, the largest loss issuer in this category, amounted to $19,725. The preferred stock impairments consisted of 15 issues with loss amounts ranging from less than $1 to $1,234. This category was primarily comprised of financial institution securities and real estate related securities. Total losses from KBC Bank, the largest preferred stock, loss amounted to $1,234. The common stock impairments consisted of 3 issues with loss amounts ranging from less than $12 to $1,044. These securities were in the cable TV industry. Losses realized in 2008 included $1,510 from the sale of securities that had been previously impaired. A gain of $866 was recorded due to recovery from litigation proceeds for a security that was other-than-temporary impaired and totally disposed of during 2002. Gains realized in 2007 included $289 due to recovery from litigation proceeds for a security that was other-than-temporary impaired and totally disposed of during 2002. In each of the periods, the other-than-temporary impaired securities were marked to fair value, and the write-downs were recorded as realized investment losses in the statutory statements of operations.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

Change in Net Unrealized Capital Gains (Losses)

Common stocks are carried at fair value. The resulting unrealized capital gains or losses are reflected as credits or charges directly to unassigned surplus. The unrealized capital gains also include the impact of deferred tax assets. This amount was $(151) and $(341) at December 31, 2008 and 2007, respectively.


	2008		2007

Net unrealized capital gains (losses):
Beginning	$	635	$	—
End of year		280		635


Change in net unrealized capital gains (losses)	$	355	$	(635	)

Bonds and Preferred Stock

At December 31, 2008 and 2007, the fair value and gross unrealized capital losses of investments in bonds and preferred stock segregated between securities having an unrealized loss for less than 12 months and securities having an unrealized capital loss for 12 months or longer were as follows:


	Less than 12 months				12 months or longer				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
As of December 31, 2008
U.S. government and agency obligations:
Mortgage-backed securities	$	37,982	$	212	$	6,542	$	135	$	44,524	$	347
Other		2,317		83		—		—		2,317		83
Municipal bonds		27,717		2,878		—		—		27,717		2,878
Foreign government bonds		2,835		156		—		—		2,835		156
Corporate bonds		696,952		99,272		385,511		79,954		1,082,463		179,226
Other mortgage-backed securities		163,818		58,806		69,453		70,006		233,271		128,812
Preferred stocks		25,921		9,090		30,458		22,610		56,379		31,700

Totals	$	957,542	$	170,497	$	491,964	$	172,705	$	1,449,506	$	343,202


	Less than 12 months				12 months or longer				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
As of December 31, 2007
U.S. government and agency obligations:
Mortgage-backed securities	$	72,311	$	185	$	370,965	$	5,195	$	443,276	$	5,380
Other		64,423		40		22,830		77		87,253		117
Municipal bonds		—		—		14,463		537		14,463		537
Foreign government bonds		—		—		3,911		35		3,911		35
Corporate bonds		328,863		10,555		480,593		15,567		809,456		26,122
Other mortgage-backed securities		142,569		9,013		44,742		1,385		187,311		10,398
Preferred stocks		60,424		7,989		4,139		346		64,563		8,335

Totals	$	668,590	$	27,782	$	941,643	$	23,142	$	1,610,233	$	50,924

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

		At December 31, 2008, the gross unrealized capital loss position in the investment portfolio was $343,202 (681 positions and less than 12% of the investment portfolio’s fair value). Securities with an investment grade rating represented 93% of the gross unrealized capital losses. The largest single unrealized capital loss was $6,262 on a Teck Cominco Limited preferred stock. The portfolio included 282 securities that have been in an unrealized capital loss position for greater than 12 months, totaling $172,705 (of which $22,202 was from securities purchased in 2003 when interest rates were at record lows). The Company views the decrease in value of all of the securities with unrealized capital losses at December 31, 2008 as temporary, expects recovery in fair value, anticipates continued payments under the terms of the securities, and does not intend to sell the investments before recovery of the cost of the investment. Therefore, no impairment of these securities was recorded at December 31, 2008.

		At December 31, 2008 and 2007, 1.7% and 2.3% of the total bond portfolio (at amortized cost) consisted of private placement bonds, respectively. The fair value of private placement bonds is estimated based upon factors including credit quality, interest rates and maturity dates.

		The carrying value and NAIC fair value of investments in bonds, preferred and common stocks as of December 31, 2008 and 2007 are as follows:


			Gross		Gross			NAIC
	Carrying		Unrealized		Unrealized			Fair
December 31, 2008	Value		Gains		Losses			Value

U.S. government and agency obligations:
Mortgage-backed securities	$	795,553	$	19,659	$	(347	)	$	814,865
Other		120,455		4,172		(83	)		124,544
Municipal bonds		49,483		1,455		(2,878	)		48,060
Foreign government bonds		13,188		716		(156	)		13,748
Corporate securities		1,621,564		19,503		(179,226	)		1,461,841
Other mortgage-backed securities		465,929		9,130		(128,812	)		346,247
Preferred stocks		105,579		450		(31,700	)		74,329
Common stocks		14,572		—		—			14,572

Total	$	3,186,323	$	55,085	$	(343,202	)	$	2,898,206

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)


			Gross		Gross			NAIC
	Carrying		Unrealized		Unrealized			Fair
December 31, 2007	Value		Gains		Losses			Value

U.S. government and agency obligations:
Mortgage-backed securities	$	868,124	$	5,874	$	(5,380	)	$	868,618
Other		228,777		2,308		(117	)		230,968
Municipal bonds		25,519		883		(537	)		25,865
Foreign government bonds		13,229		1,465		(35	)		14,659
Corporate securities		1,662,542		29,093		(26,122	)		1,665,513
Other mortgage-backed securities		268,285		2,690		(10,398	)		260,577
Preferred stocks		94,082		555		(8,335	)		86,302
Common stocks		2,379		—		—			2,379

Total	$	3,162,937	$	42,868	$	(50,924	)	$	3,154,881

		U.S. government and agency obligations include securities issued by Federal National Mortgage Association of $452,740 and $676,009; Federal Home Loan Mortgage Association of $419,126 and $366,217; Government National Mortgage Association of $32,263 and $27,327; and Other Government of $11,879 and $27,348 as of December 31, 2008 and 2007, respectively.

