<PAGE>
As filed with the Securities and Exchange Registration No. 33-87932
Commission on September 18, 1995 Registration No. 811-2512
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
--------------------------------------------------------------------------------
Post-Effective Amendment No.1 To
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment To
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
--------------------------------------------------------------------------------
Variable Annuity Account B of Aetna Life Insurance and Annuity Company
(Exact Name of Registrant)
Aetna Life Insurance and Annuity Company
(Name of Depositor)
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (860) 273-7834
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
--------------------------------------------------------------------------------
It is proposed that this filing will become effective (Check appropriate space):
immediately upon filing pursuant to paragraph (b) of Rule 485
---
on _______________________ pursuant to paragraph (b) of Rule 485
---
X 60 days after filing pursuant to paragraph (a)(i) of Rule 485
---
on _______________________ pursuant to paragraph (a)(ii) of Rule 485
---
75 days after filing pursuant to paragraph (a)(ii) of Rule 485
---
on _______________________ pursuant to (a)(ii) of Rule 485
---
If appropriate check the following space:
This post-effective amendment designates a new effective date for a
--- previously filed post-effective amendment.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
Registrant filed a Rule 24f-2 Notice for the fiscal year ended December 31, 1994
on February 28, 1995.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Form N-4
--------
Item No. Part A (Prospectus) Location
-------- ------------------- --------
<C> <S> <C>
1 Cover Page..................................... Cover Page
2 Definitions.................................... Glossary of Special Terms
3 Synopsis or Highlights......................... Prospectus Summary; Fee Table
4 Condensed Financial Information................ Condensed Financial
Information
5 General Description of Registrant, Depositor, The Company; Variable Annuity
and Portfolio Companies........................ Account B; The Funds
6 Deductions and Expenses........................ Charges and Deductions
7 General Description of Variable Annuity
Contracts...................................... Contract Rights; Miscellaneous
8 Annuity Period................................. Annuity Period
9 Death Benefit.................................. Death Benefit
10 Purchases and Contract Value................... Contract Purchase; Certificate
Holder's Account Value
11 Redemptions.................................... Contract Rights - Withdrawals;
Right to Cancel
12 Taxes.......................................... Tax Status
13 Legal Proceedings.............................. Miscellaneous - Legal
Proceedings
14 Table of Contents of the Statement of Statement of Additional
Additional Information......................... Information - Table of Contents
Part B (Statement of Additional Information)
--------------------------------------------
15 Cover Page..................................... Cover page
16 Table of Contents.............................. Table of Contents
17 General Information and History................ General Information and History
18 Services....................................... General Information and
History; Independent Auditors
19 Purchase of Securities Being Offered........... Offering and Purchase of Contracts
20 Underwriters................................... Offering and Purchase of Contracts
21 Calculation of Performance Data................ Performance Data - General;
Performance Data - Average
Annual Total Return Quotations
22 Annuity Payments............................... Annuity Payments
23 Financial Statements........................... Financial Statements
</TABLE>
Part C (Other Information)
--------------------------
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Service Unit, RS1T 151 Farmington Avenue Hartford, Connecticut 06156
Telephone: 1-800-531-4547
VARIABLE ANNUITY ACCOUNT B
Prospectus Dated: , 1995
MARATHON PLUS/GROWTH PLUS (NEW YORK)
This Prospectus describes provisions of the New York group and individual
variable annuity contracts issued by Aetna Life Insurance and Annuity Company
(the "Company"). As of the date of this Prospectus, only interests in group
contracts are offered for new sales. Two Contracts are described in this
Prospectus: the nonqualified-flexible premium contract ("Nonqualified Flexible
Premium Contract") and the Contract available for rollovers under Individual
Retirement Annuities ("IRA Rollover Contract"). See "Contract Purchase" and
"Contract Rights."
The Contracts are offered through the Company as underwriter, and by
registered broker-dealers selected by it. See "Contract Purchase --
Distribution."
Purchase Payments received under the Contracts on behalf of persons
participating under group Contracts or individual Contract owners
(collectively, "Certificate Holders") will be allocated at the Certificate
Holder's direction to variable funding options or to a credited interest
option for accumulation of values for the Certificate Holder's Account. The
variable options reflect the investment experience of Variable Annuity Account
B (the "Separate Account") based on Purchase Payments directed to one or more
of the following mutual funds as selected by the Certificate Holder. (See
"Variable Annuity Account B" and "The Funds.")
. Aetna Variable Fund . Fidelity Contrafund Portfolio
. Aetna Income Shares . IMS -- Equity Growth and Income
. Aetna Variable Encore Fund Fund
. Aetna Investment Advisers Fund, Inc. . IMS -- Growth Stock Fund
. Aetna Ascent Variable Portfolio . IMS -- Utility Fund
. Aetna Crossroads Variable Portfolio . IMS -- Prime Money Fund
. Aetna Legacy Variable Portfolio . IMS -- U.S. Government Bond Fund
. Alger American Balanced Portfolio . IMS -- Corporate Bond Fund
. Alger American Income and Growth . IMS -- International Stock Fund
Portfolio . Janus Aspen Aggressive Growth
. Alger American Growth Portfolio Portfolio
. Alger American MidCap Growth . Janus Aspen Balanced Portfolio
Portfolio . Janus Aspen Flexible Income
. Alger American Leveraged AllCap Portfolio
Portfolio . Janus Aspen Growth Portfolio
. Alger American Small Cap Portfolio . Janus Aspen Short-Term Bond
. Fidelity High Income Portfolio Portfolio
. Fidelity Equity-Income Portfolio . Janus Aspen Worldwide Growth
. Fidelity Growth Portfolio Portfolio
. Fidelity Overseas Portfolio . Lexington Emerging Markets Fund
. Fidelity Investment Grade Bond . Lexington Natural Resources Trust
Portfolio . TCI International (a Twentieth
. Fidelity Asset Manager Portfolio Century Fund)
. Fidelity Index 500 Portfolio . TCI Growth (a Twentieth Century
Fund)
. TCI Balanced (a Twentieth Century
Fund)
The fixed interest option available during the Accumulation Period is the
ALIAC Guaranteed Account ("AGA").
Except as specifically mentioned, this Prospectus describes only the variable
options of the Contracts. Information about the AGA is found in the Appendix
and in the AGA prospectus.
This Prospectus provides information about the Separate Account that you
should know before investing. Additional information about the Separate
Account is contained in a Statement of Additional Information ("SAI") dated
, 1995, filed with the Securities and Exchange Commission and
incorporated herein by reference. The Table of Contents for the SAI is printed
in this Prospectus. The SAI may be obtained without charge by indicating your
request on your application, or by calling 1-800-531-4547.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR
THE FUNDS AND THE ALIAC GUARANTEED ACCOUNT. ALL PROSPECTUSES SHOULD BE READ
AND RETAINED FOR FUTURE REFERENCE. THE SECURITIES OFFERED BY THIS PROSPECTUS
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 THE PROSPECTUSES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THE PROSPECTUSES, IN CONNECTION
WITH THE OFFERS OF THE SECURITIES DESCRIBED IN THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
GLOSSARY OF SPECIAL TERMS.................................................. 3
PROSPECTUS SUMMARY......................................................... 6
FEE TABLE.................................................................. 7
PERFORMANCE DATA........................................................... 13
THE COMPANY................................................................ 14
VARIABLE ANNUITY ACCOUNT B................................................. 14
THE FUNDS.................................................................. 14
Fund Investment Advisers.................................................. 19
Fund Additions and Limitations............................................ 20
Mixed and Shared Funding.................................................. 20
CONTRACT PURCHASE
General................................................................... 20
Purchase.................................................................. 20
Purchase Payments......................................................... 21
Designations of Beneficiary and Annuitant................................. 21
Distribution.............................................................. 21
CERTIFICATE HOLDER'S ACCOUNT VALUES
Accumulation Units........................................................ 22
Net Investment Factor..................................................... 23
CONTRACT RIGHTS
Right to Cancel........................................................... 23
Rights Under the Contract and Account..................................... 23
Loans..................................................................... 23
Transfers Among Investment Options........................................ 24
Dollar Cost Averaging Program............................................. 24
Account Rebalancing Program .............................................. 24
Withdrawals............................................................... 25
CHARGES AND DEDUCTIONS
General................................................................... 25
Maintenance Fee........................................................... 26
Mortality and Expense Risk Charges........................................ 26
Administrative Expense Charge............................................. 26
Transfer Fees............................................................. 26
Deferred Sales Charge..................................................... 26
Fund Expenses............................................................. 28
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Premium Tax.............................................................. 28
Commissions and Distribution Expenses.................................... 28
ADDITIONAL WITHDRAWAL OPTIONS
General.................................................................. 28
Estate Conservation Option............................................... 29
Systematic Withdrawal Option............................................. 29
ANNUITY PERIOD
Annuity Period Elections................................................. 30
Annuity Options.......................................................... 31
DEATH BENEFIT
General.................................................................. 32
Death Benefit Amount..................................................... 32
Death Benefit Options Available to Beneficiary Under a Nonqualified
Flexible Premium Contract............................................... 33
Death Benefit Options Available to Beneficiary Under an IRA Rollover
Contract................................................................ 35
TAX STATUS
Introduction............................................................. 36
Taxation of the Company.................................................. 36
Tax Status of the Contract............................................... 37
Taxation of Annuities.................................................... 38
IRA Rollover Contract.................................................... 39
Withholding.............................................................. 40
Possible Changes in Taxation............................................. 40
Other Tax Consequences................................................... 40
MISCELLANEOUS
Voting Rights............................................................ 40
Modification of the Contract............................................. 41
Inquiries................................................................ 41
Telephone Transfers...................................................... 41
Transfer of Ownership; Assignment........................................ 42
Legal Proceedings........................................................ 42
Legal Matters............................................................ 42
STATEMENT OF ADDITIONAL INFORMATION -- TABLE OF CONTENTS.................. 43
APPENDIX: ALIAC Guaranteed Account........................................ 44
</TABLE>
2
<PAGE>
GLOSSARY OF SPECIAL TERMS
As used in this Prospectus, the following terms have the meanings shown:
ACCUMULATION PERIOD: The period during which one or more Net Purchase Payments
applied to a Certificate Holder's Account are invested to fund future annuity
payments.
ACCUMULATION UNIT: A measure of the net investment results for each variable
investment option during the Accumulation Period. The Accumulation Units for
the applicable Funds are used to calculate the portion of the Certificate
Holder's Account attributable to the Separate Account during the Accumulation
Period.
ADJUSTED ACCOUNT VALUE: The Certificate Holder's Account Value plus or minus
the Certificate Holder's aggregate ALIAC Guaranteed Account market value
adjustment ("MVA").
AGA: ALIAC Guaranteed Account, a credited interest option offered as a funding
option under the Contract.
ANNUITANT: The natural person on whose life the Annuity benefit under a
Contract is based.
ANNUITY: A series of payments for life, for a definite period or for a
combination of the two.
ANNUITY DATE: The date on which Annuity payments commence.
ANNUITY OPTIONS: Annuity payment methods available during the Annuity Period.
ANNUITY PERIOD: The period of time during which Annuity payments are made.
ANNUITY UNIT: A unit of measure used to calculate the dollar amount of each
variable Annuity payment during the Annuity Period. Annuity Units are used to
calculate the amount of each variable Annuity payment.
BENEFICIARY: The person entitled to receive any death benefit with respect to
a Certificate Holder's Account.
CERTIFICATE: The document issued to a Certificate Holder for a Certificate
Holder's Account established under a group Contract.
CERTIFICATE HOLDER: A person or entity (i.e., a Trustee for a Trust) who
purchases or acquires an interest under a group Contract or who purchases an
individual Contract, sometimes referred to as "you." A Certificate Holder's
spouse may have an interest in the same Certificate Holder's Account as a
joint Certificate Holder. References to "Certificate Holders" in this
Prospectus mean both of the Certificate Holders on Joint Accounts.
CERTIFICATE HOLDER'S ACCOUNT: A record established for each Certificate Holder
to maintain values under a Contract.
CERTIFICATE HOLDER'S ACCOUNT VALUE: As of any Valuation Period, the dollar
value of all amounts accumulated in a Certificate Holder's Account, including
the value of the Accumulation Units, AGA and amounts deposited pursuant to the
guaranteed death benefit.
CODE: The Internal Revenue Code of 1986, as amended.
COMPANY: Aetna Life Insurance and Annuity Company.
3
<PAGE>
CONTRACTS: Group or individual variable deferred annuity contracts described
in this prospectus, one of which is a nonqualified flexible premium contract
and the other an Individual Retirement Annuity (IRA).
DISTRIBUTOR(S): The registered broker-dealer(s) which have entered into
selling agreements with the Company to offer and sell the Contracts. The
Company may also serve as a Distributor.
EFFECTIVE DATE: The date a Contract or Certificate is issued to a Certificate
Holder.
FUNDS: The open-end management investment companies available as variable
funding options for the investment of assets of the Separate Account under the
Contracts.
GENERAL ACCOUNT: The account into which all Company assets not held in a
separate account are deposited. The General Account is subject to all
liabilities of the Company.
GROUP CONTRACT HOLDER: The entity to which a group Contract is issued.
HOME OFFICE: The principal executive offices of the Company located at 151
Farmington Avenue, Hartford, Connecticut 06156.
INDIVIDUAL RETIREMENT ANNUITY (IRA) ROLLOVER CONTRACT: An individual or group
variable deferred annuity contract established to accept Purchase Payments of
rollover amounts previously accumulated under an Individual Retirement Account
or Annuity or a plan qualified under Code Section 401 or 403. These Contracts
are intended to qualify under Code Section 408(b).
MARKET VALUE ADJUSTMENT (MVA): An amount deducted or added to amounts
withdrawn early from the AGA to reflect changes in the market value of the
investment since the date of deposit. See the Appendix and the prospectus for
the AGA for a discussion of how the market value adjustment is actually
calculated.
NASD: National Association of Securities Dealers, Inc.
1940 ACT: The Investment Company Act of 1940, as amended.
NET PURCHASE PAYMENT: The Purchase Payment less premium taxes, if applicable.
NONQUALIFIED FLEXIBLE PREMIUM CONTRACT: An individual or group variable
deferred annuity contract established to accept one or more Purchase Payments
to supplement an individual's retirement income, or to provide an alternative
investment option under an Individual Retirement Account qualified under Code
Section 408(a).
PURCHASE PAYMENT(S): The gross payment(s) made to a Certificate Holder's
Account pursuant to the terms of a Contract. The Company reserves the right to
refuse to accept any Purchase Payment at any time for any reason.
REGISTERED REPRESENTATIVE: The individual who is registered with the NASD as
an agent of a Distributor to offer and sell securities and who has the
appropriate insurance licenses to sell variable annuity contracts. See
"Distribution."
SEC: Securities and Exchange Commission.
SEPARATE ACCOUNT: Variable Annuity Account B, an account whose assets are
segregated from other assets of the Company. The Separate Account holds shares
of the Funds acquired as variable funding options under the Contracts. The
Company holds title to the assets held in the Separate Account.
4
<PAGE>
UNDERWRITER: The registered broker-dealer which contracts with other registered
broker-dealers on behalf of the Separate Account to offer and sell the
Contracts. The Company will serve as Underwriter for the Contracts.
VALUATION PERIOD: The period of time for which a Fund determines its net asset
value, usually from 4:15 p.m. Eastern time each day the New York Exchange is
open for trading until 4:15 the next such business day.
VALUATION RESERVE: A reserve established pursuant to the insurance laws of the
State of Connecticut to measure voting rights during the Annuity Period. It
also measures the value of a commutation right under the "Payments of a Stated
Period of Time" nonlifetime Annuity option when elected on a variable basis.
VARIABLE ANNUITY CONTRACT: An annuity contract providing for the accumulation
of values, and for retirement payments, which vary in amount based on
investment results.
5
<PAGE>
PROSPECTUS SUMMARY
CONTRACTS OFFERED
Two types of variable deferred annuity Contracts are being offered. One is a
Nonqualified Flexible Premium Contract and the other is an Individual
Retirement Annuity (IRA) rollover contract. See "Contract Purchase --
General," "Contract Rights" and "Miscellaneous."
PURCHASE
Under the group Contract, individuals may be enrolled as Certificate Holders
and the Company will maintain a Certificate Holder's Account for each
Certificate Holder. Under an individual Contract, the owner will be an
individual. (In either case, the individual is referred to as "Certificate
Holder" or "you.") Under the Contracts, Certificate Holders have certain
rights (see "Contract Rights"). As of the date of this Prospectus, only
interests in group contracts are offered for new sales.
WITHDRAWAL
You may redeem all or a portion of your Account Value during the Accumulation
Period by completing the Company's disbursement form and sending it to the
Company. Amounts withdrawn may be subject to a deferred sales charge or
maintenance fee. See "Charges and Deductions." The maximum deferred sales
charge that could be assessed is 7% of each Net Purchase Payment. Amounts
withdrawn from the AGA may be subject to a market value adjustment. (See the
Appendix.) A 10% federal penalty tax may also be imposed on the taxable
portion paid to you and certain amounts may be subject to tax withholding. See
"Tax Status -- Taxation of Annuities."
GUARANTEED DEATH BENEFIT
These Contacts contain a guaranteed death benefit feature. Upon the death of
the Certificate Holder or the Annuitant, under certain circumstances, the
Certificate Holder's Account Value may be adjusted upward. See "Death
Benefit."
CONTRACT CHARGES
Certain charges are associated with these Contracts, for example, mortality
and expense risk charges, administrative expense charges, maintenance fees and
transfer fees. The Funds are also subject to certain fees and expenses. See
"Charges and Deductions" for a complete explanation of these charges.
FREE LOOK PROVISION
The Certificate Holder may cancel the Certificate Holder's Account no later
than ten days after receiving the Contract or Certificate (whichever is
applicable) by returning it to us or to the Distributor from whom it was
purchased along with a written notice of cancellation. The Certificate Holder
will receive the full amount of Purchase Payments made under the Contract upon
cancellation under this provision. (See "Contract Rights -- Right to Cancel.")
6
<PAGE>
FEE TABLE
(Based on year ended December 31, 1994)
THE PURPOSE OF THE FEE TABLE IS TO ASSIST CERTIFICATE HOLDERS IN UNDERSTANDING
THE VARIOUS COSTS AND EXPENSES THAT WILL BE BORNE, DIRECTLY OR INDIRECTLY,
UNDER THE CONTRACT. THE INFORMATION LISTED REFLECTS THE CHARGES DUE UNDER THE
CONTRACT AS WELL AS THE FEES AND EXPENSES DEDUCTED FROM THE FUNDS. ADDITIONAL
INFORMATION REGARDING THE CHARGES AND DEDUCTIONS ASSESSED UNDER THE CONTRACT
CAN BE FOUND UNDER "CHARGES AND DEDUCTIONS" IN THIS PROSPECTUS. CHARGES AND
EXPENSES SHOWN DO NOT TAKE INTO ACCOUNT PREMIUM TAXES THAT MAY BE APPLICABLE.
FOR MORE INFORMATION REGARDING EXPENSES PAID OUT OF THE ASSETS OF A PARTICULAR
FUND, SEE THE FUND'S PROSPECTUS.
TRANSACTION EXPENSES
--------------------
DEFERRED SALES CHARGE (as a percentage of each Net Purchase Payment
deposited)(/1/)
<TABLE>
<CAPTION>
LENGTH OF TIME SINCE NET PURCHASE PAYMENT MADE DEDUCTION
---------------------------------------------- ---------
<S> <C>
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 or more than 7 years 0%
Transfers(/2/) $ 0.00
</TABLE>
<TABLE>
<CAPTION>
ANNUAL EXPENSES
---------------
<S> <C>
Annual Maintenance Fee(/3/) $30.00
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSES
Daily deductions are made from the Certificate Holder's Account Value held in
the variable options. The deduction is the daily equivalent of the annual
effective percentage shown in the following chart:
<TABLE>
<S> <C>
During the Accumulation Period:
Mortality and Expense Risk Fees 1.25%
Administrative Expense Charge 0.15%
-----
Total Separate Account Annual Expenses 1.40%
=====
During the Annuity Period:
Mortality and Expense Risk Fees 1.25%
Administrative Expense Charge(/4/) 0.00%
-----
Total Separate Account Annual Expenses 1.25%
=====
</TABLE>
(/1/)Referred to in the Contracts as a "surrender fee." See "Charges and
Deductions -- Deferred Sales Charge" for instances in which this charge
may be waived.
(/2/)We currently do not impose a transfer fee; however, we reserve the right
to impose a fee of $10 for each transfer in excess of 12 per year. See
"Contract Rights -- Transfers Among Investment Options."
(/3/)The maintenance fee is waived when the Certificate Holder's Account Value
is $50,000 or more on the date the maintenance fee is due. See "Charges
and Deductions -- Maintenance Fee."
(/4/)The Company does not currently impose an administrative charge during the
Annuity Period. We do, however, reserve the right to deduct a daily
administrative expense charge during the Annuity Period of up to 0.25% per
year from the portion of a Certificate Holder's Account Values held in the
Separate Account.
7
<PAGE>
MUTUAL FUND ANNUAL EXPENSES
(As a percentage of average net assets, except where otherwise noted, based on
figures for the year ended December 31, 1994.)
<TABLE>
<CAPTION>
INVESTMENT OTHER
ADVISORY FEES(/1/) EXPENSE(/2/)
(AFTER EXPENSE (AFTER EXPENSE TOTAL FUND
REIMBURSEMENT) REIMBURSEMENT) ANNUAL EXPENSES
------------------ -------------- ---------------
<S> <C> <C> <C>
Aetna Variable Fund 0.25% 0.05% 0.30%
Aetna Income Shares 0.25% 0.08% 0.33%
Aetna Variable Encore Fund 0.25% 0.07% 0.32%
Aetna Investment Advisers
Fund, Inc. 0.25% 0.07% 0.32%
Aetna Ascent Variable
Portfolio(/3/) 0.50% 0.20% 0.70%
Aetna Crossroads Variable
Portfolio(/3/) 0.50% 0.20% 0.70%
Aetna Legacy Variable
Portfolio(/3/) 0.50% 0.20% 0.70%
Alger American Balanced
Portfolio 0.75% 0.33% 1.08%
Alger American Income and
Growth Portfolio 0.63% 0.12% 0.75%
Alger American MidCap Growth
Portfolio 0.80% 0.17% 0.97%
Alger American Leveraged
AllCap Growth
Portfolio(/3/)(/4/) 0.85% 0.94% 1.79%
Alger American Small Cap
Portfolio 0.85% 0.11% 0.96%
Alger American Growth
Portfolio 0.75% 0.11% 0.86%
Fidelity High Income
Portfolio 0.61% 0.10% 0.71%
Fidelity Equity-Income
Portfolio(/5/) 0.52% 0.06% 0.58%
Fidelity Growth
Portfolio(/5/) 0.62% 0.07% 0.69%
Fidelity Overseas Portfolio 0.77% 0.15% 0.92%
Fidelity Investment Grade
Bond Portfolio 0.46% 0.21% 0.67%
Fidelity Asset Manager
Portfolio(/5/) 0.72% 0.08% 0.80%
Fidelity Index 500
Portfolio(/6/) 0.00% 0.28% 0.28%
Fidelity Contrafund
Portfolio(/3/) 0.62% 0.27% 0.89%
IMS Equity Growth and Income
Fund(/7/) 0.00% 0.85% 0.85%
IMS Utility Fund(/7/) 0.00% 0.85% 0.85%
IMS Prime Money Fund(/7/) 0.00% 0.80% 0.80%
IMS U.S. Government Bond
Fund(/7/) 0.00% 0.80% 0.80%
IMS Corporate Bond Fund(/7/) 0.00% 0.80% 0.80%
IMS International Stock
Fund(/8/) 0.52% 0.73% 1.25%
IMS Growth Stock Fund(/9/) 0.00% 0.85% 0.85%
Janus Aspen Aggressive
Growth(/10/) 0.77% 0.28% 1.05%
Janus Aspen Balanced
Portfolio(/10/) 0.83% 0.74% 1.57%
Janus Aspen Flexible Income
Portfolio(/10/) 0.30% 0.70% 1.00%
Janus Aspen Growth
Portfolio(/10/) 0.66% 0.22% 0.88%
Janus Aspen Short-Term Bond
Portfolio(/10/) 0.00% 0.65% 0.65%
Janus Aspen Worldwide Growth
Portfolio(/10/) 0.69% 0.49% 1.18%
Lexington Emerging Markets
Fund(/11/) 0.85% 0.45% 1.30%
Lexington Natural Resources
Trust 1.00% 0.55% 1.55%
TCI Growth(/12/) 1.00% 0.00% 1.00%
TCI Balanced(/12/) 1.00% 0.00% 1.00%
TCI International(/12/) 1.50% 0.00% 1.50%
</TABLE>
8
<PAGE>
-------
(/1/)Certain of the unaffiliated Fund managers or their affiliates reimburse
the Company for administrative costs incurred in connection with
administering the Funds as variable funding options. These reimbursements
are generally based on a percentage of assets under management and may be
paid out of the managers' advisory fees. These amounts are not charged to
the Funds or Contract Holders, but are paid from other assets of the Fund
Managers or their affiliates.
(/2/)A mutual fund's "Other Expenses" include operating costs of the Fund. The
deduction of the above expenses are reflected in the Fund's net asset
value and are not deducted from the Contract Value.
(/3/)These funds have only limited operating history; therefore the expenses
are estimated for the current fiscal year.
(/4/)This figure does not include 0.75% that is attributable to Interest
Expense.
(/5/)A portion of the brokerage commission the Fund paid was used to reduce
its expenses. Without this reduction, total operating expenses would have
been 0.60% for the Equity-Income Portfolio, 0.70% for the Growth
Portfolio and 0.81% for the Asset Manager Portfolio.
(/6/)The Fund's expenses were voluntarily reduced by the Fund's investment
adviser. Absent reimbursement, investment advisory fees, other expenses
and total expenses would have been 0.28%, 0.53% and 0.81%, respectively.
(/7/)The Fund's Adviser has agreed to waive all or a portion of its advisory
fee and reimburse certain expenses so that the total annual expenses for
the Equity Growth and Income Fund and the Utility Fund would not exceed
0.85% of average net assets, and the total annual expenses for the Prime
Money Fund, the U.S. Government Bond Fund and the Corporate Bond Fund
would not exceed 0.80% of average net assets. Without this waiver and
reimbursement, the maximum advisory fees and the maximum total annual
expenses for the Funds, respectively, would have been 0.75% and 25.96%
for the Equity Growth and Income Fund, 0.75% and 55.43% for the Utility
Fund, 0.50% and 72.54% for the Prime Money Fund, 0.60% and 33.35% for the
U.S. Government Bond Fund, and 0.60% and 10.42% for the Corporate Bond
Fund. The Adviser can terminate this voluntary waiver or reimbursement of
expenses at any time at its sole discretion.
(/8/)The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee. The Fund's Adviser
can terminate this voluntary waiver at any time at its sole discretion.
The maximum management fee is 1.00%. The Total Fund Annual Expenses are
estimated to be 1.73% absent the anticipated voluntary waiver of a
portion of the management fee. Total Fund Annual Expenses are estimated
based on average expenses expected to be incurred during the period
ending December 31, 1995. During the course of this period, expenses may
be more or less than the average amount shown.
(/9/)The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of the management fee. The Fund's Adviser can terminate
this voluntary waiver at any time at its sole discretion. The maximum
management fee is 0.75%. The Total Fund Annual Expenses are estimated to
be 5.81% absent the anticipated voluntary waiver of the management fee
and the anticipated voluntary reimbursement of certain other operating
expenses. Total Fund Annual Expenses are estimated based on average
expenses expected to be incurred during the period ending December 31,
1995. During the course of this period, expenses may be more or less than
the average amount shown.
(/10/)The expense figures shown are net of certain expense waivers from Janus
Capital Corporation. Without such waivers, the Investment Advisory Fees,
Other Expenses and Total Mutual Fund Annual Expenses for the Portfolios
for the fiscal year ended December 31, 1994 would have been; 1.00%, 0.28%
and 1.28%, respectively, for Janus Aspen Aggressive Growth Portfolio:
1.00%, 0.74% and 1.74%, respectively, for Janus Aspen Balanced Portfolio;
0.65%, 0.70% and 1.35%, respectively, for Janus Aspen Flexible Income
Portfolio; 1.00%, 0.22% and 1.22%, respectively, for Janus Aspen Growth
Portfolio; 0.65%, 0.75% and 1.40%, respectively, for Janus Aspen Short-
Term Bond Portfolio; and 1.00%, 0.49% and 1.49%, respectively, for Janus
Aspen Worldwide Growth Portfolio.
(/11/)The Fund's investment adviser has agreed to reimburse the Fund so that
the total expenses of the Fund (excluding taxes, brokerage, and
extraordinary expenses) will not exceed an annual rate of 1.30% of the
Fund's average net assets. Without this agreement, it is estimated that
the Fund's Investment Advisory Fee, Total Other Expenses and Total Mutual
Fund Annual Expenses would have been 0.85%, 5.43% and 6.28%,
respectively.
(/12/)The Portfolio's investment adviser pays all expenses of the Portfolio
except brokerage commissions, taxes, interest, fees and expenses of the
non-interested directors (including counsel fees) and extraordinary
expenses.
