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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON February 13, 2009
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FILE NO. 333-

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

ALLSTATE LIFE INSURANCE COMPANY
(Exact Name of Registrant)

ILLINOIS 36-2554642
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)

3100 SANDERS ROAD, NORTHBROOK, ILLINOIS 60062
847-402-5000

(Address and Phone Number of Principal Executive Office)

SUSAN L. LEES
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
ALLSTATE LIFE INSURANCE COMPANY
3100 SANDERS ROAD, SUITE J5B
NORTHBROOK, ILLINOIS 60062
847-402-5000

(Name, Complete Address and Telephone Number of Agent for Service)

COPIES TO:
JOCELYN LIU, ESQUIRE
ALLSTATE LIFE INSURANCE COMPANY
3100 SANDERS ROAD, SUITE J5B
NORTHBROOK, IL 60062

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
The annuity contracts and interests thereunder covered by this registration
statement are to be issued promptly and from time to time after the effective
date of this registration statement.

If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this Form is a registration statement pursuant to General Instruction I.D. or
a post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box: /X/

If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box.
/ /

Indicate by checkmark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer / / Accelerated filer / /

Non-accelerated filer /X/ (Do not check if a smaller reporting company)

Smaller reporting company / /

CALCULATION OF REGISTRATION FEE

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Title of securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered offering price per aggregate offering registration fee
unit price
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Deferred annuity $100,000 (1) $100,000 $3.93
interests and
participating
interests therein
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(1) The maximum aggregate offering price is estimated solely for the purpose of
determining the registration fee. The amount being registered and the
proposed maximum offering price per unit are not applicable in that the
Contract does not provide for a predetermined amount or number of units.

THE CUSTOM ANNUITY

ALLSTATE LIFE INSURANCE COMPANY
STREET ADDRESS: 2940 S. 84TH STREET, LINCOLN, NE 68506-4142
MAILING ADDRESS: P.O. BOX 80469, LINCOLN, NE 68501-0469
TELEPHONE NUMBER: 1-800-654-2397, FAX: 1-866-628-1006
PROSPECTUS DATED FEBRUARY 13, 2009
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Allstate Life Insurance Company ("ALLSTATE LIFE") has issued The Custom Annuity,
a group and individual flexible premium deferred annuity contract ("CONTRACT").
This prospectus contains information about the Contract. Please keep it for
future reference.

The Contract is no longer being offered for sale. If you have already purchased
a Contract, you may continue to add to it. Each additional payment must be at
least $1,000.

The Contracts are available exclusively through Morgan Stanley & Co. Inc., the
principal underwriter for the Contracts.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS, NOR
HAS IT PASSED ON THE ACCURACY OR THE ADEQUACY OF THIS
PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
FEDERAL CRIME.
IMPORTANT
INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT RISKS,
NOTICES INCLUDING POSSIBLE LOSS OF PRINCIPAL.

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
WE DO NOT AUTHORIZE ANYONE TO PROVIDE ANY INFORMATION OR
REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS.

1 PROSPECTUS

TABLE OF CONTENTS
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PAGE

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OVERVIEW
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Important Terms 3
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The Contract At A Glance 4
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How the Contract Works 5
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CONTRACT FEATURES
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The Contract 6
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Purchases and Contract Value 7
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Guarantee Periods 7
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Expenses 9
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Access To Your Money 10
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PAGE

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Income Payments 11
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Death Benefits 12
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OTHER INFORMATION
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More Information About: 13
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Allstate Life 13
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The Contract 13
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Qualified Plans 13
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Legal Matters 13
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Taxes 14
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Annual Reports and Other Documents 21
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APPENDIX A -- MARKET VALUE ADJUSTMENT 22
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2 PROSPECTUS

IMPORTANT TERMS
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This prospectus uses a number of important terms with which you may not be
familiar. The index below identifies the page that describes each term. The
first use of each term in this prospectus appears in highlighted text.

PAGE

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Accumulation Phase 5
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Allstate Life ("We") 13
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Annuitant 6
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Automatic Additions Program 7
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Beneficiary 6
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*Contract 6
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Contract Owner ("You") 6
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Contract Value 7
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Due Proof of Death 12
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Free Withdrawal Amount 9
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PAGE

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Guarantee Periods 7
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Income Plan 11
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Issue Date 5
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Market Value Adjustment 9
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Payout Phase 5
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Payout Start Date 11
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Qualified Contracts 16
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SEC 1
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Settlement Value 12
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Systematic Withdrawal Program 10
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*In certain states the Contract was available as a group Contract. In these
states we issued you a certificate that represents your ownership and
summarizes the provisions of the group Contract. References to "Contract" in
this prospectus include certificates unless the context requires otherwise.

3 PROSPECTUS

THE CONTRACT AT A GLANCE
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The following is a snapshot of the Contract. Please read the remainder of this
prospectus for more information.

FLEXIBLE We have discontinued offering new Contracts. You can add to your
PAYMENTS existing Contract as often and as much as you like, but each
payment must be at least $1,000. You must maintain a minimum
account size of $1,000.
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EXPENSES You will bear the following expenses:

.A withdrawal charge will apply to withdrawals made from a
Guarantee Period prior to its expiration. Withdrawal charges
will be the lesser of: (a) the amount withdrawn in excess of the
Free Withdrawal Amount times one half of the interest rate for
the Guarantee Period; or (b) interest earned on the amount
withdrawn. Certain limits may apply to reduce this charge.

.A Market Value Adjustment (which can be positive or negative)
for withdrawals except those taken during the 30 day period
after the expiration of a Guarantee Period.

. State premium tax (if your state imposes one).
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GUARANTEED The Contract offers fixed interest rates that we guarantee for
INTEREST specified periods we call "GUARANTEE PERIODS." To find out what
the current rates are on the Guarantee Periods, please call us at
1-800-654-2397.
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SPECIAL For your convenience, we offer these special services:
SERVICES
. AUTOMATIC ADDITIONS PROGRAM;

. SYSTEMATIC WITHDRAWAL PROGRAM.
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INCOME The Contract offers three income payment plans:
PAYMENTS
. life income with guaranteed payments;

. a joint and survivor life income with guaranteed payments; or

. guaranteed payments for a specified period (5 to 30 years)
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DEATH If you or the ANNUITANT dies before the PAYOUT START DATE, we will
BENEFITS pay benefits as described in the Contract.
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WITHDRAWALS You may withdraw some or all of your Contract value ("CONTRACT
VALUE") at any time prior to the Payout Start Date. If you
withdraw Contract Value from a Guarantee Period before its
maturity, a withdrawal charge, MARKET VALUE ADJUSTMENT, and taxes
may apply. Withdrawals taken prior to annuitization (referred to
in this prospectus as the Payout Phase) are generally considered
to come from the earnings in the Contract first. If the Contract
is tax-qualified, generally all withdrawals are treated as
distributions of earnings. Withdrawals of earnings are taxed as
ordinary income and, if taken prior to age 59 1/2, may be subject
to an additional 10% federal tax penalty.
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4 PROSPECTUS

HOW THE CONTRACT WORKS
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The Contract basically works in two ways.

First, the CONTRACT can help you (we assume you are the "CONTRACT OWNER") save
for retirement because you can invest in the Contract and generally pay no
federal income taxes on any earnings until you withdraw them. You do this during
what we call the "ACCUMULATION PHASE" of the Contract. The Accumulation Phase
begins on the date we issue your Contract (we call that date the "ISSUE DATE")
and continues until the "PAYOUT START DATE," which is the date we apply your
money to provide income payments. During the Accumulation Phase, you may
allocate your purchase payment to any combination of the Guarantee Periods. You
will earn a fixed rate of interest that we declare periodically.

Second, the Contract can help you plan for retirement because you can use it to
receive retirement income for life and/ or for a pre-set number of years, by
selecting one of the income payment options (we call these "INCOME PLANS")
described at "Income Payments - Income Plans". You receive income payments
during what we call the "PAYOUT PHASE" of the Contract, which begins on the
Payout Start Date and continues until we make the last income payment required
by the Income Plan you select. During the Payout Phase, we guarantee the amount
of your payments, which will remain fixed. The amount of money you accumulate
under your Contract during the Accumulation Phase and apply to an Income Plan
will determine the amount of your income payments during the Payout Phase.

The timeline below illustrates how you might use your Contract.

Issue Payout Start
Date Accumulation Phase Date Payout Phase
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You buy You save for retirement You elect to receive You can receive Or you can receive
a Contract income payments income payments income payments
for a set period for life

As the Contract Owner, you exercise all of the rights and privileges provided by
the Contract. If you die, any surviving Contract Owner or, if none, the
BENEFICIARY will exercise the rights and privileges provided by the Contract.
See "The Contract." In addition, if you die before the Payout Start Date we will
pay a death benefit to any surviving Contract Owner or, if there is none, to
your Beneficiary. (See "Death Benefits.")

Please call us at 1-800-654-2397 if you have any question about how the Contract
works.

5 PROSPECTUS

THE CONTRACT
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CONTRACT OWNER
The Custom Annuity is a contract between you, the Contract Owner, and Allstate
Life, a life insurance company. As the Contract Owner, you may exercise all of
the rights and privileges provided to you by the Contract. That means it is up
to you to select or change (to the extent permitted):

.. the amount and timing of your purchase payments and withdrawals,

.. the programs you want to use to invest or withdraw money,

.. the income payment plan you want to use to receive retirement income,

.. the Annuitant (either yourself or someone else) on whose life the income
payments will be based,

.. the Beneficiary or Beneficiaries who will receive the benefits that the
Contract provides when the last surviving Contract Owner dies, and

.. any other rights that the Contract provides.

If you die, any surviving Contract Owner or, if none, the Beneficiary may
exercise the rights and privileges provided to them by the Contract. If the sole
surviving Contract Owner dies after the Payout Start Date, the Beneficiary will
receive any guaranteed income payments scheduled to continue.

Changing ownership of this Contract may cause adverse tax consequences and may
not be allowed under qualified plans. Please consult with a competent tax
advisor prior to making a request for a change of Contract Owner.

The Contract cannot be jointly owned by both a non-living person and a living
person.

You can use the Contract with or without a "qualified plan." A qualified plan is
a personal retirement savings plan, such as an IRA or tax-sheltered annuity,
that meets the requirements of the Internal Revenue Code. The endorsements
required to qualify these annuities under the Internal Revenue Code of 1986, as
amended ("Code"), may limit or modify your rights and privileges under the
Contract. We use the term "Qualified Contract" to refer to a Contract issued
with a qualified plan. See "Qualified Plans" on page 12.

ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of
income payments (other than under Income Plans with guaranteed payments for
specified periods). The Contract requires that there be an Annuitant at all
times during the Accumulation Phase and on the Payout Start Date. The Annuitant
must be a living person.