		Bonds by NAIC class at December 31 are as follows:


	2008				2007
			NAIC				NAIC
	Statement		Fair		Statement		Fair
	Value		Value		Value		Value

Class 1	$	2,220,063	$	2,091,967	$	2,268,131	$	2,264,624
Class 2		740,709		635,158		677,409		683,452
Class 3		51,085		39,917		40,447		39,521
Class 4		50,007		38,142		78,958		76,872
Class 5		2,689		2,455		1,530		1,561
Class 6		1,619		1,666		1		170


Total by class	$	3,066,172	$	2,809,305	$	3,066,476	$	3,066,200

		At December 31, 2008, .65% of the Company’s investment portfolio was invested in collateralized mortgage obligations (CMOs) excluding mortgage obligations of United States governmental agencies. The average credit quality rating of the Company’s investment in CMOs was AAA and NAIC 1 -the highest ratings. The fair value of CMOs at December 31, 2008 was $156,621 compared to a $156,657 carrying value. The average duration of the Company’s investment in CMOs was 5.2 years at December 31, 2008.

		The carrying value and NAIC fair value of bonds by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)


			NAIC
	Carrying		Fair
December 31, 2008	Value		Value

Due in one year or less	$	245,374	$	224,818
Due after one year through five years		903,396		827,714
Due after five years through ten years		921,765		844,545
Due after ten years through twenty years		310,480		284,470
Due after twenty years		685,157		627,758


Total bonds	$	3,066,172	$	2,809,305

Proceeds from the sale of investments in bonds and stocks during 2008, 2007 and 2006 were $485,953, $639,498 and $484,288, respectively. Gross gains of $8,203, $10,738 and $9,592 and gross losses of $13,961, $8,470 and $4,847 were realized on those sales for 2008, 2007 and 2006, respectively.

Deposits

Included in bonds is the carrying value of securities on deposit with governmental authorities, as required by law, as of December 31 were as follows:


	2008		2007

Held for all policyholders	$	1,674	$	1,672
Held for policyholders in certain states		1,104		971


Total deposits	$	2,778	$	2,643

Securities Lending

The Company loans fixed income securities to third parties, primarily major brokerage firms. Beginning in the third quarter of 2007, the Company reduced the amount of fixed income securities that it loans compared to the previous levels and at December 31, 2008 the Company’s securities lending program is suspended. As of December 31, 2008 and 2007, fixed maturities with a fair value of $0 and $74,599, respectively, were on loan. The Company maintains effective control over the loaned securities and therefore reports them as bonds in the statutory statements of admitted assets, liabilities and capital and surplus. Securities lending collateral is classified as short-term investments with a corresponding liability in the Company’s statutory statements of admitted assets, liabilities and capital and surplus. Acceptable collateral for this program is U.S. Government securities, U.S. Government Agency securities and cash. The collateral is not restricted. The initial collateral received is 102% of the fair value of the loan, and the collateral is maintaining at 102% of the fair value of the loan. The separate account of the Company does not participate in any securities lending program.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

Policy reserves for losses for accident and health contracts are estimated by the Company’s valuation actuary using statistical claim development models to develop best estimates of liabilities for medical expense business and using tabular reserves employing mortality/morbidity tables and discount rates specified by regulatory authorities for disability income business.

Aggregate reserves for accident and health policies include the present value of amounts not yet due on existing claims and unearned premiums at December 31 as follows:


	Aggregate reserves
	2008		2007

Present value of amounts not yet due on claims (3% interest rate)	$	5,911	$	6,222
Additional contract reserves		222		280
Unearned premiums and other		162		168


Aggregate accident and health reserves	$	6,295	$	6,670

The Company discounts the liabilities for certain cancelable disability insurance business. The liabilities included $5,495 and $5,611 of such discounted reserves at December 31, 2008 and 2007, respectively. The aggregate amount of discount at December 31, 2008 and 2007 were $1,029 and $1,063, respectively.

Unpaid Benefits

Unpaid benefits consists of case basis reserves and estimates of losses incurred but not reported. Estimates for losses incurred but not reported are based on prior experience modified for current trends.

Accident and health claim reserves and liabilities include the following:


	2008			2007

Aggregate reserves for accident and health	$	6,295		$	6,670
Unpaid benefits for accident and health		273			243
Less: Additional contract reserves		(222	)		(280	)
Unearned premiums and other		(162	)		(168	)


Accident and health claim reserves and liabilities	$	6,184		$	6,465

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

The following table sets forth an analysis of accident and health claim reserves and liabilities and provides a reconciliation of beginning and ending reserves for the periods indicated.


	2008		2007			2006

Net balance at January 1	$	6,465	$	7,304		$	7,875

Incurred related to:
Current year		1,989		2,207			2,142
Prior years		69		(642	)		(203	)


Total incurred		2,058		1,565			1,939


Paid related to:
Current year		679		798			670
Prior years		1,660		1,606			1,840


Total paid		2,339		2,404			2,510


Net balance at December 31	$	6,184	$	6,465		$	7,304

As a result of changes in estimates of claims incurred in prior years, the accident and health claims and claim adjustment expenses incurred increased by $69 and decreased by $642 in 2008 and 2007, respectively. These changes in estimates are the result of normal reserve development inherent in the uncertainty of establishing the liability for unpaid accident and health claims and claim and loss adjustment expenses.

(4)

Related Party Transactions

The Company has common management and shares office facilities with HMEC and other affiliates and is a party to several intercompany service agreements. Under these agreements, the Company paid $83,748, $107,316, and $99,130 for management, administrative, data processing, commissions and agency services, utilization of personnel, and investment advisory services in 2008, 2007 and 2006, respectively. The Company holds a mortgage loan on the home office property from HMSC in the amount of $13,374 and $13,625 as of December 31, 2008 and 2007, respectively.

The Company had net balances receivable from affiliates of $11,447 and net payable to affiliates of $488 at December 31, 2008 and 2007, respectively.

ALIC reinsures all of the Company’s life insurance business in the state of Arizona. Effective January 1, 2001, ALIC also assumed a small block of Florida whole life business from the Company (see note 8).

