<PAGE> 1
TRAVELERS ACCESS (ABD II)
VARIABLE ANNUITY CONTRACT PROFILE
JULY 24, 1997
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD
KNOW AND CONSIDER BEFORE PURCHASING THE CONTRACT. THE CONTRACT IS MORE FULLY
DESCRIBED IN THE FULL PROSPECTUS WHICH IS ATTACHED TO THIS PROFILE. PLEASE READ
THE PROSPECTUS CAREFULLY. THE TERMS "WE," "US," "OUR" AND THE "COMPANY" REFER TO
THE TRAVELERS LIFE AND ANNUITY COMPANY. "YOU" AND "YOUR" REFER TO THE CONTRACT
OWNER.
1. THE VARIABLE ANNUITY CONTRACT. The Contract offered by Travelers Life and
Annuity Company is a variable annuity that is intended for retirement savings or
other long-term investment purposes. The Contract provides a death benefit as
well as guaranteed income options. Under a qualified Contract, you can make one
or more payments, as you choose, on a tax-deferred basis. Under a nonqualified
Contract, you can make one or more payments with after-tax dollars. You direct
your payment(s) to one or more of the variable funding options listed in Section
4 and/or to the Fixed Account. We guarantee money directed to the Fixed Account
as to principal and interest. The variable funding options are designed to
produce a higher rate of return than the Fixed Account; however, this is not
guaranteed. You may also lose money in the variable funding options.
The Contract, like all deferred variable annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, under a
qualified contract, your pre-tax contributions accumulate on a tax-deferred
basis and are taxed as income when you make a withdrawal, presumably when you
are in a lower tax bracket. During the accumulation phase, under a nonqualified
contract, earnings on your after-tax contributions accumulate on a tax-deferred
basis and are taxed as income when you make a withdrawal. The income phase
occurs when you begin receiving payments from your Contract. The amount of money
you accumulate in your Contract determines the amount of income (annuity
payments) you receive during the income phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE). You may choose to receive annuity
payments from the Fixed Account or the variable funding options. If you want to
receive payments from your annuity, you can choose one of the following annuity
options: Option 1 -- payments for your life (life annuity) -- assuming that you
are the annuitant; Option 2 -- payments for your life with an added guarantee
that payments will continue to your beneficiary for a certain number of months
(120, 180 or 240, as you select), if you should die during that period; Option
3 -- Joint and Last Survivor Annuity, in which payments are made for your life
and the life of another person (usually your spouse). This option can also be
elected with payments continuing at a reduced rate after the death of one payee.
There are also two Income Options: Fixed Amount -- the contract value will be
paid to you in equal payments; or Fixed Period -- the contract value will be
used to make payments for a fixed time period. If you should die before the end
of the Fixed Period, the remaining amount would go to your beneficiary.
Once you make an election of an annuity option or an income option and begin to
receive payments, it cannot be changed. During the income phase, you have the
same investment choices you had during the accumulation phase. If amounts are
directed to the variable funding options, the dollar amount of your payments may
increase or decrease.
3. PURCHASE. You may purchase the Contract with an initial payment of at least
$20,000. You may make additional payments of at least $500 at any time during
the accumulation phase. (In some states, additional payments are not allowed.)
<PAGE> 2
WHO SHOULD PURCHASE THIS CONTRACT? The Contract is currently available for use
in connection with (1) individual nonqualified purchases; (2) rollovers from
Individual Retirement Annuities (IRAs) and (3) rollovers from other qualified
retirement plans. Qualified contracts include contracts qualifying under Section
401(a), 403(b), or 408(b) of the Internal Revenue Code of 1986, as amended.
4. INVESTMENT OPTIONS. You can direct your money into the Fixed Account or any
or all of the following variable funding options. They are described in the
prospectuses for the funds. Depending on market conditions, you may make or lose
money in any of these options:
<TABLE>
<S> <C>
Capital Appreciation Fund MFS Emerging Growth Portfolio
Cash Income Trust Federated Stock Portfolio
Alliance Growth Portfolio Federated High Yield Portfolio
MFS Total Return Portfolio Large Cap Portfolio
Putnam Diversified Income Portfolio Equity Income Portfolio
Travelers Quality Bond Portfolio Mid Cap Disciplined Equity Fund
Lazard International Stock Portfolio
</TABLE>
5. EXPENSES. The Contract has insurance features and investment features, and
there are costs related to each. For Contracts with a value of less than
$40,000, the Company deducts an annual administrative charge of $30. The annual
insurance charge is 1.25% of the amounts you direct to the funding options and a
related sub-account administrative charge of .15% annually is charged.
Each funding option has a charge for investment management and other expenses.
The charges, which vary by funding option, range from 0.75% to 1.25% annually,
of the average daily net asset balance of the funding option.
If you withdraw amounts under the contract, or if you begin receiving annuity
payments, the Company may be required by your state to deduct a premium tax of
0%-5%.
The following table is designed to help you understand the Contract charges. The
"Total Annual Insurance Charge" column includes the mortality and expense risk
charge, the sub-account administrative charges, and reflects the $30 annual
contract charge as .021%. The "Total Annual Funding Option Expenses" column
reflects the investment charges for each portfolio, including any expense waiver
or reimbursement. The column "Total Annual Charges" reflects the sum of the
previous two columns. The columns under the heading "Examples" show you how much
you would pay under the Contract for a one-year period and for a 10-year period.
As required by the SEC, the examples assume that you invested $1,000 in a
Contract that earns 5% annually and that you withdraw your money at the end of
year 1 and at the end of year 10. For years 1 and 10, the examples show the
total annual charges assessed during that time. For these examples, the premium
tax is assumed to be 0%. Please refer to the Fee Table contained in the
prospectus for more details.
<TABLE>
<CAPTION>
EXAMPLES:
TOTAL ANNUAL
TOTAL ANNUAL EXPENSES
TOTAL ANNUAL FUNDING OPTION TOTAL ANNUAL AT END OF:
PORTFOLIO NAME INSURANCE CHARGES EXPENSES CHARGES 1 YEAR 10 YEARS
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Capital Appreciation.................... 1.42% 0.83% 2.25% $ 23 $259
Cash Income............................. 1.42% 0.60% 2.02% 21 235
Alliance Growth......................... 1.42% 0.87% 2.29% 23 263
MFS Total Return........................ 1.42% 0.91% 2.33% 24 267
Putnam Diversified Income............... 1.42% 0.96% 2.38% 24 272
Travelers Quality Bond.................. 1.42% 0.75% 2.17% 22 250
Lazard International Stock.............. 1.42% 1.25% 2.67% 27 300
MFS Emerging Growth..................... 1.42% 0.95% 2.37% 24 271
Federated Stock......................... 1.42% 0.95% 2.37% 24 271
Federated High Yield.................... 1.42% 0.95% 2.37% 24 271
Large Cap............................... 1.42% 0.95% 2.37% 24 271
Equity Income........................... 1.42% 0.95% 2.37% 24 271
Mid Cap Disciplined Equity.............. 1.42% 0.95% 2.37% 24 271
</TABLE>
ii
<PAGE> 3
6. TAXES. The payments you make to a qualified Contract during the accumulation
phase are made with before-tax dollars. You will be taxed on your purchase
payments and on any earnings when you make a withdrawal or begin receiving
annuity or income payments. Under a nonqualified Contract, payments to the
contract are made with after-tax dollars, and any earnings will accumulate
tax-deferred. You will be taxed on these earnings when they are withdrawn from
the Contract.
For owners of qualified Contracts, if you reach a certain age, you may be
required by federal tax laws to begin receiving payments from your annuity or
risk paying a penalty tax. In those cases, we can calculate and pay you the
minimum required distribution amounts. If you are younger than 59 1/2 when you
take money out, you may be charged a 10% federal penalty tax on the amount
withdrawn.
7. ACCESS TO YOUR MONEY. You can take withdrawals any time during the
accumulation phase. While there is no withdrawal charge, income taxes and a
penalty tax may apply to taxable amounts withdrawn.