You initially designate an Annuitant in your application. You (or the youngest
Contract Owner if there is more than one) will be the Annuitant unless a
different person is named. You may not change the Annuitant. You may designate a
joint Annuitant, who is a second person on whose life income payments depend. If
the Annuitant dies prior to the Payout Start Date, the new Annuitant will be the
youngest Contract Owner if living, otherwise the youngest Beneficiary.

BENEFICIARY
The Beneficiary is the person who may elect to receive the death benefit or
become the new Contract Owner subject to the Death of Owner provision if the
sole surviving Contract Owner dies before the Payout Start Date. If the sole
surviving Contract Owner dies after the Payout Start Date, the Beneficiaries
will receive any guaranteed income payments scheduled to continue.

You may name one or more Beneficiaries when you apply for a Contract. You may
change or add Beneficiaries at any time while the Annuitant is alive unless you
have designated an irrevocable Beneficiary. We will provide a change of
beneficiary form to be signed and filed with us. Until we receive your written
request to change a Beneficiary, we are entitled to rely on the most recent
Beneficiary information in our files. Once we accept your change request, any
change will be effective on the date you sign the written request. We are not
liable for any payment we make or other action we take before accepting any
written request from you. Accordingly, if you wish to change your Beneficiary,
you should deliver your written notice to us promptly. If the Contract Owner is
a living person, we will determine the Beneficiary from the most recent request
of the Contract Owner.

You may restrict income payments to Beneficiaries by providing us with a written
request. Once we accept the written request, the restriction will take effect as
of the date you signed the request. Any restriction is subject to any payment
made by use or any other action we take before we accept the request.

If you did not name a Beneficiary or if the named Beneficiary is no longer
living when the sole surviving Contract Owner dies, the Beneficiary will be:

.. your spouse or, if he or she is no longer alive;

.. your surviving children equally, or if you have no surviving children;

.. your estate.

Children, as used in this prospectus, are natural and adopted children only,
either minor or adult.

If more than one Beneficiary survives you, we will divide the death benefit
among your surviving Beneficiaries according to your most recent written
instructions. If you have not given us written instructions in a form

6 PROSPECTUS

satisfactory to us, we will pay the death benefit in equal amounts to the
surviving Beneficiaries.

For purposes of the Contract, in determining whether a living person, including
a Contract Owner, Beneficiary, or Annuitant ("Living Person A") has survived
another living person, including a Contract Owner, Beneficiary, or Annuitant
(Living Person B"), Living Person A must survive Living Person B by at least 24
hours. Otherwise, Living Person A will be conclusively deemed to have
predeceased Living Person B.

MODIFICATION OF THE CONTRACT
Only an Allstate Life officer may approve a change in or waive any provision of
the Contract. Any change or waiver must be in writing. None of our agents has
the authority to change or waive the provisions of the Contract. We may not
change the terms of the Contract without your consent, except to conform the
Contract to applicable law or changes in the law or except as otherwise
permitted in the Contract. If a provision of the Contract is inconsistent with
state law, we will follow state law.

ASSIGNMENT
No owner has a right to assign any interest in a Contract as collateral or
security for a loan. However, you may otherwise assign periodic income payments
under the Contract prior to the Payout Start Date. No Beneficiary may assign
benefits under the Contract until they are due. We will not be bound by any
assignment until you sign and file it with us. We are not responsible for the
validity of any assignment. Federal law prohibits or restricts the assignment of
benefits under many types of retirement plans and the terms of such plans may
themselves contain restrictions on assignments. An assignment may also result in
taxes or tax penalties. You should consult with an attorney before requesting
any assignment.

PURCHASES AND CONTRACT VALUE
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MINIMUM PURCHASE PAYMENTS
All subsequent purchase payments must be at least $1,000. You may make purchase
payments at any time prior to the Payout Start Date. We reserve the right to
limit the maximum amount and number of purchase payments we will accept.

AUTOMATIC ADDITIONS PROGRAM
You may make subsequent purchases payments by automatically transferring money
from your bank account or your Morgan Stanley Active Assets/TM/ Account. Please
call or write us for an enrollment form.

ALLOCATION OF PURCHASE PAYMENTS
For each purchase payment, you must select a Guarantee Period. A Guarantee
Period is a period of years during which you will earn a guaranteed interest
rate on your money. You must allocate at least $1,000 to any one Guarantee
Period at the time you make your purchase payment or select a renewal Guarantee
Period.

We will apply your purchase payment to the Guarantee Period you select within 7
days of the receipt of the payment and required information.

CONTRACT VALUE
Your Contract Value at any time during the Accumulation Phase is equal to the
sum of the purchase payments you have invested in the Guarantee Periods, plus
earnings thereon, and less any amounts previously withdrawn.

GUARANTEE PERIODS
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Each payment allocated to a Guarantee Period earns interest at a specified rate
that we guarantee. Guarantee Periods may range from 1 to 10 years. You select
the Guarantee Period for each purchase payment.

Amounts allocated to Guarantee Periods become part of our general account, which
supports our insurance and annuity obligations. The general account consists of
our general assets other than those in segregated asset accounts. We have sole
discretion to invest the assets of the general account, subject to applicable
law. You do not share in the investment experience of the general account.

You must allocate as least $1,000 to a Guarantee Period at the time you make a
purchase payment or select a renewal Guarantee Period.

INTEREST RATES
We will tell you what interest rates and Guarantee Periods we are offering at a
particular time. We will not change the interest rate that we credit to a
particular investment until the end of the relevant Guarantee Period. We may
declare different interest rates for Guarantee Periods of the same length that
begin at different times.

We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set those interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, sales commissions and administrative expenses,
general economic trends, and competitive factors. We determine

7 PROSPECTUS

the interest rates to be declared in our sole discretion. We can neither predict
nor guarantee what those rates will be in the future. For current interest rate
information, please contact your Morgan Stanley Financial Advisor or Allstate
Life at 1-800-654-2397. The interest rate will never be less than the minimum
guaranteed rate stated in the Contract.

HOW WE CREDIT INTEREST
We will credit interest to your additional purchase payments from the date we
receive them.

We will credit interest daily to each amount allocated to a Guarantee Period at
a rate that compounds to the annual interest rate that we declared at the
beginning of the applicable Guarantee Period.

The following example illustrates how a $10,000 purchase payment would grow, if
allocated to a 5 year Guarantee Period, crediting a hypothetical 4.5% annual
interest rate:

Example
Purchase Payment............................................... $10,000
Guarantee Period............................................... 5years
Annual Interest Rate........................................... 4.50%

END OF CONTRACT
YEAR

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YE
---------- ---------- ---------- ----------

Beginning Contract Value.......................................................... $10,000.00
X (1 + Annual Interest Rate) 1.045
----------
$10,450.00
Contract Value at end of Contract Year............................................ $10,450.00
X (1 + Annual Interest) 1.045
----------
$10,920.25
Contract Value at end of Contract Year............................................ $10,920.25
X (1 + Annual Interest Rate) 1.045
----------
$11,411.66
Contract Value at end of Contract Year............................................ $11,411
X (1 + Annual Interest Rate) 1.
----------
$11,925
Contract Value at end of Contract Year............................................ $11,9
X (1 + Annual Interest Rate)

$12,4

TOTAL INTEREST CREDITED DURING GUARANTEE PERIOD ^ $2,461.82 ($12,461.82 ^
$10,000)

This example assumes no withdrawals during the entire 5 year Guarantee Period.
If you were to make a partial withdrawal, you may be required to pay a
withdrawal charge. In addition, the amount withdrawn may be increased or
decreased by a Market Value Adjustment that reflects changes in interest rates
since the time you invested the amount withdrawn (see "Market Value
Adjustment"). THE HYPOTHETICAL ANNUAL INTEREST RATE IS FOR ILLUSTRATIVE PURPOSES
ONLY AND IS NOT INTENDED TO PREDICT FUTURE INTEREST RATES TO BE DECLARED UNDER
THE CONTRACT. ACTUAL INTEREST RATES DECLARED FOR ANY GIVEN GUARANTEE PERIOD MAY
BE MORE OR LESS THAN SHOWN ABOVE BUT WILL NEVER BE LESS THAN THE GUARANTEED
MINIMUM RATE STATED IN THE CONTRACT.

RENEWALS. We will mail you a notice 21 days prior to the end of each Guarantee
Period informing you of the options available to you for the expiring Guarantee
Period. During the 10-day period after the end of the Guarantee Period, you may:

1) Take no action. We will automatically apply your money to a new Guarantee
Period of the same length as the expiring Guarantee Period. The new Guarantee
Period will begin on the day the previous Guarantee Period ends. The new
interest rate will be our then current declared rate for a Guarantee Period of
that length; or

2) Instruct us to apply your money to one or more new Guarantee Periods that may
be available. The new Guarantee Period(s) will begin on the day the previous
Guarantee Period ends. The new interest rate will be our then current declared
rate for those Guarantee Periods; or

3) Withdraw all or a portion of your money from the expired Guarantee Period
without incurring a withdrawal charge or a Market Value Adjustment. Amounts
not withdrawn will be applied to a new Guarantee Period of the same length as
the previous Guarantee Period. The new Guarantee Period will begin on the day
the previous Guarantee Period ends.

8 PROSPECTUS

During the first 10 days of a renewal Guarantee Period, any amount withdrawn
will not reflect any interest earned during the 10-day period.

MARKET VALUE ADJUSTMENT. All withdrawals from a Guarantee Period, other than
those taken within the first 10 days of a renewal of a Guarantee Period, are
subject to a Market Value Adjustment. A Market Value Adjustment may also apply
upon payment of a death benefit under a Contract.

We will not apply the Market Value Adjustment to withdrawals you make:

.. to satisfy IRS minimum distribution rules for the Contract; or

.. within the Free Withdrawal Amount, described under "Expenses" below.

We apply the Market Value Adjustment to reflect changes in interest rates from
the time you first allocate money to a Guarantee Period to the time you remove
it from that Guarantee Period. We calculate the Market Value Adjustment by
comparing the interest rate for the Guarantee Period at its inception to the
interest rate for a period equal to the time remaining in the Guarantee Period
when you remove your money, as determined under the Contract.

The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. As such, you bear the investment risk associated with changes in
interest rates. If interest rates increase significantly from the time you make
a purchase payment, the Market Value Adjustment, any applicable withdrawal
charge, premium taxes, and income tax withholding (if applicable) could reduce
the amount you receive upon full withdrawal of your Contract Value to an amount
that is less than the sum of your purchase payments plus interest at the minimum
guaranteed interest rate under the Contract. However, we guarantee that the
amount received upon surrender (prior to any withholding and before deduction
for any applicable premium taxes) will be at least equal to the purchase
payments less any prior partial withdrawals.