The Company has no common stock investments in any upstream companies or affiliates.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

The Company’s income tax incurred and change in deferred income tax differs from the amount obtained by applying the federal statutory rate of 35% to income (loss) before income taxes as follows:


	2008			2007			2006

Current income tax (benefit) expense incurred	$	(510	)	$	10,989		$	6,667
Change in deferred income tax (without tax on unrealized gains and losses)		(5,851	)		1,225			357

Total income tax (benefit) expense reported		(6,361	)		12,214			7,024

Income (loss) before taxes		(13,964	)		38,458			38,893

Expected income tax expense (benefit) at 35% statutory rate		(4,887	)		13,460			13,613


Increase (decrease) in actual tax reported resulting from:
Dividends received deduction		(1,179	)		(981	)		(1,542	)
Nondeductible expense for meals, penalties and lobbying		112			118			91
Tax adjustment for IMR		(546	)		(729	)		(865	)
Deferred tax benefit on non-admitted assets		12			134			59
Prior year surplus reserve adjustment		222			—			(4,149	)
Resolution of contingent tax liabilities		(2,697	)		—			—
Provision to return		(208	)		(47	)		(197	)
Reserve basis change		3,101			—			—
Other		(291	)		259			14

Total income tax (benefit) expense	$	(6,361	)	$	12,214		$	7,024

As of December 31, 2008, the Company had no unused net operating loss carryforwards. The Company has available capital loss carryforwards of $1,232 to offset future taxable capital gains.

The amount of federal income taxes incurred that are available for recoupment in the event of future net losses are $6,117, $8,821 and $6,533 for 2008, 2007, and 2006 respectively.

As of December 31, 2008, the Company had no deposits reported as admitted assets under Section 6603 of the Internal Revenue Code.

At December 31, 2008, the Company had federal income tax returns for the 2005 through 2007 tax years still open and subject to examination by all major tax authorities. The Internal Revenue Service (IRS) completed its examination of tax years 2002, 2004, 2005 and 2006. As a result, the Company recorded a reduction in its liability for uncertain tax positions including interest of $2,993.

The Company records liabilities for potential tax contingencies where it is not probable that the position will be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based upon change in facts or law. The Company has no unrecorded tax contingencies.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

A reconciliation of the beginning and ending amount of tax contingencies is as follows:


	2008			2007

Balance as of the beginning of the year	$	3,089		$	2,643
Additions based on tax contingencies related to the current year		505			420
Additions for tax contingencies for prior years		—			26
Settlements		(2,697	)		—


Balance as of the end of the year	$	897		$	3,089

		All of the liability for tax contingencies would affect income tax incurred if not realized. There are no contingencies for which it is reasonably possible the total tax contingency will significantly increase or decrease within the next 12 months.

		The Company classifies all interest and penalties as income tax expense. The 2008 expense for interest and penalties was $12 ($8 net of tax benefit); for 2007, this amount was $396 ($258 net of tax); for 2006, this amount was $93 ($61 net of tax). The Company has recorded $160 and $543 in gross liabilities for tax related interest and penalties on its Statutory Statement of Admitted Assets, Liabilities and Capital and Surplus at December 31, 2008 and 2007, respectively.

(6)		Restrictions of Surplus

		The amount of dividends which can be paid by Illinois insurance companies without prior approval of the State Insurance Commissioner is subject to restrictions relating to profitability and statutory surplus. Dividends which may be paid to the Parent Company during 2009 without prior approval are approximately $27,000. Ordinary dividends of $24,000, $0 and $0 were paid in 2008, 2007 and 2006, respectively.

(7)		Fair Value of Financial Instruments

		The Company’s financial assets and financial liabilities carried at fair value have been classified, for disclosure purposes, in accordance with Statement of Financial Accounting Standards No. 157 (FAS 157), Fair Value Measurements. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.

		Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No. 157 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)


Level 1		Unadjusted quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities (both common stocks and preferred stocks) that are traded in an active exchange market, as well as U.S. Treasury securities.

Level 2		Unadjusted observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments. This category generally includes certain U.S. Government and agency mortgage-backed debt securities, non-agency structured securities, corporate debt securities, preferred stocks, and separate account assets.

Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain private debt and equity investments.

As required by SFAS No. 157, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. As a result, a Level 3 fair value measurement may include inputs that are observable (Level 1 or Level 2) and unobservable (Level 3). Net transfers in (out) of Level 3 are reported as having occurred at the end of the reporting period in which the transfers were determined.

The following discussion describes the valuation methodologies used for financial assets measured at fair value. For fixed maturities, equity securities, and short-term and other investments, fair value equals quoted market value, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities, adjusted for differences between the quoted securities and the securities being valued. The fair value of mortgage loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and the same remaining maturities. The fair value of contract loans is based on estimates using discounted cash flow analysis and current interest rates being offered for new loans.

The fair values of annuity contract liabilities and policyholder account balances on interest-sensitive life contracts are equal to the discounted estimated future cash flows (using the Company’s current interest rates earned on its investments) including an adjustment for risk that the timing or amount of cash flows will vary from management’s estimate.

Policyholder funds on deposit are supplementary contract reserves and dividend accumulations which represent deposits that do not have defined maturities. The carrying value of these funds is used as a reasonable estimate of fair value.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2008 and other assets and liabilities not carried at fair value but for which the disclosure is meaningful. In addition, the table includes the carrying amounts and fair values of financial instruments at December 31, 2007.


					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using (1)
	Amount		Value		Level 1		Level 2		Level 3
December 31, 2008
Financial Assets
Investments
Fixed maturities (3)	$	3,134,911	$	2,868,159	$	33,196	$	2,804,933	$	30,030
Equity securities (4)		67,841		50,957		37,899		13,059		—
Short-term and other investments (2)(5)		260,139		263,922		136,766		748		—

Total investments		3,462,891		3,183,038		207,861		2,818,740		30,030

Separate Account (variable annuity) assets		965,217		965,217		—		965,217		—

Financial Liabilities
Policyholder account balances on interest- sensitive life contracts		80,250		70,580
Annuity contract liabilities		2,125,672		1,877,400
Other policyholder funds		127,854		127,854

Separate Account liability		965,217		965,217

December 31, 2007
Financial Assets
Investments
Fixed maturities (3)	$	3,125,000	$	3,123,375
Equity securities (4)		54,365		50,559
Short-term and other investments (2)(5)		147,757		150,762
Short-term investments, loaned securities collateral		76,848		76,711

Total investments		3,403,970		3,401,407

Separate Account (variable annuity) assets	$	1,562,210	$	1,562,210

Financial Liabilities
Policyholder account balances on interest- sensitive life contracts		80,751		73,848
Annuity contract liabilities		1,982,252		1,768,074
Other policyholder funds		137,263		137,263

Separate Account liability		1,562,210		1,562,210


(1)		At December 31, 2008, this information is not required for financial liabilities or for periods prior to the adoption of SFAS No. 157.

