Ohio · Kentucky · Indiana · Tennessee · West Virginia

Kevin L. Cooney
(513) 651-6712
kcooney@fbtlaw.com

April 25, 2010

Via Email (ruckmanc@sec.gov) and EDGAR

Mr. Craig Ruckman
Office of Insurance Products
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

		Re:		Annuity Investors Variable Account B
				Comments on Post-Effective Amendments filed pursuant to Section 485(a) in February 2010
				Advantage Variable Annuity Contract, File No. 333-51971

Dear Mr. Ruckman:

On behalf of Annuity Investors Variable Account B (the “Registrant”), we are hereby submitting responses to the verbal comments of the staff of the U.S. Securities and Exchange Commission (the “Staff”) that were provided to the Registrant in a telephone call on April 16, 2010. These comments were made in connection with the filing in February 2010 of a Post-Effective Amendment to the Registration Statement filed pursuant to Rule 485(a) of the Securities Act of 1933, as amended (“1933 Act”), with the following 1933 Act File No. 333-51971 (the “485(a) Filing”).

The Registrant understands that the comments of the Staff, as presented in this letter, are not the legal record of the comments. We have attempted to recite the Staff comments as accurately as possible based on our notes of the April 16, 2010 telephone call.

A copy of the revised prospectus for File No. 333-51971 (“Advantage”) the Registrant proposes, which includes changes made in response to the Staff’s comments on the prospectus in the 485(a) Filing, is attached as Attachment A (the “Advantage Prospectus”).

201 East Fifth Street, Suite 2200      Cincinnati, Ohio 45202      513.651.6800 • 513.651.6981 fax      www.frostbrowntodd.com

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 2

Response to Staff Comments

1.

General — The Prospectus Supplement: Closed Funds includes a separate set of expense examples. Please confirm supplementally that the additional examples are required to be disclosed to contract owners receiving that supplemental prospectus.

		Response:		The examples in the prospectus are based on the expense ratios of portfolios in which currently available subaccounts (“Available Subaccounts”) invest. These examples do not take into account the expense ratios of portfolios in which closed subaccounts (“Closed Subaccounts”) invest. One of the Closed Subaccounts invests in The Timothy Plan Strategic Growth Variable Series portfolio (the “Closed Timothy Portfolio.”). The 2009 expense ratio for the Closed Timothy Portfolio is higher than the expense ratio of any portfolio in which an Available Subaccount invests. Therefore, using the Closed Timothy Portfolio’s expense ratio, we will generate additional examples for a contract with maximum fund operating expenses. We will include these additional examples in the supplemental prospectus pursuant to instruction 21(b) of Item 3 of Form N-4.

2.

General — Please provide a cross-reference in the prospectus to the Prospectus Supplement: Closed Funds that indicates that such supplemental prospectus contains additional expense examples.

		Response:		We have included the following cross reference in the prospectus.
				The following investment options are available only to Contract Owners who held Accumulation Units in these Subaccounts on November 30, 2004: AIM V.I. Dynamics Fund Closed Subaccount, Janus Aspen Worldwide Growth Closed Subaccount, The Timothy Plan Conservative Growth Variable Series Closed Subaccount, and The Timothy Plan Strategic Growth Variable Series Closed Subaccount. If you still have funds allocated to one of these closed Subaccounts, please see the supplemental prospectus that accompanies this document for additional examples.

3.

General — The use of multiple continuing supplemental prospectuses fragments the disclosure in some instances. The Staff requests that the Registrant revise the prospectus to incorporate relevant information contained in the continuing supplemental prospectuses, in particular those related to contract riders, into the main prospectus and to reduce the number of continuing supplemental prospectuses associated with the contract.

		Response:		The Registrant has eliminated the supplemental prospectus related to the one-year guarantee interest rate option. With respect to the supplemental prospectus related to investment options that are no longer available with the contract, the Registrant will retain this supplemental prospectus and continue

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 3

				to distribute it to the limited number of contract owners who have previously allocated funds to such investment options. With respect to the supplemental prospectus related to riders that are no longer available with the contract, the Registrant will retain this supplemental prospectus and continue to distribute it to the limited number of contract owners who purchased contracts with these riders. The Registrant believes that targeted use of these supplemental prospectuses, which is similar to the approach described in the instructions to Item 11 of Form N-4, is appropriate because this approach ensures that affected contract owners receive relevant information and unaffected contract owners are not confused by the receipt of irrelevant information.

4.

General — Please clarify supplementally whether the Annuity Investors Life Insurance Company (the “Company”) has entered into any guarantee or support agreements with third parties to support the Company’s guarantees under the policies.

		Response:		The Company has not entered into any guarantees or support agreements with third parties to support any of the guarantees under the contracts.

5.

General — Please confirm supplementally that the contract name on the front of the prospectus is and will continue to be the same as included in the EDGAR Class Identifiers. If they are not the same, please confirm supplementally that they will be made the same by changing either the name on the prospectus or the respective EDGAR Class Identifier.

		Response:		The name of the contract on the front of the prospectus is, and will continue to be, the name included in the EDGAR Class Identifier for the contract.

6.

General — Please clarify supplementally if the Registrant qualifies for and intends to rely upon Rule 12h-7 under the Exchange Act, and if so, include a statement to that effect in the prospectus.

		Response:		The Registrant does not intend to rely upon Rule 12h-7 under the Securities Exchange Act of 1934.

7.

Cover Page — Please add a statement that notes that fees and expenses for contracts that have bonuses may be higher than those that don’t have bonuses and that such fees and expenses may more than offset the amount of such bonus.

		Response:		The Registrant has added the following text to the cover page of the prospectus.
				The Contract’s fees and charges may be higher than those of a contract without a purchase payment bonus and the amount of the purchase payment bonus under the Contact may be more than offset by the Contract’s higher

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 4

				fees and charges. In addition, the contingent deferred sales charges under the Contract may be assessed for a longer period than those under a contract without a purchase payment bonus. More information about the Purchase Payment bonus is included in the Purchase Payment Bonus section of this prospectus.

8.

Cover Page — Please add a statement that withdrawal periods may be imposed for longer periods of time on contracts that have a bonus than those that don’t have a bonus.

		Response:		The Registrant has added the text set our in the previous response to the cover page of the prospectus.

9.

Expense Tables — Table A — Please convert the descriptive text in the table to table footnotes.

		Response:		The Registrant made the requested changes.

10.

Expense Tables — Table A: Contract Owner Transaction Expenses (CDSC) — Please add a footnote to Contingent Deferred Sales Charge in the table that provides (a) that the CDSC will be waived under certain circumstances, (b) includes a cross-reference to the Charges section of the prospectus and (c) if accurate, confirm that the CDSC will be charged when the contract is annuitized.

		Response:		The Registrant has added a footnote to Maximum Contingent Deferred Sales Charges in Table A that provides additional information about CDSCs, including that the CDSC may be waived under certain circumstances. In addition, a cross-reference to the Charges and Deductions section of the prospectus was included in the new footnote. The CDSC does not apply to any annuitization under the Contract.

11.

Expense Tables — Table A: Contract Owner Transaction Expenses (Loan Interest Spread) — Please clarify in a footnote to Table A and in the Contract Loans section of the prospectus the “maximum loan rate” and the components of the “loan interest spread”. In addition, please include the collateralization requirements for contract loans in the footnote.

		Response:		The narrative text under Loan Interest Spread in Table A was moved to a footnote. The footnote was expanded to include information regarding the collateralization requirements for contract loans, the maximum loan rate of the Company and the components of the loan interest spread.

12.

Expense Tables — Narrative Following Table C: Total Annual Portfolio Operating Expenses — In the paragraph discussing the Ibbotson Portfolios following Table C, please add disclosure that the contract holder will effectively be paying the management fees of the “acquired funds.”

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 5

		Response:		The Registrant has added the requested statement.

13.

Examples — Please confirm supplementally that the examples are based upon $10,000 + 5% annual return and not $10,400 (i.e., including bonus) + 5% annual return.

		Response:		The Registrant confirms that the examples are based on a $10,000 purchase payment without any adjustment for the purchase payment bonus.

14.

Examples — Please make the title for Table B and the description of the applicable fees in the Examples consistent for ease of cross-reference. In addition, please confirm that the CDSC will not be referred to as the “early withdrawal charge”.

		Response:		The reference in the first paragraph under the Examples heading of the prospectus was modified to refer to Annual Expenses, which is the same as the title to Table B. The CDSC will not be referred to as an “early withdrawal charge” and an inadvertent reference as such was deleted.

15.

Examples — Why do the example assumptions refer to a “minimum” and “maximum” Separate Account annual expenses if they are the same? If no difference, please remove “minimum” and “maximum” descriptors. Please confirm supplementally that Expense Tables - Table B includes the maximum expense amounts.

		Response:		The Registrant confirms that the maximum expense amounts are included in Table B of the Expense Tables. The Registrant revised the descriptions of the examples to clarify any references to “minimum Separate Account annual expenses” or “maximum Separate Account annual expenses.”

16.

Examples — From a review of the examples, the Staff assumes that the CDSC is imposed upon annuitization. Please direct the Staff to the disclosure in the prospectus of the imposition of the CDSC upon annuitization. In addition, if such disclosure is not included in the prospectus, please add the appropriate disclosure regarding the imposition of the CDSC upon annuitization.

		Response:		The CDSC does not apply to any annuitization under the contracts. The Registrant has revised the Examples section to specifically indicate whether the CDSC applies to the transactions illustrated in each of the examples.

17.

Overview — What Benefits are Available Under the Contract? — Please add a statement that describes that a withdrawal of Account Value may result in a reduction of the Death Benefit amount by more than the amount of the withdrawal.

		Response:		The Registrant has added the requested statement.

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 6

18.

Fixed Accounts — Please include a statement that the Fixed Accounts are part of the Company’s general accounts.

		Response:		The Registrant has added the requested statement.

19.

Purchase Payments and Allocation to Investment Options — In the opening paragraph, please add a cross-reference to the Automatic Transfer Programs.

		Response:		The Registrant has added the requested cross-reference.

20.

Purchase Payments and Allocation to Investment Options — Please capitalize the term “Good Order” throughout the prospectus.

		Response:		The Registrant has capitalized the term “Good Order” throughout the prospectus.

21.

Purchase Payments and Allocation to Investment Options — Please add a discussion regarding how Net Investment Factors are determined.

		Response:		The Registrant has added a discussion of the Net Investment Factor in the Definitions section of the prospectus.

22.

Purchase Payment Bonus — Please confirm supplementally that the Registrant has relief under Section 2(a)(32), Section 22(c) and Section 27(i)(2)(a) of the Investment Company Act of 1940 (the “Act”) and Rule 22c-1 for the recapture of bonus credits.

		Response:		The Registrant has received an order (Release No. 25273 dated November 19, 2001) under Section 6(c) of the Act, granting exemptions from the provisions of Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder, to permit, under specified circumstances, the recapture of certain bonuses applied to purchase payments made under the Advantage contract.

23.

Purchase Payment Bonus — Please include the Bonus Recapture Charge in the Fee Table.

		Response:		The Registrant has added text after Table A that explains the circumstances in which it will recapture a purchase payment bonus previously credited to the owner’s account.

24.

Purchase Payment Bonus — Please include an example of the operation of the bonus including the impact of subsequent purchase payments, withdrawals and CDSCs will have on the bonus.

		Response:		The Registrant has added to the prospectus an example that shows how the bonus works.

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 7

25.

Purchase Payments and Allocation to Investment Options — Please clarify whether the amounts allocated to a Fixed Account Option with Guarantee Period are subject to penalty for transfer out of such Fixed Account Option with Guarantee Period prior to the maturity of the guarantee period.

		Response:		The Registrant has added disclosure to the Fixed Account section of the prospectus and the Transfers section of the prospectus to clarify that there is no penalty for such transfers prior to the maturity of the guarantee period but that such transfers are limited in amount.

26.

Principal Guarantee Program — Please provide an example as to how the Principal Guarantee Program works.

		Response:		The Registrant is in the process of determining whether the Principal Guarantee Program is still available. If it is available, the Registrant will add an example describing the program. If it is no longer available, the Registrant will delete all references to the program.

27.

Charges and Deductions — In the Charges and Deductions section, please add a cross reference to the Contract Loans section of the prospectus for a description of loan-related expenses.

		Response:		In the Charges and Deductions section of the prospectus, the Registrant has added a brief description of the fees, charges and other costs (e.g., loan interest rate spread) associated with contract loans and a cross-reference to the Contract Loans section of the prospectus.

28.

Charges and Deductions — CDSC — Please indicate if the CDSC will be deducted from the amount withdrawn or from the remaining contract value and please clarify whether the CDSC is assessed versus the oldest premium payments first.

		Response:		In the Charges and Deductions section of the prospectus, the Registrant has added a new paragraph labeled “Deductions for Contingent Deferred Sales Charges When You Make a Withdrawal,” where the Registrant explains that the CDSC will be deducted from the remaining contract value and provides and example. In addition, the Registrant has added the following statement for clarification: “For purposes of calculating the CDSC, we process withdrawals against purchase payments in the order in which we receive them.”

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 8

29.

Transfers — Please revise the table on current transfer restrictions that clarifies and distinguished the differences between the Fixed Accumulation Account and the Fixed Account Guarantee Period options that also includes the impact of any restrictions on transfer.

		Response:		The Registrant has revised the table on current transfer restrictions.

30.

Withdrawals and Surrenders — Please clarify whether the partial surrender amount will be reduced by any applicable CDSC and please add a “plain English” description for the term “first-in, first-out”.

		Response:		The Registrant added a statement that the CDSC will be deducted from the remaining contract value and inserted a cross-reference to the “Deductions for Contingent Deferred Sales Charges” section of the prospectus. In addition, the Registrant has deleted the reference to “first in, first out” and substituted the following text: “in the order in which we receive them.”

31.

Long-Term Care Waiver Rider — Please clarify the method by which the Long-Term Care Waiver Rider is selected.

		Response:		The Long-Term Care Waiver Rider is automatically provided with all contracts, unless it is not available in the applicable state.

32.

Contract Loans — Please clarify that the maximum rate charged may be higher if required by a plan administrator or other third party.

		Response:		The Registrant has added language that clarifies that a plan administrator or other third party may require that an interest rate greater than 8% be charged for contract loans.

33.

Contract Loans — Please clarify if, and if so how, the interest charged on a contract loan is capitalized.

		Response:		The Registrant added disclosure to the Contract Loans section of the prospectus to address this comment.

34.

Contract Loans — Please add a statement that clarifies that amounts held in the Fixed Accumulation Account as collateral for a loan may earn less than amounts invested in the other Subaccounts during the same time period.

		Response:		This concept is currently explained in the second paragraph in the Contract Loans section of the prospectus. The paragraph includes the following statements: “A loan, whether or not repaid, will have a permanent effect on the Account Value of the Contract because the collateral cannot be

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 9

				suballocated to the Subaccounts or the Fixed Account guarantee periods. The longer the loan is outstanding, the greater the effect is likely to be. This effect could be favorable or unfavorable.”

35.

Contract Loans — Please clarify if there are any transfer restrictions imposed on the amounts transferred to the Fixed Accumulation Account as collateral for a contract loan. In addition, are such restrictions still applicable on those amounts in the Fixed Accumulation Account once the loan is repaid? In other words, as the loan is repaid how does the repayment of the loan affect the amounts transferred as collateral to the Fixed Accumulation Account and the ability to transfer such amounts out from the Fixed Accumulation Account?

		Response:		The restrictions on transfers to and from the Fixed Accumulation Account do not apply to transfers of collateral into and out of the Fixed Accumulation Account. The Registrant has added disclosure explaining this exception in the Contract Loans section of the prospectus. The Registrant has added disclosure that the amount of collateral required must equal 110% of the outstanding loan and that the contract owner will be permitted to transfer excess collateral out of the Fixed Accumulation Account to the other Subaccounts.

36.

Accumulation Period — Contract Loans — Please clarify how Purchase Payments are treated while a loan is outstanding and when are they applied to reduce the amount of outstanding loans?

		Response:		The Registrant treats Purchase Payments and loan repayments separately. The Registrant has added disclosure that Purchase Payments made while the loan is outstanding are not treated as loan repayments and will not reduce the amount of outstanding loans.

37.

Contract Loans/Annuity Benefit — Please clarify whether there is any restriction on annuitizing the Contract while a loan remains outstanding and whether the Annuity Benefit amount is adjusted as a result.

		Response:		The Registrant requires the contract owner to pay all contract loans in full before annuitizing the contract. The Registrant has added disclosure to clarify this requirement.

38.

Death Benefit Amount — Please add a statement that describes that a withdrawal of Account Value may result in a reduction of the Death Benefit amount by more than the amount of the withdrawal.

		Response:		The Registrant has added the requested statement.

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 10

39.

Death Benefit Amount — Please provide examples of the the available death benefit amounts and include the effect of a partial surrender/withdrawal on such amounts.

		Response:		The Registrant has added examples describing the available death benefit amounts.

40.

Payment of Benefits — Please provide a discussion concerning the fixed dollar benefits and variable dollar benefits, including (a) what makes each “fixed” versus “variable”, (b) how initial payments are determined and (c) the importance of the assumed investment rate of return used to set the initial payment amounts and how may vary based upon actual performance.

