<PAGE>
As Filed with the Securities and Exchange Commission on April 15, 1998.
File No. 33-13735
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2
TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
A. Exact name of trust: ICMG Registered Variable Life Separate Account One
B. Name of depositor: Hartford Life and Annuity Insurance Company
C. Complete address of depositor's principal
executive offices: P.O. Box 2999
Hartford, CT 06104-2999
D. Name and complete address of agent for service:
Marianne O'Doherty, Esq.
Hartford Life
P.O. Box 2999
Hartford, 06104-2999
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
--------
X on May 1, 1998, pursuant to paragraph (b) of Rule 485
--------
60 days after filing pursuant to paragraph (a)(1) of Rule 485
--------
on May 1, 1998, pursuant to paragraph (a)(1) of Rule 485
--------
If appropriate check the following:
this post-effective amendment designates a new effective date for
-------- a previously filed post-effective amendment.
E. Title and amount of securities being registered: Group Flexible Premium
Variable Life Insurance Policies. Pursuant to Rule 24f-2 under the
Investment Company Act of 1940, the Registrant has registered an indefinite
amount of these group flexible premium variable life insurance policies.
F. Proposed maximum aggregate offering price to the public of the securities
being registered: N/A
G. Amount of filing fee: N/A
H. Approximate date of proposed public offering: As soon as practicable after
the effective date of this registration statement.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
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1. Cover page
2. Cover page
3. Not applicable
4. Hartford; Distribution of the Group Policy
5. Summary - The Separate Account
6. The Separate Account
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; The Funds; Detailed Description of Certificate
Benefits and Provisions; Other Matters - Voting Rights,
Dividends
11. Summary; The Funds
12. Summary; The Funds
13. Deductions and Charges From Investment Value;
Distribution of the Group Policy; Federal Tax
Considerations
14. Detailed Description of Certificate Benefits and
Provisions - Enrollment for a Certificate
15. Detailed Description of Certificate Benefits and
Provisions - Allocation of Premium Payments
16. The Funds; Detailed Description of Certificate Benefits
and Provisions - Allocation of Premium Payments
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
17. Summary; Detailed Description of Certificate Benefits
and Provisions - Values Under the Certificate,
Surrender of the Certificate, The Right to Examine the
Certificate
18. The Funds; Detailed Description of Certificate Benefits
and Provisions - Deductions and Charges From Investment
Value; Federal Tax Considerations
19. Other Matters - Statements to Owners
20. Not applicable
21. Detailed Description of Certificate Benefits and
Provisions - Loans
22. Not applicable
23. Safekeeping of the Separate Account Assets
24. Other Matters - Assignment
25. Hartford
26. Not applicable
27. Hartford
28. Hartford; Executive Officers and Directors
29. Hartford
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
34. Not applicable
35. Distribution of the Group Policy
36. Not required by Form S-6
37. Not applicable
38. Distribution of the Group Policy
39. Hartford; Distribution of the Group Policy
40. Not applicable
41. Hartford; Distribution of the Group Policy
42. Not applicable
43. Not applicable
44. Detailed Description of Certificate Benefits and
Provisions - Allocation of Premium Payments
45. Not applicable
46. Detailed Description of Certificate Benefits and
Provisions - Values Under the Certificate
47. The Funds
48. Cover page; Hartford
49. Not applicable
50. The Separate Account
51. Summary; Hartford; Detailed Description of
Certificate Benefits and Provisions
52. The Funds - General
53. Federal Tax Considerations
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
----------- ---------------------
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
<PAGE>
FUTUREVANTAGE
GROUP FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICIES
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CT 06104-2999
[LOGO] TELEPHONE (800) 861-1408
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This Prospectus describes a group flexible premium variable life insurance
policy (the "Group Policies," and each individually a "Group Policy") and
certificates of insurance (the "Certificates," and each individually a
"Certificate") offered by Hartford Life and Annuity Insurance Company
("Hartford"). The Certificates are designed to provide lifetime insurance
coverage to the Insured(s) named in the Certificates, and maximum flexibility in
connection with premium payments and the Death Benefit, together with an
opportunity to participate in the investment experience of ICMG Registered
Variable Life Separate Account One. For a given amount of Death Benefit chosen,
the Owner has considerable flexibility in selecting the timing and amount of
premium payments. In addition to the Initial Premium payment, additional premium
payments are also allowed.
Group Policies may be issued to a Participating Employer or to a trust that is
adopted by a Participating Employer. Eligible employees of Participating
Employers may own Certificates issued under their respective Participating
Employer's Group Policy. The Owners possess all rights and interests under the
Group Policy. The Owners are provided with the Certificates, which describe each
Owner's rights, benefits, and options under the Group Policy.
Sales agents can provide prospective purchasers with individualized sales
illustrations which reflect all the fees and charges associated with the
Certificate options selected.
The Certificates provide for a Death Benefit, pursuant to which Death Proceeds
are payable at the Insured's death. You may select one of two Death Benefit
options. Death Benefit Option A is an amount equal to the larger of (1) the Face
Amount and (2) the Variable Insurance Amount. Death Benefit Option B is an
amount equal to the larger of (1) the Face Amount plus the Cash Value and (2)
the Variable Insurance Amount. The Death Proceeds payable to the Beneficiary
equal the Death Benefit less any Debt outstanding under the Certificate plus any
rider benefits payable.
The Investment Value of a Certificate will also vary up or down to reflect the
investment experience of the Investment Divisions to which Net Premiums have
been allocated. The Owner bears the investment risk for all amounts so
allocated.
The current Investment Divisions and underlying Portfolios of the Funds are:
<TABLE>
<CAPTION>
INVESTMENT DIVISION UNDERLYING PORTFOLIO
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<S> <C>
Hartford Capital Appreciation Investment shares of Class IA of Hartford Capital Appreciation HLS
Division Fund, Inc. ("Hartford Capital Appreciation Fund")
Hartford Bond Investment Division shares of Class IA of Hartford Bond HLS Fund, Inc.
("Hartford Bond Fund")
N&B AMT Balanced Investment Division Balanced Portfolio of the Neuberger & Berman Advisers
Management Trust ("N&B AMT Balanced Portfolio")
N&B AMT Partners Investment Division Partners Portfolio of the Neuberger & Berman Advisers
Management Trust ("N&B AMT Partners Portfolio")
Alger American Small Capitalization Alger American Small Capitalization Portfolio of The Alger
Investment Division American Fund ("Alger American Small Cap Portfolio")
Alger American Growth Investment Division Alger American Growth Portfolio of The Alger American Fund
("Alger American Growth Portfolio")
ML Domestic Money Market Investment Division Merrill Lynch Domestic Money Market Fund of the Merrill
Lynch Variable Series Funds, Inc. ("ML Domestic Money
Market Fund")
ML Prime Bond Investment Division Merrill Lynch Prime Bond Fund of the Merrill Lynch
Variable Series Funds, Inc. ("ML Prime Bond Fund")
ML High Current Income Investment Division Merrill Lynch High Current Income Fund of the Merrill
Lynch Variable Series Funds, Inc. ("ML High Current Income
Fund")
ML Quality Equity Investment Division Merrill Lynch Quality Equity Fund of the Merrill Lynch
Variable Series Funds, Inc. ("ML Quality Equity Fund")
ML Special Value Focus Investment Division Merrill Lynch Special Value Focus Fund of the Merrill
Lynch Variable Series Funds, Inc. ("ML Special Value Focus
Fund")
ML Natural Resources Focus Investment Merrill Lynch Natural Resources Focus Fund of the Merrill
Division Lynch Variable Series Funds, Inc. ("ML Natural Resources
Focus Fund")
ML American Balanced Investment Division Merrill Lynch American Balanced Fund of the Merrill Lynch
Variable Series Funds, Inc. ("ML American Balanced Fund")
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT DIVISION UNDERLYING PORTFOLIO
- -------------------------------------------- ----------------------------------------------------------
<S> <C>
ML Global Strategy Focus Investment Division Merrill Lynch Global Strategy Focus Fund of the Merrill
Lynch Variable Series Funds, Inc. ("ML Global Strategy
Focus Fund")
ML Basic Value Focus Investment Division Merrill Lynch Basic Value Focus Fund of the Merrill Lynch
Variable Series Funds, Inc. ("ML Basic Value Focus Fund")
ML Global Bond Focus Investment Division Merrill Lynch Global Bond Focus Fund of the Merrill Lynch
Variable Series Funds, Inc. ("ML Global Bond Focus Fund")
ML Global Utility Focus Investment Division Merrill Lynch Global Utility Focus Fund of the Merrill
Lynch Variable Series Funds, Inc. ("ML Global Utility
Focus Fund")
ML International Equity Focus Investment Merrill Lynch International Equity Focus Fund of the
Division Merrill Lynch Variable Series Funds, Inc. ("ML
International Equity Focus Fund")
ML Developing Capital Markets Focus Merrill Lynch Developing Capital Markets Focus Fund of the
Investment Division Merrill Lynch Variable Series Funds, Inc. ("ML Developing
Capital Markets Focus Fund")
ML Government Bond Investment Division Merrill Lynch Government Bond Fund of the Merrill Lynch
Variable Series Funds, Inc. ("ML Government Bond Fund")
ML Index 500 Investment Division Merrill Lynch Index 500 Fund of the Merrill Lynch Variable
Series Funds, Inc. ("ML Index 500 Fund")
</TABLE>
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IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY OWN A
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
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THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE
AVAILABLE UNDERLYING FUNDS WHICH CONTAIN A FULL DESCRIPTION OF THOSE FUNDS. ALL
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS MAY 1, 1998.
<PAGE>
2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SPECIAL TERMS......................................................... 4
SUMMARY............................................................... 6
HARTFORD.............................................................. 9
THE SEPARATE ACCOUNT.................................................. 9
THE FUNDS............................................................. 9
General............................................................. 9
Hartford Funds.................................................... 10
Neuberger & Berman Advisers Management Trust...................... 10
The Alger American Fund........................................... 10
Merrill Lynch Variable Series Funds, Inc.......................... 10
The Portfolios...................................................... 11
DETAILED DESCRIPTION OF CERTIFICATE BENEFITS AND PROVISIONS........... 12
General............................................................. 12
Issuance of a Certificate........................................... 12
Premiums............................................................ 13
Premium Payment Flexibility....................................... 13
Allocation of Premium Payments.................................... 13
Accumulation Units................................................ 13
Accumulation Unit Values.......................................... 13
Premium Limitation................................................ 14
Values Under the Certificate........................................ 14
Surrender of the Certificate........................................ 14
Partial Withdrawals............................................... 14
Transfers Among Investment Divisions................................ 14
Amount and Frequency of Transfers................................. 14
Transfers To or From Investment Divisions......................... 15
Asset Rebalancing................................................. 15
Procedures for Telephone Transfer................................. 15
Valuation of Payments and Transfers................................. 15
Processing of Transactions........................................ 15
Loans............................................................... 16
Loan Interest..................................................... 16
Credited Interest................................................. 16
Loan Repayments................................................... 16
Termination Due to Excessive Debt................................. 16
Effect of Loans on Investment Value............................... 16
Death Benefit....................................................... 16
Minimum Death Benefit Testing Procedures.......................... 16
Death Benefit Options............................................. 17
Option Change..................................................... 17
Payment Options................................................... 17
Legal Developments Regarding Income Payments...................... 17
Beneficiary....................................................... 17
Increases and Decreases in Face Amount............................ 18
Benefits at Maturity................................................ 18
Termination of Participation in the Group Policy.................... 18
Lapse and Reinstatement While the Group Policy Is In Effect......... 18
Lapse and Grace Period............................................ 18
Reinstatement..................................................... 18
Enrollment for a Certificate........................................ 19
The Right to Examine the Certificate................................ 19
Deductions from Premium............................................. 19
Front-End Sales Load.............................................. 19
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Premium Related Tax Charge........................................ 19
DAC Tax Charge.................................................... 19
Deductions and Charges from Investment Value........................ 19
Monthly Deduction Amount.......................................... 19
Mortality and Expense Risk Charge................................... 20
Taxes............................................................... 21
OTHER MATTERS......................................................... 21
Additions, Deletions or Substitutions of Investments................ 21
Voting Rights....................................................... 21
Our Rights.......................................................... 21
Statements to Owners................................................ 22
Limit on Right to Contest........................................... 22
Misstatement as to Age or Sex....................................... 22
Assignment.......................................................... 22
Dividends........................................................... 22
Experience Credits.................................................. 22
SUPPLEMENTAL BENEFITS................................................. 22
Maturity Date Extension Rider....................................... 22
EXECUTIVE OFFICERS AND DIRECTORS...................................... 23
DISTRIBUTION OF THE GROUP POLICY...................................... 27
SAFEKEEPING OF THE SEPARATE ACCOUNT ASSETS............................ 27
FEDERAL TAX CONSIDERATIONS............................................ 27
General............................................................. 27
Taxation of Hartford and the Separate Account....................... 27
Income Taxation of Certificate Benefits -- Generally................ 28
Diversification Requirements........................................ 28
Ownership of the Assets in the Separate Account..................... 28
Tax Deferral During Accumulation Period............................. 29
Modified Endowment Contracts........................................ 29
Federal Income Tax Withholding...................................... 30
Other Tax Considerations............................................ 30
LEGAL PROCEEDINGS..................................................... 30
EXPERTS............................................................... 30
REGISTRATION STATEMENT................................................ 30
FINANCIAL STATEMENTS..................................................
</TABLE>
THE GROUP POLICIES MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER OR OTHER PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
an Investment Division.
ADJUSTABLE LOAN INTEREST RATE: The interest rate charged on Loans that is
adjusted from time to time by Hartford. The method of calculation of the
Adjustable Loan Interest Rate is described later in this Prospectus.
ATTAINED AGE: The Issue Age plus the period since the Coverage Date.
BENEFICIARY: The person so designated by the Owner in the Certificate.
CASH SURRENDER VALUE: The Cash Value, less Debt, less any charges accrued but
not yet deducted.
CASH VALUE: The Investment Value plus the Loan Account Value.
CERTIFICATE: The form evidencing and describing the Owner's rights, benefits,
and options under the Group Policy. The Certificate will describe, among other
things, (i) the benefits for the named Insured, (ii) to whom the benefits are
payable and (iii) the limits and other terms of the Group Policy as they pertain
to the Insured.
CERTIFICATE ANNIVERSARY: An anniversary of the Coverage Date.
CHARGE DEDUCTION DIVISION: An Investment Division from which all charges are
deducted if so designated in the Enrollment Form or later elected.
CODE: The Internal Revenue Code of 1986, as amended.
COVERAGE DATE: The date insurance under the Certificate is effective as to an
Insured and from which Coverage Months and Coverage Years are determined.
COVERAGE MONTH(S): The 1-month period following the Coverage Date and each
anniversary thereof.
COVERAGE YEAR(S): The 12-month period following the Coverage Date and each
anniversary thereof.
CUSTOMER SERVICE CENTER: The service area of Hartford Life and Annuity Insurance
Company.
DEATH BENEFIT: The Death Benefit option in effect determines how the Death
Benefit is calculated. The two Death Benefit options are described under
"Detailed Description of Certificate Benefits and Provisions -- Death Benefit."
DEATH PROCEEDS: The Death Benefit less outstanding Debt plus any rider benefits
payable.
DEBT: The aggregate amount of outstanding Loans, plus any interest accrued at
the Adjustable Loan Interest Rate.
ENROLLMENT FORM: The form required to be filled out prior to issuance of a
Certificate. The specific form used will depend on the underwriting
classification and plan design.
FACE AMOUNT: The minimum Death Benefit as long as the Certificate is in force.
It is specified at issue and may be changed after issue on request, or due to a
change in Death Benefit option or a partial withdrawal.
FUNDS: The registered open-end management investment companies in which assets
of the Investment Divisions of the Separate Account may be invested.
GENERAL ACCOUNT: The assets of Hartford other than those allocated to the
Separate Account. Premium Payments allocated to the General Account become a
part of the general assets of Hartford. Hartford invests the assets of the
General Account in accordance with applicable law governing the investments of
insurance company general accounts.
GRACE PERIOD: The 61-day period, measured in calendar days, following the date
We mail to the Owner notice that the Cash Surrender Value is insufficient to pay
the charges due. Unless the Owner has given Us written notice of the termination
in advance of the date of termination of any Certificate, insurance will
continue in force during this period.
GROUP POLICY: The group flexible premium variable life insurance policy issued
by Hartford and described in this Prospectus.
HARTFORD (ALSO REFERRED TO AS "WE," "US," "OUR"): Hartford Life and Annuity
Insurance Company.
IN WRITING: In a written form satisfactory to Us.
INITIAL PREMIUM: The amount of premium initially payable shown in Your
Certificate.
INSURED: The person on whose life the Certificate is issued. The Insured is
identified in the Certificate.
INVESTMENT DIVISION: A separate division of the Separate Account which invests
exclusively in the shares of a specified Portfolio of a Fund.
INVESTMENT VALUE: The sum of the values of assets in the Investment Divisions
under the Certificate.
ISSUE AGE: The Insured's age on the birthday nearest to the Coverage Date.
LOAN: Any amount borrowed against the Investment Value under a Certificate.
LOAN ACCOUNT: That portion of Hartford's General Account to which amounts are
transferred as a result of a Loan. The Loan Account is credited with interest
and does not participate in the investment experience of the Separate Account.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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LOAN ACCOUNT VALUE: The amounts of the Investment Value transferred to (or from)
the Loan Account to secure Loans, plus interest accrued at the daily equivalent
of an annual rate equal to the Adjustable Loan Interest Rate actually charged,
reduced by not more than 1%.
MATURITY DATE: The date on which an Insured's coverage matures as shown in the
Certificate. We will pay the Cash Surrender Value, if any, if the Insured is
living on the Maturity Date, upon surrender of the Certificate to Hartford.
MONTHLY DEDUCTION AMOUNT: The fees and charges deducted from the Investment
Value on the Processing Date.
NET AMOUNT AT RISK: The Death Benefit less the Cash Value.
NET PREMIUM: The amount of premium actually credited to the Investment
Divisions.
NYSE: The New York Stock Exchange.
OWNER (ALSO REFERRED TO AS "YOU" OR "YOUR"): The person or legal entity so
designated in the Enrollment Form or as subsequently changed. The Owner may be
someone other than the Insured. The Owner possesses all rights under the Group
Policy with respect to the Certificate.
PARTICIPATING EMPLOYER: A participating employer, or a trust sponsored by a
participating employer, to which Hartford issues the Group Policy described in
this Prospectus.
PORTFOLIO: A separate mutual fund, series or portfolio of the Funds. There are
currently 21 Portfolios available under the Group Policy.
PRO RATA BASIS: An allocation method based on the proportion of the Investment
Value in each Investment Division.
PROCESSING DATE(S): The day(s) on which We deduct charges from the Investment
Value. The first Processing Date is the Coverage Date. There is a Processing
Date each month. Later Processing Dates are on the same calendar day as the
Coverage Date, or on the last day of any month which has no such calendar day.
PROCESSING PERIOD: The period from the Coverage Date to the next Processing
Date, and thereafter, the period from one Processing Date to the next.
SEC: U.S. Securities and Exchange Commission.
SEPARATE ACCOUNT: ICMG Registered Variable Life Separate Account One, an account
established by Hartford to separate the assets funding the Group Policies from
other assets of Hartford.
VALUATION DAY: Each business day that Hartford and each of the Funds value their
respective investment portfolios, unless the Certificate indicates otherwise. A
business day is any day the NYSE is open for trading or any day the SEC requires
mutual funds, unit investment trusts or other investment portfolios to be
valued. The value of the Separate Account is determined at the close of the NYSE
(generally 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE INSURANCE AMOUNT: The Cash Value multiplied by the applicable variable
insurance factor provided in the Certificate.
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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SUMMARY
THE GROUP POLICY
The Group Policies, and the Certificates, offered by this Prospectus are
funded by the Separate Account, a separate account established by Hartford
pursuant to Connecticut insurance law and organized as a unit investment trust
registered under the Investment Company Act of 1940 (the "1940 Act"). The
Separate Account has 21 Investment Divisions dedicated to the Group Policies,
each of which invests solely in a corresponding Portfolio of the Funds.
Depending upon the state of issuance of Your Certificate and the applicable
provisions of Your Certificate, Your initial Net Premium will, when Your
Certificate is issued, either be (1) invested in the ML Domestic Money Market
Investment Division during the right to examine period or (2) invested
immediately in Your chosen Investment Divisions, upon Our receipt thereof. IF
YOUR INITIAL NET PREMIUM IS INVESTED IMMEDIATELY IN YOUR CHOSEN INVESTMENT
DIVISIONS, YOU WILL BEAR FULL INVESTMENT RISK FOR ANY AMOUNTS ALLOCATED TO THE
INVESTMENT DIVISIONS DURING THE RIGHT TO EXAMINE PERIOD. Please note that this
automatic immediate investment feature only applies if Your Certificate so
specifies. Please check with Your agent to determine the status of Your
Certificate. You must fill out and send Us the appropriate form In Writing or
comply with other designated Hartford procedures if You would like to change how
subsequent Net Premiums are allocated. See "Allocation of Premium Payments,"
page 13.