(2)		Fair value of “Short-term and other investments” includes investments for which inputs to fair value measurements are not required. Inputs to fair value measurements are provided only for those investments carried at fair value.

(3)		Fixed maturities include bonds, preferred stocks with sinking funds, and surplus debentures (other assets).

(4)		Equities include preferred stocks without sinking funds and common stocks.

(5)		Short-term and other investments include mortgage loans, contract loans, and short-term investments.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

The following table presents a reconciliation for all Level 3 assets measured at fair value on a recurring basis for the period January 1, 2008 to December 31, 2008.


	Level 3 Assets
	Fixed			Equity
	Maturities			Securities		Total
Financial Assets
Beginning balance, January 1, 2008	$	657		$	—	$	657
Total net gains (losses) (unrealized)		2			—		2
Paydowns and maturities		(596	)		—		(596	)
Purchases, sales, issuances and settlements		—			—		—
Transfers in (out) of Level 3		29,967			—		29,967

Ending balance, December 31, 2008	$	30,030		$	—	$	30,030

(8)		Differences Between U.S. Generally Accepted Accounting Principles and Statutory Accounting Practices

		Statutory accounting practices differ in some respects from U.S. generally accepted accounting principles (GAAP). The most significant differences between statutory accounting practices and GAAP are highlighted by the following descriptions of the GAAP treatment:

	(a)		Aggregate reserves for future life benefits are computed on the net level premium method using estimates of future investment yield, mortality, and withdrawal.

	(b)		Aggregate reserve for annuity contracts are carried at accumulated policyholder values without reduction for potential surrender or withdrawal charges.

	(c)		Annuity considerations and other fund deposits are reflected as deposits rather than revenue.

	(d)		Acquisition costs are deferred and amortized in proportion to anticipated premiums over the terms of the insurance policies for individual life contracts and amortized over 20 years in proportion to estimated gross profits for interest-sensitive life and investment (annuity) contracts.

	(e)		Non-admitted assets are restored to the balance sheet less applicable allowance accounts.

	(f)		Asset valuation and interest maintenance reserves are not provided.

	(g)		The assets and liabilities are revalued as of the date of acquisition of HMEC and its subsidiaries in August, 1989.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

	(h)		Realized investment gains (losses) resulting from changes in interest rates are recognized in operations when the related security is sold.

	(i)		Reinsurance ceded credits are recognized as assets in GAAP basis financial statements.

	(j)		Fixed maturity investments (bonds) categorized as available for sale. Such investments are carried at fair value with changes in fair value charged or credited to shareholder’s equity, net of deferred income taxes and the amortization of capitalized acquisition costs.

	(k)		The statement of cash flows is presented in a format as prescribed by Statement of Financial Accounting Standards No. 95.

	(l)		A statement of comprehensive income (loss) is required.

	(m)		The realization of DTAs under GAAP is evaluated utilizing a “more likely than not” standard. A valuation allowance is established for DTAs deemed not realizable using this standard. Changes in the balances of DTAs and DTLs result in increases or decreases of operations under GAAP.

	(n)		Deferred premium assets are not provided.

	(o)		Tax liabilities are recorded only if it is more likely than not the position will not be sustainable upon audit by taxing authorities.

	(p)		Policy and contract fees are recognized through the statements of operations when due. Under GAAP, these amounts are reported as unearned revenue and are recognized in income over the period in which the services are provided.

		The aggregate effect of the foregoing differences has not been determined separately for the Company.

(9)		Reinsurance

		The Company cedes reinsurance primarily to limit losses from large exposures and to permit recovery of a portion of direct losses; however, such a transfer does not relieve the Company of its primary obligation to the policyholders.

		Information with respect to reinsurance ceded and assumed by the Company is set forth below.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)


	2008		2007		2006

Direct life insurance premiums	$	101,789	$	101,435	$	102,978
Life insurance premiums ceded:
To ALIC		1,531		1,518		1,558
Other		3,222		3,160		3,256

Net life insurance premiums as reported		97,036		96,757		98,164

Life insurance reserves ceded:
To ALIC		13,362		12,751		12,070
To other companies		4,196		4,591		4,434
Accident and health premiums ceded:
To other companies		1,856		2,043		2,112
Amounts recoverable from reinsurers on paid losses		238		440		754

		The maximum amount of direct individual ordinary insurance retained on any standard life is $200 and a maximum of $100 or $125 is retained on each group life policy depending on the type of coverage. Amounts in excess of the retained portion are ceded on a yearly renewable term basis of reinsurance. The Company also maintains a life catastrophe reinsurance program. The Company reinsures 100% of the catastrophe risk in excess of $1,000 up to $15,000 per occurrence, with one reinstatement. The Company’s catastrophe risk reinsurance program covers acts of terrorism and includes nuclear, biological and chemical explosions but excludes other acts of war.

		The Company has a quota share reinsurance agreement with Hartford Life and Accident Insurance Company and cedes 50% of the Company’s disability income policies.

(10)		Pension Plans and Other Postretirement Benefits

		The Company is a member of the Horace Mann group of insurance companies. All the Company’s personnel are employees of HMSC. Salaries, pension and related benefits are allocated to the Company for these services.

Pension Plans

		HMSC has the following retirement plans: a defined contribution plan; a 401(k) plan; a defined benefit plan for employees hired on or before December 31, 1998; and certain employees participate in a supplemental defined benefit plan or a supplemental defined contribution plan or both.

		After completing the first year of employment, all employees of HMSC participate in the defined contribution plan. Under the defined contribution plan, HMSC makes contributions to each participant’s account based on eligible compensation and years of service. Through December 31, 2006, participants were 100% vested in this plan after 5 years of service. Effective January 1, 2007, participants are 100% vested in this plan after 3 years of service.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

		All employees of HMSC participate in a 401(k) plan. HMSC contributes 3% of eligible compensation to each employee’s account, which is 100% vested at the time of the contribution. In addition, employees may voluntarily contribute up to 20% of their eligible compensation into their account.