Generally, if the annual interest rate for the Guarantee Period at the time you
allocate your purchase payment is lower than the applicable current annual
interest rate for a period equal to the time remaining in the Guarantee Period,
then the Market Value Adjustment will result in a lower amount payable to you.
Conversely, if the annual interest rate for the Guarantee Period at the time you
allocate your purchase payment is higher than the applicable current annual
interest rate, then the Market Value Adjustment will result in a higher amount
payable to you.

For example, assume that you purchase a Contract and select an initial Guarantee
Period of 5 years that has an annual interest rate of 4.50%. Assume that at the
end of 3 years, you make a partial withdrawal, in excess of the Free Withdrawal
Amount. If, at that later time, the current interest rate for a 2 year Guarantee
Period is 4.00%, then the Market Value Adjustment will be positive, which will
result in an increase in the amount payable to you. Conversely, if the current
interest rate for the 2 year Guarantee Period is 5.00%, then the Market Value
Adjustment will be negative, which will result in a decrease in the amount
payable to you.

The formula for calculating Market Value Adjustments is set forth in Appendix A
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.

EXPENSES
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As a Contract Owner, you will bear the charges and expenses described below.

WITHDRAWAL CHARGE
During the Accumulation Phase, we may assess a withdrawal charge from amounts
you withdraw. However, each year you may withdraw up to 10% of the money
initially allocated to the Guarantee Period from which you are making the
withdrawal without paying a withdrawal charge. We measure each year from the
commencement of the relevant Guarantee Period. Unused portions of this 10% "Free
Withdrawal Amount" are not carried forward to future years or other Guarantee
Periods. We will deduct withdrawal charges, if applicable, from the amount paid
unless you instruct otherwise.

The withdrawal charge is equal to the lesser of:

1) one-half the annual interest rate for the Guarantee Period multiplied by the
amount withdrawn in excess of the 10% Free Withdrawal Amount; or

2) interest earned on the amount of the withdrawal.

We do not apply a withdrawal charge in the following situations:

.. on the Payout Start Date; or

.. withdrawals taken from a renewal Guarantee Period within the first 10 days of
such Period; or

.. withdrawals taken to satisfy IRS minimum distribution rules for the Contract;
or

.. upon the death of the Contract Owner or Annuitant.

We use the amounts obtained from the withdrawal charge to recover the cost of
sales commissions and other promotional or distribution expenses associated with
marketing the Contracts.

9 PROSPECTUS

Withdrawals may be subject to tax penalties, income tax and a Market Value
Adjustment. You should consult your own tax counsel or other tax advisers
regarding the tax consequences of making any withdrawals.

PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. We are responsible for paying these taxes and
will deduct them from your Contract Value. Some of these taxes are due when the
Contract is issued, others are due when income payments begin or upon surrender.
Our current practice is not to charge anyone for these taxes until income
payments begin or when a total withdrawal occurs, including payment upon death.
We may some time in the future discontinue this practice and deduct premium
taxes from the purchase payments. Premium taxes generally range from 0% to 4%,
depending on the state or other governmental entity (as applicable).

At the Payout Start Date, we deduct the charge for any applicable premium taxes
from each Guarantee Period in the proportion that the Contract owner's value in
that Guarantee Period bears to the total Contract Value.

ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------

You can withdraw some or all of your money at any time prior to the Payout Start
Date. You may not make any withdrawals or surrender your Contract once the
Payout Phase has begun.

You must specify the Guarantee Period from which you would like to withdraw your
money. The minimum you may withdraw is $100. If the amount you withdraw reduces
the amount invested in any Guarantee Period to less than $1,000, we will treat
the withdrawal request as a request to withdraw the entire amount in that
Guarantee Period.

The amount you receive may be reduced by a withdrawal charge, income tax
withholding and any applicable premium taxes. The amount you receive may be
increased or reduced by a Market Value Adjustment. If you request a total
withdrawal, we may require that you return your Contract to us.

Withdrawals taken prior to annuitization (referred to in this prospectus as the
Payout Phase) are generally considered to come from the earnings in the Contract
first. If the Contract is tax-qualified, generally all withdrawals are treated
as distributions of earnings. Withdrawals of earnings are taxed as ordinary
income and, if taken prior to age 59 1/2, may be subject to an additional 10%
federal tax penalty.

Please consult your tax advisor before taking any withdrawal.

SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly,
quarterly, semi-annual, or annual basis at any time prior to the Payout Start
Date. The minimum amount of each systematic withdrawal is $100. We will deposit
systematic withdrawal payments into the Contract Owner's bank account or Morgan
Stanley Active AssetsTM Account. Please consult with your Morgan Stanley
Financial Advisor for details.

We may modify or suspend the Systematic Withdrawal Program and charge a
processing fee for the service. If we modify or suspend the Systematic
Withdrawal Program, existing systematic withdrawal payments will not be
affected.

POSTPONEMENT OF PAYMENTS
We may defer payment of withdrawals for up to 6 months from the date we receive
your withdrawal request.

Allstate Life may postpone paying any amount for a partial withdrawal or full
surrender to authenticate the signature on a request. In the event that we
postpone payment, the request will not be effective until we have validated the
signature on the request to our satisfaction. Once accepted, the request for the
partial withdrawal or full surrender will be paid within seven days.

RETURN OF PURCHASE PAYMENTS GUARANTEE
When you withdraw your money, a withdrawal charge and a Market Value Adjustment
may apply. However, if you decide to surrender your Contract, we guarantee that
the amount you receive upon surrender will never be less than the sum of your
initial and any subsequent purchase payments, less amounts previously withdrawn
(prior to withholding and the deduction of any applicable premium and penalty
taxes). Applicable premium tax and income tax withheld may reduce the amount you
receive on surrender to less than the sum of your initial and any subsequent
purchase payments. This guarantee does not apply to earnings on purchase
payments. The renewal of a Guarantee Period does not in any way change this
guarantee.

MINIMUM CONTRACT VALUE
If the amount you withdraw reduces your Contract Value to less than $1,000, we
may treat it as a request to withdraw your entire Contract Value. Your Contract
will

10 PROSPECTUS

terminate if you withdraw all of your Contract Value. We will, however, ask you
to confirm your withdrawal request before terminating your Contract. Before
terminating any Contract whose value has been reduced by withdrawals to less
than $1,000, we would inform you in writing of our intention to terminate your
Contract and give you at least 30 days in which to make an additional purchase
payment to restore your Contract's value to the contractual minimum of $1,000.
If we terminate your Contract, we will distribute to you its Contract Value,
adjusted by any Market Value Adjustment, less withdrawal and other charges and
applicable taxes.

INCOME PAYMENTS
- --------------------------------------------------------------------------------

PAYOUT START DATE
The Payout Start Date is the day that we apply your Contract Value, less any
applicable taxes, to an Income Plan. The Payout Start Date must be:

.. at least 30 days after the Issue Date; and

.. no later than the Annuitant's 90th birthday, or

.. the 10th Contract anniversary, if later.

You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract.

INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designate. You may choose only one Income Plan. You may choose and change your
choice of Income Plan until 30 days before the Payout Start Date. If you do not
select an Income Plan, we will make income payments in accordance with Income
Plan 1 with guaranteed payments for 10 years. After the Payout Start Date, you
may not make withdrawals or change your choice of Income Plan.

A portion of each payment will be considered taxable and the remaining portion
will be a non-taxable return of your investment in the Contract, which is also
called the "basis". Once the investment in the Contract is depleted, all
remaining payments will be fully taxable. If the Contract is tax-qualified,
generally, all payments will be fully taxable. Taxable payments taken prior to
age 59 1/2, may be subject to an additional 10% federal tax penalty.

The three Income Plans available under the Contract are:

INCOME PLAN 1 - LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make
periodic income payments for at least as long as the Annuitant lives. If the
Annuitant dies in the Payout Phase, we will continue to pay income payments
until the guaranteed number of payments has been paid.

INCOME PLAN 2 - JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. Under
this plan, we make periodic income payments for at least as long as either the
Annuitant or the joint Annuitant lives. If both the Annuitant and the joint
Annuitant die in the Payout Phase, we will continue to pay the income payments
until the guaranteed number of payments has been paid.

INCOME PLAN 3 - GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD. Under this plan, we
make periodic income payments for the period you have chosen. These payments do
not depend on the life of the Annuitant. The shortest number of months
guaranteed is 60; the longer number of months guaranteed is 360.

The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amount of each income payment. As a general
rule, longer guarantee periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a minimum specified period for guaranteed
payments. As a general rule, plans with a joint Annuitant also will result in
lower income payments. Income plans may vary from state to state.

We may make other Income Plans available, including ones that you and we agree
upon. You may obtain information about them by writing or calling us.

If you choose Income Plan 1 or 2, or, if available, another Income Plan with
payments that continue for the life of the Annuitant or joint Annuitant, we will
require proof of age and sex of the Annuitant or joint Annuitant before starting
income payments, and we may require proof that the Annuitant or joint Annuitant
is still alive before we make each payment. Please note that under such Income
Plans, if you elect to take no minimum guaranteed payments, it is possible that
the payee could receive no income payments if the Annuitant and any joint
Annuitant both die before the first income payment, or only 1 income payment if
they die before the second income payment, and so on.

We will apply your Contract Value, less applicable taxes, to your Income Plan on
the Payout Start Date. If the amount available to apply under an Income Plan is
less than $2,000, or if your initial monthly payment would be less than $20, and
state law permits, we may:

.. terminate your Contract and pay you the Contract Value, less any applicable
taxes, in a lump sum instead of the periodic payments you have chosen; or

.. reduce the frequency of your payments so that each payment will be at least
$20.

11 PROSPECTUS

INCOME PAYMENTS
Subject to your Income Plan selection, we guarantee income payment amounts for
the duration of the Income Plan. We calculate income payments by:

1) determining your Contract Value on the Payout Start Date;

2) deducting any applicable premium tax; and

3) applying the resulting amount to the greater of (a) the appropriate value
from the income payment table in your Contract or (b) such other value as we
are offering at that time.

We may defer making fixed income payments for a period of up to six months or
such shorter time state law may require. If we defer such payments for 30 days
or more, we will pay interest as required by law from the date we receive the
withdrawal request to the date we make payment.

CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age, except in
states that require unisex tables. We reserve the right to use income payment
tables that do not distinguish on the basis of sex, to the extent permitted by
law. In certain employment-related situations, employers are required by law to
use the same income payment tables for men and women. Accordingly, if the
Contract is to be used in connection with an employment-related retirement or
benefit plan and we do not offer unisex annuity tables in your state, you should
consult with legal counsel as to whether the Contract is appropriate.