8. PERFORMANCE. The value of the Contract will vary depending upon the
investment performance of the funding options you choose. The following chart
shows total returns for each funding option for the time periods shown. These
rates of return reflect the insurance charges, administrative charge, investment
charges and all other expenses of the funding option. The rates of return do not
reflect any applicable taxes, which, if applied, would reduce such performance.
Past performance is not a guarantee of future results.
LAST TEN CALENDAR YEARS (OR FULL YEARS SINCE INCEPTION):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation
Fund................... 26.39% 35.46% -6.12% 13.45% 15.97% 32.04% -6.89% 13.85% 8.50% -9.21%
Cash Income Trust........ 2.69% 2.77% 3.31% 0.77% 1.80% 5.16% 6.53% 6.16% 5.60%
Travelers Series Fund,
Inc....................
Alliance Growth........ 27.56% 32.97%
MFS Total Return....... 12.88% 23.93%
Putnam Diversified
Income............... 6.70% 15.74%
</TABLE>
Those funding options not illustrated above do not yet have one full year of
performance history.
9. DEATH BENEFIT. The death benefit applies upon the first death of the owner,
joint owner, or annuitant. Assuming you are the Annuitant, the death benefit is
as follows: If you die before the Contract is in the income phase, the person
you have chosen as your beneficiary will receive a death benefit. The death
benefit paid depends on your age at the time of your death. The death benefit
value is calculated at the close of the business day on which the Company's Home
Office receives due proof of death. If you die on or before age 75, the person
you have selected as the beneficiary will receive an amount equal to the
greatest of the following:
1) the contract value;
2) the total purchase payments made under the Contract; or
3) the contract value on the latest fifth contract year before the
Company receives due proof of death.
If you die after age 75 but before age 85 (90 in Florida) and before the
contract maturity date, the beneficiary will receive
1) the contract value;
2) total purchase payments made under the Contract; or
3) the Contract value on the latest fifth year anniversary occurring on
or before the annuitant's 75th birthday;
iii
<PAGE> 4
If you die on or after age 85 and before the maturity date, the death benefit
will equal Contract value.
NOTE: In all cases described above, amounts will be reduced by loans
outstanding, premium taxes owed and partial withdrawals not previously deducted.
This death benefit may not be available in all states. Certain states may have
varying age requirements. Please refer to the Contract prospectus for more
details.
10. OTHER INFORMATION
RIGHT TO RETURN. If you cancel the Contract within twenty days after you
receive it, you will receive a full refund of the Contract Value (including
charges). Where state law requires a longer right to return period, or the
return of purchase payments, the Company will comply. You bear the investment
risk during the right to return period; therefore, the Contract value returned
may be greater or less than your purchase payment. If the Contract is purchased
as an Individual Retirement Annuity, and is returned within the first seven days
after delivery, your full purchase payment will be refunded; during the
remainder of the right to return period, the Contract value (including charges)
will be refunded. The Contract value will be determined at the close of business
on the day we receive a written request for a refund.
TRNASFER BETWEEN FUNDING OPTIONS. You can transfer between the funding options
as frequently as you wish without any current tax implications. Currently there
is no charge for transfers, nor a limit to the number of transfers allowed. The
Company may, in the future, charge a fee for any transfer request, or limit the
number of transfers allowed. The Company, at the minimum, would always allow one
transfer every six months. You may transfer between the Fixed Account and the
funding options twice a year (during the 30 days after the six-month contract
date anniversary), provided the amount is not greater than 15% of the Fixed
Account Value on that date.
ADDITIONAL FEATURES. This Contract has other features you may be interested in.
These include:
DOLLAR COST AVERAGING. This is a program that allows you to invest a fixed
amount of money in funding options each month, theoretically giving you a lower
average cost per unit over time than a single one-time purchase. Dollar Cost
Averaging requires regular investments regardless of fluctuating price levels,
and does not guarantee profits or prevent losses in a declining market.
Potential investors should consider their financial ability to continue
purchases through periods of low price levels.
SYSTEMATIC WITHDRAWAL OPTION. Before the maturity date, you can arrange to
have money sent to you at set intervals throughout the year. Of course, any
applicable income and penalty taxes will apply on amounts withdrawn.
AUTOMATIC REBALANCING. You may elect to have the Company periodically
reallocate the values in your Contract to match your original (or your latest)
funding option allocation request.
11. INQUIRIES. If you need more information, please contact us at (800)
842-8573 or:
Travelers Life and Annuity Company
Annuity Services
One Tower Square
Hartford, CT 06183
iv
<PAGE> 5
TRAVELERS ACCESS:
THE TRAVELERS FUND ABD II FOR VARIABLE ANNUITIES
This prospectus describes TRAVELERS ACCESS, a flexible premium variable annuity
contract (the "Contract") issued by The Travelers Life and Annuity Company (the
"Company," "we" or "our"). The Contract is available in connection with certain
retirement plans that qualify for special federal income tax treatment
("qualified Contracts") as well as those that do not qualify for such treatment
("nonqualified Contracts"). Travelers Access may be issued as an individual
Contract or as a group Contract. In states where only group Contracts are
available, you will be issued a certificate summarizing the provisions of the
group Contract. For convenience, this prospectus refers to both Contracts and
certificates as "Contracts."
You can choose to have your purchase payments accumulate on a fixed basis (i.e.,
a Fixed Account funded through the Company's general account) and/or a variable
basis (i.e., one or more of the sub-accounts ("funding options") of the
Travelers Fund ABD II for Variable Annuities ("Fund ABD II")). Your contract
value will vary daily to reflect the investment experience of the funding
options you select and any interest credited to the Fixed Account. The variable
funding options currently available are: Capital Appreciation Fund; Cash Income
Trust; Alliance Growth Portfolio, MFS Total Return Portfolio, and Putnam
Diversified Income Portfolio, of the Travelers Series Fund, Inc.; and Travelers
Quality Bond Portfolio, Lazard International Stock Portfolio, MFS Emerging
Growth Portfolio, Federated Stock Portfolio, Federated High Yield Portfolio,
Large Cap Portfolio, Equity Income Portfolio and Mid Cap Disciplined Equity Fund
of the Travelers Series Trust. The Fixed Account is described in Appendix A.
Unless specified otherwise, this prospectus refers to the variable funding
options. The contracts and/or some of the funding options may not be available
in all states. THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT
PROSPECTUSES FOR THE VARIABLE FUNDING OPTIONS. THESE PROSPECTUSES SHOULD BE READ
AND RETAINED FOR FUTURE REFERENCE.
This prospectus provides the information that you should know before investing
in the Contract. You can receive additional information about Fund ABD II by
requesting a copy of the Statement of Additional Information ("SAI") dated July
24, 1997. The SAI has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this prospectus. To request a
copy, write to The Travelers Life and Annuity Company, Annuity Services, One
Tower Square, Hartford, Connecticut 06183, or call (800) 842-8573. The Table of
Contents of the SAI appears in Appendix B of this prospectus.
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.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY
THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT.