		Response:		The Registrant has added a discussion concerning fixed dollar benefits and variable dollar benefits.

41.

Settlement Options — Please clarify that the settlement options are available with respect to both fixed dollar benefits and variable dollar benefits.

		Response:		The Registrant has added language to the prospectus that clarifies that both fixed dollar benefits and variable dollar benefits are available for each of the settlement options.

42.

Benefit Payment Period — Settlement Options — Please clarify the impact of the annuitant dying if a settlement option based on a fixed period is elected and that the death of the annuitant if a settlement option based upon a life contingency may result in only a single payment being made.

		Response:		The Registrant has added language to the prospectus to explain that (a) if a fixed period settlement option is selected, the death of the annuitant will not impact the payments and that they will continue for the remainder of the period and (b) if the life contingency settlement option is selected, the death of the annuitant may result in only a single payment being made.

43.

Annuity Investors Life Insurance Company — Please clarify that contract owners must rely upon the financial strength of the Company for the payment of claims (including death benefits) and that the Company’s general account will be subject to the claims of the Company’s creditors.

		Response:		The Registrant has clarified that contract owners must rely on the financial strength of the Company for the payment of claims (including death benefits) and that the Company’s general account will be subject to the claims of the Company’s creditors.

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 11

44.

Appendix B — If true, please add a statement to the effect that the Company has entered into an Information Sharing Agreement with the underlying Portfolios as required by Rule 22c-2 of the 1940 Act.

		Response:		The Registrant has added a statement regarding Information Sharing Agreements as required by Rule 22c-2 of the Investment Company Act of 1940.

45.

Appendix B — U.S. Mail Restrictions — In the U.S. Mail Restrictions on Managers of Multiple Contracts section of Appendix B, please disclose the situations where such persons may submit transfer requests other than by mail.

		Response:		The Registrant has added the following statement to the prospectus: “The Company may permit a manager of multiple contracts to submit transfer requests other than by mail upon written request if contracts are managed independently rather than in the aggregate. The manager of multiple contracts must provide the Company with sufficient information regarding the management methodology to support the representation that aggregate transfers will not be an intended or unintended consequence of day to day management decisions. The Company will monitor the contracts associated with the grant of any exception and, in the event a pattern of aggregate transactions emerges, again require transfer request via U.S. mail.”

46.

Appendix B — Other Restrictions — Please identify and provide examples of the “unanticipated financial emergencies” where the Company would waive the transfer restriction procedures.

		Response:		The Registrant has added the following statement to the prospectus: “For example, if extent economic conditions arise such that the impact of short-term trading is benign or a positive, the Company may allow it.”

47.

Prospectus Supplements — Generally — On any continuing supplemental prospectus that includes the statement beginning “If the terms of this prospectus supplement . . .”, please state clearly that all material rights and obligations with respect to the contract and its riders are described in the prospectus.

		Response:		The Registrant has deleted the statement identified in this comment from each supplemental prospectus.

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 12

48.

Prospectus Supplement: Closed Funds — Please confirm supplementally that all changes to the expense and examples sections of the prospectus will also be made to the continuing supplemental prospectus to the extent applicable.

		Response:		Changes to the expense and examples section sin the prospectus will also be made to the closed funds supplemental prospectus to the extent applicable.

49.

Prospectus Supplement: Fixed Account — Please clarify why the Fixed Account One Year guarantee period option continues to be discussed if it has not been available since 2007.

		Response:		The Registrant has moved the information about the Fixed Account One Year Guarantee Period option to the prospectus. The disclosure continues to indicate that transfers to this option are not currently permitted. The Registrant retained the information about this option in the prospectus because, as permitted by the Advantage contract, the Registrant could open this option to transfers at some point in the future.

50.

Prospectus Supplement: Guaranteed Minimum Withdrawal Benefit Rider (GMWB) and Guaranteed Lifetime Benefit Rider (GLWB) — Please add an overview section that briefly summarizes the key benefits of each rider and distinguished between the two. Please update the cross-reference to the “Designated Subaccounts” to the proper section of the prospectus.

		Response:		The Registrant has added an Overview section after the Supplement to Examples section of the document and has revised the cross-reference to additional information about the Designated Subaccounts.

51.

Prospectus Supplement: Guaranteed Minimum Withdrawal Benefit Rider (GMWB) and Guaranteed Lifetime Benefit Rider (GLWB) — In the discussion of the GMWB, please clarify when the Company may decline to reset the Beneficial Base Amount. In addition, please revise the textual discussion regarding the Roll-up Base Amount and the provided example to clarify how such amount is calculated and that the example is determined in the same manner as described in the narrative.

		Response:		The Registrant has added the following text in the Reset Opportunities discussions: “If you do not elect a reset by Written Request on an applicable Contract Anniversary or request automatic resets, we will not reset the Benefit Base Amount even if your Account Value is higher than the Benefit Base Amount on the Contract Anniversary.” In the Rollup Base Amount discussion of the GLWB, the Registrant has included the formulas for calculating the Rollup Base Amount and the Rollup Interest Credit and, after each example, has included a table showing how these amounts were calculated in the example.

Mr. Craig Ruckman
Securities and Exchange Commission
April 25, 2010
Page 13

52.

Prospectus Supplement: Guaranteed Minimum Withdrawal Benefit Rider (GMWB) and Guaranteed Lifetime Benefit Rider (GLWB) — Under the discussion of Reset Opportunities, please clarify if resets are available after the Benefit Start Date.

		Response:		Resets are not available after the Benefit Start Date. The Registrant has added a statement to this effect to both Reset Opportunities sections.

53.

Prospectus Supplement: Guaranteed Minimum Withdrawal Benefit Rider (GMWB) and Guaranteed Lifetime Benefit Rider (GLWB) — In the discussion, please revise the Activation of the Rider section to explain that the GMWB may not be activated when the GLWB is in effect (rather than when the GMWB is in effect).

		Response:		The Registrant made the requested correction.

          The Tandy representations, executed by the Registrant, are included with this letter as Attachment B.

          The Advantage Prospectus, which reflects the applicable revisions discussed above, is included with this letter. They also contain the following updated material:

	•		updated information related the underlying Portfolios
	•		updated information related to the loan interest spread
	•		updated costs in the examples
	•		updated financial information
	•		updated text in the Federal Tax Matters section

          The revised prospectus includes corrections to typographical errors, additional customer service contact information, and clarifying references related to domestic partners.

          Please contact Kevin L. Cooney at (513) 651-6712 or kcooney@fbtlaw.com immediately for responses to any questions or comments.

KLC:jss
cc:		Ms. Karen McLaughlin (via email)

Attachment A

Prospectus for File No. 333-51971

Advantage Prospectus

201 East Fifth Street, Suite 2200     Cincinnati, Ohio 45202     513.651.6800 • 513.651.6981 fax     www.frostbrowntodd.com

ANNUITY INVESTORS LIFE INSURANCE COMPANY^®
ANNUITY INVESTORS^® VARIABLE ACCOUNT B

THE COMMODORE ADVANTAGE^®
PROSPECTUS FOR INDIVIDUAL AND GROUP FLEXIBLE PREMIUM DEFERRED ANNUITIES
PROSPECTUS DATED MAY 1, 2010

This prospectus describes individual and group flexible premium deferred annuity contracts. The individual contracts and interests in the group contracts are referred to in this prospectus as the “Contracts.” Annuity Investors Life Insurance Company^® (the “Company”) is the issuer of the Contracts.

The Contracts offer both variable and fixed investment options. The variable investment options under the Contracts are Subaccounts of Annuity Investors^® Variable Account B (the “Separate Account”). The Contracts currently offers the Subaccounts listed below. Each Subaccount is invested in shares of a registered investment company or a portfolio thereof (each, a “Portfolio”). The Portfolios are listed below.

2010 Portfolio Changes — The list above and this prospectus reflects the name changes and transactions described below.

	•		On April 19, 2010, the Dreyfus Developing Leaders Portfolio, a series of the Dreyfus Variable Insurance Fund, changed its name to the Dreyfus Opportunistic Small Cap Portfolio.
	•		On May 1, 2010, the AIM portfolios changed their brand name to Invesco. For example, AIM V.I. Capital Development Fund became Invesco V.I. Capital Development Fund.

	•		On May 1, 2010, The Universal Institutional Funds, Inc. changed its brand name from Van Kampen to Morgan Stanley.
	•		On June 1, 2010 or as soon as practical after that date, Van Kampen’s U.S. Mid Cap Value Portfolio and Value Portfolio, which currently are series of The Universal Institutional Funds, Inc., will be merged into AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and change its brand name to Invesco Van Kampen. The list above reflects this anticipated transaction.

The following investment options are available only to Contract Owners who held Accumulation Units in these Subaccounts on November 30, 2004: AIM V.I. Dynamics Fund Closed Subaccount, Janus Aspen Worldwide Growth Closed Subaccount, The Timothy Plan Conservative Growth Variable Series Closed Subaccount, and The Timothy Plan Strategic Growth Variable Series Closed Subaccount. If you still have funds allocated to one of these closed Subaccounts, please see the supplemental prospectus that accompanies this document for additional examples.

The fixed investment options are provided through the Company’s Fixed Account. The Contracts currently offers the following fixed investment options:

•

Seven-Year Guaranteed Interest Rate Option

The Contracts are available for tax-qualified and non-tax-qualified annuity purchases. All Contracts are designed to be eligible for tax-deferred treatment during the Accumulation Period. The tax treatment of annuities is discussed in the Federal Tax Matters section of this prospectus.

The Contract’s fees and charges may be higher than those of a contract without a purchase payment bonus and the amount of the purchase payment bonus under the Contact may be more than offset by the Contract’s higher fees and charges. In addition, the contingent deferred sales charges under the Contract may be assessed for a longer period than those under a contract without a purchase payment bonus. More information about the Purchase Payment bonus is included in the Purchase Payment Bonus section of this prospectus.

This prospectus includes information you should know before investing in the Contracts. This prospectus is not complete without the current prospectuses for the Portfolios. Please keep this prospectus and the Portfolio prospectuses for future reference.

A Statement of Additional Information (“SAI”), dated May 1, 2010, contains more information about the Separate Account and the Contracts. The Company filed the SAI with the Securities and Exchange Commission. It is part of this prospectus. For a free copy, complete and return the form on the last page of this prospectus, or call the Company at 1-800-789-6771. You may also access the SAI (as well as all other information regarding the Contracts, the Separate Account or the Company) at the Securities and Exchange Commission’s Web site: http://www.sec.gov. The registration number is 333-51971. The table of contents for the SAI is printed on the last page of this prospectus.

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

Right to Cancel

You may cancel a Contract within 20 days after you receive it. The right to cancel may be longer in some states. In many states, you will bear the risk of investment gain or loss on any amounts allocated to the Subaccounts prior to cancellation. The right to cancel may not apply to group Contracts. The right to cancel is described more fully in the Right to Cancel section of this prospectus.

TABLE OF CONTENTS

DEFINITIONS			5
EXPENSE TABLES			7
Table A: Contract Owner Transaction Expenses			7
Table B: Annual Expenses			8
Table C: Total Annual Portfolio Operating Expenses			8
Examples			9
FINANCIAL INFORMATION			10
Condensed Financial Information			10
Financial Statements			10
OVERVIEW			10
What is the Separate Account?			10
What Are the Contracts?			10
What Benefits Are Available under the Contract?			10
What Are the Risks Related to the Contract?			10
How Do I Purchase or Cancel a Contract?			10
Will Any Penalties or Charges Apply If I Make Withdrawals or Surrender a Contract?			11
What Other Charges and Deductions Apply to the Contract?			11
How Do I Contact the Company?			11
THE PORTFOLIOS			11
Overview			11
Portfolios, Share Classes, Advisors and Portfolio Investment Categories			12
THE FIXED ACCOUNTS			13
Fixed Accumulation Account			14
Fixed Account Options with Guarantee Periods			14
PURCHASE PAYMENTS AND ALLOCATION TO INVESTMENT OPTIONS			14
Purchase Payments			15
Investment Options—Allocations			17
CHARGES AND DEDUCTIONS			17
Charges and Deductions By the Company			17
Expenses of the Portfolios			20
TRANSFERS			20
Transfers			20
WITHDRAWALS AND SURRENDERS			22
Surrender and Withdrawals			22
CONTRACT LOANS			24
ANNUITY BENEFIT			24
DEATH BENEFIT			25
Death Benefit			25
Successor Owner Election			27
Payment of Benefits			27
SETTLEMENT OPTIONS			28
Settlement Options			28
Forms of Benefit Payments Under Settlement Options			29
THE CONTRACTS			30
Right to Cancel			30
Termination			30
Persons With Rights Under a Contract			31
ANNUITY INVESTORS LIFE INSURANCE COMPANY®			31
THE SEPARATE ACCOUNT			32
General			32
Additions, Deletions or Substitutions of Subaccounts			32
VOTING OF PORTFOLIO SHARES			33
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS			33
FEDERAL TAX MATTERS			33
Tax Deferral on Annuities			34

Tax-Qualified Retirement Plans			34
Nonqualified Deferred Compensation Plans			35
Summary of Income Tax Rules			36
Required Minimum Distributions			37
DELIVERY OF DOCUMENTS TO CONTRACT OWNERS			37
Reports and Confirmations			37
Householding — Revocation of Consent			37
Electronic Delivery of Required Documents			37
THE REGISTRATION STATEMENT			37
STATEMENT OF ADDITIONAL INFORMATION			38

DEFINITIONS

The capitalized terms defined on this page will have the meanings given to them when used in this prospectus. Other terms which may have a specific meaning under the Contracts, but which are not defined on this page, will be explained in the section of this prospectus where they are primarily used.

Account Value

The value of a Contract during the Accumulation Period. It is equal to the sum of the value of the Owner’s interest in the Subaccounts and the Owner’s interest in the Fixed Account options.

Accumulation Period

The period during which purchase payments and accumulated earnings are invested according to the investment options elected. The Accumulation Period ends when a Contract is annuitized or surrendered in full, or on the Death Benefit Valuation Date.

Accumulation Unit

A share of a Subaccount that an Owner purchases during the Accumulation Period.

Accumulation Unit Value

The value of an Accumulation Unit at the end of a Valuation Period.

The initial Accumulation Unit Value for each Subaccount other than the money market Subaccount was set at $10. The initial Accumulation Unit Value for the money market Subaccount was set at $1. The initial Accumulation Unit Value for a Subaccount was established at the inception date of the Separate Account, or on the date the Subaccount was established, if later.

After the initial Accumulation Unit Value is established, the Accumulation Unit Value for a Subaccount at the end of each Valuation Period is the Accumulation Unit Value at the end of the previous Valuation Period multiplied by the Net Investment Factor for that Subaccount for the current Valuation Period.

A Net Investment Factor of 1 produces no change in the Accumulation Unit Value for that Valuation Period. A Net Investment Factor of more than 1 or less than 1 produces an increase or a decrease, respectively, in the Accumulation Unit Value for that Valuation Period. The Accumulation Unit Value will vary to reflect the investment experience of the applicable Portfolios.

Annuity Commencement Date

The first day of the first payment interval for which an annuity benefit payment is to be made. For tax qualified forms, the Annuity Commencement Date generally must be no later than the Contract anniversary following the Owner’s 70th birthday. For non-tax qualified forms, the Annuity Commencement Date is generally the Owner’s 85th birthday, or five years after the Contract’s effective date, if later.

Benefit Payment Period

The period during which either annuity benefit or death benefit payments are paid under a settlement option. The Benefit Payment Period begins on the first day of the first payment interval in which a benefit payment will be paid.

Benefit Unit

A share of a Subaccount that is used to determine the amount of each variable dollar benefit payment during the Benefit Payment Period.

Benefit Unit Value

The value of a Benefit Unit at the end of a Valuation Period.

The initial Benefit Unit Value for a Subaccount will be set equal to the Accumulation Unit Value for that Subaccount at the end of the first Valuation Period in which a variable dollar benefit is established by the Company. Thereafter, the Benefit Unit Value for a Subaccount at the end of a Valuation Period is determined by multiplying the previous Benefit

Unit Value by the Net Investment Factor for that Subaccount for the current Valuation Period, and multiplying the number again by a daily investment factor for each day in the Valuation Period. The daily investment factor reduces the previous Benefit Unit Value by the daily amount of the assumed interest rate (3% per year, compounded annually) which is already incorporated in the calculation of variable dollar benefit payments.

Company

Annuity Investors Life Insurance Company. The words “we” “us” and “our” also refer to the Company.

Death Benefit Valuation Date

The date the death benefit is valued. It is the date that the Company receives both proof of the death of the Owner and instructions as to how the death benefit will be paid. If instructions are not received within one year of the date of death, the Death Benefit Valuation Date will be one year after the date of death.

Good Order

We cannot process information or a request until we have received your instructions in “Good Order” at our Administrative Offices. We will consider information or a request to be in “Good Order” when we have actually received a Written Request, along with all the information and other legal documentation that we require to process the information or request. To be in “Good Order,” instructions must be sufficiently clear so that we do not need to exercise any discretion to process the information or request

Net Asset Value

The price computed by or for each Portfolio, no less frequently than each Valuation Period, at which the Portfolio’s shares or units are redeemed in accordance with the rules of the SEC.