DEATH BENEFITS
- --------------------------------------------------------------------------------

We will pay a death benefit if, prior to the Payout Start Date:

1) the Contract Owner dies; or

2) the Annuitant dies.

We will pay the death benefit to the new Contract Owner as determined
immediately after the death. The new Contract Owner would be a surviving
Contract Owner or, if none, the Beneficiary.

DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greater of:

1. the Contract Value; and

2. the "SETTLEMENT VALUE," which is the Contract Value, adjusted by any Market
Value Adjustment, less withdrawal charges and premium taxes.

We will calculate the value of the death benefit as of the date we receive the
first complete request for settlement of the death benefit.

A claim for settlement of the death benefit must include Due Proof of Death. We
will accept the following documentation as "Due Proof of Death":

.. a certified copy of a death certificate;

.. a certified copy of a decree of a court of competent jurisdiction as to the
finding of death; or

.. any other proof acceptable to us.

DEATH BENEFIT OPTIONS
Upon death of the Contract Owner, the new Contract Owner generally has the
following 3 options:

1. receive the Settlement Value within 5 years of the date of death;

2. receive the death benefit in a lump sum; or

3. apply the death benefit to an Income Plan, with income payments beginning
within one year of the date of death. Income payments must be made over the life
of the new Contract Owner, or a period not to exceed the life expectancy of the
new Contract Owner.

Options 2 and 3 above are available only if we receive Due Proof of Death within
60 days of the date of death. We reserve the right to waive or extend the 60 day
limit on a non-discriminatory basis.

For Options 1 and 3, if there is no Annuitant at the time, the new Annuitant
will be the youngest Contract Owner unless the Contract Owner names a different
Annuitant.

If the new Contract Owner is a non-living person, the new Contract Owner must
elect to receive the death benefit in a lump sum. If we receive Due Proof of
Death within 60 days of the date of death, we will pay a death benefit.
Otherwise, we will pay a Settlement Value.

If the surviving spouse of the deceased Contract Owner is the new Contract
Owner, then the spouse may elect Options 2 or 3 listed above or may continue the
Contract in the Accumulation Phase as if the death had not occurred. If there is
no Annuitant at that time, the new Annuitant will be the surviving spouse.

If the Contract Owner is not the Annuitant and the Annuitant dies, then the
Contract Owner has the following 3 options:

1. continue the Contract as if the death had not occurred;

2. receive the death benefit in a lump sum; or

3. apply the death benefit to an Income Plan, which must begin within 1 year of
the date of death and must be for a period equal to or less than the life
expectancy of the Contract Owner.

The Contract Owner has 60 days from the date Allstate Life receives Due Proof
of Death to select an income plan

12 PROSPECTUS

without incurring a tax on the entire gain in the Contract. If the Contract
Owner elects to continue the Contract they will be taxed on the entire gain in
the Contract computed on the date of continuance. We are required to report such
gain to the IRS as income to the Contract Owner. An additional 10% federal tax
penalty may apply if the Contract Owner is under age 59 1/2. Any amount included
in the Contract Owner's gross income as a result of a Contract continuance will
increase the investment in the Contract for future distributions.

For Options 1 or 3, the new Annuitant will be the youngest Contract Owner unless
the Contract Owner names a different Annuitant. Options 1 and 3 are not
available if the Contract Owner is a non-living person.

Options 2 and 3 above are available only if we receive Due Proof of Death within
60 days of the date of death. We reserve the right to waive or extend the 60 day
limit on a non-discriminatory basis.

MORE INFORMATION
- --------------------------------------------------------------------------------

ALLSTATE LIFE
Allstate Life is the issuer of the Contract. Allstate Life was organized in 1957
as a stock life insurance company under the laws of the State of Illinois.
Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, a
stock property-liability insurance company organized under the laws of the State
of Illinois. All of the capital stock issued and outstanding of Allstate
Insurance Company is owned by The Allstate Corporation.

Allstate Life is licensed to operate in the District of Columbia, Puerto Rico
and all jurisdictions except the State of New York. Our home office is located
at 3100 Sanders Road, Northbrook, Illinois, 60062.

THE CONTRACT

DISTRIBUTION. Morgan Stanley & Co. Inc., located at 1585 Broadway, New York, NY
10036, serves as principal underwriter of the Contracts. Morgan Stanley & Co.
Inc. is a wholly owned subsidiary of Morgan Stanley Dean Witter & Co. Morgan
Stanley & Co. Inc. is a registered broker-dealer under the Securities Exchange
Act of 1934, as amended ("Exchange Act"), and is a member of the Financial
Industry Regulatory Authority ("FINRA"). Morgan Stanley & Co. Inc. is also
registered with the Securities and Exchange Commission ("SEC") as an investment
adviser.

We may pay broker-dealers up to a maximum sales commission of 8% on subsequent
purchase payments or upon renewal of a Guarantee Period.

The underwriting agreement with Morgan Stanley & Co. Inc. provides that we will
reimburse Morgan Stanley & Co. Inc. for any liability to Contract Owners arising
out of services rendered or Contracts issued.

ADMINISTRATION. We have primary responsibility for all administration of the
Contracts. We provide the following administrative services, among others:

.. issuance of the Contracts;

.. maintenance of Contract Owner records;

.. Contract Owner services; and

.. preparation of Contract Owner reports.

We will send you Contract statements and transaction confirmations at least
annually. You should notify us promptly in writing of any address change. You
should read your statements and confirmations carefully and verify their
accuracy. You should contact us promptly if you have a question about a periodic
statement. We will investigate all complaints and make any necessary adjustments
retroactively, but you must notify us of a potential error within a reasonable
time after the date of the questioned statement. If you wait too long, we
reserve the right to make the adjustment as of the date that we receive notice
of the potential error.

We also will provide you with additional periodic and other reports, information
and prospectuses as may be required by federal securities laws

ANNUITIES HELD WITHIN A QUALIFIED PLAN
If you use the Contract with an employer-sponsored qualified retirement plan,
the plan may impose different or additional conditions or limitations on
withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates,
income payments, and other Contract features. In addition, adverse tax
consequences may result if qualified plan limits on distributions and other
conditions are not met. Please consult your qualified plan administrator for
more information. Allstate Life no longer issues deferred annuities to employer-
sponsored qualified retirement plans.

LEGAL MATTERS
Certain matters of state insurance law pertaining to the Contracts, including
the validity of the Contracts and Allstate Life's right to issue such Contracts
under applicable state insurance law, have been passed upon by Susan L. Lees,
General Counsel of Allstate Life.

13 PROSPECTUS

TAXES
- --------------------------------------------------------------------------------

THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. ALLSTATE
LIFE MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR
TRANSACTION INVOLVING A CONTRACT.

Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax adviser.

TAXATION OF ALLSTATE LIFE INSURANCE COMPANY
Allstate Life is taxed as a life insurance company under Part I of Subchapter L
of the Code.

TAXATION OF FIXED ANNUITIES IN GENERAL

TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where the Contract Owner is
a natural person.

NON-NATURAL OWNERS. Non-natural owners are also referred to as Non Living
Owners in this prospectus. As a general rule, annuity contracts owned by
non-natural persons such as corporations, trusts, or other entities are not
treated as annuity contracts for federal income tax purposes. The income on such
contracts does not enjoy tax deferral and is taxed as ordinary income received
or accrued by the non-natural owner during the taxable year.

EXCEPTIONS TO THE NON-NATURAL OWNER RULE. There are several exceptions to the
general rule that annuity contracts held by a non-natural owner are not treated
as annuity contracts for federal income tax purposes. Contracts will generally
be treated as held by a natural person if the nominal owner is a trust or other
entity which holds the contract as agent for a natural person. However, this
special exception will not apply in the case of an employer who is the nominal
owner of an annuity contract under a non-Qualified deferred compensation
arrangement for its employees. Other exceptions to the non-natural owner rule
are: (1) contracts acquired by an estate of a decedent by reason of the death of
the decedent; (2) certain qualified contracts; (3) contracts purchased by
employers upon the termination of certain Qualified Plans; (4) certain contracts
used in connection with structured settlement agreements; and (5) immediate
annuity contracts, purchased with a single premium, when the annuity starting
date is no later than a year from purchase of the annuity and substantially
equal periodic payments are made, not less frequently than annually, during the
annuity period.

GRANTOR TRUST OWNED ANNUITY. Contracts owned by a grantor trust are considered
owned by a non-natural owner. Grantor trust owned contracts receive tax
deferral as described in the Exceptions to the Non-Natural Owner Rule section.
In accordance with the Code, upon the death of the annuitant, the death benefit
must be paid. According to your Contract, the Death Benefit is paid to the
surviving Contract Owner. Since the trust will be the surviving Contract Owner
in all cases, the Death Benefit will be payable to the trust notwithstanding any
beneficiary designation on the annuity contract. A trust, including a grantor
trust, has two options for receiving any death benefits: 1) a lump sum payment;
or 2) payment deferred up to five years from date of death.

TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal
under a non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a total withdrawal
under a non-Qualified Contract, the amount received will be taxable only to the
extent it exceeds the investment in the Contract.

You should contact a competent tax advisor about the potential tax consequences
of a Market Value Adjustment, as no definitive guidance exists on the proper tax
treatment of Market Value Adjustments.

TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of
annuity payments received from a non-Qualified Contract provides for the return
of your investment in the Contract in equal tax-free amounts over the payment
period. The balance of each payment received is taxable. For fixed annuity
payments, the amount excluded from income is determined by multiplying the
payment by the ratio of the investment in the Contract (adjusted for any refund
feature or period certain) to the total expected value of annuity payments for
the term of the Contract. The annuity payments will be fully taxable after the
total amount of the investment in the Contract is excluded using these ratios.
The federal tax treatment of annuity payments is unclear in some respects. As a
result, if the IRS should provide further guidance, it is possible that the
amount we calculate and report to the IRS as taxable could be different. If you
die, and annuity payments cease before the total amount of the investment in the
Contract is recovered, the unrecovered amount will be allowed as a deduction for
your last taxable year.

WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding
the taxation of any additional withdrawal received after the Payout Start Date.
It is possible that a greater or lesser portion of such a payment could be
taxable than the amount we determine.

14 PROSPECTUS

DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for
federal income tax purposes, the Contract must provide:

.. if any Contract Owner dies on or after the Payout Start Date but before the
entire interest in the Contract has been distributed, the remaining portion of
such interest must be distributed at least as rapidly as under the method of
distribution being used as of the date of the Contract Owner's death;

.. if any Contract Owner dies prior to the Payout Start Date, the entire interest
in the Contract will be distributed within 5 years after the date of the
Contract Owner's death. These requirements are satisfied if any portion of the
Contract Owner's interest that is payable to (or for the benefit of) a
designated Beneficiary is distributed over the life of such Beneficiary (or
over a period not extending beyond the life expectancy of the Beneficiary) and
the distributions begin within 1 year of the Contract Owner's death. If the
Contract Owner's designated Beneficiary is the surviving spouse of the
Contract Owner, the Contract may be continued with the surviving spouse as the
new Contract Owner;

.. if the Contract Owner is a non-natural person, then the Annuitant will be
treated as the Contract Owner for purposes of applying the distribution at
death rules. In addition, a change in the Annuitant on a Contract owned by a
non-natural person will trigger the rules under death of the Contract Owner.

TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in
income as follows:

.. if distributed in a lump sum, the amounts are taxed in the same manner as a
total withdrawal, or

.. if distributed under an Income Plan, the amounts are taxed in the same manner
as annuity payments.

PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the
taxable amount of any premature distribution from a non-Qualified Contract. The
penalty tax generally applies to any distribution made prior to the date you
attain age 59 1/2. However, no penalty tax is incurred on distributions:

.. made on or after the date the Contract Owner attains age 59 1/2,

.. made as a result of the Contract Owner's death or becoming totally disabled,

.. made in substantially equal periodic payments over the Contract Owner's life
or life expectancy, or over the joint lives or joint life expectancies of the
Contract Owner and the Beneficiary,

.. made under an immediate annuity, or

.. attributable to investment in the Contract before August 14, 1982.

You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.

SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts
using substantially equal periodic payments or immediate annuity payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other material modification of the payment stream would violate
the requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the Contract Owner's attaining age 59 1/2 would be
subject to a 10% penalty tax unless another exception to the penalty tax
applied. The tax for the year of the modification is increased by the penalty
tax that would have been imposed without the exception, plus interest for the
years in which the exception was used. A material modification does not include
permitted changes described in published IRS rulings. You should consult a
competent tax advisor prior to creating or modifying a substantially equal
periodic payment stream.

TAX FREE EXCHANGES UNDER INTERNAL REVENUE CODE SECTION 1035. A 1035 exchange is
a tax-free exchange of a non-Qualified life insurance contract, endowment
contract or annuity contract into a non-Qualified annuity contract or, after
2009, into a qualified long-term care insurance contract. The contract owner(s)
must be the same on the old and new contract. Basis from the old contract
carries over to the new contract so long as we receive that information from the
relinquishing company. If basis information is never received, we will assume
that all exchanged funds represent earnings and will allocate no cost basis to
them.

PARTIAL EXCHANGES. The IRS has issued a ruling that permits partial exchanges
of annuity contracts. Effective June 30, 2008, a partial exchange, of one
deferred annuity contract for a new deferred annuity contract, will qualify for
tax-deferral only if no amount is withdrawn or surrendered from either contract
for a period of 12 months. The 12 month period begins on the date when exchange
proceeds are treated as premiums paid for the recipient contract. Withdrawals
from, annuitizations, taxable Owner or Annuitant changes, or surrenders of
either contract within the 12 month period will retroactively negate the partial
exchange unless one of the following applies:

.. the contract owner reaches age 59 1/2, becomes disabled (as defined by Code
section 72(m)(7)), dies, obtains a divorce, or suffers a loss of employment
after the partial exchange was completed and prior to the withdrawal,
annuitization, owner or annuitant change, or surrender;

.. if the annuity is owned by an entity, the annuitant dies after the partial
exchange was completed and prior to the withdrawal, annuitization, owner or
annuitant change, or surrender;

.. the withdrawal is allocable to investment in the Contract before August 14,
1982; or

15 PROSPECTUS

.. the annuity is a qualified funding asset within the meaning of Code section
130(d).

If a partial exchange is retroactively negated, the amount originally
transferred is subject to taxation as a withdrawal, which is taxable to the
extent of any gain in the source contract on the date of the exchange. An
additional 10% tax penalty may also apply if the Contract Owner is under age 59
1/2 . The IRS has not provided guidance on how to report these taxable
distributions. Your Contract may not permit partial exchanges.

TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without
full and adequate consideration to a person other than your spouse (or to a
former spouse incident to a divorce), you will be taxed on the difference
between the Contract Value and the investment in the Contract at the time of
transfer. Any assignment or pledge (or agreement to assign or pledge) of the
Contract Value is taxed as a withdrawal of such amount or portion and may also
incur the 10% penalty tax.

AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-Qualified
deferred annuity contracts issued by Allstate Life (or its affiliates) to the
same Contract Owner during any calendar year be aggregated and treated as one
annuity contract for purposes of determining the taxable amount of a
distribution from any contract(s) in the aggregated group.

INCOME TAX WITHHOLDING
Generally, Allstate Life is required to withhold federal income tax at a rate of
10% from all non-annuitized distributions. The customer may elect out of
withholding by completing and signing a withholding election form. If no
election is made or no U.S. taxpayer identification number is provided, we will
automatically withhold the required 10% of the taxable amount. In certain
states, if there is federal withholding, then state withholding is also
mandatory.

Allstate Life is required to withhold federal income tax using the wage
withholding rates for all annuitized distributions. The customer may elect out
of withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold using married with three
exemptions as the default. If no U.S. taxpayer identification number is
provided, we will automatically withhold using single with zero exemptions as
the default. In certain states, if there is federal withholding, then state
withholding is also mandatory.

Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.

Generally, Code Section 1441 provides that Allstate Life as a withholding agent
must withhold 30% of the taxable amounts paid to a non-resident alien. A
non-resident alien is someone other than a U.S. citizen or resident alien. We
require an original IRS Form W-8BEN at issue to certify the owners' foreign
status. Withholding may be reduced or eliminated if covered by an income tax
treaty between the U.S. and the non-resident alien's country of residence if the
payee provides a U.S. taxpayer identification number on a fully completed Form
W-8BEN. A U.S. taxpayer identification number is a social security number or an
individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS
to non-resident alien individuals who are not eligible to obtain a social
security number. The U.S. does not have a tax treaty with all countries nor do
all tax treaties provide an exclusion or lower withholding rate for annuities.

TAX QUALIFIED CONTRACTS
The income on tax sheltered annuity (TSA) and IRA investments is tax deferred,
and the income from annuities held by such plans does not receive any additional
tax deferral. You should review the annuity features, including all benefits and
expenses, prior to purchasing an annuity as an IRA. Tax Qualified Contracts are
contracts purchased as or in connection with:

.. Individual Retirement Annuities (IRAs) under Code Section 408(b);

.. Roth IRAs under Code Section 408A;

.. Simplified Employee Pension (SEP IRA) under Code Section 408(k);

.. Savings Incentive Match Plans for Employees (SIMPLE IRA) under Code Section
408(p);

.. Tax Sheltered Annuities under Code Section 403(b);

.. Corporate and Self Employed Pension and Profit Sharing Plans under Code
Section 401; and

.. State and Local Government and Tax-Exempt Organization Deferred Compensation
Plans under Code Section 457.

Allstate Life reserves the right to limit the availability of the Contract for
use with any of the retirement plans listed above or to modify the Contract to
conform with tax requirements. If you use the Contract within an employer
sponsored qualified retirement plan or TSA, the plan may impose different or
additional conditions or limitations on withdrawals, waiver of charges, death
benefits, Payout Start Dates, income payments, and other Contract features. In
addition, adverse tax consequences may result if Qualified Plan and TSA limits
on distributions and other conditions are not met. Please consult your Qualified
Plan or TSA administrator for more information. Allstate Life no longer issues
deferred annuities to employer sponsored qualified retirement plans. Allstate
Life no longer issues deferred annuities to employer sponsored qualified
retirement plans or under 403(b) Plans.

The tax rules applicable to participants with tax qualified annuities vary
according to the type of contract and the terms and conditions of the
endorsement. Adverse tax consequences may result from certain transactions such
as

16 PROSPECTUS

excess contributions, premature distributions, and, distributions that do not
conform to specified commencement and minimum distribution rules. Allstate Life
can issue an individual retirement annuity on a rollover or transfer of proceeds
from a decedent's IRA, TSA, or employer sponsored retirement plan under which
the decedent's surviving spouse is the beneficiary. Allstate Life does not offer
an individual retirement annuity that can accept a transfer of funds for any
other, non-spousal, beneficiary of a decedent's IRA, TSA, or employer sponsored
qualified retirement plan.

Please refer to your Endorsement for IRAs or 403(b) plans, if applicable, for
additional information on your death settlement options. In the case of certain
Qualified Plans, the terms of the Qualified Plan Endorsement and the plans may
govern the right to benefits, regardless of the terms of the Contract.

TAXATION OF WITHDRAWALS FROM AN INDIVIDUALLY OWNED TAX QUALIFIED CONTRACT. If
you make a partial withdrawal under a Tax Qualified Contract other than a Roth
IRA, the portion of the payment that bears the same ratio to the total payment
that the investment in the Contract (i.e., nondeductible IRA contributions)
bears to the Contract Value, is excluded from your income. We do not keep track
of nondeductible contributions, and generally all tax reporting of distributions
from Tax Qualified Contracts other than Roth IRAs will indicate that the
distribution is fully taxable.

"Qualified distributions" from Roth IRAs are not included in gross income.
"Qualified distributions" are any distributions made more than five taxable
years after the taxable year of the first contribution to any Roth IRA and which
are:

.. made on or after the date the Contract Owner attains age 59 1/2,

.. made to a beneficiary after the Contract Owner's death,

.. attributable to the Contract Owner being disabled, or

.. made for a first time home purchase (first time home purchases are subject to
a lifetime limit of $10,000).

"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are included in gross income only to the extent that
distributions exceed contributions.

REQUIRED MINIMUM DISTRIBUTIONS (RMDS). The Worker, Retiree, and Employer
Recovery Act of 2008 (WRERA 2008) was signed into law December 23, 2008. WRERA
2008 includes provisions to give relief from existing tax rules that would have
forced many retirees to further deplete their tax-deferred retirement savings
when they are at their lowest by taking RMDs from their qualified plans or IRAs.

Generally, Tax Qualified Contracts (excluding Roth IRAs) require minimum
distributions upon reaching age 70 1/2. Failure to withdraw the required minimum
distribution will result in a 50% tax penalty on the shortfall not withdrawn
from the Contract. Effective December 31, 2005, the IRS requires annuity
contracts to include the actuarial present value of other benefits for purposes
of calculating the required minimum distribution amount. These other benefits
may include accumulation, income, or death benefits. Not all income plans
offered under the Contract satisfy the requirements for minimum distributions.
Because these distributions are required under the Code and the method of
calculation is complex, please see a competent tax advisor.

WRERA 2008 suspends RMDs and eliminates the 50% penalty for 2009 only. RMDs for
2008 are still required. Certain beneficiaries may have selected the five year
deferral option which requires the entire annuity contract to be distributed by
December 31 of the year containing the fifth anniversary of the original owner's
death. With the waiver of the RMD for 2009, distributions can be taken over a
6-year rather than a 5-year period.