PROSPECTUS DATED JULY 24, 1997
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
INDEX OF SPECIAL TERMS................. 2
FEE TABLE.............................. 3
THE ANNUITY CONTRACT................... 4
Purchase Payments...................... 4
Accumulation Units..................... 4
The Funding Options.................... 5
Substitutions and Additions............ 6
CHARGES AND DEDUCTIONS................. 6
Administrative Charges................. 6
Mortality and Expense Risk Charge...... 6
Reduction or Elimination of Contract
Charges.............................. 6
Funding Option Expenses................ 7
Premium Tax............................ 7
Changes in Taxes Based Upon Premium or
Value................................ 7
OWNERSHIP PROVISIONS................... 7
Types of Ownership..................... 7
Beneficiary............................ 7
Annuitant.............................. 8
TRANSFERS.............................. 8
Dollar Cost Averaging.................. 8
ACCESS TO YOUR MONEY................... 8
Systematic Withdrawals................. 9
Loans.................................. 9
DEATH BENEFIT.......................... 9
Death Proceeds Before the Maturity
Date................................. 9
Death Proceeds After the Maturity
Date................................. 10
THE ANNUITY PERIOD..................... 10
Maturity Date.......................... 10
Allocation of Annuity.................. 11
Variable Annuity....................... 11
Fixed Annuity.......................... 12
PAYMENT OPTIONS........................ 12
Election of Options.................... 12
Annuity Options........................ 12
Income Options......................... 13
MISCELLANEOUS CONTRACT PROVISIONS...... 13
Right to Return........................ 13
Termination............................ 14
Required Reports....................... 14
Suspension of Payments................. 14
Transfers of Contract Values to Other
Annuities............................ 14
THE SEPARATE ACCOUNT................... 14
Performance Information................ 15
FEDERAL TAX CONSIDERATIONS............. 15
General Taxation of Annuities.......... 15
Types of Contracts: Qualified or
Nonqualified......................... 16
Nonqualified Annuity Contracts......... 16
Qualified Annuity Contracts............ 16
Penalty Tax for Premature
Distributions........................ 16
Diversification Requirements for
Variable Annuities................... 17
Ownership of the Investments........... 17
Mandatory Distributions for Qualified
Plans................................ 17
OTHER INFORMATION...................... 17
The Insurance Company.................. 17
Distribution of Variable Annuity
Contracts............................ 18
Conformity with State and Federal
Laws................................. 18
Voting Rights.......................... 18
Legal Proceedings And Opinions......... 18
APPENDIX A: The Fixed Account.......... 19
APPENDIX B: Table of Contents of the
Statement of Additional
Information.......................... 20
</TABLE>
INDEX OF SPECIAL TERMS
The following terms are italicized throughout the prospectus. Refer to the page
listed for an explanation of each term.
<TABLE>
<S> <C>
Accumulation Unit...................... 4
Accumulation Period.................... 5
Annuitant.............................. 8
Annuity Payments....................... 10
Annuity Unit........................... 11
Contract Date.......................... 4
Contract Owner (You, Your)............. 4
Contract Value......................... 4
Contract Year.......................... 4
Fixed Account.......................... 19
Funding Option(s)...................... 5
Income Payments........................ 12
Maturity Date.......................... 4
Purchase Payment....................... 4
Written Request........................ 4
</TABLE>
2
<PAGE> 7
FUND ABD II FEE TABLE
- --------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Annual Contract Administrative Charge (Waived if
contract value is $40,000 or more) $30
ANNUAL SEPARATE ACCOUNT CHARGES:
(as a percentage of the average daily net assets of the
Separate Account)
Mortality and Expense Risk Charge................... 1.25%
Administrative Expense Charge....................... 0.15%
------
Total Separate Account Charges................... 1.40%
FUNDING OPTION EXPENSES:
(as a percentage of average daily net assets of the Funding
Option)
</TABLE>
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEE EXPENSES FUNDING
(AFTER EXPENSES (AFTER EXPENSES OPTION
PORTFOLIO NAME ARE REIMBURSED) ARE REIMBURSED) EXPENSES
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation.......................... 0.75% 0.08%(1) 0.83%
Cash Income................................... 0.32% 0.28%(1)(2) 0.60%
Alliance Growth............................... 0.80% 0.07%(1) 0.87%
MFS Total Return.............................. 0.80% 0.11%(1) 0.91%
Putnam Diversified Income..................... 0.75% 0.21%(1) 0.96%
Travelers Quality Bond........................ 0.32% 0.43%(1)(3) 0.75%
Lazard International Stock.................... 0.83% 0.42%(1)(3) 1.25%
MFS Emerging Growth........................... 0.75% 0.20%(1)(3) 0.95%
Federated Stock............................... 0.63% 0.32%(3) 0.95%
Federated High Yield.......................... 0.65% 0.30%(3) 0.95%
Large Cap (Sub-Adv. Fidelity)................. 0.75% 0.20%(1)(4) 0.95%
Equity Income (Sub-Adv. Fidelity)............. 0.75% 0.20%(1)(4) 0.95%
Mid Cap Disciplined Equity.................... 0.70% 0.25%(1)(5) 0.95%
</TABLE>
NOTES:
The purpose of the Fee Table is to assist contract owners in understanding the
various costs and expenses that a contract owner will bear, directly or
indirectly. See "Charges and Deductions" in this prospectus for additional
information. Expenses shown do not include premium taxes, which may be
applicable.
(1) Includes a Sub-Administrator Charge of .06%.
(2) Other Expenses take into account the current expense reimbursement
arrangement with the Company. The Company has agreed to reimburse the
funding option for the amount by which its aggregate expenses (including the
management fee, but excluding brokerage commissions, interest charges and
taxes) exceeds 0.60%. Without such arrangement, Other Expenses would have
been 1.71% for Cash Income Trust.
(3) The Travelers has waived all of its fees for the period ended December 31,
1996. In addition, the Travelers has agreed to reimburse the Portfolios'
expenses for the same period. Without such arrangements, Other Expenses for
the Travelers Series Trust Portfolios would have been: Travelers Quality
Bond, 1.76%; Lazard International Stock, 2.87%, MFS Emerging Growth, 2.09%;
Federated High Yield, 2.19% and Federated Stock, 3.03%.
(4) Other Expenses take into account the current expense reimbursement
arrangement with the Company. The Company has agreed to reimburse the
funding option for the amount by which its aggregate expenses (including the
management fee, but excluding brokerage commissions, interest charges and
taxes) exceeds 0.95%. Without such arrangements, Other Expenses for the
Travelers Series Trust Large Cap Portfolio and Equity Income Portfolios
would have been 1.55%.
(5) Other Expenses for the Mid Cap Disciplined Equity Fund are based on
estimated expenses for 1997 since the portfolio has no investment history.
They also take into account the current expense reimbursement arrangement
with the Company in which the Company has agreed to reimburse the funding
option for the amount by which its aggregate expenses (including the
management fee, but excluding brokerage commissions, interest charges and
taxes) exceeds 0.95%. Without such an arrangement, Other Expenses, based on
estimated expenses for 1997, would be 1.31%.
3
<PAGE> 8
EXAMPLE*
Assuming a 5% annual return, a $1,000 investment would be subject to the
following expenses, whether the contract has been surrendered, annuitized, or if
no withdrawals have been made:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Appreciation.............................................................. $ 23 $ 70 $ 121 $ 259
Cash Income....................................................................... 21 63 109 235
Alliance Growth................................................................... 23 72 123 263
MFS Total Return.................................................................. 24 73 125 267
Putnam Diversified Income......................................................... 24 74 127 272
Travelers Quality Bond............................................................ 22 68 n/a n/a
Lazard International Stock........................................................ 27 83 n/a n/a
MFS Emerging Growth............................................................... 24 74 n/a n/a
Federated Stock................................................................... 24 74 n/a n/a
Federated High Yield.............................................................. 24 74 n/a n/a
Large Cap......................................................................... 24 74 n/a n/a
Equity Income..................................................................... 24 74 n/a n/a
Mid Cap Disciplined Equity........................................................ 24 74 n/a n/a
</TABLE>
* THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE REFLECTS THE $30 ANNUAL CONTRACT ADMINISTRATIVE CHARGE AS AN ANNUAL
CHARGE OF .021% OF ASSETS. FOR NEW FUNDING OPTIONS, EXPENSES ARE GIVEN ONLY
FOR YEARS ONE AND THREE.
THE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
Travelers Access is a contract between you, the contract owner, and Travelers
Life and Annuity Company (called "us" or the "Company"). Under this contract,
you make purchase payments to us and we credit them to your Contract. The
Company promises to pay you an income, in the form of annuity or income
payments, beginning on a future date that you choose, the maturity date. The
purchase payments accumulate tax deferred in the funding options of your choice.
We offer multiple variable funding options, and one fixed account option. The
contract owner assumes the risk of gain or loss according to the performance of
the variable funding options. The contract value is the amount of purchase
payments, plus or minus any investment experience or interest. The contract
value also reflects all surrenders made and charges deducted. There is generally
no guarantee that at the maturity date the contract value will equal or exceed
the total purchase payments made under the Contract, except as noted under the
Death Benefit provisions described in this prospectus. The date the contract and
its benefits became effective is referred to as the contract date. Each
anniversary of this contract date is called a contract year.