Net Investment Factor

The factor that represents the percentage change in the Accumulation Unit Values and Benefit Unit Values from one Valuation Period to the next. The Net Investment Factor for each Valuation Period reflects changes to the net asset value of the underlying Portfolio, dividends or capital gains distributions by the Portfolio, credits and charges for tax reserves with respect to the Subaccount, and the mortality and expense risk charges and administration charges.

Owner

For purposes of this prospectus, references to the Owner means the owner of an individual annuity contract or the participant in a group annuity contract (even though the participant is not the owner of the group contract itself.) The words “you” and “your” also refer to the Owner.

Portfolio

A registered investment company or a portfolio of a registered investment company in which the corresponding Subaccount invests. The Portfolios are listed on the cover page of this prospectus.

Purchase Payments

An amount paid to us for this Contract, less any fee charged by the person remitting payments and the deduction of applicable premium or other taxes.

SEC

Securities and Exchange Commission.

Separate Account

Annuity Investors Variable Account B, which is an account that was established and is maintained by the Company.

Subaccount

A subdivision of the Separate Account. Each Subaccount invests in the shares of the corresponding Portfolio listed on the cover page of this Prospectus.

Valuation Date

A day on which Accumulation Unit Values and Benefit Unit Values can be calculated. Each day that the New York Stock Exchange is open for business is a Valuation Date.

Valuation Period

The period starting at the close of regular trading on the New York Stock Exchange on any Valuation Date and ending at the close of trading on the next succeeding Valuation Date.

Written Request

Information provided to us or a request made to us that is:

•

complete and satisfactory to us;

•

on our form or in a manner satisfactory to us; and

•

received by us at our Administrative Office, P.O. Box 5423, Cincinnati, Ohio 45201-5423.

To obtain one of our forms, contact us at the above address, or call us at 1-800-789-6771.

A Written Request may, at our discretion, be made by telephone or electronic means.

We will treat a Written Request as a standing order. It may be modified or revoked only by a subsequent Written Request, when permitted by the terms of the Contract. A Written Request is subject to (1) any payment that we make before we acknowledge the Written Request and (2) any other action that we take before we acknowledge the Written Request.

Additional Details

The Statement of Additional Information contains more information about Accumulation Units and Benefit Units. It also contains the formula for determining the Net Investment Factor for any Subaccount for any Valuation Period and an explanation of how the following values are calculated:

	•		Variable account value
	•		Fixed account value
	•		Accumulation Unit Values; and
	•		Benefit Unit values

EXPENSE TABLES

These tables describe the fees and expenses that you will pay when you buy, hold or withdraw amounts from the Contract.

Table A: Contract Owner Transaction Expenses

The first table describes the fees and expenses that you will pay at the time that you buy the Contract, withdrawal amounts from the Contract, surrender the Contract, transfer cash value between investment options or borrow money under the Contract. Premium taxes may also be deducted.

		Current				Maximum
Maximum Contingent Deferred Sales Charge (as to purchase payments only)(1)			8.00	%			8.00	%
Transfer Fee(2)		$	25			$	30
Annual Automatic Transfer Program Fee		None				$	30
Annual Systematic Withdrawal Fee		None				$	30
Loan Interest Spread(3)			3.00	%			5.00	%

If you cancel the Contract during the right to cancel period, we generally will recapture all bonus amounts credited to the Purchase Payments during that period. In addition, we will recapture the amount of any bonus credited to the Purchase Payments made with the 12-month period that ends on the Death Benefit Valuation Date. Additional information about the recapture of bonus amounts is set out in the Purchase Payment Bonus section of this prospectus.

Table B: Annual Expenses

The next table describes the fees and expenses that you will pay periodically during the time that you own the Contract, not including Portfolio fees and expenses. Separate Account annual expenses are shown as a percentage of the average value of the Owner’s interest in the Subaccounts.

						Standard Contracts
						With Administration
		Standard Contracts				Charge Waived*
Annual Contract Maintenance Fee		$	30			$	30
Separate Account Annual Expenses
Mortality and Expense Risk Charge			1.25	%			1.25	%
Administration Charge			0.15	%			0.00	%
Total Separate Account Annual Expenses			1.40	%			1.25	%

If you surrender your Contract, we will apply the contract maintenance fee at that time.

Table C: Total Annual Portfolio Operating Expenses

The next table shows the minimum and maximum total operating expenses charged by the Portfolios that you may pay periodically during the time that you own the Contract. These expenses that are deducted from Portfolio assets, including management fees, distribution and service (12b-1) fees, acquired fund fees and expense, and other expenses. More detail concerning each Portfolio’s fees and expenses is contained in the prospectus for each Portfolio.

		Minimum				Maximum
Before any fee reduction or expense reimbursement			0.29	%			1.37	%
After contractual fee reductions and/or expense reimbursements(1)			0.29	%			1.31	%

The information about Portfolio expenses that we used to prepare this table was provided to us by the Portfolios. We have not independently verified the Portfolio expense information. The minimum and maximum expenses shown in the table are for the year ended December 31, 2009. Actual expenses of a Portfolio in future years may be higher or lower.

The Portfolios in the Financial Investors Variable Insurance Trust and the Wilshire Variable Insurance Trust are structured as “fund of funds” and invest in other investment companies (“Acquired Funds”). As a result, each Ibbotson portfolio and each Wilshire portfolio will likely incur higher expenses than fund that invest directly in securities and you will effectively be paying a portion of the management fees and other expenses of the Acquired Funds.

The minimum expenses, both before and after any fee reduction and/or expense reimbursement, are the expenses of the Dreyfus Stock Index Fund, Inc.

The maximum expenses before fee reductions and/or expense reimbursements are the expenses of the Ibbotson Conservative ETF Asset Allocation Portfolio. The adviser and subadviser to the Ibbotson Conservative ETF Asset Allocation Portfolio have contractually agreed to jointly waive its management fee and subadvisory fee, respectively, and/or reimburse expenses so that net annual fund operating expenses, excluding acquired fund fees and expenses and extraordinary expenses, do not exceed a maximum of 0.73% of the average daily net assets through April 30, 2011. The addition of excluded expenses may cause the net annual fund operating expenses to exceed the maximum amount of 0.73% agreed to by the adviser and subadviser.

The maximum expenses after fee reductions and/or expense reimbursement, are the expenses of the Calamos Growth and Income Portfolio.

Examples

These examples are 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 the Contract Owner transaction expenses (described in Table A above), the Annual Expenses (described in Table B above), and Portfolio operating expenses (described in Table C above). Your actual costs may be higher or lower than the costs shown in the examples.

Example 1: Contract with Maximum Fund Operating Expenses

Assumptions

	•		You invest $10,000 in the Contract for the periods indicated and your investment has a 5% return each year.
	•		The annual contract maintenance fee ($30), the Separate Account annual expenses (1.40%), and the maximum Portfolio expenses (1.37% before reimbursement or 1.31% after reimbursement) are incurred.

In this table, we assume that you surrender your Contract at the end of the period. We also assume that the applicable contingent deferred sales charge is incurred. In this case, your costs would be:

		1 year				3 years				5 years				10 years
Before reimbursement		$	1,115			$	1,709			$	2,297			$	4,248
After reimbursement		$	1,109			$	1,690			$	2,264			$	4,176

In this table, we assume that you keep your Contract and leave your money in your Contract for the entire period or you annuitize your Contract at the end of the period. The contingent deferred sales charge does not apply in these situations. In this case, your costs would be:

		1 year				3 years				5 years				10 years
Before reimbursement		$	315			$	1,009			$	1,797			$	4,248
After reimbursement		$	309			$	990			$	1,764			$	4,176

Example 2: Contract with Minimum Fund Operating Expenses

Assumptions

	•		You invest $10,000 in the Contract for the periods indicated and your investment has a 5% return each year.
	•		The annual contract maintenance fee ($40), the Separate Account annual expenses (1.40%), and the minimum Portfolio expenses (0.29%) are incurred.

In this table, we assume that you surrender your Contract at the end of the period. We also assume that the applicable contingent deferred sales charge is incurred. In this case, your costs would be:

		1 year				3 years				5 years				10 years
		$	1,005			$	1,362			$	1,688			$	2,867

In this table, we assume that you keep your Contract and leave your money in your Contract for the entire period or you annuitize your Contract at the end of the period. The contingent deferred sales charge does not apply in these situations. In this case, your costs would be:

		1 year				3 years				5 years				10 years
		$	205			$	662			$	1,188			$	2,867

By comparing the costs shown in the tables above, you can see the impact of contingent deferred sales charges on your costs.

FINANCIAL INFORMATION

Condensed Financial Information

Condensed financial information for the Contracts is set forth in Appendix A to this prospectus. It includes

	•		year-end accumulation unit values for each Subaccount for each of the last 10 fiscal years through December 31, 2009, or from the end of the year of inception of a Subaccount, if later, to December 31, 2009; and
	•		number of accumulation units outstanding as of the end of each period.

Financial Statements

The financial statements and reports of the independent registered public accounting firm of the Company and of the Separate Account are included in the Statement of Additional Information.

OVERVIEW

What is the Separate Account?

The Separate Account is a unit investment trust registered with the SEC under the Investment Company Act of 1940. The Separate Account is divided into Subaccounts. Each Subaccount is invested in one of the Portfolios listed on the cover page of this prospectus. If you choose a variable investment option, you are investing in the Subaccounts, not directly in the Portfolios.

What Are the Contracts?

The Contracts are individual and group deferred annuities, which are insurance products. The Contracts are sold with either a standard fee structure or with the administration charge waived, as described in the Expense Tables of this prospectus. The Contracts are available in both tax-qualified and non-tax-qualified forms, both of which are designed to be eligible for tax-deferred investment status. See the Federal Tax Matters section of this prospectus for more information about tax qualifications and taxation of annuities in general. During the Accumulation Period, the amounts you contribute can be allocated among any of the then available variable investment options and Fixed Account options. The variable investment options are the Subaccounts of the Separate Account, each of which is invested in a Portfolio. The Owner bears the risk of any investment gain or loss on amounts allocated to the Subaccounts. The Fixed Account options earn a rate of interest declared from time to time by the Company, which will be no less than the minimum interest rate permitted under the law of the state when and where the Contract is issued. The Company guarantees amounts invested in the Fixed Account options and the earnings thereon so long as those amounts remain in the Fixed Account.

During the Benefit Payment Period, payments can be allocated between variable dollar and fixed dollar options. If a variable dollar option is selected, Benefit Units can be allocated to any of the same Subaccounts that are available during the Accumulation Period.

What Benefits Are Available under the Contract?

Annuity Benefit		When the Contract is annuitized, we promise to pay a stream of Annuity Benefit payments for the duration of the settlement option selected.
Death Benefit		A Death Benefit will be paid under the Contract if the Owner dies during the Accumulation Period.

A partial surrender or withdrawal from the Contract may result in the reduction of the Death Benefit that is greater than the amount of the partial surrender or withdrawal.

What Are the Risks Related to the Contract?

The variable investment options to which you allocate Purchase Payments may lose value, which would cause your Account Value to decrease. We may not be able to pay claims related to the annuity or death benefits. A penalty tax may be imposed at the time of a withdrawal or a surrender depending on your age and other circumstances.

How Do I Purchase or Cancel a Contract?

The requirements to purchase a Contract are explained in The Contracts section of this prospectus. You may purchase a Contract only through a licensed securities representative. You may cancel a Contract within twenty days after you receive it (the right to cancel may be longer in some states). In many states, you will bear the risk of investment gain or

loss on any amounts allocated to the Subaccounts prior to cancellation. The right to cancel may not apply to group Contracts. The right to cancel is described in the Right to Cancel section of this prospectus.

Will Any Penalties or Charges Apply If I Make Withdrawals or Surrender a Contract?

A contingent deferred sales charge (“CDSC”) may apply to amounts withdrawn or surrendered depending on the timing and amount of the withdrawal or surrender. The maximum CDSC is 8% for each purchase payment. For CDSC purposes, any bonus credited to a purchase payment is generally deemed to be part of that purchase payment. CDSC would not be imposed, however, with respect to any bonus amounts recaptured following a cancellation during the right to cancel period. CDSC is also not imposed with respect to any bonus amounts upon full or partial surrender during the first Contract year. The CDSC percentage decreases over eight years to 0% after the eighth year from the date of receipt of each purchase payment. The CDSC will be waived in its entirety following the tenth Contract Anniversary for Contracts issued pursuant to Internal Revenue Code Section 403(b) (if the Contract is issued without an employer plan endorsement), including those issued to Contract Owners in the Texas Teachers Retirement System. Withdrawal and surrender procedures and the CDSC are described in the Surrender and Withdrawals section of this prospectus. A penalty tax may also be imposed at the time of a withdrawal or surrender depending on your age and other circumstances of the surrender. Tax consequences of a withdrawal or surrender are described in the Federal Tax Matters section of this prospectus. The right to make withdrawals or surrender may be restricted under certain tax-qualified retirement plans.

What Other Charges and Deductions Apply to the Contract?

Other than the CDSC, the Company will charge the fees and charges listed below unless the Company reduces or waives the fee or charge as discussed in the Charges and Deductions section of this prospectus:

•

a transfer fee for certain transfers among investment options;

•

an annual contract maintenance fee, which is assessed only against investments in the Subaccounts;

•

a mortality and expense risk charge, which is an expense of the Separate Account and charged against all assets in the Subaccounts (this charge may never be waived);

•

an administration charge, which is an expense of the Separate Account and charged against all assets in the Subaccounts; and

•

premium taxes, if any.

In addition to charges and deductions under the Contracts, the Portfolios incur expenses that are passed through to Owners. Portfolio expenses for the fiscal year ended December 31, 2009 are described in the prospectuses and SAIs for the Portfolios.

How Do I Contact the Company?

Any questions or inquiries should be directed to the Company’s Administrative Office, P.O. Box 5423, Cincinnati, Ohio 45201-5423, 1-800 789-6771. Please include the Contract number and the Owner’s name. You may also call the Company at 1-800 789-6771, or visit us at our web site, www.gafri.com, to request a copy.

THE PORTFOLIOS

Overview

The Separate Account currently offers the following Subaccounts, each of which is invested in a Portfolio with its own investment objectives and policies. The current Portfolio prospectuses, which accompany this prospectus, contain additional information concerning the investment objectives and policies of each Portfolio, the investment advisory services and administrative services of each Portfolio and the charges of each Portfolio. There is no assurance that the Portfolios will achieve their stated objectives. The SEC does not supervise the management or the investment practices and/or policies of any of the Portfolios. You should read the Portfolio prospectuses carefully before making any decision concerning the allocation of purchase payments to, or transfers among, the Subaccounts. For a copy of any prospectus of any Portfolio, which contains more complete information about the Portfolio, contact us at our Administrative Office, P.O. Box 5423, Cincinnati, Ohio 45201-4523, call us at 1-800-789-6771, or go to our website at www.gafri.com.

The Company and/or its affiliates may directly or indirectly receive payments from the Portfolios and/or their service providers (investment advisers, administrators and/or distributors) in connection with certain administrative, marketing and other services provided by the Company and/or its affiliates and expenses incurred by the Company and/or its

affiliates. The Company and/or its affiliates generally receive three types of payments: Rule 12b-1 fees, support fees and other payments. The Company and its affiliates may use the proceeds from these payments for any corporate purpose, including payment of expense related to promoting, issuing, distributing and administering the Contracts, marketing the underlying Portfolios, and administering the Separate Account. The Company and its affiliates may profit from these payments. More information about these payments is included in the Statement of Additional Information.