9
<PAGE>
HYPOTHETICAL ILLUSTRATION (EXAMPLE)
-----------------------------------
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
Assuming a 5% annual return on assets, you would have paid the following
expenses on a $1,000 investment (/1/):
<TABLE>
<CAPTION>
For a complete withdrawal at If no withdrawal is made, or if
the end of the applicable time the Certificate Holder
period: annuitizes:
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund $72 $ 91 $113 $207 $18 $ 55 $ 95 $207
Aetna Income Shares $72 $ 92 $115 $210 $18 $ 56 $ 97 $210
Aetna Variable Encore Fund $72 $ 92 $114 $209 $18 $ 56 $ 96 $209
Aetna Investment
Advisers Fund, Inc. $72 $ 92 $114 $209 $18 $ 56 $ 96 $209
Aetna Ascent Variable
Portfolio $76 $103 $134 $249 $22 $ 68 $116 $249
Aetna Crossroads
Variable Portfolio $76 $103 $134 $249 $22 $ 68 $116 $249
Aetna Legacy Variable
Portfolio $76 $103 $134 $249 $22 $ 68 $116 $249
Alger American Balanced
Portfolio $80 $115 $153 $287 $26 $ 79 $135 $287
Alger American Income
and Growth Portfolio $76 $105 $136 $254 $22 $ 69 $118 $254
Alger American MidCap
Growth Portfolio $78 $111 $147 $276 $25 $ 76 $129 $276
Alger American Leveraged
AllCap Portfolio $87 $136 $187 $355 $33 $100 $170 $355
Alger American Small Cap
Portfolio $78 $111 $147 $275 $24 $ 75 $129 $275
Alger American Growth
Portfolio $77 $108 $142 $265 $23 $ 72 $124 $265
Fidelity Equity-Income
Portfolio $75 $100 $127 $237 $21 $ 64 $110 $237
Fidelity Growth
Portfolio $76 $103 $133 $248 $22 $ 67 $115 $248
Fidelity Overseas
Portfolio $78 $110 $145 $271 $24 $ 74 $127 $271
Fidelity Asset Manager
Portfolio $77 $106 $139 $259 $23 $ 71 $121 $259
Fidelity High Income
Portfolio $76 $104 $134 $250 $22 $ 68 $116 $250
Fidelity Investment
Grade Bond Portfolio $75 $102 $132 $246 $22 $ 67 $114 $246
Fidelity Index 500
Portfolio $71 $ 90 $112 $205 $18 $ 55 $ 94 $205
Fidelity Contrafund
Portfolio $78 $109 $143 $268 $24 $ 73 $125 $268
IMS Equity Growth and
Income Fund $77 $108 $141 $264 $23 $ 72 $123 $264
IMS Utility Fund $77 $108 $141 $264 $23 $ 72 $123 $264
IMS Prime Money Fund $77 $106 $139 $259 $23 $ 71 $121 $259
IMS U.S. Government Bond
Fund $77 $106 $139 $259 $23 $ 71 $121 $259
IMS Corporate Bond Fund $77 $106 $139 $259 $23 $ 71 $121 $259
IMS International Stock
Fund $81 $120 $161 $304 $27 $ 84 $143 $304
IMS Growth Stock Fund $77 $108 $141 $264 $23 $ 72 $123 $264
Janus Aspen Aggressive
Growth Portfolio $79 $114 $151 $284 $25 $ 78 $133 $284
Janus Aspen Balanced
Portfolio $84 $129 $177 $334 $31 $ 94 $159 $334
Janus Aspen Flexible
Income Portfolio $79 $112 $149 $279 $25 $ 77 $131 $279
Janus Aspen Growth
Portfolio $78 $109 $143 $267 $24 $ 73 $125 $267
Janus Aspen Short-Term
Bond Portfolio $75 $102 $131 $244 $21 $ 66 $113 $244
Janus Aspen Worldwide
Growth Portfolio $81 $118 $158 $297 $27 $ 82 $140 $297
Lexington Emerging
Markets Fund $82 $121 $164 $309 $28 $ 86 $146 $309
Lexington Natural
Resources Trust $91 $150 $210 $397 $37 $114 $192 $397
TCI Growth $79 $112 $149 $279 $25 $ 77 $131 $279
TCI Balanced $79 $112 $149 $279 $25 $ 77 $131 $279
TCI International $84 $127 $173 $328 $30 $ 91 $156 $328
</TABLE>
-------
(/1/)The illustration reflects the $30.00 maintenance fee as an annual charge
of 0.058% of assets.
10
<PAGE>
CONDENSED FINANCIAL INFORMATION
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR THE YEAR OR PERIOD
ENDED DECEMBER 31, 1994 IS DERIVED FROM THE FINANCIAL STATEMENTS OF THE
SEPARATE ACCOUNT, WHICH FINANCIAL STATEMENTS HAVE BEEN AUDITED BY KPMG PEAT
MARWICK LLP, INDEPENDENT AUDITORS. THE FINANCIAL STATEMENTS AS OF AND FOR THE
YEAR ENDED DECEMBER 31, 1994, AND THE INDEPENDENT AUDITORS' REPORT THEREON,
ARE INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
<TABLE>
<CAPTION>
1994
---------
<S> <C>
AETNA VARIABLE FUND
Value at beginning of
period $10.000
Value at end of period $10.737
Increase (decrease) in
value of accumulation
units(/1/) 7.37%(/2/)
Number of accumulation
units outstanding at
end of period 3,178,712
AETNA INCOME SHARES
Value at beginning of
period $10.000
Value at end of period $10.324
Increase (decrease) in
value of accumulation
units(/1/) 3.24%(/3/)
Number of accumulation
units outstanding at
end of period 983,357
AETNA VARIABLE ENCORE
FUND
Value at beginning of
period $10.000
Value at end of period $10.489
Increase (decrease) in
value of accumulation
units(/1/) 4.89%(/2/)
Number of accumulation
units outstanding at
end of period 3,407,448
AETNA INVESTMENT
ADVISERS FUND, INC.
Value at beginning of
period $10.000
Value at end of period $10.828
Increase (decrease) in
value of accumulation
units(/1/) 8.28%(/4/)
Number of accumulation
units outstanding at
end of period 911,281
FIDELITY EQUITY-INCOME
PORTFOLIO
Value at beginning of
period $10.000
Value at end of period $10.002
Increase (decrease) in
value of accumulation
units(/1/) 0.02%(/5/)
Number of accumulation
units outstanding at
end of period 17,013
FIDELITY GROWTH
PORTFOLIO
Value at beginning of
period $10.000
Value at end of period $10.423
Increase (decrease) in
value of accumulation
units(/1/) 4.23%(/5/)
Number of accumulation
units outstanding at
end of period 17,013
IMS EQUITY GROWTH AND
INCOME FUND
Value at beginning of
period $10.000
Value at end of period $ 9.838
Increase (decrease) in
value of accumulation
units(/1/) (1.62)%(/6/)
Number of accumulation
units outstanding at
end of period 188,708
IMS UTILITY FUND
Value at beginning of
period $10.000
Value at end of period $ 9.881
Increase (decrease) in
value of accumulation
units(/1/) (1.19)%(/6/)
Number of accumulation
units outstanding at
end of period 41,191
IMS U.S. GOVERNMENT BOND
FUND
Value at beginning of
period $10.000
Value at end of period $10.073
Increase (decrease) in
value of accumulation
units(/1/) 0.73%(/6/)
Number of accumulation
units outstanding at
end of period 12,714
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
1994
-------
<S> <C>
IMS CORPORATE BOND FUND
Value at beginning of period $10.000
Value at end of period $ 9.814
Increase (decrease) in value of accumulation units(/1/) (1.86)%(/6/)
Number of accumulation units outstanding at end of period 31,309
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.000
Value at end of period $10.109
Increase (decrease) in value of accumulation units(/1/) 1.09%(/4/)
Number of accumulation units outstanding at end of period 9,588
LEXINGTON EMERGING MARKETS FUND
Value at beginning of period $10.000
Value at end of period $ 9.795
Increase (decrease) in value of accumulation units(/1/) (2.05)%(/4/)
Number of accumulation units outstanding at end of period 1,500
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $10.000
Value at end of period $ 9.056
Increase (decrease) in value of accumulation units(/1/) (9.44)%(/3/)
Number of accumulation units outstanding at end of period 537
TCI GROWTH
Value at beginning of period $10.000
Value at end of period $10.847
Increase (decrease) in value of accumulation units(/1/) 8.47%(/4/)
Number of accumulation units outstanding at end of period 893,534
TCI BALANCED
Value at beginning of period $10.000
Value at end of period $10.152
Increase (decrease) in value of accumulation units(/1/) 1.52%(/4/)
Number of accumulation units outstanding at end of period 3,477
TCI INTERNATIONAL
Value at beginning of period $10.000
Value at end of period $ 9.441
Increase (decrease) in value of accumulation units(/1/) (5.59)%(/4/)
Number of accumulation units outstanding at end of period 3,745
</TABLE>
(/1/)The above figures are calculated by subtracting the beginning Accumulation
Unit value from the ending Accumulation Unit value during a calendar year,
and dividing the result by the beginning Accumulation Unit value. These
figures do not reflect the deferred sales charge or the fixed dollar
annual maintenance fee, if any. Inclusion of these charges would reduce
the investment results shown.
(/2/)Reflects less than a full year of performance activity. Funds were first
received in this option during October 1994.
(/3/)Reflects less than a full year of performance activity. Funds were first
received in this option during August 1994.
(/4/)Reflects less than a full year of performance activity. Funds were first
received in this option during July 1994.
(/5/)Reflects less than a full year of performance activity. Funds were first
received in this option during December 1994.
(/6/)Reflects less than a full year of performance activity. Funds were first
received in this option during September 1994.
12
<PAGE>
PERFORMANCE DATA
From time to time, the Company may advertise different types of historical
performance for the variable funding options of the Separate Account available
under the Contracts described in this Prospectus. The Company may advertise
the "standardized average annual total returns" of the variable funding
options, calculated in a manner prescribed by the SEC, as well as the "non-
standardized return." Both methods are described below. Further information is
contained in the SAI.
"Standardized average annual total returns" are computed according to a
formula in which a hypothetical investment of $1,000 is applied to the
variable funding options under the Contract and then related to the ending
redeemable values over the most recent one, five and ten-year periods (or
since inception if less than 10 years). Standardized returns will reflect the
deduction of all recurring charges during each period (e.g., mortality and
expense risk charges, the annual maintenance fee, the administrative expense
charge and any applicable deferred sales charge).
"Non-standardized return" will be calculated in a similar manner, except that
non-standardized figures will not reflect the deduction of any applicable
deferred sales charge (which would decrease the level of performance shown if
reflected in these calculations). The non-standardized figures may also
include a three-year period.
For Funds that were in existence prior to the date that the Fund became
available under the Contract, the performance data will show the investment
performance that such Fund would have achieved (reduced by the applicable
charges) had it been available under the Contract for the period quoted.
The Company may distribute sales literature that compares the percentage
change in Accumulation Unit values for any of the Funds to established market
indexes such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Averages or to the change in values of other management investment
companies that have investment objectives similar to the Fund being compared.
The Company may publish in advertisements and reports to Certificate Holders
the ratings and other information assigned to us by one or more independent
rating organizations such as A.M. Best Company, Duff & Phelps, Standard &
Poor's Corporation and Moody's Investors Service, Inc. The purpose of the
ratings is to reflect the Company's financial strength and/or claims-paying
ability. We may also quote ranking services, such as Morningstar's Variable
Annuity/Life Performance Report, and Lipper's Variable Insurance Products
Performance Analysis Service (VIPPAS), which rank variable annuity or life
subaccounts or their underlying funds by performance and/or investment
objective. From time to time, we will quote articles from newspapers and
magazines or other publications or reports including, but not limited to, The
Wall Street Journal, Money magazine, USA Today and The VARDS Report.
13
<PAGE>
THE COMPANY
Aetna Life Insurance and Annuity Company (the "Company") is the issuer of the
Contracts and the depositor of the Separate Account. The Company is engaged in
the business of issuing variable annuity and variable and universal life
insurance policies. The Company was organized in 1976 as a stock life
insurance company under the insurance laws of the State of Connecticut.
Through a merger, the Company succeeded to the business of Aetna Variable
Annuity Life Insurance Company. The former Company had been doing business
since 1954 as an Arkansas insurance company under the name Participating
Annuity Life Insurance Company.
The Company is registered as an investment adviser under the Investment
Advisers Act of 1940 and, as such, serves as the investment adviser to the
Aetna Funds. It is also registered as a broker-dealer under the Securities
Exchange Act of 1934 and is a member of the National Association of Securities
Dealers, Inc.
The Company is a wholly owned subsidiary of Aetna Life and Casualty Company, a
diversified financial services company. Organized under the laws of the State
of Connecticut in 1967, Aetna Life and Casualty Company is publicly held, and
to the best of its knowledge, no single person or entity beneficially owns as
much as 10% of the outstanding shares of its capital stock.
VARIABLE ANNUITY ACCOUNT B
Variable Annuity Account B is a separate account established by the Company in
1976 under the insurance laws of the State of Connecticut. The Separate
Account was formed for the purpose of segregating assets attributable to the
variable portions of the Contracts from Company assets. The Separate Account
is registered as a unit investment trust under Investment Company Act of 1940,
and meets the definition of "separate account" under the federal securities
laws.
Although the Company holds title to the assets of the Separate Account, such
assets are not chargeable with liabilities arising out of any other business
the Company may conduct. Income, gains or losses of the Separate Account are
credited to or charged against the assets of the Separate Account without
regard to the other income, gains or losses of the Company. All obligations of
the Company arising under the contracts are its general corporate obligations.
THE FUNDS
The Certificate Holder will designate some or all of the mutual funds
described below as variable funding options under the Contract. Except where
noted, all of the Funds are diversified as defined in the Investment Company
Act of 1940. The availability of the Funds is subject to applicable regulatory
authorization.
. AETNA VARIABLE FUND (sometimes called the "Growth and Income Fund")
seeks to maximize total return through investments in a diversified
portfolio of common stocks and securities convertible into common
stocks.
. AETNA INCOME SHARES (sometimes called the "Bond Fund") seeks to maximize
total return, consistent with reasonable risk, through investments in a
diversified portfolio consisting primarily of debt securities.
. AETNA VARIABLE ENCORE FUND (sometimes called the "Money Market Fund")
seeks to provide high current return, consistent with preservation of
capital and liquidity, through investment in high-quality money market
instruments. An investment in the Fund is neither insured nor guaranteed
by the U.S. Government.
. AETNA INVESTMENT ADVISERS FUND, INC. (sometimes called the "Managed
Fund") is a managed mutual fund which seeks to maximize investment
return consistent with reasonable safety of principal by investing in
one or more of the following asset classes: stocks, bonds and cash
equivalents, based on the Company's judgment of which of those sectors
or mix thereof offers the best investment prospects.
14
<PAGE>
. AETNA GENERATION PORTFOLIOS INC. -- AETNA ASCENT VARIABLE PORTFOLIO seeks
to provide capital appreciation by allocating its investments among
equities and fixed income securities. Aetna Ascent Variable Portfolio is
managed for investors who generally have an investment horizon exceeding
15 years, and who have a high level of risk tolerance. See the Fund's
prospectus for a discussion of the risks involved.
. AETNA GENERATION PORTFOLIOS, INC. -- AETNA CROSSROADS VARIABLE PORTFOLIO
seeks to provide total return (i.e., income and capital appreciation,
both realized and unrealized) by allocating its investments among
equities and fixed income securities. Aetna Crossroads Variable Portfolio
is managed for investors who generally have an investment horizon
exceeding 10 years and who have a moderate level of risk tolerance.
. AETNA GENERATION PORTFOLIOS, INC. -- AETNA LEGACY VARIABLE PORTFOLIO
seeks to provide total return consistent with preservation of capital by
allocating its investments among equities and fixed income securities.
Aetna Legacy Variable Portfolio is managed for investors who generally
have an investment horizon exceeding five years and who have a low level
of risk tolerance.
. ALGER AMERICAN FUND -- ALGER AMERICAN BALANCED PORTFOLIO seeks current
income and long-term capital appreciation by investing in common stocks
and fixed income securities, with emphasis on income-producing
securities which appear to have some potential for capital appreciation.
. ALGER AMERICAN FUND -- ALGER AMERICAN INCOME AND GROWTH PORTFOLIO seeks
a high level of dividend income to the extent consistent with prudent
investment management by investing primarily in dividend paying equity
securities. Capital appreciation is a secondary objective of the
Portfolio.
. ALGER AMERICAN FUND -- 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 -- present market value per share multiplied by the total
number of shares outstanding -- of $1 billion or greater. Income is a
consideration in the selection of investments but is not an investment
objective.
. ALGER AMERICAN FUND -- ALGER AMERICAN MIDCAP 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 between $750 million and $3.5 billion. Income is a
consideration in the selection of investments but is not an investment
objective of the Portfolio.
. ALGER AMERICAN FUND -- ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO seeks
long-term capital appreciation by investing in a diversified, actively
managed portfolio of equity securities. Income is a consideration in the
selection of investments but is not an investment objective of the
Portfolio. The Portfolio may engage in leveraging (up to 33 1/3% of its
assets) and options and futures transactions, which are deemed to be
speculative and which may cause the Portfolio's net asset value to
fluctuate.
. ALGER AMERICAN FUND -- ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
("Alger American Small Cap Portfolio") seeks capital return through
investment in the common stock of smaller companies offering the
potential for significant price gain. It invests at least 85% of its net
assets in equity securities and at least 65% of its net assets in equity
securities of companies that, at the time of purchase, have "total market
capitalization" -- present market value per share multiplied by the total
number of shares outstanding -- of less than $1 billion. Investing in
smaller companies may present risks not present in investments in larger
companies. See the Fund's prospectus for a discussion of these risks.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND -- HIGH INCOME
PORTFOLIO ("Fidelity High Income Portfolio") seeks to obtain a high level
of current income by investing primarily in high-yielding, lower-rated,
fixed income securities, while also considering growth of capital. Lower-
rated corporate debt obligations are commonly known as "junk bonds" or
"high yield, high risk bonds" and involve significant degree of risk (see
the funds' prospectus for a discussion of the risk factors involved in
investing in lower-rated corporate debt obligations).
15
<PAGE>
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND -- EQUITY-INCOME
PORTFOLIO ("Fidelity Equity-Income Portfolio") seeks reasonable income by
investing primarily in income-producing equity securities. In choosing
these securities, the Fund will also consider the potential for capital
appreciation.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND -- GROWTH
PORTFOLIO ("Fidelity Growth Portfolio") seeks to achieve capital
appreciation by investing primarily in common stock, although the Fund is
not limited to any one type of security.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND -- OVERSEAS
PORTFOLIO ("Fidelity Overseas Portfolio") seeks long-term growth of
capital primarily through investments in foreign securities (at least 65%
from at least three countries outside of North America). Investing in
foreign securities may involve a greater degree of risk than investing in
domestic securities. See the Funds' prospectus for a discussion of the
risks involved.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II -- INVESTMENT
GRADE BOND PORTFOLIO ("Fidelity Investment Grade Bond Portfolio") seeks
as high a level of current income as is consistent with the preservation
of capital by investing in a broad range of investment-grade fixed-income
securities.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II -- ASSET
MANAGER PORTFOLIO ("Fidelity Asset Manager Portfolio") seeks high total
return with reduced risk over the long-term by allocating its assets
among stocks, bonds and short-term fixed-income instruments.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II -- INDEX 500
PORTFOLIO ("Fidelity Index 500 Portfolio") seeks to provide investment
results that correspond to the total return of common stocks publicly
traded in the United States by duplicating the composition and total
return of the Standard & Poor's 500 Composite Stock Price Index.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II -- CONTRAFUND
PORTFOLIO ("Fidelity Contrafund Portfolio") seeks maximum total return
over the long term by investing its assets mainly in equity securities of
companies that are undervalued or out-of-favor.
. INSURANCE MANAGEMENT SERIES -- EQUITY GROWTH AND INCOME FUND ("IMS Equity
Growth and Income Fund") seeks to achieve long-term growth of capital and
to provide income. The IMS Equity Growth and Income Fund pursues its
investment objectives by investing, under normal circumstances, at least
65% of its total assets in common stock of "blue-chip" companies. "Blue-
chip" companies generally are top-quality, established growth companies
which, in the opinion of the Adviser, meet certain criteria.
. INSURANCE MANAGEMENT SERIES -- UTILITY FUND ("IMS Utility Fund") seeks to
achieve high current income and moderate capital appreciation by
investing primarily in a professionally managed and diversified portfolio
of equity and debt securities of utility companies. Under normal market
conditions, the IMS Utility Fund will invest at least 65% of its total
assets in securities of utility companies.
. INSURANCE MANAGEMENT SERIES -- PRIME MONEY FUND ("IMS Prime Money Fund")
The investment objective of the Fund is to provide current income
consistent with stability of principal and liquidity. The Fund pursues
its investment objective by investing exclusively in a portfolio of money
market instruments maturing in 397 days or less. The average maturity of
the money market instruments in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. A investment in this Fund
is neither insured nor guaranteed by the U.S. government.
. INSURANCE MANAGEMENT SERIES -- U.S. GOVERNMENT BOND FUND ("IMS U.S.
Government Bond Fund") seeks to provide current income. The IMS U.S.
Government Bond Fund pursues its investment objective by investing at
least 65% of the value of its total assets in securities issued or
guaranteed as to payment of principal and interest by the U.S. government
or its agencies or instrumentalities.
. INSURANCE MANAGEMENT SERIES -- CORPORATE BOND FUND ("IMS Corporate Bond
Fund") seeks high current income by investing primarily in a diversified
portfolio of professionally managed fixed income
16
<PAGE>
securities. The fixed-income securities in which the Fund intends to invest
are lower-rated corporate debt obligations. Lower-rated corporate debt
obligations are commonly known as "junk bonds" or "high yield, high risk
bonds" and involve significant degree of risk (see the funds' prospectus for
a discussion of the risk factors involved in investing in lower-rated
corporate debt obligations). Some of the fixed income securities may involve
equity features. Capital growth will be considered, but only when consistent
with the investment objective of high current income.
. INSURANCE MANAGEMENT SERIES -- INTERNATIONAL STOCK FUND ("IMS
International Stock Fund") The investment objective of the Fund is to
seek a total return on its assets by investing at least 65% of its assets
(and under normal market conditions, substantially all of its assets) in
equity securities of issuers located in at least three different
countries outside of the United States. Investing in non-U.S. securities
carries substantial risks in addition to those associated with domestic
investments. In an attempt to reduce some of these risks, the Fund
diversifies its investments broadly among foreign countries, including
both developed and developing countries. At least three countries will
always be represented. Other risks may also be attributable to
investments in developing countries due to less mature economies and less
stable political systems. Investors should consult the Fund's prospectus
for a discussion of these risks before investing.
. INSURANCE MANAGEMENT SERIES -- GROWTH STOCK FUND ("IMS Growth Stock
Fund") The investment objective of the Fund is capital appreciation. The
Fund pursues its investment objective by investing at least 65% of its
assets in equity securities of companies with prospects for above-average
growth in earnings and dividends or companies where significant
fundamental changes are taking place. Equity securities include common
stocks, preferred stocks, and securities (including debt securities) that
are convertible into common stocks.
. JANUS ASPEN SERIES -- AGGRESSIVE GROWTH PORTFOLIO ("Janus Aspen
Aggressive Growth Portfolio") is a nondiversified portfolio that seeks
long-term growth of capital by emphasizing investments in common stock of
companies with a market capitalization between $1 billion and $5 billion.
. JANUS ASPEN SERIES -- BALANCED PORTFOLIO ("Janus Aspen Balanced
Portfolio") seeks both long-term growth of capital and current income.
The Portfolio is designed for investors who want to participate in the
equity markets through a more moderate investment than a pure growth
fund. Investments in income-producing securities are intended to result
in a portfolio that provides a more consistent total return than may be
attainable through investing solely in growth stocks. The Portfolio is
not designed for investors who desire a consistent level of income.
. JANUS ASPEN SERIES -- FLEXIBLE INCOME PORTFOLIO ("Janus Aspen Flexible
Income Portfolio") seeks to maximize total return, consistent with
preservation of capital from a combination of current income and capital
appreciation. Janus Aspen Flexible Income Portfolio invests in all types
of income-producing securities, and may have substantial holdings of debt
securities rated below investment grade ("high yield, high risk
securities") also commonly known as "junk bonds." High yield, high risk
securities involve certain risks. See the Fund's prospectus for a
discussion of these risks.
. JANUS ASPEN SERIES -- GROWTH PORTFOLIO ("Janus Aspen Growth Portfolio")
seeks long-term growth of capital by investing primarily in a
diversified portfolio of common stocks of a large number of issuers of
any size. The Portfolio generally emphasizes issuers with large market
capitalizations.
. JANUS ASPEN SERIES -- SHORT-TERM BOND PORTFOLIO ("Janus Aspen Short-Term
Bond Portfolio") seeks as high a level of current income as is consistent
with preservation of capital by investing primarily in short-and
intermediate-term fixed income securities. The Portfolio will normally
maintain a dollar-weighted average portfolio maturity of less than three
years, but not to exceed five years depending upon its portfolio
manager's opinion of prevailing market, financial and economic
conditions.
17
<PAGE>
. JANUS ASPEN SERIES -- WORLDWIDE GROWTH PORTFOLIO ("Janus Aspen Worldwide
Growth Portfolio") seeks long-term growth of capital by investing
primarily in common stocks of companies of foreign and domestic issuers
of any size. The Portfolio normally invests in issuers from at least five
different countries including the United States. International
investments involve risks not present in U.S. Securities.
. LEXINGTON EMERGING MARKETS FUND seeks long-term growth of capital
primarily through investment in equity securities of companies domiciled
in, or doing business in emerging countries and emerging markets.
Investments in emerging markets involve risks not present in domestic
markets. See the Fund's prospectus for information on risks inherent in
this investment.
. LEXINGTON NATURAL RESOURCES TRUST is a nondiversified portfolio that
seeks long-term growth of capital through investment primarily in common
stocks of companies which own or develop natural resources and other
basic commodities or supply goods and services to such companies. Current
income will not be a factor. Total return will consist primarily of
capital appreciation. The Fund may invest up to 25% of its total assets
in foreign securities. Foreign investing involves risks that differ from
those involved in domestic investing. See the Fund's prospectus for a
discussion of these risks.
. TCI PORTFOLIOS, INC. -- TCI GROWTH (a Twentieth Century Fund) seeks
capital growth by investing in common stocks (including securities
convertible into common stocks) and other securities that meet certain
fundamental and technical standards of selection and, in the opinion of
the Fund's management, have better than average potential for
appreciation. The Fund tries to stay fully invested in such securities,
regardless of the movement of prices generally. The Fund may invest in
foreign securities. Foreign investing involves risks that differ from
those involved in domestic investing. See the Fund's prospectus for a
discussion of these risks.
. TCI PORTFOLIOS, INC. -- TCI BALANCED (a Twentieth Century Fund) seeks
capital growth and current income. It seeks capital growth by investing
in 60% common stocks (including securities convertible into common
stocks) and other securities that meet certain fundamental and technical
standards of selection and, in the opinion of the Fund's management, have
better-than-average potential for appreciation. Management intends to
maintain approximately 40% of the Fund's assets in fixed income
securities.
. TCI PORTFOLIOS, INC. -- TCI INTERNATIONAL (a Twentieth Century Fund)
seeks capital growth by investing primarily in an internationally
diversified portfolio of common stocks that are considered by management
to have prospects for appreciation. The fund will invest primarily in
securities of issuers located in countries with developed economies.
Investing in foreign securities may involve a greater degree of risk than
investing in domestic securities. See the Fund's prospectus for a
discussion of the risks involved.
There is no assurance that the Funds will achieve their investment objectives.
Certificate Holders bear the full investment risk of investments in the Funds
selected.
Some of the Funds may use instruments known as derivatives as part of their
investment strategies as described in their respective prospectus. The use of
certain derivatives such as inverse floaters and principal only debt
instruments may involve higher risk of volatility to a Fund. The use of
leverage in connection with derivatives can also increase risk of losses. See
the prospectus for the Funds for a discussion of the risks associated with an
investment in those funds.
More comprehensive information, including a discussion of potential risks, is
found in the current prospectus for each Fund which is distributed with and
must accompany this Prospectus. Certificate Holders should read the
accompanying prospectuses carefully before investing. Additional prospectuses
and the Statements of Additional Information for this Prospectus and each of
the Funds can be obtained from the Company's Home Office at the address and
telephone number listed on the cover of this Prospectus.
18
<PAGE>
FUND INVESTMENT ADVISERS
The following identifies the investment adviser and the subadviser, if any, for
each Fund.
<TABLE>
<CAPTION>
FUND INVESTMENT ADVISER
---- ------------------
<S> <C>
Aetna Life Insurance and
Aetna Variable Fund Annuity Company (ALIAC)
Aetna Income Shares ALIAC
Aetna Variable Encore Fund ALIAC
Aetna Investment Advisers Fund, Inc. ALIAC
Aetna Ascent Variable Portfolio ALIAC
Aetna Crossroads Variable Portfolio ALIAC
Aetna Legacy Variable Portfolio ALIAC
Alger American Balanced Portfolio Fred Alger Management, Inc.
Alger American Income and Growth Fred Alger Management, Inc.
Portfolio
Alger American MidCap Growth Portfolio Fred Alger Management, Inc.
Alger American Leveraged AllCap Fred Alger Management, Inc.
Portfolio
Alger American Small Cap Portfolio Fred Alger Management, Inc.
Alger American Growth Portfolio Fred Alger Management, Inc.
Fidelity High Income Portfolio Fidelity Management & Research Company
Fidelity Equity-Income Portfolio Fidelity Management & Research Company
Fidelity Growth Portfolio Fidelity Management & Research Company
Fidelity Overseas Portfolio Fidelity Management & Research Company
Fidelity Investment Grade Bond Fidelity Management & Research Company
Portfolio
Fidelity Asset Manager Portfolio Fidelity Management & Research Company
Fidelity Index 500 Portfolio Fidelity Management & Research Company
Fidelity Contrafund Portfolio Fidelity Management & Research Company
IMS Equity Growth and Income Fund Federated Advisers
IMS Utility Fund Federated Advisers
IMS Prime Money Fund Federated Advisers
IMS International Stock Fund Federated Advisers
IMS U.S. Government Bond Fund Federated Advisers
IMS Corporate Bond Fund Federated Advisers
IMS Growth Stock Fund Federated Advisers
Janus Aggressive Growth Portfolio Janus Capital Corporation
Janus Balanced Portfolio Janus Capital Corporation
Janus Flexible Income Portfolio Janus Capital Corporation
Janus Growth Portfolio Janus Capital Corporation
Janus Short-Term Bond Portfolio Janus Capital Corporation
Janus Worldwide Growth Portfolio Janus Capital Corporation
Lexington Emerging Markets Fund Lexington Management Corporation
Lexington Natural Resources Trust Lexington Management Corporation*
TCI Growth Investors Research Corporation
TCI Balanced Investors Research Corporation
TCI International Investors Research Corporation
</TABLE>
-------
* Market Systems Research Advisors, Inc. serves as the subadviser for the
Lexington Natural Resources Trust.
19
<PAGE>
FUND ADDITIONS AND LIMITATIONS
We may, from time to time, add additional mutual funds as eligible variable
funding options under the Contracts. No more than 18 different choices of
investment options may be made over the life of the individual Contract or the
Certificate under a group Contract. See "Transfers Among Investment Options."
The Company has reserved the right to limit which, and how many, funding
options will be available during the annuity period.
Funding options offered under the Contract may vary by Distributor.
MIXED AND SHARED FUNDING
Shares of the Funds are sold to us for funding variable annuities. The Funds
may be sold to other companies for the same purpose. This is referred to as
"shared funding." Shares of the Funds may also be used for funding variable
life insurance policies through variable life separate accounts sponsored by
us or by third parties. This is referred to as "mixed funding."
It is conceivable that, in the future, it may be disadvantageous for variable
annuity separate accounts and variable life separate accounts of the same or
of an unaffiliated insurance company to invest in these Funds simultaneously,
since the interests of the contract holders or policy owners or insurance
companies may differ. Each Fund's Board of Trustees or Directors has agreed to
monitor events in order to identify any material irreconcilable conflicts
which may possibly arise and to determine what action, if any, should be taken
in response thereto. If such a conflict were to occur, one of the separate
accounts might withdraw its investment in a Fund. This might force that Fund
to sell portfolio securities at disadvantageous prices.
CONTRACT PURCHASE
GENERAL
Two types of variable deferred annuity contracts are being offered. One allows
the purchaser to make one or more payments in any amounts (flexible premiums),
subject to the minimums discussed below (the "Nonqualified Flexible Premium
Contract"). The Nonqualified Flexible Premium Contract does not qualify for
any special tax treatment under the Code other than the provisions applicable
to all deferred annuities. See "Tax Status." The other Contract is intended to
be established as an individual retirement annuity under Section 408(b) of the
Code to accept rollover payments from qualifying retirement plans such as
plans qualified under Section 401 or 403 of the Code or another Individual
Retirement Annuity or Account under Section 408 of the Code.