Pursuant to the Certificates, each selected Investment Division is credited
with Accumulation Units and each selected Investment Division's assets are
invested in the applicable underlying Portfolio. Subject to certain
restrictions, an Owner may transfer amounts among the available Investment
Divisions. See "Detailed Description of Certificate Benefits and Provisions --
Transfers Among Investment Divisions," page 14.
The Group Policies are first and foremost life insurance policies and the
Certificates evidencing an Owner's interest in the Group Policies provide for
death benefits, cash values, and other features traditionally associated with
life insurance. The Group Policies are "flexible premium" because, once the
desired level and pattern of the Death Benefit have been determined, a purchaser
has considerable flexibility in the selection of the timing and amount of
premium to be paid. The Group Policies are called "variable" because, unlike the
fixed benefits of an ordinary whole life insurance policy, the Investment Value
under a Certificate will, and the Death Benefit may, increase or decrease
depending on the investment experience of the Investment Divisions to which the
Net Premiums have been allocated. See "Detailed Description of Certificate
Benefits and Provisions -- Death Benefit," page 16.
DEATH BENEFIT
The Certificates provide for two Death Benefit options. Under Death Benefit
Option A, the Death Benefit is an amount equal to the larger of (1) the Face
Amount and (2) the Variable Insurance Amount. Under Death Benefit Option B, the
Death Benefit is an amount equal to the larger of (1) the Face Amount plus the
Cash Value and (2) the Variable Insurance Amount. At the death of the Insured,
We will pay the Death Proceeds to the Beneficiary. The Death Proceeds equal the
Death Benefit less outstanding Debt plus any rider benefits payable under the
Certificate. See "Detailed Description of Certificate Benefits and Provisions --
Death Benefit," page 16.
PREMIUM
You have considerable flexibility as to when and in what amounts You pay
premiums.
No premium payment will be accepted which causes the Certificate to fail to
meet the tax qualification guidelines for life insurance under the Code.
GENERAL ACCOUNT
Amounts allocated to the Loan Account to secure a Loan become part of the
General Account assets of Hartford. Hartford invests the assets of the General
Account in accordance with applicable law governing the investments of insurance
company general accounts. See "Detailed Description of Certificate Benefits and
Provisions -- Loans," page 16.
DEDUCTIONS FROM PREMIUM
Prior to the allocation of premiums to the selected Investment Divisions, a
deduction as a percentage of premium is made for the front-end sales load, state
premium taxes, and the Deferred Acquisition Cost ("DAC") tax charge. The amount
of each premium allocated among the Investment Divisions is Your Net Premium.
FRONT-END SALES LOAD
When We receive a Premium Payment, We deduct a front-end sales load. The
current front-end sales load is 6.75% of any premium paid for Coverage Years 1
through 7 and 4.75% of any premium paid in Coverage Years 8 and later. The
maximum front-end sales load is 9% of any premium paid for Coverage Years 1
through 7 and 7% of any premium paid in Coverage Years 8 and later.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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The front-end sales load covers expenses relating to the sale and
distribution of the Certificates and may be reduced for certain sales of the
Certificates under circumstances which result in savings of such sales and
distribution expenses. For more information concerning the front-end sales load,
see "Detailed Description of Certificate Benefits and Provisions -- Deductions
from Premium," page 19.
LIMITS ON FRONT-END SALES LOAD
Certain insurance laws and regulations limit the front-end sales load which
can be assessed against the Certificates. The front-end sales load assessed in
the Certificates complies with these limitations.
PREMIUM RELATED TAX CHARGE
We deduct a percentage of each premium to cover taxes assessed against
Hartford by various states and jurisdictions that are attributable to premiums.
The percentage actually deducted will vary by locale depending on the tax rates
in effect there. The range is generally between 0% and 4%.
DAC TAX CHARGE
Hartford deducts 1.25% of each premium to cover a federal premium tax
assessed against Hartford. This charge is reasonable in relation to Hartford's
federal income tax burden, under Code Section 848, resulting from the receipt of
premiums. We will adjust the charge based on changes in the applicable tax law.
DEDUCTIONS AND CHARGES FROM
INVESTMENT VALUE
As with many other types of insurance policies, each Certificate will have
an Investment Value. The Investment Value of the Certificate will increase or
decrease to reflect the investment experience of the chosen Investment
Divisions, deductions for the Monthly Deduction Amount and any amounts
transferred from the Investment Divisions into the Loan Account. There is no
minimum guaranteed Investment Value and the Owner bears the risk of the
investment in the underlying Portfolios. See "Detailed Description of
Certificate Benefits and Provisions -- Deductions and Charges from Investment
Value," page 19.
We will subtract amounts from Your Investment Value to provide for the
Monthly Deduction Amount. These will be taken from the Charge Deduction
Division, as specified in the Certificate. If there is insufficient Investment
Value in the Charge Deduction Division:
(1) Hartford will apply the Investment Value of the Charge Deduction Division to
the charges due and set the Investment Value in the Charge Deduction
Division to zero; and
(2) any additional amount due will be allocated among the remaining Investment
Divisions on a Pro Rata Basis.
If no Charge Deduction Division is selected, any amounts due will be taken
on a Pro Rata Basis from Your chosen Investment Divisions on each Processing
Date.
The Monthly Deduction Amount equals:
(a) the administrative expense charge; plus
(b) the charges for cost of insurance; plus
(c) the charges for additional benefits provided by rider, if any.
Hartford may also set up a provision for income taxes imposed on the assets
of the Separate Account. See "Deductions and Charges from Investment Value,"
page 19, and "Federal Tax Considerations," page 26.
MORTALITY AND EXPENSE RISK CHARGE
A charge is made for mortality and expense risks assumed by Hartford.
Hartford currently deducts a daily charge for Coverage Years 1 through 10 at an
effective annual rate of .65% of the value of each Investment Division's assets
and for Coverage Years 11 and later at an effective annual rate of .50% of each
Investment Division's assets. In no event will the charge exceed .65% of an
Investment Division's assets on an annual basis.
CHARGES AGAINST THE FUNDS
The Separate Account purchases Fund shares at net asset value. The net asset
value of those shares reflects investment advisory fees and administrative and
other expenses deducted from the assets of the Portfolios. Applicants should
review the prospectuses for the Funds which accompany this Prospectus for a
description of the charges assessed against the assets of each of the
Portfolios.
The following table shows annual operating expenses after waivers or
reimbursements for 1997:
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL OPERATING
OTHER EXPENSES (AFTER
MANAGEMENT EXPENSES WAIVERS AND/OR
FEE (AFTER (AFTER REIMBURSEMENTS)
PORTFOLIO NAME WAIVERS) REIMBURSEMENTS) (1)
- -------------------------------------------------- ---------- --------------- ---------------
<S> <C> <C> <C>
Hartford Capital Appreciation Fund................ 0.620% 0.020% 0.640%
Hartford Bond Fund................................ 0.490% 0.020% 0.510%
</TABLE>
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL OPERATING
OTHER EXPENSES (AFTER
MANAGEMENT EXPENSES WAIVERS AND/OR
FEE (AFTER (AFTER REIMBURSEMENTS)
PORTFOLIO NAME WAIVERS) REIMBURSEMENTS) (1)
- -------------------------------------------------- ---------- --------------- ---------------
<S> <C> <C> <C>
N&B AMT Balanced Portfolio (2).................... 0.850% 0.190% 1.040%
N&B AMT Partners Portfolio (2).................... 0.800% 0.060% 0.860%
Alger American Small Cap Portfolio................ 0.850% 0.040% 0.890%
Alger American Growth Portfolio................... 0.750% 0.040% 0.790%
ML Domestic Money Market Fund (3)................. 0.500% 0.040% 0.540%
ML Prime Bond Fund (3)............................ 0.420% 0.050% 0.470%
ML High Current Income Fund (3)................... 0.470% 0.070% 0.540%
ML Quality Equity Fund (3)........................ 0.440% 0.040% 0.480%
ML Special Value Focus Fund (3)................... 0.750% 0.050% 0.800%
ML Natural Resources Focus Fund (3)............... 0.650% 0.160% 0.810%
ML American Balanced Fund (3)..................... 0.550% 0.050% 0.600%
ML Global Strategy Focus Fund (3)................. 0.650% 0.080% 0.730%
ML Basic Value Focus Fund (3)..................... 0.600% 0.050% 0.650%
ML Global Bond Focus Fund (3)..................... 0.600% 0.130% 0.730%
ML Global Utility Focus Fund (3).................. 0.600% 0.070% 0.670%
ML International Equity Focus Fund (3)............ 0.750% 0.150% 0.900%
ML Developing Capital Markets Focus Fund (3)(4)... 0.830% 0.420% 1.250%
ML Government Bond Fund (3)(4).................... 0.440% 0.070% 0.510%
ML Index 500 Fund (3)(4).......................... 0.240% 0.100% 0.340%
</TABLE>
- ----------
(1) Management Fees generally represent the fees paid to the investment adviser
or its affiliate for investment and administrative services provided. Other
Expenses are expenses (other than Management Fees) which are deducted from
the fund including legal, accounting and custodian fees. For complete
description of the nature of the services provided in consideration of the
operating expenses deducted, please see the Fund prospectuses.
(2) Neuberger & Berman Advisers Management Trust is divided into Portfolios,
each of which invests all of its net investable assets in a corresponding
series of Advisers Managers Trust. The figures reported under "Management
Fee" include the aggregate of the administration fees paid by the Portfolio
and the management fee paid by its corresponding series of Advisers Managers
Trust. Similarly, "Other Expenses" includes all other expenses of the
Portfolio and its corresponding series of Advisers Managers Trust.
(3) Expense information for the Portfolios of Merrill Lynch Variable Series
Funds, Inc. is for Class A shares of those Portfolios.
(4) Merrill Lynch Asset Management, L.P. ("MLAM") and Merrill Lynch Life Agency,
Inc. have entered into a reimbursement agreement that limits the operating
expenses, exclusive of any distribution fees imposed on shares of Class B
common stock, paid by each portfolio of Merrill Lynch Variable Series Funds,
Inc. in a given year to 1.25% of its average daily net assets. During 1997,
MLAM voluntarily waived management fees for the ML Developing Capital
Markets Focus Fund, ML Government Bond Fund, and ML Index 500 Fund in
amounts totaling, respectively, 0.17%, 0.06%, and 0.06% of those Funds'
average daily net assets of Class A shares; absent these waivers, the total
expenses for Class A shares of the ML Developing Capital Markets Focus Fund,
ML Government Bond Fund, and ML Index 500 Fund would have been 1.42%, 0.57%,
and 0.40%, respectively.
LOANS
An Owner may obtain a cash Loan from Hartford. The Loan is secured by the
Owner's Certificate. The maximum Loan amount is equal to the sum of the Cash
Surrender Value plus outstanding Debt, multiplied by .90, less outstanding Debt.
See "Detailed Description of Certificate Benefits and Provisions -- Loans," page
16.
THE RIGHT TO EXAMINE THE CERTIFICATE
An applicant has a limited right to return his or her Certificate. Subject
to applicable state regulations, if the applicant returns the Certificate within
10 calendar days after delivery of the Certificate Hartford will return to the
applicant, within seven days thereafter, either (i) the premium paid or (ii) the
Cash Value under the Certificate plus charges deducted. See "The Right to
Examine the Certificate," page 19.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
TAX CONSEQUENCES
The current Federal tax law generally excludes all Death Benefit payments
from the gross income of the Beneficiary under the Certificate. See "Federal Tax
Considerations," page 27.
There are circumstances when the Certificate may become a Modified Endowment
Contract under Federal tax law. If it does, Loans and other pre-death
distributions are includable in gross income on an income-first basis. A 10%
penalty tax may be imposed on income distributed before the insured attains age
59 1/2. Prospective purchasers and Owners are advised to consult a qualified tax
adviser before taking steps that may affect whether the Certificate becomes a
Modified Endowment Contract. Hartford has instituted procedures to monitor
whether a Certificate may become a modified endowment contract after issue. See
"Federal Tax Considerations -- Modified Endowment Contract" for a discussion of
the "seven-pay" test, page 29.
HARTFORD
Hartford Life and Annuity Insurance Company ("Hartford") is a stock life
insurance company engaged in the business of writing life insurance and
annuities, both individual and group, in all states of the United States and the
District of Columbia, except New York. Effective on January 1, 1998, Hartford's
name changed from ITT Hartford Life and Annuity Insurance Company to Hartford
Life and Annuity Insurance Company. Hartford was originally incorporated under
the laws of Wisconsin on January 9, 1956, and was subsequently redomiciled to
Connecticut. Its offices are located in Simsbury, Connecticut; however, its
mailing address is P.O. Box 2999, Hartford, CT 06104-2999. Hartford is a
subsidiary of Hartford Fire Insurance Company, one of the largest multiple lines
insurance carriers in the United States. Hartford is ultimately controlled by
The Hartford Financial Services Group, Inc., a Delaware corporation.
Hartford is rated A+ (superior by A.M. Best and Company, Inc., on the basis
of its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps on the basis of its claims paying
ability. These ratings do not apply to the investment performance of the
Sub-Accounts. The ratings apply to Hartford's ability to meet its insurance
obligations, including those described in this Prospectus.
THE SEPARATE ACCOUNT
ICMG Registered Variable Life Separate Account One is a separate account
established by Hartford on October 9, 1995, under the insurance laws of the
State of Connecticut, pursuant to a resolution of Hartford's Board of Directors.
The Separate Account is organized as a unit investment trust and is registered
with the SEC under the 1940 Act. Such registration does not signify that the SEC
supervises the management or the investment practices or policies of the
Separate Account. The Separate Account meets the definition of a "separate
account" under the federal securities laws.
Under Connecticut law, the assets of the Separate Account are held
exclusively for the benefit of Owners and persons entitled to payments under the
Group Policies and the Certificates and owners of any other policies which may
be available through the Separate Account. The assets of the Separate Account
are owned by Hartford and the obligations under the Group Policies and the
Certificates are obligations of Hartford. These assets are held separately from
the other assets of Hartford and income, gains and losses incurred on the assets
in the Separate Account, whether or not realized, are credited to or charged
against the Separate Account without regard to other income, gains or losses of
Hartford (except to the extent that assets in the Separate Account exceed the
reserves and other liabilities of the Separate Account). Therefore, the
investment performance of the Separate Account is entirely independent of the
investment performance of the General Account assets or any other separate
account maintained by Hartford.
The Separate Account has 21 Investment Divisions dedicated to the Group
Policies, each of which invests solely in a corresponding Portfolio of the
Funds. Additional Investment Divisions may be established or current Investment
Divisions may deleted at the discretion of Hartford. The Separate Account may
include other divisions which will not be available under the Group Policies.
THE FUNDS
GENERAL
The shares of the Portfolios are sold by the Funds to the Separate Account.
The assets of the Separate Account attributable to the Group Policies are
invested exclusively in the Investment Divisions. An Owner may allocate Net
Premium payments among the Investment Divisions. Owners should review the brief
descriptions of the investment objectives of each of the Portfolios in
connection with that allocation. See "The Funds -- The Portfolios," page 11.
Each Fund continually issues an unlimited number of full and fractional
shares of beneficial interest in the relevant Portfolios. In addition to being
offered to the Separate Account, each Fund's shares are or may be offered to
other separate accounts funding variable annuity contracts and variable life
insurance policies issued by Hartford or its affiliates and to separate accounts
of other insurance companies. It is conceivable that in the future it may become
disadvantageous for both variable annuity and variable life insurance
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
separate accounts or for separate accounts of other life insurance companies to
invest in shares of the Funds simultaneously. Although neither Hartford nor any
of the Funds currently foresee any such disadvantage, each Fund's Board of
Directors or Board of Trustees, as applicable (collectively, the "Boards"), will
monitor events in order to identify any material conflict between different
variable annuity and variable life owners and to determine what action, if any,
should be taken in response thereto, including the possible withdrawal of the
Separate Account's participation in any of the Funds. Material conflicts could
result from such things as (1) changes in state insurance law, (2) changes in
federal income tax law, (3) changes in the investment management of any
Portfolio, or (4) differences between voting instructions given by variable
annuity and variable life owners. If the Boards were to conclude that separate
underlying funds should be established for variable annuity and variable life
insurance separate accounts, Hartford will bear the attendant expenses.
All investment income of, and other distributions to, each Investment
Division arising from the applicable Portfolio are reinvested in shares of that
Portfolio at net asset value. Hartford will purchase Portfolio shares in
connection with Net Premium payments allocated to the applicable Investment
Division in accordance with Owners' instructions and will redeem Portfolio
shares to meet obligations under the Group Policies and the Certificates or make
adjustments in reserves, if any. The Funds are required to redeem Portfolio
shares at net asset value and generally to make payment within seven (7)
calendar days.
Applicants should read the Fund prospectuses accompanying this Prospectus in
connection with the purchase of a Certificate.
HARTFORD FUNDS
The Separate Account currently invests in the Hartford Funds, a family of
funds comprised of twelve separate diversified open-end management investment
companies registered under the 1940 Act and organized as Maryland corporations.
Two of the Hartford Funds, the Hartford Capital Appreciation Fund and the
Hartford Bond Fund are available as part of FutureVantage.
HL Advisors serves as the investment adviser to each of the Hartford Funds.
In addition, HL Advisors has entered an investment services agreement with
Hartford Investment Management Company, Inc. ("HIMCO"), pursuant to which HIMCO
will provide certain investment services to Hartford Bond Fund. Wellington
Management Company, L.L.P. ("Wellington Management") serves as sub-investment
adviser for Hartford Capital Appreciation Fund Inc.
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
The Separate Account currently invests in Neuberger & Berman Advisers
Management Trust ("Neuberger & Berman AMT"), a diversified open-end management
investment company registered under the 1940 Act and organized as a Delaware
business trust. Neuberger & Berman AMT consists of several portfolios, including
the Balanced Portfolio and Partners Portfolio available as part of
FutureVantage.
Each portfolio of Neuberger & Berman AMT invests its assets in its
corresponding series of the Advisers Managers Trust, which is also an open-end
management investment company registered under the 1940 Act and is organized as
a New York common law trust. The investment performance of the Limited Maturity
Bond Portfolio, Balanced Portfolio and Partners Portfolio will directly
correspond with the investment performance of the corresponding series of the
Advisers Managers Trust. This "Master/Feeder Fund " structure is different from
that of many other investment companies which directly acquire and manage their
own portfolios of securities.
Neuberger & Berman Management Inc. serves as the investment manager of each
series of Advisers Managers Trust, as administrator of each portfolio of
Neuberger & Berman AMT, and as distributor of the shares of each portfolio of
Neuberger & Berman AMT. Neuberger & Berman, LLC serves as the sub-adviser for
each series of Advisers Managers Trust.
THE ALGER AMERICAN FUND
The Separate Account currently invests in shares of The Alger American Fund,
a diversified open-end management investment company registered under the 1940
Act and organized as a Massachusetts business trust. The Alger American Fund
consists of six series, including the Alger American Small Capitalization and
Alger American Growth Portfolios available as part of FutureVantage.
The Alger American Fund is managed by Alger Management, a subsidiary of Fred
Alger & Company, Incorporated, which is in turn a subsidiary of Alger
Associates, Inc., a financial services holding company. Alger Management has
been in the business of providing investment advisory services since 1964.
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
The Separate Account currently invests in shares of Merrill Lynch Variable
Series Funds, Inc., an open-end management investment company which has a wide
range of investment objectives among its sixteen separate funds, including the
eighteen available as part of FutureVantage.
Merrill Lynch Variable Series Funds, Inc., is advised by Merrill Lynch Asset
Management, L.P., an indirect wholly-owned subsidiary of Merrill Lynch & Co.,
Inc. The general partner of Merrill Lynch Asset Management, L.P. is Princeton
Services, Inc., a wholly-owned subsidiary of Merrill Lynch & Co., Inc.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
THE PORTFOLIOS
HARTFORD CAPITAL APPRECIATION FUND
Seeks to achieve growth of capital by investing in equity securities
selected solely on the basis of potential for capital appreciation.
HARTFORD BOND FUND
Seeks to achieve maximum current income consistent with preservation of
capital by investing primarily in fixed-income securities. Up to 20% of the
total assets of the Portfolio may be invested in debt securities rated in the
highest category below investment grade ("Ba" by Moody's Investor Services, Inc.
or "BB" by Standard & Poor's) or, if unrated, are determined to be of comparable
quality by the Portfolio's investment adviser. Securities rated below investment
grade are commonly referred to as "high yield-high risk securities" or "junk
bonds." For more information concerning the risks associated with investing in
such securities, please refer to the section in the accompanying prospectus for
the Hartford Funds entitled "High Yield-High Risk Debt Securities."