Portfolios, Share Classes, Advisors and Portfolio Investment Categories

		SHARE
PORTFOLIO		CLASS		ADVISOR		INVESTMENT CATEGORY
American Century Variable Portfolios, Inc.
Large Company Value Fund		Class I		American Century Investment Management		Domestic equity: Large value
Mid Cap Value Fund		Class I		American Century Investment Management		Domestic equity: Mid cap value
Ultra® Fund		Class I		American Century Investment Management		Domestic equity: Large growth
VistaSM Fund		Class I		American Century Investment Management		Domestic equity: Mid cap growth
Calamos® Advisors Trust
Growth and Income Portfolio		n/a		Calamos Advisors LLC		Balanced: Moderate allocation
Davis Variable Account Fund, Inc.
Value Portfolio		n/a		Davis Selected Advisers, L.P. Sub-Adviser: Davis Selected Advisers-NY, Inc.		Domestic equity: Large blend
Dreyfus Portfolios
Dreyfus Investment Portfolios MidCap Stock Portfolio		Service		The Dreyfus Corporation		Domestic equity: Mid cap blend
Dreyfus Investment Portfolios Technology Growth Portfolio		Initial		The Dreyfus Corporation		Domestic equity: Technology
The Dreyfus Socially Responsible Growth Fund, Inc.		Institutional		The Dreyfus Corporation		Domestic equity: Large growth
Dreyfus Stock Index Fund, Inc.		Institutional		The Dreyfus Corporation (Index Mgr: Mellon Capital Management Corp*)		Domestic equity: Large blend
Dreyfus Variable Investment Fund Appreciation Portfolio		Initial		The Dreyfus Corporation		Domestic equity: Large blend
Dreyfus Variable Investment Fund Growth and Income Portfolio		Initial		The Dreyfus Corporation		Domestic equity: Large growth
Dreyfus Variable Investment Fund Money Market Portfolio		N/A		The Dreyfus Corporation		Money market: Money market taxable
Dreyfus Variable Investment Fund Opportunistic Small Cap Portfolio		Initial		The Dreyfus Corporation		Domestic equity: Small blend
Financial Investors Variable Insurance Trust
Ibbotson Balanced ETF Asset Allocation Portfolio		Class II		ALPS Advisers, Inc.		Balanced: Moderate allocation
Ibbotson Conservative ETF Asset Allocation Portfolio		Class II		ALPS Advisers, Inc.		Balanced: Conservative allocation
Ibbotson Growth ETF Asset Allocation Portfolio		Class II		ALPS Advisers, Inc.		Domestic equity: Large blend
Ibbotson Income and Growth ETF Asset Allocation Portfolio		Class II		ALPS Advisers, Inc.		Balanced: Conservative allocation
Franklin Templeton Variable Insurance Products Trust
Templeton Foreign Securities Fund		Class 2		Templeton Investment Counsel, LLC		International equity: Foreign large value
Invesco Variable Insurance Funds+
Invesco V.I. Capital Development Fund		Series I		Invesco Advisors, Inc.		Domestic equity: Mid cap growth
Invesco V.I. Core Equity Fund		Series I		Invesco Advisors, Inc.		Domestic equity: Large blend
Invesco V.I. Financial Services Fund		Series I		Invesco Advisors, Inc.		Domestic equity: Financial
Invesco V.I. Global Health Fund		Series I		Invesco Advisors, Inc.		Domestic equity: Health
Invesco V.I. High Yield Fund		Series I		Invesco Advisors, Inc.		Specialty bond: High yield bond
Invesco V.I. Small Cap Equity Fund		Series I		Invesco Advisors, Inc.		Domestic equity: Small blend

		SHARE
PORTFOLIO		CLASS		ADVISOR		INVESTMENT CATEGORY
Invesco Van Kampen U.S. Mid Cap Value Portfolio		Class I		Van Kampen**		Domestic equity: Mid cap value
Invesco Van Kampen Value Portfolio		Class I		Van Kampen**		Domestic equity: Large value
Janus Aspen Series
Balanced Portfolio		Institutional		Janus Capital Management		Balanced: Market allocation
Enterprise Portfolio		Institutional		Janus Capital Management		Domestic equity: Mid cap growth
Forty Portfolio		Institutional		Janus Capital Management		Domestic equity: Large growth
Janus Portfolio		Institutional		Janus Capital Management		Domestic equity: Large growth
Overseas Portfolio		Institutional		Janus Capital Management		International equity: Foreign large growth
Morgan Stanley—The Universal Institutional Funds, Inc.
Mid Cap Growth Portfolio		Class I		Van Kampen**		Domestic equity: Mid cap growth
U.S. Real Estate Portfolio		Class I		Van Kampen**		Specialty stock: Real estate
Oppenheimer Variable Account Funds
Balanced Fund		Service		OppenheimerFunds		Balanced: Moderate allocation
Capital Appreciation Fund		Non-Service		OppenheimerFunds		Domestic equity: Large growth
Main Street Fund®		Non-Service		OppenheimerFunds		Domestic equity: Large blend
PIMCO Variable Insurance Trust
Real Return Portfolio		Administrative		Pacific Investment Management Company		General bond: Inflation-protected bond
Total Return Portfolio		Administrative		Pacific Investment Management Company		General bond: Intermediate-term bond
Wilshire
2015 ETF Fund		n/a		Wilshire Associates Incorporated		Balanced: Target date 2011-2015
2025 ETF Fund		n/a		Wilshire Associates Incorporated		Balanced: Target date 2021-2025
2035 ETF Fund		n/a		Wilshire Associates Incorporated		Balanced: Target date 2031-2035

2010 Portfolio Changes — The list above and this prospectus reflects the name changes and transactions described below.

	•		On April 19, 2010, the Dreyfus Developing Leaders Portfolio, a series of the Dreyfus Variable Insurance Fund, changed its name to the Dreyfus Opportunistic Small Cap Portfolio.
	•		On May 1, 2010, the AIM portfolios changed their brand name to Invesco. For example, AIM V.I. Capital Development Fund became Invesco V.I. Capital Development Fund.
	•		On May 1, 2010, The Universal Institutional Funds, Inc. changed its brand name from Van Kampen to Morgan Stanley.
	•		On June 1, 2010 or as soon as practical after that date, Van Kampen’s U.S. Mid Cap Value Portfolio and Value Portfolio, which currently are series of The Universal Institutional Funds, Inc., will be merged into AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and change its brand name to Invesco Van Kampen. The list above reflects this anticipated transaction.

Each Ibbotson Portfolio and each Wilshire Portfolio listed in the table above is structured as a “fund of funds”. A “fund of funds” attempts to achieve its investment objective by investing in other investment companies (each, an “Acquired Fund”), which in turn invests directly in securities. Each Ibbotson Portfolio and each Wilshire Portfolio indirectly incurs a proportionate share of the expenses of each Acquired Fund in which it invests. As a result of this fund of funds structure, the Ibbotson Portfolios and the Wilshire Portfolios will likely incur higher expenses than funds that invest directly in securities.

THE FIXED ACCOUNTS

The available fixed investment options are:

	•		Fixed Accumulation Account Option
	•		Fixed Account Option One-Year Guarantee Period
	•		Fixed Account Option Three-Year Guarantee Period
	•		Fixed Account Option Five-Year Guarantee Period
	•		Fixed Account Option Seven-Year Guarantee Period

Note: Currently, you may not transfer amounts to the Fixed Account Option One-Year Guarantee Period.

Interests in the Fixed Account options are not securities and are not registered with the SEC. Amounts allocated to the Fixed Account options will receive a stated rate of interest of at least 3% per year. Amounts allocated to the Fixed Account options and interest credited to the Fixed Account options are guaranteed by the Company. Interests in the Subaccounts are securities registered with the SEC. The Owner bears the risk of investment gain or loss on amounts allocated to the Subaccounts.

There are restrictions on allocations to the Fixed Accounts, which are more fully described in the Purchase Payments and Investment Options-Allocations sections of this prospectus. There are also restrictions on transfers to and from the Fixed Accounts, which are described more fully in the Transfers section of this prospectus.

Fixed Accumulation Account

Amounts allocated to the Fixed Accumulation Account will receive a stated rate of interest of at least 3% per year. We may from time to time pay a higher current interest rate for the Fixed Accumulation Account.

Fixed Account Options with Guarantee Periods

Amounts allocated to a Fixed Account option with a guarantee period will receive a stated rate of interest for the guarantee period. The stated rate of interest will not change during the applicable guarantee period. The stated rate of interest will be at least 3% but may be higher.

Example: You allocate $5,000 to the Fixed Account Option Five-Year Guarantee Period when the stated rate of interest for the option is 3.5%. The $5,000 you allocated to the option will earn interest at a rate of 3.5% per year, compounded annually, for the next five years.

Renewal of Fixed Account Options with Guarantee Periods

At the end of a guarantee period and for 30 days preceding the end of the period, the Owner may elect a new option to replace the option that is then maturing. The Company will notify the Owner of the date on which the amount matures and Fixed Account options available at that time.

The entire amount in the maturing option may be re-allocated to any of the then-current Fixed Account options or Subaccounts. The Owner may not re-allocate to a Fixed Account option with a guarantee period that would extend beyond the Owner’s 85^th birthday or five years after the Contract effective date, if later (the “latest date”).

If the Owner does not elect a new option, the entire amount maturing will be re-allocated to the maturing option so long as its guarantee period does not extend beyond the “latest date.” If the guarantee period extends beyond the “latest date,” the entire amount maturing will be re-allocated to the Fixed Account option with the longest available guarantee period that expires before the “latest date” or, failing that, the Fixed Accumulation option.

Example: You allocate $5,000 to the Fixed Account Option Five-Year Guarantee Period. At the end of the five-year guarantee period, the “latest date” will occur in nine years. You do not elect a new option. The $5,000 is re-allocated to the Fixed Account Option Five-Year Guarantee Period for another five years. At the end of second five-year guarantee period, the “latest date” will occur in four years. Once again, you do not elect a new option. The $5,000 cannot be re-allocated to the Fixed Account Option Five-Year Guarantee Period because the five year guarantee period will extend beyond the “latest date.” No Fixed Account option with a shorter guarantee period is then available. The $5,000 is re-allocated to the Fixed Accumulation Account option.

PURCHASE PAYMENTS AND ALLOCATION TO INVESTMENT OPTIONS

Each Contract allows for an Accumulation Period during which purchase payments are invested according to the Owner’s instructions. During the Accumulation Period, the Owner can control the allocation of investments through transfers or through the following investment programs offered by the Company: dollar cost averaging, portfolio rebalancing and interest sweep. For more information on these programs, see the Automatic Transfer Programs section of this prospectus. The telephone, facsimile and Internet transfer procedures are described in the Transfers section of this prospectus. The Owner can access the Account Value during the Accumulation Period through surrenders or withdrawal, systematic withdrawal, or contract loans (if available). These withdrawal features are described more fully in the Surrender and Withdrawals and Contract Loans sections of this prospectus.

Purchase Payments

Purchase payments may be made at any time during the Accumulation Period. The current restrictions on purchase payment amounts are:

		Tax-Qualified				Non-Tax-Qualified
Minimum initial purchase payment		$    2,000	*			$  10,000
Minimum monthly payments under periodic payment program		$         50				$       100
Minimum additional payments		$         50				$         50
Maximum single purchase payment		$500,000 or Company approval				$500,000 or Company approval

The Company reserves the right to increase or decrease the minimum initial purchase payment or minimum purchase payment under a periodic payment program, the minimum allowable additional purchase payment, or the maximum single purchase payment, at its discretion and at any time, where permitted by law.

Each purchase payment will be applied by the Company to the credit of the Owner’s account. If the application or order ticket form is in Good Order, the Company will apply the initial purchase payment to an account for the Owner within two business days of receipt of the purchase payment. If the application or order ticket form is not in Good Order, the Company will attempt to get the application or order ticket form in Good Order within five business days. If the application or order ticket form is not in Good Order at the end of this period, the Company will inform the applicant of the reason for the delay and that the purchase payment will be returned immediately unless he or she specifically gives the Company consent to keep the purchase payment until the application or order ticket form is in Good Order. Once the application or order ticket form is in Good Order, the purchase payment will be applied to the Owner’s account within two business days.

Each additional Purchase Payment is credited to a Contract as of the Valuation Date on which the Company receives the Purchase Payment and any related allocation instructions in Good Order. If any portion of the additional Purchase Payment is allocated to a Subaccount, it will be applied at the next Accumulation Unit Value calculated after the Company receives the Purchase Payment and related allocation instructions in Good Order.

The Company may, in its sole discretion, restrict or prohibit the credit of purchase payment to any Fixed Account option or any Subaccount from time to time on a nondiscriminatory basis.

Purchase Payment Bonus

A bonus in the amount of 4% of each purchase payment will be credited to the Account Value. The bonus will be deemed to be a purchase payment for all purposes under a Contract and this prospectus except where otherwise noted. For example, the bonus will be allocated as part of purchase payment allocations. Any bonus credited to a purchase payment is also deemed to be part of that purchase payment for CDSC purposes. This means if the bonus is returned to the Owner on a surrender or withdrawal following the first Contract year, a CDSC, to the extent applicable to the purchase payment, will be deducted from the bonus amount. CDSC would not be imposed, however, with respect to any bonus amounts recaptured following a cancellation during the Right to Cancel period. CDSC is also not imposed with respect to any bonus amounts upon full or partial surrender during the first Contract year.

The bonus will not be returned to the Owner if a Contract is canceled under the Right to Cancel provision, if any, or if a Contract is surrendered in full during the first Contract year, unless otherwise required by state law. In either case, the bonus will be forfeited and the Owner will bear the risk of investment gains or losses on the amount of the bonus that was allocated to Subaccounts.

The bonus is funded from the Company’s General Account, and the Company guarantees that the bonus will never be less than 4%. The CDSC for the Contract is slightly higher and longer than for the other variable annuity contracts issued by the Company through Annuity Investors^® Variable Account B. The Company expects to partially recover the expenses associated with providing the bonus under the Contract from this additional CDSC. The standard mortality and expense risk charge for the Contract is the same as for other variable annuity standard contracts issued by the Company through Annuity Investors Variable Account B. It does not include any additional charge for the bonus feature.

In certain circumstances, due to the generally higher surrender charge and longer surrender period for a contract with a bonus, an annuity contract without a bonus may provide greater value on surrender or withdrawal. In addition, if you surrender or withdrawal your contract during the first Contract Year, we will recapture the entire amount of the bonus even if your Contract has declined in value to an amount less than your Purchase Payments. As with any variable annuity that includes a contingent deferred sales charge, you should carefully consider your need to access your Account Value during the CDSC period, and the extent to which the free withdrawal privilege available under the Contract may be sufficient.

Example of Bonus Calculation

This example is intended to help you understand how the purchase payment bonus is determined.

Assumptions: You make the Purchase Payments shown. The bonus percentage is 4%.

Purchase Payments				Bonus Calculation		Bonuses
$	40,000			4% of $40,000		$	1,600
$	20,000			4% of $20,000		$	800
$	10,000			4% of $10,000		$	400
$	30,000			4% of $30,000		$	1,200
$	100,000					$	4,000

Example of Calculation of CDSC on Bonus Amount

This example is intended to help you understand that the CDSC applies to bonus amounts. The CDSC is calculated as a percentage of the Purchase Payment and any related bonus withdrawn, surrendered or annuitized.

Assumptions: You buy your Contract with a Purchase payment of $200,000. We credit an $8,000 bonus to this Purchase Payment. You allocate your Purchase Payment and the related bonus to a Subaccount that has a 0% return while you own your Contract. So your account value remains $208,000. You surrender your contract when the CDSC is 6% and the only waiver that applies is the 10% free withdrawal privilege. We take a CDSC of $11,232 and you receive $196,768.

		Formula		Calculation		Amount
Free withdrawal amount		0.10 x (purchase payment + bonus)		0.10 x $208,000		$	20,800
Amount subject to CDSC		(purchase payment + bonus) – free withdrawal amount		$208,000 - $20,800		$	187,200
CDSC		0.06 x amount subject to charge		0.06 x $187,200		$	11,232
Amount paid to you		account value – CDSC		$208,000 – $11,232		$	196,768

Investment Options—Allocations

Purchase payments can be allocated in whole percentages to any of the available Subaccounts or Fixed Account options.

The current restrictions on allocations are:

		Tax-Qualified and Non-Tax-Qualified
Minimum allocation to any Subaccount		$10
Minimum allocation to Fixed Accumulation Account		$10
Minimum allocation to a Fixed Account option with a guarantee period		$2,000 No amounts may be allocated to a guarantee period option which would extend beyond the Annuity Commencement Date.
Allocations to either Five-Year Guaranteed Interest Rate Option or Seven-Year Guaranteed Interest Rate Option		For Contracts issued after May 1, 2004 for states where the Company has received regulatory approval, amounts may be allocated to the Five-Year Guaranteed Interest Rate Option and the Seven-Year Guaranteed Interest Rate Option only during the first contract year.
Allocation during right to cancel period		No current restrictions, however, the Company reserves the right to require that purchase payment(s) be allocated to the money market Subaccount or to the Fixed Accumulation Account option during the right to cancel period.

Interests in the Fixed Account options are not securities and are not registered with the SEC. Interests in the Subaccounts are securities registered with the SEC. The Owner bears the risk of investment gain or loss on amounts allocated to the Subaccounts.

The Company may, in its sole discretion, restrict or prohibit allocation to any Fixed Account option or any Subaccount from time to time on a nondiscriminatory basis.

[*** Add discussion of Principal Guarantee Program & Example if still available]

CHARGES AND DEDUCTIONS

Charges and Deductions By the Company

There are two types of charges and deductions by the Company. There are charges assessed to the Contract which are reflected in the Account Value of the Contract, but not in Accumulation Unit Values (or Benefit Unit Values). These charges are the contingent deferred sales charge, the annual contract maintenance fee, transfer fees, and premium taxes, where applicable. There are also charges assessed against the Separate Account. These charges are reflected in the Accumulation Unit Values (and Benefit Unit Values) of the Subaccounts. These charges are the mortality and expense risk charge and the administration charge.

Contingent Deferred Sales Charge (“CDSC”)

Purpose of Charge		Offset expenses incurred by the Company in the sale of the Contracts, including commissions paid and costs of sales literature.
Amount of Charge		Up to 8% of each purchase payment withdrawn from the Contract depending on number of years elapsed since receipt of the purchase payment.