PURCHASE
As of the effective date of this Prospectus, only interests in group Contracts
are offered for new sales.
A Certificate Holder establishes an account under a group contract by
completing an enrollment form and any other required forms. The Distributor
will deliver any application or enrollment form to the Company for review,
acceptance or rejection.
The Company must accept or reject an enrollment form within two business days
of its receipt. If the enrollment form is incomplete, the Company may hold it
and any accompanying Purchase Payment for five days. Purchase
20
<PAGE>
Payments may be held for longer periods only with the consent of the
Certificate Holder, pending acceptance of the enrollment form. If the
enrollment form is accepted, a Certificate will be issued to the Certificate
Holder. Any Purchase Payment accompanying the enrollment form, or received
prior to acceptance of the enrollment form, will be invested as of the date of
acceptance. If the enrollment form is rejected, the enrollment form and any
Purchase Payments will be returned to the Certificate Holder.
You may cancel the Contract or Certificate within 10 days of receiving it. See
"Contract Rights -- Right to Cancel."
PURCHASE PAYMENTS
Each Purchase Payment accepted by us that is to be invested in the Funds, is
deposited in the Separate Account as set forth under "Certificate Holder's
Account Values."
You may elect to have each Purchase Payment accumulate (a) on a variable basis
by allocating your Purchase Payment to one or more of the Funds; (b) on a
fixed basis under the AGA; or (c) in a combination of any of the available
investment options. Purchase Payments must be allocated in terms of whole
percentages. For subsequent Purchase Payments, if no allocation instructions
are received with the Purchase Payment, the allocation will be the same as
that indicated on the original enrollment form. See the Appendix for a
discussion of subsequent Purchase Payments allocated to AGA.
For the Nonqualified Flexible Premium Contract the minimum initial Purchase
Payment is $5,000. Additional Purchase Payments to a Nonqualified Flexible
Premium Contract must be at least $2,500. Subsequent payments may be sent to
the Distributor or to the Company at the Home Office. The minimum Purchase
Payment for the IRA Rollover Contract is $5,000. A Purchase Payment of more
than $500,000 is allowed only with our consent. The maximum issue age for the
Annuitant is 90.
Additional Purchase Payments made to an existing Contract are subject to the
terms and conditions published by us at the time of the payment. We reserve
the right to limit the total dollar amount accepted from a Certificate Holder.
We also reserve the right to reject any Purchase Payment to a prospective or
existing Certificate Holder's Account without advance notice.
Each Nonqualified Flexible Premium Contract must be aggregated with other
annuity contracts and/or accounts under a Contract purchased by you from us
(and our affiliates) in any calendar year on or after October 21, 1988 for
purposes of determining the taxable portion of payments. (See "Tax Status --
Taxation of Annuities.")
DESIGNATIONS OF BENEFICIARY AND ANNUITANT
You must designate the Beneficiary and the Annuitant on the enrollment form.
For an IRA Rollover Contract, you must be the Annuitant. For Flexible Premium
Contracts, you may (but need not) select a different person as the Annuitant.
See "Death Benefit--Death Benefit Amount" if you are not the Annuitant.
DISTRIBUTION
The Company will serve as Underwriter for the securities sold by this
Prospectus. The Company is registered as a broker-dealer with the Securities
and Exchange Commission and is a member of the National Association of
21
<PAGE>
Securities Dealers, Inc. (NASD). As Underwriter, the Company will contract
with one or more registered broker-dealers ("Distributors") to offer and sell
the Contracts. The Company and one or more affiliates may also sell the
Contracts directly. All registered representatives of the Distributors must
also be licensed as insurance agents to sell variable annuity contracts.
The Company may also contract with independent third party broker-dealers who
will act as wholesalers by assisting the Company in finding broker-dealers
interested in acting as Distributors for the Company. These wholesalers may
also provide training, marketing and other sales related functions for the
Company and the Distributors and may provide certain administrative services
to the Company in connection with the Contracts. The Company may pay such
wholesalers compensation based on Purchase Payments for the Contracts
purchased through Distributors selected by the wholesaler.
The Company may also designate third parties to provide services in connection
with the Contracts such as reviewing applications for completeness and
compliance with insurance requirements and providing the Distributors with
approved marketing material, prospectuses or other supplies. These parties
will also receive payments based on Purchase Payments for their services, to
the extent such payments are allowed by applicable securities laws. All costs
and expenses related to these services will be paid by the Company.
Federated Securities Corp. ("FSC"), an affiliate of the adviser to the Funds
in the Insurance Management Series, may enter into agreements with some of the
Distributors to provide services to customers in connection with these Funds
acquired through the Contracts. These services will include providing
customers with information concerning the Funds, their investment objectives,
policies and limitations; portfolio securities; performance, responding to
customer inquiries and providing such other services as the parties may agree.
Fees for these services may be based on the total number of assets in the
Funds attributable to the Distributors' customers.
CERTIFICATE HOLDER'S ACCOUNT VALUES
ACCUMULATION UNITS
A Purchase Payment that is directed to one or more of the Funds is deposited
in the Separate Account and credited to the Certificate Holder's Account in
the form of Accumulation Units for each Fund selected. The number of
Accumulation Units credited is determined by dividing the applicable portion
of the Purchase Payment by that Contract's Accumulation Unit value of the
appropriate Fund. The Accumulation Unit value used is that next-computed
following the date on which a Purchase Payment is received, unless the
application has not been accepted. In that event, Purchase Payments will be
credited at the Accumulation Unit value next determined after acceptance of
the application. Shares of the Funds are purchased by the Separate Account at
the net asset value next determined by the Fund following receipt of Purchase
Payments by the Separate Account, which will be no later than the next
business day following the crediting of the Accumulation Units attributable to
the Funds. The value of Accumulation Units attributable to the Funds will be
affected by the investment performance, expenses and charges of those Funds.
Generally, if the net asset value of the fund increases, so does the
Accumulation Unit value; however, performance of the Separate Account is
reduced by charges and deductions under the Contract.
Accumulation Units are valued separately for each Fund. Therefore, if you
elect to have a Purchase Payment invested in a combination of Funds, you will
have Accumulation Units credited from more than one source. The value of the
Certificate Holder's Account as of the most recent Valuation Period is
determined by adding the value of any Accumulation Units attributed to the
Fund(s) you have selected to the value of any amounts invested in the AGA.
22
<PAGE>
NET INVESTMENT FACTOR
The value of an Accumulation Unit in any Valuation Period is calculated by
multiplying the Fund's Accumulation Unit value for your Contract for the
immediately preceding Valuation Period by the net investment factor of the
appropriate investment option for the current period.
The net investment factor is calculated separately for each Fund in which
assets of the Separate Account are invested. It is determined by adding
1.0000000 to the net investment rate.
The net investment rate equals (a) the net assets of the Fund held by the
Separate Account at the end of a Valuation Period, minus (b) the net assets of
the Fund held by the Separate Account at the beginning of a Valuation Period,
plus or minus (c) taxes or provision for taxes, if any, attributable to the
operation of the Separate Account, divided by (d) the value of the Fund's
Accumulation and Annuity Units held by the Separate Account at the beginning
of the Valuation Period, minus (e) a daily charge at the annual effective rate
of 1.25% for mortality and expense risks, and a daily administrative expense
charge at the annual effective rate of 0.15% during the Accumulation Period
and up to 0.25% during the Annuity Period. The net investment rate may be more
or less than 0%.
CONTRACT RIGHTS
RIGHT TO CANCEL
The Certificate Holder may cancel the Certificate Holder's Account no later
than ten days after receiving the Contract or Certificate by returning it to
us or the Distributor from whom it was purchased along with a written notice
of cancellation. We will send a refund not later than seven calendar days
after we receive the Contract or Certificate and the written notice at our
Home Office. We will refund the Purchase Payments made under the Contract as
of the date the request is received.
RIGHTS UNDER THE CONTRACT AND ACCOUNT
The Group Contract Holder has title to the Contract. The Certificate Holder
has all other rights to the Certificate Holder's Account under the Contract.
However, under a Nonqualified Flexible Premium Contract, if the Certificate
Holder and the Annuitant are not the same, and the Annuitant dies first, a
different provision applies. In this case, the Certificate Holder's rights are
automatically transferred to the Beneficiary. (See "Death Benefit.")
Two individuals may have an interest in the same Certificate Holder's Account
as Joint Certificate Holders. See "Contract Purchase." Joint Certificate
Holders have equal rights under the Contract and with respect to their
Certificate Holder's Account. On the death of a Joint Certificate Holder prior
to the Annuity Date, the surviving Certificate Holder may retain all ownership
rights under the Contract or elect to have the proceeds distributed. See
"Death Benefits." All rights under the Contract must be exercised by both
Joint Certificate Holders with the exception of transfers among investment
options; at the Company's discretion, one Joint Certificate Holder can select
additional investment options after the Certificate Holder's Account has been
established.
LOANS
Loans are not allowed.
23
<PAGE>
TRANSFERS AMONG INVESTMENT OPTIONS
The Company currently allows unlimited transfers of accumulated amounts to
available investment options during the Accumulation Period without charge;
however, it reserves the right to charge up to $10 per transaction if more
than 12 transfers are made in a calendar year. See "Charges and Deductions --
Transfer Charges." The Company reserves the right to establish a minimum
transfer amount. Unless the transfer is made from the one-year guaranteed term
in connection with the Dollar Cost Averaging Program transfers from the AGA
will be subject to a market value adjustment, if applicable. (See "Dollar Cost
Averaging Program" below, as well as the Appendix and the prospectus for the
AGA.) Any transfer will be based on the Accumulation Unit value next
determined after the Company receives a valid request at its Home Office.
During the Annuity Period, transfers are not available.
DOLLAR COST AVERAGING PROGRAM
Dollar Cost Averaging ("DCA") is a system for investing a fixed amount of
money at regular intervals over a period of time. It is based on the economic
fact that buying a variably priced item with a constant sum of money at fixed
intervals affords the buyer the opportunity to automatically buy more of that
item when prices are low and less of it when prices are high, thus reducing
the average cost per item. Dollar Cost Averaging does not ensure a profit nor
guarantee against loss in a declining market. Certificate Holders should
consider their financial ability to continue purchases through periods of low
price levels.
The Dollar Cost Averaging Program permits Certificate Holders to
systematically transfer amounts from any of the variable funding options and
the one-year Guaranteed Term of the AGA to any of the variable investment
options. A market value adjustment will not be applied to dollar cost
averaging transfers from the one-year Guaranteed Term. (See Appendix I for a
discussion of the restrictions and features attributable to the Guaranteed
Account.)
You must have an Account Value of at least $5,000 to participate in the Dollar
Cost Averaging Program. The minimum amount that may be transferred into a
particular variable funding option is $50. DCA can be elected at any time
during the Accumulation Period by completing the DCA section of the
application or by completing a DCA Election Form available from the Company at
its Home Office. All DCA transfers will be made on the 15th of each month (or
the next Valuation Period, if applicable). Any transfer made under the DCA
program will not be counted for purposes of any transfer limitations imposed
under the Contract. A Certificate Holder may terminate the DCA program at any
time. The Company reserves the right to modify or terminate the DCA program at
any time.
Dollar Cost Averaging is not available to individuals who have elected the
Systematic Withdrawal Option or the Account Rebalancing Program (described
below).
ACCOUNT REBALANCING PROGRAM
The Account Rebalancing Program allows Certificate Holders to have portions of
their Certificate Holder's Account Value automatically reallocated annually to
a specified percentage. Only Certificate Holder Account Values accumulating in
the variable funding options can be rebalanced. Certificate Holders may
participate in this program by completing the Account Rebalancing Section of
the enrollment form, or by requesting the service in writing from the
Company's Home Office. Reallocations under the Account Rebalancing Program
will not be counted for purposes of any transfer limitations imposed under the
Contract.
Account Rebalancing is not available to Certificate Holders who have elected
the Dollar Cost Averaging Program.
Account Rebalancing does not ensure a profit nor guarantee against loss in a
declining market.
24
<PAGE>
WITHDRAWALS
You may withdraw all or a portion of the Certificate Holder's Account Value
during the Accumulation Period by properly completing a disbursement form
provided by us and sending it to our Home Office. Withdrawal request forms are
available from us and from the Distributors. The following types of
withdrawals may be requested:
. Full Withdrawal: The Adjusted Account Value minus any applicable deferred
sales charge and maintenance fee due.
. Partial Withdrawal (Percentage): The percentage of the Adjusted Account
Value requested minus any applicable deferred sales charge.
. Partial Withdrawal (Specific Dollar Amount): The dollar amount requested.
The amount actually withdrawn from the Certificate Holder's Account may
be greater or less than the dollar amount requested to allow for payment
of any applicable deferred sales charge plus or minus any applicable MVA.
We will pay all amounts based on the Certificate Holder's Account Value next
computed after the request is received in the Home Office or at a later date,
if specified. For any partial withdrawal, if you do not provide instructions
to the contrary, amounts will be withdrawn on a pro rata basis from each of
the funding options in which you have an interest. A deferred sales charge
(surrender fee) may be deducted upon any full or partial withdrawal. See
"Charges and Deductions -- Deferred Sales Charge." For treatment of amounts
withdrawn from the AGA, see the Appendix.
Tax or tax penalties may be due on the amounts withdrawn or tax withholding
may apply. See "Tax Status --Taxation of Annuities."
We reserve the right to close out, on 90 days' written notice, any Certificate
or Individual Contract with a value of $2,500 or less immediately following a
partial withdrawal. A deferred sales charge will not be deducted in this
event. The Company does not intend to exercise this right in cases where the
Account Value is reduced to $2,500 or less solely due to investment
performance. IRA Rollover Contracts will not be closed out if adverse
consequences would result to the Certificate Holder from the withdrawal.
Our policy is to make payments for withdrawal requests in accordance with SEC
requirements, but normally not later than seven calendar days after we receive
a properly completed withdrawal form in our Home Office or within seven
calendar days of the date the withdrawal form may specify. Payments may be
delayed for: (a) any period in which the New York Stock Exchange ("Exchange")
is closed (other than customary weekend and holiday closings) or in which
trading on the Exchange is restricted; (b) any period in which an emergency
exists where disposal of securities held by the Funds is not reasonably
practicable or it is not reasonably practicable for the value of the assets of
the Funds to be fairly determined; or (c) such other periods as the SEC may by
order permit for the protection of Certificate Holders. The conditions under
which restricted trading or an emergency exists will be determined by the
rules and regulations of the SEC.
The tax treatment of withdrawals from each Nonqualified Flexible Premium
Contract may be affected if you own other annuity contracts or accounts issued
by us (or our affiliates) that were purchased on or after October 21, 1988.
(See "Tax Status -- Taxation of Annuities.")
CHARGES AND DEDUCTIONS
GENERAL
This section describes the maximum charges that may be deducted under the
Contract or Certificate for maintenance fees, administrative expenses, sales-
related expenses and transfer fees. A description of mortality and expense
risk charges and Fund expenses is also included.
25
<PAGE>
MAINTENANCE FEE
We charge an annual maintenance fee of $30 for each Certificate or Contract
during the Accumulation Period. This fee is to reimburse us for some
administrative expenses relating to the establishment and maintenance of the
Certificate Holder's Account. We will deduct the fee from the Certificate
Holder's Account Value on the anniversary of an individual Contract's or a
Certificate's Effective Date (or, if this is not a day that the New York Stock
Exchange is open, on the next such day). The fee is also deducted upon
withdrawal of your entire Account Value. The fee is deducted proportionately
from each funding option used by liquidating a portion of amounts held in
those options.
We will not deduct a maintenance fee (either annually or upon withdrawal) when
the Certificate Holder's Account Value is $50,000 or more on the day the
maintenance fee is due.
MORTALITY AND EXPENSE RISK CHARGES
We make a daily deduction from the Separate Account portion of the Certificate
Holder's Account Value for mortality and expense risks (insurance charges).
The deduction, equal to the annual effective rate of 1.25% per year, is made
as part of the calculation of Accumulation Unit and Annuity Unit values.
The mortality risk charge is to compensate us for the risks we assume (a) for
the guaranteed death benefit and (b) when we promise to continue making
payments for the lives of individual Annuitants according to Annuity rates
specified in the Contract or Certificate. The expense risk charge is to
compensate us for the risk that actual expenses for costs incurred under the
Contract will exceed the maximum costs that can be charged under the Contract.
We hope to profit from the daily deduction for mortality and expense risks.
Any such profit, as well as any other profit realized by us, would be
available for any proper corporate purpose, including, but not limited to,
payment of sales and distribution expenses. During 1994, we received
$8,918,042 for mortality and expense risks from contracts funded through the
Separate Account.
ADMINISTRATIVE EXPENSE CHARGE
During the Accumulation Period, we deduct a daily charge of 0.15% per year
from the Separate Account portion of the Certificate Holder's Account Value.
This charge is to reimburse us for expenses we incur in administering the
Contract; we do not intend to profit from this charge. The administrative
expense charge is a percentage of the variable portion of your Account Value;
therefore, there may be no relationship between the amount deducted and the
amount of expenses attributable to the Certificate Holder's Account.
An administrative expense charge is established upon election of a variable
Annuity Option. This charge will not exceed 0.25% per year, deducted on a
daily basis from any variable portion of the Annuity Option. Through April 30,
1996, this charge is guaranteed to be 0%. Once an Annuity Option is elected,
and an administrative expense charge is established, we will not change the
charge.
TRANSFER FEES
Unlimited transfers are allowed during the Accumulation Period. We allow 12
free transfers per calendar year. Thereafter, we reserve the right to charge
$10 for each additional transfer. If we do assess the fee, it will be deducted
from the Account Value. During the Annuity Period, transfers are not allowed.
DEFERRED SALES CHARGE
You may withdraw your Adjusted Account Value of the Certificate Holder's
Account at any time during the Accumulation Period; however, a deferred sales
charge (referred to in the Contract as a surrender fee) may be deducted so
that we may recover some of our sales expenses.
26
<PAGE>
The charge only applies to that portion of your Certificate Holder's Account
Value that represents Net Purchase Payments (not to any associated changes in
value), and decreases by 1% per year so that seven years after the date of the
Purchase Payment, the charge associated with that payment is 0%. To satisfy a
partial withdrawal, the deferred sales charge is calculated as if Purchase
Payments are withdrawn in the same order they were paid to the Certificate
Holder's Account (i.e., the oldest Purchase Payment will be exhausted, then
the next oldest and so on). Partial withdrawals from the AGA will be treated
as described in the Appendix and the prospectus for the AGA. Withdrawals are
charged first against Purchase Payments then against increases in value. The
deferred sales charge for each Purchase Payment is determined by multiplying
the Purchase Payment withdrawn by the appropriate percentage, depending on the
number of years completed since the Purchase Payment was made, as shown in the
table below. The total charge will be the sum of the charges applicable for
all of the Purchase Payments withdrawn.
<TABLE>
<CAPTION>
LENGTH OF TIME SINCE
PURCHASE PAYMENT MADE DEDUCTION
--------------------- ---------
<S> <C>
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 or more than 7 years 0%
</TABLE>
We will not deduct a deferred sales charge from any Purchase Payment withdrawn
that is:
(a) Applied to provide Annuity benefits;
(b) Paid to a Beneficiary due to the Annuitant's death before Annuity
payments start, up to a maximum of the Net Purchase Payment(s) in the
Certificate Holder's Account on the Annuitant's date of death;
(c) Withdrawn due to the election of the Systematic Withdrawal Option (SWO)
or the Estate Conservation Option (ECO);
(d) Paid due to the full withdrawal of the Certificate Holder's Account for
which the value is $2,500 or less and no withdrawals have been made in
the prior 12 months;
(e) Paid at least 12 months after the date of the first Purchase Payment to
the Certificate Holder's Account in an amount of 15% or less of the
Certificate Holder's Account Value. This applies to the first partial
or full withdrawal made each calendar year. The 15% amount will be
calculated using the Certificate Holder's Account Value on the date the
request is received in good order at the Home Office. If a withdrawal
is made that exceeds 15%, the applicable deferred sales charge will be
assessed on the amount over 15%. This provision may not be exercised if
SWO is elected; or
(f) Paid if we close out the Certificate Holder's Account. See "Contract
Rights -- Withdrawals."
In the instances cited in the above paragraphs, no deferred sales charge is
deducted. However, the amount withdrawn may be subject to the 10% federal
penalty tax. See "Tax Status -- Taxation of Annuities." An MVA may also apply
to amounts withdrawn from the AGA.
Based on our actuarial determination, we do not anticipate that the deferred
sales charge will cover all sales and administrative expenses that we will
incur in connection with the Contract.
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FUND EXPENSES
Each Fund has an investment adviser which charges a management or investment
advisory fee for its services. These fees are based on each Fund's average net
assets, and are deducted from the assets of each Fund and paid to the
investment adviser. The Fee Table sets forth the management fee and expenses
of each Fund. See "The Funds" for a list of the Funds' investment advisers.
Most expenses incurred in the operations of each Fund are borne by that Fund.
Fund advisers may reimburse the Funds they advise for some or all of these
expenses. For further details on each Fund's expenses, you should read the
accompanying prospectus for each Fund and the Fee Table in this Prospectus.
PREMIUM TAX
New York currently does not impose a premium tax on Purchase Payments.
COMMISSIONS AND DISTRIBUTION EXPENSES
We pay Distributors and their registered representatives who sell the
Contracts commissions and service fees. In limited circumstances, we also pay
certain of these professionals compensation, overrides or reimbursement for
expenses associated with the distribution of the Contract. In total, the
compensation amounts are considered equivalent to approximately 7.5% of the
Purchase Payments credited to the Contract over the Contract's estimated life.
See "Contract Purchase -- Distribution."
We pay these commissions, fees and related distribution expenses out of any
deferred sales charges assessed or out of our general assets, including
investment income and any profit from investment advisory fees and mortality
and expense risk charges. No additional deductions or charges are imposed for
commissions and related expenses. See "Charges and Deductions -- Deferred
Sales Charge."
ADDITIONAL WITHDRAWAL OPTIONS
GENERAL
We offer two withdrawal options that are not considered Annuity options: the
Estate Conservation Option ("ECO") and the Systematic Withdrawal Option
("SWO"). These options are available if the Certificate Holder's Account Value
is at least $25,000 at the time of election and you are at least age 70 1/2
for ECO or 59 1/2 for SWO. ECO is available only for amounts in an IRA
Contract, and not for amounts under a Nonqualified Flexible Premium Contract.
Under SWO, you receive a series of partial withdrawals from your Account based
on a payment method you select. it is designed for those who want a periodic
income while retaining investment flexibility for amounts accumulating under
the Contract. ECO offers the same investment flexibility as SWO, but is
designed for those who want to receive only the minimum distribution that the
Code requires each year. Under ECO, the Company calculates the minimum
distribution amount required by law and pays you that amount once a year.
Amounts withdrawn under the ECO or SWO will be deducted from the Account in
the same manner as for any other withdrawals during the Accumulation Period
except that no deferred sales charge or market value adjustment (if
applicable) will be applied. See "Contract Rights -- Withdrawals" and "Charges
and Deductions -- Deferred Sales Charges."
Since ECO and SWO are not Annuity Options, the Certificate Holder's Account
retains all the rights and obligations available during the Accumulation
Period as described in this Prospectus, and is subject to all Accumulation
Period Contract charges. We reserve the right to discontinue the availability
of these withdrawal options and to change the terms for future elections.
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Once elected, you or your spousal beneficiary may revoke the applicable
option(s) at any time by submitting a written request to our Home Office. Any
revocation will apply only to the amounts not yet paid. Once ECO or SWO is
revoked, it may not be elected again.
SWO is different from ECO in the following ways: (1) SWO payments are made for
a fixed dollar amount, fixed time period or fixed percentage whereas ECO
payments vary in dollar amount and can continue indefinitely during your
lifetime, (2) generally, SWO payments will be higher than expected ECO
payments; and (3) ECO is available only for amounts in an Individual
Retirement Annuity Contract, whereas SWO is available under both Individual
Retirement Annuity Contracts and nonqualified deferred annuity contracts. You
should carefully assess your future income needs when considering the election
of these withdrawal options.
You should consult your tax adviser prior to electing one of these options due
to the potential for adverse tax consequences.
For a discussion of the consequences if you or your Beneficiary dies after SWO
or ECO has been elected, see "Death Benefit."
ESTATE CONSERVATION OPTION
The first distribution may not be made before the calendar year in which the
Certificate Holder attains age 70 1/2. ECO is available only for amounts in an
Individual Retirement Annuity Contract.
We will calculate and distribute an annual amount using the recalculation
method contained in the Code's minimum distribution regulations. You specify
the month during which you want to receive your distribution, and we will mail
such distribution for receipt by the 15th of that month annually thereafter.
The annual distribution is determined each year by dividing the Certificate
Holder's Account Value by a life expectancy factor from tables designated by
the Internal Revenue Service ("IRS"). The factor will be based on either your
life expectancy or the joint life expectancy of you and your Beneficiary and
will be redetermined for each calendar year's distribution. The Certificate
Holder's Account Value to be used in this calculation is the Certificate
Holder's Account Value on the December 31st of the year prior to the year in
which the ECO payment is being made. This calculation will be changed, if
necessary, to conform to changes in the Code or applicable regulations.
SYSTEMATIC WITHDRAWAL OPTION
SWO payments are available on a monthly, quarterly, semiannual or annual basis
and are mailed for receipt by the 15th of the month. Under the Specified
Percentage method, payments will be made until you reach age 70 1/2, or if
elected by your spouse as a Beneficiary, until you would have reached age 70
1/2. You may not make any election that would result in a payment of less than
$500.
You may elect one of the following methods of distribution:
(a) Specified Payment -- payments of a designated dollar amount. The dollar
amount chosen cannot be greater than 10% of the Certificate Holder's
Account Value. We may require a minimum payment amount.
(b) Specified Period -- payments for a designated time period. The
specified period must be at least 10 years but, for IRA Rollover
Contracts, not greater than your life expectancy factor.
(c) Specified Percentage -- payments of a designated percentage. The
specified percentage chosen cannot be greater than 10% of the
Certificate Holder's Account Value. The percentage elected may be
changed every six months.
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Each annual distribution is determined by multiplying the Certificate Holder's
Account Value by the percentage chosen. The value used in this calculation is
the value on the December 31st of the year prior to the year for which the
payment is being made. For payments made more often than annually, the annual
payment result (calculated above) is divided by the number of the payments due
each year.
Note: For an IRA Rollover Contract, the annual minimum SWO distribution, or
maximum SWO time period, as you direct, will be determined by a life
expectancy factor from tables designated by the IRS. Under both the Specified
Payment and Specified Period payment methods, a higher amount will be paid in
any year, if required under the Code's minimum distribution rules. For the
initial distribution year, we will calculate the amount paid based on your
single life expectancy determined from Table V of Section 1.72-9 of the Income
Tax Regulations. For each year thereafter, we will use the life expectancy for
the previous year reduced by one.
ANNUITY PERIOD
ANNUITY PERIOD ELECTIONS
You must notify us in writing of the Annuity Date and Annuity Option you
elect. Until a date and option are elected, the Certificate Holder's Account
Value will continue in the Accumulation Period. Once an Annuity Option is
elected, it cannot be changed. Payments may not begin earlier than one year
after purchase, or later than the later of: (a) the first day of the month
following the Annuitant's 85th birthday, or (b) the tenth anniversary of the
last Purchase Payment. As required by the Code, distributions from an IRA
Rollover Contract must begin no later than April 1 of the calendar year after
the calendar year in which you attain age 70 1/2.
At least 30 days before the Annuity Date, you must notify us in writing to
elect or change (a) the date on which Annuity payments are to begin, (b) the
Annuity option, (c) whether the payments are to be made monthly, quarterly,
semiannually or annually, and (d) the investment option(s) to be used to
provide Annuity payments. The Company has reserved the right to limit which,
and how many, funding options will be available during the Annuity Period.
Once Annuity Payments start, no further changes of Annuity Options may be
made. In addition, no further changes may be made to the selection of variable
funding options offered during the Annuity Period.
If Annuity payments are elected on a variable basis, the first and subsequent
Annuity payments will depend on an assumed net investment rate (3 1/2%
annually, unless a 5% annual rate is elected). Use of the 3 1/2% assumed rate
causes a lower first payment, but subsequent payments would increase more
rapidly or decline more slowly as changes occur in the net investment rate. A
5% rate causes a higher first payment, but Annuity payments will increase
thereafter only to the extent that the net investment rate exceeds 5%
annually. Annuity payments would decline if the rate were below 5%.
For purposes of Annuity payments, the Annuitant's adjusted age (and joint
Annuitant's, if elected) will be used. The Annuitant's adjusted age is his or
her age as of the birthday closest to the date of the first Annuity payment,
reduced by one year for Annuity start dates occurring during the period from
July 1, 1993 through December 31, 1999. The Annuitant's age (and joint
Annuitant's, if applicable) will be reduced by two years for Annuity start
dates occurring during the period from January 1, 2000 through December 31,
2009. The Annuitant's adjusted age (and joint Annuitant's, if applicable) will
be reduced by one additional year for Annuity start dates in each succeeding
decade.
No election may be made that would result in a first Annuity payment of less
than $50 or total yearly Annuity payments of less than $250 (less if required
by state law). If the Account Value on the Annuity start date is insufficient
to elect an option for the minimum amount specified, a lump-sum payment must
be elected. We
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reserve the right to increase the minimum first Annuity payment amount and the
minimum annual Annuity payment amount based on increases reflected in the
Consumer Price Index-Urban (CPI-U), since July 1, 1993.
For IRA Rollover Contracts, in determining the amount of Annuity payments, we
must satisfy the minimum distribution incidental death benefit rule described
in IRS regulations. This rule assures that any death benefits payable are
incidental to the primary purpose of the Contract, which is to provide you
with retirement benefits. The amount to be distributed under this rule is
determined based on your age and tables contained in the IRS regulations.
When payments start, the age of the Annuitant plus the number of years for
which payments are guaranteed must not exceed 95.
ANNUITY OPTIONS
LIFETIME:
(a) Life Annuity -- an Annuity with payments guaranteed to the date of the
Annuitant's death. This option may be elected with payments guaranteed
for a minimum of 5, 10, 15 or 20 years. Because it provides a specified
minimum number of Annuity payments, the election of a guaranteed
payment period results in somewhat lower payment than if a Life Annuity
with no specified number of guaranteed payments had been elected.
(b) Life Income Based Upon the Lives of Two Payees -- An Annuity will be
paid during the lives of the Annuitant and a second Annuitant. Payments
will continue until both Annuitants have died. When this option is
chosen, a choice must be made of:
(i) 100% of the payment to continue after the first death;
(ii) 66 2/3% of the payment to continue after the first death;
(iii) 50% of the payment to continue after the first death;
(iv) Payments for a minimum of 120 months, with 100% of the payment to
continue after the first death; or
(v) 100% of the payment to continue at the death of the second Annuitant
and 50% of the payment to continue at the death of the Annuitant.
Because (b)(iv) provides a specified minimum number of Annuity payments, the
election of the guaranteed payment period results in somewhat lower payments.