		Effective April 1, 2002, participants stopped accruing benefits under the defined benefit and supplemental defined benefit plans but continue to retain the benefits they had accrued to date. Amounts earned under the defined benefit and supplemental defined benefit plans have been based on years of service and the highest 36 consecutive months of earnings while under the plan (through March 31, 2002). Participants were 100% vested in these defined benefit plans effective April 1, 2007.

		HMSC’s policy with respect to funding the defined benefit plan is to contribute to the plan trust amounts which are actuarially determined to provide the plan with sufficient assets to meet future benefit payments consistent with the funding requirements of federal laws and regulations. For the defined contribution, 401(k) and defined benefit plans, investments have been set aside in separate trust funds; whereas the supplemental retirement plans are unfunded non-qualified plans.

		Employees whose compensation exceeds the limits covered under the qualified plans participate in an unfunded, non-qualified defined contribution plan. HMSC accrues an amount for each participant based on their compensation, years of service and account balance. Participants are 100% vested in this plan after 5 years of service.

		The Company has no obligations to current or former employees for benefits after their employment but before their retirement.

		Total pension expense allocated to the Company was $4,777, $4,811, and $5,609 for 2008, 2007 and 2006, respectively.

Postemployment Benefits

		In addition to providing pension benefits, HMSC also provides certain health care and life insurance benefits to retired employees and eligible dependents. Effective January 1, 2004, only employees who were at least age 50 with a minimum of 15 years of service in 2004 were eligible to continue in this program. Postretirement benefits other than pensions of active and retired employees were accrued as expense over the employees’ service years. The allocated cost of these benefits totaled $(1,044), $(1,773), and $(495) for the years ended December 31, 2008, 2007 and 2006, respectively.

		Effective January 1, 2007, HMSC eliminated the previous health care benefits for individuals 65 years of age and over and established a Health Reimbursement Account (HRA) for each eligible participant. Also, the new plan does not provide life insurance benefits to individuals who retired after December 31, 1993.

(11)		Lawsuits and Legal Proceedings

		There are various lawsuits and legal proceedings against the Company. Management and legal counsel are of the opinion that the ultimate disposition of such litigation will have no material adverse effect on the Company’s financial position or results of operation.

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

The Company is subject to guaranty fund and other assessments by the states in which it writes business. Guaranty fund assessments are accrued at the time of insolvencies. Other assessments are accrued either at the time of assessment or in the case of loss based assessments, at the time the losses are incurred.

Extra Contractual Obligations

		The Company paid claims-related extra contractual obligations and bad faith losses of $201, $275, and $226 during 2008, 2007, and 2006 respectively. The number of claims paid to settle claims-related extra contractual obligations or bad faith losses resulting from lawsuits was between 51-100 in 2008, 2007, and 2006 respectively.

(12)		Risk-Based Capital

		The insurance departments of various states, including the Company’s domiciliary state of Illinois impose risk-based capital (RBC) requirements on insurance enterprises. The RBC calculation serves as a benchmark for the regulation of insurance companies by state insurance regulators. The requirements apply various weighted factors to financial balances or activity levels based on their perceived degree of risk.

		The RBC guidelines define specific capital levels where regulatory intervention is required based on the ratio of a company’s actual total adjusted capital (sum of capital and surplus and AVR) to control levels determined by the RBC formula. At December 31, 2008, the Company’s actual total adjusted capital was $270,525 and the authorized control level risk-based capital was $27,063.

(13)		Risk Disclosures

		The Company’s business involves various risks and uncertainties which are based on general business and insurance industry environments. The following are some of the risk factors that could affect the Company:

		Investment Risks

		The Company’s fixed income portfolio is subject to a number of risks including:

	•		market value risk, which is the risk that invested assets will decrease in value due to a change in the yields realized on assets and prevailing market yields for similar assets, an unfavorable change in the liquidity of the investment or an unfavorable change in the financial prospects or a downgrade in the credit rating of the issuer of the investment;

	•		credit risk, which is the risk that the value of certain investments becomes impaired due to deterioration in financial condition of one or more issuers of those instruments or the deterioration in performance or credit quality of the underlying collateral of certain structured securities and, ultimately, the risk of permanent loss in the event of default by an issuer or underlying credit;

	•		market fundamentals risk, which is the risk that there are changes in the market that can have an unfavorable impact on securities valuation such as availability of credit in the capital markets, re-pricing of credit risk, reduced market liquidity, and increased market volatility;

	•		reinvestment risk, which is the risk that interest rates will decline and funds reinvested will earn less than expected;

(Continued)

HORACE MANN LIFE INSURANCE COMPANY

Notes to Statutory Financial Statements

(In thousands)

•

concentration risk, which is the risk that the portfolio may be too heavily concentrated in the securities of one or more issuers, sectors or industries, which could result in a significant decrease in the value of the portfolio in the event of deterioration in the financial condition of those issuers or the market value of their securities;

•

liquidity risk, which is the risk that liabilities are surrendered or mature sooner than anticipated requiring the Company to sell assets at an undesirable time to provide for policyholder surrenders, withdrawals or claims; and

•

regulatory risk, which is the risk that regulatory bodies or governments, in the U.S. or in other countries, may make substantial investments or take significant ownership positions in, or ultimately nationalize, financial institutions or other issuers of securities held in the Company’s investment portfolio, which could adversely impact the seniority or contractual terms of the securities.

Interest Rate Risk

Significant changes in interest rates expose the Company to the risk of not earning income or experiencing losses based on the differences between the interest rates earned on investments and the credited interest rates paid on outstanding fixed annuity and interest-sensitive life contracts. Significant changes in interest rates may affect:

	•		the unrealized gains and losses in the investment portfolio

	•		the book yield of the investment portfolio; and

	•		the ability of the Company to maintain appropriate interest rate spreads over the fixed rates guaranteed in their life and annuity products.

Credit Risk

Third parties that owe money, securities or other assets to the Company may not pay or perform their obligations. These parties may include the issuers of securities, customers, reinsurers, and other financial intermediaries

Ratings Risk

Claims-paying ratings and financial strength ratings have become an increasingly important factor in establishing the competitive position of insurance companies. Each rating agency reviews its ratings periodically and from time to time may modify its rating criteria including, among other factors, its expectations regarding capital adequacy, profitability and revenue growth. A downgrade in the ratings or adverse change in the ratings outlook of the Company could result in a substantial loss of business.