Certain changes and elections must be made in writing to the Company. Where the
term "written request" is used, it means that written information must be sent
to the Company's Home Office in a form and content satisfactory to us.
PURCHASE PAYMENTS
The initial purchase payment must be at least $20,000. Additional payments of at
least $500 may be made under the Contract at any time. Under certain
circumstances, we may waive the minimum purchase payment requirement. Purchase
payments over $1,000,000 may be made with our prior consent. In some states, we
do not accept additional purchase payments.
We will apply the initial purchase payment within two business days after we
receive it in good order at our Home Office. Subsequent purchase payments
received in good order will be credited to a Contract within one business day.
Our business day ends when the New York Stock Exchange closes, usually 4:00 p.m.
Eastern time.
ACCUMULATION UNITS
An accumulation unit is used to calculate the value of a Contract. An
accumulation unit works like a share of a mutual fund. Each funding option has a
corresponding accumulation unit value. The
4
<PAGE> 9
accumulation units are valued each business day and may increase or decrease
from day to day. The number of accumulation units we will credit to your
Contract once we receive a purchase payment is determined by dividing the amount
directed to each funding option by the value of the accumulation unit. We
calculate the value of an accumulation unit for each funding option each day
after the New York Stock Exchange closes. After the value is calculated, your
Contract is credited. The period between the contract effective date and the
maturity date is the accumulation period. During the annuity period (i.e., after
the maturity date), you are credited with annuity units.
THE FUNDING OPTIONS
You choose which of the following variable funding options to have your purchase
payments allocated to. You will find detailed information about the options and
their inherent risks in the current prospectuses for the funding options which
must accompany this prospectus. Since each option has varying degrees of risk,
please read the prospectuses carefully before investing. Additional copies of
the prospectuses may be obtained by contacting your registered representative or
by calling 1-800-842-8573.
The current variable funding options are listed below, along with their
investment advisers and any subadviser:
<TABLE>
<CAPTION>
FUNDING OPTION INVESTMENT OBJECTIVE INVESTMENT ADVISER/SUBADVISER
- ------------------------------- -------------------------------------------------- -------------------------------
<S> <C> <C>
Capital Appreciation Fund growth of capital Travelers Asset Management
International Corporation
("TAMIC")
Subadviser: Janus Capital
Corporation
Cash Income Trust high current income while emphasizing preservation TAMIC
of capital and maintaining a high degree of
liquidity
Alliance Growth Portfolio long-term growth of capital Travelers Investment Advisers,
Inc. ("TIA")
Subadviser: Alliance Capital
Management L.P.
MFS Total Return Portfolio obtain above-average income (compared to a TIA
portfolio entirely invested in equity securities) Subadviser: Massachusetts
consistent with the prudent employment of capital Financial Services Company
("MFS")
Putnam Diversified Income high current income consistent with preservation TIA
Portfolio of capital Subadviser: Putnam Investment
Management, Inc
Travelers Quality Bond current income, moderate capital volatility and TAMIC
Portfolio total return
Lazard International Stock capital appreciation through investing primarily TAMIC
Portfolio in the equity securities of non-United States Subadviser: Lazard Asset
companies Management
MFS Emerging Growth Portfolio long-term growth of capital TAMIC
Subadviser: MFS
Federated Stock Portfolio growth of income and capital TAMIC
Subadviser: Federated
Investment Counseling, Inc.
Federated High Yield Portfolio high current income TAMIC
Subadviser: Federated
Investment Counseling, Inc.
Large Cap Portfolio long-term growth of capital TAMIC
Subadviser: Fidelity Management
& Research Company
Equity Income Portfolio reasonable income TAMIC
Subadviser: Fidelity Management
& Research Company
Mid Cap Disciplined Equity Fund growth of capital TAMIC
Subadviser: Travelers
Investment Management Company
</TABLE>
5
<PAGE> 10
SUBSTITUTIONS AND ADDITIONS
If any of the funding options become unavailable for allocating purchase
payments, or if we believe that further investment in a funding option is
inappropriate for the purposes of the Contract, we may substitute another
funding option. However, we will not make any substitutions without notifying
you and obtaining any applicable state and SEC approval. From time to time we
may make new funding options available.
CHARGES AND DEDUCTIONS
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ADMINISTRATIVE CHARGES
A Contract administrative charge of $30 is deducted annually from Contracts with
a value of less than $40,000. This charge compensates us for expenses incurred
in establishing and maintaining the Contract. The charge is deducted from the
contract value on the fourth Friday of each August by canceling accumulation
units applicable to each funding option on a pro rata basis. For the first
contract year this charge will be prorated (i.e. calculated) from the date of
purchase. A prorated charge will also be made if the Contract is completely
withdrawn or terminated. We will not deduct a contract administrative charge:
(1) if the distribution results from the death of the contract owner or the
annuitant with no contingent annuitant surviving, (2) after an annuity payout
has begun, or (3) if the contract value on the date of assessment is equal to or
greater than $40,000.
An administrative expense charge (sometimes called "sub-account administrative
charge") is deducted on each business day from amounts allocated to the variable
funding options in order to compensate the Company for certain related
administrative and operating expenses. The charge equals, on an annual basis,
0.15% of the daily net asset value allocated to each of the variable funding
options.
MORTALITY AND EXPENSE RISK CHARGE
Each business day, the Company deducts a mortality and expense risk charge. The
deduction is reflected in our calculation of accumulation and annuity unit
values. This charge equals, on an annual basis, 1.25% of the amounts held in
each funding option. We reserve the right to lower this charge at any time. The
mortality risk portion compensates us for guaranteeing to provide annuity
payments according to the terms of the Contract regardless of how long the
annuitant lives and for guaranteeing to provide the death benefit if an
annuitant dies prior to the maturity date. The expense risk portion compensates
us for the risk that the charges under the Contract, which cannot be increased
during the duration of the Contract, will be insufficient to cover actual costs.
REDUCTION OR ELIMINATION OF CONTRACT CHARGES
The administrative charges and/or the mortality and expense risk charge under
the Contract may be reduced or eliminated when certain sales or administration
of the Contract result in savings or reduction of administrative or sales
expenses, and/or mortality and expense risks. Any such reduction will be based
on the following: (1) the size and type of group to which sales are to be made;
(2) the total amount of purchase payments to be received; and (3) any prior or
existing relationship with the Company. There may be other circumstances, of
which we are not presently aware, which could result in fewer sales expenses,
administrative charges, or mortality and expense risk charges. In no event will
reduction or elimination of the administrative charge be permitted where such
reduction or elimination will be unfairly discriminatory to any person.
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<PAGE> 11
FUNDING OPTION EXPENSES
The deductions from and expenses paid out of the assets of the various funding
options are summarized in the fee table and are described in the accompanying
prospectuses.
PREMIUM TAX
Certain state and local governments charge premium taxes ranging from 0% to 5%,
depending upon jurisdiction. The Company is responsible for paying these taxes
and will determine the method used to recover premium tax expenses incurred.
Where required, the Company will deduct any applicable premium taxes from the
contract value either upon death, surrender, annuitization, or at the time
purchase payments are made to the Contract, but no earlier than when the Company
has a tax liability under state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the Company based upon
premiums, contract gains or value of the contract, we reserve the right to
charge you proportionately for this tax.
OWNERSHIP PROVISIONS
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TYPES OF OWNERSHIP
Contract Owner (you). The Contract belongs to the contract owner named in the
Contract (on the Specifications page), or to any other person to whom the
contract is subsequently assigned. An assignment of ownership or a collateral
assignment may be made only for nonqualified contracts. You have sole power
during the annuitant's lifetime to exercise any rights and to receive all
benefits given in the contract provided you have not named an irrevocable
beneficiary and provided the Contract is not assigned.
You receive all payments while the annuitant is alive unless you direct them to
an alternate recipient. An alternate recipient does not become the contract
owner.