Payments under any lifetime Annuity option will be determined without regard
to the sex of the Annuitant(s). Such Annuity payments will be based solely on
the age of the Annuitant(s).
If a lifetime option is elected without a guaranteed minimum payment period,
it is possible that only one Annuity payment will be made if the Annuitant
under (a), or the surviving Annuitant under (b), should die prior to the due
date of the second Annuity payment.
Once lifetime Annuity payments begin, you cannot elect to receive a lump-sum
settlement or change elections.
NONLIFETIME:
(a) Payments for a Stated Period of Time -- an Annuity with payments to be
made for five to 30 years, as selected. If this option is elected on a
variable basis, you may request at any time during the payment
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period that the present value of all or any portion of the remaining
variable payments be paid in one sum. If elected on a fixed basis, you
cannot elect to receive a lump-sum settlement. Any lump sum elected
before three years of payments have been completed will be treated as a
withdrawal during the Accumulation Period and any applicable deferred
sales charge will be assessed. See "Charges and Deductions -- Deferred
Sales Charge." Once an Annuity Option is elected on either a variable or
fixed basis, you cannot change elections.
(b) Payment of Interest -- This option may be used only by your Beneficiary
when you die before electing an Annuity Option. All or a portion of the
amount payable upon your death will be held in our general account.
Interest payments will be made to your Beneficiary. Your Beneficiary
may withdraw any amount held under this option or direct that any or
all of the amount be applied to an Annuity Option.
We make a daily deduction for mortality and expense risks from any amounts
held on a variable basis. See "Charges and Deductions -- Mortality and Expense
Risk Charges." Therefore, electing the nonlifetime option on a variable basis
will result in a deduction being made even though we assume no mortality risk.
In addition to the Annuity Options described, we may offer you and other
payees optional methods of payment.
DEATH BENEFIT
GENERAL
The following section provides information about determining the death benefit
amount, should you or the Annuitant die during the Accumulation Period.
Additional information is given for IRA Rollover Contracts and Nonqualified
Flexible Premium Contracts regarding the rights available and who receives
them in case of the death of you or the Annuitant. In many cases, the rights
available will depend on whether the Beneficiary is your spouse.
In many of the scenarios described below, a deadline is given for receiving
distributions equal to the Certificate Holder's Account Value. According to
the Code, the required amount must be distributed by the deadline given. If
not, the IRS will deem the Beneficiary to be in "constructive receipt" of the
amount, and the Beneficiary may be subject to a penalty tax in addition to any
other income tax due on the amount.
Upon the death of a Joint Certificate Holder prior to the Annuity Date, the
surviving Certificate Holder, if any, will be the designated beneficiary. Any
other beneficiary designation on record with the Company at the time of death
will be treated as a contingent beneficiary, and payments will be made to such
beneficiary only upon the death of the surviving Certificate Holder. Upon the
death of an Annuitant who is not a Certificate Holder, the Death Benefit
Amount will be paid to the beneficiary designated.
Note: We will not allow Annuity payments to a Beneficiary to extend beyond the
Beneficiary's life or any period certain greater than the Beneficiary's life
expectancy.
DEATH BENEFIT AMOUNT
If the Annuitant (or for the Nonqualified Flexible Premium Contract, the
Certificate Holder or the Annuitant) dies before Annuity payments start, the
Beneficiary is entitled to a death benefit. The excess, if any, of the amount
of the guaranteed death benefit over the Certificate Holder's Account Value is
determined as of the date of death. Any excess amount will be deposited to the
Certificate Holder's Account and allocated to the money market option
available under the Contract as of the claim date. The Certificate Holder's
Account Value on the claim date plus any excess amount deposited, becomes the
Certificate Holder's Account Value. The claim date is the date when we receive
valid proof of death and the Beneficiary's claim at our Home Office.
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For Nonqualified Flexible Premium Contracts, the death benefit value is
determined as described in items (a), (b), (c) and (d) below. For IRA Rollover
Contracts, the death benefit value is determined as described in items (a),
(b) and (d) below.
(a) Death of Certificate Holder/Annuitant (for IRA Rollover Contracts) or
death of Annuitant (for Nonqualified Flexible Premium Contracts) less
than 85 years of age: The guaranteed death benefit value is the
greatest of:
(1) The Net Purchase Payment(s) made to the Certificate Holder's Account
minus the sum of all amounts withdrawn, applied to an Annuity, or
deducted from the Certificate Holder's Account;
(2) The highest step-up value as of the date of death. A step-up value
is determined on each anniversary of the Effective Date. Each step-
up value is calculated as the Certificate Holder's Account Value on
the Effective Date anniversary, increased by the amount of any
Purchase Payment(s) made, and decreased by the amount of any partial
withdrawals and/or amounts applied to an Annuity Option since the
Effective Date anniversary;
(3) The Certificate Holder's Account Value as of the date of death.
The excess, if any, of the guaranteed death benefit value over the
Certificate Holder's Account Value is determined as of the date of
death. Any excess amount will be deposited and allocated to the money
market option available under the Contract as of the claim date. The
Certificate Holder's Account Value on the claim date plus any excess
amount deposited becomes the Certificate Holder's Account Value.
(b) Death of Certificate Holder/Annuitant (for IRA Rollover Contracts) or
death of Annuitant (for Nonqualified Flexible Premium Contracts) age 85 or
greater: The death benefit is the greatest of:
(1) The Net Purchase Payments made to the Certificate Holder's Account
minus the sum of all amounts withdrawn, applied to an Annuity, or
deducted from the Certificate Holder's Account;
(2) The highest step-up value as of the Participant's 85th birthday. The
step-up value is calculated as described in (a)(2);
(3) The Certificate Holder's Account Value as of the date of death.
(c) Death of the Certificate Holder if the Certificate Holder is not the
Annuitant (Nonqualified Flexible Premium Contracts only): The death
benefit amount is the Certificate Holder's Adjusted Account Value on
the Claim Date. A deferred sales charge may apply to any full or
partial withdrawal. (See "Charges and Deductions--Deferred Sales
Charge.")
(d) Death of a Spousal Beneficiary: In the case of a spousal beneficiary
who continued the Account in his or her own name, the death benefit
shall be equal to the Certificate Holder's Account Value, less any
applicable deferred sales charge on any Purchase Payment(s) made after
we receive proof of death.
For amounts held in the ALIAC Guaranteed Account: The death benefit, if paid
within six months of the date of the Annuitant's death, is the greater of the
Certificate Holder's Account Value or the aggregate market value adjusted
(MVA) amount. If paid after the six-month period, the death benefit will be
the aggregate Market Value Adjustment amount. The aggregate Market Value
Adjustment amount may be more or less than the Certificate Holder's Account
Value.
DEATH BENEFIT OPTIONS AVAILABLE TO BENEFICIARY UNDER A NONQUALIFIED FLEXIBLE
PREMIUM CONTRACT
Under a Nonqualified Flexible Premium Contract, prior to any election, the
Certificate Holder's Account Value will remain in the Certificate Holder's
Account and the Certificate Holder's Account Value will continue to be
affected
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by the investment performance of the investment option(s) selected. The
Beneficiary has the right to allocate or transfer any amount to any available
investment options (subject to an MVA, as applicable). The Code requires that
distributions begin within a certain time period as described below; failure
to commence distribution within those time periods can result in tax
penalties. The following options are available to the Beneficiary:
(a) When you are the Annuitant and you die:
(1) If the Beneficiary is your surviving spouse, the Beneficiary will
become the successor Certificate Holder. The successor Certificate
Holder may exercise all Certificate Holder rights under the Contract
and continue in the Accumulation Period, or may elect (i), (ii), or
(iii) below. Under the Code, distributions are not required until
the successor Certificate Holder's death. The Beneficiary may:
(i) Apply some or all of the Certificate Holder's Adjusted Account
Value to any of the Annuity options. The Amount of payout will
depend on the annuity option elected and the investment
option(s) used to provide such payments. The proceeds are taxed
in the same manner as annuity payments. See "Tax Status."
(ii) Elect to have some or all of the Certificate Holder's Adjusted
Account Value deposited in the Company's general account,
earning the then-current interest rate which may be changed from
time to time. The Beneficiary may elect to receive monthly,
quarterly, semiannual or annual interest payments. The balance
on deposit can be withdrawn at any time or applied to any
Annuity option. The principal amount is guaranteed, but interest
payments may vary; or
(iii) Request, at any time, a lump-sum payment equal to all or a
portion of the Certificate Holder's Adjusted Account Value.
Under (ii) and (iii) above, payments are taxed as surrenders as they are
received.
(2) If the Beneficiary is not your surviving spouse, he or she may
exercise all Contract or Certificate Holder rights and continue in
the Accumulation Period or may elect option (i), (ii), or (iii)
under (1) above. According to the Code, any portion of the
Certificate Holder's Adjusted Account Value not applied to an
Annuity option (other than the Nonlifetime Payment of Interest)
within one year of your death, must be paid within five years after
your death.
(3) If no Beneficiary exists, a lump-sum payment equal to the
Certificate Holder's Adjusted Account Value will be made to your
estate.
Note: If SWO has been elected, SWO payments to the Beneficiary may be
continued, unless the Beneficiary elects otherwise. Any payments elected must
be made at least as frequently as those made prior to your death.
(b) When you are not the Annuitant and you die:
(1) If the Beneficiary is your surviving spouse, he or she will become
the successor Certificate Holder. The successor Certificate Holder
may exercise all your rights under the Contract and continue in the
Accumulation Period, or may elect (i), (ii), or (iii) below. Under
the Code, distributions are not required until the successor
Certificate Holder's death. The Beneficiary may elect to:
(i) Apply some or all of the Certificate Holder's Adjusted Account
Value to any of the Annuity options. The amount of payout will
depend on the annuity option elected and the investment
option(s) used to provide such payments. The proceeds are taxed
in the same manner as annuity payments;
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(ii) Elect to have some or all of the Surrender Value deposited in
the Company's general account, earning the then-current interest
rate which may be changed from time to time. The Beneficiary may
elect to receive monthly, quarterly, semiannual or annual
interest payments. The balance on deposit can be withdrawn at
any time or applied to any Annuity option. The principal amount
is guaranteed, but interest payments may vary; or
(iii) Request, at any time, a lump-sum payment equal to all or a
portion of the Surrender Value.
Under (ii) and (iii) above, payments are taxed as surrenders as they are
received.
(2) If the Beneficiary is not your surviving spouse, he or she may elect
option (i), (ii), or (iii) under (1) above. According to the Code,
any portion of the Certificate Holder's Adjusted Account Value not
applied to one of the Annuity options (other than the Nonlifetime
Payment of Interest) within one year of your death and must be paid
within five years after your death. This amount will be subject to a
deferred sales charge, if applicable.
(3) If no Beneficiary exists, a lump-sum payment equal to the Surrender
Value will be made to your estate.
Note: If SWO has been elected, the payments to the Beneficiary may be
continued, unless the Beneficiary elects otherwise. Any payments elected must
be made at least as frequently as those made prior to your death.
(c) When you are not the Annuitant and the Annuitant dies: the Beneficiary
must elect an Annuity option (see "Annuity Options") other than the
Nonlifetime Payment of Interest within 60 days of the date of death.
DEATH BENEFIT OPTIONS AVAILABLE TO BENEFICIARY UNDER AN IRA ROLLOVER CONTRACT
Under an IRA Rollover Contract, prior to any election, the Certificate
Holder's Account Value will be retained in the Certificate Holder's Account
and the Account Value will continue to be affected by the investment
performance of the investment option(s) selected. Under the Code,
distributions must begin within a certain time period. If no elections are
made, no distributions will be made. Failure to commence distributions within
those time periods can result in tax penalties. The following options are
available to the Beneficiary:
(a) If the Beneficiary is your surviving spouse, he or she may exercise all
rights under the Contract and continue in the Accumulation Period, or
may elect (1), (2), or (3) below. Under the Code, distributions are not
required until December 31st of the year in which you would have
attained age 70 1/2. The Beneficiary may elect to:
(1) Apply some or all of the Certificate Holder's Adjusted Account Value
to the Annuity options. The amount of payout will depend on the
annuity option elected and the investment option(s) used to provide
such payments;
(2) Elect to have some or all of the Certificate Holder's Adjusted
Account Value deposited in the Company's general account, earning
the then-current interest rate which may be changed from time to
time. The Beneficiary may elect to receive monthly, quarterly,
semiannual or annual interest payments. The balance on deposit can
be withdrawn at any time, or applied to any Annuity option. The
principal amount is guaranteed, but interest amounts may vary; or
(3) Receive, at any time, a lump-sum payment equal to all or any portion
of the Adjusted Account Value.
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In general, regardless of the method of payment, payments received by your
Beneficiaries after your death are taxed in the same manner as if you had
received those payments. See "Tax Status."
Note: If ECO is in effect when you die, your surviving spouse can elect to
continue receiving ECO payments if a joint life expectancy was chosen.
Otherwise, your surviving spouse must receive a lump-sum payment of the
Certificate Holder's Adjusted Account Value. If SWO is in effect and you die
before your required beginning date for minimum distributions the SWO payments
will stop and your surviving spouse may elect (1), (2) or (3) above. If SWO is
in effect and you die after your required beginning date for minimum
distributions, your surviving spouse can elect to continue SWO payments.
Otherwise, your spouse must elect to receive a lump sum payment equal to the
Adjusted Account Value.
(b) If the Beneficiary is other than your surviving spouse, and ECO is not
in effect when you die, he or she may exercise all rights under the
Certificate Holder's Account and continue in the Accumulation Period or
may elect option (1), (2), or (3) under (a) above. Any portion of the
Adjusted Account Value that is not applied to an Annuity Option (other
than the Nonlifetime Payment of Interest) by December 31st of the year
following the year of your death must be distributed by December 31st
of the year containing the fifth anniversary of your date of death.
Note: If ECO or SWO is in effect when you die, the Beneficiary must receive an
automatic and immediate lump-sum payment of the Adjusted Account Value.
(c) If no Beneficiary exists, a lump-sum payment equal to the Adjusted
Account Value will be made to your estate.
TAX STATUS
INTRODUCTION
The following discussion is a general discussion of federal income tax
considerations relating to the Contract and is not intended as tax advice.
This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the
likelihood of the continuation of the present federal income tax laws or of
the current interpretation by the IRS. Moreover, no attempt has been made to
consider any applicable state or other tax laws.
The Nonqualified Flexible Premium Contract is purchased on a non-tax qualified
basis. The IRA Rollover Contract is purchased and used in connection with
certain arrangements entitled to special income tax treatment under section
408 of the Code. The ultimate effect of federal income taxes on the amounts
held under a Contract, on Annuity Payments, and on the economic benefit to the
Contract Holder, the Annuitant, or the Beneficiary may depend on the tax
status of the individual concerned.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under the Code. Since the
Separate Account is not an entity separate from the Company, and its operation
forms a part of the Company, it will not be taxed separately as a
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"regulated investment company" under Subchapter M of the Code or as any other
Separate entity. Investment income and capital gains are automatically applied
to increase reserves under the Contracts. Under existing federal income tax
law, the Company believes that the Separate Account investment income and net
capital gains will not be taxed to the extent that such income and gains are
applied to increase the reserves under the Contracts.
Accordingly, the Company does not anticipate that it will incur any federal
income tax liability attributable to the Separate Account and, therefore, the
Company does not intend to make provisions for any such taxes. However, if
changes in the federal tax laws or interpretations thereof result in the
Company being taxed on income or gains attributable to the Separate Account,
then the Company may impose a charge against the Separate Account (with
respect to some or all Contracts) in order to set aside provisions to pay such
taxes.
TAX STATUS OF THE CONTRACT
DIVERSIFICATION: Section 817(h) of the Code requires that with respect to
Nonqualified Flexible Premium Contracts, the investments of the Funds be
"adequately diversified" in accordance with Treasury Regulations in order for
the Contracts to qualify as annuity contracts under federal tax law. The
Separate Account, through the Funds, intends to comply with the
diversification requirements prescribed by the Treasury in Reg. Sec. 1.817-5,
which affects how the Funds' assets may be invested.
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In these circumstances,
income and gains from the separate account assets would be includible in the
variable contract owner's gross income. The IRS has stated in published
rulings that a variable contract owner will be considered the owner of
separate account assets if the contract owner possesses incidents of
investment control over the assets. The ownership rights under the contract
are similar to, but different in certain respects from those described by the
IRS in rulings in which it was determined that contract owners were not owners
of separate account assets. For example, a Certificate Holder has additional
flexibility in allocating premium payments and account values. In addition,
the number of funds provided under the Contract is significantly greater than
the number of funds offered in contracts on which rulings have been issued.
These differences could result in a Certificate Holder being treated as the
owner of a pro rata portion of the assets of the Separate Account. The Company
reserves the right to modify the Contract as necessary to attempt to prevent a
Certificate Holder from being considered the owner of a pro rata share of the
assets of the Separate Account.
REQUIRED DISTRIBUTION: In order to be treated as an annuity contract for
federal income tax purposes, section 72(s) of the Code requires nonqualified
contracts to provide that (a) if any Certificate Holder dies on or after the
annuity date but prior to the time the entire interest in the Contract has
been distributed, the remaining portion of such interest will be distributed
at least as rapidly as under the method of distribution being used as of the
date of such owner's death; and (b) if any Certificate Holder dies prior to
the annuity date, the entire interest in the Contract will be distributed
within five years after the date of such Certificate Holder's death. These
requirements will be considered satisfied as to any portion of a Certificate
Holder's interest which is payable to or for the benefit of a "designated
beneficiary" and which is distributed over the life of such "designated
beneficiary" or over a period not extending beyond the life expectancy of that
beneficiary, provided that such distributions begin within one year of the
Certificate Holder's death. The "designated beneficiary" refers to a natural
person designated by the Certificate Holder as a Beneficiary and to whom
ownership of the contract passes by reason of death. However, if the
"designated beneficiary" is the surviving spouse of the deceased Certificate
Holder, the contract may be continued with the surviving spouse as the new
Certificate Holder.
The Nonqualified Flexible Premium Contracts contain provisions which are
intended to comply with the requirements of section 72(s) of the Code,
although no regulations interpreting these requirements have yet been
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issued. The Company intends to review such provisions and modify them if
necessary to assure that they comply with the requirements of Code section
72(s) when clarified by regulation or otherwise. Other rules may apply to IRA
Rollover Contracts.
The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes.
TAXATION OF ANNUITIES
IN GENERAL: Section 72 of the Code governs taxation of annuities in
general. The Company believes that a Certificate Holder who is a natural
person generally is not taxed on increases in the Contract Value until
distribution occurs by withdrawing all or part of such Account Value (e.g.,
withdrawals or Annuity payments under the Annuity Option elected). The
assignment, pledge, or agreement to assign or pledge any portion of the
Value generally will be treated as a distribution. The taxable portion of a
distribution (in the form of a single sum payment or an annuity) is taxable
as ordinary income.
The following discussion generally applies to a Contract owned by a natural
person.
WITHDRAWALS: In the case of a withdrawal under an IRA Rollover Contract,
including withdrawals under SWO or ECO, the amount taxable is generally
based on the ratio of the "investment in the contract" to Contract Value.
The "investment in the contract" generally equals the amount of any
nondeductible Purchase Payments paid by or on behalf of any individual less
any amount received previously which was excludable from gross income. For
an IRA Rollover Contract, the "investment in the contract" can be zero.
Special tax rules may be available for certain distributions from an IRA
Rollover Contract.
With respect to Nonqualified Flexible Premium Contracts, partial
withdrawals, including withdrawals under SWO, are generally treated as
taxable income to the extent that the Contract Value immediately before the
withdrawal exceeds the "investment in the contract" at that time. The
Contract Value immediately before a withdrawal may have to be increased by
any positive market value adjustment (MVA) that results from such a
withdrawal. There is, however, no definitive guidance on the proper tax
treatment of MVAs in these circumstances, and a Contract Holder should
contact a competent tax advisor with respect to the potential tax
consequences of any MVA that arises as a result of a partial withdrawal.
Full withdrawals of a Nonqualified Flexible Premium Contract are treated as
taxable income to the extent that the amount received exceeds the
"investment in the contract."
ANNUITY PAYMENTS: Although the tax consequences may vary depending on the
Annuity payment elected under the Contract, in general, only the portion of
the Annuity payment that represents the amount by which the Contract Value
exceeds the "investment in the contract" will be taxed; after the
"investment in the contract" is recovered, the full amount of any
additional Annuity payments is taxable. For Variable Annuity payments, the
taxable portion is generally determined by an equation that establishes a
specific dollar amount of each payment that is not taxed. The dollar amount
is determined by dividing the "investment in the contract" by the total
number of expected periodic payments. However, the entire distribution will
be taxable once the recipient has recovered the dollar amount of his or her
"investment in the contract." For Fixed Annuity payments, in general there
is no tax on the portion of each payment which represents the same ratio
that the "investment in the contract" bears to the total expected value of
the Annuity payments for the term of the payments; however, the remainder
of each Annuity payment is taxable. Once the "investment in the contract"
has been fully recovered, the full amount of any additional Annuity
payments is taxable. If Annuity payments cease as a result of an
Annuitant's death before full recovery of the "investment in the contract,"
consult a competent tax advisor regarding deductibility of the unrecovered
amount.
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PENALTY TAX: In the case of a distribution pursuant to a Nonqualified
Flexible Premium Contract, there may be imposed a federal income tax
penalty equal to 10% of the amount treated as taxable income. In general,
however, there is no penalty tax on distributions: (1) made on or after the
date on which the taxpayer attains age 59 1/2; (2) made as a result of
death or disability of a Certificate Holder; (3) received in substantially
equal periodic payments as a life annuity or a joint and survivor annuity
for the lives or life expectancies of the Certificate Holder and a
"designated beneficiary." Other tax penalties may apply to certain
distributions pursuant to an IRA Rollover Contract.
TAXATION OF DEATH BENEFIT PROCEEDS: Amounts may be distributed from the
Contract because of the death of a Certificate Holder or the Annuitant.
Generally, such amounts are includible in the income of the recipient as
follows: (1) if distributed in a lump sum, they are taxed in the same
manner as a full surrender as described above, or (2) if distributed under
an Annuity Option, they are taxed in the same manner as Annuity payments,
as described above.
TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF THE CONTRACT: A transfer of
ownership of a Contract, the designation of an Annuitant, Payee or other
Beneficiary who is not also a Certificate Holder, the selection of certain
Annuity Dates, or the exchange of a Contract may result in certain tax
consequences that are not discussed herein. Assignments or transfers of
ownership of an IRA Rollover Contract are not allowed except as permitted
under Code Section 408(d)(6), coincident to a divorce. Anyone contemplating
any such designation, transfer, assignment, selection, or exchange should
contact a competent tax adviser with respect to the potential tax effects
of such a transaction.
MULTIPLE CONTRACTS: All deferred nonqualified annuity contracts that are
issued by the Company (or its affiliates) to the same owner during any
calendar year are treated as one annuity contract for purposes of
determining the amount includible in gross income under section 72(e) of
the Code. In addition, the Treasury Department has specific authority to
issue regulations that prevent the avoidance of section 72(e) through the
serial purchase of annuity contracts or otherwise. Congress has also
indicated that the Treasury Department may have authority to treat the
combination purchase of an immediate annuity contract and separate deferred
annuity contracts as a single annuity contract under its general authority
to prescribe rules as may be necessary to enforce the income tax laws.
IRA ROLLOVER CONTRACT
IN GENERAL: The qualified contract is designed for use as an Individual
Retirement Annuity. The tax rules applicable to participants and beneficiaries
in Individual Retirement Annuities are complex. Special favorable tax
treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in
excess of specified limits; distributions prior to age 59 1/2 (subject to
certain exceptions); distributions that do not conform to specified
commencement and minimum distribution rules; aggregate distributions in excess
of a specified annual amount; and in other specified circumstances.
INDIVIDUAL RETIREMENT ANNUITIES: Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
Individual Retirement Annuity or Individual Retirement Account, each
hereinafter referred to as an "IRA." Also, distributions from certain other
types of qualified plans may be "rolled over" on a tax-deferred basis into an
IRA. The sale of a contract for use with an IRA may be subject to special
disclosure requirements of the Internal Revenue Service. Purchasers of a
Contract for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency. Such
purchasers will have the right to revoke their purchase within 7 days of the
earlier of the establishment of the IRA or their purchase. A Qualified
Contract issued in connection with an IRA will be amended as necessary
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to conform to the requirements of the Code. Purchasers should seek competent
advice as to the suitability of the Contract for use with IRAs.
The Internal Revenue Service has not reviewed the Contract for qualification
as an IRA, and has not addressed in a ruling of general applicability whether
a death benefit provision such as the provision in the Contract comports with
IRA qualification requirements.
WITHHOLDING
Pension and annuity distributions generally are subject to withholding for the
recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions.
POSSIBLE CHANGES IN TAXATION
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of nonqualified annuities that
did not have "substantial life contingencies" by taxing income as it is
credited to the annuity. Although as of the date of this prospectus Congress
is not actively considering any legislation regarding the taxation of
annuities, there is always the possibility that the tax treatment of annuities
could change by legislation or other means (such as IRS regulations, revenue
rulings, judicial decisions, etc.). Moreover, it is also possible that any
change could be retroactive (that is, effective prior to the date of the
change).
OTHER TAX CONSEQUENCES
As noted, above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect the Company's understanding
of the current law and the law may change. Federal estate and gift tax
consequences of ownership or receipt of distributions under the Contract
depend on the individual circumstances of each Certificate Holder or recipient
of a distribution. A competent tax adviser should be consulted for further
information.
MISCELLANEOUS
VOTING RIGHTS
Each Certificate Holder may direct us in the voting of shares at shareholders'
meetings of the appropriate Fund(s). The number of votes to which each
Certificate Holder may give direction will be determined as of the record
date. The number of votes each Certificate Holder is entitled to direct with
respect to a particular Fund during the Accumulation Period equals the portion
of the Certificate Holder's Account Value(s) attributable to that Fund,
divided by the net asset value of one share of that Fund. During the Annuity
Period, the number of votes is equal to the Certificate Holder's share of the
Valuation Reserve for the portion of the Contract attributable to that Fund,
divided by the net asset value of one share of that Fund. In determining the
number of votes, fractional votes will be recognized. Where the value of the
Contract or Valuation Reserve relates to more than one Fund, the calculation
of votes will be performed separately for each Fund. Votes attributable to
Certificate Holders who do not direct us will be cast by us in the same
proportion as votes for which directions have been received.
You will receive a notice of each meeting of shareholders, together with any
proxy solicitation materials, and a statement of the number of votes
attributable to your Contract.
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MODIFICATION OF THE CONTRACT
The Company may modify the Contract when it deems an amendment appropriate,
subject to the limitations described below, by notifying the Contract Holder
and Certificate Holder in writing 30 days before the effective date of the
change. The following Contract provisions are considered material by the
Company and cannot be changed without the approval of appropriate state or
federal regulatory authorities:
(a) transfers among investment options;
(b) notification to the Contract Holder;
(c) conditions governing payments of surrender values;
(d) terms of Annuity Options;
(e) death benefit payments; and
(f) contract charges.
In addition, changes to the items listed below will apply only to new
Certificate Holders' Accounts established under a group Contract, or
individual Contracts issued after the effective date of the change:
(a) the Annuity Options;
(b) the contractual promise that no deduction will be made from the
Purchase Payment for sales or administrative expenses;
(c) increasing the deferred sales charges;
(d) increasing the mortality and expense risk charges;
(e) increasing the administrative charge;
(f) the right to make transfers; and
(g) the Guaranteed Rate of the AGA.
Modification of items (b) through (e) above specifically require authorization
by the SEC to the extent that the proposed changes are not currently
authorized by existing orders issued to us by the SEC.
No modification may affect any Annuity beginning before the effective date of
the change unless deemed necessary for the Contract to comply with the
requirements of the Code or other laws and regulations affecting the Contract.
INQUIRIES
You may direct inquiries by writing directly to us at the address shown on the
cover page of this Prospectus or by calling 1-800-531-4547.
TELEPHONE TRANSFERS
You automatically have the right to make transfers among Funds by telephone.
The Company has enacted procedures to prevent abuses of transactions by
telephone. The procedures include requiring the use of a personal
identification number (PIN) to execute transactions. You are responsible for
safeguarding your PIN, and for keeping your Contract information confidential.
If the Company fails to follow its procedures it would be liable for any
losses to your Contract resulting from the failure. To ensure authenticity,
the Company records all calls on the 800 line.
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TRANSFER OF OWNERSHIP; ASSIGNMENT
Assignments or transfers of ownership of an IRA Rollover Contract are not
allowed except as permitted under Code Section 408(d)(6), coincident to a
divorce. We will accept assignments or transfers of ownership of a
Nonqualified Flexible Premium Contract, with proper notification. The date of
any such transfer will be the date we receive the notification at our Home
Office. See "Tax Status -- Taxation of Annuities." If you are contemplating a
transfer of ownership or assignment you should consult a tax adviser due to
the potential for tax liability.
LEGAL PROCEEDINGS
We know of no material legal proceedings pending to which the Separate Account
is a party or which would materially affect the Separate Account.
LEGAL MATTERS
The validity of the securities offered by this Prospectus has been passed upon
by Susan E. Bryant, Esq., Counsel to the Company.
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STATEMENT OF ADDITIONAL INFORMATION -- TABLE OF CONTENTS
The following items are the contents of the Statement of Additional
Information:
<TABLE>
<S> <C>
General Information and History............................................. 2
Variable Annuity Account B.................................................. 2
Offering and Purchase of Contracts.......................................... 3
Performance Data............................................................ 3
General.................................................................... 3
Average Annual Total Return Quotations..................................... 4
Annuity Payments............................................................ 5
Dollar-Cost Averaging....................................................... 7
Sales Material.............................................................. 7
Independent Auditors........................................................ 7
Financial Statements of the Separate Account................................ S-1
Financial Statements of the Company......................................... F-1
</TABLE>
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APPENDIX
ALIAC GUARANTEED ACCOUNT
THE ALIAC GUARANTEED ACCOUNT ("AGA") IS A CREDITED INTEREST OPTION AVAILABLE
DURING THE ACCUMULATION PERIOD UNDER THE CONTRACTS DESCRIBED IN THIS
PROSPECTUS. SINCE MGA IS A FUNDING OPTION UNDER THE CONTRACT, YOU SHOULD READ
THE ACCOMPANYING AGA PROSPECTUS CAREFULLY BEFORE INVESTING. THIS APPENDIX IS
INTENDED AS A SUMMARY DESCRIPTION OF AGA AND IS NOT INTENDED AS A REPLACEMENT
FOR THE ALIAC GUARANTEED ACCOUNT PROSPECTUS.
GENERAL
AGA is a credited interest option for which we guarantee a stipulated rate of
interest for a stated period of time on amounts applied to AGA. For guaranteed
terms of one year or less, a guaranteed rate is credited for the full term.
For guaranteed rates of greater than one year, the initial guaranteed rate is
credited from the date of deposit to the end of a specified period within the
guaranteed term. The interest rate stipulated is an annual effective yield;
that is, it reflects a full year's interest. Interest is credited daily at a
rate that will provide the guaranteed annual effective yield over the period
of one year. Guaranteed interest rates will never be less than an annual
effective rate of 3%.