N&B AMT BALANCED PORTFOLIO
Seeks to achieve long-term capital growth and reasonable current income
without undue risk to principal. It is anticipated that the Portfolio's
investment program will normally be managed so that approximately 60% of its
total assets will be invested in common and preferred stocks and the remaining
assets will be invested in debt securities primarily investment grade. However,
depending on the investment manager's views regarding current market trends, the
common stock portion of its portfolio investments may be adjusted downward to as
low as 50% or upward to as high as 70%. At least 25% of its assets will be
invested in fixed income securities.
N&B AMT PARTNERS PORTFOLIO
Seeks to achieve capital growth. This Portfolio's investment approach is to
invest principally in common stocks of medium to large capitalization
established companies, using a value-oriented investment approach designed to
increase capital with reasonable risk. Its investment program seeks securities
believed to be undervalued based on strong fundamentals such as low
price-to-earnings ratios, consistent cash flow and the company's track record
through all parts of the market cycle.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
Seeks long-term capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, primarily of companies with total market
capitalization within the range of companies included in the Russell 2000 Growth
Index or the S&P SmallCap 600 Index, updated quarterly.
ALGER AMERICAN GROWTH PORTFOLIO
Seeks long-term capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, primarily of companies with total market
capitalization of $1 billion or greater.
ML DOMESTIC MONEY MARKET FUND
Seeks to preserve capital, maintain liquidity and achieve the highest
possible current income consistent with the foregoing objectives by investing in
short-term domestic money market securities.
ML PRIME BOND FUND
Seeks as high a level of current income as is consistent with its investment
policies and prudent investment management, and, as a secondary objective,
capital appreciation to the extent consistent with the foregoing objective. The
Portfolio invests primarily in long-term corporate bonds rated A or better by
either Moody's Investors Service, Inc. or Standard & Poor's Ratings Group.
ML HIGH CURRENT INCOME FUND
Seeks as high a level of current income as is consistent with its investment
policies and prudent investment management, and as a secondary objective,
capital appreciation when consistent with the foregoing objective. The Portfolio
invests principally in fixed-income securities that are rated in the lower
rating categories of the established rating services or in unrated securities of
comparable quality, including "junk bonds".
ML QUALITY EQUITY FUND
Seeks the highest total investment return consistent with prudent risk. The
Portfolio uses a fully managed investment policy utilizing equity securities,
primarily common stocks of large-capitalization companies, as well as investment
grade debt and convertible securities.
ML SPECIAL VALUE FOCUS FUND
Seeks long-term capital growth by investing in a diversified portfolio of
securities, primarily common stocks, of relatively small companies that Merrill
Lynch Variable Series Funds, Inc. believes have special investment value, and of
emerging growth companies regardless of size.
ML NATURAL RESOURCES FOCUS FUND
Seeks long-term growth of capital and protection of the purchasing power of
shareholders' capital by investing primarily in equity securities of domestic
and foreign companies with substantial natural resource assets.
ML AMERICAN BALANCED FUND
Seeks a level of current income and a degree of stability of principal not
normally available from an investment solely in equity securities and the
opportunity for capital appreciation greater than is normally available from an
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
investment solely in debt securities by investing in a balanced portfolio of
fixed income and equity securities.
ML GLOBAL STRATEGY FOCUS FUND
Seeks a high total investment return by investing primarily in a portfolio
of equity and fixed income securities, including convertible securities, of U.S.
and foreign issuers.
ML BASIC VALUE FOCUS FUND
Seeks capital appreciation and, secondarily, income by investing in
securities, primarily equities, that management of the Fund believes are
undervalued and therefore represent basic investment value.
ML GLOBAL BOND FOCUS FUND
Seeks a high total investment return by investing in a global portfolio of
fixed income securities denominated in various currencies, including
multinational currency units.
ML GLOBAL UTILITY FOCUS FUND
Seeks both capital appreciation and current income through investment of at
least 65% of its total assets in equity and debt securities issued by domestic
and foreign companies which are, in the opinion of the investment adviser,
primarily engaged in the ownership or operation of facilities used to generate,
transmit or distribute electricity, telecommunications, gas or water.
ML INTERNATIONAL EQUITY FOCUS FUND
Seeks capital appreciation and, secondarily, income through investing in a
diversified portfolio of equity securities of issuers in countries other than
the United States.
ML DEVELOPING CAPITAL MARKETS FOCUS FUND
Seeks long-term capital appreciation by investing in securities, principally
equities, of issuers in countries having smaller capital markets. For purposes
of its objective, the Portfolio considers countries having smaller capital
markets to be all countries other than the four countries having the largest
equity market capitalizations.
ML GOVERNMENT BOND FUND
Seeks the highest possible current income consistent with the protection of
capital afforded by investing in debt securities issued or guaranteed by the
United States Government, its agencies or instrumentalities.
ML INDEX 500 FUND
Seeks to provide investment results that, before expenses, correspond to the
aggregate price and yield performance of the Standard & Poor's Composite Stock
Price Index.
There is no assurance that any Portfolio will achieve its stated objectives.
Owners are also advised to read the prospectuses for each of the Funds
accompanying this Prospectus for more detailed information. Each Fund is subject
to certain investment restrictions which may not be changed without the approval
of a majority of the shareholders of the Fund. See the accompanying prospectuses
for each of the Funds.
DETAILED DESCRIPTION
OF CERTIFICATE BENEFITS
AND PROVISIONS
GENERAL
This Prospectus describes a flexible premium group variable life insurance
policy where the Owner has considerable flexibility in selecting the timing and
amount of premium payments.
ISSUANCE OF A CERTIFICATE
Certificates will only be offered to eligible employees when provided by the
Participating Employer. Individuals wishing to purchase a Certificate must
complete an Enrollment Form In Writing, which must be received by Our Customer
Service Center before a Certificate will be issued. A Certificate will not be
issued with a specified Face Amount of less than the minimum Face Amount.
Acceptance is subject to Hartford's underwriting rules then in effect. Hartford
reserves the right to reject an Enrollment Form for any reason permitted by law.
There are two circumstances under which a Certificate may be issued with a
backdated Coverage Date. The first involves Group Policy rollovers from Section
1035 exchanges under the Code. Backdating will occur in order to prevent a gap
in coverage under the Certificate. Charges and deductions (other than those of
the Portfolios) will be made for the period the Coverage Date is backdated;
however, the Owner will not experience investment return during that time.
Backdating will also occur when an application accompanied by the Initial
Premium is received by Us but issuance of a Certificate is subject to Our
insurance underwriting requirements. The initial Net Premium will be allocated
to the ML Domestic Money Market Investment Division during the underwriting
period. See "Premiums -- Allocation of Premium Payments" below. If the Insured
meets Our underwriting requirements, a Certificate will be issued with a
backdated Coverage Date. Charges and deductions (other than those of the
Portfolios) will be made for the backdated period. If the Insured does not meet
Our underwriting requirements, no Certificate will be issued and no coverage
will have been in effect. A conditional receipt will be given to the applicant
reflecting receipt of the Initial Premium
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
and outlining any interim coverage in effect until the Certificate is either
issued or declined.
Backdating may only be permitted in certain states.
PREMIUMS
PREMIUM PAYMENT FLEXIBILITY
A significant feature of the Certificate is that once the desired level and
pattern of the Death Benefit have been determined, the Owner has considerable
flexibility in the selection of the timing and amount of premiums to be paid and
can choose the level of premiums, within a range determined by Hartford, based
on the Face Amount of the Certificate, the Insured's sex (except where unisex
rates apply), Issue Age, and the Insured's risk classification.
A minimum Initial Premium, as set forth in the Certificate, is due on the
Coverage Date. Unless determined otherwise by Hartford, the amount of the
minimum Initial Premium is the amount which, after the deductions for sales
load, state premium tax, and DAC tax charge, is sufficient (disregarding
investment performance) to pay twelve (12) times the first Monthly Deduction
Amount. Thereafter, additional premiums may be paid at any time, subject to the
premium limitations set forth by the Code as indicated in the section entitled
"Premium Limitation," page 14. You have the right to pay additional premiums of
at least $500.00 at any time.
ALLOCATION OF PREMIUM PAYMENTS
If the state of issue of Your Certificate requires that We return Your
Initial Premium, We will allocate the initial Net Premium when Your Certificate
is issued to the ML Domestic Money Market Investment Division until the
expiration of the right to examine period. Upon the expiration of the right to
examine period, the initial Net Premium will, at a later date, be invested
according to Your initial allocation instructions (except that any accrued
interest will remain in the ML Domestic Money Market Investment Division if it
is selected as an initial allocation option). This later date is the later of
ten (10) calendar days after We receive the Initial Premium premium and the date
We receive the final requirement to put the Certificate in force. The
Certificates are credited with units ("Accumulation Units") in each selected
Investment Division, the assets of which are invested in the corresponding
underlying Portfolio. An Owner may transfer funds among the Investment Divisions
subject to certain restrictions. See "Detailed Description of Certificate
Benefits and Provisions -- Transfers Among Investment Divisions, " page 14. Any
additional premiums received by Us prior to such date will be allocated to the
ML Domestic Money Market Investment Division.
Alternatively, if the state of issue of Your Certificate provides for Our
return of the Certificate's Cash Value to the Owner, We will allocate the
initial Net Premium immediately among Your chosen Investment Divisions. In that
case You will bear full investment risk for any amounts allocated to the
Investment Divisions during the right to examine period. (Please note that this
automatic immediate investment feature only applies if Your Certificate so
specifies. Please check with Your agent to determine the status of Your
Certificate.)
Upon written request, You may change the premium allocation. Subsequent Net
Premiums will be allocated among Investment Divisions according to Your most
recent instructions, subject to the following. If the asset rebalancing option
is in effect, Net Premiums will be allocated accordingly until that option is
terminated. See "Transfers Among Investment Divisions -- Asset Rebalancing,"
page 15.
The Owner will receive several different types of notification as to what is
his or her current premium allocation. The initial allocation chosen by the
Owner on the Enrollment Form is shown in the Certificate. In addition, every
transactional confirmation generated after a premium payment is received will
show how that premium has been allocated. A Certificate's annual statement will
also summarize the current premium allocation in effect for that Certificate.
ACCUMULATION UNITS
Net Premiums allocated to the Investment Divisions are used to credit
Accumulation Units under the Certificate.
The number of Accumulation Units in each Investment Division to be credited
under the Certificate (including the initial allocation to the ML Domestic Money
Market Investment Division) will be determined first by multiplying the Net
Premium by the appropriate allocation percentage to determine the portion to be
invested in the Investment Division. Each portion to be invested in an
Investment Division is then divided by the Accumulation Unit Value of that
particular Investment Division next computed following receipt of the payment.
ACCUMULATION UNIT VALUES
The Accumulation Unit value for each Investment Division will vary daily to
reflect the investment experience of the applicable Portfolio, as well as the
daily deduction for mortality and expense risks, and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Investment Division on the preceding Valuation Day by a net investment factor
for that Investment Division for the Valuation Period then ended. The net
investment factor for each of the Investment Divisions is equal to the net asset
value per share of the corresponding Portfolio at the end of the Valuation
Period (plus the per share amount of any dividend or capital gain distributions
paid by that Portfolio in the Valuation Period then ended)
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
divided by the net asset value per share of the corresponding Portfolio at the
beginning of the Valuation Period, less the daily deduction for the mortality
and expense risks assumed by Hartford.
All valuations in connection with a Certificate, e.g., with respect to
determining Cash Value and Investment Value, or calculating of the Death
Benefit, or with respect to determining the number of Accumulation Units to be
credited to a Certificate with each premium payment, other than the Initial
Premium, will be made on the date the request or payment is received by Hartford
at the Customer Service Center if such date is a Valuation Day; otherwise such
determination will be made on the next succeeding date which is a Valuation Day.
PREMIUM LIMITATION
If premiums are received which would cause the Certificate to fail to meet
the definition of a life insurance policy in accordance with the Code, We will
refund the excess premium payments. We will refund such premium payments and
interest thereon within sixty (60) days after the end of a Coverage Year.
A premium payment that results in an increase in the Death Benefit greater
than the amount of the premium will be accepted only after We approve evidence
of insurability.
VALUES UNDER THE CERTIFICATE
As with traditional life insurance, each Certificate will have a Cash
Surrender Value. The Cash Surrender Value is equal to the Cash Value, less Debt,
less any charges accrued but not deducted. There is no minimum guaranteed Cash
Surrender Value. The Cash Value equals the value in the Investment Divisions
plus the Loan Account Value.
Each Certificate will also have an Investment Value. The Investment Value of
a Certificate changes on a daily basis and will be computed on each Valuation
Day. The Investment Value will vary to reflect the investment experience of the
Investment Divisions, Monthly Deduction Amounts and any amounts transferred to
the Loan Account to secure a Loan.
The Investment Value of a particular Certificate is related to the net asset
value of the Portfolios associated with the Investment Divisions to which Net
Premiums on the Certificate have been allocated. The total Investment Value in
the Investment Divisions on any Valuation Day is calculated by multiplying the
number of Accumulation Units in each Investment Division as of the Valuation Day
by the current Accumulation Unit value of that Investment Division and then
summing the result for all the Investment Divisions. The Investment Value equals
the sum of the values of the assets in the Investment Divisions. See "Premiums
- -- Accumulation Unit Values, " page 13.
SURRENDER OF THE CERTIFICATE
At any time prior to the Maturity Date, provided the Certificate is in
effect and has a Cash Surrender Value, the Owner may choose, without the consent
of the Beneficiary (provided the designation of the Beneficiary is not
irrevocable) to surrender the Certificate and receive the full Cash Surrender
Value from Us. To surrender a Certificate, You must submit a request for
surrender In Writing. We will determine the Cash Surrender Value as of the
Valuation Day We receive the request In Writing at Our Customer Service Center,
or the date requested by the Owner, whichever is later.
The Cash Surrender Value, which is the net amount available upon surrender
of the Certificate, equals the Cash Value, less Debt, less any charges accrued
but not yet deducted. The Certificate will terminate on the date of receipt of
the written request, or the date the Owner requests the surrender to be
effective, whichever is later.
The Cash Surrender Value may be paid in cash or allocated to any other
payment option agreed upon by Us.
PARTIAL WITHDRAWALS
At any time before the Maturity Date, and subject to Hartford's rules then
in effect, up to twelve (12) partial withdrawals are allowed per Coverage Year;
however, only one (1) partial withdrawal is allowed between any successive
Processing Dates. The minimum partial withdrawal allowed is $500.00. The maximum
partial withdrawal is an amount equal to the sum of the Cash Surrender Value
plus outstanding Debt, multiplied by .90, less outstanding Debt. Hartford
currently imposes a charge for processing partial withdrawals which is the
lesser of 2% of the amount withdrawn or $25.00. A partial withdrawal will reduce
the Cash Surrender Value, Cash Value and Investment Value. Any partial
withdrawal will have a permanent effect on the Cash Surrender Value and may have
a permanent effect on the Death Benefit payable. If Death Benefit Option A is in
effect, the Face Amount is reduced by the amount of the partial withdrawal.
Unless specified otherwise, partial withdrawals will be deducted on a Pro Rata
Basis from the Investment Divisions. Requests for partial withdrawals must be
made In Writing to Us. The effective date of a partial withdrawal will be the
Valuation Day We receive the request In Writing at Our Customer Service Center.
A 10% penalty tax may be imposed on income distributed before the insured
attains age 59 1/2. See "Federal Tax Considerations -- Modified Endowment
Contracts," page 29.
TRANSFERS AMONG INVESTMENT DIVISIONS
AMOUNT AND FREQUENCY OF TRANSFERS
Upon request and as long as the Certificate is in effect, You may transfer
amounts among the Investment Divisions, without charge, up to twelve (12) times
per Coverage Year.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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Transfers in excess of twelve (12) per Coverage Year will be subject to a charge
of $50 per transfer deducted from the amount of the transfer. Transfer requests
must be In Writing on a form approved by Hartford or by telephone in accordance
with established procedures. The amounts which may be transferred will be
limited by Our rules then in effect. Currently, the minimum value of
Accumulation Units that may be transferred from one Investment Division to
another is the lesser of (i) $500 or (ii) the total value of the Accumulation
Units in the Investment Division. The value of the remaining Accumulation Units
in the Investment Division must equal at least $500. If, after an ordered
transfer, the value of the remaining Accumulation Units in an Investment
Division would be less than $500, the entire value will be transferred.
Currently there are no restrictions on transfers other than those described
herein. Hartford reserves the right in the future to impose additional
restrictions on transfers.
TRANSFERS TO OR FROM INVESTMENT DIVISIONS
In the event of a transfer from an Investment Division, the number of
Accumulation Units credited to the Investment Division from which the transfer
is made will be reduced. The reduction will be determined by dividing:
1. the amount transferred by,
2. the Accumulation Unit value for that Investment Division on the Valuation
Day We receive Your request for transfer In Writing.
In the event of a transfer to an Investment Division, We will increase the
number of Accumulation Units credited thereto. The increase will equal:
1. the amount transferred divided by,
2. the Accumulation Unit value for that Investment Division determined on the
Valuation Day We receive Your request for transfer In Writing.
ASSET REBALANCING
Subject to Our rules then in effect, an Owner may authorize Hartford to
automatically reallocate Investment Value periodically in order to maintain a
particular percentage allocation among the Investment Divisions as selected by
the Owner ("Asset Rebalancing"). The Investment Value held in each Investment
Division will increase or decrease in value at different rates during the
relevant period. Asset Rebalancing is intended to reallocate Investment Value
from those Investment Divisions that have increased in value to those that have
decreased in value.
To elect Asset Rebalancing, a request In Writing must be received by
Hartford. If Asset Rebalancing is elected, all Investment Value must be included
in the automatic reallocation. The percentages selected under Asset Rebalancing
will override any prior percentage allocations chosen by the Owner and all
future Net Premiums will be allocated accordingly. Once elected, an Owner may
instruct Hartford In Writing at any time to terminate the option. In addition,
any transfer made outside of Asset Rebalancing will terminate the option.
PROCEDURES FOR TELEPHONE TRANSFERS
Owners may effect telephone transfers in two ways. All Owners may directly
contact a customer service representative. Owners may in the future also request
access to an electronic service known as a Voice Response Unit (VRU). The VRU
will permit the transfer of monies among the Investment Divisions and change of
the allocation of future payments. All Owners intending to conduct telephone
transfers through the VRU will be asked to complete a Telephone Authorization
Form.
Hartford will undertake reasonable procedures to confirm that instructions
communicated by telephone are genuine. Before a customer service representative
accepts any request, the caller will be asked for his or her social security
number and address. All calls will also be recorded. A Personal Identification
Number (PIN) will be assigned to all Owners who request VRU access. The PIN is
selected by and known only to the Owner. Proper entry of the PIN is required
before any transactions will be allowed through the VRU. Furthermore, all
transactions performed over the VRU, as well as with a customer service
representative, will be confirmed by Hartford through a written letter.
Moreover, all VRU transactions will be assigned a unique confirmation number
which will become part of the Certificate's history. Hartford is not liable for
any loss, cost or expense for action on telephone instructions which are
believed to be genuine in accordance with these procedures.
VALUATION OF PAYMENTS AND TRANSFERS
We value the Certificate on every Valuation Day.
We will generally pay Death Proceeds, Cash Surrender Values, partial
withdrawals, and Loan amounts attributable to the Investment Divisions within
seven (7) calendar days after We receive all the information needed to process
the payment unless the NYSE is closed for other than a regular holiday or
weekend, trading is restricted by the SEC or the SEC declares that an emergency
exists.
Hartford may defer payment of any amounts not attributable to the Investment
Divisions for up to six months from the date on which We receive the request.
PROCESSING OF TRANSACTIONS
Generally, transactions initiated by an Owner will be processed only on a
Valuation Day. Requests received by Hartford on a Valuation Day before the close
of trading on the NYSE (generally 4:00 p.m. Eastern Time) will be processed as
of that day, except as otherwise provided in this
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16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Prospectus. Those requests received after the close of the NYSE will be
processed as of the next Valuation Day.
LOANS
As long as the Certificate is in effect, an Owner may obtain, without the
consent of the Beneficiary (provided the designation of Beneficiary is not
irrevocable), a cash Loan from Hartford. The maximum Loan amount is equal to the
sum of the Cash Surrender Value plus outstanding Debt, multiplied by .90, less
outstanding Debt.
The amount of each Loan will be transferred on a Pro-Rata Basis from each of
the Investment Divisions (unless the Owner specifies otherwise) to the Loan
Account. The Loan Account is the mechanism used to ensure that any outstanding
Debt remains fully secured by the Investment Value.
LOAN INTEREST
Interest will accrue daily on outstanding Debt at the Adjustable Loan
Interest Rate indicated in the Certificate. The difference between the value of
the Loan Account and any outstanding Debt will be transferred from the
Investment Divisions to the Loan Account on each Certificate Anniversary.
Interest payments are due as shown in the Certificate Specifications. If
interest is not paid within 5 days of its due date, it will be added to the
amount of the Loan as of its due date.
The maximum Adjustable Loan Interest Rate We may charge for Loans is 5%.
CREDITED INTEREST
Amounts in the Loan Account for Coverage Years 1 through 10 will be credited
with interest at a rate equal to the Adjustable Loan Interest Rate then in
effect, minus 1%. Amounts in the Loan Account for Coverage Years 11 and later
will be credited with interest at a rate equal to the Adjustable Loan Interest
Rate then in effect, minus .20%.