For Contracts issued after May 1, 2004 for states where the Company has received regulatory approval:

Number of full years elapsed between date of receipt of purchase payment and date request for withdrawal or surrender received			0				1				2				3				4				5				6				7				8 +
CDSC as a percentage of purchase payment withdrawn or surrendered			8	%			8	%			7	%			6	%			5	%			4	%			3	%			2	%			0	%

For all other Contracts:

Number of full years elapsed between date of receipt of purchase payment and date request for withdrawal or surrender received			0				1				2				3				4				5				6				7				8	+
CDSC as a percentage of purchase payment withdrawn or surrendered			8	%			8	%			8	%			7	%			6	%			5	%			4	%			2	%			0	%

When and How Deducted		On surrenders or withdrawals of Purchase Payments, not earnings, during Accumulation Period. For purposes of calculating the CDSC, we process full or partial surrenders against purchase payments in the order in which we receive them.
Waivers		•    Free withdrawal privilege. See the Surrender and Withdrawals section of this prospectus for information.
		•    In the Company’s discretion where the Company incurs reduced sales and servicing expenses.
		•    Upon separation from service if Contract issued with employer plan endorsement or deferred compensation endorsement.
		•    If the Contract is issued with a tax-sheltered annuity endorsement (and without an employer plan endorsement): (i) upon separation from service if Owner has attained age 55 and Contract has been in force for at least seven years; or (ii) after Contract has been in force ten years or more.
		•    Long-term care waiver rider. See the Surrender and Withdrawals section of this prospectus for information.
		•    If the Social Security Administration determines after the Contract is issued that the Owner is “disabled” as that term is defined in the Social Security Act of 1935, as amended.
		•    Successor Owner election. See the Account Value section of this prospectus for information.
		•    Where required to satisfy state law or required for participation in certain retirement plans.

Deduction for Contingent Deferred Sales Charge When You Take a Withdrawal

Unless you instruct us otherwise, any contingent deferred sales charge that applies to a withdrawal will be deducted from the amount remaining in your account after you receive the amount you requested. In other words, the amount of the withdrawal will be grossed-up to cover the charge. For example, if the charge is 4%, you request $100, and no waiver applies, you receive $100, the charge is $4.17, and the total withdrawal from your account is $104.17.

Contract Maintenance Fee

Purpose of Charge		Offset expenses incurred in issuing the Contracts and in maintaining the Contracts and the Separate Account.
Amount of Charge		$30.00 per year.
When and How Deducted		During the Accumulation Period, the charge is deducted pro rata from amounts invested in the Subaccounts on each anniversary of the effective date of the Contract, and at time of surrender. During the Benefit Payment Period, a portion of the charge is deducted from each variable dollar benefit payment.
Waivers		•    During the Accumulation Period if the Account Value is at least $40,000 on the date the charge is due (individual contracts only).
		•    During the Benefit Payment Period if the amount applied to a variable dollar benefit is at least $40,000 (individual contracts only).
		•    In the Company’s discretion where the Company incurs reduced sales and servicing expenses.
		•    During the Benefit Payment Period where required to satisfy state law.

Transfer Fee

Purpose of Charge		Offset cost incurred in administering the Contracts.
Amount of Charge		$25 for each transfer in excess of 12 in any contract year. The Company reserves the right to change the amount of this charge at any time or the number of transfers that can be made without incurring the transfer fee. The maximum amount of the fee that the Company would impose on a transfer is $30.
When and How Deducted		During the Accumulation Period, the fee is deducted from the amount transferred.
Waivers		Currently, the transfer fee does not apply to transfers associated with the dollar cost averaging, interest sweep and portfolio rebalancing programs. Transfers associated with these programs do not count toward the 12 free transfers permitted in a contract year. The Company reserves the right to eliminate this waiver at any time.

Administration Charge

Purpose of Charge		Offset expenses incurred in administering the Contracts and the Separate Account.
Amount of Charge		Daily charge equal to 0.000411% of the daily Net Asset Value for each Subaccount, which corresponds to an annual effective rate of 0.15%.
When and How Deducted		During the Accumulation Period and during the Benefit Payment Period if a variable dollar benefit is elected, the charge is deducted from amounts invested in the Subaccounts.
Waivers		May be waived or reduced in the Company’s discretion where the Company incurs reduced sales and servicing expenses.

Mortality and Expense Risk Charge

Purpose of Charge		Compensation for bearing certain mortality and expense risks under the Contract. Mortality risks arise from the Company’s obligation to make benefit payments during the Benefit Payment Period and to pay the death benefit. The expense risk assumed by the Company is the risk that the Company’s actual expenses in administering the Contracts and the Separate Account will exceed the amount recovered through the contract maintenance fees, transfer fees and administration charges.
Amount of Charge		Daily charge equal to 0.003446% of the daily Net Asset Value for each Subaccount, which corresponds to an effective annual rate of 1.25%.
When and How Deducted		During the Accumulation Period, and during the Benefit Payment Period if a variable dollar benefit is elected, the charge is deducted from amounts invested in the Subaccounts.
Waivers		None.

Premium Taxes

Currently some state governments impose premium taxes on annuity purchase payments. These taxes currently range from zero to 3.5% depending upon the jurisdiction. A federal premium tax has been proposed but not enacted. The Company will deduct any applicable premium taxes from the Account Value either upon death, withdrawal, surrender, annuitization, or at the time purchase payments are made, but no earlier than when the Company incurs a tax liability under applicable law.

Expenses Related to Loans

If loans are available under your Contract and you borrow money under the loan provisions of your Contract, we will charge interest on the loan. The maximum interest rate we charge on a loan is 8%. For more information about loans, see the Contract Loans section of the prospectus

Maximum Charges

Except as indicated below, the Company will never charge more to a Contract than the fees and charges described, even if its actual expenses exceed the total fees and charges collected. If the fees and charges collected by the Company exceed the actual expenses it incurs, the excess will be profit to the Company and will not be returned to Owners.

The Company reserves the right to increase the amount of the transfer fee in the future, and/or to charge fees for the automatic transfer programs described in the Transfers section of this prospectus, and/or for the systematic withdrawal

program described in the Surrender and Withdrawals section of this prospectus, if in the Company’s discretion, it determines such charges are necessary to offset the costs of administering transfers or systematic withdrawals.

Discretionary Waivers of Charges

The Company will look at the following factors to determine if it will waive a charge, in part or in full, due to reduced sales and servicing expenses: (1) the size and type of the group to which sales are to be made; (2) the total amount of purchase payments to be received; and (3) any prior or existing relationship with the Company. The Company would expect to incur reduced sales and servicing expenses in connection with Contracts offered to employees of the Company, its subsidiaries and/or affiliates. There may be other circumstances, of which the Company is not presently aware, which could result in reduced sales and servicing expenses. In no event will the Company waive a charge where such waiver would be unfairly discriminatory to any person.

Expenses of the Portfolios

In addition to charges and deductions by the Company, there are Portfolio management fees and administration expenses which are described in the prospectus and Statement of Additional Information for each Portfolio. Portfolio expenses, like Separate Account expenses, are reflected in Accumulation Unit Values (or Benefit Unit Values).

TRANSFERS

Transfers

If allowed by the Company, in its sole discretion, during the Accumulation Period, an Owner may transfer amounts among Subaccounts, between Fixed Account options, and/or between Subaccounts and Fixed Account options by written request once each Valuation Period.

The current restrictions on transfers are:

		Tax-Qualified and Non-Tax-Qualified
Minimum Transfers from
- any Subaccount		$500 or balance of Subaccount, if less than $1,000
- Fixed Account option		$500 or balance of Fixed Account option, if less
Minimum Transfer to
- Fixed Accumulation Account		None
- Fixed Account option with guarantee period		$2,000 — No amounts may be transferred to a guarantee period option which would extend beyond the Annuity Commencement Date.
Maximum Transfers from
- Fixed Accumulation Account		During any contract year, 20% of the Fixed Account option’s value as of the most recent contract anniversary.
- Maturing Fixed Account option with guarantee period		The amount contained in the maturing Fixed Account option with guarantee period.
- Non-Maturing Fixed Account option with guarantee period		During any contract year, 20% of the Fixed Account option’s value as of the most recent contract anniversary without penalty.
General Restrictions on Transfers from Fixed Account options		§     May not be made prior to first contract anniversary. §     Amounts transferred from Fixed Account options to Subaccounts may not be transferred back to Fixed Account options for a period of six months from the date of the original transfer.
General Restrictions on Transfers to Fixed Account option with guarantee period		For Contracts issued after May 1, 2004 in states where the Company has received regulatory approval, amounts may be transferred to the Three-Year Guaranteed Interest Rate Option only during the first contract year.

A transfer is effective on the Valuation Date during which the Company receives the request for transfer. Transfers to a Subaccount will be processed at the next Accumulation Unit Value calculated after the Company receives the transfer

request in Good Order. The Company may, in its sole discretion, restrict, delay or prohibit transfers to any Fixed Account option or any Subaccount from time to time on a nondiscriminatory basis.

How to Request a Transfer

Currently, instead of placing a request in writing, an Owner may place a request for all or part of the Account Value to be transferred by telephone, facsimile or over the Internet. All transfers must be in accordance with the terms of the Contract. Transfer instructions are currently accepted once each Valuation Period. Transfer instructions currently may be placed by telephone at 1-800-789-6771, or via facsimile at 513-765-5115, or over the Internet through the Company’s web site at www.gafri.com, between 9:30 a.m. and 4:00 p.m. Once instructions have been accepted, they may not be rescinded; however, new instructions may be given the following Valuation Period. Access to these alternate methods of placing transfer requests, particularly through the Company’s web site, may be limited or unavailable during periods of peak demand, system upgrading and maintenance, or for other reasons. The Company may withdraw the right to make transfers by telephone, facsimile or over the Internet upon 10 days’ written notice to affected Contract Owners.

The Company will not be liable for complying with transfer instructions that the Company reasonably believes to be genuine, or for any loss, damage, cost or expense in acting on such instructions. In addition, the Company will not be liable for refusing to comply with transfer instructions that are not in Good Order or that the Company reasonably believes are not genuine, or for any loss, damage, cost or expense for failing to act on such instructions. The Owner or person with the right to control payments will bear the risk of such loss. The Company will employ reasonable procedures to determine that telephone, facsimile or Internet instructions are genuine. If the Company does not employ such procedures, the Company may be liable for losses due to unauthorized or fraudulent instructions. These procedures may include, among others, tape recording telephone instructions or requiring use of a unique password or other identifying information.

Automatic Transfer Programs

During the Accumulation Period, the Company offers the automatic transfer services described below. To enroll in one of these programs, you will need to complete the appropriate authorization form, which you can obtain from the Company by calling 1-800-789-6771. There are risks involved in switching between investments available under the Contract.

Currently, the transfer fee does not apply to dollar cost averaging, portfolio rebalancing, or interest sweep transfers, and transfers under these programs will not count toward the twelve transfers permitted under the Contract without a transfer fee charge.

				Minimum Account
Service		Description		Requirements		Limitations/Notes
Dollar Cost Averaging Dollar cost averaging requires regular investments regardless of fluctuating price levels and does not guarantee profits or prevent losses in a declining market. You should consider your financial ability to continue dollar cost averaging transfers through periods of changing price levels.		Automatic transfers from the money market Subaccount to any other Subaccount(s), or from the Fixed Accumulation Account option (where available) to any Subaccount(s), on a monthly or quarterly basis.		Source of funds must be at least $10,000. Minimum transfer per month is $500. When balance of source of funds falls below $500, entire balance will be allocated according to dollar cost averaging instructions.		Dollar cost averaging transfers may not be made to any of the Fixed Account options. The dollar cost averaging transfers will take place on the last Valuation Date of each calendar month or quarter as requested by the Owner.
Portfolio Rebalancing Portfolio rebalancing does not guarantee profits or prevent losses in a declining market.		Automatically transfer amounts between the Subaccounts and the Fixed Accumulation Account option (where available) to maintain the percentage allocations selected by the Owner.		Minimum Account Value of $10,000.		Transfers will take place on the last Valuation Date of each calendar quarter. Portfolio rebalancing will not be available if the dollar cost averaging program or an interest sweep from the Fixed Accumulation Account option is being utilized.

				Minimum Account
Service		Description		Requirements		Limitations/Notes
Interest Sweep		Automatic transfers of the income from any Fixed Account option(s) to any Subaccount(s).		Balance of each Fixed Account option selected must be at least $5,000. Maximum transfer from each Fixed Account option selected is 20% of such Fixed Account option’s value per year. Amounts transferred under the interest sweep program will reduce the 20% maximum transfer amount otherwise allowed.		Interest sweep transfers will take place on the last Valuation Date of each calendar quarter. Interest sweep is not available from the Seven-Year Guaranteed Interest Rate Option if the Principal Guarantee Program is selected.

Changes in or Termination of Automatic Transfer Programs

The Owner may terminate any of the automatic transfer programs at any time, but must give the Company at least 30 days’ notice to change any automatic transfer instructions that are already in place. Termination and change instructions will be accepted by U.S. or overnight mail, or by facsimile at 513-768-5115. Termination and change instructions will also be accepted by telephone at 1-800-789-6771. The Company may terminate, suspend or modify any aspect of the automatic transfer programs described above without prior notice to Owners, as permitted by applicable law. Any such termination, suspension or modification will not affect automatic transfer programs already in place.

The Company may also impose an annual fee or increase the current annual fee, as applicable, for any of the foregoing automatic transfer programs in such amount(s) as the Company may then determine to be reasonable for participation in the program. The maximum amount of the annual fee that would be imposed for participating in each automatic transfer program is $30.

Restrictions on Transfers Relate to Active Trading Strategies

Neither the Contracts described in this prospectus nor the underlying Portfolios are designed to support active trading strategies that involve frequent movement between or among Subaccounts (sometimes referred to as “market-timing” or “short-term trading”). An Owner who intends to use an active trading strategy should consult his/her registered representative and request information on variable annuity contracts that offer underlying Portfolios designed specifically to support active trading strategies.

We have implemented several processes and/or restrictions aimed at eliminating the negative impact of active trading strategies. Transfer restrictions may vary by state.

Appendix B to this prospectus contains more information about the processes and restrictions.

WITHDRAWALS AND SURRENDERS

Surrender and Withdrawals

An Owner may surrender a Contract either in full or take a partial withdrawal during the Accumulation Period. A CDSC may apply on surrender or withdrawal. If a CDSC applies to a withdrawal, it will generally be deducted from the remaining contract value. For more information about the calculation of the CDSC, please see the Deduction for Contingent Deferred Sales Charge When You Make a Withdrawal section of this prospectus.

If bonus amounts credited to a purchase payment are returned to the Owner on a withdrawal or surrender following the first year, a CDSC, to the extent applicable to the purchase payment, will be deducted from the bonus amount. CDSC would not be imposed, however, with respect to any bonus amounts recaptured following a cancellation during the free look period. CDSC is also not imposed with respect to any bonus amounts upon withdrawal or surrender during the first Contract year. The restrictions and charges on withdrawals and surrenders are:

		Tax-Qualified		Non-Tax-Qualified
Minimum amount of withdrawal		$500		$500
Minimum remaining Surrender Value after withdrawal		$500		$500
Amount available for surrender or withdrawal (valued as of end of Valuation Period in which request for surrender or withdrawal is received by the Company)		Surrender Value, subject to tax law or employer plan restrictions on withdrawals or surrender		Surrender Value, subject to employer plan restrictions on withdrawals or surrender
		Tax-Qualified and Non-Tax-Qualified
Tax penalty for early withdrawal		When applicable, 10% of amount distributed before age 59 1/2 (25% for certain SIMPLE IRAs)
Contract maintenance fee on surrender		$30 (no CDSC applies to fee)
Contingent deferred sales charge (“CDSC”)		Up to 8% of purchase payments
Order of withdrawal for purposes of CDSC (order may be different for tax purposes)		First from accumulated earnings (no CDSC applies) and then from purchase payments in the order in which we receive them (CDSC may apply)

A surrender will terminate the Contract. Withdrawals are taken proportionally from all Subaccounts and Fixed Account options in which the Contract is invested on the date the Company receives the request unless the Owner requests that the withdrawal be from a specific investment option.

A surrender or withdrawal is effective on the Valuation Date during which the Company receives the request, and will be processed at the Next Accumulation Unit Value calculated after the Company receives the request in Good Order. Payment of a surrendered or withdrawn amount may be delayed if it includes an amount paid to the Company by a check that has not yet cleared. Processing and payment of the amount surrendered or withdrawn from a Fixed Account option may be delayed for up to six months after receipt of the request for surrender or withdrawal as allowed by state law. If the Company delays processing and payment, it will comply with the applicable state law. Payment of the amount surrendered or withdrawn from the Subaccounts may be delayed during any period the New York Stock Exchange is closed or trading is restricted, or when the Securities and Exchange Commission either: (1) determines that there is an emergency which prevents valuation or disposal of securities held in the Separate Account; or (2) permits a delay in payment for the protection of security holders.

Free Withdrawal Privilege

The Company will waive the CDSC on full or partial surrender or withdrawal during the first contract year, on an amount equal to not more than 10% of all purchase payments received. During the second and succeeding contract years, the Company will waive the CDSC on an amount equal to not more than the greater of: (a) accumulated earnings (Account Value in excess of purchase payments); or (b) 10% of the Account Value as of the last contract anniversary.

If the free withdrawal privilege is not exercised during a contract year, it does not carry over to the next contract year. The free withdrawal privilege may not be available under some group Contracts.