Legal/Regulatory Risk

The Company is subject to extensive regulation and supervision designed to protect the interests of policyholders. The ability to comply with laws and regulations, at a reasonable cost, and to obtain necessary regulatory action in a timely manner, is and will continue to be critical. Legal/regulatory risk also includes risks related to market conduct and appropriate product sales to policyholders.

HORACE MANN LIFE INSURANCE COMPANY
SUPPLEMENTARY INSURANCE INFORMATION — SCHEDULE III & VI
For the years ended December 31, 2008, 2007 and 2006
(Amounts in thousands)


	As of December 31,						For the years ended December 31,
		Future policy					Premium revenue						Amortization
	Deferred	benefits			Other policy		and annuity,				Benefits,		of deferred
	policy	losses, claims			claims and		pension and		Net		claims, losses		policy	Other
	acquisition	and loss		Unearned	benefits		other contract		investment		and settlement		acquisition	operating		Premiums
Segment	cost(1)	expenses(3)		premiums(3)	payable		considerations		income		expenses		costs(1)	expenses		written(2)
2008:
Life		$	1,007,395		$	3,272	$	97,036	$	57,947	$	102,026		$	37,322
Annuity			2,025,288			—		311,747		121,028		398,377			43,700
Supplementary Contracts			106,399			124,529		6,753		15,131		17,685			2,208
Accident and Health			6,568			53		3,911		593		1,994			2,702


Total		$	3,145,650		$	127,854	$	419,447	$	194,699	$	520,082		$	85,932


2007:
Life		$	970,767		$	3,368	$	96,757	$	55,284	$	96,388		$	39,038
Annuity			1,871,643			—		337,148		111,181		411,731			45,352
Supplementary Contracts			114,444			133,863		9,044		17,696		21,215			2,425
Accident and Health			6,912			32		4,105		888		1,492			2,661


Total		$	2,963,766		$	137,263	$	447,054	$	185,049	$	530,826		$	89,476


2006:
Life		$	938,754		$	3,461	$	98,164	$	51,617	$	95,438		$	42,100
Annuity			1,804,470			—		325,691		102,944		395,171			45,776
Supplementary Contracts			111,851			137,435		9,017		16,968		21,904			2,757
Accident and Health			7,824			62		4,219		939		1,859			3,268


Total		$	2,862,899		$	140,958	$	437,091	$	172,468	$	514,372		$	93,901


(1)		Does not apply to financial statements of life insurance companies which are prepared on a statutory basis.

(2)		Does not apply to life insurance.

(3)		Unearned premiums and other deposit funds are included in future policy benefits, losses, claims and loss expenses.

See accompanying report of independent auditors’ report.

(1) Resolution of Board of Directors⁽¹⁾

(2) Not Applicable

(3) Underwriting Agreement⁽¹⁾

(4) Form of Variable Annuity Contract⁽²⁾

(5) Form of application

(6) Certificate of incorporation and bylaws ⁽²⁾

(7) Not Applicable

(8) Not Applicable

(9) Opinion and Consent of Counsel Filed Herewith

(10) Independent Auditors Consent Filed Herewith

(11) Financial Statement Schedules for Horace Mann Life Insurance Company and the Independent Auditors’ Report thereon Filed Herewith

(12) Not Applicable

(1)

Incorporated by reference to Horace Mann Life Insurance Separate Account Post-Effective Amendment No. 63 to Form N-4 Registration Statement, dated April 30, 1998 (File No. 811-1343).

(2) Incorporated by reference to Horace Mann Life Insurance Separate Account Pre-Effective Amendment No. 1 to Form N-4 Registration Statement, dated February 14, 2006 (File No. 811-1343).

Item 25. Directors and Officers of the Depositor

The directors and officers of Horace Mann Life Insurance Company, who are engaged directly or indirectly in activities relating to the Registrant or the variable annuity contracts offered by the Registrant, are listed below. Their principal business address is One Horace Mann Plaza, Springfield, Illinois 62715.


Name		Position and Office with Depositor
Peter H. Heckman		Director and Executive Vice President, Chief Financial Officer
Ann M. Caparros		Director, Vice President, General Counsel, Corporate Secretary & Chief Compliance Officer
Louis G. Lower II		Director, Chairman, President & Chief Executive Officer
Paul D. Andrews		Director and Senior Vice President
Angela S. Christian		Vice President & Treasurer
Brent Hamann		Senior Vice President

Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant

According to Section 21 of the Distribution Agreement, Horace Mann Life Insurance Company agrees to indemnify Horace Mann Investors, Inc. for any liability Horace Mann Investors, Inc. may incur to a Contract Owner or party-in-interest under a Contract (i) arising out of any act or omission in the course of, or in the connection with, rendering services under this Agreement, or (ii) arising out of the purchase, retention or surrender of a Contract; provided however the Horace Mann Life Insurance Company will not indemnify Horace Mann Investors, Inc. for any such liability that results from the willful misfeasance, bad faith or gross negligence of Horace Mann Investors, Inc., or from the reckless disregard, by Horace Mann Investors, Inc., of its duties and obligations arising under the Distribution Agreement.

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the Act, 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.

Item 29. Principal Underwriters

(a) Horace Mann Investors, Inc., the underwriter of Horace Mann Life Insurance Company Separate Account, acts as principal underwriter for Horace Mann Life Insurance Company Separate Account B, Horace Mann Life Insurance Company Allegiance Separate Account A, Horace Mann Life Insurance Company Qualified Group Annuity Separate Account and Horace Mann Life Insurance Group Annuity Separate Account.

(b) The following are the directors and officers of Horace Mann Investors, Inc. Their principal business address is One Horace Mann Plaza, Springfield, Illinois 62715.


Name		Position with Underwriter
Harry L. Mitchell		President
Joseph D. Terry		Chief Compliance Officer
Peter H. Heckman		Director
Rhonda R. Armstead		Secretary
Diane M. Barnett		Tax Compliance Officer


Name		Position with Underwriter
Angela S. Christian		Treasurer
Bret A. Conklin		Controller
Paul D. Andrews		Director
Ann M. Caparros		Director

(c) The following is a listing of the commissions and other compensation received by the principal underwriter from the Registrant, Horace Mann Life Insurance Company Separate Account B, Horace Mann Life Insurance Company Allegiance Separate Account A, Horace Mann Life Insurance Group Annuity Separate Account and the Horace Mann Life Insurance Company Qualified Group Annuity Separate Account during the fiscal year ended December 31, 2008:

Name of

Compensation

Principal

Net Underwriting Discounts

Brokerage

Underwriter

and Commission

Redemption

Commission

Compensation

Horace Mann Investors, Inc.