LOAN REPAYMENTS
You can repay any part of or the entire Loan at any time. The amount of the
Loan repayment will be allocated to Your chosen Investment Divisions on a Pro
Rata Basis, determined as of the date of the Loan repayment. Unless specified
otherwise, additional premium payments received by Hartford during the period
when a Loan is outstanding will be treated as Loan repayments.
TERMINATION DUE TO EXCESSIVE DEBT
If total Debt outstanding equals or exceeds the Cash Surrender Value, the
Certificate will terminate thirty-one (31) calendar days after We have mailed
notice to Your last known address and that of any assignees of record. If
sufficient Loan repayment is not made by the end of this 31-day period, the
Certificate will end without value.
EFFECT OF LOANS ON INVESTMENT VALUE
A Loan, whether or not repaid, will have a permanent effect on the
Investment Value because the investment results of each Investment Division will
apply only to the amount remaining in such Investment Divisions. The longer a
Loan is outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the Investment Divisions earn more than the annual
interest rate for funds held in the Loan Account, an Owner's Investment Value
will not increase as rapidly as it would have had no Loan been made. If the
Investment Divisions earn less than the Loan Account, the Owner's Investment
Value will be greater than it would have been had no Loan been made. Also, if
not repaid, the aggregate amount of outstanding Debt will reduce the Death
Proceeds and Cash Surrender Value otherwise payable.
DEATH BENEFIT
As long as the Certificate remains in force, the Certificate provides for
the payment of the Death Proceeds to the named Beneficiary when the Insured
under the Certificate dies. The Death Proceeds payable to the Beneficiary equal
the Death Benefit less any Debt outstanding under the Certificate plus any rider
benefits payable. The Death Benefit depends on the Death Benefit option You
select and is determined as of the date of the death of the Insured.
MINIMUM DEATH BENEFIT TESTING PROCEDURES
Section 7702 of the Code defines alternative testing procedures, the
guideline premium test ("GPT") and the cash value accumulation test ("CVAT") in
order to meet the definition of life insurance under the Code. See "Federal Tax
Considerations -- Income Taxation of Certificate Benefits." Each Certificate
must qualify under either the GPT or the CVAT. Prior to issue, the Owner chooses
the procedure under which a Certificate will qualify. Once either the GPT or the
CVAT is chosen to test a Certificate, it cannot be changed while the Certificate
is in force.
Under both testing procedures, there is a minimum Death Benefit required at
all times equal to the Variable Insurance Amount. The factors used to determine
the Variable Insurance Amount depend on the testing procedure chosen and are set
forth in the Certificate.
Under the GPT, there is also a maximum amount of premium which may be paid
with respect to each Certificate.
Use of the CVAT can be advantageous if an Owner intends to maximize the
total amount of premiums paid under a Certificate. An offsetting consideration,
however, is that the factors used to determine the Variable Insurance Amount are
higher under the CVAT, which can result in a higher Death Benefit over time and
thus, a higher total cost of insurance.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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DEATH BENEFIT OPTIONS
Regardless of the minimum death benefit testing procedure chosen, there are
two Death Benefit options: Death Benefit Option A and Death Benefit Option B.
1. Under Death Benefit Option A, the Death Benefit is the greater of (a)the
Face Amount and (b) the Variable Insurance Amount.
2. Under Death Benefit Option B, the Death Benefit is the greater of (a) the
Face Amount plus the Cash Value and (b) the Variable Insurance Amount.
Regardless of which Death Benefit option You select, the maximum amount
payable under such option will be the Death Proceeds.
OPTION CHANGE
While the Certificate is in force, You may change the Death Benefit option
selected under a Certificate by making a request In Writing during the lifetime
of the Insured. If the change is from Death Benefit Option A to Death Benefit
Option B, satisfactory evidence of insurability must be provided to Hartford.
The Face Amount after the change will be equal to the Face Amount before the
change, less the Cash Value on the effective date of the change. If the change
is from Death Benefit Option B to Death Benefit Option A, the Face Amount after
the change will be equal to the Face Amount before the change plus the Cash
Value on the effective date of change. Any change in the selection of a Death
Benefit option will become effective at the beginning of the Coverage Month
following Hartford's approval of such change. We will notify You that the change
has been made.
All or part of the Death Proceeds may be paid in cash or applied under one
of the payment options described below.
PAYMENT OPTIONS
Death Proceeds under the Certificate may be paid in a lump sum or may be
applied to one of Hartford's payment options. The minimum amount that may be
placed under a payment option is $5,000 unless Hartford consents to a lesser
amount. Once payments under payment options 2, 3 or 4 commence, no surrender of
the Certificate may be made for the purpose of receiving a lump sum settlement
in lieu of the life insurance payments. The following options are available
under the Certificates:
FIRST OPTION -- Interest Income
Payments of interest at the rate We declare, but not less than 3% per year,
on the amount applied under this option.
SECOND OPTION -- Income of Fixed Amount
Equal payments of the amount chosen until the amount applied under this
option, with interest of not less than 3% per year, is exhausted. The final
payment will be for the balance remaining.
THIRD OPTION -- Payments for a Fixed Period
An amount payable monthly for the number of years selected which may be from
1 to 30 years.
FOURTH OPTION -- Life Income
LIFE ANNUITY -- an annuity payable monthly during the lifetime of the
Annuitant and terminating with the last monthly payment due preceding the
death of the Annuitant. Under this option, it is possible that only one
monthly annuity payment would be made, if the Annuitant died before the second
monthly annuity payment was due.
LIFE ANNUITY WITH 120 MONTHLY PAYMENTS CERTAIN -- an annuity providing monthly
income to the Annuitant for a fixed period of 120 months and for as long
thereafter as the Annuitant shall live.
The fourth payment option is based on the 1983a Individual Annuity Mortality
Table set back one year and a net investment rate of 3% per annum. The amount of
each payment under this option will depend upon the age of the Annuitant at the
time the first payment is due. If any periodic payment due any payee is less
than $200, Hartford may make payments less often. The first, second and third
payment options are based on a net investment rate of 3% per annum. Hartford
may, however, from time to time, at Our discretion if mortality appears more
favorable and interest rates justify, apply other tables which will result in
higher monthly payments for each $1,000 applied under one or more of the four
payment options.
Hartford will make any other arrangements for income payments as may be
agreed on.
LEGAL DEVELOPMENTS REGARDING INCOME PAYMENTS
In those states affected by the 1983 Supreme Court decision in Arizona
Governing Committee v. Norris, income payment options involving life income are
based on unisex actuarial tables. In addition, legislation has previously been
introduced in Congress which, had it been enacted, would have required the use
of tables that do not vary on the basis of sex for some or all annuities.
Currently, several states have enacted such laws.
BENEFICIARY
The Owner names the Beneficiary in the Enrollment Form for the Certificate.
The Owner may change the Beneficiary (unless irrevocably named) during the
Insured's lifetime by written request to Hartford. If no Beneficiary is living
when the Insured dies, the Death Proceeds will be paid to the Owner if living;
otherwise to the Owner's estate.
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18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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INCREASES AND DECREASES IN FACE AMOUNT
The minimum Face Amount of the Certificate is $50,000. At any time after
purchasing a Certificate, the Owner may request a change in the Face Amount by
making a request In Writing to Hartford and directing such request to Hartford's
Customer Service Center.
All requests to increase the Face Amount must be applied for on a new
Enrollment Form. All requests will be subject to evidence of insurability
satisfactory to Hartford and subject to Our rules then in effect. Any increase
approved by Us will be effective on the Processing Date following the date We
approve the request. The Monthly Deduction Amount on the first Processing Date
on or after the effective date of the increase will reflect a charge for the
increase. A decrease in the Face Amount will be effective on the first
Processing Date following the date We receive the request. Decreases must reduce
the Face Amount by at least $25,000, and the remaining Face Amount must not be
less than $50,000. Decreases will be applied:
(a) to the most recent increase; then
(b) successively to each prior increase, and then
(c) to the initial Face Amount.
We reserve the right to limit the number of Face Amount increases or
decreases made under the Certificate to no more than one in any twelve (12)
month period.
BENEFITS AT MATURITY
If the Insured is living on the Maturity Date, on surrender of the
Certificate to Hartford, Hartford will pay to the Owner the Cash Surrender Value
on the date the Certificate is surrendered. However, on the Maturity Date, the
Certificate will terminate and Hartford will have no further obligations under
the Certificate.
TERMINATION OF PARTICIPATION IN
THE GROUP POLICY
Participation in the Group Policy may be terminated by Hartford or the
Participating Employer. The party initiating the termination must provide notice
of such termination to each Owner of record, at his or her last known address,
at least fifteen (15) days prior to the date of termination. In the event of
such termination, no new Enrollment Forms for new Insureds will be accepted on
or after the date notice of discontinuance is received or sent by Hartford,
whichever is applicable, nor will any new Certificates be issued. If premium
payments are discontinued, Hartford will continue insurance coverage under the
Certificate as long as the Cash Surrender Value is sufficient to cover the
charges due. This continuation of insurance will not continue the coverage under
the Certificate beyond Attained Age 100, nor will it continue any optional
benefit rider beyond the Certificate's date of termination. If the Group Policy
is discontinued or amended to discontinue the eligible class to which an Insured
belongs (and if the coverage on the Insured is not transferred to another
insurance carrier), any Certificate then in effect will remain in force under
the discontinued Group Policy, provided it is not canceled or surrendered by the
Owner, subject to Hartford's qualifications then in effect.
LAPSE AND REINSTATEMENT WHILE
THE GROUP POLICY IS IN EFFECT
LAPSE AND GRACE PERIOD
A Grace Period will follow the date We mail notice to the Owner that the
Cash Surrender Value is insufficient to pay the charges due under the
Certificate. Unless the Owner has given Hartford written notice of termination
in advance of the date of termination of the Certificate, insurance will
continue in force during the Grace Period. The Owner will be liable to Hartford
for all charges due under the Certificate then unpaid for the period the
Certificate remains in force.
In the event that total Debt outstanding equals or exceeds the Cash
Surrender Value, the Certificate will terminate thirty-one (31) calendar days
after We have mailed notice to Your last known address and that of any assignees
of record. If sufficient Loan repayment is not made by the end of this 31-day
period, the Certificate will end without value.
REINSTATEMENT
Prior to the death of the Insured, and unless (i) the Group Policy is
terminated (see "Termination of Participation in the Group Policy" above) or
(ii) the Certificate has been surrendered for cash, the Certificate may be
reinstated prior to the Maturity Date, provided:
(a) you make Your request within three (3) years of the date of lapse; and
(b) satisfactory evidence of insurability is submitted.
To reinstate Your Certificate, you must remit a premium payment large enough
to keep the coverage under the Certificate in force for at least three (3)
months following the date of reinstatement. The Face Amount of the reinstated
Certificate cannot exceed the Face Amount at the time of lapse. The Investment
Value on the reinstatement date will reflect:
(a) The Investment Value at the time of termination; plus
(b) Net Premiums attributable to premiums paid at the time of reinstatement.
Upon reinstatement, any Debt at the time of termination must be repaid or
carried over to the reinstated Certificate.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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ENROLLMENT FOR A CERTIFICATE
Individuals wishing to purchase a Certificate must submit an Enrollment Form
to Hartford. Within limits, an applicant may choose the Initial Premium and the
initial Face Amount. A Certificate generally will be issued only on the lives of
Insureds Attained Age 79 and under who supply evidence of insurability
satisfactory to Hartford. Acceptance is subject to Hartford's underwriting rules
and Hartford reserves the right to reject an Enrollment Form for any reason. No
change in the terms or conditions of a Certificate will be made without the
consent of the Owner.
The Certificate will be effective on the Coverage Date only after Hartford
has received all outstanding delivery requirements and received the Initial
Premium. The Coverage Date is the date used to determine all future cyclical
transactions on the Certificate, e.g., Processing Date, Coverage Months and
Coverage Years.
THE RIGHT TO EXAMINE THE CERTIFICATE
An Owner has a limited right to return a Certificate. Subject to applicable
state regulation, if the Certificate is returned, by mail or personal delivery
to Hartford or to the agent who sold the Certificate, to be canceled within ten
(10) calendar days after delivery of the Certificate to the Owner, Hartford will
return either (i) the total amount of premiums or (ii) the Cash Value plus
charges deducted under the Certificate to the Owner within seven (7) days. If
the state where Your Certificate is issued requires that We return Your Initial
Premium, We will allocate Your initial Net Premium to the ML Domestic Money
Market Investment Division. If the state of issue of Your Certificate provides
for Our return of the Certificate's Cash Value to the Owner, We will allocate
the initial Net Premium immediately among Your chosen Investment Divisions.
DEDUCTIONS FROM PREMIUM
Before allocating the Net Premium to the Investment Divisions, a deduction
as a percentage of premium is made for the front-end sales load, premium taxes
and the DAC tax charge. The amount of each premium allocated to the Investment
Divisions is Your Net Premium.
FRONT-END SALES LOAD
The current front-end sales load is 6.75% of any premium paid for Coverage
Years 1 through 7 and 4.75% of any premium paid in Coverage Years 8 and later.
The maximum front-end sales load is 9% of any premium paid in Coverage Years 1
through 7 and 7% of any premium paid in Coverage Years 8 and later.
Front-end sales loads cover expenses related to the sale and distribution of
the Certificates. The front-end sales load may be reduced for certain sales of
the Certificates under circumstances which result in a saving of such sales and
distribution expenses. To qualify for such a reduction, a plan must satisfy
certain criteria as to, for example, the expected number of Owners and the
anticipated Face Amount of all Certificates under the plan. Generally, the sales
contacts and effort and administrative costs per Certificate vary based on such
factors as the size of the plan, the purpose for which Certificates are
purchased and certain characteristics of the plan's members. The amount of
reduction and the criteria for qualification are related to the reduced sales
effort and administrative costs resulting from sales to qualifying plans.
Hartford may modify from time to time on a uniform basis both the amounts of
reductions and the criteria for qualification. Reductions in these charges will
not be unfairly discriminatory against any person, including the affected Owners
funded by the Separate Account.
PREMIUM RELATED TAX CHARGE
We deduct a percentage of each premium to cover taxes assessed against
Hartford that are attributable to premiums. This percentage will vary by locale
depending on the tax rates in effect there. The range of premium taxes actually
deducted by Hartford currently ranges from 0% to 4%.
DAC TAX CHARGE
Hartford deducts 1.25% of each premium to cover a federal premium tax
assessed against Hartford. This charge is reasonable in relation to Hartford's
federal income tax burden, under Section 848 of the Code, resulting from the
receipt of premiums. We will adjust this charge based on changes in the
applicable tax law.
DEDUCTIONS AND CHARGES
FROM INVESTMENT VALUE
MONTHLY DEDUCTION AMOUNT
On the Coverage Date and on each subsequent Processing Date, Hartford will
deduct the Monthly Deduction Amount from the Investment Value to cover certain
charges and expenses incurred in connection with a Certificate. The Monthly
Deduction Amount will vary from month to month. It will be taken from the Charge
Deduction Division, if designated in the Enrollment Form for the Certificate or
later elected.
If a Charge Deduction Division has been designated but the Investment Value
in the Charge Deduction Division is less than that required to cover all charges
due on such date:
(1) Hartford will apply the Investment Value of the Charge Deduction Division to
the charges due and set the Investment Value in the Charge Deduction
Division to zero; and
(2) any additional amount due will be allocated among the remaining Investment
Divisions on a Pro Rata Basis.
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If no Charge Deduction Division has been designated or elected, any amounts
due will be allocated among the Owner's chosen Investment Divisions on a Pro
Rata Basis.
The Monthly Deduction Amount equals:
(a) the administrative expense charge; plus
(b) the charges for cost of insurance; plus
(c) the charges for additional benefits provided by rider, if any.
(A) Monthly Administrative Fee and Other Expense Charges
Hartford will assess a monthly administrative charge to compensate Hartford
for administrative costs in connection with the Certificates. This charge will
be $5 per Coverage Month initially and is guaranteed never to exceed $10.00 per
Coverage Month.
(B) Cost of Insurance Charge
The charge for the cost of insurance is equal to:
(i) the cost of insurance rate per $1,000; multiplied by
(ii) the Net Amount at Risk; divided by
(iii) $1,000.
The Net Amount at Risk equals the Death Benefit less the Cash Value on
that date.
The cost of insurance charge is to cover Hartford's anticipated mortality
costs. Hartford uses various underwriting procedures, including medical
underwriting procedures, depending on the characteristics of the group to
which the Group Policies are issued. The current cost of insurance rates for
standard risks may be equal to or less than the 1980 Commissioners Standard
Ordinary Mortality Table. Substandard risks will be charged a higher cost of
insurance rate that will not exceed rates based on a multiple of the 1980
Commissioners Standard Ordinary Mortality Table. The multiple will be based
on the Insured's risk class. The use of simplified underwriting and
guaranteed issue procedures may result in the cost of insurance charges
being higher for some individuals than if medical underwriting procedures
were used.
Cost of insurance rates are based on the age, sex (except where unisex
rates apply), and rate class of the Insured and group mortality
characteristics and the particular characteristics (such as the rate class
structure) under the Group Policy that are agreed to by Hartford and the
Participating Employer. The actual monthly cost of insurance rates will be
based on Hartford's expectations as to future experience. Hartford will
determine the cost of insurance rate at the start of each Coverage Year. Any
changes in the cost of insurance rate will be made uniformly for all
Insureds in the same risk class.
The rate class of an Insured affects the cost of insurance rate. Hartford
and the Participating Employer will agree to the number of classes and
characteristics of each class. The classes may vary by smokers and
nonsmokers, active and retired status, and/or any other nondiscriminatory
classes agreed to by the Participating Employer. Where smoker and non-smoker
divisions are provided, an Insured who is in the nonsmoker division of a
rate class will have a lower cost of insurance than an Insured in the smoker
division of the same rate class, even if each Insured has an identical
Certificate.
Because the Cash Value and the Death Benefit Amount under a Certificate
may vary from month to month, the cost of insurance charge may also vary on
each Processing Date.
(C) Rider Charge
If the Certificate includes riders, a charge is deducted from the
Investment Value on each Processing Date. The applicable charge is specified
on the rider and is to compensate Hartford for the anticipated cost of
providing the benefits thereunder.
The riders available under the Certificate are described on page 22 under
"Supplemental Benefits."
MORTALITY AND EXPENSE RISK CHARGE
A charge is made for mortality and expense risks assumed by Hartford.
Hartford currently deducts a daily charge for Coverage Years 1 through 10 at an
effective annual rate of .65% of the value of each Investment Division's assets
and for Coverage Years 11 and later at an effective annual rate of .50% of an
Investment Division's assets. In no event will the charge exceed .65% of an
Investment Division's assets on an annual basis. See also "Premiums --
Accumulation Unit Values," page 13.
The mortality and expense risk charge is equal to:
(i) the mortality and expense risk rate; multiplied by
(ii) the portion of the Cash Value allocated to the Investment Divisions and
the Loan Account.
The mortality risk assumed is that the actual cost of insurance charges
specified in the Certificate will be insufficient to meet actual claims. The
expense risk assumed is that expenses incurred in issuing and administering the
Certificates will exceed the administrative charges set forth therein.
If these charges are insufficient to cover actual costs and assumed risks,
the loss will fall on Hartford. Conversely,
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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if the charge proves more than sufficient, any excess will be added to
Hartford's surplus.
TAXES
Currently, no charge is made to the Separate Account for federal, state, and
local taxes that may be attributable to the Separate Account. A change in the
applicable federal, state or local tax laws which impose tax on Hartford and/or
the Separate Account may result in a charge against the Certificates in the
future. Charges for other taxes, if any, attributable to the Separate Account
may also be made.
OTHER MATTERS
ADDITIONS, DELETIONS OR
SUBSTITUTIONS OF INVESTMENTS
Hartford reserves the right, subject to compliance with the law as then in
effect, to make additions to, deletions from, or substitutions for the Separate
Account and the Investment Divisions which fund the Group Policies. If shares of
any of the Portfolios should no longer be available for investment, or if, in
the judgment of Hartford's management, further investment in shares of any
Portfolio should become inappropriate in view of the purposes of the Group
Policies, Hartford may substitute shares of another Portfolio for shares already
purchased, or to be purchased in the future, under the Group Policies. No
substitution of securities will take place without notice to and consent of
Owners and without prior approval of the SEC to the extent required by the 1940
Act. Subject to Owner approval, if required, Hartford also reserves the right to
end the registration under the 1940 Act of the Separate Account or any other
separate accounts of which it is the depositor which may fund the Group Policy.
VOTING RIGHTS
In accordance with its view of presently applicable law, Hartford will vote
the shares of the Funds at regular and special meetings of the shareholders of
the Funds in accordance with instructions from Owners (or the assignee of the
Certificates, as the case may be) having a voting interest in the Separate
Account. The number of shares held in the Separate Account which are
attributable to each Owner is determined by dividing the Owner's interest in
each Investment Division by the net asset value of the applicable shares of the
Funds. Hartford will vote shares for which no instructions have been given and
shares which are not attributable to Owners (i.e., shares owned by Hartford) in
the same proportion as it votes shares for which it has received instructions.