Joint Owner. For nonqualified contracts only, joint owners (i.e., spouses) may
be named in a written request before the contract is in effect. Joint owners may
independently exercise transfers allowed under the Contract. All other rights of
ownership must be exercised by both owners. Joint owners own equal shares of any
benefits accruing or payments made to them. All rights of a joint owner end at
death if the other joint owner survives. The entire interest of the deceased
joint owner in the Contract will pass to the surviving joint owner.
BENEFICIARY
The beneficiary is named by you in a written request. The beneficiary has the
right to receive any remaining contractual benefits upon the death of the
annuitant or the contract owner. If more than one beneficiary survives the
annuitant, they will share equally in benefits unless different shares are
recorded with the Company by written request before the death of the annuitant
or contract owner.
With nonqualified contracts, as discussed under "Death Benefit," the beneficiary
named in the contract may differ from the designated beneficiary (for example,
the joint owner or a contingent annuitant). In such cases, the designated
beneficiary receives the contract benefits (rather than the beneficiary) upon
your death.
Unless an irrevocable beneficiary has been named, you have the right to change
any beneficiary by written request during the lifetime of the annuitant and
while the Contract continues.
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<PAGE> 12
ANNUITANT
The annuitant is designated in the Contract (on the Specifications page), and is
the individual on whose life the maturity date and the amount of the monthly
annuity payments depend. The annuitant may not be changed after the contract is
in effect.
For nonqualified Contracts only, the contract owner may also name one individual
as a contingent annuitant by written request before the Contract becomes
effective. If the annuitant dies before the maturity date, and a contingent
annuitant has been named, the contingent annuitant becomes the annuitant and the
Contract continues. A contingent annuitant may not be changed, deleted or added
after the Contract becomes effective.
TRANSFERS
- --------------------------------------------------------------------------------
Before the maturity date, you may transfer all or part of the contract value
between funding options. There are no charges or restrictions on the amount or
frequency of transfers currently; however, we reserve the right to charge a fee
for any transfer request, and to limit the number of transfers to one in any
six-month period. Since different funding options have different expenses, a
transfer of contract values from one funding option to another could result in
your investment becoming subject to higher or lower expenses. After the maturity
date, you may make transfers between funding options only with our consent.
DOLLAR COST AVERAGING
Dollar cost averaging (or "automated transfers") allows you to transfer a set
dollar amount to other funding options on a monthly or quarterly basis so that
more accumulation units are purchased in a funding option if the value per unit
is low and less accumulation units are purchased if the value per unit is high.
Therefore, a lower-than-average cost per unit may be achieved over the long run.
You may elect automated transfers through written request or other method
acceptable to the Company. You must have a minimum total contract value of
$5,000 to enroll in the Dollar Cost Averaging program. The minimum amount that
may be transferred through this program is $400.
You may establish automated transfers of contract values from the Fixed Account,
subject to certain restrictions. Automated transfers from the Fixed Account may
not deplete your Fixed Account Value in less than twelve months from your
enrollment in the Dollar Cost Averaging program.
You may start or stop participation in the Dollar Cost Averaging program at any
time, but you must give the Company at least 30 days' notice to change any
automated transfer instructions that are currently in place. All provisions and
terms of the Contract apply to automated transfers, including provisions
relating to the transfer of money between investment options. We reserve the
right to suspend or modify transfer privileges at any time and to assess a
processing fee for this service.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
Any time before the maturity date, you may redeem all or any portion of the
contract value, less any premium tax not previously deducted. You must submit a
written request specifying the fixed or variable funding option(s) from which
amounts are to be withdrawn. If no funding options are specified, the withdrawal
will be made on a pro rata basis. The contract value will be determined as of
the close of business after we receive your surrender request at the Home
Office. The contract value may be more or less than the purchase payments made.
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<PAGE> 13
We may defer payment of any contract value for a period of up to seven days
after the written request is received, but it is our intent to pay as soon as
possible. We cannot process requests for withdrawal that are not in good order.
We will contact you if there is a deficiency causing a delay and will advise
what is needed to act upon the withdrawal request.
SYSTEMATIC WITHDRAWALS
Before the maturity date, you may choose to withdraw a specified dollar amount
(at least $100) on a monthly, quarterly, semiannual or annual basis. Any
applicable premium taxes will be deducted. To elect systematic withdrawals, you
must have a contract value of at least $15,000 and you must make the election on
the form provided by the Company. We will surrender accumulation units pro rata
from all funding options in which you have an interest, unless you instruct us
otherwise. You may begin or discontinue systematic withdrawals at any time by
notifying us in writing, but at least 30 days' notice must be given to change
any systematic withdrawal instructions that are currently in place.
We reserve the right to discontinue offering systematic withdrawals or to assess
a processing fee for this service upon 30 days' written notice to contract
owners (where allowed by state law).
Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the contract owner is under age 59 1/2. You should consult with
your tax adviser regarding the tax consequences of systematic withdrawals.
LOANS
Loans may be available under your Contract. If available, all loan provisions
are described in your Contract or loan agreement.
DEATH BENEFIT
- --------------------------------------------------------------------------------
Before the maturity date, a death benefit is payable to the beneficiary when
either the annuitant, the contract owner or the first of joint owners dies and
there is no contingent annuitant. The death benefit is calculated at the close
of the business day on which the Company's Home Office receives due proof of
death.
If the Company is notified of the death more than six months after the death,
the death benefit will be the contract value.
DEATH PROCEEDS BEFORE THE MATURITY DATE
DEATH OF ANY OWNER OR THE ANNUITANT BEFORE AGE 75. The Company will pay the
beneficiary an amount equal to the greatest of (1), (2) or (3) below, each
reduced by any applicable premium tax, withdrawals not previously deducted and
any outstanding loans:
1) the contract value;
2) the total purchase payments made under the Contract; or
3) the contract value on the latest fifth contract year anniversary
before the Company receives due proof of death.
DEATH OF ANY OWNER OR THE ANNUITANT ON OR AFTER AGE 75, BUT BEFORE AGE 85. The
Company will pay the beneficiary a death benefit in an amount equal to the
greatest of (1), (2) or (3) below, each reduced by any applicable premium tax,
withdrawals not previously deducted and any outstanding loans:
1) the contract value;
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<PAGE> 14
2) the total purchase payments made under the Contract; or
3) the contract value on the latest fifth contract year anniversary
occurring on or before the annuitant's 75th birthday.
DEATH OF ANY OWNER OR THE ANNUITANT ON OR AFTER AGE 85 (90 IN FLORIDA). The
Company will pay the beneficiary a death benefit in an amount equal to the
contract value, less any applicable premium tax.
PAYMENT OF PROCEEDS
The process of paying death benefit proceeds under various situations is
described below. Generally, the person(s) receiving the benefit may request that
the proceeds be paid in a lump sum, or be applied to one of the settlement
options available under the Contract.
DEATH OF ANNUITANT WHO IS THE CONTRACT OWNER. The Company will pay the proceeds
to any surviving joint owner, or if none, to the beneficiary(ies), or if none,
to the contract owner's estate.
Under a nonqualified contract, the death benefit proceeds must be distributed to
the beneficiary within five years of the contract owner's death. Or, the
beneficiary may elect to receive payments from an annuity which begins within
one year of the contract owner's death and which is payable for the life of the
beneficiary or over a period not exceeding the beneficiary's life expectancy.
If the beneficiary is the contract owner's spouse, he or she may elect to
continue the contract as the new contract owner rather than receiving the
distribution. In such case, the distribution rules applicable when a contract
owner dies generally will apply when that spouse, as contract owner, dies.
DEATH OF ANNUITANT WHO IS NOT THE CONTRACT OWNER. If there is no contingent
annuitant, the Company will pay the death proceeds to the beneficiary. However,
if there is a contingent annuitant, he or she becomes the annuitant and the
Contract continues in effect (generally using the original maturity date). The
proceeds described above will be paid upon the death of the last surviving
contingent annuitant.
ENTITY AS OWNER. In the case of a nonqualified Contract owned by a nonnatural
person (e.g. a trust or another entity), any annuitant will be treated as the
contract owner. Any change in the annuitant will be treated as the death of the
contract owner.