5,478,911

N/A

Item 30. Location of Accounts and Records

Horace Mann Investors, Inc., underwriter of the Registrant, is located at One Horace Mann Plaza, Springfield, Illinois 62715. Horace Mann Investors, Inc. maintains those accounts and records associated with its duties as underwriter required to be maintained pursuant to Section 31(a) of the Investment Company Act and the rules promulgated thereunder.

Horace Mann Life Insurance Company, the depositor, is located at One Horace Mann Plaza, Springfield, Illinois 62715. Horace Mann Life Insurance Company maintains those accounts and records required to be maintained pursuant to Section 31(a) of the Investment Company Act of 1940 and the rules promulgated thereunder that are not maintained by Horace Mann Investors, Inc.

Item 31. Management Services

Not applicable.

Item 32. Undertakings

(a) Horace Mann Life Insurance Company and the Registrant are relying on a no-action letter from the Securities and Exchange Commission that was issued to the American Council of Life Insurance and made publicly available on November 28, 1988. That letter outlines conditions that must be met if a company offering registered annuity contracts imposes the limitations on surrenders and withdrawals on section 403(b) contracts as required by the Internal Revenue Code. Horace Mann Life Insurance Company and the Registrant are in compliance with the conditions of that no-action letter.

(b) Horace Mann Life Insurance Company represents that the fees and charges deducted under the variable annuity contract described in the prospectus, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company.

(c) The Registrant undertakes to file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments may be accepted under the variable annuity contracts described in the prospectus.

(d) The Registrant undertakes to include either: (i) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a statement of additional information; or (ii) a postcard or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a statement of additional information.

(e) The Registrant undertakes to deliver any statement of additional information and any financial statements required to be made available under this Form promptly upon written request.

	o		Immediately upon filing pursuant to paragraph (b) of Rule 485


	þ		On May 1, 2009 pursuant to paragraph (b) of Rule 485


	o		60 days after filing pursuant to paragraph (a)(1) of Rule 485


	o		On May 1, 2009 pursuant to paragraph (a)(1) of Rule 485


Admitted Assets	2008		2007

Cash and investments:
Bonds	$	3,066,172	$	2,991,877
Bonds on loan		—		74,599
Preferred stocks		105,579		94,082
Common stocks		14,572		2,379
Mortgage loans on real estate		16,142		16,696
Cash		1,962		11,902
Short-term investments		137,516		31,342
Short-term investments, loaned securities collateral		—		76,848
Contract loans		106,481		99,712
Receivable for securities and other invested assets		16,429		16,435


Total cash and investments		3,464,853		3,415,872

Investment income due and accrued		37,664		36,972

Uncollected premiums and agents’ balances in course of collection		767		764

Deferred premiums and agents’ balances booked but deferred and not yet due		46,064		45,932

Current federal income tax recoverable		9,299		1,495

Deferred tax assets		3,936		4,090

Guaranty funds receivable or on deposit		298		357

Receivable from parent, subs or affiliates		11,477		—

Other assets		1,259		2,188

Variable annuity assets held in separate accounts		965,217		1,562,210


Total admitted assets	$	4,540,834	$	5,069,880


Liabilities and Capital and Surplus	2008			2007

Policy liabilities:
Aggregate reserves:
Life and annuity	$	3,125,961		$	2,947,947
Accident and health		6,295			6,670
Unpaid benefits:
Life		13,121			8,906
Accident and health		273			243
Policyholder funds on deposit		127,854			137,263
Remittances not allocated		865			1,876


Total policy liabilities		3,274,369			3,102,905

Accrued expenses		2,110			2,240
Asset valuation reserve		92			19,428
Interest maintenance reserve		26,111			30,383
Amounts retained by Company as trustee		12,568			12,124
Payable to parent, subsidiaries and affiliates		30			488
Payable for securities and other liabilities		503			2,068
Escrow for securities lending		—			76,850
Transfer from separate accounts accrued for expense allowances recognized in reserves		(10,599	)		(15,427	)
Variable annuity liabilities held in separate accounts		965,217			1,562,210


Total liabilities		4,270,401			4,793,269


Capital and surplus:
Capital stock, $1 par value.
Authorized 5,000,000 shares, 2,500,000 shares outstanding		2,500			2,500
Additional paid-in capital and contributed surplus		43,704			43,704
Unassigned surplus		224,229			230,407


Total capital and surplus		270,433			276,611


Total liabilities and capital and surplus	$	4,540,834		$	5,069,880


	2008		2007

Bonds, preferred stock and short-term investments	$	67	$	19,400
Mortgage loans		25		28


Total AVR	$	92	$	19,428

		Assets held in trust for purchasers of variable annuity contracts and the related liabilities are included in the statutory statements of admitted assets, liabilities and capital and surplus. Variable annuity assets, carried at fair value, and liabilities represent tax-qualified variable annuity funds invested in various mutual funds.

		The investment income, gains and losses of these accounts accrue directly to the policyholders and are not included in the operations of the Company.

		Reconciliation of transfers to (from) separate account is as follows:


	2008			2007

Transfers to separate account	$	135,194		$	150,298
Transfers from separate account		(148,406	)		(151,196	)


Net transfers to separate account	$	(13,212	)	$	(898	)

(3)		Reserves

		The composition of aggregate reserves for life policies, annuity contracts, and supplementary contracts with life contingencies at December 31 was as follows:


	Aggregate reserves				Mortality		Interest
	2008		2007		table		rates

Life	$	770,233	$	737,860	1980 CSO			4.0-6.0	%
		1,425		1,379	1958 CET			2.5-4.5
		150,015		153,180	1958 CSO			2.5-4.5
		71,793		66,173	Various			2.5-5.5
		6,823		7,103	1941 CSO			2.5-3.0

Annuity		1,383,121		1,313,072	1971 IAM			3.0-5.5
		68,780		70,676		a-1949		3.0-5.5
		1,130		1,152	1937 SAT			3.0
		558		80	Various			3.0
		415,896		339,309		a-2000		1.5-3.5
		150,008		143,547		1983a		3.0-4.5

Supplementary contract with life contingencies		41,462		46,500		1983a		6.25-11.0
		62,983		65,779		a-2000		5.25-7.0
		1,481		1,775	1971 IAM			4.5-11.25
		253		362	1937 SAT			3.5

