PARTICIPATION AGREEMENT



                                     Among



                       VANGUARD VARIABLE INSURANCE FUNDS



                                      and



                           THE VANGUARD GROUP, INC.



                                      and



                        VANGUARD MARKETING CORPORATION



                                      and



                          USAA LIFE INSURANCE COMPANY







         THIS AGREEMENT, made and entered into as of the 12th day of March,

2001, by and among VANGUARD VARIABLE INSURANCE FUNDS (hereinafter the "Fund"), a

Delaware business trust, THE VANGUARD GROUP, INC. (hereinafter the "Sponsor"), a

Pennsylvania corporation, VANGUARD MARKETING CORPORATION (hereinafter the

"Distributor"), a Delaware corporation, and USAA LIFE INSURANCE COMPANY

(hereinafter the "Company"), a Texas corporation, on its own behalf and on

behalf of each segregated asset account of the Company named in Schedule A

hereto as may be amended from time to time (each such account hereinafter

referred to as the "Account").



         WHEREAS, the Fund was organized to act as the investment vehicle for

variable life insurance policies and variable annuity contracts to be offered by

separate accounts of insurance companies which have entered into participation

agreements with the Fund and the Sponsor (hereinafter "Participating Insurance

Companies"); and



         WHEREAS, the beneficial interest in the Fund is divided into several

series of shares, each designated a "Portfolio," and representing the interest

in a particular managed portfolio of securities and other assets; and



         WHEREAS, the Fund is registered as an open-end management investment

company under the Investment Company Act of 1940, as amended (the "1940 Act")

and its shares are registered under the Securities Act of 1933, as amended (the

"1933 Act"); and



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         WHEREAS, the assets of each Portfolio of the Fund are managed by

several entities (the "Advisers"), each of which is duly registered as an

investment adviser under the federal Investment Advisers Act of 1940 and any

applicable state securities laws; and



         WHEREAS, the Company has established or will establish one or more

Accounts to fund certain variable annuity and variable life insurance policies

(the "Variable Insurance Products"), which Accounts and Variable Insurance

Products are registered under the 1940 Act and the 1933 Act, respectively; and



         WHEREAS, each Account is a duly organized, validly existing segregated

asset account, established by resolution in the Board of Directors of the

Company, on the date shown for each Account on Schedule A hereto, to set aside

and invest assets attributable to the Variable Insurance Products; and



         WHEREAS, the Distributor is a wholly-owned subsidiary of the Sponsor,

is registered as a broker dealer with the Securities and Exchange Commission

("SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act")

and is a member in good standing of the National Association of Securities

Dealers, Inc. ("NASD"); and



         WHEREAS, to the extent permitted by applicable insurance laws and

regulations, the Company intends to purchase shares of the Portfolios on behalf

of each Account to fund the Variable Insurance Products and the Sponsor is

authorized to sell such shares to the Accounts at net asset value;



         NOW, THEREFORE, in consideration of their mutual promises, the Company,

the Fund, the Sponsor and the Distributor agree as follows:





                        ARTICLE I.  Sale of Fund Shares



         1.1  The Sponsor and the Distributor agree to sell to the Company those

shares of the Portfolios of the Fund listed on Schedule B which each Account

orders.  In the case of any such order received by the Fund or its designee on

any Business Day prior to the time the net asset value of shares of the Fund is

determined (the close of trading on the New York Stock Exchange, generally 4:00

p.m. Eastern time) (the "market close"), the order shall be accorded a trade

date on the Fund's accounting system that is the date of receipt of the order by

the Fund or its designee.  In the case of any such order received by the Fund or

its designee on any Business Day after the market close, the order shall be

accorded a trade date on the Fund's accounting system that is the next Business

Day.  For purposes of this Section 1.1, the Company shall be the designee of the

Fund for receipt of such orders from each Account and receipt by such designee

shall constitute receipt by the Fund; provided that the Fund receives notice of

such order by 8:30 a.m. Eastern time on the next following Business Day.

"Business Day" shall mean any day on which the New York Stock Exchange



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                                       2

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("NYSE") is open for trading and on which the Fund calculates its net asset

value pursuant to the rules of the SEC.



         1.2  The Fund, subject to the provisions of Article IX of this

Agreement, agrees to make its shares available indefinitely for purchase at the

applicable net asset value per share by the Company and its Accounts on those

days on which the Fund calculates its net asset value pursuant to the rules of

the SEC and the Fund shall use its best efforts to calculate such net asset

value on each day which the NYSE is open for trading. Notwithstanding the

foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may

refuse to sell shares of any Portfolio to any person including, but not limited

to, the Company, or suspend or terminate the offering of shares of any Portfolio

if such action is required by law or by regulatory authorities having

jurisdiction or is, in the sole discretion of the Board, acting in good faith

and in light of their fiduciary duties under federal and any applicable state

laws, necessary in the best interests of the shareholders of such Portfolio.

Further, it is acknowledged and agreed that the availability of shares of the

Fund shall be subject to the Fund's then current prospectus and statement of

additional information, federal and state securities laws and applicable rules

and regulations of the Securities and Exchange Commission and the National

Association of Securities Dealers, Inc.



         1.3  The Fund and the Sponsor agree that shares of the Fund will be

sold only to Participating Insurance Companies and their separate accounts. No

shares of any Portfolio will be sold to the general public.



         1.4  The Fund and the Sponsor will not sell Fund shares to any

Participating Insurance Company or its separate account unless an agreement

containing a provision substantially the same as Section 2.4 of Article II of

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