During the deposit period, amounts may be applied to any of the available
guaranteed terms. Purchase Payments received after the initial payment will be
allocated in the same proportions as the last allocation, if no new allocation
instructions are received with the Purchase Payment. For amounts allocated to
the ALIAC Guaranteed Account, if the same guaranteed term(s) are not
available, the next shortest term will be used. If no shorter guaranteed term
is available, the next longer guaranteed term will be used.
WITHDRAWALS
Except for transfers from the one-year Guaranteed Term in connection with the
Dollar Cost Averaging Program and withdrawals taken in connection with an
Estate Conservation or Systematic Withdrawal distribution option, withdrawals
or transfers from a guaranteed term before the guaranteed term matures may be
subject to a market value adjustment ("MVA"). An MVA reflects the change in
the value of the investment due to changes in interest rates since the date of
deposit. When interest rates increase after the date of deposit, the value of
the investment decreases, and the MVA is negative. Conversely, when interest
rates decrease after the date of deposit, the value of the investment
increases, and the MVA is positive. It is possible that a negative MVA could
result in you receiving an amount that is less than the amount you allocated
to AGA.
For partial withdrawals during the Accumulation Period, amounts to be
withdrawn from the AGA will be withdrawn on a pro rata basis from each group
of deposits having the same length of time until the Maturity Date
("Guaranteed Term Group"). Within a Guaranteed Term Group, the amount will be
withdrawn first from the oldest Deposit Period, then from the next oldest, and
so on until the amount requested is satisfied.
MATURITY OF A GUARANTEED TERM
As a guaranteed term matures, assets accumulating under AGA may be (a)
transferred to a new guaranteed term, (b) transferred to any other available
investment options, or (c) withdrawn. Amounts withdrawn may be subject to a
deferred sales charge. If no direction is received by the Company at its Home
Office by the maturity date of a guaranteed term, the amount from the maturing
guaranteed term will be transferred to the current deposit period for a
similar length guaranteed term. If the same guaranteed term is no longer
available the next shortest guaranteed term available in the current deposit
period will be used. If no shorter guaranteed term is available, the next
longer guaranteed term will be used.
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If you do not provide instruction concerning the maturity value of a maturing
guaranteed term, the maturity value transfer provision applies. This provision
allows you to transfer without an MVA to available guaranteed terms of the
current deposit period or to other available investment options, or surrender
without an MVA (if applicable, a deferred sales charge is assessed on the
surrendered amount). The provision is available only during the calendar month
immediately following a guaranteed term maturity date and only applies to the
first transaction regardless of the amount involved in the transaction.
MORTALITY AND EXPENSE RISK CHARGES
We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited rate.
TRANSFERS
Amounts applied to a guaranteed term during a deposit period may not be
transferred to any other funding option or to another guaranteed term during
that deposit period or for 90 days after the close of that deposit period.
This does not apply to (1) amounts transferred on the Maturity Date or under
the maturity value transfer provision; (2) amounts transferred from the
Guaranteed Account before the Maturity Date due to the election of an Annuity
option; (3) amounts transferred from the one-year Guaranteed Term in
connection with the Dollar Cost Averaging Program; and (4) amounts distributed
under the Estate Conservation or Systematic Withdrawal distribution. Transfers
after the 90-day period are permitted from guaranteed term(s) to other
guaranteed term(s) available during a deposit period or to other available
investment options. Except for transactions described in items (1), (3) and
(4) above, amounts withdrawn or transferred from the Guaranteed Account prior
to the maturity date will be subject to a Market Value Adjustment. However,
only a positive aggregate Market Value Adjustment will be applied to transfers
made due to annuitization under one of the lifetime Annuity Options described
in (2) above.
Transfers of AGA values on or within one calendar month of a term's maturity
date are not counted as one of the 12 free transfers of accumulated values in
the Certificate Holder's Account.
The Certificate Holder may select a maximum of 18 different funding options
over the lifetime of the Contract. Under the ALIAC Guaranteed Account, each
guaranteed term is counted as one funding option. If a guaranteed term
matures, and is renewed for the same term, it will not count as an additional
funding option.
DEATH BENEFIT
Full and partial withdrawals and transfers made from the AGA within six months
after the date of the Annuitant's death will be the greater of:
(a) The aggregate MVA amount (i.e., the sum of all market value adjusted
amounts calculated due to a withdrawal of amounts). This total may be
greater or less than the Certificate Holder's Account Value of those
amounts; or
(b) The applicable portion of the Certificate Holder's Account Value
attributable to AGA.
After the six-month period, the surrender or transfer amount will be
adjusted for the aggregate MVA amount, which may be greater or less than
the Certificate Holder's Account Value of those amounts. Only a positive
aggregate Market Value Adjustment will be applied to transfers made due to
annuitization under one of the lifetime Annuity Options.
ANNUITY PERIOD
By notifying us at our Home Office at least 30 days before the Annuity Date,
you may elect to have amounts which have been accumulating under AGA
transferred to one or more of the funds available during the Annuity Period to
provide variable Annuity payments. AGA cannot be used as an investment option
during the Annuity Period. Transfers made due to the election of a lifetime
Annuity Option will be subject to only a positive aggregate MVA.
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--------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT B
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
--------------------------------------------------------------------------------
Statement of Additional Information dated September ___, 1995
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Marathon Plus/Growth Plus (New
York) dated September ______, 1995.
A free prospectus is available upon request from the local Aetna Life Insurance
and Annuity Company office or by writing to or calling:
Aetna Life Insurance and Annuity Company
Service Unit
151 Farmington Avenue
Hartford, Connecticut 06156
1-800-531-4547
Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the prospectus.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
General Information and History................................... 2
Variable Annuity Account B........................................ 2
Offering and Purchase of Contracts................................ 3
Performance Data.................................................. 3
General......................................................... 3
Average Annual Total Return Quotations.......................... 4
Annuity Payments.................................................. 5
Dollar-Cost Averaging............................................. 7
Sales Material.................................................... 7
Independent Auditors.............................................. 7
Financial Statements of the Separate Account...................... S-1
Financial Statements of Aetna Life Insurance and Annuity Company.. F-1
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the "Company") is a stock life
insurance company which was organized in 1976 under the insurance laws of the
State of Connecticut. The Company is a wholly owned subsidiary of Aetna Life
Insurance and Casualty Company which, with its subsidiaries, constitutes one of
the nation's largest diversified financial services organizations. The
Company's Home Office is located at 151 Farmington Avenue, Hartford, Connecticut
06156.
ALIAC, a registered broker-dealer under the Securities Exchange Act of 1934,
serves as the principal underwriter for the Separate Account. ALIAC is also a
registered investment adviser under the Investment Advisers Act of 1940, and
provides investment advice to several of the registered management investment
companies offered as variable investment options under the Contracts funded by
the Separate Account (see "Variable Annuity Account B" below).
Other than the mortality and expense risk charges and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the Separate Account are borne by the Company. See "Charges and Deductions" in
the prospectus. The Company receives reimbursement for certain administrative
costs from the Funds' investment adviser used as funding options under the
Contract. These fees generally range from 0.10% to 0.25%.
The assets of the Separate Account are held by the Company. The Separate Account
has no custodian. However, the Funds in whose shares the assets of the Separate
Account are invested each have custodians, as discussed in their respective
prospectuses.
VARIABLE ANNUITY ACCOUNT B
Variable Annuity Account B (the "Separate Account") is a separate account
established by the Company for the purpose of funding variable annuity contracts
issued by the Company. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940, as amended. The assets of the Separate Account will be invested
exclusively in shares of the mutual funds described in the Prospectus. Purchase
Payments made under the Contract may be allocated to one or more of the variable
investment options. The Company may make additions to or deletions from
available investment options as permitted by law. The availability of the Funds
is subject to applicable regulatory authorization. Not all Funds are available
in all jurisdictions or under all Contracts. The Funds currently available
under the Contract are as follows:
2
<PAGE>
<TABLE>
<S> <C>
Aetna Variable Fund Fidelity Index 500 Portfolio
Aetna Income Shares IMS-Growth Stock Fund
Aetna Variable Encore Fund IMS-Equity Growth and Income Fund
Aetna Investment Advisers Fund, Inc. IMS-Utility Fund
Aetna Ascent Variable Portfolio IMS-U.S. Government Bond Fund
Aetna Crossroads Variable Portfolio IMS-Corporate Bond Fund
Aetna Legacy Variable Portfolio IMS-International Stock Fund
Alger American Balanced Portfolio IMS-Prime Money Fund
Alger American Income and Growth Portfolio Janus Aspen Balanced Portfolio
Alger American Growth Portfolio Janus Aspen Flexible Income Portfolio
Alger American MidCap Growth Portfolio Janus Aspen Growth Portfolio
Alger American Leveraged AllCap Portfolio Janus Aspen Short-Term Bond Portfolio
Alger American Small Cap Portfolio Janus Aspen Worldwide Growth Portfolio
Fidelity Contrafund Portfolio Janus Aspen Aggressive Growth Portfolio
Fidelity Equity-Income Portfolio Lexington Natural Resources Trust
Fidelity GrowthPortfolio Lexington Emerging Markets Fund
Fidelity Overseas Portfolio TCI Growth
Fidelity Asset Manager Portfolio TCI Balanced
Fidelity High Income Portfolio TCI International
Fidelity Investment Grade Bond Portfolio
</TABLE>
Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, are contained in the
prospectuses and statements of additional information for each of the Funds.
OFFERING AND PURCHASE OF CONTRACTS
As principal underwriter, ALIAC offers the Contracts through life insurance
agents licensed to sell variable annuities who are registered representatives of
ALIAC or of other registered broker-dealers who have sales agreements with
ALIAC. The offering of the Contracts is continuous. A description of the
manner in which Contracts are purchased may be found in the prospectus under the
sections titled "Contract Purchase" and "Certificate Holder's Account Values."
PERFORMANCE DATA
GENERAL
From time to time, the Company may advertise different types of historical
performance for the variable options of the Separate Account available under the
Contracts issued by the Company which are described in the Prospectus. The
Company may advertise the "standardized average annual total returns,"
calculated in a manner prescribed by the Securities and Exchange Commission (the
"standardized return"), as well as the "non-standardized total return," both of
which are described below.
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the variable options under the Contract, and then related
to the ending redeemable values over one, three, five and ten year periods (or
fractional periods thereof). The standardized figures reflect the deduction of
all recurring charges during
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each period (e.g., mortality and expense risk charges, maintenance fees,
administrative charges, and deferred sales charges). These charges will be
deducted on a pro rata basis in the case of fractional periods. The maintenance
fee is converted to a percentage of assets based on the average account size
under these contracts and similar contracts funded by the Separate Account.
The non-standardized figures will be calculated in a similar manner, except that
non-standardized figures will not reflect the deduction of any applicable
deferred sales charge (which would decrease the level of performance shown if
reflected in these calculations). The non-standardized figures may also include
a three year period.
For variable options underlying the Separate Account that were in existence
prior to the date the Fund became available under the Contract or the date on
which the Separate Account commenced operations, the standardized and non-
standardized total returns may include periods prior to the date on which such
Fund became available under the Contract. These figures are calculated by
adjusting the actual returns of the Fund to reflect the charges that would have
been assessed under the Contract had that Fund been available under the Contract
during that period.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance. Investment results of the
Funds will fluctuate over time, and any presentation of the Funds' total return
quotations for any prior period should not be considered as a representation of
how the variable options will perform in any future period. Additionally, your
Account Value upon redemption may be more or less than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The table shown below reflects the average annual standardized and non-
standardized total return quotation figures for the periods ended December 31,
1994 for the variable options available under the Contract.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Fund
STANDARDIZED NON-STANDARDIZED Inception
Date
------------------------------------------------------------------------------------------------------------------------------
Installment Payment Contract 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
($30 annual maintenance fee)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund (7.84)% 6.20% 12.51% (2.43)% 2.57% 6.47% 12.51% 04/30/75
-------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares (10.62)% 6.28% 8.61% (5.19)% 2.76% 6.55% 8.61% 06/01/78
-------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund (2.81)% 3.33% 4.96% 2.58% 2.14% 3.64% 4.96% 09/01/75
-------------------------------------------------------------------------------------------------------------------------------
* *
Aetna Investment Advisers Fund, Inc. (7.23)% 5.99% 6.19% (1.82)% 3.69% 6.26% 6.42% 06/23/89
-------------------------------------------------------------------------------------------------------------------------------
* *
Alger American Balanced Portfolio (11.09)% 2.90% 3.15% (5.66)% 2.63% 3.21% 3.43% 09/05/89
-------------------------------------------------------------------------------------------------------------------------------
* *
Alger American Income and Growth (15.08)% 4.53% 4.91% (9.62)% 1.71% 4.82% 5.01% 11/14/88
Portfolio
-------------------------------------------------------------------------------------------------------------------------------
* *
Alger American Growth Portfolio (5.43)% 13.47% 15.00% (0.03)% 10.14% 13.67% 15.13% 01/08/89
-------------------------------------------------------------------------------------------------------------------------------
* *
Alger American MidCap Growth Portfolio (8.40)% 15.95% N/A (2.98)% 18.74% N/A N/A 04/30/93
-------------------------------------------------------------------------------------------------------------------------------
* *
Alger American Small Cap Portfolio (11.21)% 12.09% 17.68% (5.77)% 2.39% 12.30% 17.73% 09/20/88
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Fund
STANDARDIZED NON-STANDARDIZED Inception
Date
------------------------------------------------------------------------------------------------------------------------------
Installment Payment Contract 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
($30 annual maintenance fee)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
* *
Fidelity Asset Manager Portfolio (12.88)% 8.88% 8.39% (7.43)% 6.79% 9.12% 8.62% 09/06/89
-------------------------------------------------------------------------------------------------------------------------------
* *
Fidelity Equity-Income Portfolio 0.14% 8.67% 9.39% 5.51% 12.32% 8.91% 9.39% 10/22/86
-------------------------------------------------------------------------------------------------------------------------------
* *
Fidelity Growth Portfolio (6.87)% 9.03% 11.06% (1.46)% 7.68% 9.27% 11.06% 11/07/86
-------------------------------------------------------------------------------------------------------------------------------
* *
Fidelity Overseas Portfolio (5.15)% 3.96% 5.51% 0.25% 6.09% 4.25% 5.51% 02/13/87
-------------------------------------------------------------------------------------------------------------------------------
* *
Fidelity High Income Portfolio (8.49)% 12.15% 9.33% (3.07)% 11.76% 12.36% 9.33% 10/11/85
-------------------------------------------------------------------------------------------------------------------------------
* *
Fidelity Investment Grade Bond Portfolio (10.59)% 5.24% 5.93% (5.16)% 2.91% 5.52% 6.03% 12/05/88
-------------------------------------------------------------------------------------------------------------------------------
* *
Fidelity Index 500 Portfolio (5.83)% 3.93% N/A (0.43)% 5.71% N/A N/A 08/27/92
-------------------------------------------------------------------------------------------------------------------------------
* *
IMS-Equity Growth and Income Fund (8.27)% N/A N/A (1.96)% N/A N/A N/A 02/10/94
-------------------------------------------------------------------------------------------------------------------------------
* *
IMS Prime Money Fund (6.02)% N/A 0.28% N/A N/A N/A N/A
-------------------------------------------------------------------------------------------------------------------------------
* *
IMS-Utility Fund (11.45)% N/A N/A (5.11)% N/A N/A N/A 02/10/94
-------------------------------------------------------------------------------------------------------------------------------
* *
IMS-U.S. Government Bond Fund (4.88)% N/A N/A 1.41% N/A N/A N/A 03/28/94
-------------------------------------------------------------------------------------------------------------------------------
* *
IMS-Corporate Bond Fund (10.99)% N/A N/A (4.65)% N/A N/A N/A 03/01/94
-------------------------------------------------------------------------------------------------------------------------------
* *
Janus Aspen Aggressive Growth Portfolio 9.62% 22.40% N/A 14.93% 26.14% N/A N/A 09/13/93
-------------------------------------------------------------------------------------------------------------------------------
* *
Janus Aspen Balanced Portfolio (6.04)% 0.53% N/A (0.64)% 4.63% N/A N/A 09/13/93
-------------------------------------------------------------------------------------------------------------------------------
* *
Janus Aspen Flexible Income Portfolio (7.57)% (5.67)% N/A (2.16)% (1.46)% N/A N/A 09/13/93
-------------------------------------------------------------------------------------------------------------------------------
* *
Janus Aspen Growth Portfolio (4.00)% (0.68)% N/A 1.40% 3.44% N/A N/A 09/13/93
-------------------------------------------------------------------------------------------------------------------------------
* *
Janus Aspen Short-Term Bond Portfolio (5.95)% (4.72)% N/A (0.55)% (0.53)% N/A N/A 09/13/93
-------------------------------------------------------------------------------------------------------------------------------
* *
Janus Aspen Worldwide Growth Portfolio (5.34)% 10.15% N/A 0.06% 14.08% N/A N/A 09/13/93
-------------------------------------------------------------------------------------------------------------------------------
* *
Lexington Emerging Markets Fund (7.73)% N/A N/A (1.42)% N/A N/A N/A 03/31/94
-------------------------------------------------------------------------------------------------------------------------------
* *
Lexington Natural Resources Trust (12.20)% (4.55)% (1.71)% (6.76)% 1.09% (4.11)% (1.36)% 05/31/89
-------------------------------------------------------------------------------------------------------------------------------
* *
TCI International (11.50)% N/A N/A (5.16)% N/A N/A N/A 05/31/94
-------------------------------------------------------------------------------------------------------------------------------
* *
TCI Growth (8.10)% 6.91% 9.10% (2.69)% 1.12% 7.17% 9.10% 11/20/87
-------------------------------------------------------------------------------------------------------------------------------
* *
TCI Balanced (6.15)% 4.56% N/A (0.74)% (0.85)% 5.40% N/A 05/31/94
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Although results are not available for the full calendar indicated, the
percentage shown is an average annual return since inception.
ANNUITY PAYMENTS
When Annuity payments are to begin, the value of the Contract or Account is
determined using Accumulation Unit values as of the tenth Valuation Period
before the first Annuity payment is due. Such
5
<PAGE>
value (less any applicable premium tax) is applied to provide an Annuity in
accordance with the Annuity and investment options elected.
The Annuity option tables found in the Contract show, for each form of Annuity,
the amount of the first Annuity payment for each $1,000 of value applied.
Thereafter, variable Annuity payments fluctuate as the Annuity Unit value(s)
fluctuates with the investment experience of the selected investment option(s).
The first payment and subsequent payments also vary depending on the assumed net
investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a
higher first payment, but Annuity payments will increase thereafter only to the
extent that the net investment rate increases by more than 5% on an annual
basis. Annuity payments would decline if the rate failed to increase by 5%. Use
of the 3.5% assumed rate causes a lower first payment, but subsequent payments
would increase more rapidly or decline more slowly as changes occur in the net
investment rate.
When the Annuity Period begins, the Annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b) where (a)
is the amount of the first Annuity payment based on a particular investment
option and (b) is the then current Annuity Unit value for that investment
option. As noted, Annuity Unit values fluctuate from one Valuation Period to the
next; such fluctuations reflect changes in the net investment factor for the
appropriate Fund(s) (with a ten Valuation Period lag which gives the Company
time to process Annuity payments) and a mathematical adjustment which offsets
the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.
EXAMPLE:
Assume that, at the date Annuity payments are to begin, there are 3,000
Accumulation Units credited under a particular Contract or Account and that the
value of an Accumulation Unit for the tenth Valuation Period prior to retirement
was $13.650000. This produces a total value of $40,950.
Assume also that no premium tax is payable and that the Annuity table in the
Contract provides, for the option elected, a first monthly variable Annuity
payment of $6.68 per $1000 of value applied; the Annuitant's first monthly
payment would thus be 40.950 multiplied by $6.68, or $273.55.
Assume then that the value of an Annuity Unit for the Valuation Period in which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be 20.414.
The value of this number of Annuity Units will be paid in each subsequent month.
If the net investment factor with respect to the appropriate Fund is 1.0015000
as of the tenth Valuation Period preceding the due date of the second monthly
payment, multiplying this factor by .9999058* (to neutralize the assumed net
investment rate of 3.5% per annum built into the number of Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Annuity Unit value for
6
<PAGE>
the prior Valuation Period (assume such value to be $13.504376) to produce an
Annuity Unit value of $13.523359 for the Valuation Period in which the second
payment is due.
7
<PAGE>
The second monthly payment is then determined by multiplying the number of
Annuity Units by the current Annuity Unit value, or 20.414 times $13.523359,
which produces a payment of $276.07.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
neutralize such assumed rate would be .9998663.
DOLLAR-COST AVERAGING
The term "dollar-cost averaging" describes a system of investing a uniform sum
of money at regular intervals over an extended period of time. It is based on
the economic fact that buying a variably priced item with a constant sum of
money at fixed intervals results in acquiring more of the item when prices are
low and less of it when prices are high. In order to maximize the effectiveness
of dollar-cost averaging, it is important that investors consider their
financial ability to continue purchasing the securities through periods of high
and low price levels. Investors should also note that no system can protect
against reduced values in a declining market.
SALES MATERIAL
The Company may include hypothetical illustrations in its sales literature that
explain the mathematical principles of dollar cost averaging, compounded
interest, tax deferred accumulation, and the mechanics of variable annuity
contracts. The Company may also discuss the difference between variable annuity
contracts and other types of savings or investment products, including, but not
limited to, personal savings accounts and Certificates of Deposit.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the
independent auditors for the Separate Account and for the Company. The services
provided to the Separate Account include primarily the examination of the
Separate Account's financial statements and the review of filings made with the
SEC.
8
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT B
Index
Independent Auditors Report
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Condensed Financial Information
S-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Aetna Life Insurance and Annuity Company and
Contract Owners of Variable Annuity Account B:
We have audited the accompanying statement of assets and liabilities of Aetna
Life Insurance and Annuity Company Variable Annuity Account B (the "Account")
as of December 31, 1994, the related statement of operations and condensed fi-
nancial information for the year then ended and the statements of changes in
net assets for each of the years in the two-year period then ended. These fi-
nancial statements and condensed financial information are the responsibility
of the Account's management. Our responsibility is to express an opinion on
these financial statements and condensed financial information based on our au-
dits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and condensed fi-
nancial information are free of material misstatement. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1994, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant esti-
mates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and condensed financial information
referred to above present fairly, in all material respects, the financial posi-
tion of Aetna Life Insurance and Annuity Company Variable Annuity Account B as
of December 31, 1994, the results of its operations and condensed financial in-
formation for the year then ended and the changes in its net assets for each of
the years in the two-year period then ended in conformity with generally ac-
cepted accounting principles.
KPMG Peat Marwick llp
Hartford, Connecticut
January 31, 1995
<PAGE>
Variable Annuity Account B
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, at net asset value: (Note 1)
Aetna Variable Fund; 17,826,130 shares at $26.23 per share (cost
$507,156,445)................................................... $467,568,315
Aetna Income Shares; 5,871,114 shares at $11.72 per share (cost
$74,117,645).................................................... 68,832,108
Aetna Variable Encore Fund; 7,078,396 shares at $12.55 per share
(cost $89,821,997).............................................. 88,823,487
Aetna Investment Advisers Fund, Inc.; 7,752,415 shares at $12.23
per share
(cost $93,379,859).............................................. 94,792,938
Aetna GET Fund, Series B; 1,226,848 shares at $9.92 per share
(cost $12,353,186).............................................. 12,170,153
Alger American Fund--Alger American Small Capitalization
Portfolio; 155,668 shares at $27.31 per share (cost $4,071,354). 4,251,298
Calvert Socially Responsible Series; 5,491 shares at $1.44 per
share (cost $8,462)............................................. 7,912
Fidelity Investments Variable Insurance Products Fund--Equity-
Income Portfolio; 11,086 shares at $15.35 per share (cost
$170,056)....................................................... 170,167
Fidelity Investments Variable Insurance Products Fund--Growth
Portfolio; 8,176 shares at $21.69 per share (cost $170,056)..... 177,333
Insurance Management Series--Corporate Bond Fund; 34,641 shares
at $8.87 per share
(cost $311,414)................................................. 307,263
Insurance Management Series--Equity Growth and Income Fund;
190,609 shares at $9.74 per share (cost $1,862,442)............. 1,856,527
Insurance Management Series--U.S. Government Bond Fund; 12,833
shares at $9.98 per share (cost $128,226)....................... 128,071
Insurance Management Series--Prime Money Fund; 521,201 shares at
$1.00 per share
(cost $521,214)................................................. 521,201
Insurance Management Series--Utility Fund; 43,813 shares at $9.29
per share
(cost $408,580)................................................. 407,020
Janus Aspen Series--Aggressive Growth Portfolio; 99,782 shares at
$13.62 per share (cost $1,346,463).............................. 1,359,035
Janus Aspen Series--Flexible Income Portfolio; 16,574 shares at
$9.48 per share (cost $162,859)................................. 157,121
Janus Aspen Series--Growth Portfolio; 9,169 shares at $10.57 per
share (cost $96,205)............................................ 96,920
Lexington Emerging Markets Fund, Inc.; 1,490 shares at $9.86 per
share (cost $14,968)............................................ 14,692
Lexington Natural Resources Trust; 132,414 shares at $9.71 per
share (cost $1,326,234)......................................... 1,285,738
Neuberger & Berman Advisers Management Trust--Growth Portfolio;
137,169 shares at $20.31 per share (cost $2,851,294)............ 2,785,910
Scudder Variable Life Investment Fund--International Portfolio;
816,372 shares at $10.69 per share (cost $8,944,895)............ 8,727,018
TCI Portfolios, Inc.--TCI Balanced; 5,922 shares at $5.96 per
share (cost $35,156)............................................ 35,294
TCI Portfolios, Inc.--TCI Growth; 4,483,578 shares at $9.21 per
share (cost $40,864,347)........................................ 41,293,756
TCI Portfolios, Inc.--TCI International; 7,444 shares at $4.75
per share (cost $37,331)........................................ 35,359
------------
NET ASSETS........................................................ $795,804,636
============
</TABLE>
<PAGE>
Variable Annuity Account B
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 1994 (continued)
Net assets represented by:
<TABLE>
<CAPTION>
ACCUMULATION
UNIT
UNITS VALUE
------------ ------------
<S> <C> <C> <C>
Reserves for annuity contracts in
accumulation period:
AETNA VARIABLE FUND:
Non-Qualified 1964................... 5,159.1 $114.828 $ 592,407
Non-Qualified I...................... 232,142.6 129.838 30,140,993
Non-Qualified II..................... 478,180.1 91.515 43,760,850
Non-Qualified III.................... 2,229,372.7 87.638 195,378,787
Non-Qualified V...................... 11,117,382.8 10.698 118,932,105
Non-Qualified VI..................... 52,441.8 9.993 524,057
Non-Qualified VII.................... 3,178,711.5 10.737 34,130,411
AETNA INCOME SHARES:
Non-Qualified I...................... 16,981.4 39.514 671,004
Non-Qualified II..................... 151,836.3 41.302 6,271,196
Non-Qualified III.................... 699,850.8 39.919 27,937,427
Non-Qualified V...................... 1,988,960.0 10.457 20,799,277
Non-Qualified VI..................... 8,201.1 9.534 78,189
Non-Qualified VII.................... 983,356.7 10.324 10,152,119
AETNA VARIABLE ENCORE FUND:
Non-Qualified I...................... 30,683.2 35.958 1,103,292
Non-Qualified II..................... 194,997.6 36.602 7,137,317
Non-Qualified III.................... 744,594.5 34.450 25,651,159
Non-Qualified V...................... 1,822,449.0 10.509 19,152,951
Non-Qualified VI..................... 3,730.2 10.237 38,185
Non-Qualified VII.................... 3,407,448.2 10.489 35,740,583
AETNA INVESTMENT ADVISERS FUND, INC.:
Non-Qualified I...................... 70,446.9 14.299 1,007,320
Non-Qualified II..................... 679,528.1 14.252 9,684,634
Non-Qualified III.................... 2,044,887.2 14.218 29,074,206
Non-Qualified V...................... 3,541,702.6 10.971 38,856,019
Non-Qualified VII.................... 911,280.6 10.828 9,867,346
AETNA GET FUND, SERIES B:
Non-Qualified V...................... 1,197,924.6 10.159 12,170,153
ALGER AMERICAN FUND--ALGER AMERICAN
SMALL CAPITALIZATION PORTFOLIO:
Non-Qualified V...................... 441,808.5 9.622 4,251,298
CALVERT SOCIALLY RESPONSIBLE SERIES:
Non-Qualified V...................... 752.3 10.518 7,912
FIDELITY INVESTMENTS VARIABLE
INSURANCE PRODUCTS
FUND--EQUITY-INCOME PORTFOLIO:
Non-Qualified VII.................... 17,012.8 10.002 170,167
FIDELITY INVESTMENTS VARIABLE
INSURANCE PRODUCTS
FUND--GROWTH PORTFOLIO:
Non-Qualified VII.................... 17,012.8 10.423 177,333
</TABLE>
<PAGE>
Variable Annuity Account B
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 1994 (continued)
<TABLE>
<CAPTION>
ACCUMULATION
UNIT
UNITS VALUE
------------ ------------
<S> <C> <C> <C>
INSURANCE MANAGEMENT SERIES--CORPORATE
BOND FUND:
Non-Qualified VII...................... 31,308.6 $ 9.814 $ 307,263
INSURANCE MANAGEMENT SERIES--EQUITY
GROWTH AND INCOME FUND:
Non-Qualified VII...................... 188,707.5 9.838 1,856,527
INSURANCE MANAGEMENT SERIES--U.S.
GOVERNMENT BOND FUND:
Non-Qualified VII...................... 12,713.7 10.073 128,071
INSURANCE MANAGEMENT SERIES--PRIME
MONEY FUND:
Non-Qualified VII...................... 51,948.7 10.033 521,201
INSURANCE MANAGEMENT SERIES--UTILITY
FUND:
Non-Qualified VII...................... 41,190.7 9.881 407,020
JANUS ASPEN SERIES--AGGRESSIVE GROWTH
PORTFOLIO:
Non-Qualified V........................ 131,702.1 10.319 1,359,035
JANUS ASPEN SERIES--FLEXIBLE INCOME
PORTFOLIO:
Non-Qualified V........................ 15,892.7 9.886 157,121
JANUS ASPEN SERIES--GROWTH PORTFOLIO:
Non-Qualified VII...................... 9,587.6 10.109 96,920
LEXINGTON EMERGING MARKETS FUND, INC.:
Non-Qualified VII...................... 1,500.0 9.795 14,692
LEXINGTON NATURAL RESOURCES TRUST:
Non-Qualified V........................ 141,075.6 9.079 1,280,873
Non-Qualified VII...................... 537.2 9.056 4,865
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST--GROWTH PORTFOLIO:
Non-Qualified V........................ 228,369.5 12.199 2,785,910
SCUDDER VARIABLE LIFE INVESTMENT FUND--
INTERNATIONAL PORTFOLIO:
Non-Qualified V........................ 652,629.7 13.372 8,727,018
TCI PORTFOLIOS, INC.--TCI BALANCED:
Non-Qualified VII...................... 3,476.6 10.152 35,294
TCI PORTFOLIOS, INC.--TCI GROWTH:
Non-Qualified II....................... 568,153.8 10.213 5,802,835
Non-Qualified III...................... 1,340,758.1 10.123 13,573,082
Non-Qualified V........................ 1,123,365.7 10.883 12,225,789
Non-Qualified VII...................... 893,534.0 10.847 9,692,050
TCI PORTFOLIOS, INC.--TCI
INTERNATIONAL:
Non-Qualified VII...................... 3,745.4 9.441 35,359
Reserved for annuity contracts in
payment period (Note 1)............... 53,335,014
------------
$795,804,636
============
</TABLE>
See Notes to Financial Statements.