THE DEATH BENEFIT AND TAX QUALIFIED CONTRACTS. Pursuant to the Code and IRS
regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA)
may not invest in life insurance contracts. However, an IRA may provide a death
benefit that equals the greater of the purchase payments or the Contract Value.
The Contract offers a death benefit that in certain circumstances may exceed the
greater of the purchase payments or the Contract Value. We believe that the
Death Benefits offered by your Contract do not constitute life insurance under
these regulations.

It is also possible that certain death benefits that offer enhanced earnings
could be characterized as an incidental death benefit. If the death benefit were
so characterized, this could result in current taxable income to a Contract
Owner. In addition, there are limitations on the amount of incidental death
benefits that may be provided under Qualified Plans, such as in connection with
a TSA or employer sponsored qualified retirement plan.

Allstate Life reserves the right to limit the availability of the Contract for
use with any of the Qualified Plans listed above.

PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM TAX QUALIFIED CONTRACTS. A 10%
penalty tax applies to the taxable amount of any premature distribution from a
Tax Qualified Contract. The penalty tax generally applies to any distribution
made prior to the date you attain age 59 1/2. However, no penalty tax is
incurred on distributions:

.. made on or after the date the Contract Owner attains age 59 1/2,

.. made as a result of the Contract Owner's death or total disability,

.. made in substantially equal periodic payments over the Contract Owner's life
or life expectancy, or over

17 PROSPECTUS

the joint lives or joint life expectancies of the Contract Owner and the
Beneficiary,

.. made after separation from service after age 55 (does not apply to IRAs),

.. made pursuant to an IRS levy,

.. made for certain medical expenses,

.. made to pay for health insurance premiums while unemployed (applies only for
IRAs),

.. made for qualified higher education expenses (applies only for IRAs)

.. made for a first time home purchase (up to a $10,000 lifetime limit and
applies only for IRAs), and

.. from an IRA or attributable to elective deferrals under a 401(k) plan,
403(b) annuity, or certain similar arrangements made to individuals who
(because of their being members of a reserve component) are ordered or called
to active duty after Sept. 11, 2001, and before Dec. 31, 2007, for a period of
more than 179 days or for an indefinite period; and made during the period
beginning on the date of the order or call to duty and ending at the close of
the active duty period.

During the first 2 years of the individual's participation in a SIMPLE IRA,
distributions that are otherwise subject to the premature distribution penalty,
will be subject to a 25% penalty tax.

You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.

SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON TAX QUALIFIED CONTRACTS. With respect
to Tax Qualified Contracts using substantially equal periodic payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other material modification of the payment stream would violate
the requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to
a 10% penalty tax unless another exception to the penalty tax applied. The tax
for the year of the modification is increased by the penalty tax that would have
been imposed without the exception, plus interest for the years in which the
exception was used. A material modification does not include permitted changes
described in published IRS rulings. You should consult a competent tax advisor
prior to creating or modifying a substantially equal periodic payment stream.

INCOME TAX WITHHOLDING ON TAX QUALIFIED CONTRACTS. Generally, Allstate Life is
required to withhold federal income tax at a rate of 10% from all non-annuitized
distributions that are not considered "eligible rollover distributions." The
customer may elect out of withholding by completing and signing a withholding
election form. If no election is made or if no U.S. taxpayer identification
number is provided, we will automatically withhold the required 10% from the
taxable amount. Since we cannot determine the taxable amount of distributions
from a Roth IRA, we will not automatically withhold 10%. If you request
withholding from a Roth IRA distribution, federal income tax will be withheld on
the entire amount distributed. In certain states, if there is federal
withholding, then state withholding is also mandatory. Allstate Life is required
to withhold federal income tax at a rate of 20% on all "eligible rollover
distributions" unless you elect to make a "direct rollover" of such amounts to
an IRA or eligible retirement plan. Eligible rollover distributions generally
include all distributions from Tax Qualified Contracts, including TSAs but
excluding IRAs, with the exception of:

.. required minimum distributions, or,

.. a series of substantially equal periodic payments made over a period of at
least 10 years, or,

.. a series of substantially equal periodic payments made over the life (joint
lives) of the participant (and beneficiary), or,

.. hardship distributions.

For all annuitized distributions that are not subject to the 20% withholding
requirement, Allstate Life is required to withhold federal income tax using the
wage withholding rates. The customer may elect out of withholding by completing
and signing a withholding election form. If no election is made, we will
automatically withhold using married with three exemptions as the default. If
no U.S. taxpayer identification number is provided, we will automatically
withhold using single with zero exemptions as the default. In certain states,
if there is federal withholding, then state withholding is also mandatory.

Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.

CHARITABLE IRA DISTRIBUTIONS. The Emergency Economic Stabilization Act of 2008
(EESA 2008) was

18 PROSPECTUS

signed into law October 3, 2008. EESA 2008 includes an extension of a
charitable giving incentive permitting tax-free IRA distributions for charitable
purposes that was part of the Pension Protection Act of 2006 (PPA 2006).

For distributions in tax years beginning after 2005 and before 2009, these Acts
provide an exclusion from gross income, up to $100,000, for otherwise taxable
IRA distributions from a traditional or Roth IRA that are qualified charitable
distributions. To constitute a qualified charitable distribution, the
distribution must be made (1) directly by the IRA trustee to certain qualified
charitable organizations and (2) on or after the date the IRA owner attains age
70 1/2. Distributions that are excluded from income under this provision are
not taken into account in determining the individual's deduction, if any, for
charitable contributions. The qualified charitable distributions count toward
the minimum distribution requirements, which would usually be taxed. Charitable
distributions to fund planned gifts such as a charitable gift annuity are not
permitted.

Your IRA trustee will send you a 1099-R by the end of January indicating your
total IRA distribution for the year, including those distributions to charity.
The IRA trustee has no obligation to determine if your charitable distributions
qualify under law for tax exclusion. As a result, the general rules for
reporting IRA distributions apply.

INDIVIDUAL RETIREMENT ANNUITIES. Code Section 408(b) permits eligible
individuals to contribute to an individual retirement program known as an
Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject
to limitations on the amount that can be contributed and on the time when
distributions may commence. Certain distributions from other types of qualified
retirement plans may be "rolled over" on a tax-deferred basis into an Individual
Retirement Annuity.

ROTH INDIVIDUAL RETIREMENT ANNUITIES. Code Section 408A permits eligible
individuals to make nondeductible contributions to an individual retirement
program known as a Roth Individual Retirement Annuity. Roth Individual
Retirement Annuities are subject to limitations on the amount that can be
contributed and on the time when distributions may commence.

Subject to certain limitations, a traditional Individual Retirement Account or
Annuity may be converted or "rolled over" to a Roth Individual Retirement
Annuity. For distributions after 2007, the Pension Protection Act of 2006 allows
distributions from qualified retirement plans including tax sheltered annuities
and governmental Section 457 plans to be rolled over directly into a Roth IRA,
subject to the usual rules that apply to conversions from a traditional IRA into
a Roth IRA. The income portion of a conversion or rollover distribution is
taxable currently, but is exempted from the 10% penalty tax on premature
distributions. An individual with adjusted gross income (AGI) of $100,000 or
more won't be able to rollover amounts from an eligible retirement plan into a
Roth IRA. Please note, however, that the $100,000 AGI limit will be eliminated
for tax years beginning after December 31, 2009. Effective January 1, 2005, the
IRS requires conversions of annuity contracts to include the actuarial present
value of other benefits for purposes of valuing the taxable amount of the
conversion.

ANNUITIES HELD BY INDIVIDUAL RETIREMENT ACCOUNTS (COMMONLY KNOWN AS CUSTODIAL

IRAS). Code Section 408 permits a custodian or trustee of an Individual
Retirement Account to purchase an annuity as an investment of the Individual
Retirement Account. If an annuity is purchased inside of an Individual
Retirement Account, then the Annuitant must be the same person as the beneficial
owner of the Individual Retirement Account.

If you have a contract issued as an IRA under Code Section 408(b) and request to
change the ownership to an IRA custodian permitted under Section 408, we will
treat a request to change ownership from an individual to a custodian as an
indirect rollover. We will send a Form 1099R to report the distribution and the
custodian should issue a Form 5498 for the contract value contribution.

Generally, the death benefit of an annuity held in an Individual Retirement
Account must be paid upon the death of the Annuitant. However, in most states,
the Contract permits the custodian or trustee of the Individual Retirement
Account to continue the Contract in the accumulation phase, with the Annuitant's
surviving spouse as the new Annuitant, if the following conditions are met:

1) The custodian or trustee of the Individual Retirement Account is the owner of
the annuity and has the right to the death proceeds otherwise payable under
the Contract;

2) The deceased Annuitant was the beneficial owner of the Individual Retirement
Account;

3) We receive a complete request for settlement for the death of the Annuitant;
and

4) The custodian or trustee of the Individual Retirement Account provides us
with a signed certification of the following:

(a) The Annuitant's surviving spouse is the sole beneficiary of the Individual
Retirement Account;

(b) The Annuitant's surviving spouse has elected to continue the Individual
Retirement Account as his or her own Individual Retirement Account; and

(c) The custodian or trustee of the Individual Retirement Account has
continued the Individual Retirement Account pursuant to the surviving spouse's
election.

SIMPLIFIED EMPLOYEE PENSION IRA. Code Section 408(k) allows eligible employers
to establish simplified employee pension plans for their employees using
individual retirement annuities. These employers may, within specified limits,
make deductible contributions on

19 PROSPECTUS

behalf of the employees to the individual retirement annuities. Employers
intending to use the Contract in connection with such plans should seek
competent tax advice.

SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA). Code Section 408(p)
allows eligible employers with 100 or fewer employees to establish SIMPLE
retirement plans for their employees using individual retirement annuities. In
general, a SIMPLE IRA consists of a salary deferral program for eligible
employees and matching or nonelective contributions made by employers. Employers
intending to purchase the Contract as a SIMPLE IRA should seek competent tax and
legal advice. SIMPLE IRA plans must include the provisions of the Economic
Growth and Tax Relief Reconciliation Act of 2007 (EGTRRA) to avoid adverse tax
consequences. If your current SIMPLE IRA plan uses IRS Model Form 5304-SIMPLE
with a revision date of March 2002 or later, then your plan is up to date. If
your plan has a revision date prior to March 2002, please consult with your tax
or legal advisor to determine the action you need to take in order to comply
with this requirement.

TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS
(TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND
YOUR COMPETENT TAX ADVISOR.

TAX SHELTERED ANNUITIES. Code Section 403(b) provides tax-deferred retirement
savings plans for employees of certain non-profit and educational organizations.
Allstate Life no longer sells TSA contracts.