Long-Term Care Waiver Rider

If the Long-Term Care Waiver Rider is available in your state, it is automatically provided with your Contract. If a Contract is modified by the Long-Term Care Waiver Rider, a surrender or withdrawal may be made free of any CDSC if the Owner has been confined in a qualifying licensed hospital or long-term care facility for at least 90 days beginning on or after the first contract anniversary. There is no charge for this rider.

Systematic Withdrawal

During the Accumulation Period, an Owner may elect to automatically withdraw money from the Contract. The Account Value must be at least $10,000 in order to make a systematic withdrawal election. The minimum monthly amount that can be withdrawn is $100. Systematic withdrawals will be subject to the CDSC to the extent the amount withdrawn exceeds the free withdrawal privilege. The Owner may begin or discontinue systematic withdrawals at any time by request to the Company, but at least 30 days’ notice must be given to change any systematic withdrawal instructions that are currently in place. The Company reserves the right to discontinue offering systematic withdrawals at any time. Currently, the Company does not charge a fee for systematic withdrawal services. However, the Company

reserves the right to impose an annual fee in such amount as the Company may then determine to be reasonable for participation in the systematic withdrawal program. If imposed, the fee will not exceed $30 annually.

Before electing a systematic withdrawal program, you should consult with a financial advisor. Systematic withdrawal is similar to annuitization, but will result in different taxation of payments and potentially different amount of total payments over the life of the Contract than if annuitization were elected.

CONTRACT LOANS

If loans are available under a Contract, loan provisions are described in the loan endorsement to the Contract. The Company may make loans to Owners of certain tax-qualified Contracts. If loans are available under your Contract and you borrow money under the loan provisions, we will charge interest on the loan. The maximum interest rate we charge is 8%. Any such loans will be secured with an interest in the Contract, and the collateral for the loan will be moved from the Subaccounts you designate to the Fixed Accumulation Account option and earn a fixed rate of interest applicable to loan collateral, which will be at least 3%. Generally, we require the collateral amount to be 110% of the outstanding loan balance. The restrictions that otherwise apply to the Fixed Accumulation Account do not apply to transfers of collateral amounts to the Fixed Accumulation Account or to such amounts no longer required to collateralize the loan.

The difference between the interest rate we charge on a loan and the interest rate we credit to the collateral amount is called the “loan interest spread.”

	•		Because the maximum interest rate we charge on a loan is 8% and the minimum interest rate we credit to the collateral amount in the Fixed Accumulation Account is 3%, the maximum loan interest spread is 5%.
	•		Because we are currently charging 6% interest on loans and crediting 3% interest on collateral, the current “loan interest spread” is 3%.
	•		A plan administrator or employer retirement plan may require us to charge an interest rate on loans that is higher than 8%. In this case, the maximum “loan interest spread” will be higher than 5% and the current “loan interest spread” will be higher than 3%.

Any unpaid interest will be added to the loan. As a result, it will be compounded and be part of the loan.

If loans are available under your Contract and you borrow money under the loan provisions, you will not be able to surrender or annuitize your Contract until all such loans are paid in full. Loans may also limit the amount of money that you can partially surrender from your Contract. If you default in repaying a loan under your Contract, we may pay off the loan by effectively reducing your Account Value by an amount equal to the balance of the loan.

If we receive money from you while a loan is outstanding under your Contract, we will treat the money as a Purchase Payment unless you notify us that the money is a loan payment.

Loan amounts and repayment requirements are subject to provisions of the Internal Revenue Code, and default on a loan will result in a taxable event. You should consult a tax advisor prior to exercising loan privileges.

A loan, whether or not repaid, will have a permanent effect on the Account Value of a Contract because the collateral cannot be allocated to the Subaccounts or Fixed Account guarantee periods. The longer the loan is outstanding, the greater the effect is likely to be. The effect could be favorable or unfavorable. If the investment results are greater than the rate being credited on collateral while the loan is outstanding, the Account Value will not increase as rapidly as it would if no loan were outstanding. If investment results are below that rate, the Account Value will be higher than it would have been if no loan had been outstanding.

ANNUITY BENEFIT

An Owner may designate the date that annuity payments will begin, and may change the date up to 30 days before annuity payments are scheduled to begin. Unless the Company agrees otherwise, the first day of a Benefit Payment Period in which annuity payments are paid cannot be later than the Annuity Commencement Date.

Annuity Benefit payments will be made to the Annuitant as Payee. In lieu of that, you may elect by Written Request to have Annuity Benefit payments made to you as Payee. Any Annuity Benefit amounts remaining payable on the death of the Payee will be paid to the contingent Payee designated by you by Written Request. We may reject the naming of a non-natural contingent Payee.

The amount applied to a settlement option will be the Account Value as of the end of the Valuation Period immediately proceeding the first day of the Benefit Payment Period. For tax-qualified Contracts, if the Payee is a non-natural person, a surrender will be deemed to have been made and the amount applied to a settlement option will be the Surrender Value instead of the Account Value, unless the non-natural person Payee is the Owner of the individual or group Contract and has an immediate obligation to make corresponding payments to the Annuitant of the Contract.

The Owner may select any form of settlement option which is currently available. The standard forms of settlement options are described in the Settlement Options section of this prospectus.

If the Owner has not previously made an election as to the form of settlement option, the Company will contact the Owner to ascertain the form of settlement option to be paid. If the Owner does not select a settlement option, such as a specific fixed dollar benefit payment, a variable dollar benefit payment, or a combination of a variable and fixed dollar benefit payment, the Company will apply the Account Value (or Surrender Value) to a fixed dollar benefit for the life of the Annuitant with 120 monthly payments assured, as described in the Settlement Options section of this prospectus.

DEATH BENEFIT

Death Benefit

A death benefit will be paid under a Contract if the Owner dies during the Accumulation Period. If a surviving (or your civil union partner/domestic partner/same-gender spouse in applicable states) becomes a Successor Owner of the Contract, the death benefit will be paid on the death of the Successor Owner if he or she dies during the Accumulation Period.

A partial surrender or withdrawal from the Contract may result in the reduction of the Death Benefit that is greater than the amount of the partial surrender or withdrawal.

Death Benefit Amount

The determination of the Death Benefit Amount depends on the form of Contract in effect in your state of residence when the Contract was issued. For example, in 2003, the Company sought approval from the various states for an endorsement with revised provisions concerning the determination of the Death Benefit Amount (the “2003 Death Benefit Endorsement”). Please contact the Company if you have questions as to how to determine the Death Benefit Amount under your Contract.

Death Benefit Amount (Version 1)

The Death Benefit Amount will equal the greater of:

1)		the Account Value on the Death Benefit Valuation Date; or
2)		the Minimum Death Benefit.

The Minimum Death Benefit is equal to the total purchase payments, including the bonus(es) thereon, reduced proportionally for withdrawals. This reduction will include any charges or adjustments applicable to such withdrawals, and will be made on the date of the withdrawal. This means that the Minimum Death Benefit will be reduced on that date in the same percentage as the percentage reduction in the Account Value.

Example of Determination of Death Benefit Amount (Version 1)

This example is intended to help you understand how a withdrawal impacts the Death Benefit amount.

Assuming your total Purchase Payments equal $100,000, your Account Value is $90,000, you withdraw $10,000 from the Contract, and you are left with an Account Value of $80,000.

Step One: Calculate the proportional reduction.

Step Two: Calculate the reduced Purchase Payment amount.

Purchase Payments		$	100,000
Less proportional reduction for withdrawals			- 11,111
Purchase Payments reduced for withdrawals		$	88,889

Step Three: Determine the Death Benefit amount.

Immediately after the withdrawal, the reduced Purchase Payments of $88,889 is greater than the Account Value of $80,000, so the Death Benefit amount would be $88,889.

The Death Benefit Amount will be reduced by any applicable premium tax or other tax not previously deducted. It will also be reduced by any outstanding loans.

The Death Benefit Amount will be allocated among the Subaccounts and Fixed Account options as of the Death Benefit Valuation Date. This allocation will be made in the same proportion as the value of each option bears to the Owner’s total Account Value immediately before the Death Benefit Valuation Date.

For all Contracts an Owner may elect the form of payment of the death benefit at any time before his or her death. The form of payment may be a lump sum, or any available form of settlement option. The standard forms of settlement options are described in the Settlement Options section of this prospectus. There is no additional charge associated with the form of Death Benefit election. If the Owner does not make an election as to the form of death benefit, the Beneficiary may make an election within one year after the Owner’s death. If no election as to form of settlement option is made; the Company will apply the death benefit to a fixed dollar benefit for a period certain of 48 months. The first day of the Benefit Payment Period in which a death benefit is paid may not be more than one year after the Owner’s death; the day a death benefit is paid in a lump sum may not be more than five years after the Owner’s date of death.

Death Benefit Amount (Version 2)

The death benefit will be an amount equal to the larger of the following two amounts:

1)		The Account Value on the Death Benefit Valuation Date; or
2)		The total purchase payment(s), including the bonus(es) thereon, less any partial withdrawals and any CDSC that applied to those amounts.

Example of Determination of Death Benefit Amount (Version 2)

This example is intended to help you understand how a withdrawal impacts the Death Benefit amount.

Assuming your total Purchase Payments equal $100,000, you earned bonuses of $4,000, your Account Value is $94,000, you withdraw $10,000 from the Contract, you incur a CDSC of $___and you are left with an Account Value of $___.

Step One: Calculate the total Purchase Payment amount, plus bonuses, less partial withdrawals and any CDSCs.

Purchase Payments		$	100,000
Plus bonus payments			4,000
Less withdrawals			-10,000
Less CDSC			—
Purchase Payments reduced for withdrawals		$

Step Two: Determine the Death Benefit amount.

Immediately after the withdrawal, the Account Value of $94,000 is greater than the reduced Purchase Payments of $___, so the Death Benefit amount would be $94,000.

Any applicable premium tax or other taxes not previously deducted, and any outstanding loans, will be deducted from the death benefit amount described above. The Death Benefit Amount will be allocated among the Subaccounts and Fixed Account options as of the Death Benefit Valuation Date. This allocation will be made in the same proportion as the value of each option bears to the Owner’s total Account Value immediately before the Death Benefit Valuation Date.

For all Contracts an Owner may elect the form of payment of the death benefit at any time before his or her death. The form of payment may be a lump sum, or any available form of settlement option. The standard forms of settlement options are described in the Settlement Options section of this prospectus. There is no additional charge associated with the form of Death Benefit election. If the Owner does not make an election as to the form of death benefit, the Beneficiary may make an election within one year after the Owner’s death. If no election as to form of settlement option is made; the Company will apply the death benefit to a fixed dollar benefit for a period certain of 48 months. The first day of the Benefit Payment Period in which a death benefit is paid may not be more than one year after the Owner’s death; the day a death benefit is paid in a lump sum may not be more than five years after the Owner’s date of death.

Successor Owner Election

If the Contract is issued after May 1, 2004, and the surviving (or your civil union partner/domestic partner/same-gender spouse in applicable states) of a deceased Owner becomes a Successor Owner of the Contract, the Account Value will be stepped-up to equal the death benefit which otherwise would have been payable, as of what would have been the Death Benefit Valuation Date. In addition, contingent deferred sales charges will be waived on the entire stepped-up Account Value as of that date, but will apply to any purchase payments applied to the Contract after that date. There is no additional charge associated with this feature.

For purposes of determining what would have been the Death Benefit Valuation Date, the election to become Successor Owner will be deemed to be instructions as to the form of death benefit. The election to become Successor Owner must be made within one year of the date of the Owner’s death.

Prior to May 1, 2004, the Successor Owner provisions of the Contract were available only by endorsement and may not have been available in all states.

Payment of Benefits

When a Contract is annuitized, or when a death benefit is applied to a settlement option, the Account Value or the death benefit, as the case may be, the Company promises to pay a stream of benefit payments for the duration of the settlement option selected. Upon annuitization, the Account Value is no longer available to the Owner. Benefit payments may be calculated and paid: (1) as a variable dollar benefit; (2) as a fixed dollar benefit; or (3) as a combination of both. The stream of payments, whether variable dollar or fixed dollar, is an obligation of the Company’s general account. However, only the amount of fixed dollar benefit payments is guaranteed by the Company. The Owner (or Payee) bears the risk that any variable dollar benefit payment may be less than the initial variable dollar benefit payment, or that it may decline to zero, if Benefit Unit Values for that payment decrease sufficiently. Transfers between a variable dollar benefit and a fixed dollar benefit are not permitted, but transfers of Benefit Units among Subaccounts are permitted once each 12 months after a variable dollar benefit has been paid for at least 12 months. The formulas for transferring Benefit Units among Subaccounts during the Benefit Payment Period are set forth in the Statement of Additional Information.

If the beneficiary is an individual and the lump sum payment option is selected, we pay the death benefit by establishing an interest-bearing draft account for the beneficiary in the amount of the death benefit. This account is called the Great American Benefit Choice Account. We send the beneficiary a personalized “checkbook” for this account. The beneficiary may withdraw all or part of the money in this account at any time by writing a draft against the account. The servicing bank will process the draft by drawing funds from our general account.

The Great American Benefit Choice Account earns interest, which is compounded daily and credited monthly. We set the interest rate for this account. We review the rate periodically and we may change it at any time. We may make a profit on the money held in this account.

The Great American Benefit Choice Account is part of our general account. It is not a bank account, and it is not insured by the FDIC, NCUSIF, or any government agency. As part of our general account, it is subject to the claims of our creditors.

In some circumstances when a lump sum payment option is selected, we do not establish a draft account for the beneficiary.

	•		If the death benefit is less than $5,000 or the beneficiary is a non-natural person such as a trust, estate or corporation, we pay the death benefit with a single check payable to the beneficiary.
	•		If the beneficiary is a resident of Arkansas, Colorado, Florida, Kansas, Maryland, Nevada, North Carolina or North Dakota and he or she requests that the lump sum be paid by check, we pay the death benefit with a single check payable to the beneficiary.

SETTLEMENT OPTIONS

Settlement Options

The Company will make periodic payments in any form of settlement option that is acceptable to it at the time of an election. The standard forms of settlement options are described below. Payments under any settlement option may be in monthly, quarterly, semiannual or annual payment intervals. If the amount of any regular payment under the form of settlement option elected would be less than $50, an alternative form of settlement option will have to be elected. The Company, in its discretion, may require benefit payments to be made by direct deposit or wire transfer to the account of a designated Payee.

The Company may modify minimum amounts, payment intervals and other terms and conditions at any time without prior notice to Owners. If the Company changes the minimum amounts, the Company may change any current or future payment amounts and/or payment intervals to conform with the change. More than one settlement option may be elected if the requirements for each settlement option elected are satisfied. Once payment begins under a settlement option that is contingent on the life of a specified person or persons, the settlement option may not be changed or commuted (i.e., redeemed at present value). Other settlement options may be commuted as described in the Commuted Values section of this prospectus.

The dollar amount of benefit payments will vary with the frequency of the payment interval and the duration of the payments. Generally, each payment in a stream of payments will be lesser in amount as the frequency of payments increases, or as the length of the payment period increases, because more payments will be paid. For life contingent settlement options, each payment in the stream of payments will generally be lesser in amount as the life expectancy of the Annuitant or Beneficiary increases because more payments are expected to be paid.

For life contingent settlement options, the death of the Annuitant may result in only a single payment being made. For fixed period settlement options, the periodic payments will continue for the entire fixed period even if the Annuitant dies during the payment period.

Income for a Fixed Period: The Company will make periodic payments for a fixed period of 5 to 30 years. (Payment intervals of 1 to 4 years are available for death benefit settlement options only.)

Life Annuity with Payments for a Fixed Period: The Company will make periodic payments for a fixed period, or until the death of the person on whose life benefit payments are based if he or she lives longer than the fixed period.

Joint and One-Half Survivor Annuity: The Company will make periodic payments until the death of the primary person on whose life benefit payments are based; thereafter, the Company will make one-half of the periodic payment until the death of the secondary person on whose life benefit payments are based.

Life Annuity: The Company will make periodic payments until the death of the person on whose life the benefit payments are based.

For Contracts issued after May 1, 2004, in states where the Company has received regulatory approval, the Company generally guarantees minimum benefit payment factors based on annuity 2000 mortality tables for blended lives (60% female/40%male) with interest at 1% per year, compounded annually.

For all other Contracts, the Company guarantees minimum fixed dollar benefit payment factors based on 1983 annuity mortality tables for individuals or groups, as applicable, with interest at 3% per year, compounded annually.

Forms of Benefit Payments Under Settlement Options

Fixed Dollar Payments

Fixed dollar benefit payments are determined by multiplying the amount applied to the fixed dollar benefit (expressed in thousands of dollars and after deduction of any fees and charges, loans, or applicable premium taxes) by the amount of the payment per $1,000 of value which the Company is currently paying for settlement options of that type. Fixed dollar benefit payments will remain level for the duration of the Benefit Payment Period.

The Company guarantees minimum fixed dollar benefit payment factors based on 1983 group annuity mortality tables, for blended lives (60% female/40% male) with interest at 3% per year, compounded annually. The minimum monthly payments per $1,000 of value for the Company’s standard settlement options are set forth in tables in the Contracts. Upon request, the Company will provide information about minimum monthly payments for ages or fixed periods not shown in the settlement option tables.