<PAGE>
Variable Annuity Account B
STATEMENT OF OPERATIONS -- Year Ended December 31, 1994
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Dividends: (Notes 1 and 3)
Aetna Variable Fund............................................. $ 71,958,106
Aetna Income Shares............................................. 4,312,751
Aetna Variable Encore Fund...................................... 2,814,325
Aetna Investment Advisers Fund, Inc............................. 3,701,779
Aetna GET Fund, Series B........................................ 423,359
Alger American Fund--Alger American Small Capitalization
Portfolio...................................................... 51,845
Calvert Socially Responsible Series............................. 246
Insurance Management Series--Corporate Bond Fund................ 3,827
Insurance Management Series--Equity Growth and Income Fund...... 4,162
Insurance Management Series--U.S. Government Bond Fund.......... 936
Insurance Management Series--Prime Money Fund................... 2,397
Insurance Management Series--Utility Fund....................... 1,778
Janus Aspen Series--Aggressive Growth Portfolio................. 9,728
Janus Aspen Series--Flexible Income Portfolio................... 4,789
Janus Aspen Series--Growth Portfolio............................ 274
Lexington Emerging Markets Fund, Inc. .......................... 315
Lexington Natural Resources Trust............................... 4,758
Neuberger & Berman Advisers Management Trust--Growth Portfolio.. 113,211
Scudder Variable Life Investment Fund--International Portfolio.. 20,721
TCI Portfolios, Inc.--TCI Balanced.............................. 405
TCI Portfolios, Inc.--TCI Growth................................ 3,234
------------
Total investment income...................................... 83,432,946
Valuation period deductions (Note 2)............................. (8,918,042)
------------
Net investment income............................................ 74,514,904
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1 and 4)
Proceeds from sales............................................. 213,403,512
Cost of investments sold........................................ 156,402,976
------------
Net realized gain............................................ 57,000,536
Net unrealized gain (loss) on investments:
Beginning of year............................................... 102,069,324
End of year..................................................... (44,356,052)
------------
Net unrealized loss.......................................... (146,425,376)
------------
Net realized and unrealized loss on investments.................. (89,424,840)
------------
Net decrease in net assets resulting from operations............. $(14,909,936)
============
</TABLE>
See Notes to Financial Statements.
<PAGE>
Variable Annuity Account B
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1994 1993
------------ ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.............................. $ 74,514,904 $ 34,484,591
Net realized and unrealized gain (loss) on invest-
ments............................................. (89,424,840) 995,346
------------ ------------
Net increase (decrease) in net assets resulting
from operations.................................. (14,909,936) 35,479,937
------------ ------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments........ 170,170,873 115,263,261
Sales and administrative charges deducted by the
Company........................................... (8,045) (68,920)
------------ ------------
Net variable annuity contract purchase payments... 170,162,828 115,194,341
Transfers from the Company for mortality guarantee
adjustments....................................... 537,027 522,820
Transfers from (to) the Company's fixed account op-
tions............................................. (6,000,310) 12,354,531
Redemptions by contract holders.................... (32,737,461) (20,997,172)
Annuity payments................................... (7,564,589) (5,704,047)
Other.............................................. (127,555) 166,934
------------ ------------
Net increase in net assets from unit transactions. 124,269,940 101,537,407
------------ ------------
Change in net assets............................... 109,360,004 137,017,344
NET ASSETS:
Beginning of year.................................. 686,444,632 549,427,288
------------ ------------
End of year........................................ $795,804,636 $686,444,632
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
Variable Annuity Account B
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Variable Annuity Account B ("Account") is registered under the Investment Com-
pany Act of 1940 as a unit investment trust. The Account is sold exclusively
for use with annuity contracts that may be entitled to tax-deferred treatment
under specific sections of the Internal Revenue Code of 1986, as amended.
The accompanying financial statements of the Account have been prepared in ac-
cordance with generally accepted accounting principles.
A. VALUATION OF INVESTMENTS
Investments in the following Funds are stated at the closing net asset
value per share as determined by each fund on December 31, 1994:
Aetna Variable Fund Insurance Management Series--
Aetna Income Shares Prime Money Fund
Aetna Variable Encore Fund Insurance Management Series--
Aetna Investment Advisers Fund, Utility Fund
Inc. Janus Aspen Series--Aggressive
Aetna GET Fund, Series B Growth Portfolio
Alger American Fund--Alger Janus Aspen Series--Flexible
American Small Capitalization Income Portfolio
Portfolio Janus Aspen Series--Growth
Calvert Socially Responsible Portfolio
Series Lexington Emerging Markets Fund,
Fidelity Investments Variable Inc.
Insurance Products Fund-- Lexington Natural Resources Trust
Equity-Income Portfolio Neuberger & Berman Advisers
Fidelity Investments Variable Management Trust--Growth
Insurance Products Fund-- Portfolio
Growth Portfolio Scudder Variable Life Investment
Insurance Management Series-- Fund--International Portfolio
Corporate Bond Fund TCI Portfolios, Inc.--TCI
Insurance Management Series-- Balanced
Equity Growth and Income Fund TCI Portfolios, Inc.--TCI Growth
Insurance Management Series--U.S. TCI Portfolios, Inc.--TCI
Government Bond Fund International
B. OTHER
Investment transactions are accounted for on a trade-date basis and divi-
dend income is recorded on the ex-dividend date. The cost of investments
sold is determined by specific identification.
C. FEDERAL INCOME TAXES
The operations of the Account form a part of, and are taxed with, the total
operations of Aetna Life Insurance and Annuity Company ("Company") which is
taxed as a life insurance company under the Internal Revenue Code of 1986,
as amended.
D. ANNUITY RESERVES
Annuity reserves held in the Separate Accounts are computed for currently
payable contracts according to the Progressive Annuity, a49, 1971 Individ-
ual Annuity Mortality, 1971 Group Annuity Mortality, 83a, and 1983 Group
Annuity Mortality tables using various assumed interest rates not to exceed
seven percent. Mortality experience is monitored by the Company. Charges to
annuity reserves for mortality experience are reimbursed to the Company if
the reserves required are less than originally estimated. If additional re-
serves are required, the Company reimburses the Account.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
NOTES TO FINANCIAL STATEMENTS (continued)
2. VALUATION PERIOD DEDUCTIONS
Deductions by the Account for mortality and expense risk charges are made in
accordance with the terms of the contracts and are paid to the Company.
3. DIVIDEND INCOME
On an annual basis, the Funds distribute substantially all of their taxable
income and realized capital gains to their shareholders. Distributions to the
Account are automatically reinvested in shares of the Funds. The Account's
proportionate share of the Funds' undistributed net investment income and
accumulated net realized gain (loss) on investments is included in net
unrealized loss in the Statement of Operations.
Dividends were received from the following Funds:
<TABLE>
<CAPTION>
DATE OF DIVIDEND SOURCE
FUND REINVESTMENT OF DIVIDENDS
---- ---------------- ------------
<S> <C> <C>
Aetna Variable Fund July 20, 1994 Net investment income and net
December 30, 1994 realized gains
-------------------------------------------------------------------------------
Aetna Income Shares July 20, 1994
December 30, 1994 Net investment income
-------------------------------------------------------------------------------
Aetna Variable Encore Fund July 20, 1994
December 30, 1994 Net investment income
-------------------------------------------------------------------------------
Aetna Investment Advisers July 20, 1994 Net investment income and net
Fund, Inc. December 30, 1994 realized gains
-------------------------------------------------------------------------------
Aetna Get Fund, Series B Net investment income and net
December 30, 1994 realized gains
-------------------------------------------------------------------------------
Alger American Fund--Alger
American Small
Capitalization Portfolio May 5, 1994 Net realized gains
-------------------------------------------------------------------------------
Calvert Socially Responsible
Series December 30, 1994 Net investment income
-------------------------------------------------------------------------------
Insurance Management October 21, 1994
Series--Corporate Bond November 21, 1994
Fund December 21, 1994 Net investment income
-------------------------------------------------------------------------------
Insurance Management
Series--Equity Growth and
Income Fund December 21, 1994 Net investment income
-------------------------------------------------------------------------------
Insurance Management October 21, 1994
Series--U.S. Government November 21, 1994
Bond Fund December 21, 1994 Net investment income
-------------------------------------------------------------------------------
Insurance Management November 30, 1994
Series--Prime Money Fund December 30, 1994 Net investment income
-------------------------------------------------------------------------------
Insurance Management October 21, 1994
Series--Utility Fund November 21, 1994
December 21, 1994 Net investment income
</TABLE>
<PAGE>
VARIABLE ANNUITY ACCOUNT B
NOTES TO FINANCIAL STATEMENTS (continued)
3. DIVIDEND INCOME (continued)
<TABLE>
<CAPTION>
DATE OF DIVIDEND SOURCE
FUND REINVESTMENT OF DIVIDENDS
---- ---------------- ------------
<S> <C> <C>
Janus Aspen Series--
Aggressive Growth
Portfolio December 29, 1994 Net investment income
-------------------------------------------------------------------------------
Janus Aspen Series--Flexible
Income Portfolio December 29, 1994 Net investment income
-------------------------------------------------------------------------------
Janus Aspen Series--Growth
Portfolio December 29, 1994 Net investment income
-------------------------------------------------------------------------------
Lexington Emerging Markets Net investment income and net
Fund, Inc. December 29, 1994 realized gains
-------------------------------------------------------------------------------
Lexington Natural Resources
Trust December 29, 1994 Net investment income
-------------------------------------------------------------------------------
Neuberger & Berman Advisers
Management Trust--Growth Net investment income and net
Portfolio February 11, 1994 realized gains
-------------------------------------------------------------------------------
Scudder Variable Life
Investment Fund--
International Portfolio February 28, 1994 Net investment income
-------------------------------------------------------------------------------
TCI Portfolios, Inc.--TCI September 24, 1994
Balanced December 16, 1994 Net investment income
-------------------------------------------------------------------------------
TCI Portfolios, Inc.--TCI April 8, 1994 Net investment income
Growth
</TABLE>
4. PURCHASES AND SALES OF INVESTMENTS
The cost of purchases and proceeds from sales of investments other than
short-term investments for the year ended December 31, 1994 aggregated
$342,561,371 and $213,403,512, respectively.
<PAGE>
Variable Annuity Account B
CONDENSED FINANCIAL INFORMATION
CHANGE IN VALUE OF ACCUMULATION UNIT -- JANUARY 1, 1994 TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
INCREASE
NET NET REALIZED (DECREASE)
VALUE AT INVESTMENT AND UNREALIZED VALUE AT IN VALUE OF ANNUITY UNIT
BEGINNING INCOME GAIN (LOSS) ON END OF ACCUMULATION VALUE AT END
OF YEAR (LOSS) INVESTMENTS YEAR UNIT OF YEAR (A)
--------- ---------- -------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND:
Non-Qualified 1964............. $117.426 $ 3.539 $(6.137) $114.828 (2.21%) $ --
Non-Qualified I................ 132.696 2.261 (5.119) 129.838 (2.15%) 48.373
Non-Qualified II............... 93.586 3.122 (5.193) 91.515 (2.21%) 46.528
Non-Qualified III.............. 89.593 3.170 (5.125) 87.638 (2.18%) --
---------------------------------------------------------------------------------------------------------
AETNA INCOME SHARES:
Non-Qualified I................ $ 41.562 $ 0.774 $(2.822) $ 39.514 (4.93%) $21.717
Non-Qualified II............... 43.469 0.870 (3.037) 41.302 (4.99%) 24.646
Non-Qualified III.............. 42.014 0.887 (2.982) 39.919 (4.99%) --
---------------------------------------------------------------------------------------------------------
AETNA VARIABLE ENCORE FUND:
Non-Qualified I................ $ 34.957 $ 0.147 $ 0.854 $ 35.958 2.86% $ --
Non-Qualified II............... 35.605 0.244 0.753 36.602 2.80% --
Non-Qualified III.............. 33.511 0.270 0.669 34.450 2.80% --
---------------------------------------------------------------------------------------------------------
AETNA INVESTMENT ADVISERS FUND, INC.:
Non-Qualified I................ $ 14.543 $ 0.347 $(0.591) $ 14.299 (1.68%) $11.326
Non-Qualified II............... 14.503 0.348 (0.599) 14.252 (1.73%) 11.296
Non-Qualified III.............. 14.462 0.348 (0.592) 14.218 (1.69%) --
---------------------------------------------------------------------------------------------------------
TCI PORTFOLIOS, INC--TCI GROWTH:
Non-Qualified II............... $ 10.473 $(0.124) $(0.136) $ 10.213 (2.48%) $ --
Non-Qualified III.............. 10.373 (0.123) (0.127) 10.123 (2.41%) --
---------------------------------------------------------------------------------------------------------
</TABLE>
Condensed financial information for Aetna GET Fund, Series B, Alger American
Fund--Alger American Small Capitalization Portfolio, Calvert Socially
Responsible Series, Fidelity Investments Variable Insurance Products Fund--
Equity--Income Portfolio, Fidelity Investments Variable Insurance Products
Fund--Growth Portfolio, Insurance Management Series--Corporate Bond Fund,
Insurance Management Series--Equity Growth and Income Fund, Insurance
Management Series--U.S. Government Bond Fund, Insurance Management Series--
Prime Money Fund, Insurance Management Series--Utility Fund, Janus Aspen
Series--Aggressive Growth Portfolio, Janus Aspen Series--Flexible Income
Portfolio, Janus Aspen Series--Growth Portfolio, Lexington Emerging Markets
Fund, Inc., Lexington Natural Resources Trust, Neuberger & Berman Advisers
Management Trust--Growth Portfolio, Scudder Variable Life Investment Fund--
International Portfolio, TCI Portfolios, Inc.--TCI Balanced, TCI Portfolios,
Inc.--International has been omitted as it only pertains to those individuals
in the Aetna Growth Plus and Marathon Plus programs.
NON-QUALIFIED 1964 Individual contracts issued from December 1, 1964 to
March 14, 1967.
NON-QUALIFIED I Individual contracts issued in connection with deferred
compensation plans from March 15, 1967 through April 30,
1975; other individual contracts issued from March 15, 1967
through October 31, 1975; and group contracts issued from
March 15, 1967 to December 31, 1975.
NON-QUALIFIED II Individual contracts issued in connection with deferred
compensation plans since May 1, 1975; other individual
contracts issued since November 1, 1975; and group
contracts issued since January 1, 1976.
NON-QUALIFIED III Group contracts issued in connection with deferred
compensation plans for tax-exempt organizations
(non-governmental only) since May 3, 1982.
(a) The annuity unit is a statistical device used to calculate variable annuity
payments. Each variable annuity payment is determined by multiplying the
current annuity unit value by the number of annuity units credited to the
annuitant at the commencement of the annuity period. At this time, only
Aetna Variable Fund, Aetna Income Shares and Aetna Investment Advisers Fund,
Inc. are available for variable annuity payments.
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Consolidated Financial Statements:
Consolidated Statements of Income for the Years Ended December 31, 1994,
1993 and 1992.......................................................... F-3
Consolidated Balance Sheets as of December 31, 1994 and 1993............ F-4
Consolidated Statements of Shareholder's Equity for the Years Ended
December 31, 1994, 1993 and 1992....................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1994, 1993 and 1992.................................................... F-6
Notes to Consolidated Financial Statements.............................. F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Shareholder and Board of Directors
Aetna Life Insurance and Annuity Company:
We have audited the accompanying consolidated balance sheets of Aetna Life
Insurance and Annuity Company and Subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of income, changes in
shareholder's equity and cash flows for each of the years in the three-year
period ended December 31, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Aetna Life
Insurance and Annuity Company and Subsidiaries at December 31, 1994 and 1993,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1993 the
Company changed its methods of accounting for certain investments in debt and
equity securities and reinsurance contracts. In 1992, the Company changed its
method of accounting for income taxes and postretirement benefits other than
pensions.
KPMG Peat Marwick LLP
Hartford, Connecticut
February 7, 1995
F-2
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED STATEMENTS OF INCOME
(MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Premiums......................................... $ 124.2 $ 82.1 $ 72.5
Charges assessed against policyholders........... 279.0 251.5 235.4
Net investment income............................ 917.2 911.9 848.1
Net realized capital gains....................... 1.5 9.5 13.4
Other income..................................... 10.3 9.5 6.7
-------- -------- --------
Total revenue.................................. 1,332.2 1,264.5 1,176.1
-------- -------- --------
Benefits and expenses:
Current and future benefits...................... 852.4 806.4 761.6
Operating expenses............................... 227.2 201.3 213.5
Amortization of deferred policy acquisition
costs........................................... 36.1 37.7 32.9
-------- -------- --------
Total benefits and expenses.................... 1,115.7 1,045.4 1,008.0
-------- -------- --------
Income before federal income taxes and cumulative
effect adjustments................................ 216.5 219.1 168.1
Federal income taxes............................. 71.2 76.2 54.9
-------- -------- --------
Income before cumulative effect adjustments........ 145.3 142.9 113.2
Cumulative effect adjustments, net of tax:
Change in accounting for income taxes............ -- -- 22.8
Change in accounting for postretirement benefits
other than pensions............................. -- -- (13.2)
-------- -------- --------
Net income......................................... $ 145.3 $ 142.9 $ 122.8
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED BALANCE SHEETS
(MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
ASSETS 1994 1993
------ --------- ---------
<S> <C> <C>
Investments:
Debt securities, available for sale:
(amortized cost: $10,577.8 and $9,783.9).................... $10,191.4 $10,531.0
Equity securities, available for sale:
Non-redeemable preferred stock (cost: $43.3 and $38.3)...... 47.2 45.9
Investment in affiliated mutual funds (cost: $187.2 and
$122.4).................................................... 181.9 126.7
Short-term investments....................................... 98.0 22.6
Mortgage loans............................................... 9.9 10.1
Policy loans................................................. 248.7 202.7
Limited partnership.......................................... 24.4 --
--------- ---------
Total investments........................................ 10,801.5 10,939.0
Cash and cash equivalents...................................... 623.3 536.1
Accrued investment income...................................... 142.2 124.7
Premiums due and other receivables............................. 75.8 67.0
Deferred policy acquisition costs.............................. 1,172.0 1,061.0
Reinsurance loan to affiliate.................................. 690.3 711.0
Other assets................................................... 15.9 12.6
Separate Accounts assets....................................... 7,420.8 6,684.3
--------- ---------
Total assets............................................. $20,941.8 $20,135.7
========= =========
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
<S> <C> <C>
Liabilities:
Future policy benefits....................................... $ 2,968.1 $ 2,741.8
Unpaid claims and claim expenses............................. 23.8 27.2
Policyholders' funds left with the Company................... 8,901.6 9,003.9
--------- ---------
Total insurance liabilities.............................. 11,893.5 11,698.7
Other liabilities............................................ 302.1 229.7
Federal income taxes:
Current.................................................... 3.4 40.6
Deferred................................................... 233.5 161.5
Separate Accounts liabilities................................ 7,420.8 6,684.3
--------- ---------
Total liabilities........................................ 19,853.3 18,889.0
--------- ---------
Shareholder's equity:
Common capital stock, par value $50 (100,000 shares autho-
rized; 55,000 shares issued and outstanding)................ 2.8 2.8
Paid-in capital.............................................. 407.6 407.6
Net unrealized capital gains (losses)........................ (189.0) 114.5
Retained earnings............................................ 867.1 721.8
--------- ---------
Total shareholder's equity............................... 1,088.5 1,246.7
--------- ---------
Total liabilities and shareholder's equity............... $20,941.8 $20,135.7
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1994 1993 1992
-------- -------- ------
<S> <C> <C> <C>
Shareholder's equity, beginning of year.............. $1,246.7 $ 990.1 $867.4
Net change in unrealized capital gains (losses)...... (303.5) 113.7 (0.1)
Net income........................................... 145.3 142.9 122.8
-------- -------- ------
Shareholder's equity, end of year.................... $1,088.5 $1,246.7 $990.1
======== ======== ======
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income.................................. $ 145.3 $ 142.9 $ 122.8
Cumulative effect adjustments............... -- -- (9.6)
Increase in accrued investment income....... (17.5) (11.1) (8.7)
(Increase) decrease in premiums due and
other receivables.......................... 1.3 (5.6) (19.9)
Increase in policy loans.................... (46.0) (36.4) (32.4)
Increase in deferred policy acquisition
costs...................................... (96.5) (60.5) (60.8)
Decrease in reinsurance loan to affiliate... 27.8 31.8 37.8
Net increase in universal life account
balances................................... 164.7 126.4 130.8
Increase in other insurance reserve
liabilities................................ 65.7 86.1 20.5
Net increase in other liabilities and other
assets..................................... 53.9 7.0 20.2
Decrease in federal income taxes............ (11.7) (3.7) (11.8)
Net accretion of discount on bonds.......... (77.9) (88.1) (75.2)
Net realized capital gains.................. (1.5) (9.5) (13.4)
Other, net.................................. (1.0) 0.2 (0.2)
--------- --------- ---------
Net cash provided by operating activities. 206.6 179.5 100.1
--------- --------- ---------
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale........ 3,593.8 473.9 543.3
Equity securities......................... 93.1 89.6 50.6
Investment maturities and collections of:
Debt securities available for sale........ 1,289.2 2,133.3 1,179.2
Short-term investments.................... 30.4 19.7 5.0
Cost of investment purchases in:
Debt securities........................... (5,621.4) (3,669.2) (2,612.2)
Equity securities......................... (162.5) (157.5) (63.0)
Short-term investments.................... (106.1) (41.3) (5.0)
Limited partnership....................... (25.0) -- --
--------- --------- ---------
Net cash used for investing activities.. (908.5) (1,151.5) (902.1)
--------- --------- ---------
Cash Flows from Financing Activities:
Deposits and interest credited for
investment contracts....................... 1,737.8 2,117.8 1,619.6
Withdrawals of investment contracts......... (948.7) (1,000.3) (767.7)
--------- --------- ---------
Net cash provided by financing
activities............................. 789.1 1,117.5 851.9
--------- --------- ---------
Net increase in cash and cash equivalents..... 87.2 145.5 49.9
Cash and cash equivalents, beginning of year.. 536.1 390.6 340.7
--------- --------- ---------
Cash and cash equivalents, end of year........ $ 623.3 $ 536.1 $ 390.6
========= ========= =========
Supplemental cash flow information:
Income taxes paid, net...................... $ 82.6 $ 79.9 $ 54.0
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993, AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include Aetna Life Insurance and Annuity
Company and its wholly owned subsidiaries, Aetna Insurance Company of America,
Systematized Benefits Administrators, Inc., Aetna Private Capital, Inc. and
Aetna Investment Services, Inc. (collectively, the "Company"). Aetna Life
Insurance and Annuity Company is a wholly owned subsidiary of Aetna Life and
Casualty Company ("Aetna").
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. Intercompany transactions have been
eliminated. Certain reclassifications have been made to 1993 and 1992 financial
information to conform to the 1994 presentation.
The Company offers a wide range of life insurance products and annuity
contracts with variable and fixed accumulation and payout options. The Company
also provides investment advisory and other services to affiliated mutual
funds.
Accounting Changes
Accounting for Certain Investments in Debt and Equity Securities
On December 31, 1993, the Company adopted Financial Accounting Standard ("FAS")
No. 115, Accounting for Certain Investments in Debt and Equity Securities,
which requires the classification of debt securities into three categories:
"held to maturity", which are carried at amortized cost; "available for sale",
which are carried at fair value with changes in fair value recognized as a
component of shareholder's equity; and "trading", which are carried at fair
value with immediate recognition in income of changes in fair value.
Initial adoption of this standard resulted in a net increase of $106.8 million,
net of taxes of $57.5 million, to net unrealized gains in shareholder's equity.
These amounts exclude gains and losses allocable to experience-rated (including
universal life) contractholders. Adoption of FAS No. 115 did not have a
material effect on deferred policy acquisition costs.
Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration
Contracts
During 1993, the Company adopted FAS No. 113, Accounting and Reporting for
Reinsurance of Short-Duration and Long-Duration Contracts, retroactive to
January 1, 1993. Reinsurance recoverables (previously reported as a reduction
in insurance reserve liabilities) and reinsurance receivables and ceded
unearned premiums are included in premiums due and other receivables. The
adoption of FAS No. 113 did not have a material impact on the Company's 1993
Consolidated Financial Statements.
Accounting for Income Taxes
The Company adopted FAS No. 109, Accounting for Income Taxes, in 1992,
retroactive to January 1, 1992. A cumulative effect benefit of $22.8 million
related to the adoption of this standard is reflected in the 1992 Consolidated
Statement of Income.
F-7
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Postretirement Benefits Other Than Pensions
FAS No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, required that employers accrue the cost and recognize the liability
for providing non-pension benefits to retired employees and agents. Aetna and
the Company implemented FAS No. 106 in 1992, retroactive to January 1, 1992 on
the immediate recognition basis. The cumulative effect charge for all Aetna
employees was reflected in Aetna's 1992 Statement of Income. A cumulative
effect charge of $13.2 million, net of taxes of $7.1 million, related to the
adoption of this standard for Company agents is reflected in the Company's 1992
Consolidated Statement of Income.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with a maturity of ninety days or less when purchased.
Investments
Debt Securities
At December 31, 1994 and 1993, all of the Company's debt securities are
classified as available for sale and carried at fair value. These securities
are written down (as realized losses) for other than temporary decline in
value. Unrealized gains and losses related to these securities, after deducting
amounts allocable to experience-rated contractholders and related taxes, are
reflected in shareholder's equity.
Fair values for debt securities are based on quoted market prices or dealer
quotations. Where quoted market prices or dealer quotations are not available,
fair values are measured utilizing quoted market prices for similar securities
or by using discounted cash flow methods. Cost for mortgage-backed securities
is adjusted for unamortized premiums and discounts, which are amortized using
the interest method over the estimated remaining term of the securities,
adjusted for anticipated prepayments.
Purchases and sales of debt securities are recorded on the trade date.
Equity Securities
Equity securities are classified as available for sale and carried at fair
value based on quoted market prices or dealer quotations. Equity securities are
written down (as realized losses) for other than temporary declines in value.
Unrealized gains and losses related to such securities are reflected in
shareholder's equity. Purchases and sales are recorded on the trade date.
The investment in affiliated mutual funds represents an investment in the Aetna
Series Fund, Inc., a retail mutual fund which has been seeded by the Company,
and is carried at fair value.
Mortgage Loans and Policy Loans
Mortgage loans and policy loans are carried at unpaid principal balances net of
valuation reserves, which approximates fair value, and are generally secured.
Purchases and sales of mortgage loans are recorded on the closing date.
F-8
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Limited Partnership
The Company's limited partnership investment is carried at the amount invested
plus the Company's share of undistributed operating results and unrealized
gains (losses), which approximates fair value.
Short-Term Investments
Short-term investments, consisting primarily of money market instruments and
other debt issues purchased with an original maturity of over ninety days and
less than one year, are considered available for sale and are carried at fair
value, which approximates amortized cost.
Deferred Policy Acquisition Costs
Certain costs of acquiring insurance business have been deferred. These costs,
all of which vary with and are primarily related to the production of new
business, consist principally of commissions, certain expenses of underwriting
and issuing contracts and certain agency expenses. For fixed ordinary life
contracts, such costs are amortized over expected premium-paying periods. For
universal life and certain annuity contracts, such costs are amortized in
proportion to estimated gross profits and adjusted to reflect actual gross
profits. These costs are amortized over twenty years for annuity pension
contracts, and over the contract period for universal life contracts. Deferred
policy acquisition costs are written off to the extent that it is determined
that future policy premiums and investment income or gross profits would not be
adequate to cover related losses and expenses.
Insurance Reserve Liabilities
The Company's liabilities include reserves related to fixed ordinary life,
fixed universal life and fixed annuity contracts. Reserves for future policy
benefits for fixed ordinary life contracts are computed on the basis of assumed
investment yield, assumed mortality, withdrawals and expenses, including a
margin for adverse deviation, which generally vary by plan, year of issue and
policy duration. Reserve interest rates range from 2.25% to 10.50%. Assumed
investment yield is based on the Company's experience. Mortality and withdrawal
rate assumptions are based on relevant Aetna experience and are periodically
reviewed against both industry standards and experience.
Reserves for fixed universal life (included in Future Policy Benefits) and
fixed deferred annuity contracts (included in Policyholders' Funds Left With
the Company) are equal to the fund value. The fund value is equal to cumulative
deposits less charges plus credited interest thereon, without reduction for
possible future penalties assessed on premature withdrawal. For guaranteed
interest options, the interest credited ranged from 4.00% to 5.85% in 1994 and
4.00% to 7.68% in 1993. For all other fixed options, the interest credited
ranged from 5.00% to 7.50% in 1994 and 5.00% to 9.25% in 1993.
Reserves for fixed annuity contracts in the annuity period and for future
amounts due under settlement options are computed actuarially using the
Progressive Annuity Table (modified), the Annuity Table for 1949, the 1971
Individual Annuity Mortality Table, the 1971 Group Annuity Mortality Table, the
1983 Individual Annuity Mortality Table and the 1983 Group Annuity Mortality
Table, at assumed interest rates ranging from 3.5% to 9.5%. Reserves relating
to contracts with life contingencies are included in Future Policy Benefits.
For other contracts, the reserves are reflected in Policyholders' Funds Left
With the Company.
F-9
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Unpaid claims for all lines of insurance include benefits for reported losses
and estimates of benefits for losses incurred but not reported.
Premiums, Charges Assessed Against Policyholders, Benefits and Expenses
Premiums are recorded as revenue when due for fixed ordinary life contracts.
Charges assessed against policyholders' funds for cost of insurance, surrender
charges, actuarial margin and other fees are recorded as revenue for universal
life and certain annuity contracts. Policy benefits and expenses are recorded
in relation to the associated premiums or gross profit so as to result in
recognition of profits over the expected lives of the contracts.
Separate Accounts
Assets held under variable universal life, variable life and variable annuity
contracts are segregated in Separate Accounts and are invested, as designated
by the contractholder or participant under a contract, in shares of Aetna
Variable Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna
Investment Advisers Fund, Inc., Aetna GET Fund, or The Aetna Series Fund Inc.,
which are managed by the Company or other selected mutual funds not managed by
the Company.