If the 1940 Act or any rule promulgated thereunder should be amended, however,
or if Hartford's present interpretation should change and, as a result, Hartford
determines it is permitted to vote the shares of the Funds in its own right, it
may elect to do so.
The voting interests of the Owners (or the assignees) in the Funds will be
determined as follows: Owners may cast one vote for each full or fractional
Accumulation Unit owned under their respective Certificates and allocated to an
Investment Division the assets of which are invested in the particular Fund on
the record date for the shareholder meeting for that Fund. If, however, an Owner
has taken a Loan secured by the Certificate, amounts transferred from the
Investment Division(s) to the Loan Account(s) in connection with the Loan (see
"Detailed Description of Certificate Benefits and Provisions -- Loans," page 16)
will not be considered in determining the voting interests of the Owner. Owners
should review the prospectuses for the Funds which accompany this Prospectus to
determine matters on which shareholders may vote.
Hartford may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to cause a change in the sub-classification or investment objective
of one or more of the Funds or to approve or disapprove an investment advisory
policy for the Funds. In addition, Hartford itself may disregard voting
instructions in favor of changes initiated by an Owner in the investment policy
or the investment adviser of the Funds if Hartford reasonably disapproves of
such changes. A change would be disapproved only if the proposed change is
contrary to state law or prohibited by state regulatory authorities. In the
event Hartford does disregard voting instructions, a summary of that action and
the reasons for such action will be included in the next periodic report to
Owners.
OUR RIGHTS
We reserve the right to take certain actions in connection with Our
operations and the operations of the Separate Account. These actions will be
taken in accordance with applicable laws (including obtaining any required
approval of the SEC). If necessary, We will seek approval by Owners.
Specifically, We reserve the right to:
- - Add or remove any Investment Division;
- - Create new separate accounts;
- - Combine the Separate Account with one or more other separate accounts;
- - Operate the Separate Account as a management investment company under the 1940
Act or in any other form permitted by law;
- - Deregister the Separate Account under the 1940 Act;
- - Manage the Separate Account under the direction of a committee or discharge
such committee at any time;
<PAGE>
22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- - Transfer the assets of the Separate Account to one or more other separate
accounts; and
- - Restrict or eliminate any of the voting rights of Owners or other persons who
have voting rights as to the Separate Account.
Hartford also reserves the right to change the name of the Separate Account.
We have reserved all rights to the name of Hartford Life and Annuity
Insurance Company or any part of it. We may allow the Separate Account and other
entities to use Our name or part of it, but We may also withdraw this right.
STATEMENTS TO OWNERS
We will send You a statement at least once each Coverage Year, showing:
(a) the current Cash Value, Cash Surrender Value and Face Amount;
(b) the premiums paid, Monthly Deduction Amounts and Loans since the last
report;
(c) the amount of any outstanding Debt;
(d) notifications required by the provisions of the Certificate; and
(e) any other information required by the Insurance Department of the State
where the Certificate was delivered.
LIMIT ON RIGHT TO CONTEST
Hartford may not contest the validity of the Certificate after it has been
in effect during the Insured's lifetime for two years from the Issue Date. If
the Certificate is reinstated, the two-year period is measured from the date of
reinstatement. Any increase in the Face Amount as a result of a premium payment
is contestable for two years from its effective date. In addition, if the
Insured commits suicide in the two-year period, or such period as specified in
state law, the Death Benefit payable will be limited to the premiums paid less
any outstanding Debt and partial withdrawals.
MISSTATEMENT AS TO AGE OR SEX
If the age or sex of the Insured is incorrectly stated, the amount of all
benefits payable will be appropriately adjusted, as specified in the
Certificate.
ASSIGNMENT
The Certificate may be assigned as collateral for a loan or other
obligation. Hartford is not responsible for any payment made or action taken
before receipt of written notice of such assignment. Proof of interest must be
filed with any claim under a collateral assignment.
DIVIDENDS
No dividends will be paid under the Certificates.
EXPERIENCE CREDITS
The Certificates issued under a Group Policy may be eligible for experience
credits due to administrative savings. The amount of any experience credit may
be paid in cash or applied to and used to increase the Investment Value.
SUPPLEMENTAL BENEFITS
The following supplemental benefit may in the future be included in a
Certificate, subject to the restrictions and limitations set forth therein.
MATURITY DATE EXTENSION RIDER
We will extend the Maturity Date (the date on which the Certificate will
mature), to the date of death of the Insured. Certain Death Benefit and premium
restrictions apply. See "Federal Tax Considerations -- Income Taxation of
Certificate Benefits," page 28.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- --------------------------- ----------------------------------------------------------------------------------
<S> <C> <C>
Bossen, Wendell J., 64 Vice President, 1995** Vice President (1992-Present), Hartford Life and
Accident Insurance Company; Vice President
(1992-Present), Hartford Life Insurance Company;
President (1992-Present), International
Corporate Marketing Group, Inc.
Boyko, Gregory A., 46 Senior Vice President, Chief Vice President & Controller (1995-1997), Hartford;
Financial Officer & Director (1997-Present); Senior Vice President,
Treasurer, 1997 Chief Financial Officer & Treasurer
Director, 1997* (1997-Present); Vice President & Controller
(1995-1997), Hartford Life and Accident
Insurance Company; Director (1997-Present);
Senior Vice President, Chief Financial Officer &
Treasurer (1997-Present); Vice President and
Controller (1995-1997), Hartford Life Insurance
Company; Senior Vice President, Chief Financial
Officer & Treasurer (1997-Present), Hartford
Life, Inc.; Chief Financial Officer (1994-1995)
IMG American Life; Senior Vice President
(1992-1994), Connecticut Mutual Life Insurance
Company.
Cummins, Peter W., 60 Senior Vice President, 1997 Vice President (1993-1997), Hartford; Senior Vice
President, (1997-Present); Vice President
(1989-1997), Hartford Life and Accident
Insurance Company; Senior Vice President
(1997-Present); Vice President (1989-1997);
Senior Vice President (1997-Present); Vice
President (1989-1997), Hartford Life Insurance
Company.
deRaismes, Ann M., 47 Senior Vice President, 1997 Vice President (1994-1997), Hartford; Senior Vice
Director of Human Resources, President (1997-Present); Vice President
1994 (1994-1997); Assistant Vice President
(1992-1994); Director of Human Resources
(1991-Present), Hartford Life and Accident
Insurance Company; Senior Vice President
(1997-Present); Vice President (1994-1997);
Assistant Vice President (1992-1994); Director
of Human Resources (1991-Present), Hartford Life
Insurance Company; Vice President, Human
Resources (1997-Present), Hartford Life, Inc.
Dooley, James R., 61 Vice President, 1993 Director, Information Services (1973-1997),
Hartford Life Insurance Company.
Fitch, Timothy M., 45 Vice President, 1995 Vice President, (1995-Present); Actuary
Actuary, 1997 (1994-Present) Assistant Vice President
(1992-1995), Hartford Life and Accident
Insurance Company; Vice President
(1995-Present); Actuary (1994-Present);
Assistant Vice President (1992-1995), Hartford
Life Insurance Company.
</TABLE>
<PAGE>
24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- --------------------------- ----------------------------------------------------------------------------------
<S> <C> <C>
Foy, David T., 31 Vice President, 1998 Assistant Vice President (1995-1998), Hartford;
Vice President (1998-Present); Assistant Vice
President (1995-1998), Hartford Life Insurance
Company.
Garrett, J. Richard, 53 Vice President, 1994 Treasurer (1994-1997), Hartford; Vice President
Assistant Treasurer, 1997 (1993-Present); Assistant Treasurer
(1997-Present); Treasurer (1984-1997), Hartford
Life and Accident Insurance Company; Vice
President, (1993-Present); Assistant Treasurer
(1997-Present); Treasurer (1986-1997), Hartford
Life Insurance Company; Vice President
(1997-Present), Hartford Life, Inc.
Gillette, Donald J., 52 Vice President, 1997 Assistant Vice President, (1995-1997), Hartford;
Assistant Vice President (1995-1997), Hartford
Life and Accident Insurance Company; Assistant
Vice President (1995-Present), Hartford Life
Insurance Company.
Godfrey, William A., III, Senior Vice President, 1997 Senior Vice President (1997-Present), Hartford;
41 Senior Vice President (1997-Present), Hartford
Life and Accident Insurance Company; Vice
President Information Technology (1997-Present),
Hartford Life, Inc.
Godkin, Lynda, 44 Senior Vice President, 1997 Assistant General Counsel and Secretary
General Counsel, 1996 (1994-1995), Hartford; Director (1997-Present);
Corporate Secretary, 1996 Senior Vice President (1997-Present); General
Director, 1997* Counsel (1996-Present); Corporate Secretary
(1995-Present); Associate General Counsel
(1995-1996); Assistant General Counsel and
Secretary (1994-1995); Counsel (1990-1994),
Hartford Life and Accident Insurance Company;
Senior Vice President (1997-Present); General
Counsel (1996-Present); Corporate Secretary
(1995-Present); Director (1997-Present);
Associate General Counsel (1995-1996); Assistant
General Counsel and Secretary (1994-1995);
Counsel (1990-1994), Hartford Life Insurance
Company; Vice President and General Counsel
(1997-Present), Hartford Life, Inc.
Grady, Lois W., 53 Senior Vice President, 1998 Senior Vice President (1998-Present); Vice
Vice President, 1994 President (1993-1997); Assistant Vice President
(1987-1993), Hartford Life and Accident
Insurance Company; Senior Vice President
(1998-Present); Vice President (1993-1997);
Assistant Vice President (1987-1993), Hartford
Life Insurance Company.
Graham, Christopher, 47 Vice President, 1997
Hunt, Mark E., 37 Vice President, 1998 Assistant Vice President (1997-1998), Hartford;
Vice President (1998-Present), Hartford Life and
Accident Insurance Company.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- --------------------------- ----------------------------------------------------------------------------------
<S> <C> <C>
Joyce, Stephen T., 39 Vice President, 1997 Assistant Vice President (1995-1997), Hartford;
Assistant Vice President (1994-1997), Hartford
Life and Accident Insurance Company; Vice
President (1997-Present); Assistant Vice
President (1994-1997), Hartford Life Insurance
Company.
Keeler, Michael D., 37 Vice President, 1998 Vice President (1998-Present); Hartford Life and
Accident Insurance Company.
Kerzner, Robert A., 46 Senior Vice President, 1998 Senior Vice President (1998-Present); Vice
Vice President, 1997 President (1994-1998), Hartford; Senior Vice
President (1998-Present); Vice President
(1994-1997); Regional Vice President
(1991-1994), Hartford Life Insurance Company.
Levenson, David N., 31 Vice President, 1998 Assistant Vice President (1997-1998), Hartford.
Malchodi, Jr., William B., Vice President, 1994 [Director of Taxes (1992-1998), Hartford;] Vice
50 Director of Taxes, 1992 President (1994-Present); Director of Taxes
[delete?] (1992-[1998] Present), Hartford Life and
Accident Insurance Company; Vice President
(1994-Present); Director of Taxes
(1991-Present), Hartford Life Insurance Company.
Marra, Thomas M., 38 Executive Vice President, 1996 Senior Vice President (1993-1996); Director of
Director, Individual Life Individual Annuities (1991-1993), Hartford;
and Annuity Division, 1993 Director (1994-Present); Executive Vice
Director, 1994* President (1995-Present); Director, Individual
Life and Annuity Division (1994-Present); Senior
Vice President (1994-1995); Vice President
(1989-1994); Actuary (1987-1997), Hartford Life
and Accident Insurance Company; Director
(1994-Present); Executive Vice President
(1995-Present); Director, Individual Life and
Annuity Division (1994-Present); Senior Vice
President (1994-1995); Vice President
(1989-1994); Actuary (1987-1995), Hartford Life
Insurance Company; Executive Vice President,
Individual Life and Annuities (1997-Present),
Hartford Life, Inc.
Matthieson, Steven L., 53 Vice President, 1984 Director of New Business (1984-1997), Hartford.
O'Halloran, C. Michael, 51 Vice President, 1997 Vice President (1997-Present), Hartford Life and
Accident Insurance Company; Vice President
(1997-Present), Hartford Life Insurance Company;
Corporate Secretary (1997-Present), Hartford
Life, Inc.; Senior Associate General Counsel
(1988-Present), Director of Corporate Law
(1994-Present), The Hartford Financial Services
Group.
O'Sullivan, Daniel E., 43 Vice President, 1998 Vice President (1998-Present), Hartford; Vice
President (1988-Present), Hartford Life
Insurance Company.
</TABLE>
<PAGE>
26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- --------------------------- ----------------------------------------------------------------------------------
<S> <C> <C>
Raymond, Craig R., 37 Senior Vice President, 1997 Vice President (1993-1997); Assistant Vice
Chief Actuary, 1994 President (1992-1993); Actuary (1989-1994),
Hartford; Senior Vice President (1997-Present);
Chief Actuary (1995-Present); Vice President
(1993-1997); Actuary (1990-1995), Hartford Life
and Accident Insurance Company; Senior Vice
President (1997-Present); Chief Actuary
(1994-Present); Vice President (1993-1997);
Assistant Vice President (1992-1993); Actuary
(1989-1994), Hartford Life Insurance Company;
Vice President and Chief Actuary (1997-Present),
Hartford Life, Inc.
Schrandt, David T., 50 Vice President, 1987 Treasurer (1987-1997); Controller (1987-1997),
Hartford.
Smith, Lowndes A., 58 President, 1989 Chief Operating Officer (1989-1997), Hartford;
Chief Executive Officer, 1997 Director (1981-Present); President
Director, 1985* (1989-Present); Chief Executive Officer
(1997-Present); Chief Operating Officer
(1989-1997), Hartford Life and Accident
Insurance Company; Director (1981-Present);
President (1989-Present), Chief Executive
Officer (1997-Present); Chief Operating Officer
(1989-1997), Hartford Life Insurance Company;
Chief Executive Officer and President and
Director (1997-Present), Hartford Life, Inc.
Welsh, Walter C., 51 Senior Vice President, 1997 Senior Vice President (1997-Present); Vice
President (1994-1997); Assistant Vice President
(1992-1995), Hartford Life and Accident
Insurance Company; Senior Vice President
(1997-Present); Vice President (1995-1997);
Assistant Vice President (1992-1995), Hartford
Life Insurance Company; Vice President,
Government Affairs (1997-Present), Hartford
Life, Inc.
Znamierowski, David M., 38 Senior Vice President, 1997 Director (1998-Present); Senior Vice President
Director, 1998 (1997-Present), Hartford Life and Accident
Insurance Company; Director (1998-Present);
Senior Vice President (1997-Present); Director,
Risk Management Strategy (1996-Present); Vice
President (1997), Hartford Life Insurance
Company; Vice President, Investment Strategy
(1997-Present), Hartford Life, Inc.; Vice
President, Investment Strategy & Policy, Aetna
Life and Casualty Company.
- ---------
* Denotes date of election to Board of Directors of Hartford.
** Affiliated Company of The Hartford Financial Services Group, Inc.
</TABLE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
DISTRIBUTION OF
THE GROUP POLICY
Hartford intends to sell the Group Policy in all jurisdictions where it is
licensed to do business. The Group Policy will be sold by life insurance sales
representatives who represent Hartford and who are registered representatives of
Hartford Equity Sales Company, Inc. ("HESCO"), or certain other registered
Broker-Dealers. Any sales representative or employee will have been qualified to
sell variable life insurance policies under applicable Federal and State laws.
Each Broker-Dealer is registered with the SEC under the Securities Exchange Act
of 1934 and all are members of the National Association of Securities Dealers,
Inc. HESCO is the principal underwriter for the Group Policy. The maximum sales
commission payable to Hartford agents, independent registered insurance brokers,
and other registered Broker-Dealers is 6% of the premiums paid. In addition,
expense allowances, service fees and asset-based trail commissions may be paid.
The sales representative may be required to return all or a portion of the
commissions paid if a Certificate terminates prior to the second Certificate
Anniversary.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HESCO and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments made
by policyholders or contract owners. This compensation is usually paid from the
sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HESCO, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for broker-dealers or financial
institutions, will be made by HESCO, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or surrender variable insurance products.
SAFEKEEPING OF THE SEPARATE
ACCOUNT ASSETS
The assets of the Separate Account are held by Hartford. The assets of the
Separate Account are kept physically segregated and held separate and apart from
the General Account of Hartford. Hartford maintains records of all purchases and
redemptions of shares of the Fund. Additional protection for the assets of the
Separate Account is afforded by Hartford's blanket fidelity bond issued by Aetna
Casualty and Surety Company, in the aggregate amount of $50 million, covering
all of the officers and employees of Hartford.
FEDERAL TAX CONSIDERATIONS
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE OWNER INVOLVED AND THE TYPE OF PLAN UNDER WHICH THE
GROUP POLICY IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A GROUP POLICY DESCRIBED
HEREIN.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Group Policies cannot be made
in this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a qualified tax adviser should always be consulted. This discussion
of federal tax considerations is based upon Hartford's understanding of existing
federal income tax laws as they are currently interpreted.
TAXATION OF HARTFORD AND
THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Part 1 of Subchapter L of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"). Accordingly, the Separate Account
will not be taxed as a "regulated investment company" under Subchapter M of the
Code. Investment income and realized capital gains on the assets of the Separate
Account (the underlying Investment Divisions) are reinvested and are taken into
account in determining the value of the Accumulation Units (see "Detailed
Description of Certificate Benefits and Provisions -- Values Under the
Certificate," on page 14). As a result, such investment income and realized
capital gains are automatically applied to increase reserves under the
Certificate.
Hartford does not expect to incur any federal income tax on the earnings or
realized capital gains attributable to the Separate Account. Based upon these
expectations, no charge is currently being made to the Separate Account for
federal income taxes. If Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for taxes against the Separate Account.
<PAGE>
28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
INCOME TAXATION OF
CERTIFICATE BENEFITS -- GENERALLY
For federal income tax purposes, the Certificates should be treated as life
insurance policies under Section 7702 of the Code. The Death Benefit under a
life insurance policy is excluded from the gross income of the Beneficiary.
Also, a life insurance policy owner is not taxed on increments in the policy
value until the policy is partially or completely surrendered. Section 7702
limits the amount of premiums that may be invested in a policy that is treated
as life insurance. Hartford intends to monitor premium levels to assure
compliance with Section 7702 standards.
During the first fifteen policy years, an "income first" rule generally
applies to any distribution of cash that is required under Code Section 7702
because of a reduction in benefits under the Certificate.
Hartford also believes that any Loan received under a Certificate will be
treated as Debt of the Owner, and that no part of any Loan under a Certificate
will constitute income to the Owner. A surrender or assignment of the
Certificate may have tax consequences depending upon the circumstances. Owners
should consult qualified tax advisers concerning the effect of such changes.
Federal, state, and local estate tax, inheritance, and other tax
consequences of ownership or receipt of Certificate proceeds depend on the
circumstances of each Owner or Beneficiary.
The Maturity Date Extension Rider allows an Owner to extend the Maturity
Date to the date of the death of the Insured. Although Hartford believes that
the Certificate will continue to be treated as a life insurance policy for
federal income tax purposes after the scheduled Maturity Date, due to the lack
of specific guidance on this issue, this result is not certain. If the
Certificate is not treated as a life insurance policy for federal income tax
purposes after the Maturity Date, among other things, the Death Proceeds may be
taxable to the recipient. The Owner should consult a competent tax adviser
regarding the possible adverse tax consequences resulting from an extension of
the scheduled Maturity Date.
DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable life insurance policy
(other than a pension plan policy) will not be treated as a life insurance
policy for any period during which the investments made by the separate account
underlying the policy are not adequately diversified in accordance with
regulations prescribed by the Treasury. If a policy is not treated as a life
insurance policy, the policy owner will be subject to income tax on the annual
increases in cash value. The Treasury has issued diversification regulations
which, among other things, generally require that no more than 55% of the value
of the total assets of the segregated asset account (such as the Funds)
underlying a variable contract is represented by any one investment, no more
than 70% is represented by any two investments, no more than 80% is represented
by any three investments, and no more than 90% is represented by any four
investments. In determining whether the diversification standards are met, all
securities of the same issuer, all interests in the same real property project,
and all interests in the same commodity are each treated as a single investment.
In addition, in the case of government securities, each government agency or
instrumentality shall be treated as a separate issuer. If the diversification
standards are not met, non-pension policy owners will be subject to current tax
on the increase in cash value in the policy.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to need the diversification
standards, the company may comply within a reasonable period and avoid the
taxation of policy income on an ongoing basis. However, either the company or
policy owner must agree to pay the tax due for the period during which the
diversification standards were not met. The amount required to be paid shall be
an amount based upon the tax that would have been owed by the policy owner if he
or she was treated as receiving the income on the policy for such period or
periods.