DEATH PROCEEDS AFTER THE MATURITY DATE
If any owner or the annuitant dies on or after the maturity date, the Company
will pay the beneficiary a death benefit consisting of any benefit remaining
under the annuity or income option then in effect.
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
MATURITY DATE
Under the Contract, you can receive regular income payments (annuity payments).
You can choose the month and the year in which those payments begin (maturity
date). You can also choose among income plans (annuity or income options). We
ask you to choose the maturity date and the annuity option when you purchase the
contract. While the annuitant is alive, you can change your selection any time
up to the maturity date. Annuity or income payments will begin on the maturity
date stated in the Contract unless the Contract has been fully surrendered or
the proceeds have been paid to the beneficiary before that date. Annuity
payments are a series of periodic payments (a) for life; (b) for life with
either a minimum number of payments or a specific amount assured; or (c) for the
joint lifetime of the annuitant and another person, and
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<PAGE> 15
thereafter during the lifetime of the survivor. We may require proof that the
annuitant is alive before annuity payments are made.
Unless you elect otherwise, the maturity date will be the annuitant's 70th
birthday for qualified contracts, or, for nonqualified contracts, the
annuitant's 75th birthday, or ten years after the effective date of the
contract, if later. (For Contracts issued in Florida, the maturity date elected
may not be later than the annuitant's 90th birthday.)
For nonqualified Contracts, at least 30 days before the original maturity date,
a contract owner may elect to extend the maturity date to any time prior to the
annuitant's 85th birthday or, for qualified Contracts, to a later date with the
Company's consent. Certain annuity options taken at the maturity date may be
used to meet the minimum required distribution requirements of federal tax law,
or a program of partial surrenders may be used instead. These mandatory
distribution requirements take effect generally upon the death of the contract
owner, or with qualified contracts upon either the later of the contract owner's
attainment of age 70 1/2 or year of retirement; or the death of the contract
owner. Independent tax advice should be sought regarding the election of minimum
required distributions.
ALLOCATION OF ANNUITY
When an annuity option is elected, it may be elected as a variable annuity, a
fixed annuity, or a combination of both. (Variable payouts may not be available
in all states. Refer to your contract.) If, at the time annuity payments begin,
no election has been made to the contrary, the contract value will be applied to
provide an annuity funded by the same investment options as you have selected
during the accumulation period. At least 30 days before the maturity date, you
may transfer the contract value among the funding options in order to change the
basis on which annuity payments will be determined. (See "Transfers.")
VARIABLE ANNUITY
You may choose an annuity payout that fluctuates depending on the investment
experience of the variable funding options. The number of annuity units credited
to the Contract is determined by dividing the first monthly annuity payment
attributable to each funding option by the corresponding accumulation unit value
as of 14 days before the date annuity payments begin. An annuity unit is used to
measure the dollar value of an annuity payment. The number of annuity units (but
not their value) remains fixed during the annuity period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly annuity payment. The amount applied to effect a
variable annuity will be the value of the funding options as of 14 days before
the date annuity payments begin less any applicable premium taxes not previously
deducted.
The amount of the first monthly payment depends on the annuity option elected. A
formula for determining the adjusted age is contained in the Contract. The total
first monthly annuity payment is determined by multiplying the benefit per
$1,000 of value shown in the tables of the Contract by the number of thousands
of dollars of value of the Contract applied to that annuity option. The Company
reserves the right to require satisfactory proof of age of any person on whose
life annuity payments are based before making the first payment under any of the
payment options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
the second and subsequent annuity payments is not predetermined and may change
from month to month based on the investment experience of the applicable funding
option. The total amount of each annuity payment will be equal to the sum of the
basic payments in each funding option. The actual amounts of these payments are
determined by multiplying the number of annuity units credited to each funding
option by the corresponding annuity unit value as of the date 14 days before the
date the payment is due.
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<PAGE> 16
FIXED ANNUITY
You may choose a fixed annuity that provides payments which do not vary during
the annuity period. We will calculate the dollar amount of the first fixed
annuity payment as described under "Variable Annuity," except that the amount
applied to effect the annuity will be the contract value, determined as of the
date annuity payments begin. If it would produce a larger payment, the first
fixed annuity payment will be determined using the Life Annuity Tables in effect
on the maturity date.
PAYMENT OPTIONS
- --------------------------------------------------------------------------------
ELECTION OF OPTIONS
While the annuitant is alive, you can change your annuity or income option
selection any time up to the maturity date. Income options differ from annuity
options in that the amount of the payments made under income options are not
based upon the life of any person. Therefore, the annuitant may outlive the
payment period. Once annuity or income payments have begun, no further elections
are allowed.
During the annuitant's lifetime, if you do not elect otherwise before the
maturity date, we will pay you (or another designated payee) the first of a
series of monthly annuity payments based on the life of the annuitant, in
accordance with Annuity Option 2 (Life Annuity with 120 monthly payments
assured). For certain qualified contracts, Annuity Option 4 (Joint and Last
Survivor Joint Life Annuity -- Annuity Reduced on Death of Primary Payee) will
be the automatic option as described in the contract.
The minimum amount that can be placed under an annuity or income option will be
$2,000 unless we agree to a lesser amount. If any monthly periodic payment due
is less than $100, the Company reserves the right to make payments at less
frequent intervals, or to pay the contract value in a lump-sum. The amount
applied to effect an income or annuity option will be the contract value as of
the date the payments begin, less any applicable premium taxes not previously
deducted. (Certain states may have different requirements that we will honor.)
The contract value used to determine the amount of any such payment will be
determined on the same basis as the contract value during the accumulation
period, including the deduction for mortality and expense risks and the
administrative expense charge.
On the maturity date, we will pay the amount due under the Contract in one lump
sum (except in Florida, where this is not permitted), or in accordance with the
payment option that you select. You must elect an option in writing, in a form
satisfactory to the Company. Any election made during the lifetime of the
annuitant must be made by the contract owner.
ANNUITY OPTIONS
Subject to the conditions described in "Election of Options" above, all or any
part of the contract value may be paid under one or more of the following
annuity options. Payments under the annuity options may be elected on a monthly,
quarterly, semiannual or annual basis.
Option 1 -- Life Annuity -- No Refund. The Company will make annuity payments
during the lifetime of the annuitant ending with the last payment before death.
This option offers the maximum periodic payment, since there is no assurance of
a minimum number of payments or provision for a death benefit for beneficiaries.
Option 2 -- Life Annuity with 120, 180 or 240 Monthly Payments Assured. The
Company will make monthly annuity payments during the lifetime of the annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months as elected, we will continue making
payments to the beneficiary during the remainder of the period.
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<PAGE> 17
Option 3 -- Joint and Last Survivor Life Annuity -- No Refund. The Company will
make regular annuity payments during the lifetime of the annuitant and a second
person. When either person dies, we will continue making payments to the
survivor. No further payments will be made following the death of the survivor.
Option 4 -- Joint and Last Survivor Life Annuity -- Annuity Reduced on Death of
Primary Payee. The Company will make annuity payments during the lifetimes of
the annuitant and a second person. One will be designated the primary payee, the
other will be designated the secondary payee. On the death of the secondary
payee, the Company will continue to make monthly annuity payments to the primary
payee in the same amount that would have been payable during the joint lifetime
of the two persons. On the death of the primary payee, the Company will continue
to make annuity payments to the secondary payee in an amount equal to 50% of the
payments which would have been made during the lifetime of the primary payee. No
further payments will be made once both payees have died.
Option 5 -- Other Annuity Options. The Company will make any other arrangements
for annuity payments as may be mutually agreed upon.
INCOME OPTIONS
Instead of one of the annuity options described above, and subject to the
conditions described under "Election of Options," all or part of the contract
value may be paid under one or more of the following income options, provided
that they are consistent with federal tax law qualification requirements.
Payments under the income options may be elected on a monthly, quarterly,
semiannual or annual basis:
Option 1 -- Payments of a Fixed Amount. The Company will make equal payments of
the amount elected until the contract value applied under this option has been
exhausted. The first payment and all later payments will be paid from amounts
attributable to each investment option in proportion to the contract value
attributable to each. The final payment will include any amount insufficient to
make another full payment.