Variable Dollar Payments

The first variable dollar benefit payment is the amount it would be if it were a fixed dollar benefit payment calculated at the Company’s minimum guaranteed settlement option factors, reduced by a pro rata portion of the certificate maintenance fee, equal to the amount of the fee divided by the number of payments to be made over a 12-month period.

The amount of each subsequent variable dollar benefit payment will reflect the investment performance of the Subaccount(s) selected and may vary from payment to payment. For example, because the first benefit payment includes a 3% rate of interest, subsequent benefit payments will be less than the first payment if the net investment performance of the applicable Subaccount(s) is less than 3%.

The amount of each subsequent payment is the sum of the payment due for each Subaccount selected, less a pro rata portion of the certificate maintenance fee, as described above. The payment due for a Subaccount equals the shares for that Subaccount, which are the Benefit Units, times their value, which is the Benefit Unit Value for that Subaccount as of the end of the fifth Valuation Period preceding the due date of the payment.

The number of Benefit Units for each Subaccount selected is determined by allocating the amount of the first variable dollar benefit payment (before deduction of the pro rata portion of the certificate maintenance fee) among the Subaccount(s) selected in the percentages indicated by the Owner (or Payee). The dollar amount allocated to a Subaccount is divided by the Benefit Unit Value for that Subaccount as of the first day of the Benefit Payment Period. The result is the number of Benefit Units that the Company will pay for that Subaccount at each payment interval. The number of Benefit Units for each Subaccount remains fixed during the Benefit Payment Period, except as a result of any transfers among Subaccounts or as provided under the settlement option elected. An explanation of how Benefit Unit Values are calculated is included in the Glossary of Financial Terms of this prospectus.

Considerations in Selecting a Settlement Option and Payment Forms

Periodic payments under a settlement option are affected by various factors, including the length of the payment period, the life expectancy of the person on whose life benefit payments are based, the frequency of the payment interval (monthly, quarterly, semi-annual or annual), and the payment form selected (fixed dollar or variable dollar).

•		Generally, the longer the period over which payments are made or the more frequently the payments are made, the lower the amount of each payment because more payments will be made.
•		For life contingent settlement options, the longer the life expectancy of the Annuitant or Beneficiary, the lower the amount of each payment because more payments are expected to be paid.
•		Fixed dollar payments will remain level for the duration of the payment period.
•		The actual amount of each variable dollar payment may vary from payment to payment regardless of the duration of the payment period. The actual amount of each variable dollar payment will reflect the investment performance of the Subaccount(s) selected. The daily investment factor and the assumed interest rate also affect the amount by which variable dollar payments increase or decrease.

Additional information about fixed dollar payments, variable dollar payments, the daily investment factor, and the assumed interest rate is included in the Calculation of Benefit Payments and Glossary of Financial Terms sections of this prospectus.

THE CONTRACTS

Each Contract is an agreement between the Company and the Owner. Values, benefits and charges are calculated separately for each Contract. In the case of a group Contract, the agreement is between the group Owner and the Company. An individual participant under a group Contract will receive a certificate of participation, which is evidence of the participant’s interest in the group Contract. A certificate of participation is not a Contract. Values, benefits and charges are calculated separately for each certificate issued under a Contract. The description of Contract provisions in this prospectus applies to the interests of certificate Owners, except where otherwise noted.

Because the Company is subject to the insurance laws and regulations of all the jurisdictions where it is licensed to operate, the availability of certain Contract rights and provisions in a given State may depend on that State’s approval of the Contracts. Where required by state law or regulation, the Contracts will be modified accordingly. To obtain an explanation of the modifications that we have made to Contracts delivered in the state where you live, contact us at our Administrative Office, P.O. Box 5423, Cincinnati, OH 45201-5423, or call us at 1-800-789-6771.

Right to Cancel

The Owner of an individual Contract may cancel it before midnight of the twentieth day following the date the Owner receives the Contract. For a valid cancellation, the Contract must be returned to the Company, and written notice of cancellation must be given to the Company, or to the agent who sold the Contract, by that deadline. If mailed, the return of the Contract or the notice is effective on the date it is postmarked, with the proper address and with postage paid. If the Owner cancels the Contract, the Contract will be void and the Company will refund the purchase payment(s) paid for it, plus or minus any investment gains or losses under the Contract, and less the bonus amounts credited to the purchase payment(s), as of the end of the Valuation Period during which the returned Contract is received by the Company. When required by state or federal law, the Company will return the purchase payment(s), less the bonus amounts, without any investment gain or loss, during all or part of the right to cancel period. When required by state or federal law, the Company will return the Purchase Payments in full, without deducting any fees or charges, during the right to cancel period. When required by state law, the right to cancel period may be longer than 20 days. When required by state law, the right to cancel may apply to group Contracts. During the right to cancel period specified on the first page of the Contract, the Company reserves the right to allocate all purchase payments to either the Fixed Accumulation Account or a money market Subaccount, at our discretion. If we exercise this right, we will allocate the Account Value as of the end of the right to cancel period to the Fixed Account options and/or to the Subaccounts in the percentages that the Owner instructed.

Termination

The Company reserves the right to terminate any Contract at any time during the Accumulation Period if the Surrender Value is less than $500. In that case, the Contract will be involuntarily surrendered and the Company will pay the Owner the amount which would be due the Owner on a full surrender. A group Contract may be terminated on 60 days advance notice, in which case participants will be entitled to continue their interests on a deferred, paid-up basis, subject to the Company’s involuntary surrender right as described above.

Persons With Rights Under a Contract

Owner: The Owner is the person with authority to exercise rights and receive benefits under the Contract (e.g., make allocations among investment options, elect a settlement option, designate the Annuitant, Beneficiary and Payee). An Owner must ordinarily be a natural person, or a trust or other legal entity holding a contract for the benefit of a natural person. Ownership of a non-tax-qualified Contract may be transferred, but transfer may have adverse tax consequences. Ownership of a tax-qualified Contract may not be transferred. Unless otherwise elected or required by law, a transfer of Ownership will not automatically cancel a designation of an Annuitant or Beneficiary or any settlement options election previously made.

Joint Owners: There may be joint Owners of a non-tax-qualified Contract. Joint Owners may each exercise transfer rights and make purchase payment allocations independently. All other rights must be exercised by joint action. A surviving joint Owner who is not the (or your civil union partner/domestic partner/same-gender spouse in applicable states) of a deceased Owner may not become a Successor Owner, but will be deemed to be the Beneficiary of the death benefit which becomes payable on the death of the first Owner to die, regardless of any Beneficiary designation.

Successor Owner: The surviving (or your civil union partner/domestic partner/same-gender spouse in applicable states) of a deceased Owner may become a Successor Owner if the surviving (or your civil union partner/domestic partner/same-gender spouse in applicable states) was either the joint Owner or sole surviving Beneficiary under the Contract. In order for a (or your civil union partner/domestic partner/same-gender spouse in applicable states) to become a Successor Owner, the Owner must make an election prior to the Owner’s death, or the surviving (or your civil union partner/domestic partner/same-gender spouse in applicable states) must make an election within one year of the Owner’s death.

As required by federal tax law, the Contract contains rules about the rate at which a death benefit must be paid to a beneficiary who is not your spouse. If the successor owner is not you spouse as defined by federal tax law, then after your death the contract values must be distributed in a manner that complies with these rules.

Civil Union Partners, Domestic Partners and Same-Gender Married Couples: The federal Defense of Marriage Act states that none of the following persons are considered married under federal law: civil union partners, domestic partners, or same-gender married couples. Therefore the favorable tax treatment provided by federal tax law to a surviving spouse is NOT available to a surviving civil union partner, a surviving domestic partner, or the surviving spouse of a same-gender marriage. For information about federal tax laws, please consult a tax advisor.

Annuitant: The Annuitant is the person whose life is the measuring life for life contingent annuity benefit payments. The Annuitant must be the same person as the Owner under a tax-qualified Contract. The Owner may designate or change an Annuitant under a non-tax-qualified Contract. Unless otherwise elected or required by law, a change of Annuitant will not automatically cancel a designation of a Beneficiary or any settlement option election previously made.

Beneficiary: The person entitled to receive the death benefit. The Owner may designate or change the Beneficiary, except that a surviving joint Owner will be deemed to be the Beneficiary regardless of any designation. Unless otherwise elected or required by law, a change of Beneficiary will not automatically cancel a designation of any Annuitant or any settlement option election previously made. If no Beneficiary is designated, and there is no surviving joint Owner, the Owner’s estate will be the Beneficiary. The Beneficiary will be the measuring life for life contingent death benefit payments.

Payee: Under a tax-qualified Contract, the Owner-Annuitant is the Payee of annuity benefits. Under a non-tax-qualified Contract, the Owner may designate the Annuitant or the Owner as the Payee of annuity benefits. Irrevocable naming of a Payee other than the Owner can have adverse tax consequences. The Beneficiary is the Payee of the death benefit.

Assignee: Under a tax-qualified Contract, assignment is not permitted. The Owner of a non-tax-qualified Contract may assign most of his/her rights or benefits under a Contract. Assignment of rights or benefits may have adverse tax consequences.

ANNUITY INVESTORS LIFE INSURANCE COMPANY^®

The Company is a stock life insurance company incorporated under the laws of the State of Ohio in 1981. The Company is principally engaged in the sale of variable and fixed annuity policies. The home office of the Company is located at 525 Vine Street, Cincinnati, Ohio 45202.

The obligations under the Contracts are obligations of the Company. The fixed benefits under this Contract are provided through the Fixed Account. The Fixed Account is part of our general account and its values are not dependent on the investment performance of the Subaccounts that make up the Separate Account. The variable benefits under this Contract are provided through the Separate Account, which is described below.

The Company’s general account assets are used to guarantee the payment of applicable annuity and death benefits under the Contracts. As a result, Contract owners must rely on the financial strength of the Company for any benefit payments under the Contract. To the extent that we are required to pay benefit amounts in excess of the applicable Contract values, such amounts will come from the Company’s general account assets. You should be aware that the Company’s general account is exposed to the risks normally associated with a portfolio of fixed-income securities, including interest rate risk, liquidity risk and credit risk. The Company’s financial statements in the Statement of Additional Information include a further discussion of investments held by the Company’s general account. In addition, the Company’s general account is subject to the claims of its creditors.

The Company and Great Americana Advisors^®, Inc., the principal underwriter of the Contracts, are involved in various kinds of routine litigation that, in management’s judgment, are not of material importance to their assets or the Separate Account. There are no pending legal proceedings against the Separate Account.

THE SEPARATE ACCOUNT

General

The Separate Account was established by the Company on December 19, 1996, as an insurance company separate account under the laws of the State of Ohio pursuant to resolution of the Company’s Board of Directors. The Separate Account is registered with the SEC as a unit investment trust. It is divided into Subaccounts that invest in corresponding Portfolios. Interests in the Subaccounts are securities registered with the SEC. However, the SEC does not supervise the management or the investment practices or policies of the Separate Account.

The assets of the Separate Account are owned by the Company, but they are held separately from the other assets of the Company. Under Ohio law, the assets of a separate account are not chargeable with liabilities incurred in any other business operation of the Company. Income, gains and losses incurred on the assets in the Separate Account, whether realized or not, are credited to or charged against the Separate Account, without regard to other income, gains or losses of the Company.

Therefore, the performance of the Separate Account is entirely independent of the investment performance of the Company’s general account assets or any other separate account maintained by the Company. The assets of the Separate Account will be held for the exclusive benefit of Owners of, and the persons entitled to payment under, the Contracts offered by this prospectus and all other contracts issued by the Separate Account. The obligations under the Contracts are obligations of the Company.

Additions, Deletions or Substitutions of Subaccounts

New Subaccounts may be established when, in our sole discretion, marketing, tax, investment or other conditions warrant. Any new Subaccounts will be made available to existing Owners on a basis to be determined by us and that is not discriminatory. We do not guarantee that any of the Subaccounts or any of the Portfolios will always be available for allocation of Purchase Payments or variable dollar benefit payments or for transfers. We may substitute the shares of a different portfolio or a different class of shares for shares held in a Portfolio.

In the event of any addition, merger, combination or substitution, we may make such changes in the Contract as may be necessary or appropriate to reflect such event. Additions, mergers, combinations or substitutions may be due to an investment decision by us, or due to an event not within our control, such as liquidation of a Portfolio or an irreconcilable conflict of interest between the Separate Account and another insurance company that offers the Portfolio. We will obtain approval of additions, mergers, combinations or substitution from the SEC to the extent required by the Investment Company Act of 1940, or other applicable law. We will also notify you before we make a substitution.

VOTING OF PORTFOLIO SHARES

To the extent required by law, all Portfolio shares held in the Separate Account will be voted by the Company at regular and special shareholder meetings of the respective Portfolios in accordance with instructions received from persons having voting interests in the corresponding Subaccount. During the Accumulation Period, the Company will vote Portfolio shares according to instructions of Owners, unless the Company is permitted to vote shares in its own right.

The number of votes that an Owner may vote will be calculated separately for each Subaccount. The number will be determined by applying the Owner’s percentage interest, if any, in a particular Subaccount to the total number of votes attributable to that Subaccount.

The Owner’s percentage interest and the total number of votes will be determined as of the record date established by that Portfolio for voting purposes. Voting instructions will be solicited by written communication in accordance with procedures established by the respective Portfolios.

The Company will vote or abstain from voting shares for which it receives no timely instructions and shares it holds as to which Owners have no beneficial interest (including shares held by the Company as reserves for benefit payments*). The Company will vote or abstain from voting such shares in proportion to the voting instructions it receives from Owners of all Contracts participating in the Subaccount. Because the Company will use this proportional method of voting, a small number of Owners may determine the manner in which the Company will vote Portfolio shares for which it solicits voting instructions but receives no timely instructions.

Each person or entity having a voting interest in a Subaccount will receive proxy material, reports and other material relating to the appropriate Portfolio. The Portfolios are not required to hold annual or other regular meetings of shareholders.

*

Neither the Owner nor Payee has any interest in the Separate Account during the Benefit Payment Period. Benefit Units are merely a measure of the amount of the payment the Company is obligated to pay on each payment date.

DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS

Great American Advisors^®, Inc. (“GAA”) is the principal underwriter of the contracts. Its business address is 525 Vine Street, Cincinnati, Ohio 45202. GAA is a wholly-owned subsidiary of Great American Financial Resources, Inc. and an affiliate of the Company.

The Contracts are sold by insurance agents who are also registered representatives of (1) GAA or (2) other broker-dealers that have entered into selling agreements with GAA. GAA and the other broker-dealers are registered under the Securities Exchange Act of 1934, and are members of the National Association of Securities Dealers, Inc. All registered representatives who sell the Contracts are appointed by the Company as insurance agents and are authorized under applicable state insurance regulations to sell variable annuity contracts.

The Company pays commissions to GAA for promotion and sale of the contracts. GAA retains the commissions for sales made through its registered representatives, or pays the commissions to other broker-dealers for sales made through their registered representatives. GAA and the other broker-dealers pay their registered representatives from their own funds. Commissions paid by the Company are calculated as a percentage of the purchase payments received for a contract. The maximum percentage is 8.5% of the purchase payments received from a contract. Commissions paid by the Company may also be calculated as a percentage of the contract value (sometimes called a trail commission). Trail commissions are not expected to exceed 1% of the contract value on an annual basis.

Commissions paid on the Contracts and payments for other services are not charged directly to you or your Account Value, but are charged indirectly through fees and charges imposed under the Contracts. If these fees and charges are not sufficient to cover the commissions and other payments, any deficiency will be made up from our general assets.

The Statement of Additional Information includes more information about the compensation we pay to GAA and the additional compensation that GAA pays to select selling firms.

FEDERAL TAX MATTERS

This section provides a general description of federal income tax considerations relating to the Contracts. The purchase, holding and transfer of a Contract may have federal estate and gift tax consequences in addition to income tax consequences. Estate and gift taxation is not discussed in this prospectus or in the Statement of Additional Information. State taxation will vary depending on the state in which you reside, and is not discussed in this prospectus or in the Statement of Additional Information.

The tax information provided in the prospectus is not intended or written to be used as legal or tax advice. It is written solely to provide general information related to the sale and holding of the Contracts. A taxpayer cannot use it for the purpose of avoiding penalties that may be imposed under the tax laws. You should seek advice on legal or tax questions based on your particular circumstances from an independent attorney or tax advisor who is not affiliated with the Company.

Tax Deferral on Annuities

Internal Revenue Code (“IRC”) Section 72 governs taxation of annuities in general. The income earned on a Contract is generally not included in income until it is withdrawn from the Contract. In other words, a Contract is a tax-deferred investment. The Contracts must meet certain requirements in order to qualify for tax-deferred treatment under IRC Section 72. These requirements are discussed in the Statement of Additional Information. In addition, tax deferral is not available for a Contract when an Owner is not a natural person unless the Contract is part of a tax-qualified retirement plan or the Owner is a mere agent for a natural person. For a nonqualified deferred compensation plan, this rule means that the employer as Owner of the Contract will generally be taxed currently on any increase in the Account Value, although the plan itself may provide a tax deferral to the participating employee. For a group nonqualified Contract where the Owner has no rights over the separate interests, this rule is applied to each participant who is not a natural person.