Separate Accounts assets and liabilities are carried at fair value except for
those relating to a guaranteed interest option which is offered through a
Separate Account. The assets of the Separate Account supporting the guaranteed
interest option are carried at an amortized cost of $149.7 million for 1994
(fair value $146.3 million) and $31.2 million for 1993 (fair value $33.3
million), since the Company bears the investment risk where the contract is
held to maturity. Reserves relating to the guaranteed interest option are
maintained at fund value and reflect interest credited at rates ranging from
4.5% to 8.38% in 1994 and from 4% to 9.45% in 1993. Separate Accounts assets
and liabilities are shown as separate captions in the Consolidated Balance
Sheets. Deposits, investment income and net realized and unrealized capital
gains (losses) of the Separate Accounts are not reflected in the Consolidated
Statements of Income (with the exception of realized capital gains (losses) on
the sale of assets supporting the guaranteed interest option). The Consolidated
Statements of Cash Flows do not reflect investment activity of the Separate
Accounts.
Federal Income Taxes
The Company is included in the consolidated federal income tax return of Aetna.
The Company is taxed at regular corporate rates after adjusting income reported
for financial statement purposes for certain items. Deferred income tax
benefits result from changes during the year in cumulative temporary
differences between the tax basis and book basis of assets and liabilities.
F-10
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. INVESTMENTS
Investments in debt securities available for sale as of December 31, 1994 were
as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obliga-
tions of U.S government agencies and
corporations........................ $ 1,396.1 $ 2.0 $ 84.2 $ 1,313.9
Obligations of states and political
subdivisions........................ 37.9 1.2 -- 39.1
U.S. Corporate securities:
Financial.......................... 2,216.9 3.8 109.4 2,111.3
Utilities.......................... 100.1 -- 7.9 92.2
Other.............................. 1,344.3 6.0 67.9 1,282.4
--------- ------ ------ ---------
Total U.S. Corporate securities.. 3,661.3 9.8 185.2 3,485.9
Foreign securities:
Government......................... 434.4 1.2 33.9 401.7
Financial.......................... 368.2 1.1 23.0 346.3
Utilities.......................... 204.4 2.5 9.5 197.4
Other.............................. 46.3 0.8 1.5 45.6
--------- ------ ------ ---------
Total Foreign securities......... 1,053.3 5.6 67.9 991.0
Residential mortgage-backed securi-
ties:
Residential pass-throughs.......... 627.1 81.5 5.0 703.6
Residential CMOs................... 2,671.0 32.9 139.4 2,564.5
--------- ------ ------ ---------
Total Residential mortgage-backed se-
curities............................ 3,298.1 114.4 144.4 3,268.1
Commercial/Multifamily mortgage-
backed securities................... 435.0 0.2 21.3 413.9
--------- ------ ------ ---------
Total Mortgage-backed securities. 3,733.1 114.6 165.7 3,682.0
Other loan-backed securities......... 696.1 0.2 16.8 679.5
--------- ------ ------ ---------
Total debt securities available for
sale................................ $10,577.8 $133.4 $519.8 $10,191.4
========= ====== ====== =========
</TABLE>
F-11
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Investments in debt securities available for sale as of December 31, 1993
were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obliga-
tions of U.S. government agencies
and corporations.................... $ 827.2 $ 19.4 $ 6.6 $ 840.0
Obligations of states and political
subdivisions........................ 0.5 -- -- 0.5
U.S. Corporate securities:
Financial.......................... 983.3 49.2 0.7 1,031.8
Utilities.......................... 141.2 12.4 -- 153.6
Other.............................. 704.3 51.6 2.3 753.6
-------- ------ ----- ---------
Total U.S. Corporate securi-
ties.......................... 1,828.8 113.2 3.0 1,939.0
Foreign securities:
Government......................... 289.1 31.7 0.5 320.3
Financial.......................... 365.8 18.5 0.9 383.4
Utilities.......................... 206.2 28.9 0.1 235.0
Other.............................. 30.4 1.3 0.8 30.9
-------- ------ ----- ---------
Total Foreign securities....... 891.5 80.4 2.3 969.6
Residential mortgage-backed securi-
ties:
Residential pass-throughs.......... 1,125.0 218.1 1.7 1,341.4
Residential CMOs................... 4,868.7 318.1 1.1 5,185.7
-------- ------ ----- ---------
Total Residential mortgage-backed se-
curities............................ 5,993.7 536.2 2.8 6,527.1
Commercial/Multifamily mortgage-
backed securities................... 193.0 13.4 0.8 205.6
-------- ------ ----- ---------
Total Mortgage-backed securi-
ties.......................... 6,186.7 549.6 3.6 6,732.7
Other loan-backed securities......... 49.2 0.2 0.2 49.2
-------- ------ ----- ---------
Total debt securities available for
sale................................ $9,783.9 $762.8 $15.7 $10,531.0
======== ====== ===== =========
</TABLE>
At December 31, 1994 and 1993, net unrealized appreciation (depreciation) of
$(386.4) million and $747.1 million, respectively, on available for sale debt
securities included $(308.6) million and $582.8 million, respectively, related
to experience-rated contractholders, which were not included in shareholder's
equity.
F-12
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The amortized cost and fair value of debt securities for the year ended
December 31, 1994 are shown below by contractual maturity. Actual maturities
may differ from contractual maturities because securities may be restructured,
called, or prepaid.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- ---------
(millions)
<S> <C> <C>
Due to mature:
One year or less................................... $ 103.9 $ 103.5
After one year through five years.................. 1,965.6 1,920.0
After five years through ten years................. 2,371.3 2,207.0
After ten years.................................... 1,707.8 1,599.4
Mortgage-backed securities......................... 3,733.1 3,682.0
Other loan-backed securities....................... 696.1 679.5
--------- ---------
Total............................................ $10,577.8 $10,191.4
========= =========
</TABLE>
At December 31, 1994 and 1993, debt securities carried at $7.0 million and $7.3
million, respectively, were on deposit as required by regulatory authorities.
The valuation reserve for mortgage loans was $3.1 million and $4.2 million at
December 31, 1994 and 1993, respectively. The carrying value of non-income
producing investments was $0.2 million and $34.3 million at December 31, 1994
and 1993, respectively.
Investments in a single issuer, other than obligations of the U.S. government,
with a carrying value in excess of 10% of the Company's shareholder's equity at
December 31, 1994 are as follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR
DEBT SECURITIES COST VALUE
--------------- --------- ------
(millions)
<S> <C> <C>
General Electric Capital Corporation.................... $264.9 $252.1
General Motors Corporation.............................. 167.8 161.7
Society National Bank................................... 152.8 143.7
Ford Motor Company...................................... 144.7 142.3
Associates Corporation of North America................. 132.9 131.1
First Deposit Master Trust 1994-1A...................... 114.9 112.1
</TABLE>
The portfolio of debt securities at December 31, 1994 and 1993 included $318
million and $329 million, respectively, (3% of the debt securities for both
years) of investments that are considered "below investment grade". "Below
investment grade" securities are defined to be securities that carry a rating
below BBB-/Baa3, by Standard & Poors/Moody's Investor Services, respectively.
Of these below investment grade assets, $32 million and $39 million, at
December 31, 1994 and 1993, respectively, were investments that were purchased
at investment grade, but whose ratings have since been downgraded.
Included in residential mortgage-back securities are collateralized mortgage
obligations ("CMOs") with carrying values of $2.6 billion and $5.2 billion at
December 31, 1994 and 1993, respectively. The $2.6 billion decline in CMOs from
December 31, 1993 to December 31, 1994 was related primarily to sales
F-13
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
and principal repayments. CMO sales of $1.6 billion resulted in net realized
capital gains of $35 million of which $23 million was allocated to experience-
rated contracts. The Company's CMO exposure was reduced as a result of changes
in their risk and return characteristics and to better diversify the risk
profile of the Company's assets. The principal risks inherent in holding CMOs
are prepayment and extension risks related to dramatic decreases and increases
in interest rates whereby the CMOs would be subject to repayments of principal
earlier or later than originally anticipated. At December 31, 1994 and 1993,
approximately 85% and 93%, respectively, of the Company's CMO holdings
consisted of sequential and planned amortization class ("PAC") debt securities
which are subject to less prepayment and extension risk than other CMO
instruments. At December 31, 1994 and 1993, approximately 82% of the Company's
CMO holdings were collateralized by residential mortgage loans, on which the
timely payment of principal and interest was backed by specified government
agencies (e.g., GNMA, FNMA, FHLMC).
If due to declining interest rates, principal was to be repaid earlier than
originally anticipated, the Company could be affected by a decrease in
investment income due to the reinvestment of these funds at a lower interest
rate. Such prepayments may result in a duration mismatch between assets and
liabilities which could be corrected as cash from prepayments could be
reinvested at an appropriate duration to adjust the mismatch.
Conversely, if due to increasing interest rates, principal was to be repaid
slower than originally anticipated, the Company could be affected by a decrease
in cash flow which reduces the ability to reinvest expected principal
repayments at higher interest rates. Such slower payments may result in a
duration mismatch between assets and liabilities which could be corrected as
available cash flow could be reinvested at an appropriate duration to adjust
the mismatch.
At December 31, 1994 and 1993, 4% and 3%, respectively, of the Company's CMO
holdings consisted of interest-only strips (IOs) or principal-only strips
(POs). IOs receive payments of interest and POs receive payments of principal
on the underlying pool of mortgages. The risk inherent in holding POs is
extension risk related to dramatic increases in interest rates whereby the
future payments due on POs could be repaid much slower than originally
anticipated. The extension risks inherent in holding POs, PACs and sequentials
was mitigated by purchasing offsetting positions in IOs. During dramatic
increases in interest rates, IOs would generate more future payments than
originally anticipated.
The risk inherent in holding IOs is prepayment risk related to dramatic
decreases in interest rates whereby future IO cash flows could be much less
than originally anticipated and in some cases could be less than the original
cost of the IO. The risks inherent in IOs are mitigated by holding offsetting
positions in PO's, PACs, and sequentials. During dramatic decreases in interest
rates POs, PACs and sequentials would generate future cash flows much quicker
than originally anticipated.
In 1993, due to declining interest rates and prepayments on the underlying pool
of mortgages, the amortized cost on IO's was written down by $85.4 million. IO
writedowns of $4.7 million, net of $80.7 million allocated to experience-rated
contracts, were reflected in 1993 net realized capital gains (losses). In 1994,
due to increasing interest rates, unrealized gains on IO's increased from $0.5
million at December 31, 1993 to $17.8 million at December 31, 1994. Conversely,
unrealized gains on POs decreased from $36.7 million at December 31, 1993 to
$5.3 million at December 31, 1994. 1994 net realized gains (losses) included
net gains of $10.0 million as a result of sales of IOs and POs (including
amounts allocated to experience-rated contractholders).
F-14
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company did not use derivative instruments (ie., futures, forward
contracts, interest swaps, etc.) for hedging or any other purposes in 1994 or
1993.
The Company does hold investments in certain debt and equity securities with
derivative characteristics (ie., including the fact that their market value is
at least partially determined by, among other things, levels of or changes in
interest rates, prepayment rates, equity markets or credit ratings/spreads).
The amortized cost and fair value of these securities, included in the $10.8
billion investment portfolio, as of December 31, 1994 was as follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- --------
(millions)
<S> <C> <C>
Collateralized mortgage obligations (including
interest-only and principal-only strips)............ $2,671.0 $2,564.5
Treasury and agency strips:
Principal.......................................... 20.7 21.6
Interest........................................... 104.2 90.2
Mandatorily convertible preferred stock.............. 12.1 11.6
</TABLE>
Investments in available for sale equity securities were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------- ---------- ---------- -------
(millions)
<S> <C> <C> <C> <C>
1994
Equity Securities...................... $ 230.5 $ 6.5 $7.9 $ 229.1
------- ----- ---- -------
1993
Equity Securities...................... $ 160.7 $12.0 $0.1 $ 172.6
------- ----- ---- -------
</TABLE>
At December 31, 1994 and 1993, 91% of outstanding policy loans had fixed
interest rates. The fixed interest rates for annuity policy loans ranged from
1% to 3% for individual annuity policies in both 1994 and 1993. The fixed
interest rates for individual life policy loans ranged from 5% to 8% in 1994
and 6% to 8% in 1993. The remaining outstanding policy loans had variable
interest rates averaging 8% in 1994 and 1993. Investment income from policy
loans was $11.5 million, $10.8 million and $9.5 million in 1994, 1993 and 1992,
respectively.
Off-Balance Sheet Financial Instruments
At December 31, 1993, the Company had $149.0 million in outstanding forward
commitments to purchase mortgage-backed securities at a specified future date
and at a specified price or yield. These instruments involve elements of market
risk whereby future changes in market prices may make a financial instrument
less valuable. However, the difference between the fair value at which the
commitments can be settled, and the contractual value of these securities, was
immaterial at December 31, 1993. There were no outstanding forward commitments
at December 31, 1994.
There were no material concentrations of off-balance sheet financial
instruments at December 31, 1994 and 1993.
F-15
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS
Realized capital gains or losses are the difference between proceeds received
from investments sold or prepaid, and amortized cost. Net realized capital
gains as reflected in the Consolidated Statements of Income are after
deductions for net realized capital gains (losses) allocated to experience-
rated contracts of $(29.1) million, $(54.8) million and $36.1 million for the
years ended December 31, 1994, 1993, and 1992, respectively. Net realized
capital gains (losses) allocated to experience-rated contracts are deferred and
subsequently reflected in credited rates on an amortized basis. Net unamortized
gains (losses), reflected as a component of Policyholders' Funds Left With the
Company, were $(50.7) million and $(16.5) million at the end of December 31,
1994 and 1993, respectively.
Changes to the mortgage loan valuation reserve and writedowns on debt
securities are included in net realized capital gains (losses) and amounted to
$1.1 million and $(98.5) million, of which $0.8 million and $(91.5) million
were allocable to experience-rated contractholders, for the years ended
December 31, 1994 and 1993, respectively. There were no changes to the
valuation reserve or writedowns in 1992. The 1993 losses were primarily related
to writedowns of interest-only mortgage-backed securities to their fair value.
Net realized capital gains (losses) on investments, net of amounts allocated to
experience-rated contracts, were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- -----
(millions)
<S> <C> <C> <C>
Debt securities............................................ $1.0 $9.6 $12.9
Equity securities.......................................... 0.2 .1 0.5
Mortgage loans............................................. 0.3 (0.2) --
---- ---- -----
Pretax realized capital gains.............................. $1.5 $9.5 $13.4
==== ==== =====
After-tax realized capital gains........................... $1.0 $6.2 $ 8.8
==== ==== =====
</TABLE>
Gross gains of $26.6 million, $33.3 million and $13.9 million and gross losses
of $25.6 million, $23.7 million and $1.0 million were realized from the sales
of investments in debt securities in 1994, 1993 and 1992, respectively.
Changes in unrealized capital gains (losses), excluding changes in unrealized
capital gains (losses) related to experience-rated contracts, for the years
ended December 31, were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ -----
(millions)
<S> <C> <C> <C>
Debt securities...................................... $(242.1) $164.3 $ --
Equity securities.................................... (13.3) 10.6 (0.1)
Limited partnership.................................. (1.8) -- --
------- ------ -----
(257.2) 174.9 (0.1)
Deferred federal income taxes (See Note 6)........... 46.3 61.2 --
------- ------ -----
Net change in unrealized capital gains (losses)...... $(303.5) $113.7 $(0.1)
======= ====== =====
</TABLE>
The net change in unrealized capital gains (losses) on debt securities in 1994
and 1993 resulted from the adoption of FAS No. 115. For the year ended December
31, 1992, debt securities were carried at
F-16
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
amortized cost. The unrecorded net appreciation for debt securities carried at
amortized cost (including amounts allocable to experience-rated contracts)
amounted to $612.4 million at December 31, 1992.
Net unrealized capital gains (losses) allocable to experience-rated contracts
of $(308.6) million and $582.8 million at December 31, 1994 and 1993,
respectively, are not included in shareholder's equity. These amounts are
reflected on the Consolidated Balance Sheet in policyholders' funds left with
the Company.
Shareholder's equity included the following unrealized capital gains (losses),
which are net of amounts allocable to experience-rated contractholders, at
December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ ------
(millions)
<S> <C> <C> <C>
Debt securities
Gross unrealized capital gains.................... $ 27.4 $164.3 $ --
Gross unrealized capital losses................... (105.2) -- --
------- ------ ------
(77.8) 164.3 --
Equity securities
Gross unrealized capital gains.................... 6.5 12.0 2.0
Gross unrealized capital losses................... (7.9) (0.1) (0.7)
------- ------ ------
(1.4) 11.9 1.3
Limited Partnership
Gross unrealized capital gains.................... -- -- --
Gross unrealized capital losses................... (1.8) -- --
------- ------ ------
(1.8) -- --
Deferred federal income taxes (See Note 6).......... 108.0 61.7 0.5
------- ------ ------
Net unrealized capital gains (losses)............... $(189.0) $114.5 $ 0.8
======= ====== ======
</TABLE>
4. NET INVESTMENT INCOME
Sources of net investment income were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(millions)
<S> <C> <C> <C>
Debt securities.................................. $823.9 $828.0 $763.7
Preferred stock.................................. 3.9 2.3 2.8
Investment in affiliated mutual funds............ 5.2 2.9 3.2
Mortgage loans................................... 1.4 1.5 1.8
Policy loans..................................... 11.5 10.8 9.5
Reinsurance loan to affiliate.................... 51.5 53.3 56.7
Cash equivalents................................. 29.5 16.8 16.6
Other............................................ 6.7 7.7 6.4
------ ------ ------
Gross investment income.......................... 933.6 923.3 860.7
Less investment expenses......................... (16.4) (11.4) (12.6)
------ ------ ------
Net investment income............................ $917.2 $911.9 $848.1
====== ====== ======
</TABLE>
F-17
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Net investment income includes amounts allocable to experience-rated
contractholders of $677.1 million, $661.3 million and $604.0 million for the
years ended December 31, 1994, 1993 and 1992, respectively. Interest credited
to contractholders is included in Current and Future Benefits.
5. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY
The amount of dividends that may be paid to the shareholder in 1995 without
prior approval by the Insurance Commissioner of the State of Connecticut is
$70.9 million.
The Insurance Department of the State of Connecticut (the "Department")
recognizes as net income and shareholder's equity those amounts determined in
conformity with statutory accounting practices prescribed or permitted by the
Department, which differ in certain respects from generally accepted accounting
principles. Statutory net income was $70.9 million, $77.6 million and $62.5
million for the years ended December 31, 1994, 1993 and 1992, respectively.
Statutory shareholder's equity was $615.0 million and $574.4 million as of
December 31, 1994 and 1993, respectively.
As of December 31, 1994, the Company does not utilize any statutory accounting
practices which are not prescribed by insurance regulators that, individually
or in the aggregate, materially affect statutory shareholder's equity.
6. FEDERAL INCOME TAXES
The Company is included in the consolidated federal income tax return of Aetna.
Aetna allocates to each member an amount approximating the tax it would have
incurred were it not a member of the consolidated group, and credits the member
for the use of its tax saving attributes in the consolidated return.
As discussed in Note 1, the Company adopted FAS No. 109 as of January 1, 1992
resulting in a cumulative effect benefit of $22.8 million.
In August 1993, the Omnibus Budget Reconciliation Act of 1993 (OBRA) was
enacted which resulted in an increase in the federal corporate tax rate from
34% to 35% retroactive to January 1, 1993. The enactment of OBRA resulted in an
increase in the deferred tax liability of $3.4 million at date of enactment,
which is included in the 1993 deferred tax expense.
Components of income tax expense (benefits) were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(millions)
<S> <C> <C> <C>
Current taxes (benefits):
Income from operations............................. $ 78.7 $ 87.1 $ 68.0
Net realized capital gains......................... (33.2) 18.1 18.1
------ ------ ------
45.5 105.2 86.1
------ ------ ------
Deferred taxes (benefits):
Income from operations............................. (8.0) (14.2) (17.7)
Net realized capital gains......................... 33.7 (14.8) (13.5)
------ ------ ------
25.7 (29.0) (31.2)
------ ------ ------
Total............................................ $ 71.2 $ 76.2 $ 54.9
====== ====== ======
</TABLE>
F-18
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Income tax expense was different from the amount computed by applying the
federal income tax rate to income before federal income taxes for the following
reasons:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(millions)
<S> <C> <C> <C>
Income before federal income taxes................... $216.5 $219.1 $168.1
Tax rate............................................. 35% 35% 34%
------ ------ ------
Application of the tax rate.......................... 75.8 76.7 57.2
------ ------ ------
Tax effect of:
Excludable dividends............................... (8.6) (8.7) (6.4)
Tax reserve adjustments............................ 2.9 4.7 5.1
Reinsurance transaction............................ 1.9 (0.2) (0.5)
Tax rate change on deferred liabilities............ -- 3.7 --
Other, net......................................... (0.8) -- (0.5)
------ ------ ------
Income tax expense............................... $ 71.2 $ 76.2 $ 54.9
====== ====== ======
</TABLE>
The tax effects of temporary differences that give rise to deferred tax assets
and deferred tax liabilities under FAS No. 109 at December 31, 1994 and 1993
are presented below:
<TABLE>
<CAPTION>
1994 1993
------ ------
(millions)
<S> <C> <C>
Deferred tax assets:
Insurance reserves........................................... $211.5 $195.4
Net unrealized capital losses................................ 136.3 --
Investment losses not currently deductible................... 15.5 31.2
Postretirement benefits other than pensions.................. 8.4 8.6
Impairment reserves.......................................... -- 7.9
Other........................................................ 28.3 19.3
------ ------
Total gross assets......................................... 400.0 262.4
Less valuation allowance....................................... 136.3 --
------ ------
Deferred tax assets net of valuation......................... 263.7 262.4
Deferred tax liabilities:
Deferred policy acquisition costs............................ 385.2 355.2
Unrealized losses allocable to experience-rated contracts.... 108.0 --
Market discount.............................................. 3.6 5.4
Net unrealized capital gains................................. -- 61.7
Other........................................................ 0.4 1.6
------ ------
Total gross liabilities.................................... 497.2 423.9
------ ------
Net deferred tax liability................................. $233.5 $161.5
====== ======
</TABLE>
Net unrealized capital gains and losses are presented in shareholder's equity
net of deferred taxes. At December 31, 1994, $81.0 million of net unrealized
capital losses were reflected in shareholder's equity without deferred tax
benefits. For federal income tax purposes, capital losses are deductible only
against capital gains in the year of sale or during the carryback and
carryforward periods (three and five years, respectively). Due to the expected
full utilization of capital gains in the carryback period and
F-19
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the uncertainty of future capital gains, a valuation allowance of $28.3 million
related to the net unrealized capital losses has been reflected in
shareholder's equity. In addition, $308.6 million of net unrealized capital
losses related to experience-rated contracts are not reflected in shareholder's
equity since such losses, if realized, are allocable to contractholders.
However, the potential loss of tax benefits on such losses is the risk of the
Company and therefore would adversely affect the Company rather than the
contractholder. Accordingly, an additional valuation allowance of $108.0
million has been reflected in shareholder's equity as of December 31, 1994. Any
reversals of the valuation allowance are contingent upon the recognition of
future capital gains in the Company's federal income tax return or a change in
circumstances which causes the recognition of the benefits to become more
likely than not. Non-recognition of the deferred tax benefits on net unrealized
losses described above had no impact on net income for 1994, but has the
potential to adversely affect future results if such losses are realized.
The "Policyholders' Surplus Account," which arose under prior tax law, is
generally that portion of a life insurance company's statutory income that has
not been subject to taxation. As of December 31, 1983, no further additions
could be made to the Policyholders' Surplus Account for tax return purposes
under the Deficit Reduction Act of 1984. The balance in such account was
approximately $17.2 million at December 31, 1994. This amount would be taxed
only under certain conditions. No income taxes have been provided on this
amount since management believes the conditions under which such taxes would
become payable are remote.
The Internal Revenue Service ("Service") has completed examinations of the
consolidated federal income tax returns of Aetna through 1986. Discussions are
being held with the Service with respect to proposed adjustments. However,
management believes there are adequate defenses against, or sufficient reserves
to provide for, such adjustments. The Service has commenced its examinations
for the years 1987 through 1990.
7. BENEFIT PLANS
Employee Pension Plans -- The Company, in conjunction with Aetna, has non-
contributory defined benefit pension plans covering substantially all
employees. The plans provide pension benefits based on years of service and
average annual compensation (measured over sixty consecutive months of highest
earnings in a 120 month period). Contributions are determined using the Entry
Age Normal Cost Method and, for qualified plans subject to ERISA requirements,
are limited to the amounts that are currently deductible for tax reporting
purposes. The accumulated benefit obligation and plan assets are recorded by
Aetna. The accumulated plan assets exceed accumulated plan benefits. There has
been no funding to the plan for the years 1992 through 1994, and therefore, no
expense has been recorded by the Company.
Agent Pension Plans -- The Company, in conjunction with Aetna, has a non-
qualified pension plan covering certain agents. The plan provides pension
benefits based on annual commission earnings. The accumulated plan assets
exceed accumulated plan benefits. There has been no funding to the plan for the
years 1992 through 1994, and therefore, no expense has been recorded by the
Company.
Employee Postretirement Benefits -- In addition to providing pension benefits,
Aetna also provides certain postretirement health care and life insurance
benefits, subject to certain caps, for retired employees. Medical and dental
benefits are offered to all full-time employees retiring at age 50 with at
least 15 years of service or at age 65 with at least 10 years of service.
Retirees are required to contribute to the plans based on their years of
service with Aetna.
F-20
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Aetna implemented FAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions in 1992 on the immediate recognition basis. The
cumulative effect charge for all Aetna employees was reflected in Aetna's 1992
Statement of Income. Prior to the adoption of FAS No. 106, the cost of
postretirement benefits was charged to operations as payments were made. The
accumulated benefit obligation and plan assets are recorded by Aetna.
Accumulated postretirement benefits exceed plan assets.
The cost to the Company associated with the Aetna postretirement plans for
1994, 1993 and 1992 were $1.0 million, $0.8 million and $0.8 million,
respectively.
Agent Postretirement Benefits -- The Company, in conjunction with Aetna, also
provides certain postemployment health care and life insurance benefits for
certain agents. The impact of recognizing the liability for agent costs was a
cumulative effect adjustment of $13.2 million (net of deferred taxes of $6.8
million) and is reported in the 1992 Consolidated Statement of Income.
The cost to the Company associated to the agents' postretirement plans for
1994, 1993 and 1992 were $0.7 million, $0.6 million and $0.7 million,
respectively.
Incentive Savings Plan -- Substantially all employees are eligible to
participate in a savings plan under which designated contributions, which may
be invested in common stock of Aetna or certain other investments, are matched,
up to 5% of compensation, by Aetna. Pretax charges to operations for the
incentive savings plan were $3.3 million, $3.1 million and $2.8 million in
1994, 1993 and 1992, respectively.
Stock Plans -- Aetna has a stock incentive plan that provides for stock options
and deferred contingent common stock or cash awards to certain key employees.
Aetna also has a stock option plan under which executive and middle management
employees of Aetna may be granted options to purchase common stock of Aetna at
the market price on the date of grant or, in connection with certain business
combinations, may be granted options to purchase common stock on different
terms. The cost to the Company associated to the Aetna stock plans for 1994 and
1993 was $2.3 million, $0.4 million, respectively. The cost for 1992 was
immaterial.
8. RELATED PARTY TRANSACTIONS
The Company is compensated by the Separate Accounts for bearing mortality and
expense risks pertaining to variable life and annuity contracts. Under the
insurance contracts, the Separate Accounts pay the Company a daily fee which,
on an annual basis, ranges, depending on the product, from .70% to 1.80% of
their average daily net assets. The Company also receives fees from the
variable life and annuity mutual funds and The Aetna Series Fund for serving as
investment adviser. Under the advisory agreements, the Funds pay the Company a
daily fee which, on an annual basis, ranges, depending on the fund, from .25%
to 1.00% of their average daily net assets. The advisory agreements also call
for the variable funds to pay their own administrative expenses and for The
Aetna Series Fund to pay certain administrative expenses. The Company also
receives fees (expressed as a percentage of the average daily net assets) from
The Aetna Series Fund for providing administration shareholder services and
promoting sales. The amount of compensation and fees received from the Separate
Accounts and Funds, included in Charges Assessed Against Policyholders,
amounted to $104.6 million, $93.6 million and $80.5 million in 1994, 1993 and
1992, respectively. The Company may waive advisory fees at its discretion.
F-21
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company may, from time to time, make reimbursements to a Fund for some or
all of its operating expenses. Reimbursement arrangements may be terminated at
any time without notice.
Since 1981, all domestic individual non-participating life insurance of Aetna
and its subsidiaries has been issued by the Company. Effective December 31,
1988, the Company entered into a reinsurance agreement with Aetna Life
Insurance Company ("Aetna Life") in which substantially all of the non-
participating individual life and annuity business written by Aetna Life prior
to 1981 was assumed by the Company. A $108.0 million commission, paid by the
Company to Aetna Life in 1988, was capitalized as deferred policy acquisition
costs. The Company maintained insurance reserves of $690.3 million and $711.0
million as of December 31, 1994 and 1993, respectively, relating to the
business assumed. In consideration for the assumption of this business, a loan
was established relating to the assets held by Aetna Life which support the
insurance reserves. The loan is being reduced in accordance with the decrease
in the reserves. The fair value of this loan was $630.3 million and $685.8
million as of December 31, 1994 and 1993, respectively, and is based upon the
fair value of the underlying assets. Premiums of $32.8 million, $33.3 million
and $36.8 million and current and future benefits of $43.8 million, $55.4
million and $47.2 million were assumed in 1994, 1993 and 1992, respectively.
Investment income of $51.5 million, $53.3 million and $56.7 million was
generated from the reinsurance loan to affiliate in 1994, 1993 and 1992,
respectively. Net income of approximately $25.1 million, $13.6 million and
$21.7 million resulted from this agreement in 1994, 1993 and 1992,
respectively.
On December 16, 1988, the Company assumed $25.0 million of premium revenue from
Aetna Life for the purchase and administration of a life contingent single
premium variable payout annuity contract. In addition, the Company also is
responsible for administering fixed annuity payments that are made to
annuitants receiving variable payments. Reserves of $24.2 million and $27.8
million were maintained for this contract as of December 31, 1994 and 1993,
respectively.
Effective February 1, 1992, the Company increased its retention limit per
individual life to $2.0 million and entered into a reinsurance agreement with
Aetna Life to reinsure amounts in excess of this limit, up to a maximum of $8.0
million on any new individual life business, on a yearly renewable term basis.
Premium amounts related to this agreement for 1994, 1993 and 1992 were
immaterial.
Effective December 31, 1992, the Company entered into an assumption reinsurance
agreement with Aetna Life to reinsure a block of approximately 3,500 life
contingent, period certain and deferred lump sum annuities (totaling $175.5
million in premium) issued by the Company to Aetna Casualty to fund its
obligations under structured settlement agreements. The negotiated price
recognized the sale of future profits and included consideration to ALIAC for
the continued administration of the reinsured contracts on behalf of, and in
the name of, Aetna Life.
The Company received no capital contributions in 1994, 1993 or 1992.
Premiums due and other receivables include $27.6 million and $9.8 million due
from affiliates in 1994 and 1993, respectively. Other liabilities include $27.9
million and $26.1 million due to affiliates for 1994 and 1993, respectively.
Substantially all of the administrative and support functions of the Company
are provided by Aetna and its affiliates. The financial statements reflect
allocated charges for these services based upon measures appropriate for the
type and nature of service provided.