OWNERSHIP OF THE ASSETS IN
THE SEPARATE ACCOUNT
In certain circumstances, variable life insurance contract owners may be
considered the owners, for federal income tax purposes, of the assets of a
segregated asset account, such as the Separate Account, used to support their
policies. In those circumstances, income and gains from the segregated asset
account would be includible in the policy owners' gross income. The Internal
Revenue Service (the "IRS") has stated in published rulings that a variable
product owner will be considered the owner of the assets of a segregated asset
account if the owner possesses incidents of ownership in those assets, such as
the ability to exercise investment control over the assets. In addition, the
Treasury Department announced, in connection with the issuance of regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular sub-accounts [of a segregated asset account] without
being treated as owners
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
of the underlying assets." As of the date of this Prospectus, no such guidance
has been issued.
The ownership rights under the Certificate are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policy owners were not owners of the assets of a segregated
asset account. For example, an Owner of this Group Policy has the choice of more
investment options to which to allocate premium payments and value, and may be
able to transfer among investment options more frequently, than in such rulings.
These differences could result in the Owner being treated as the owner of a
portion of the assets of the Separate Account. In addition, Hartford does not
know what standards will be set forth in the regulations or rulings that the
Treasury Department has stated it expects to issue. Hartford therefore reserves
the right to modify the Group Policy and Certificate as necessary to attempt to
prevent Owners from being considered the owners of the assets of the Separate
Account. However, there is no assurance that such efforts would be successful.
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any
increase in an Owner's Investment Value is generally not taxable to the Owner
unless amounts are received (or are deemed to be received) under the Certificate
prior to the Insured's death. If the Certificate is surrendered or matures, then
the Cash Surrender Value will be includible in the Owner's income to the extent
that the amount received exceeds the "investment in the contract." (If there is
any debt at the time of a surrender, then such debt will be treated as an amount
distributed to the Owner.) The "investment in the contract" is the aggregate
amount of premium payments and other consideration paid for the Certificate,
less the aggregate amount received previously under the Certificate to the
extent such amounts received were excludable from gross income. Whether partial
withdrawals (or such other amounts deemed to be distributed) from the
Certificate constitute income to the Owner depends, in part, upon whether the
Certificate is considered a modified endowment contract for federal income tax
purposes.
MODIFIED ENDOWMENT CONTRACTS
Code Section 7702A applies an additional test, the "seven-pay" test, to life
insurance policies. A modified endowment contract ("MEC") is a life insurance
policy that either: (i) satisfies the Section 7702 definition of life insurance,
but fails the seven-pay test of Section 7702a, or (ii) is exchanged for a MEC. A
policy fails the seven-pay test if the accumulated amount paid into the
Certificate at any time during the first seven Coverage Years exceeds the sum of
the net level premiums that would have been paid up to that point if the
Certificate provided for paid-up future benefits after the payment of seven
level annual premiums. Computational rules for the seven-pay test are described
in Section 7702A(c).
If the Certificate satisfies the seven-pay test at issuance, distributions
and Loans made thereafter will not be subject to the MEC rules, unless the
Certificate is changed materially. The seven-pay test will be applied anew at
any time the Certificate undergoes a material change, which includes an increase
in the Face Amount. In addition, if there is a reduction in benefits under the
Certificate within the first seven Coverage Years, the seven-pay test is applied
as if the Certificate had initially been issued at the reduced benefit level.
Any reduction in benefits attributable to the nonpayment of premiums will not be
taken into account for purposes of the seven-pay test if the benefits are
reinstated within 90 days after the reduction.
A Certificate that is classified as a MEC is eligible for certain aspects of
the beneficial tax treatment accorded to life insurance. That is, the Death
Benefit is excluded from income and increments in value are not subject to
current taxation. However, if the Certificate is classified as a MEC then
withdrawals from the Certificate will be considered first as withdrawals of
income, then as recovery of premium payments. Thus, withdrawals will be
includible in income to the extent the Cash Surrender Value exceeds the
investment in the Certificate. The amount of any Loan (including unpaid interest
thereon) under the Certificate will be treated as a withdrawal from the
Certificate for tax purposes. In addition, if the Owner assigns or pledges any
portion of the value of a Certificate (or agrees to assign or pledge any
portion) then such portion will be treated as a withdrawal from the Certificate
for tax purposes. Taxable withdrawals are subject to an additional 10% tax, with
certain exceptions. The Owner's investment in the Certificate is increased by
the amount includible in income with respect to such assignment, pledge, or
Loan, though it is not affected by any other aspect of the assignment, pledge,
or Loan (including its release or repayment).
Generally, only distributions and Loans made in the first year in which a
Certificate becomes a MEC, and in subsequent years, are taxable. However,
distributions and Loans made in the two years prior to a Certificate's failing
the seven-pay test are deemed to be in anticipation of failure and are subject
to tax.
Before assigning, pledging, or requesting a Loan under a Certificate that is
a MEC, an Owner should consult a qualified tax adviser.
All MEC Certificates that are issued within any calendar year to the same
Certificate Owner by one company or its affiliates are treated as one MEC
Certificate for the purpose of determining the taxable portion of any Loan or
distribution.
<PAGE>
30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Hartford has instituted procedures to monitor whether a Certificate may
become classified as a MEC after issue.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Owner, such
amounts will be subject to federal income tax withholding and reporting,
pursuant to Section 3405 of the Code.
OTHER TAX CONSIDERATIONS
Qualified tax advisers should be consulted concerning the estate and gift
tax consequences of Certificate ownership and distributions under federal, state
and local law.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate
Account is a party.
EXPERTS
The audited financial statements included in this prospectus and elsewhere
in the registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving the report. Reference is made to the report on the
statutory-basis financial statements of Hartford Life and Annuity Insurance
Company (formerly ITT Hartford Life and Annuity Insurance Company) which states
the statutory-basis financial statements are presented in accordance with
statutory accounting practices prescribed or permitted by the National
Association of Insurance Commissioners and the State of Connecticut Insurance
Department, and are not presented in accordance with generally accepted
accounting principles. The principal business address of Arthur Andersen LLP is
One Financial Plaza, Hartford, Connecticut 06103.
The hypothetical illustrations included in this Prospectus and Registration
Statement have been approved by Pauline Gyllenhammer, ASA, MAAA, Senior
Actuarial Associate, are included in reliance upon her opinion as to their
reasonableness.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. This Prospectus does
not contain all information set forth in the registration statement, its
amendments and exhibits, to all of which reference is made for further
information concerning the Separate Account, Hartford, the Group Policies and
the Certificates.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFIT, CASH VALUE
AND CASH SURRENDER VALUE
The following tables illustrate how the Death Benefit, Cash Value and Cash
Surrender Value of a Group Policy may change with the investment experience of
the Separate Account. The tables show how the Death Benefit, Cash Value and Cash
Surrender Value of a Certificate issued to an Insured of a given age would vary
over time if the investment return on the assets held in each Portfolio were a
uniform, gross annual rate of 0%, 6% and 12%. The Death Benefit, Cash Value and
Cash Surrender Value would be different from those shown if the gross annual
investment returns averaged 0%, 6% and 12% over a period of years, but
fluctuated above and below those averages for individual Coverage Years. The
tables assume that no Loans are made and that no partial withdrawals have been
made. The tables are also based on the assumption that the Owner has not
requested an increase or decrease in the Face Amount and that no transfers have
been made in any Coverage Years.
The tables on pages 32 to 43 illustrate a Certificate issued to a Male
Insured, Age 45 in the Medical Non-Smoker Class with an Initial Face Amount of
$250,000. The Death Benefit, Cash Value and Cash Surrender Value would be lower
if the Insured was a smoker or in a special class since the cost of insurance
charges would increase.
The tables reflect the fact that the net return on the assets held in the
Investment Divisions is lower than the gross after-tax return of the Portfolios.
This is because these tables assume an investment management fee and other
estimated Portfolio expenses totaling 0.700%. The 0.700% figure is based on an
average of the current management fees and expenses of the available 21
Portfolios, taking into account any applicable expense caps or reimbursement
arrangements. Actual fees and expenses of the Portfolios associated with a
Certificate may be more or less than 0.700%, will vary from year to year, and
will depend on how the Cash Value is allocated.
As their headings indicate, the tables reflect the deductions of current
contractual charges and guaranteed contractual charges for a single gross
interest rate. These charges include the front-end sales load, the daily charge
to the Separate Account for assuming mortality and expense risks, and the
monthly administrative expense and cost of insurance charges. All tables assume
a charge of 2.00% for taxes attributable to premiums, a 1.25% charge for the
Federal DAC tax and reflect the fact that no charges against the Separate
Account are currently made for federal, state or local taxes attributable to the
Group Policy or Certificate.
Each table also shows the amount to which the premiums would accumulate if
an amount equal to those premiums were invested to earn interest, after taxes,
at 5% compounded annually.
Upon request, Hartford will furnish a comparable illustration based on a
proposed Certificate's specific circumstances.
<PAGE>
32 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS --------------------------- ---------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- ------ --------- ------- ------ --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,257 12,257 250,000 11,014 11,014 250,000
2 30,355 24,268 24,268 250,000 21,846 21,846 250,000
3 46,680 36,039 36,039 250,000 32,499 32,499 250,000
4 63,821 47,607 47,607 250,000 42,978 42,978 250,000
5 81,819 58,990 58,990 250,000 53,285 53,285 250,000
6 100,717 70,300 70,300 250,000 63,425 63,425 250,000
7 120,560 81,451 81,451 250,000 73,392 73,392 250,000
8 126,588 79,893 79,893 250,000 70,883 70,883 250,000
9 132,917 78,310 78,310 250,000 68,252 68,252 250,000
10 139,563 76,693 76,693 250,000 65,478 65,478 250,000
11 146,541 75,135 75,135 250,000 62,544 62,544 250,000
12 153,868 73,505 73,505 250,000 59,432 59,432 250,000
13 161,561 71,781 71,781 250,000 56,127 56,127 250,000
14 169,639 69,957 69,957 250,000 52,607 52,607 250,000
15 178,121 68,028 68,028 250,000 48,850 48,850 250,000
16 187,027 65,918 65,918 250,000 44,819 44,819 250,000
17 196,378 63,683 63,683 250,000 40,470 40,470 250,000
18 206,197 61,308 61,308 250,000 35,747 35,747 250,000
19 216,507 58,777 58,777 250,000 30,584 30,584 250,000
20 227,332 56,072 56,072 250,000 24,907 24,907 250,000
25 290,140 38,996 38,996 250,000 -- -- --
30 370,300 12,321 12,321 250,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES AND
FRONT-END SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES, AND
FRONT-END SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
FLEXIBLE VARIABLE LIFE INSURANCE
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------- ----------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- ------- ---------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,005 13,005 250,000 11,715 11,715 250,000
2 30,355 26,528 26,528 250,000 23,940 23,940 250,000
3 46,680 40,600 40,600 250,000 36,705 36,705 250,000
4 63,821 55,281 55,281 250,000 50,045 50,045 250,000
5 81,819 70,619 70,619 250,000 63,991 63,991 250,000
6 100,717 86,755 86,755 250,000 78,583 78,583 250,000
7 120,560 103,642 103,642 250,000 93,856 93,856 250,000
8 126,588 108,010 108,010 250,000 96,805 96,805 250,000
9 132,917 112,557 112,557 250,000 99,798 99,798 250,000
10 139,563 117,283 117,283 251,188 102,826 102,826 250,000
11 146,541 122,361 122,361 254,915 105,886 105,886 250,000
12 153,868 127,621 127,621 258,770 108,976 108,976 250,000
13 161,561 133,057 133,057 262,697 112,096 112,096 250,000
14 169,639 138,675 138,675 266,696 115,246 115,246 250,000
15 178,121 144,485 144,485 270,775 118,423 118,423 250,000
16 187,027 150,447 150,447 274,870 121,618 121,618 250,000
17 196,378 156,615 156,615 279,070 124,822 124,822 250,000
18 206,197 162,992 162,992 283,400 128,020 128,020 250,000
19 216,507 169,586 169,586 287,881 131,194 131,194 250,000
20 227,332 176,401 176,401 292,530 134,330 134,330 250,000
25 290,140 213,957 213,957 318,304 149,053 149,053 250,000
30 370,300 257,785 257,785 349,023 160,174 160,174 250,000
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
34 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------- ------------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- --------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,754 13,754 250,000 12,416 12,416 250,000
2 30,355 28,879 28,879 250,000 26,120 26,120 250,000
3 46,680 45,530 45,530 250,000 41,259 41,259 250,000
4 63,821 63,909 63,909 250,000 58,003 58,003 250,000
5 81,819 84,223 84,223 250,000 76,537 76,537 250,000
6 100,717 106,786 106,786 255,281 97,076 97,076 250,000
7 120,560 131,655 131,655 305,667 119,700 119,700 278,068
8 126,588 145,064 145,064 327,215 130,873 130,873 295,379
9 132,917 159,822 159,822 350,390 143,042 143,042 313,794
10 139,563 176,053 176,053 375,321 156,283 156,283 333,382
11 146,541 194,177 194,177 402,664 170,684 170,684 354,218
12 153,868 214,103 214,103 432,125 186,338 186,338 376,381
13 161,561 235,987 235,987 463,768 203,356 203,356 399,954
14 169,639 260,018 260,018 497,756 221,852 221,852 425,026
15 178,121 286,407 286,407 534,274 241,947 241,947 451,693
16 187,027 315,284 315,284 573,376 263,766 263,766 480,054
17 196,378 346,983 346,983 615,438 287,435 287,435 510,219
18 206,197 381,769 381,769 660,737 313,086 313,086 542,300
19 216,507 419,936 419,936 709,580 340,850 340,850 576,420
20 227,332 461,800 461,800 762,284 370,871 370,871 612,709
25 290,140 739,709 739,709 1,095,396 561,188 561,188 831,820
30 370,300 1,176,909 1,176,909 1,586,109 837,587 837,587 1,130,059
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS --------------------------- ---------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- ------ --------- ------- ------ --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,246 12,246 262,278 10,961 10,961 261,068
2 30,355 24,226 24,226 274,280 21,684 21,684 271,811
3 46,680 35,936 35,936 286,012 32,163 32,163 282,310
4 63,821 47,407 47,407 297,503 42,397 42,397 292,565
5 81,819 58,654 58,654 308,769 52,377 52,377 302,566
6 100,717 69,827 69,827 319,948 62,099 62,099 312,309
7 120,560 80,804 80,804 330,941 71,544 71,544 321,777
8 126,588 79,061 79,061 329,201 68,489 68,489 318,732
9 132,917 77,281 77,281 327,424 65,289 65,289 315,544
10 139,563 75,450 75,450 325,597 61,919 61,919 312,189
11 146,541 73,653 73,653 323,797 58,368 58,368 308,652
12 153,868 71,756 71,756 321,908 54,617 54,617 304,918
13 161,561 69,731 69,731 319,893 50,659 50,659 300,977
14 169,639 67,573 67,573 317,747 46,479 46,479 296,815
15 178,121 65,277 65,277 315,462 42,059 42,059 292,415
16 187,027 62,747 62,747 312,952 37,369 37,369 287,748
17 196,378 60,064 60,064 310,282 32,376 32,376 282,780
18 206,197 57,214 57,214 307,445 27,035 27,035 277,467
19 216,507 54,183 54,183 304,429 21,293 21,293 271,759
20 227,332 50,954 50,954 301,216 15,104 15,104 265,607
25 290,140 31,023 31,023 281,398 0 0 0
30 370,300 2,087 2,087 252,638 0 0 0
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
36 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ----------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,994 12,994 262,963 11,659 11,659 261,710
2 30,355 26,482 26,482 276,410 23,761 23,761 273,774
3 46,680 40,482 40,482 290,365 36,320 36,320 286,295
4 63,821 55,043 55,043 304,879 49,352 49,352 299,286
5 81,819 70,205 70,205 319,990 62,864 62,864 312,758
6 100,717 86,147 86,147 335,865 76,873 76,873 326,724
7 120,560 102,777 102,777 352,437 91,378 91,378 341,187
8 126,588 106,845 106,845 356,494 93,437 93,437 343,251
9 132,917 111,038 111,038 360,676 95,398 95,398 345,221
10 139,563 115,347 115,347 364,975 97,231 97,231 347,065
11 146,541 119,931 119,931 369,535 98,915 98,915 348,762
12 153,868 124,608 124,608 374,205 100,422 100,422 350,283
13 161,561 129,354 129,354 378,945 101,732 101,732 351,611
14 169,639 134,164 134,164 383,750 102,819 102,819 352,717
15 178,121 139,036 139,036 388,616 103,652 103,652 353,571
16 187,027 143,869 143,869 393,453 104,184 104,184 354,129
17 196,378 148,746 148,746 398,326 104,362 104,362 354,337
18 206,197 153,649 153,649 403,227 104,121 104,121 354,132
19 216,507 158,566 158,566 408,142 103,383 103,383 353,436
20 227,332 163,476 163,476 413,053 102,069 102,069 352,171
25 290,140 186,942 186,942 436,559 84,148 84,148 334,595
30 370,300 204,897 204,897 454,650 36,302 36,302 287,407
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------- ------------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- --------- --------- --------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,742 13,742 263,645 12,357 12,357 262,348
2 30,355 28,828 28,828 278,615 25,923 25,923 275,809
3 46,680 45,396 45,396 295,053 40,819 40,819 290,589
4 63,821 63,629 63,629 313,141 57,181 57,181 306,823
5 81,819 83,717 83,717 333,067 75,149 75,149 324,651
6 100,717 106,012 106,012 355,169 94,886 94,886 344,234
7 120,560 130,616 130,616 379,572 116,556 116,556 365,735
8 126,588 143,735 143,735 392,586 126,660 126,660 375,768
9 132,917 158,178 158,178 406,913 137,634 137,634 386,667
10 139,563 174,069 174,069 422,678 149,545 149,545 398,496
11 146,541 191,821 191,821 440,266 162,475 162,475 411,337
12 153,868 211,352 211,352 459,642 176,510 176,510 425,276
13 161,561 232,822 232,822 480,943 191,758 191,758 440,418
14 169,639 256,432 256,432 504,366 208,327 208,327 456,871
15 178,121 282,407 282,407 530,134 226,335 226,335 474,754
16 187,027 310,876 310,876 565,360 245,901 245,901 494,185
17 196,378 342,131 342,131 606,832 267,149 267,149 515,286
18 206,197 376,429 376,429 651,496 290,206 290,206 538,185
19 216,507 414,062 414,062 699,655 315,205 315,205 563,014
20 227,332 455,340 455,340 751,620 342,293 342,293 589,920
25 290,140 729,355 729,355 1,080,064 515,806 515,806 764,552
30 370,300 1,160,431 1,160,431 1,563,901 769,793 769,793 1,038,593
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
38 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS --------------------------- ---------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- ------ --------- ------- ------ --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,057 5,057 250,000 3,968 3,968 250,000
2 12,915 9,952 9,952 250,000 7,811 7,811 250,000
3 19,861 14,685 14,685 250,000 11,527 11,527 250,000
4 27,154 19,288 19,288 250,000 15,115 15,115 250,000
5 34,812 23,775 23,775 250,000 18,566 18,566 250,000
6 42,853 28,280 28,280 250,000 21,879 21,879 250,000
7 51,296 32,693 32,693 250,000 25,038 25,038 250,000
8 60,161 37,133 37,133 250,000 28,151 28,151 250,000
9 69,469 41,472 41,472 250,000 31,083 31,083 250,000
10 79,242 45,704 45,704 250,000 33,818 33,818 250,000
11 89,504 49,885 49,885 250,000 36,348 36,348 250,000
12 100,279 53,935 53,935 250,000 38,662 38,662 250,000
13 111,593 57,837 57,837 250,000 40,757 40,757 250,000
14 123,473 61,592 61,592 250,000 42,621 42,621 250,000
15 135,947 65,200 65,200 250,000 44,243 44,243 250,000
16 149,044 68,596 68,596 250,000 45,598 45,598 250,000
17 162,796 71,844 71,844 250,000 46,660 46,660 250,000
18 177,236 74,939 74,939 250,000 47,390 47,390 250,000
19 192,398 77,876 77,876 250,000 47,744 47,744 250,000
20 208,318 80,646 80,646 250,000 47,677 47,677 250,000
25 300,684 91,605 91,605 250,000 39,397 39,397 250,000
30 418,569 96,243 96,243 250,000 9,125 9,125 250,000
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
FLEXIBLE VARIABLE LIFE INSURANCE
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS AC- ---------------------------- ----------------------------
END OF CUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,370 5,370 250,000 4,243 4,243 250,000
2 12,915 10,892 10,892 250,000 8,610 8,610 250,000
3 19,861 16,571 16,571 250,000 13,104 13,104 250,000
4 27,154 22,447 22,447 250,000 17,731 17,731 250,000
5 34,812 28,542 28,542 250,000 22,489 22,489 250,000
6 42,853 35,002 35,002 250,000 27,383 27,383 250,000
7 51,296 41,733 41,733 250,000 32,405 32,405 250,000
8 60,161 48,875 48,875 250,000 37,680 37,680 250,000
9 69,469 56,316 56,316 250,000 43,082 43,082 250,000
10 79,242 64,063 64,063 250,000 48,606 48,606 250,000
11 89,504 72,225 72,225 250,000 54,256 54,256 250,000
12 100,279 80,721 80,721 250,000 60,034 60,034 250,000
13 111,593 89,555 89,555 250,000 65,951 65,951 250,000
14 123,473 98,753 98,753 250,000 72,016 72,016 250,000
15 135,947 108,343 108,343 250,000 78,237 78,237 250,000
16 149,044 118,303 118,303 250,000 84,616 84,616 250,000
17 162,796 128,717 128,717 250,000 91,154 91,154 250,000
18 177,236 139,617 139,617 250,000 97,852 97,852 250,000
19 192,398 151,002 151,002 256,334 104,709 104,709 250,000
20 208,318 162,808 162,808 269,987 111,732 111,732 250,000
25 300,684 228,491 228,491 339,926 150,191 150,191 250,000
30 418,569 306,236 306,236 414,621 196,982 196,982 266,995
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
40 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------ ----------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- ------- --------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,683 5,683 250,000 4,518 4,518 250,000