Tax-Qualified Retirement Plans

Annuities may also qualify for tax-deferred treatment, or serve as a funding vehicle, under tax-qualified retirement plans that are governed by other IRC provisions. These provisions include IRC Sections 401 (pension and profit sharing plans), 403(b) (tax-sheltered annuities), 408 and 408A (individual retirement annuities), and 457(g) (governmental deferred compensation plans). Tax-deferral is generally also available under these tax-qualified retirement plans through the use of a trust or custodial account without the use of an annuity.

The tax law rules governing tax-qualified retirement plans and the treatment of amounts held and distributed under such plans are complex. If the Contract is to be used in connection with a tax-qualified retirement plan, including an individual retirement annuity (“IRA”) under a Simplified Employee Pension (SEP) Plan, you should seek competent legal and tax advice regarding the suitability of the Contract for the situation involved and the requirements governing the distribution of benefits.

Contributions to a tax-qualified Contract are typically made with pre-tax dollars, while contributions to other Contracts are typically made from after-tax dollars, though there are exceptions in either case. Tax-qualified Contracts may also be subject to restrictions on withdrawals that do not apply to other Contracts. These restrictions may be imposed to meet the requirements of the IRC or of an employer plan. Following is a brief description of the types of tax-qualified retirement plans for which the Contracts are available.

Individual Retirement Annuities

IRC Sections 219 and 408 permit certain individuals or their employers to contribute to an individual retirement arrangement known as an “Individual Retirement Annuity” or “IRA”. Under applicable limitations, an individual may claim a tax deduction for certain contributions to an IRA. Contributions made to an IRA for an employee under a Simplified Employee Pension (SEP) Plan or Savings Incentive Match Plan for Employees (SIMPLE) established by an employer are not includable in the gross income of the employee until distributed from the IRA. Distributions from an IRA are taxable to the extent that they represent contributions for which a tax deduction was claimed, contributions made under a SEP plan or SIMPLE, or income earned on the Contract.

Roth IRAs

IRC Section 408A permits certain individuals to contribute to a Roth IRA. Contributions to a Roth IRA are not tax deductible. Tax-free distributions of contributions may be made at any time. Distributions of earnings are tax-free

following the five-year period beginning with the first year for which a Roth IRA contribution was made if the Owner has attained age 59¹/2, become disabled, or died, or for qualified first-time homebuyer expenses.

Tax-Sheltered Annuities

IRC 403(b) of the Code permits public schools and charitable, religious, educational, and scientific organizations described in IRC Section 501(c)(3) to establish “tax-sheltered annuity” or “TSA” plans for their employees. TSA contributions and Contract earnings are generally not included in the gross income of the employee until distributed from the TSA. Amounts attributable to contributions made under a salary reduction agreement cannot be distributed until the employee attains age 59¹/2, severs employment, becomes disabled, incurs a hardship, is eligible for a qualified reservist distribution, or dies. The IRC and the plan may impose additional restrictions on distributions.

Pension, Profit-Sharing, and 401(k) Plans

IRC Section 401 permits employers to establish various types of retirement plans for employees, and permits self-employed individuals to establish such plans for themselves and their employees. These plans may use annuity contracts to fund plan benefits. Generally, contributions are deductible to the employer in the year made, and contributions and earnings are generally not included in the gross income of the employee until distributed from the plan. The IRC and the plan may impose restrictions on distributions. Purchasers of a Contract for use with such plans should seek competent advice regarding the suitability of the Contract under the particular plan.

Roth TSAs and Roth 401(k)s

IRC Section 402A permits TSA plans and 401(k) plans to allow participating employees to designate some part or all of their future elective contributions as Roth contributions. Roth contributions to a TSA or 401(k) plan are included in the employee’s taxable income as earned. Distributions are considered to come proportionally from contributions and earnings. Distributions attributable to contributions are tax-free. Distributions attributable to earnings are tax-free following the five-year period beginning with the first year for which Roth contributions are made to the plan if the employee has attained age 59¹/2, become disabled, or died. Amounts attributable to Roth TSA and Roth 401(k) contributions are subject to the same distribution restrictions that apply to other amounts attributable to TSA or 401(k) contributions made under a salary reduction agreement. The plan may impose additional restrictions on distributions.

Governmental Deferred Compensation Plans

State and local government employers may purchase annuity contracts to fund eligible deferred compensation plans for their employees as described in IRC Section 457(b). Contributions and earnings are generally not included in the gross income of the employee until the employee receives distributions from the plan. Amounts cannot be distributed until the employee attains age 70¹/2, severs employment, becomes disabled, incurs an unforeseeable emergency, or dies. The plan may impose additional restrictions on distributions.

Nonqualified Deferred Compensation Plans

Employers may invest in annuity contracts in connection with unfunded deferred compensation plans for their employees. Such plans may include eligible deferred compensation plans of non-governmental tax-exempt employers described in IRC Section 457(b); deferred compensation plans of both governmental and nongovernmental tax-exempt employers that are taxed under IRC Section 457(f) and subject to Section 409A; and nonqualified deferred compensation plans of for-profit employers subject to Section 409A. In most cases, these plans are designed so that amounts credited under the plan will not be includable in the employees’ gross income until paid under the plan. In these situations, the annuity contracts are not plan assets and are subject to the claims of the employer’s general creditors. Whether or not made from the Contract, benefits payments are subject to restrictions imposed by the IRC and the plan.

Summary of Income Tax Rules

The following chart summarizes the basic income tax rules governing tax-qualified retirement plans, nonqualified deferred compensation plans, and other Contracts.

				Nonqualified Deferred
		Tax-Qualified Contracts and Plans		Compensation Plans		Other Annuity Contracts
Plan Types		§     IRC §401 (Pension, Profit-Sharing, 401(k)) §     IRC §403(b) (Tax-Sheltered Annuity) §     IRC §408 (IRA, SEP, SIMPLE IRA) §     IRC §408A (Roth IRA) §     IRC §402A (Roth TSA or Roth 401(k)) §     IRC §457 (Governmental §457)		§    IRC §409A §    IRC §457 (Nongovernmental §457)		IRC §72 only
Who May Purchase a Contract		Eligible employee, employer, or employer plan.		Employer on behalf of eligible employee. Employer generally loses tax-deferred status of Contract itself.		Anyone. Non-natural person will generally lose tax-deferred status.
Distribution Restrictions		Distributions from Contract or plan may be restricted to meet requirements of the Internal Revenue Code and/or terms of the retirement plan.				None.
Taxation of Surrenders and Lump Sum Death Benefit		Generally, 100% of distributions must be included in taxable income. However, the portion that represents an after-tax contributions or other “investment in the contract” is not taxable. Distributions from Roth IRA are deemed to come first from after-tax contributions. Distributions from other Contracts are generally deemed to come from investment in the contract on a pro-rata basis. Distributions from §408A Roth IRA or §402A Roth TSA or Roth 401(k) are completely tax free if certain requirements are met.				Generally, distributions must be included in taxable income until all earnings are paid out. Thereafter, distributions are tax-free return of the “investment in the contract”. However, distributions are tax-free until any contributions from before August 14, 1982 are returned.
Taxation of Annuitization Payments (annuity benefit or death benefit)		For fixed dollar benefit payments, a percentage of each payment is tax free equal to the ratio of after-tax “investment in the contract” (if any) to the total expected payments, and the balance is included in taxable income. For variable dollar benefit payments, a specific dollar amount of each payment is tax free, as predetermined by a pro rata formula, rather than a percentage of each payment. In either case, once the after-tax “investment in the contract” has been recovered, the full amount of each benefit payment is included in taxable income. Distributions from a Roth IRA, Roth TSA, or Roth 401(k) are completely tax free if certain requirements are met.
Possible Penalty Taxes for Distributions Before Age 591/2		Taxable portion of payments made before age 591/2 may be subject to 10% penalty tax (or 25% for a SIMPLE IRA during the first two years of participation). Penalty taxes do not apply to payments after the participant’s death, or to §457 plans. Other exceptions may apply.		No penalty taxes.		Taxable portion of payments made before age 591/2 may be subject to a 10% penalty tax. Penalty taxes do not apply to payments after the Owner’s death. Other exceptions may apply.
Assignment/ Transfer of Contract		Assignment and transfer of Ownership generally not permitted.				Generally, deferred earnings taxable to transferor on transfer or assignment. Gift tax consequences are not discussed herein.
Federal Income Tax Withholding		Eligible rollover distributions from §401, §403(b), and governmental §457(b) plan Contracts are subject to 20% mandatory withholding on taxable portion unless direct rollover. For other payments, Payee may generally elect to have taxes withheld or not.		Generally subject to wage withholding.		Generally, Payee may elect to have taxes withheld or not.

Required Minimum Distributions

The Contracts are subject to the required minimum distribution (“RMD”) rules of federal tax law. These rules vary based on the tax qualification of the Contract or the plan under which it is issued.

For a tax-qualified Contract other than a Roth IRA, required minimum distributions must generally begin by April 1 following attainment of age 70¹/2. However, for a Tax-Sheltered Annuity Plan, Pension, Profit-Sharing, or 401(k) Plan, or Governmental Deferred Compensation Plan of an employer, a participant who is not a 5% owner of the employer may delay required minimum distributions until April 1 following the year in which the participant retires from that employer. The required minimum distributions during life are calculated based on standard life expectancy tables adopted under federal tax law.

For a Roth IRA or Contract that is not tax-qualified, there are no required minimum distributions during life.

All Contracts are generally subject to required minimum distributions after death. Generally, if payments have begun under a settlement option during life or if under a tax-qualified Contract the required beginning date for distributions had been reached, then after death any remaining payments must be made at least as rapidly as those made or required before death. Otherwise, the death benefit must be paid out in full within five years after death, or must be paid out in substantially equal payments beginning within one year of death over a period not exceeding the beneficiary’s life expectancy. For a traditional IRA, a Roth IRA, or a Contract that is not tax-qualified, a beneficiary who is a surviving spouse (as defined by federal tax law) may elect out of these requirements, and apply the required minimum distribution rules as if the Contract were his or her own.

DELIVERY OF DOCUMENTS TO CONTRACT OWNERS

Reports and Confirmations

At least once each Contract Year, we will mail reports of the Contract’s Account Value and any other information required by law to you. We will not send these reports after the Commencement Date or a full surrender of the Contract, whichever is first.

We will confirm receipt of any Purchase Payments made after the initial Purchase Payment in quarterly statements of account activity.

Householding — Revocation of Consent

Owners at a shared address who have consented to receive only one copy of each prospectus, annual report, or other required document per household (“householding”) may revoke their consent at any time, and may receive separate documents, by contacting the Company at 1-800-789-6771 or www.gafri.com.

Owners who are currently receiving multiple copies of required documents may contact the Company at 1-800-789-6771 or www.gafri.com for additional information about householding.

Electronic Delivery of Required Documents

Owners who wish to receive prospectuses, SAIs, annual reports, and other required documents only in electronic form must give their consent. Consent may be revoked at any time. Please contact the Company at 1-800-789-6771 or www.gafri.com for additional information about electronic delivery of documents.

THE REGISTRATION STATEMENT

The Company filed a Registration Statement with the SEC under the Securities Act of 1933 relating to the Contracts offered by this prospectus. This prospectus was filed as a part of the Registration Statement, but it does not constitute the complete Registration Statement. The Registration Statement contains further information relating to the Company and the Contracts. Statements in this prospectus discussing the content of the Contracts and other legal instruments are summaries. The actual documents are filed as exhibits to the Registration Statement. For a complete statement of the terms of the Contracts or any other legal document, refer to the appropriate exhibit to the Registration Statement. The Registration Statement and the exhibits thereto may be inspected and copied at the office of the SEC, located at 100 F Street, N.E., Washington, D.C., and may also be accessed at the SEC’s web site www:http://.sec.gov. The registration number for the Registration Statement is 333-51971.

STATEMENT OF ADDITIONAL INFORMATION

A Statement of Additional Information containing more details concerning the subjects discussed in this prospectus is available. The following is the table of contents for the Statement of Additional Information:

Annuity Investors Life Insurance Company

General Information and History
State Regulations
Separate Account and Subaccounts

Portfolios

General Information
Revenue We Receive from the Portfolios and/or Their Service Providers

Services

Telephone, Facsimile and Internet Instructions for Transfer Requests
Safekeeping of Separate Account Assets
Records and Reports
Experts

Distribution of the Contracts

Compensation Paid to GAA
Additional Compensation Paid to Selected Selling Firms

Performance Information

Standardized Total Return—Average Annual Total Return
Adjusted Historical Total Return
Non-Standardized Total Return—Cumulative Total Return
Standardized Yield for the Money Market Subaccount

Benefit Unit Transfer Formulas
Glossary of Financial Terms
Federal Tax Matters

Taxation of Separate Account Income
Tax Deferral on Non-Tax-Qualified Contracts

Financial Statements

Copies of the Statement of Additional Information dated May 1, 2010 are available without charge.

•		To request a copy, please clip this coupon on the dotted line below, enter your name and address in the spaces provided, and mail to: Annuity Investors Life Insurance Company, P.O. Box 5423, Cincinnati, Ohio 45201-5423.
•		You may also call us at 1-800-789-6771, or visit us at our web site www.gafri.com to request a copy.

Annuity Investors Variable Account B
Request for Statement of Additional Information

Name:

Address:

City:

State:

Zip:

APPENDIX A: CONDENSED FINANCIAL INFORMATION

														Number of
										Standard with				Standard with
						Number of				Administration				Administration
Standard						Standard				Charges Waived				Charges Waived
Accumulation Unit						Accumulation Units				Accumulation Unit				Accumulation Units
Value						Outstanding				Value				Outstanding				Year
American Century VP Large Company Value Fund-Class I Shares (Inception Date 12/1/2004)
	8.901355						251,200.267				8.970571				23,641.270				12/31/09
	7.520419						292,792.476				7.567364				22,722.785				12/31/08
	12.161971						382,937.244				12.219181				22,366.355				12/31/07
	12.494572						420,902.275				12.534154				18,866.080				12/31/06
	10.560864						99,384.541				10.578263				5,867.404				12/31/05
	10.216542						36,701.792				10.217864				0.000				12/31/04
American Century VP Mid Cap Value Fund-Class I Shares (Inception Date 12/1/2004)
	12.261657						554,495.560				12.357009				20,386.583				12/31/09
	9.570065						643,576.702				9.629807				20,864.494				12/31/08
	12.830516						824,409.192				12.890880				20,787.735				12/31/07
	13.320957						911,824.088				13.363156				17,345.331				12/31/06
	11.229852						114,376.075				11.248357				7,815.280				12/31/05
	10.395465						24,970.228				10.396812				0.000				12/31/04
American Century VP Ultra® Fund-Class I Shares (Inception Date 12/1/2004)
	9.190140						465,662.403				9.179987				0.000				12/31/09
	6.869832						518,640.998				6.912735				60.185				12/31/08
	11.906808						575,813.493				11.962841				36.573				12/31/07
	9.979396						707,542.380				10.011033				0.000				12/31/06
	10.463493						32,615.015				10.497965				143.364				12/31/05
	10.386756						598.086				10.388096				0.000				12/31/04
American Century VP VistaSM Fund-Class I Shares (Inception Date 12/1/2004)
	10.046098						743,185.410				10.124228				3,860.152				12/31/09
	8.319404						826,352.105				8.371361				3,882.977				12/31/08
	16.424171						915,985.190				16.501437				2,847.514				12/31/07
	11.918299						976,806.445				11.956077				979.911				12/31/06
	11.088360						79,780.294				11.124884				1,175.748				12/31/05
	10.399373						4,938.285				10.400714				0.000				12/31/04
Calamos Growth and Income Portfolio (Inception Date 5/1/2007)
	9.633554						118,358.600				9.672878				1,059.515				12/31/09
	7.007788						111,399.974				7.025689				1,059.515				12/31/08
	10.412111						51,983.045				10.422751				1,033.447				12/31/07
Davis Value Portfolio (Inception Date 5/1/2007)
	7.559947						190,658.865				7.590817				647.066				12/31/09
	5.845926						154,220.486				5.860868				546.159				12/31/08
	9.935864						36,509.854				9.946016				0.000				12/31/07
Dreyfus IP MidCap Stock Portfolio-Service Shares (Inception Date 5/1/2007)
	7.284643						6,059.237				7.314401				0.000				12/31/09
	5.459428						6,054.670				5.473387				0.000				12/31/08
	9.297957						1,976.759				9.307473				0.000				12/31/07
Dreyfus IP Technology Growth Portfolio-Initial Shares (Inception Date 12/1/2004)
	10.895130						997,390.377				10.979829				1,371.580				12/31/09
	7.008211						1,051,298.784				7.051955				1,371.580				12/31/08
	12.085181						1,154,532.874				12.142012				1,422.794				12/31/07
	10.684409						1,309,668.746				10.718243				1,372.144				12/31/06
	10.388053						32,100.558				10.405161				4,403.010				12/31/05
	10.151024						198.889				10.152333				0.000				12/31/04