Under Section 403(b), any contract used for a 403(b) plan must provide that
distributions attributable to salary reduction contributions made after
12/31/88, and all earnings on salary reduction contributions, may be made only
on or after the date the employee:

.. attains age 59 1/2,

.. severs employment,

.. dies,

.. becomes disabled, or

.. incurs a hardship (earnings on salary reduction contributions may not be
distributed on account of hardship).

These limitations do not apply to withdrawals where Allstate Life is directed to
transfer some or all of the Contract Value to another 403(b) plan. IRS
regulations, effective January 1, 2008, impose additional administrative
requirements on some 403(b) contracts. Unless a 403(b) contract is
grandfathered from certain requirements under the IRS regulations governing
403(b)s, distributions, loans, surrenders, or transfers/ exchanges cannot be
processed transactions unless one of the following requirements is met:

1. If the 403(b) Contract, or any other 403(b) Contract issued under the same
403(b) Plan, received rollovers, employee elective deferral contributions, or
employer contributions after 12/31/2008, the transaction must be pre-authorized
by the employer (or the employer's Third Party Administrator (TPA)) sponsoring
the 403(b) Plan under which the 403(b) Contract is held; or

2. If neither the 403(b) Contract, nor any other 403(b) Contract issue under the
same 403(b) Plan, received rollovers, employee elective deferral contributions,
or employer contributions after 12/31/2008, then the insurance company is
required to exercise good faith efforts to obtain pre-authorization from the
employer sponsoring the 403(b) Plan under which the 403(b) Contract is held.

Whether a 403(b) Contract is grandfathered from employer pre-approval depends on
specific facts and circumstances. Generally, however, a 403(b) Contract is
grandfathered from employer pre-approval in two circumstances:

1. The 403(b) Contract was issued in a tax-free exchange for another 403(b)
Contract (often referred to as "90-24 Transfers") prior to September 25, 2007
and has not received additional premium payments after it was issued; and

2. The 403(b) Contract was issued prior to 2005 and the insurance company that
issued the Contract has not received contributions after 2004 to that Contract
or any other 403(b) Contract issued under the same 403(b) Plan.

Generally, we do not accept funds in 403(b) contracts that are subject to the
Employee Retirement Income Security Act of 1974 (ERISA).

CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS.

Section 401(a) of the Code permits corporate employers to establish various
types of tax favored retirement plans for employees. Self-employed individuals
may establish tax favored retirement plans for themselves and their employees
(commonly referred to as "H.R.10" or "Keogh"). Such retirement plans may permit
the purchase of annuity contracts. Allstate Life no longer issues annuity
contracts to employer sponsored qualified retirement plans.

There are two owner types for contracts intended to qualify under Section
401(a): a qualified plan fiduciary or an annuitant owner.

.. A qualified plan fiduciary exists when a qualified plan trust that is intended
to qualify under Section 401(a) of the Code is the owner. The qualified plan
trust must have its own tax identification number and a named trustee acting
as a fiduciary on behalf of the plan. The annuitant should be the person for
whose benefit the contract was purchased.

.. An annuitant owner exists when the tax identification number of the owner and
annuitant are the same, or

20 PROSPECTUS

the annuity contract is not owned by a qualified plan trust. The annuitant
should be the person for whose benefit the contract was purchased.

If a qualified plan fiduciary is the owner of the contract, the qualified plan
must be the beneficiary so that death benefits from the annuity are distributed
in accordance with the terms of the qualified plan. Annuitant owned contracts
require that the beneficiary be the annuitant's spouse (if applicable), which is
consistent with the required IRS language for qualified plans under Section
401(a). A completed Annuitant Owned Qualified Plan Designation of Beneficiary
form is required in order to change the beneficiary of an annuitant owned
Qualified Plan contract.

STATE AND LOCAL GOVERNMENT AND TAX-EXEMPT ORGANIZATION DEFERRED COMPENSATION

PLANS. Section 457 of the Code permits employees of state and local governments
and tax-exempt organizations to defer a portion of their compensation without
paying current taxes. The employees must be participants in an eligible deferred
compensation plan. In eligible governmental plans, all assets and income must be
held in a trust/ custodial account/annuity contract for the exclusive benefit of
the participants and their beneficiaries. To the extent the Contracts are used
in connection with a non-governmental eligible plan, employees are considered
general creditors of the employer and the employer as owner of the Contract has
the sole right to the proceeds of the Contract. Under eligible 457 plans,
contributions made for the benefit of the employees will not be includible in
the employees' gross income until distributed from the plan. Allstate Life no
longer issues annuity contracts to 457 plans.

ANNUAL REPORTS AND OTHER DOCUMENTS
- --------------------------------------------------------------------------------

Allstate Life's annual report on Form 10-K for the year ended December 31, 2007
("Form 10-K Annual Report") is incorporated herein by reference, which means
that it is legally a part of this prospectus.

All other reports filed with the SEC under the Exchange Act since the Form 10-K
Annual Report, including filings made on Form 10-Q and Form 8-K, and all
documents or reports we file with the SEC under the Exchange Act after the date
of this prospectus and before we terminate the offering of the securities under
this prospectus are also incorporated herein by reference, which means that they
are legally a part of this prospectus.

Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.

We file our Exchange Act documents and reports, including our annual report on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K,
electronically on the SEC's "EDGAR" system using the identifying number CIK No.
0000352736. The SEC maintains a Web site that contains reports, proxy and
information statements and other information regarding

registrants that file electronically with the SEC. The address of the site is
http://www.sec.gov. You also can view these materials at the SEC's Public
Reference Room at 100 F Street NE, Room 1580, Washington, DC 20549-0102. For
more information on the operations of the SEC's Public Reference Room, call
1-800-SEC-0330.

If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents), please
write or call us at P.O. Box 80469, Lincoln, NE 68501-0469 or call us at
1-800-654-2397.

ANNUAL STATEMENTS
At least once a year prior to the Payout Start Date, we will send you a
statement containing information about your Contract Value. For more
information, please contact your Morgan Stanley Financial Advisor or call our
customer support unit at 1-800-654-2397.

21 PROSPECTUS

APPENDIX A
MARKET VALUE ADJUSTMENT
- --------------------------------------------------------------------------------

The Market Value Adjustment is based on the following:

I = the effective annual interest crediting rate for that Guarantee
Period;
N = the number of complete days from the date we receive the withdrawal
request to the end of the Guarantee Period; and
J = the current interest crediting rate offered for a Guarantee Period of
length N on the date we receive the withdrawal request.
If we are not currently offering a Guarantee Period of length N, we
will determine J by linear interpolation (weighted average) between
the current interest rates for the next higher and lower integral
years. If N is less than or equal to 365 days, J will be the rate for
a Guarantee Period of 365 days duration.

The Market Value Adjustment factor is determined from the following formula:

.9 X (I-J) X (N/365)

To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount withdrawn (in excess of the Free Withdrawal
Amount) from a Guarantee Period, other than amounts withdrawn from a renewal
Guarantee Period during the first 10 days thereof.

EXAMPLES OF MARKET VALUE ADJUSTMENT

Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Surrender: End of Contract Year 3

NOTE: These examples assume that premium taxes are not applicable.

EXAMPLE 1: (ASSUMES DECLINING INTEREST RATES)

Step 1. Calculate Contract Value $10,000.00 X (1.0450)/3/ = $11,411.66
at End of Contract Year 3:
Step 2. Calculate the Amount in Preferred Withdrawal Amount (.10 X 10,000) =
excess of the Preferred $1,000
Withdrawal Amount: Amount in Excess: $11,411.66 - $1,000 =
$10,411.66
Step 3. Calculate the Withdrawal .0225 X $10,411.66 = $234.26
Charge:
Step 4. Calculate the Market I = 4.5%
Value Adjustment: J = 4.2%
N = 730 days
Market Value Adjustment Factor:
.9 X (I-J) X N/365
= .9 X (.045 - .042) X (730/365) = .0054
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to Market
Value Adjustment:
= .0054 X $10,411.66 = $56.22
Step 5. Calculate the amount $11,411.66 - $234.26 + $56.22 = $11,233.62
received by a Contract Owner as
a result of full withdrawal at
the end of Contract Year 3:

EXAMPLE 2: (ASSUMES RISING INTEREST RATES)

Step 1. Calculate Contract $10,000.00 X (1.045)/3/ = $11,411.66
Value at End of Contract Year
3:
Step 2. Calculate the Amount in Free Withdrawal Amount (.10 X 10,000) = $1,000
excess of the Preferred Amount in Excess: $11,411.66 - $1,000 =
Withdrawal Amount: $10,411.66
Step 3. Calculate the 0225 X $10,411.66 = $234.26
Withdrawal Charge:
Step 4. Calculate the Market I = 4.5%
Value Adjustment: J = 4.8%
N = 730 days
Market Value Adjustment Factor:
.9 X (I-J) X N/365
= .9 X (.045 ^ .048) X (730/365) = - .0054
Market Value Adjustment = Market Value
Adjustment Factor X Amount Subject to Market
Value Adjustment:
= - .0054 X $10,411.66 = - $56.22
Step 5. Calculate the amount $11,411.66 - $234.26 - $56.22 = $11,121.18
received by Contract Owners as
a result of full withdrawal at
the end of Contract Year 3:

22 PROSPECTUS

PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Registrant anticipates that it will incur the following approximate
expenses in connection with the issuance and distribution of the securities to
be registered:

Registration fees....................$4
Cost of printing and engraving.......$5,000
Legal fees...........................$5,000
Accounting fees......................$5,000
Mailing fees.........................$5,000

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The By-laws of Allstate Life Insurance Company ("Registrant") provide that
Registrant will indemnify all of its directors, former directors, officers and
former officers, to the fullest extent permitted under law, who were or are a
party or are threatened to be made a party to any proceeding by reason of the
fact that such persons were or are directors or officers of Registrant, against
liabilities, expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by them. The indemnity shall not be deemed exclusive of
any other rights to which directors or officers may be entitled by law or under
any articles of incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise. In addition, the indemnity shall inure to
the benefit of the legal representatives of directors and officers or of their
estates, whether such representatives are court appointed or otherwise
designated, and to the benefit of the heirs of such directors and officers. The
indemnity shall extend to and include claims for such payments arising out of
any proceeding commenced or based on actions of such directors and officers
taken prior to the effectiveness of this indemnity; provided that payment of
such claims had not been agreed to or denied by Registrant before such date.

The directors and officers of Registrant have been provided liability insurance
for certain losses arising from claims or charges made against them while acting
in their capacities as directors or officers of Registrant.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Exhibit No. Description

(1) Form of Underwriting Agreement (Incorporated herein by reference to
Post-Effective Amendment No. 13 to Form N-4 Registration Statement of Northbrook
Variable Annuity Account II of Northbrook Life Insurance Company (File No.
033-35412) dated December 31, 1996.)