2 12,915 11,870 11,870 250,000 9,443 9,443 250,000
3 19,861 18,612 18,612 250,000 14,816 14,816 250,000
4 27,154 26,002 26,002 250,000 20,686 20,686 250,000
5 34,812 34,126 34,126 250,000 27,104 27,104 250,000
6 42,853 43,199 43,199 250,000 34,129 34,129 250,000
7 51,296 53,212 53,212 250,000 41,819 41,819 250,000
8 60,161 64,402 64,402 250,000 50,377 50,377 250,000
9 69,469 76,760 76,760 250,000 59,762 59,762 250,000
10 79,242 90,409 90,409 250,000 70,066 70,066 250,000
11 89,504 105,640 105,640 250,000 81,403 81,403 250,000
12 100,279 122,497 122,497 250,000 93,902 93,902 250,000
13 111,593 141,076 141,076 277,246 107,722 107,722 250,000
14 123,473 161,500 161,500 309,162 123,041 123,041 250,000
15 135,947 183,948 183,948 343,143 139,999 139,999 261,364
16 149,044 208,550 208,550 379,269 158,444 158,444 288,368
17 162,796 235,572 235,572 417,831 178,483 178,483 316,820
18 177,236 265,243 265,243 459,063 200,231 200,231 346,822
19 192,398 297,814 297,814 503,227 223,806 223,806 378,484
20 208,318 333,557 333,557 550,595 249,337 249,337 411,924
25 300,684 571,116 571,116 845,736 411,796 411,796 610,384
30 418,569 945,358 945,358 1,274,049 648,849 648,849 875,417
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 41
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS --------------------------- ---------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- ------ --------- ------- ------ --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,052 5,052 255,076 3,947 3,947 254,047
2 12,915 9,935 9,935 259,972 7,750 7,750 257,861
3 19,861 14,643 14,643 264,695 11,402 11,402 261,525
4 27,154 19,206 19,206 269,270 14,901 14,901 265,037
5 34,812 23,638 23,638 273,713 18,235 18,235 268,385
6 42,853 28,087 28,087 278,161 21,401 21,401 271,565
7 51,296 32,431 32,431 282,513 24,377 24,377 274,557
8 60,161 36,783 36,783 286,875 27,268 27,268 277,465
9 69,469 41,017 41,017 291,118 29,933 29,933 280,148
10 79,242 45,118 45,118 295,231 32,350 32,350 282,586
11 89,504 49,137 49,137 299,257 34,508 34,508 284,765
12 100,279 52,987 52,987 303,120 36,389 36,389 286,670
13 111,593 56,640 56,640 306,790 37,988 37,988 288,292
14 123,473 60,093 60,093 310,259 39,290 39,290 289,619
15 135,947 63,340 63,340 313,524 40,280 40,280 290,634
16 149,044 66,287 66,287 316,496 40,927 40,927 291,309
17 162,796 69,017 69,017 319,243 41,199 41,199 291,613
18 177,236 71,513 71,513 321,759 41,053 41,053 291,501
19 192,398 73,766 73,766 324,032 40,437 40,437 290,924
20 208,318 75,758 75,758 326,045 39,305 39,305 289,835
25 300,684 81,015 81,015 331,440 24,545 24,545 275,336
30 418,569 75,811 75,811 326,435 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
42 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ----------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,365 5,365 255,363 4,221 4,221 254,300
2 12,915 10,873 10,873 260,859 8,542 8,542 258,612
3 19,861 16,523 16,523 266,496 12,960 12,960 263,022
4 27,154 22,349 22,349 272,308 17,474 17,474 267,528
5 34,812 28,373 28,373 278,315 22,076 22,076 272,123
6 42,853 34,754 34,754 284,665 26,763 26,763 276,802
7 51,296 41,381 41,381 291,272 31,514 31,514 281,548
8 60,161 48,388 48,388 298,257 36,441 36,441 286,470
9 69,469 55,657 55,657 305,503 41,402 41,402 291,428
10 79,242 63,183 63,183 313,007 46,374 46,374 296,399
11 89,504 71,059 71,059 320,853 51,341 51,341 301,367
12 100,279 79,185 79,185 328,958 56,283 56,283 306,311
13 111,593 87,545 87,545 337,298 61,187 61,187 311,218
14 123,473 96,142 96,142 345,875 66,034 66,034 316,070
15 135,947 104,981 104,981 354,693 70,800 70,800 320,843
16 149,044 113,972 113,972 363,671 75,447 75,447 325,500
17 162,796 123,203 123,203 372,883 79,931 79,931 329,998
18 177,236 132,670 132,670 382,329 84,194 84,194 334,280
19 192,398 142,368 142,368 392,008 88,168 88,168 338,278
20 208,318 152,288 152,288 401,908 91,785 91,785 341,925
25 300,684 204,631 204,631 454,180 102,156 102,156 352,535
30 418,569 259,064 259,064 508,605 89,797 89,797 340,700
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 43
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------ ----------------------------
END OF ACCUMULATED AT CASH CASH
POLICY 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ------ -------------- ------- --------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,678 5,678 255,649 4,495 4,495 254,552
2 12,915 11,849 11,849 261,777 9,368 9,368 259,392
3 19,861 18,556 18,556 268,437 14,651 14,651 264,639
4 27,154 25,887 25,887 275,714 20,381 20,381 270,331
5 34,812 33,919 33,919 283,684 26,594 26,594 276,501
6 42,853 42,882 42,882 292,566 33,331 33,331 283,193
7 51,296 52,744 52,744 302,350 40,625 40,625 290,438
8 60,161 63,728 63,728 313,247 48,649 48,649 298,409
9 69,469 75,810 75,810 325,233 57,323 57,323 307,026
10 79,242 89,090 89,090 338,408 66,690 66,690 316,333
11 89,504 103,823 103,823 353,014 76,806 76,806 326,383
12 100,279 120,011 120,011 369,075 87,730 87,730 337,237
13 111,593 137,778 137,778 386,704 99,536 99,536 348,966
14 123,473 157,287 157,287 406,061 112,299 112,299 361,646
15 135,947 178,720 178,720 427,326 126,099 126,099 375,355
16 149,044 202,177 202,177 450,606 141,010 141,010 390,169
17 162,796 227,961 227,961 476,187 157,110 157,110 406,165
18 177,236 256,305 256,305 504,308 174,473 174,473 423,418
19 192,398 287,467 287,467 535,224 193,174 193,174 442,003
20 208,318 321,731 321,731 569,217 213,298 213,298 462,002
25 300,684 551,182 551,182 816,217 339,228 339,228 587,158
30 418,569 913,631 913,631 1,231,292 518,594 518,594 765,500
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES AND FRONT-END
SALES LOADS.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of ITT Hartford Life
and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of ITT Hartford Life
and Annuity Insurance Company (a Connecticut Corporation and wholly owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December 31,
1997 and 1996, and the related statutory statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained and quantified in Note 1.
In our opinion, because the differences in accounting practices as described in
Note 1 are material, the statutory financial statements referred to above do not
present fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of three years in the
period ended December 31, 1997.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1997 and 1996, and the results of operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with statutory accounting practices as described in Note 1.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 27, 1998
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
($000)
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 296,645 $ 250,244 $ 165,792
Annuity and other fund deposits................. 1,981,246 1,897,347 1,087,661
Net investment income........................... 102,285 98,441 78,787
Commissions and expense allowances on
reinsurance ceded.............................. 396,921 370,637 183,380
Reserve adjustment on reinsurance ceded......... 3,672,076 3,864,395 1,879,785
Other revenues.................................. 288,632 161,906 140,796
---------- ---------- ----------
Total Revenues................................ 6,737,805 6,642,970 3,536,201
---------- ---------- ----------
Benefits and Expenses
Death and annuity benefits...................... 66,013 60,111 53,029
Surrenders and other benefit payments........... 461,733 276,720 221,392
Commissions and other expenses.................. 564,240 491,720 236,202
Increase in aggregate reserves for future
benefits....................................... 33,213 27,351 94,253
Increase in liability for premium and other
deposit funds.................................. 640,006 207,156 460,124
Net transfers to Separate Accounts.............. 4,914,980 5,492,964 2,414,669
---------- ---------- ----------
Total Benefits and Expenses................... 6,680,185 6,556,022 3,479,669
---------- ---------- ----------
Net Gain from Operations Before Federal Income
Taxes............................................ 57,620 86,948 56,532
Federal income tax (benefit) expense............ (14,878) 19,360 14,048
---------- ---------- ----------
Net Gain from Operations.......................... 72,498 67,588 42,484
Net realized capital gains, after tax........... 1,544 407 374
---------- ---------- ----------
Net Income........................................ $ 74,042 $ 67,995 $ 42,858
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------
1997 1996
----------- -----------
($000)
<S> <C> <C>
Assets
Bonds........................................... $ 1,501,311 $ 1,268,480
Common stocks................................... 64,408 44,996
Mortgage loans.................................. 85,103 0
Policy loans.................................... 36,533 28,853
Cash and short-term investments................. 309,432 176,830
Other invested assets........................... 20,942 2,858
----------- -----------
Total cash and invested assets................ 2,017,729 1,522,017
----------- -----------
Investment income due and accrued............... 15,878 14,555
Premium balances receivable..................... 389 373
Receivables from affiliates..................... 1,269 257
Other assets.................................... 22,788 19,099
Separate Account assets......................... 23,208,728 14,619,324
----------- -----------
Total Assets.................................. $25,266,781 $16,175,625
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 605,183 $ 571,970
Policy and contract claims...................... 5,672 6,806
Liability for premium and other deposit funds... 1,795,149 1,155,143
Asset valuation reserve......................... 13,670 7,442
Payable to affiliates........................... 20,972 10,022
Other liabilities............................... (754,393) (498,195)
Separate Account liabilities.................... 23,208,728 14,619,324
----------- -----------
Total liabilities............................. 24,894,981 15,872,512
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 143,257 74,570
----------- -----------
Total capital and surplus..................... 371,800 303,113
----------- -----------
Total liabilities, capital and surplus.......... $25,266,781 $16,175,625
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
($000)
<S> <C> <C> <C>
Capital and surplus -- beginning of year $ 303,113 $ 238,334 $ 91,285
--------- --------- ---------
Net income...................................... 74,042 67,995 42,858
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 2,186 (5,171) 1,709
Change in asset valuation reserve............... (6,228) 568 (5,588)
Change in non-admitted assets................... (1,313) 1,387 (1,944)
Aggregate write-ins for surplus (See Note 3).... 0 0 8,080
Dividends to shareholder........................ 0 0 (10,000)
Paid-in surplus................................. 0 0 111,934
--------- --------- ---------
Change in capital and surplus................... 68,687 64,779 147,049
--------- --------- ---------
Capital and surplus -- end of year.............. $ 371,800 $ 303,113 $ 238,334
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
($000)
<S> <C> <C> <C>
Operations
Premiums, annuity considerations and fund
deposits....................................... $ 2,277,874 $ 2,147,627 $ 1,253,511
Investment income............................... 101,991 106,178 78,328
Other income.................................... 4,381,718 4,396,892 2,253,466
----------- ----------- -----------
Total income.................................. 6,761,583 6,650,697 3,585,305
----------- ----------- -----------
Benefits Paid................................... 529,733 338,998 277,965
Federal income taxes (received) paid on
operations..................................... (14,499) 28,857 208,423
Other expenses.................................. 5,754,725 6,254,139 2,664,385
----------- ----------- -----------
Total benefits and expenses..................... 6,269,959 6,621,994 3,150,773
----------- ----------- -----------
Net cash from operations........................ 491,624 28,703 434,532
----------- ----------- -----------
Proceeds from Investments
Bonds........................................... 614,413 871,019 287,941
Common stocks................................... 11,481 72,100 52
Other........................................... 152 10 28
----------- ----------- -----------
Net investment proceeds....................... 626,046 943,129 288,021
----------- ----------- -----------
Taxes Paid on Capital Gains....................... 0 936 226
Paid-In Surplus................................... 0 0 111,934
Other Cash Provided............................. 0 41,998 28,199
----------- ----------- -----------
Total Proceeds................................ 1,117,670 1,012,894 862,460
----------- ----------- -----------
Cost of Investments Acquired
Bonds........................................... 848,267 914,523 720,521
Common stocks................................... 28,302 82,495 35,794
Mortgage loans.................................. 85,103 0 0
Miscellaneous applications...................... 18,548 130 2,146
----------- ----------- -----------
Total Investments Acquired.................... 980,220 997,148 758,461
----------- ----------- -----------
Other Cash Applied
Dividends paid to stockholders.................. 0 0 10,000
Other........................................... 4,848 12,220 5,007
----------- ----------- -----------
Total other cash applied...................... 4,848 12,220 15,007
----------- ----------- -----------
Total applications.......................... 985,068 1,009,368 773,468
----------- ----------- -----------
Net Change in Cash and Short-Term Investments..... 132,602 3,526 88,992
Cash and Short-Term Investments, Beginning of
Year........................................... 176,830 173,304 84,312
----------- ----------- -----------
Cash and Short-Term Investments, End of Year.... $ 309,432 $ 176,830 $ 173,304
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
ITT Hartford Life and Annuity Insurance Company ("ILA" or "the Company"),
formerly known as ITT Life Insurance Corporation, is a wholly owned subsidiary
of Hartford Life Insurance Company ("HLIC"), which is an indirect subsidiary of
Hartford Life, Inc. ("HLI"), which is majority owned by The Hartford Financial
Services Group, Inc. ("The Hartford"), formerly a wholly owned subsidiary of ITT
Corporation ("ITT"). On February 10, 1997, HLI filed a registration statement,
as amended, with the Securities and Exchange Commission relating to the initial
public offering of HLI Class A Common Stock (the "Offering"). Pursuant to the
Offering on May 22, 1997, HLI sold to the public 26 million shares, representing
18.6% of the equity ownership of HLI. On December 19, 1995, ITT Corporation
distributed all the outstanding shares of The Hartford to ITT shareholders of
record in an action known herein as the "Distribution". As a result of the
Distribution, The Hartford became an independent, publicly traded company.
During 1996, ILA re-domesticated from the State of Wisconsin to the State of
Connecticut.
ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.
BASIS OF PRESENTATION
The accompanying ILA statutory financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners ("NAIC") and the State of
Connecticut Department of Insurance.
The preparation of financial statements in conformity with statutory
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates. The most significant estimates are
for determining the liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some variability is
inherent in these estimates, management believes the amounts provided are
adequate.
Statutory accounting practices and generally accepted accounting principles
("GAAP") differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and selling
expenses, premium taxes, etc.) which are charged to expense when incurred
for statutory purposes rather than on a pro-rata basis over the expected
life of the policy;
(2) recognition of premium revenues, which for statutory purposes are generally
recorded as collected or when due during the premium paying period of the
contract and which for GAAP purposes, for universal life policies and
investment products, generally, are only recorded for policy charges for the
cost of insurance, policy administration and surrender charges assessed to
policy account balances. Also, for GAAP purposes, premiums for traditional
life insurance policies are recognized as revenues when they are due from
policyholders and the retrospective deposit method is used in accounting for
universal life and other types of contracts where the payment pattern is
irregular or surrender charges are a significant source of profit. The
prospective deposit method is used for GAAP purposes where investment
margins are the primary source of profit;
(3) development of liabilities for future policy benefits, which for statutory
purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and
mortality assumptions used for GAAP financial reporting;
(4) providing for income taxes based on current taxable income (tax return) only
for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for
financial reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g., past
due agents' balances and furniture and equipment) from the balance sheet for
statutory purposes by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health care
benefits on an option basis, using a twenty year phase-in approach, whereas
GAAP liabilities are recorded upon adoption of the applicable standard;
<PAGE>
- --------------------------------------------------------------------------------
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and realized gains and losses are recognized in
the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where risk
transfer has taken place; whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
(9) the reporting of fixed maturities at amortized cost, whereas GAAP requires
that fixed maturities be classified as "held-to-maturity",
"available-for-sale" or "trading", based on the Company's intentions with
respect to the ultimate disposition of the security and its ability to
affect those intentions. The Company's bonds were classified on a GAAP basis
as "available-for-sale" and accordingly, those investments and common stocks
were reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
gains (losses) on securities net of tax". For statutory reporting purposes,
Change in Net Unrealized Capital Gains (Losses) on Common Stocks and Other
Invested Assets includes the change in unrealized gains (losses) on common
stock reported at fair value; and
(10) separate account liabilities are valued on the Commissioner's Annuity
Reserve Valuation Method ("CARVM"), with the surplus generated recorded as a
liability to the general account (and a contra liability on the balance
sheet of the general account), whereas GAAP liabilities are valued at
account value.
As of and for the years ended December 31, 1997, 1996 and 1995, the
significant differences between statutory and GAAP basis net income and capital
and surplus for the Company are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Net Income............... $ 58,050 $ 41,202 $ 38,821
Amortization and
deferral of policy
acquisition costs............ (345,658) (341,572) (174,341)
Change in unearned revenue
reserve...................... 4,641 55,504 32,300
Deferred taxes................ 47,113 2,090 2,801
Separate accounts............. 282,818 306,978 146,635
Other, net.................... 27,078 3,793 (3,358)
------------ ---------- ----------
Statutory Net Income.......... $ 74,042 $ 67,995 $ 42,858
------------ ---------- ----------
------------ ---------- ----------
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Capital and
Surplus...................... $ 570,469 $ 503,887 $ 455,541
Deferred policy acquisition
costs........................ (1,283,771) (938,114) (596,542)
Unearned revenue reserve...... 134,789 130,148 74,644
Deferred taxes................ 64,522 12,823 1,493
Separate accounts............. 923,040 640,101 333,123
Asset valuation reserve....... (13,670) (7,442) (8,010)
Unrealized gains (losses) on
bonds........................ 13,943 5,112 (1,696)
Adjustment relating to Lyndon
contribution (see Note 3).... (41,277) (41,277) (41,277)
Other, net.................... 3,755 (2,125) 21,058
------------ ---------- ----------
Statutory Capital and
Surplus...................... $ 371,800 $ 303,113 $ 238,334
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY FOR PREMIUM AND OTHER
DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits
were computed in accordance with actuarial standards. Reserves for life
insurance policies are generally based on the 1958 and 1980 Commissioner's
Standard Ordinary Mortality Tables and various valuation rates ranging from 2.5%
to 6%. Accumulation and on-benefit annuity reserves are based principally on
individual annuity tables at various rates ranging from 2.5% to 8.75% and using
CARVM. Accident and health reserves are established using a two year preliminary
term method and morbidity tables based on Company experience.
ILA has established separate accounts to segregate the assets and
liabilities of certain annuity contracts that must be segregated from the
Company's general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Premiums, benefits
and expenses of these contracts are reported in the Statutory Statements of
Income.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds which are deemed
ineligible to be held at amortized cost by the NAIC Securities Valuation Office
("SVO") are carried at the appropriate SVO published value. When a permanent
reduction in the value of publicly traded securities occurs, the decrease is
reported as a realized loss and the carrying value is adjusted accordingly.
Common stocks are carried at fair value with the current year change in the
difference from cost reflected in surplus. Other invested assets are generally
recorded at fair value.
The Asset Valuation Reserve ("AVR") is designed to provide a standardized
reserving process for realized and unrealized losses due to default and equity
risks associated with invested assets. The reserve increased by $6,228 in 1997,
decreased by $568 in 1996 and increased by $5,588 in 1995. Additionally, the
Interest Maintenance Reserve
<PAGE>
- --------------------------------------------------------------------------------
("IMR") captures net realized capital gains and losses, net of applicable income
taxes, resulting from changes in interest rates and amortizes these gains or
losses into income over the remaining life of the mortgage loan or bond sold.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the Statutory Statements of Income. Realized investment gains and losses are
determined on a specific identification basis. The amount of net capital losses
reclassified from the IMR was $719 in 1997 and the amount of net capital gains
reclassified was $1,413 and $39 in 1996 and 1995, respectively. The amount of
income amortized was $85, $392 and $256 in 1997, 1996 and 1995, respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $923 million and $640 million as of December 31, 1997 and
1996, respectively. The balances are classified in accordance with NAIC
accounting practices.