Total	$	3,125,961	$	2,947,947


	2008					2007
			% of					% of
	Amount		Total			Amount		Total

Subject to discretionary withdrawal

With fair value adjustment	$	38,152		1	%	$	41,388		1	%
At book value less current surrender charge of 5% or more		1,178,589		37	%		1,108,014		30	%
At fair value		954,618		30	%		1,546,783		43	%


Total with adjustment or at fair value		2,171,359					2,696,185

At book value without adjustment (minimal or no charge or adjustment)		929,930		29	%		855,037		23	%
Not subject to discretionary withdrawal		106,179		3	%		114,415		3	%

Total (gross)		3,207,468		100	%		3,665,637		100	%


Reinsurance ceded		39					—

Total (net)*	$	3,207,429				$	3,665,637


*		Reconciliation of total annuity actuarial reserves and deposit fund liabilities.


	2008		2007

Life & Accident & Health Annual Statement:
Exhibit 5, Annuities Section, Total (net)	$	2,019,493	$	1,867,836
Exhibit 5, Supplementary Contracts with Life Contingencies Section, Total (net)		106,179		114,415
Exhibit 7, Deposit-Type Contracts, Line 14, Column 1		127,139		136,603


Subtotal		2,252,811		2,118,854

Separate Accounts Annual Statement:

Exhibit 3, Line 0299999, Column 2		952,235		1,543,399
Exhibit 3, Line 0399999, Column 2		2,383		3,384


Subtotal		954,618		1,546,783


Combined Total	$	3,207,429	$	3,665,637


	2008		2007		Change

Total of all DTAs (admitted and nonadmitted)	$	60,079	$	54,433	$	5,646
Total of all DTLs		20,326		20,340		(14	)

Net DTAs		39,753		34,093		5,660
Total DTAs non-admitted		35,817		30,003		5,814

Net admitted DTAs	$	3,936	$	4,090	$	(154	)


	2008		2007

Benefit reserves	$	28,885	$	35,645
Deferred acquisition costs		10,148		10,323
Impairments		15,666		1,939
Unrealized losses		150		341
Operating expense accruals		4,799		6,185
Capital loss carryforward		431		—


Total DTAs	$	60,079	$	54,433


Total DTAs non-admitted	$	35,817	$	30,003


Admitted DTAs	$	24,262	$	24,430


					Amount
					shown in
			NAIC		Balance
Type of investments	Cost(1)		Fair Value		Sheet

Debt securities:
Bonds:
U.S. Government and government agencies and authorities	$	916,008	$	939,409	$	916,008
State, municipalities and political subdivisions		49,483		48,061		49,483
Foreign government bonds		13,188		13,748		13,188
Public utilities		252,308		238,406		252,308
Other corporate bonds		1,835,185		1,569,681		1,835,185


Total debt securities	$	3,066,172	$	2,809,305	$	3,066,172


Equity securities:

Preferred stocks:
Industrial and miscellaneous		105,579		—		105,579
Common stocks		14,572		—		14,572


Total equity securities	$	120,151	$	—	$	120,151


Mortgage loans on real estate		16,142	XXX			16,142
Real estate		—	XXX			—
Contract loans		106,481	XXX			106,481
Short-term investments		137,516	XXX			137,516
Receivable for securities		—	XXX			—
Other investments		16,429	XXX			16,429


Total investments	$	3,462,891	XXX		$	3,462,891


(1)		Debt securities are carried at amortized cost or investment values prescribed by the National Association of Insurance Commissioners.

(2)		Real estate acquired in satisfaction of indebtedness is $0.

(3)		Differences between cost and amounts shown in the balance sheet for investments, other than equity securities, represent non-admitted investments.


									Percentage
			Ceded to		Assumed				of amount
	Gross		other		from other		Net		assumed
	amount		companies		companies		amount		To net

2008: Life insurance in force	$	13,671,845	$	2,181,008	$	—	$	11,490,837		0.0	%


Premiums and annuity, pension and other contract considerations:
Life insurance	$	101,789	$	4,753	$	—	$	97,036		0.0	%
Annuity		311,747		—		—		311,747		0.0	%
Supplementary contracts		6,753		—		—		6,753
Accident and health		5,767		1,856		—		3,911		0.0	%


Total premiums	$	426,056	$	6,609	$	—	$	419,447		0.0	%


2007: Life insurance in force	$	13,576,538	$	1,957,797	$	—	$	11,618,741		0.0	%


Premiums and annuity, pension and other contract considerations:
Life insurance	$	101,435	$	4,678	$	—	$	96,757		0.0	%
Annuity		337,148		—		—		337,148		0.0	%
Supplementary contracts		9,044		—		—		9,044
Accident and health		6,148		2,043		—		4,105		0.0	%


Total premiums	$	453,775	$	6,721	$	—	$	447,054		0.0	%


2006: Life insurance in force	$	13,400,292	$	1,869,947	$	—	$	11,530,345		0.0	%


Premiums and annuity, pension and other contract considerations:
Life insurance	$	102,978	$	4,814	$	—	$	98,164		0.0	%
Annuity		325,691		—		—		325,691		0.0	%
Supplementary contracts		9,017		—		—		9,017
Accident and health		6,331		2,112		—		4,219		0.0	%


Total premiums	$	444,017	$	6,926	$	—	$	437,091		0.0	%


Attest: /s/ ANN M. CAPARROS	By:	/s/ LOUIS G. LOWER II
Ann M. Caparros		Louis G. Lower II,
Corporate Secretary of the Depositor		President and Chief Executive Officer of the Depositor


SIGNATURE	TITLE	DATE

/s/ LOUIS G. LOWER II Louis G. Lower II	Director, Chairman, President and Chief Executive Officer	April 28, 2009

/s/ PETER H. HECKMAN Peter H. Heckman	Director, Executive Vice President and Chief Financial Officer	April 28, 2009

/s/ ANN M. CAPARROS Ann M. Caparros	Director, Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer	April 28, 2009

/s/ BRENT HAMANN Brent Hamann	Senior Vice President	April 28, 2009

(9)		Opinion and Consent of Counsel


(10)		Independent Auditors Consent



(11)		Financial Statement Schedules for Horace Mann Life Insurance Company and the Independent Auditors’ Report thereon)