(2) None

(4)(a) Form of Flexible Premium Deferred Annuity Contract and Application
(Incorporated herein by reference to Post-Effective Amendment No. 7 to
Registration Statement (File No. 033-50884) dated April 29, 1999).

(4)(b) Form of Contract Endorsement to Flexible Premium Deferred Annuity
Contract.

(5) Opinion and Consent of General Counsel re: Legality.

(8) None

(11) None

(12) None

(15) Letter Re: Unaudited Interim Financial Information from Registered Public
Accounting Firm (Filed herewith.)

(23) Consent of Independent Registered Public Accounting Firm (Filed herewith.)

(24) Powers of Attorney for David A. Bird, Michael B. Boyle, Don Civgin,
Frederick F. Cripe, Judith P. Greffin, Susan L. Lees, John C. Lounds, Samuel H.
Pilch, John C. Pintozzi, George E. Ruebenson, and Thomas J. Wilson. (Filed
herewith.)

(25) None

(26) None

(27) Not applicable

(99) Experts (Filed herewith.)

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:

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

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

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

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.

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

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

(3)(b) that, for purposes of determining any liability under the Securities Act
of 1933, each filing if the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

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

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the
Township of Northfield, State of Illinois on the 13th day of February, 2009.

ALLSTATE LIFE INSURANCE COMPANY
(REGISTRANT)

By: /S/ SUSAN L. LEES
--------------------------
Susan L. Lees
Senior Vice President, Secretary
General Counsel and Director

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
13th day of February, 2009.

*/DAVID A. BIRD Director and Senior Vice President
- ---------------
David A. Bird

*/MICHAEL B. BOYLE Director and Senior Vice President
- ------------------
Michael B. Boyle

*/ DON CIVGIN Director
- ------------------
Don Civgin
*/ FREDERICK F. CRIPE Director and Executive Vice President
- -----------------------
Frederick F. Cripe

*/ JUDITH P. GREFFIN Director, Senior Vice President and
- ---------------------- Chief Investment Officer
Judith P. Greffin

/s/ SUSAN L. LEES Director, Senior Vice President, General Counsel and
- ------------------ Secretary
Susan L. Lees

*/JOHN C. LOUNDS Director and Senior Vice President
- ----------------
John C. Lounds

*/JOHN C. PINTOZZI Director, Senior Vice President and Chief Financial
- ------------------- Officer (Principal Financial Officer)
John C. Pintozzi

*/SAMUEL H. PILCH Controller and Group Vice President
- ----------------- (Principal Accounting Officer)
Samuel H. Pilch

*/GEORGE E. RUEBENSON Director, President and Chief Executive Officer
- --------------------- (Principal Executive Officer)
George E. Ruebenson

*/THOMAS J. WILSON Director and Chairman of the Board
- ------------------
Thomas J. Wilson

*/ By Susan L. Lees, pursuant to Powers of Attorney filed herewith

EXHIBIT LIST

Exhibit No. Description

(5) Opinion and Consent of General Counsel re: Legality.

(15) Letter Re: Unaudited Interim Financial Information from Registered Public
Accounting Firm.

(23) Consent of Independent Registered Public Accounting Firm.

(99) Experts

February 13, 2009

To:

Allstate Life Insurance Company

Northbrook, IL 60062

From:

Susan L. Lees

Senior Vice President, Secretary and General Counsel

Re:

Form S-3 Registration Statement Under the Securities Act of 1933

File No. 333 –

The Custom Annuity

With reference to the Form S-3 Registration Statement filed by Allstate Life Insurance Company (the “Company”), as Registrant, with the Securities and Exchange Commission covering the Custom Annuity Contract described therein, I have examined such documents and such law as I have considered necessary and appropriate, and on the basis of such examination, it is my opinion that as of February 13, 2009:

The Company is duly organized and existing under the laws of the State of Illinois and has been duly authorized to do business and to issue the Contracts by the Director of Insurance of the State of Illinois.

The securities registered by the above Registration Statement when issued will be valid, legal and binding obligations of the Company.

I hereby consent to the filing of this opinion as an exhibit to the above referenced Registration Statement and to the use of my name under the caption “Legal Matters” in the prospectus constituting part of the Registration Statement.

Sincerely,

/s/ SUSAN L. LEES

-----------------------------------------

Susan L. Lees

Senior Vice President, Secretary and General Counsel

Deloitte & Touche LLP

111S Wacker Dr

Chicago, IL 60606

USA

Tel:

312-486-1200

Fax: 312-486-1486

www.deloitte.com

February 13, 2009

Board of Directors

Allstate Life Insurance Company

Northbrook, Illinois

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited condensed consolidated interim financial information of Allstate Life Insurance Company and subsidiaries as of March 31, 2008, June 30, 2008, and September 30, 2008 and for the three-month periods ended March 31, 2008 and 2007, three-month and six-month periods ended June 30, 2008 and 2007, and three-month and nine-month periods ended September 30, 2008 and 2007, and have issued our reports thereon, dated May 12, 2008, August 7, 2008, and November 10, 2008, respectively. As indicated in such reports, because we did not perform an audit, we expressed no opinion on that information.

We are aware that our reports referred to above, which were included in your Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008, June 30, 2008 and September 30, 2008, are being incorporated by reference in this Registration Statement.

We also are aware that the aforementioned reports, pursuant to Rule 436(c) under the Securities Act of 1933, are not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ Deloitte & Touche

Member of

Deloitte Touche Tohmatsu

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated March 13, 2008 (which report expresses an unqualified opinion with respect to the consolidated financial statements and includes an explanatory paragraph relating to a change in method of accounting for uncertainty in income taxes and accounting for deferred acquisition costs associated with internal replacements in 2007), relating to the consolidated financial statements and financial statement schedules of Allstate Life Insurance Company appearing in the Annual Report on Form 10-K of Allstate Life Insurance Company for the year ended December 31, 2007, to its incorporation by reference in the Prospectus, which is included in this Registration Statement, and to the reference to us under the heading “Experts” in Exhibit 99 of Part II of this Registration Statement.

/s/ Deloitte & Touche

Chicago, Illinois

February 13, 2009

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

The undersigned director of Allstate Life Insurance Company constitutes and appoints George E. Ruebenson and Susan L. Lees and each of them (with full power to each of them to act alone) as his true and lawful attorney-in-fact and agent, in any and all capacities, to sign this Form S-3 registration statement of Allstate Life Insurance Company, as registrant, and any amendments thereto, and to file the same, with exhibits and other documents in connection therewith, with the Securities and Exchange Commission or any other regulatory authority as may be necessary or desirable. I hereby ratify and confirm each and every act that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. My subsequent disability or incapacity shall not affect this Power of Attorney.

February 13, 2009

/s/ DAVID A. BIRD

------------------------------

David A. Bird

Director and Senior Vice President

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

February 13, 2009

/s/ MICHAEL B. BOYLE

------------------------------

Michael B. Boyle

Director and Senior Vice President

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

February 13, 2009

/s/ DON CIVGIN

------------------------------

Don Civgin

Director

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

February 13, 2009

/s/ FREDERICK F. CRIPE

-------------------------------------

Frederick F. Cripe

Director and Executive Vice President

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

The undersigned director of Allstate Life Insurance Company constitutes and appoints George E. Ruebenson and Susan L. Lees and each of them (with full power to each of them to act alone) as her true and lawful attorney-in-fact and agent, in any and all capacities, to sign this Form S-3 registration statement of Allstate Life Insurance Company, as registrant, and any amendments thereto, and to file the same, with exhibits and other documents in connection therewith, with the Securities and Exchange Commission or any other regulatory authority as may be necessary or desirable. I hereby ratify and confirm each and every act that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. My subsequent disability or incapacity shall not affect this Power of Attorney.

February 13, 2009

/s/ JUDITH P. GREFFIN

----------------------------------

Judith P. Greffin

Director, Senior Vice President and Chief Investment Officer

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

The undersigned director of Allstate Life Insurance Company constitutes and appoints George E. Ruebenson and John C. Pintozzi and each of them (with full power to each of them to act alone) as her true and lawful attorney-in-fact and agent, in any and all capacities, to sign this Form S-3 registration statement of Allstate Life Insurance Company, as registrant, and any amendments thereto, and to file the same, with exhibits and other documents in connection therewith, with the Securities and Exchange Commission or any other regulatory authority as may be necessary or desirable. I hereby ratify and confirm each and every act that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. My subsequent disability or incapacity shall not affect this Power of Attorney.

February 13, 2009

/s/ SUSAN L. LEES

------------------------------

Susan L. Lees

Director, Senior Vice President, General Counsel and Secretary

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

February 13, 2009

/s/ JOHN C. LOUNDS

------------------------------

John C. Lounds

Director and Senior Vice President

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

February 13, 2009

/s/ SAMUEL H. PILCH

--------------------------------

Samuel H. Pilch

Group Vice President and Controller

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

February 13, 2009

/s/ JOHN C. PINTOZZI

---------------------------------

John C. Pintozzi

Director, Senior Vice President and Chief Financial Officer

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

The undersigned director of Allstate Life Insurance Company constitutes and appoints John C. Pintozzi and Susan L. Lees and each of them (with full power to each of them to act alone) as his true and lawful attorney-in-fact and agent, in any and all capacities, to sign this Form S-3 registration statement of Allstate Life Insurance Company, as registrant, and any amendments thereto, and to file the same, with exhibits and other documents in connection therewith, with the Securities and Exchange Commission or any other regulatory authority as may be necessary or desirable. I hereby ratify and confirm each and every act that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. My subsequent disability or incapacity shall not affect this Power of Attorney.

February 13, 2009

/s/ GEORGE E. RUEBENSON

-------------------------------------------

George E. Ruebenson

Director, President and Chief Executive Officer

POWER OF ATTORNEY

WITH RESPECT TO

ALLSTATE LIFE INSURANCE COMPANY

(REGISTRANT)

February 13, 2009

/s/ THOMAS J. WILSON

-----------------------------------

Thomas J. Wilson

Director and Chairman of the Board

EXPERTS

The consolidated financial statements and the related financial statement schedules as of December 31, 2007 and 2006, and for each of the three years in the period ended December 31, 2007, incorporated by reference in this Prospectus of Allstate Life Insurance have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report dated March 13, 2008 (which report expresses an unqualified opinion with respect to the consolidated financial statements and includes an explanatory paragraph relating to a change in method of accounting for uncertainty in income taxes and accounting for deferred acquisition costs associated with internal replacements in 2007), which is incorporated by reference herein. Such financial statements and financial statement schedules have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.