MORTGAGE LOANS
Mortgage loans, carried at cost, which approximates fair value, include
investments in assets backed by mortgage loan pools.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments....... $100,475 $89,940 $ 76,100
Interest income from policy
loans........................ 1,958 1,846 1,504
Interest and dividends from
other investments............ 1,005 7,864 2,288
-------- ------- --------
Gross investment income....... 103,438 99,650 79,892
Less: investment expenses..... 1,153 1,209 1,105
-------- ------- --------
Net investment income......... $102,285 $98,441 $ 78,787
-------- ------- --------
-------- ------- --------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $ 537 $ 713 $ 1,724
Gross unrealized capital losses at
end of year........................ (1,820) (4,160) 0
-------- ------- --------
Net unrealized capital (losses)
gains.............................. (1,283) (3,447) 1,724
Balance at beginning of year........ (3,447) 1,724 15
-------- ------- --------
Change in net unrealized capital
gains (losses) on common stocks.... $ 2,164 $(5,171) $ 1,709
-------- ------- --------
-------- ------- --------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $23,357 $ 11,821 $ 22,251
Gross unrealized capital losses at
end of year........................ (1,906) (3,842) (1,374)
------- -------- --------
Net unrealized capital gains........ 21,451 7,979 20,877
Balance at beginning of year........ 7,979 20,877 33,732
------- -------- --------
Change in net unrealized capital
gains (losses) on bonds and
short-term investments............. $13,472 $(12,898) $ 54,609
------- -------- --------
------- -------- --------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Bonds and short-term investments......... $ (120) $ 2,756 $ 56
Common stocks............................ 0 0 52
Real estate and other.................... 114 0 0
------- ------- ------
Realized capital (losses) gains.......... (6) 2,756 208
Capital gains (benefit) tax.............. (831) 936 (205)
------- ------- ------
Net realized capital gains, after tax.... 825 1,820 413
Less: IMR capital (losses) gains......... (719) 1,413 39
------- ------- ------
Net realized capital gains............... $ 1,544 $ 407 $ 374
------- ------- ------
------- ------- ------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1997 and 1996.
(F) CONCENTRATION OF CREDIT RISK
Excluding U.S. government and government agency investments, the Company is
not exposed to any significant concentration of credit risk.
<PAGE>
- --------------------------------------------------------------------------------
(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 11,114 $ 55 $ (51) $ 11,118
Guaranteed and sponsored -- asset-backed... 55,506 1,056 (269) 56,293
States, municipalities and political
subdivisions................................ 26,404 329 0 26,733
International governments.................... 7,609 500 0 8,109
Public utilities............................. 73,024 754 (132) 73,646
All other corporate.......................... 517,715 14,110 (704) 531,121
All other corporate -- asset-backed.......... 630,069 5,005 (739) 634,335
Short-term investments....................... 277,330 33 (8) 277,355
Certificates of deposit...................... 93,770 1,515 (3) 95,282
Parents, subsidiaries and affiliates......... 86,100 0 0 86,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,778,641 $23,357 $(1,906) $ 1,800,092
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 30,307 $ 537 $ 0 $ 30,844
Common stock -- affiliated................... 35,384 0 (1,820) 33,564
----------- ---------- ---------- -----------
Total common stocks.......................... $ 65,691 $ 537 $(1,820) $ 64,408
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 58,761 $ 6 $ (195) $ 58,572
Guaranteed and sponsored -- asset-backed... 78,237 1,477 (609) 79,105
States, municipalities and political
subdivisions................................ 25,958 163 (2) 26,119
International governments.................... 7,447 205 0 7,652
Public utilities............................. 70,116 396 (424) 70,088
All other corporate.......................... 410,530 6,357 (1,355) 415,532
All other corporate -- asset-backed.......... 485,953 2,654 (1,081) 487,526
Short-term investments....................... 148,094 0 (66) 148,028
Certificates of deposit...................... 83,378 563 (110) 83,831
Parents, subsidiaries and affiliates......... 48,100 0 0 48,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,416,574 $11,821 $(3,842) $ 1,424,553
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 13,064 $ 713 $ 0 $ 13,777
Common stock -- affiliated................... 35,379 0 (4,160) 31,219
----------- ---------- ---------- -----------
Total common stocks.......................... $ 48,443 $ 713 $(4,160) $ 44,996
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term
investments at December 31, 1997 by management's anticipated maturity are shown
below. Asset-backed securities are distributed to maturity year based on ILA's
estimate of the rate of future prepayments of principal
<PAGE>
- --------------------------------------------------------------------------------
over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- --------------------------------------------- ---------- -----------
<S> <C> <C>
Due in one year or less...................... $ 424,518 $ 696,203
Due after one year through five years........ 586,980 708,365
Due after five years through ten years....... 451,963 295,896
Due after ten years.......................... 315,180 99,628
---------- -----------
Total...................................... $1,778,641 $ 1,800,092
---------- -----------
---------- -----------
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1997, 1996 and 1995 were $367,626, $668,078 and $313,961, respectively,
resulting in gross realized gains of $964, $3,675 and $1,419, respectively, and
gross realized losses of $1,084, $919 and $1,263, respectively, before transfers
to IMR. The Company had realized gains of $52 during 1995 from a capital gain
distribution.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
ASSETS
Bonds and short-term investments........... $1,778 $ 1,800 $1,417 $ 1,425
Common stocks.............................. 64 64 45 45
Policy loans............................... 37 37 29 29
Mortgage loans............................. 85 85 0 0
Other invested assets...................... 21 21 3 3
LIABILITIES
Liabilities on investment contracts........ $1,911 $ 1,835 $1,245 $ 1,191
</TABLE>
The carrying amounts for policy loans approximates fair value. The fair
value of liabilities on investment contracts are determined by forecasting
future cash flows and discounting the forecasted cash flows at current market
rates.
3. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within The Hartford
relate principally to tax settlements, reinsurance, service fees, capital
contributions and payments of dividends. The Company has also invested in bonds
of its subsidiaries, Hartford Financial Services Corporation and HL Investment
Advisors, Inc., and common stock of its subsidiary, ITT Hartford Life, LTD.
On June 30, 1995, the assets of Lyndon Insurance Company were contributed to
ILA. As a result, ILA received approximately $365 million in bonds and
short-term investments, common stocks and cash, $28 million in policy reserves,
$187 million of current tax liability, $26 million in IMR, $8 million in AVR
(offset by an aggregate write-in to surplus), and $4 million of other
liabilities. The assets in excess of liabilities of $112 million were recorded
as an increase to paid-in surplus.
For additional information, see Note 5.
4. FEDERAL INCOME TAXES:
The Company and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. Federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were to file separate Federal, state and local
income tax returns.
As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of HLI, the Company will be included for Federal
income tax purposes in the consolidated group of which The Hartford is the
common parent. It is the current intention of The Hartford and its subsidiaries
to continue to file a single consolidated Federal income tax return. The Company
will continue to remit (receive from) The Hartford a current income tax
provision (benefit) computed in accordance with such tax sharing agreement.
Federal income taxes (received) paid by the Company were $(14,499), $29,792 and
$215,921 in 1997, 1996 and 1995, respectively. The effective tax rate was (26)%,
22% and 25% in 1997, 1996 and 1995, respectively. The following schedule
provides a reconciliation of the tax provision at the U.S. Federal Statutory
rate to Federal income tax (benefit) expense (in millions).
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate........................................ $ 20 $ 30 $ 20
Tax deferred acquisition costs............... 25 27 8
Statutory to tax reserve differences......... 1 0 3
Unrealized gain on separate accounts......... (44) (21) (13)
Investments and other........................ (17) (17) (4)
----- ----- -----
Federal income tax (benefit) expense......... $ (15) $ 19 $ 14
----- ----- -----
----- ----- -----
</TABLE>
5. CAPITAL AND SURPLUS AND SHAREHOLDER
DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid, without prior approval,
by State of Connecticut insurance companies to shareholders is subject to
restrictions relating to statutory surplus. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1997 or
1996. ILA paid dividends of $10 million to its parent, HLIC, in 1995. As a
result of the Distribution by ITT, the assets of ITT Lyndon Insurance Company
(Lyndon) were contributed to ILA in June 1995. Substantially all the business
was removed from Lyndon prior to the contribution. The amount of assets which
<PAGE>
- --------------------------------------------------------------------------------
exceeded liabilities at the contribution date ($112 million) was included in
paid-in surplus.
6. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
The Company's employees are included in The Hartford's non-contributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974 and the maximum amount that can be
deducted for Federal income tax purposes. Generally, pension costs are funded
through the purchase of HLIC's group pension contracts. Pension expense was
$265, $358, and $1,034 in 1997, 1996 and 1995, respectively. Liabilities for the
plan are held by The Hartford.
The Company also participates in The Hartford's Investment and Savings Plan,
which includes a deferred compensation option under IRC section 401(k) and an
ESOP allocation under IRC section 404(k). The liabilities for these plans are
included in the financial statements of The Hartford. The cost to ILA was not
material in 1997, 1996 and 1995.
The Company's employees are included in The Hartford's contributory defined
health care and life insurance benefit plans. These plans provide health care
and life insurance benefits for retired employees. Substantially all employees
may become eligible for those benefits if they reach normal or early retirement
age while still working for the Company. The Company has prefunded a portion of
the health care and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis. Amounts allocated by
The Hartford for post-retirement health care and life insurance benefits expense
(not including provisions for accrual of post-retirement benefit obligations)
are immaterial. The assumed rate of future increases in the per capita cost of
health care (the health care trend rate) was 8.5% for 1997, decreasing ratably
to 6% in the year 2001. Increasing the health care trend rates by one percent
per year would have an immaterial impact on the accumulated post-retirement
benefit obligation and the annual expense. The cost to ILA was not material in
1997, 1996 and 1995.
Post-employment benefits are primarily comprised of obligations to provide
medical and life insurance to employees on long-term disability. Post-employment
benefit expense was not material in 1997, 1996 and 1995.
7. REINSURANCE:
The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve ILA of its primary liability. ILA
also assumes insurance from other insurers.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Direct premiums................... $266,427 $226,612 $159,918
Premiums assumed.................. 51,630 33,817 13,299
Premiums ceded.................... (21,412) (10,185) (7,425)
-------- -------- --------
Premiums and annuity
considerations................... $296,645 $250,244 $165,792
-------- -------- --------
-------- -------- --------
</TABLE>
The Company cedes to RGA Reinsurance Company, on a modified coinsurance
basis, 80% of the variable annuity business written since 1994.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $23.2
billion and $14.6 billion at December 31, 1997 and 1996, respectively. Separate
account assets are reported at fair value and separate account liabilities are
determined in accordance with CARVM, which approximates the market value less
applicable surrender charges. Separate account assets are segregated from other
investments, the policyholder assumes the investment risk, and the investment
income and gains and losses accrue directly to the policyholder. Separate
account management fees, net of minimum guarantees, were $252 million, $144
million and $72 million in 1997, 1996 and 1995, respectively, and are recorded
as a component of other revenues on the Statutory Statements of Income.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1997 and 1996, the Company had no material contingent
liabilities, nor had the Company committed any surplus funds for any contingent
liabilities or arrangements. The Company is involved in various legal actions
which have arisen in the normal course of its business. In the opinion of
management, the ultimate liability with respect to such lawsuits as well as
other contingencies is not considered to be material in relation to the results
of operations and financial position of the Company.
Under insurance guaranty laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. The amount of any future assessments on ILA under these
laws cannot be reasonably estimated. Most of the laws do provide, however, that
an assessment may be excused or deferred if it would threaten an insurer's own
financial strength. Additionally, guaranty fund assessments are used to reduce
state premium taxes paid by the Company in certain states. ILA paid guaranty
fund assessments of $1,544, $1,262 and $1,684 in 1997, 1996 and 1995,
respectively. ILA incurred guaranteed fund expense of $548 in 1997 and 1996 and
$0 in 1995.
<PAGE>
PART II
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 44 pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signatures.
(1) The following exhibits included herewith correspond to those required by
paragraph A of the instructions for exhibits to Form N-8B-2.
(A1) Resolution of Board of Directors of Hartford Life and Annuity
Insurance Company ("Hartford") authorizing the establishment of the
Separate Account. (1)
(A2) Not applicable.
(A3a) Principal Underwriting Agreement. (1)
(A3b) Form of Selling Agreements. (2)
(A3c) Not Applicable.
(A4) Not Applicable.
(A5) Form of Certificate for Group Flexible Premium Variable Life
Insurance Policy. (1)
(A6a) Charter of Hartford. (3)
- -------------------------
(1) Incorporated by reference to the initial Form S-6 registration statement
for the Registrant (File No. 33-63731) filed with the Commission on
October 30, 1995.
(2) Incorporated by reference to the initial Form S-6 registration statement
for the Registrant (File No. 333-13735) filed with the Commission on
October 8, 1996.
(3) Incorporated by reference to the Post-Effective Amendment No. 1 to the
Form S-6 registration statement for the Registrant (File No. 333-13735)
filed with the Commission on February 20, 1998.
<PAGE>
(A6b) Bylaws of Hartford. (1)
(A7) Not Applicable.
(A8) Not Applicable.
(A9) Not Applicable.
(A10) Form of Enrollment Form for Certificate Issued Under Group Flexible
Premium Variable Life Insurance Policies. (1)
(A11) Memorandum describing transfer and redemption procedures. (1)
(2) Opinion and consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary
(3) No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
(4) Not applicable.
(5) Opinion and consent of Pauline Gyllenhammer, FSA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants.
(7) Copy of Power of Attorney.
<PAGE>
REPRESENTATION OF REASONABLENESS OF FEES
Hartford Life and Annuity Insurance Company ("Hartford") hereby represents
that the aggregate fees and charges under the Policy are reasonable in
relation to the services rendered, the expenses expected to be incurred, and
the risks assumed by Hartford.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
UNDERTAKINGS AND REPRESENTATIONS AS REQUIRED BY RULE 6e-3(T)
1. ICMG Registered Variable Life Separate Account One meets the definition of
"Separate Account" under Rule 6e-3(T).
2. Hartford undertakes to keep and make available to the Commission upon
request any documents used to support the any representation in as to the
reasonableness of fees.
UNDERTAKING ON INDEMNIFICATION
Under Section 33-772 of the Connecticut General Statutes, unless limited by
its certificate of incorporation, the Registrant must indemnify a director
who was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with
the proceeding.
The Registrant may indemnify an individual made a party to a proceeding
because he is or was a director against liability incurred in the proceeding
if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Registrant, and, with respect
to any criminal proceeding, had no reason to believe his conduct was
unlawful. Conn. Gen. Stat. Section 33-771(a). Additionally, pursuant to
Conn. Gen. Stat. Section 33-776, the Registrant may indemnify officers and
employees or agents for liability incurred and for any expenses to which they
becomes subject by reason of being or having been an employees or officers of
the Registrant. Connecticut law does not prescribe standards for the
indemnification of officers, employees and agents and expressly states that
their indemnification may be broader than the right of indemnification
granted to directors.
The foregoing statements are specifically made subject to the detailed
provisions of Section 33-770 et seq.
<PAGE>
Notwithstanding the fact that Connecticut law obligates the Registrant to
indemnify only a director that was successful on the merits in a suit, under
Article VIII, Section 2 of the Registrant's bylaws, the Registrant must
indemnify both directors and officers of the Registrant who are parties or
threatened to be parties to a legal proceeding by reason of his being or
having been a director or officer of the Registrant for any expenses if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the company, and with respect to criminal
proceedings, had no reason to believe his conduct was unlawful. Unless
otherwise mandated by a court, no indemnification shall be made if such
officer or director is adjudged to be liable for negligence or misconduct in
the performance of his duty to the Registrant.
Additionally, the directors and officers of Hartford and Hartford Equity
Sales Company, Inc. ("HESCO") are covered under a directors and officers
liability insurance policy issued to The Hartford Financial Services Group,
Inc. and its subsidiaries. Such policy will reimburse the Registrant for any
payments that it shall make to directors and officers pursuant to law and
will, subject to certain exclusions contained in the policy, further pay any
other costs, charges and expenses and settlements and judgments arising from
any proceeding involving any director or officer of the Registrant in his
past or present capacity as such, and for which he may be liable, except as
to any liabilities arising from acts that are deemed to be uninsurable.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the ^ Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal to be herewith affixed and attested, all in the city
of Simsbury, and the State of Connecticut on the 10th day of April, 1998.
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY ICMG REGISTERED VARIABLE LIFE
SEPARATE ACCOUNT ONE
(Registrant)
By: /s/ Gregory A. Boyko
-------------------------------------------------
Gregory A. Boyko, Senior Vice President, Chief
Financial Officer and Treasurer
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Depositor)
By: /s/ Gregory A. Boyko
-------------------------------------------------
Gregory A. Boyko, Senior Vice President, Chief
Financial Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and
on the dates indicated.
Gregory A. Boyko, Senior Vice
President, Chief Financial Officer and
Treasurer, Director*
Lynda Godkin, Senior Vice President
General Counsel and Corporate
Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/ Lynda Godkin
President and Director, Individual -------------------
Life and Annuity Division, Director* Lynda Godkin
Lowndes A. Smith, President and Attorney-In-Fact
Chief Executive Officer,
Director* Dated: April 10, 1998
David M. Znamierowski, Senior ------------------
Vice President, Director*
<PAGE>
EXHIBIT INDEX
(2) Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary
(5) Opinion and Consent of Pauline Gyllenhammer, FSA, MAAA
(6) Consent of Arthur Andersen LLP, Independent Public Accountants
(7) Copy of Power of Attorney
<PAGE>
EXHIBIT 2
[LOGO]
HARTFORD LIFE
April 10, 1998 LYNDA GODKIN, Senior Vice
President, General Counsel &
Corporate Secretary
Law Department
Board of Directors
Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
FILE NO. 333-13735
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life and Annuity Insurance
Company (the "Company"), a Connecticut insurance company, and Hartford Life
and Annuity Insurance Company Separate Account VL I (the "Account") in
connection with the registration of an indefinite amount of securities in the
form of a flexible premium variable life insurance policy (the "Policy") with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended. I have examined such documents (including the Form S-6 Registration
Statement) and reviewed such questions of law as I considered necessary and
appropriate, and on the basis of such examination and review, it is my
opinion that:
1. The Company is a corporation duly organized and validly existing as a
stock life insurance company under the laws of the State of Connecticut
and is duly authorized by the Insurance Department of the State of
Connecticut to issue the Policy.
2. The Account is a duly authorized and validly existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.
3. To the extent so provided under the Policy, that portion of the assets of
the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.
<PAGE>
Board of Directors
Hartford Life and Annuity Insurance Company
April 10, 1998
Page 2
4. The Policy, when issued as contemplated by the Form S-6 Registration
Statement, will constitute legal, validly issued and binding obligations
of the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form S-6
Registration Statement for the Policy and the Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
EXHIBIT 5
[LOGO]
HARTFORD LIFE
April 10, 1998
PAULINE GYLLENHAMMER, ASA, MAAA
SENIOR ACTUARIAL ASSOCIATE
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir:
This opinion is furnished in connection with the Form S-6 Registration
Statement under the Securities Act of 1933, as amended ("Securities Act"), of
a certain group flexible premium variable life insurance policy (the
"Policy") that will be offered and sold by Hartford Life and Annuity
Insurance Company and certain units of interest to be issued in connection
with the Policy.
The hypothetical illustrations of the Policy used in the Form S-6
Registration Statement accurately reflect reasonable estimates of projected
performance of the Policy under the stipulated rates of investment return,
the contractual expense deductions and guaranteed cost-of-insurance rates,
and utilizing a reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Form S-6
Registration Statement and to the reference to my name under the heading
"Experts" in the Prospectus included as part of such Form S-6
Registration Statement.
Very truly yours,
/s/ Pauline Gyllenhammer
Pauline Gyllenhammer
Senior Actuarial Associate
<PAGE>
EXHIBIT 6
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 333-13735 for Hartford Life and Annuity
Insurance Company ICMG Registered Variable Life Separate Account One on Form
S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
April 15, 1998
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
Gregory A. Boyko
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Marianne O'Doherty,
and Leslie T. Soler to sign as their agent, any Registration Statement,
pre-effective amendment, post-effective amendment and any application for
exemptive relief of the Hartford Life and Annuity Insurance Company under the
Securities Act of 1933 and/or the Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ Gregory A. Boyko Dated as of March 16, 1998
- ------------------------------ --------------------------
Gregory A. Boyko
/s/ Lynda Godkin Dated as of March 16, 1998
- ------------------------------ --------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of March 16, 1998
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Thomas M. Marra
/s/ Lowndes A. Smith Dated as of March 16, 1998
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Lowndes A. Smith
/s/ David M. Znamierowski Dated as of March 16, 1998
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David M. Znamierowski