Option 2 -- Payments for a Fixed Period. The Company will make payments for the
fixed period selected based on the contract value as of the date payments begin.
If, at the death of the annuitant, the total number of fixed payments has not
been made, the payments will be made to the beneficiary.
Option 3 -- Other Income Options. The Company will make any other arrangements
for income payments as may be mutually agreed upon.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
RIGHT TO RETURN
You may return the Contract for a full refund of the contract value (including
charges) within twenty days after you receive it (the "right to return period").
You bear the investment risk during the right to return period; therefore, the
contract value returned may be greater or less than your purchase payment. If
the Contract is purchased as an Individual Retirement Annuity, and is returned
within the first seven days after delivery, your purchase payment will be
refunded in full; during the remainder of the right to return period, the
contract value (including charges) will be refunded. The contract value will be
determined following the close of the business day on which we receive a written
request for a refund. Where state law requires a longer period, or the return of
purchase payments or other variations of this provision, the Company will
comply. Refer to your Contract for any state-specific information.
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<PAGE> 18
TERMINATION
You do not need to make any purchase payments after the first to keep the
Contract in effect. However, we reserve the right to terminate the Contract on
any business day if the contract value as of that date is less than $1,000 and
no purchase payments have been made for at least two years, unless otherwise
specified by state law. Termination will not occur until 31 days after the
Company has mailed notice of termination to the contract owner's last known
address and to any assignee of record. If the Contract is terminated, we will
pay you the contract value less any applicable premium tax, and less any
applicable administrative charge.
REQUIRED REPORTS
As often as required by law, but at least once in each contract year before the
due date of the first annuity payment, we will furnish a report showing the
number of accumulation units credited to the Contract and the corresponding
accumulation unit value(s) as of the date of the report for each funding option
to which the contract owner has allocated amounts during the applicable period.
The Company will keep all records required under federal or state laws.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any payment or
determination of values on any business day (1) when the New York Stock Exchange
("the Exchange") is closed; (2) when trading on the Exchange is restricted; (3)
when an emergency exists as determined by the SEC so that the sale of securities
held in the Separate Account may not reasonably occur or so that the Company may
not reasonably determine the value the Separate Account's net assets; or (4)
during any other period when the SEC, by order, so permits for the protection of
security holders.
TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES
We may permit contract owners to transfer their contract values into other
annuities offered by us or our affiliated insurance companies under rules then
in effect.
THE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
The Travelers Fund ABD II For Variable Annuities ("Fund ABD II") was established
on October 17, 1995 and is registered with the SEC as a unit investment trust
(separate account) under the Investment Company Act of 1940, as amended (the
"1940 Act"). The assets of Fund ABD II will be invested exclusively in the
shares of the variable funding options.
The assets of Fund ABD II are held for the exclusive benefit of the owners of
this separate account, according to the laws of Connecticut. Income, gains and
losses, whether or not realized, from assets allocated to Fund ABD II are, in
accordance with the Contracts, credited to or charged against Fund ABD II
without regard to other income, gains and losses of the Company. The assets held
by Fund ABD II are not chargeable with liabilities arising out of any other
business which the Company may conduct. Obligations under the Contract are
obligations of the Company.
All investment income and other distributions of the funding options are payable
to Fund ABD II. All such income and/or distributions are reinvested in shares of
the respective funding option at net asset value. Shares of the funding options
are currently sold only to life insurance company separate accounts to fund
variable annuity and variable life insurance contracts.
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PERFORMANCE INFORMATION
From time to time, we may advertise several types of historical performance for
the Contract's funding options. We may advertise the "standardized average
annual total returns" of the funding option, calculated in a manner prescribed
by the SEC, as well as the "non-standardized total return," as described below.
Specific examples of the performance information appear in the SAI.
STANDARDIZED METHOD. Quotations of average annual total returns are computed
according to a formula in which a hypothetical initial investment of $1,000 is
applied to the funding option, and then related to ending redeemable values over
one-, five-, and ten-year periods, or for a period covering the time during
which the funding option has been in existence, if less. These quotations
reflect the deduction of all recurring charges during each period (on a pro rata
basis in the case of fractional periods). The deduction for the annual
administrative charge ($30) is converted to a percentage of assets based on the
actual fee collected (or anticipated to be collected, if a new product), divided
by the average net assets for Contracts sold (or anticipated to be sold).
NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be calculated in a
similar manner based on the performance of the funding options over a period of
time, usually for the calendar year-to-date, and for the past one-, three-,
five- and ten-year periods. Nonstandardized total returns will not reflect the
deduction of the $30 annual contract administrative charge, which, if reflected,
would decrease the level of performance shown.
GENERAL Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to well-known indices of
market performance (including, but not limited to, the Dow Jones Industrial
Average, the Standard & Poor's (S&P) 500 Index and the S&P 400 Index, the Lehman
Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value
Line Index, and the Morgan Stanley Capital International's EAFE Index).
Advertisements may also include published editorial comments and performance
rankings compiled by independent organizations (including, but not limited to,
Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that
monitor the performance of the Separate Account and the variable funding
options.
For funding options that were in existence prior to the date they became
available under the Separate Account, the standardized average annual total
return quotations may be accompanied by the investment performance that such
funding options would have achieved (reduced by the applicable charges) had they
been held under the Contract for the period quoted. The total return quotations
are based upon historical earnings and are not necessarily representative of
future performance. The contract value at redemption may be more or less than
original cost.
FEDERAL TAX CONSIDERATIONS
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The following general discussion of the federal income tax consequences under
this Contract is not intended to cover all situations, and is not meant to
provide tax advice. Because of the complexity of the law and the fact that the
tax results will vary depending on many factors, you should consult your tax
adviser regarding your personal situation. For your information, a more detailed
tax discussion is contained in the SAI.
GENERAL TAXATION OF ANNUITIES
Congress has recognized the value of saving for retirement by providing certain
tax benefits, in the form of tax deferral, for money put into an annuity. The
Internal Revenue Code (Code) governs how this money is ultimately taxed,
depending upon the type of contract, qualified or non-qualified, and the manner
in which the money is distributed, as briefly described below.
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TYPES OF CONTRACTS: QUALIFIED OR NONQUALIFIED
If you purchase an annuity contract with proceeds of an eligible rollover
distribution from any pension plan, specially sponsored program, or individual
retirement annuity (IRA) with pre-tax dollars, your contract is referred to as a
qualified contract. Some examples of qualified contracts are: IRAs, 403(b)
annuities, pension and profit-sharing plans (including 401(k) plans), Keogh
Plans, and certain other qualified deferred compensation plans. If you purchase
the contract on an individual basis with after-tax dollars and not under one of
the programs described above, your contract is referred to as nonqualified.
NONQUALIFIED ANNUITY CONTRACTS
As the owner of a nonqualified annuity, you do not receive any tax benefit
(deduction or deferral of income) on purchase payments, but you will not be
taxed on increases in the value of your contract until a distribution
occurs -- either as a withdrawal (distribution made prior to the maturity date),
or as annuity payments. When a withdrawal is made, you are taxed on the amount
of the withdrawal that is considered earnings. Similarly, when you receive an
annuity payment, part of each payment is considered a return of your purchase
payments and will not be taxed. The remaining portion of the annuity payment
(i.e., any earnings) will be considered ordinary income for tax purposes.
If a nonqualified annuity is owned by other than an individual, however, (e.g.,
by a corporation), increases in the value of the contract attributable to
purchase payments made after February 28, 1986 are includible in income
annually. Furthermore, for contracts issued after April 22, 1987, if you
transfer the contract without adequate consideration all deferred increases in
value will be includible in your income at the time of the transfer.
If you make a partial withdrawal, this money will generally be taxed as first
coming from earnings, (income in the contract), and then from your purchase
payments. These withdrawn earnings are includible in your income. (See "Penalty
Tax for Premature Distributions" below.) There is income in the contract to the
extent the contract value exceeds your investment in the contract. The
investment in the contract equals the total purchase payments you paid less any
amount received previously which was excludible from gross income. Any direct or
indirect borrowing against the value of the contract or pledging of the contract
as security for a loan will be treated as a cash distribution under the tax law.
Federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the contract owner,
including the first of joint owners. If these requirements are not met, the
surviving joint owner, or the beneficiary, will have to pay taxes prior to
distribution. The distribution required depends, among other things, upon
whether an annuity option is elected or whether the new contract owner is the
surviving spouse. We will administer Contracts in accordance with these rules
and we will notify you when you should begin receiving payments.
QUALIFIED ANNUITY CONTRACTS
Under a qualified annuity, since amounts paid into the contract have not yet
been taxed, the full amount of all distributions, including lump-sum withdrawals
and annuity payments, are taxed at the ordinary income tax rate unless the
distribution is transferred to an eligible rollover account or contract. The
Contract is available as a vehicle for IRA rollovers and for other qualified
contracts. There are special rules which govern the taxation of qualified
contracts, including withdrawal restrictions, requirements for mandatory
distributions, and contribution limits. We have provided a more complete
discussion in the SAI.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the contract owner has reached the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions,
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for life or life expectancy, or unless the distribution follows the death or
disability of the contract owner. Other exceptions may be available in certain
qualified plans.
DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity contracts based on a
separate account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how separate accounts must be diversified. The Company
monitors the diversification of investments constantly and believes that its
accounts are adequately diversified. The consequence of any failure to diversify
is essentially the loss to the Contract Owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.
OWNERSHIP OF THE INVESTMENTS
Assets in the separate accounts, also referred to as segregated asset accounts,
must be owned by the Company and not by the Contract Owner for federal income
tax purposes. Otherwise, the deferral of taxes is lost and income and gains from
the accounts would be includable annually in the Contract Owner's gross income.
The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary 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 of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts [of a segregated asset
account] without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect. New regulations are generally issued with
a prospective-only effect as to future sales or as to future voluntary
transactions in existing contracts. The Company therefore reserves the right to
modify the contract as necessary to attempt to prevent Contract Owners from
being considered the owner of the assets of the separate account.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which an IRA owner attains age
70 1/2. Participants in qualified plans and 403(b) annuities may defer minimum
distributions until the later of April 1st of the calendar year following the
calendar year in which they attain age 70 1/2 or the year of retirement.
Distributions must begin or be continued according to required patterns
following the death of the contract owner or annuitant of both qualified and
nonqualified annuities.
OTHER INFORMATION
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THE INSURANCE COMPANY
The Travelers Life and Annuity Company is a stock insurance company chartered in
1973 in Connecticut and continuously engaged in the insurance business since
that time. It is licensed to
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conduct life insurance business in a majority of the states of the United
States, and intends to seek licensure in the remaining states, except New York.
The Company is an indirect wholly owned subsidiary of Travelers Group Inc. The
Company's Home Office is located at One Tower Square, Hartford, Connecticut
06183.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. The Contracts will
be sold by life insurance sales agents who represent the Company, and who are
licensed registered representatives of the Company or certain other registered
broker-dealers. The compensation paid to sales representatives will not exceed
6.5% of the payments made under the Contracts.
From time to time, the Company may pay or permit other promotional incentives,
in cash, credit or other compensation.
Any sales representative or employee will have been qualified to sell variable
annuities 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 NASD. The principal underwriter for the Contracts is Tower Square
Securities, Inc., an affiliate of the Company; however, it is currently
anticipated that an affiliated broker-dealer may become the principal
underwriter for the Contracts during 1997.
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which it is delivered. Any
paid-up annuity, contract value or death benefits that are available under the
Contract are not less than the minimum benefits required by the statutes of the
state in which the Contract is delivered. We reserve the right to make any
changes, including retroactive changes, in the Contract to the extent that the
change is required to meet the requirements of any law or regulation issued by
any governmental agency to which the Company, the Contract or the contract owner
is subject.
VOTING RIGHTS
The Company is the legal owner of the shares of the funding options. However, we
believe that when a funding option solicits proxies in conjunction with a vote
of shareholders we are required to obtain from you and from other owners
instructions on how to vote those shares. When we receive those instructions, we
will vote all of the shares we own in proportion to those instructions. This
will also include any shares we own on our own behalf. Should we determine that
we are no longer required to comply with the above, we will vote on the shares
in our own right.
LEGAL PROCEEDINGS AND OPINIONS
There are no pending material legal proceedings affecting Fund ABD II. Legal
matters in connection with the federal laws and regulations affecting the issue
and sale of the Contract described in this prospectus, as well as the
organization of the Company, its authority to issue variable annuity contracts
under Connecticut law and the validity of the forms of the variable annuity
contracts under Connecticut law, have been reviewed by the General Counsel of
the Company.
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APPENDIX A
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THE FIXED ACCOUNT
The Fixed Account is secured by part of the general assets of the Company. The
general assets of the Company include all assets of the Company other than those
held in the separate accounts sponsored by the Company or its affiliates.
The staff of the SEC does not generally review the disclosure in the prospectus
relating to the Fixed Account. Disclosure regarding the Fixed Account and the
general account may, however, be subject to certain provisions of the federal
securities laws relating to the accuracy and completeness of statements made in
the prospectus.
Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of the Separate Account or any of
the funding options does not affect the Fixed Account portion of the contract
owner's contract value, or the dollar amount of fixed annuity payments made
under any payout option.
We guarantee that, at any time, the Fixed Account contract value will not be
less than the amount of the purchase payments allocated to the Fixed Account,
plus interest credited as described below, less any applicable premium taxes or
prior surrenders.
Purchase payments allocated to the Fixed Account and any transfers made to the
Fixed Account become part of the Company's general account which supports
insurance and annuity obligations. Neither the general account nor any interest
therein is registered under, nor subject to the provisions of, the Securities
Act of 1933 or Investment Company Act of 1940. We will invest the assets of the
Fixed Account at our discretion. Investment income from such Fixed Account
assets will be allocated to us and to the Contracts participating in the Fixed
Account.
Investment income from the Fixed Account allocated to us includes compensation
for mortality and expense risks borne by us in connection with Fixed Account
Contracts. The amount of such investment income allocated to the Contracts will
vary from year to year in our sole discretion at such rate or rates as we
prospectively declare from time to time.
The initial rate for any allocations into the Fixed Account is guaranteed for
one year from the date of such allocation. Subsequent renewal rates will be
guaranteed for the calendar quarter. We also guarantee that for the life of the
Contract we will credit interest at not less than 3% per year. Any interest
credited to amounts allocated to the Fixed Account in excess of 3% per year will
be determined in our sole discretion. You assume the risk that interest credited
to the Fixed Account may not exceed the minimum guarantee of 3% for any given
year.
TRANSFERS
You may make transfers from the Fixed Account to any other available funding
option(s) twice a year during the 30 days following the semiannual anniversary
of the contract effective date. The transfers are limited to an amount of up to
15% of the Fixed Account Value on the semiannual contract effective date
anniversary. (This restriction does not apply to transfers from the Dollar Cost
Averaging Program.) Amounts previously transferred from the Fixed Account to
other funding options may not be transferred back to the Fixed Account for a
period of at least six months from the date of transfer. We reserve the right to
waive either of these restrictions.
Automated transfers from the Fixed Account to any of the funding options may
begin at any time. Automated transfers from the Fixed Account may not deplete
your Fixed Account value in a period of less than twelve months from your
enrollment in the Dollar Cost Averaging Program.
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APPENDIX B
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TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information and
financial statements relating to The Travelers Life and Annuity Company. A list
of the contents of the Statement of Additional Information is set forth below:
The Insurance Company
Principal Underwriter
Distribution and Management Agreement
Valuation of Assets
Telephone Transfers
Federal Tax Considerations
Independent Accountants
Financial Statements
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Copies of the Statement of Additional Information dated July 24, 1997 (Form No.
L-21195S) are available without charge. To request a copy, please clip this
coupon on the dotted line above, enter your name and address in the spaces
provided below, and mail to: The Travelers Life and Annuity Company, Annuity
Services, One Tower Square, Hartford, Connecticut 06183-9061.
Name:
Address:
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