F-22
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. REINSURANCE
The Company utilizes indemnity reinsurance agreements to reduce its exposure to
large losses in all aspects of its insurance business. Such reinsurance permits
recovery of a portion of losses from reinsurers, although it does not discharge
the primary liability of the Company as direct insurer of the risks reinsured.
The Company evaluates the financial strength of potential reinsurers and
continually monitors the financial condition of reinsurers. Only those
reinsurance recoverables deemed probable of recovery are reflected as assets on
the Company's Consolidated Balance Sheets.
The following table includes premium amounts ceded/assumed to/from affiliated
companies as discussed in Note 8 above.
<TABLE>
<CAPTION>
CEDED TO ASSUMED
DIRECT OTHER FROM OTHER NET
AMOUNT COMPANIES COMPANIES AMOUNT
------ --------- ---------- ------
(millions)
<S> <C> <C> <C> <C>
1994
Premiums:
Life Insurance............................ $ 25.8 $ 6.0 $32.8 $ 52.6
Accident and Health Insurance............. 10.8 9.3 -- 1.5
Annuities................................. 69.9 -- 0.2 70.1
------ ----- ----- ------
Total earned premiums................... $106.5 $15.3 $33.0 $124.2
====== ===== ===== ======
1993
Premiums:
Life Insurance............................ $ 20.9 $ 5.6 $33.3 $ 48.6
Accident and Health Insurance............. 14.4 12.9 -- 1.5
Annuities................................. 31.3 -- 0.7 32.0
------ ----- ----- ------
Total earned premiums................... $ 66.6 $18.5 $34.0 $ 82.1
====== ===== ===== ======
1992
Premiums:
Life Insurance............................ $ 20.8 $ 5.2 $36.8 $ 52.4
Accident and Health Insurance............. 15.1 13.7 -- 1.4
Annuities................................. 18.4 -- 0.3 18.7
------ ----- ----- ------
Total earned premiums................... $ 54.3 $18.9 $37.1 $ 72.5
====== ===== ===== ======
</TABLE>
10. FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of the Company's financial
instruments at December 31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
------------------- -------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
--------- --------- --------- ---------
(millions)
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents............. $ 623.3 $ 623.3 $ 536.1 $ 536.1
Short-term investments................ 98.0 98.0 22.6 22.6
Debt securities....................... 10,191.4 10,191.4 10,531.0 10,531.0
Equity securities..................... 229.1 229.1 172.6 172.6
Limited partnership................... 24.4 24.4 -- --
Mortgage loans........................ 9.9 9.9 10.1 10.1
Liabilities:
Investment contract liabilities:
With a fixed maturity............... 826.7 833.5 733.3 795.6
Without a fixed maturity............ 8,074.9 7,870.4 8,196.4 8,099.3
</TABLE>
F-23
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Fair value estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument, such as
estimates of timing and amount of expected future cash flows. Such estimates do
not reflect any premium or discount that could result from offering for sale at
one time the Company's entire holdings of a particular financial instrument,
nor do they consider the tax impact of the realization of unrealized gains or
losses. In many cases, the fair value estimates cannot be substantiated by
comparison to independent markets, nor can the disclosed value be realized in
immediate settlement of the instrument. In evaluating the Company's management
of interest rate and liquidity risk, the fair values of all assets and
liabilities should be taken into consideration, not only those above.
The following valuation methods and assumptions were used by the Company in
estimating the fair value of the above financial instruments:
Short-term instruments: Fair values are based on quoted market prices or dealer
quotations. Where quoted market prices are not available, the carrying amounts
reported in the Consolidated Balance Sheets approximates fair value. Short-term
instruments have a maturity date of one year or less and include cash and cash
equivalents, and short-term investments.
Debt and equity securities: Fair values are based on quoted market prices or
dealer quotations. Where quoted market prices or dealer quotations are not
available, fair value is estimated by using quoted market prices for similar
securities or discounted cash flow methods.
Mortgage loans: Fair value is estimated by discounting expected mortgage loan
cash flows at market rates which reflect the rates at which similar loans would
be made to similar borrowers. The rates reflect management's assessment of the
credit quality and the remaining duration of the loans. The fair value estimate
of mortgage loans of lower quality, including problem and restructured loans,
is based on the estimated fair value of the underlying collateral.
Investment contract liabilities (included in Policyholders' Funds Left With the
Company): With a fixed maturity: Fair value is estimated by discounting cash
flows at interest rates currently being offered by, or available to, the
Company for similar contracts.
Without a fixed maturity: Fair value is estimated as the amount payable to the
contractholder upon demand. However, the Company has the right under such
contracts to delay payment of withdrawals which may ultimately result in paying
an amount different than that determined to be payable on demand.
11. SEGMENT INFORMATION
Effective December 31, 1994, the Company's operations, which previously were
reported in total, will now be reported through two major business segments:
Life Insurance and Financial Services. The Life Insurance segment markets most
types of life insurance including universal life, interest-sensitive whole
life, and term insurance. These products are offered primarily to individuals,
small businesses, employer-sponsored groups and executives of Fortune 2000
companies. The Financial Services segment markets and services individual and
group annuity contracts which offer a variety of funding and distribution
options for personal and employer-sponsored retirement plans that qualify for
tax deferral under sections 401(k) for corporations, 403(b) for hospitals and
educational institutions, 408 for individual retirement accounts, and 457 for
state and local governments and tax exempt healthcare organizations (the
"deferred compensation market"), of the Internal Revenue Code. These contracts
may be immediate or deferred. These products are offered primarily to
individuals, pension plans, small businesses and employer-sponsored groups.
F-24
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
Summarized financial information for the Company's principal operations was as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(millions)
<S> <C> <C> <C>
Revenue:
Life insurance................................. $ 386.1 $ 371.7 $ 363.6
Financial services............................. 946.1 892.8 812.5
--------- --------- ---------
Total revenue................................ $ 1,332.2 $ 1,264.5 $ 1,176.1
========= ========= =========
Income from continuing operations before income
taxes and cumulative effect adjustments:
Life insurance................................. $ 96.8 $ 98.0 $ 74.6
Financial services............................. 119.7 121.1 93.5
--------- --------- ---------
Total income from continuing operations be-
fore income taxes and cumulative effect ad-
justments................................... $ 216.5 $ 219.1 $ 168.1
Net income:
Life insurance................................. $ 59.8 $ 56.1 $ 45.6
Financial services............................. 85.5 86.8 67.6
--------- --------- ---------
Income before cumulative effect adjustments.. $ 145.3 $ 142.9 $ 113.2
--------- --------- ---------
Cumulative effect adjustments................ -- -- 9.6
--------- --------- ---------
Net income....................................... $ 145.3 $ 142.9 $ 122.8
========= ========= =========
<CAPTION>
1994 1993 1992
--------- --------- ---------
(millions)
<S> <C> <C> <C>
Assets under management, at fair value:
Life insurance................................. $ 2,175.2 $ 2,180.1 $ 1,973.1
Financial services............................. 17,791.9 16,600.5 13,644.3
--------- --------- ---------
Total assets under management................ $19,967.1 $18,780.6 $15,617.4
========= ========= =========
</TABLE>
F-25
<PAGE>
VARIABLE ANNUITY ACCOUNT B
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
-------------------------------------------
(a) Financial Statements:
(1) Included in Part A:
Condensed Financial Information
(2) Included in Part B:
Financial Statements of Variable Annuity Account B:
- Independent Auditors' Report
- Statement of Assets and Liabilities as of December 31, 1994
- Statement of Operations for the year ended December 31, 1994
- Statements of Changes in Net Assets for the years ended
December 31, 1994 and 1993
- Notes to Financial Statements
Financial Statements of the Depositor:
- Independent Auditors' Report
- Consolidated Balance Sheets as of December 31, 1994 and 1993
- Consolidated Statements of Income for the years ended December
31, 1994, 1993 and 1992
- Consolidated Statements of Changes in Shareholder's Equity for
the years ended December 31, 1994, 1993 and 1992
- Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
- Notes to Consolidated Financial Statements
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance and
Annuity Company establishing Variable Annuity Account B/1/
(2) Not applicable
(3.1) Form of Selling Agreement/2/
(3.2) Alternative Form of Wholesaling Agreement and Related Selling
Agreement/3/
(4.1) Form of Variable Annuity Contract (G-CDA-IC(IR/NY))
(4.2) Form of Variable Annuity Contract (G-CDA-IC(NQ/NY))
(4.3) Form of Variable Annuity Contract (GMCC-IC(IR/NY))
(4.4) Form of Variable Annuity Contract (GMCC-IC(NQ/NY))
(5.1) Form of Variable Annuity Contract Application (795.00.2NY)*
(5.2) Form of Variable Annuity Contract Application (795.00.1NY)*
(5.3) Form of Variable Annuity Contract Application (G00557-01CNY)*
(6) Certificate of Incorporation and By-Laws of Depositor/4/
(7) Not applicable
<PAGE>
(8.1) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Alger American Fund and Fred Alger Management,
Inc. dated September 1, 1993/3/
(8.2) Fund Participation Agreement by and among Aetna Life Insurance and
Annuity Company, Insurance Management Series and Federated
Advisors/5/
(8.3) Fund Participation Agreements between Aetna Life Insurance and
Annuity Company and Fidelity Distributors Corporation dated
February 1, 1994 (Variable Annuity Products Fund)/6/
(8.4) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Fidelity Distributors Corporation dated
February 1, 1994 (Variable Annuity Products Fund II)/6/
(8.5) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994, and
amended June 15, 1994/7/
(8.6) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Lexington Management Corporation regarding
Natural Resources Trust dated December 1, 1988 and amended
February 11, 1991/8/
(8.7) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Lexington Emerging Markets Fund, Inc. and
Lexington Management Corporation (its investment advisor) dated
April 28, 1994/9/
(8.8) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Investors Research Corporation and TCI
Portfolios, Inc. dated July 29, 1992 and amended December 22,
1992 and June 1, 1994/10/
(8.9) Form of Administrative Service Agreement between Aetna Life
Insurance and Annuity Company and Agency, Inc./2/
(9) Opinion of Counsel/11/
(10.1) Consent of Independent Auditors
(10.2) Consent of Counsel*
(11) Not applicable
(12) Not applicable
(13) Computation of Performance Data
(14) Financial Data Schedule (See Exhibit 27)
(15.1) Powers of Attorney/12/
(15.2) Authorization for Signatures/13/
* To be filed by amendment
1. Incorporated by reference to Registration Statement on Form N-4 (File No.
2-52448) filed February 28, 1986.
2. Incorporated by reference to Post-Effective Amendment No. 15 to Registration
Statement on Form N-4 (File No. 33-34370) filed on April 19, 1994.
<PAGE>
3. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75996) filed on April 21, 1994.
4. Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-4 (File No. 2-52449) filed on February 28, 1994.
5. Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-4 (File No. 33-79122) filed on September 15, 1994.
6. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75978) filed on April 25, 1994.
7. Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-4 (File No. 33-75960) filed on August 9, 1994.
8. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-75978) filed on March 24, 1995.
9. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75978) filed on August 24, 1994.
10. Incorporated by reference to Registration Statement on Form N-4 (File No.
33-88720) filed on January 20, 1995.
11. Incorporated by reference to Registrant's 24f-2 Notice for the fiscal year
ended December 31, 1994 filed on February 28, 1995.
12. The Power of Attorney for David E. Bushong, Acting Chief Financial Officer,
is included in this filing. The Powers of Attorney for all other
signatories of this Registration Statement are incorporated by reference to
Post-Effective Amendment No. 3 to Registration Statement on Form N-4 (File
No. 33-75996) filed on February 23, 1995.
13. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-91846) electronically filed on August 15,
1995.
<PAGE>
Item 25. Directors and Officers of the Depositor
-------- ---------------------------------------
Name and Principal
Business Address* Positions and Offices with Depositor
------------------ ------------------------------------
Daniel P. Kearney Director and President
Gary G. Benanav Director
Christopher J. Burns Director and Senior Vice President, Life
Laura R. Estes Director and Senior Vice President, ALIAC Pensions
Shaun P. Mathews Director and Senior Vice President, Strategic
Markets and Products
Scott A. Striegel Director and Senior Vice President, Annuity
James C. Hamilton Director, Vice President and Treasurer
Dominick J. Agostino Director, Senior Vice President and Chief
Financial Officer
David E. Bushong Acting Chief Financial Officer
John Y. Kim Director and Senior Vice President, ALIAC
Investments
Robert E. Broatch Senior Vice President and Corporate Controller
Zoe Baird Senior Vice President and General Counsel
Fred J. Franklin Vice President and Chief Compliance Officer
Susan E. Schechter Corporate Secretary and Counsel
* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
-------- -------------------------------------------------------------------
Registrant
----------
Incorporated herein by references to Exhibit 24(c) to Registration Statement
on Form N-4 (File No. 33-88720) filed on January 20, 1995.
<PAGE>
Item 27. Number of Contract Owners
-------- -------------------------
As of June 30, 1995, there were 73,790 contract owners of variable annuity
contracts funded through Account B.
Item 28. Indemnification
-------- ---------------
Reference is hereby made to Section 33-320a of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and officers of
Connecticut corporations. The statute provides in general that Connecticut
corporations shall indemnify their officers, directors, employees, agents, and
certain other defined individuals against judgments, fines, penalties, amounts
paid in settlement and reasonable expenses actually incurred in connection with
proceedings against the corporation. The corporation's obligation to provide
such indemnification does not apply unless (1) the individual is successful on
the merits in the defense of any such proceeding; or (2) a determination is made
(by a majority of the board of directors not a party to the proceeding by
written consent; by independent legal counsel selected by a majority of the
directors not involved in the proceeding; or by a majority of the shareholders
not involved in the proceeding) that the individual acted in good faith and in
the best interests of the corporation; or (3) the court, upon application by the
individual, determines in view of all the circumstances that such person is
reasonably entitled to be indemnified.
C.G.S. Section 33-320a provides an exclusive remedy: a Connecticut
corporation cannot indemnify a director or officer to an extent either greater
or less than that authorized by the statute, e.g., pursuant to its certificate
of incorporation, bylaws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Consistent with the statute, Aetna Life and Casualty Company has procured
insurance from Lloyd's of London and several major United States excess insurers
for its directors and officers and the directors and officers of its
subsidiaries, including the Depositor, which supplements the indemnification
rights provided by C.G.S. Section 33-320a to the extent such coverage does not
violate public policy.
Item 29. Principal Underwriter
-------- ---------------------
(a) In addition to serving as the principal underwriter for the
Registrant, Aetna Life Insurance and Annuity Company (ALIAC) also acts
as the principal underwriter for Variable Life Account B and Variable
Annuity Accounts C and G (separate accounts of ALIAC registered as
unit investment trusts), and Separate Account I (a separate account of
Aetna Insurance Company of America registered as a unit investment
trust). Additionally, ALIAC is the investment adviser for Aetna
Variable Fund, Aetna Income Shares, Aetna
<PAGE>
Variable Encore Fund, Aetna Investment Advisers Fund, Inc., Aetna GET
Fund, Aetna Series Fund, Inc. and Aetna Generation Portfolios, Inc.
ALIAC is also the depositor of Variable Life Account B and Variable
Annuity Accounts C and G.
(b) See Item 25 regarding the Depositor.
(c) Compensation as of December 31, 1994:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage
Underwriter Commissions or Annuitization Commissions Compensation*
----------- ----------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
Aetna Life $269,230 $9,036,662
Insurance and
Annuity
Company
</TABLE>
* Compensation shown in column 5 includes deductions for mortality and expense
risk guarantees and contract charges assessed to cover costs incurred in the
sales and administration of the contracts issued under Account B.
Item 30. Location of Accounts and Records
-------- --------------------------------
All records concerning contract owners of Variable Annuity Account B are
located at the home office of the Depositor as follows:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
Item 31. Management Services
-------- -------------------
Not applicable
<PAGE>
Item 32. Undertakings
-------- ------------
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement on Form
N-4 as frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than sixteen
months old for as long as payments under the variable annuity contracts
may be accepted;
(b) to include as part of any application to purchase a contract offered by a
prospectus which is part of this registration statement on Form N-4, a
space that an applicant can check to request a Statement of Additional
Information; and
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly upon
written or oral request.
(d) Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by 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 of 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
As required by the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, the Registrant, Variable Annuity Account B of Aetna Life
Insurance and Annuity Company, has caused this Post-Effective Amendment No. 1 to
its Registration Statement on Form N-4 (File No. 33-87932) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford,
State of Connecticut, on the 18th day of September, 1995.
VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE
INSURANCE AND ANNUITY COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY COMPANY
(Depositor)
By: Daniel P. Kearney*
-----------------------------------------
Daniel P. Kearney
President
As required by the Securities Act of 1933, as amended, this Post-Effective
Amendment No. 1 to the Registration Statement on Form N-4 (File No. 33-87932)
has been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
Daniel P. Kearney* Director and President )
--------------------------- )
Daniel P. Kearney (principal executive officer) )
)
Dominick J. Agostino* Director )
--------------------------- )
Dominick J. Agostino )
)
David E. Bushong* Acting Chief Financial Officer )
--------------------------- ) September
David E. Bushong (principal accounting and financial ) 18, 1995
officer) )
)
James C. Hamilton* Director )
--------------------------- )
James C. Hamilton )
)
Gary G. Benanav* Director )
--------------------------- )
Gary G. Benanav )
)
Christopher J. Burns* Director )
--------------------------- )
Christopher J. Burns )
)
<PAGE>
Laura R. Estes* Director )
--------------------------- )
Laura R. Estes )
)
John Y. Kim* Director )
--------------------------- )
John Y. Kim )
)
Shaun P. Mathews* Director )
--------------------------- )
Shaun P. Mathews )
)
Scott A. Striegel* Director )
--------------------------- )
Scott A. Striegel )
By: /s/ Julie E. Rockmore
-----------------------------------------------
*Julie E. Rockmore
Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT B
EXHIBIT INDEX
Exhibit No. Exhibit Page
----------- ------- ----
99-B.1 Resolution of the Board of Directors of *
Aetna Life Insurance and Annuity Company
establishing Variable Annuity Account B
99-B.3.1 Form of Selling Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement *
and Related Selling Agreement
99-B.4 Form of Variable Annuity Contracts --
99-B.5 Form of Variable Annuity Contract **
Applications
99-B.6 Certificate of Incorporation and By-Laws of *
Depositor
99-B.8.1 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company, Alger
American Fund and Fred Alger Management,
Inc. dated September 1, 1993
99-B.8.2 Fund Participation Agreement by and among *
Aetna Life Insurance and Annuity Company,
Insurance Management Series and Federated
Advisors
99-B.8.3 Fund Participation Agreements between Aetna *
Life Insurance and Annuity Company and
Fidelity Distributors Corporation dated
February 1, 1994 (Variable Insurance Products
Fund)
99-B.8.4 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and
Fidelity Distributors Corporation dated
February 1, 1994 (Variable Insurance Products
Fund II)
99-B.8.5 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and Janus
Aspen Series dated April 19, 1994, and
amended June 15, 1994
99-B.8.6 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and
Lexington Management Corporation regarding
Natural Resources Trust dated December 1,
1988 and amended February 11, 1991
*Incorporated by reference
**To be filed by amendment
<PAGE>
Exhibit No. Exhibit Page
----------- ------- ----
99-B.8.7 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company,
Lexington Emerging Markets Fund, Inc. and
Lexington Management Corporation (its
investment advisor) dated April 28, 1994
99-B.8.8 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company,
Investors Research Corporation and TCI
Portfolios, Inc. dated July 29, 1992 and
amended December 22, 1992 and June 1, 1994
99-B.8.9 Form of Administrative Service Agreement *
between Aetna Life Insurance and Annuity
Company and Agency, Inc.
99-B.9 Opinion of Counsel *
99-B.10.1 Consent of Independent Auditors
------
99-B.10.2 Consent of Counsel
------
99-B.13 Computation of Performance Data
------
99-B.15.1 Powers of Attorney
------
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule
------
*Incorporated by reference
**To be filed by amendment
<PAGE>
EXHIBIT 99.B.4a
[LOGO OF AETNA APPEARS HERE] AETNA LIFE INSURANCE AND ANNUITY COMPANY
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
Aetna Life Insurance and Annuity Company, herein
called Aetna, agrees to pay the benefits stated in
the Contract.
--------------------------------------------------------------------------------
CERTIFICATE OF To the Certificate Holder:
GROUP ANNUITY
COVERAGE Aetna certifies that coverage is in force for you
under the stated Group Annuity Contract and
Certificate numbers. All data shown here is taken
from Aetna records and is based upon information
furnished by you.
This Certificate is a summary of the Group Annuity
Contract provisions. It replaces any and all prior
certificates, riders, or amendments issued to you
under the stated Contract and Certificate numbers.
This Certificate is for information only and is
not a part of the Contract.
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE
DESCRIBED IN PARTS III AND IV.
--------------------------------------------------------------------------------
RIGHT TO You may cancel this Certificate within 10 days of
CANCEL receiving it by returning this Certificate along
with a written notice to Aetna at the above
address or to the agent from whom it was
purchased. Within 7 days after it receives the
notice of cancellation and this Certificate at its
Home Office, Aetna will return the entire
consideration paid plus any increase or minus any
decrease in the current value of any funds
allocated to the Separate Account.
Dan Kearney Lucille M. Nickerson
President Secretary
--------------------------------------------------------------------------------
Contract Holder Group Annuity Contract No.
SPECIMEN SPECIMEN
--------------------------------------------------------------------------------
Your Name Certificate No.
JOHN DOE SPECIMEN
--------------------------------------------------------------------------------
Annuitant Name Type of Plan
JOHN DOE JR. FLEXIBLE PREMIUM
--------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE
ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN
EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE
ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS
MATURITY.
1
<PAGE>
<TABLE>
<S> <C>
SPECIFICATIONS
------------------------------------------------------------------------------------------------------------------------------------
GUARANTEED There are guaranteed interest rates for amounts held in the AG Account (See Contract Schedule I).
INTEREST RATE
------------------------------------------------------------------------------------------------------------------------------------
DEDUCTIONS FROM There will be deductions for mortality and expense risks and administrative fees (see Contract
THE SEPARATE Schedule I and II).
ACCOUNT
------------------------------------------------------------------------------------------------------------------------------------
DEDUCTION FROM Purchase Payment is subject to a deduction for premium taxes, if any (see 3.01).
PURCHASE PAYMENT
------------------------------------------------------------------------------------------------------------------------------------
SURRENDER There will be a charge deducted upon surrender (see Contract Schedule I).
FEE
</TABLE>
2
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the Current Value allocated to the Separate Account.
ACCOUNT: The deduction is the daily equivalent of the annual effective percentage shown in the following chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available with this Contract are:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
The Alger American Fund - Alger American Balanced Portfolio
The Alger American Fund - Alger American Income and Growth Portfolio
The Alger American Fund - Alger American Growth Portfolio
The Alger American Fund - Alger American Midcap Growth Portfolio
The Alger American Fund - Alger American Leveraged Allcap Portfolio
The Alger American Fund - Alger American Small Capitalization Portfolio
Fidelity Investments Variable Insurance Products Fund - High Income Portfolio
Fidelity Investments Variable Insurance Products Fund - Equity-Income Portfolio
Fidelity Investments Variable Insurance Products Fund - Growth Portfolio
Fidelity Investments Variable Insurance Products Fund - Overseas Portfolio
Fidelity Investments Variable Insurance Products Fund II - Investment Grade Bond Portfolio
Fidelity Investments Variable Insurance Products Fund II - Asset Manager Portfolio
Fidelity Investments Variable Insurance Products Fund II - Index 500 Portfolio
Fidelity Investments Variable Insurance Products Fund II - Contrafund Portfolio
Insurance Management Series - Corporate Bond Fund
</TABLE>
3
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT (CONT'D)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SEPARATE ACCOUNT FUNDS Insurance Management Series - Equity Growth and Income Fund
(CONT'D): Insurance Management Series - International Stock Fund
Insurance Management Series - U.S. Government
Bond Fund Insurance Management Series - Utility Fund
Janus Aspen Series - Aggressive Growth Portfolio
Janus Aspen Series - Balanced Portfolio
Janus Aspen Series - Flexible Income Portfolio
Janus Aspen Series - Growth Portfolio
Janus Aspen Series - Short-Term Bond Portfolio
Janus Aspen Series - Worldwide Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust
TCI Portfolios, Inc. - TCI International
TCI Portfolios, Inc. - TCI Growth
TCI Portfolios, Inc. - TCI Balanced
</TABLE>
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM
GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
</TABLE>
SEPARATE ACCOUNT AND AG ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna reserves the right to charge $10 for each subsequent
Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current Value is $50,000 or more on the date the Maintenance
Fee is to be deducted, the Maintenance Fee is $0.
</TABLE>
4
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SURRENDER FEE: For each surrender, the Surrender Fee will be determined as follows:
Surrender Fee
Length of Time from Deposit (as percentage of
of Net Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may not be greater than 10% of the Current Value at
OPTION (SWO) time of election.
PERCENTAGE:
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
</TABLE>
See 1. GENERAL DEFINITIONS for explanations.
5
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the Current Value allocated to the Separate Account.
ACCOUNT: The deduction is the daily equivalent of the annual effective percentage shown in the following chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available with this Contract are:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Janus Aspen Series - Aggressive Growth Portfolio
Janus Aspen Series - Flexible Income Portfolio
Janus Aspen Series - Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust
TCI Portfolios, Inc. - TCI International
TCI Portfolios, Inc. - TCI Growth
TCI Portfolios, Inc. - TCI Balanced
</TABLE>
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
</TABLE>
6
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made
during the Accumulation Period. Aetna allows 12
free Transfers in any calendar year. Thereafter,
Aetna reserves the right to charge $10 for each
subsequent Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the
Current Value is $50,000 or more on the date the
Maintenance Fee is to be deducted, the
Maintenance Fee is $0.
SURRENDER FEE: For each surrender, the Surrender Fee will be
determined as follows:
Surrender Fee
Length of Time from Deposit (as percentage of
of Net Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage
OPTION (SWO) may not be greater than 10% of the Current Value
PERCENTAGE: at time of election.
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
</TABLE>
7
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
</TABLE>
See 1. GENERAL DEFINITIONS for explanations.
8
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the Current Value allocated to the Separate Account.
ACCOUNT: The deduction is the daily equivalent of the annual effective percentage shown in the following
chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available with this Contract are:
Insurance Management Series - Equity Growth and Income Fund
Insurance Management Series - Utility Fund
Insurance Management Series - Prime Money Fund
Insurance Management Series - U.S. Government Bond Fund
Insurance Management Series - Corporate Bond Fund
Insurance Management Series - International Stock Fund
</TABLE>
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
</TABLE>
9
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna reserves the right to charge $10 for each
subsequent Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current Value is $50,000 or more on the date the
Maintenance Fee is to be deducted, the Maintenance Fee is $0.
SURRENDER FEE: For each surrender, the Surrender Fee will be determined as follows:
Surrender Fee
Length of Time from Deposit of Net (as percentage of
Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may not be greater than 10% of the Current Value at
OPTION (SWO) time of election.
PERCENTAGE:
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
</TABLE>
10
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
See 1. GENERAL DEFINITIONS for explanations.
</TABLE>
11
<PAGE>
CONTRACT SCHEDULE II
ANNUITY PERIOD
SEPARATE ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
CHARGES TO SEPARATE A daily charge at an annual effective rate of 1.25% for Annuity mortality and expense risks. The
ACCOUNT: administrative charge is established upon election of an Annuity option. This charge will not exceed
0.25%.
WARIABLE ANNUITY ASSUMED If a Variable Annuity is chosen, an assumed annual net return rate of 5.0% may be elected. If 5.0%
ANNUAL NET RETURN RATE: is not elected, Aetna will use an assumed annual net return rate of 3.5%.
The assumed annual net return rate factor for 3.5% per year is 0.9999058.
The assumed annual net return rate factor for 5.0% per year is 0.9998663.
If the portion of a Variable Annuity payment for any Fund is not to decrease, the Annuity return
factor under the Separate Account for that Fund must be:
(a) 4.75% on an annual basis plus an annual return of up to 0.25% to offset the administrative
charge set at the time Annuity payments commence if an assumed annual net return rate of 3.5%
is chosen; or
(b) 6.25% on an annual basis plus an annual return of up to 0.25% to offset the administrative
charge set at the time Annuity payments commence, if an assumed annual net return rate of 5% is
chosen.
</TABLE>
FIXED ANNUITY
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM GUARANTEED 3.0%
INTEREST RATE (effective
annual rate of return):
</TABLE>
See 1. GENERAL DEFINITIONS for explanations.
12
<PAGE>
TABLE OF CONTENTS
I. GENERAL DEFINITIONS
------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
1.01 Account....................................................................10
1.02 Accumulation Period........................................................10
1.03 Adjusted Current Value.....................................................10
1.04 ALIAC Guaranteed Account (AG Account)......................................10
1.05 Annuitant..................................................................10
1.06 Annuity....................................................................10
1.07 Beneficiary................................................................10
1.08 Certificate Holder.........................................................10
1.09 Code.......................................................................10
1.10 Contract...................................................................10
1.11 Contract Holder............................................................10
1.12 Current Value..............................................................11
1.13 Deposit Period.............................................................11
1.14 Dollar Cost Averaging......................................................11
1.15 Fixed Annuity..............................................................11
1.16 Fund(s)....................................................................11
1.17 General Account............................................................11
1.18 Guaranteed Rate -- AG Account..............................................11
1.19 Guaranteed Term............................................................11
1.20 Guaranteed Term(s) Groups..................................................12
1.21 Maintenance Fee............................................................12
1.22 Market Value Adjustment (MVA)..............................................12
1.23 Matured Term Value.........................................................12
1.24 Matured Term Value Transfer................................................12
1.25 Maturity Date..............................................................12
1.26 Net Purchase Payment(s)....................................................12
1.27 Nonunitized Separate Account...............................................12
1.28 Purchase Payment(s)........................................................12
1.29 Reinvestment...............................................................12
1.30 Separate Account...........................................................13
1.31 Surrender Value............................................................13
1.32 Transfers..................................................................13
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
1.33 Valuation Period (Period)..................................................13
1.34 Variable Annuity...........................................................13
II. GENERAL PROVISIONS
------------------------------------------------------------------
2.01 Change of Contract.........................................................13
2.02 Change of Fund(s)..........................................................14
2.03 Nonparticipating Contract..................................................14
2.04 Payments and Elections.....................................................15
2.05 State Laws.................................................................15
2.06 Control of Contract........................................................15
2.07 Designation of Beneficiary.................................................15
2.08 Misstatements and Adjustments..............................................16
2.09 Incontestability...........................................................16
2.10 Grace Period...............................................................16
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
------------------------------------------------------------------
3.01 Net Purchase Payment.......................................................16
3.02 Certificate Holder's Account...............................................16
3.03 Fund(s) Record Units -- Separate Account...................................17
3.04 Net Return Factor(s) -- Separate Account...................................17
3.05 Fund Record Unit Value -- Separate Account.................................17
3.06 Market Value Adjustment....................................................18
3.07 Transfer of Current Value from the Funds or ALIAC Guaranteed Account.......19
3.08 Notice to the Certificate Holder...........................................19
3.09 Loans......................................................................19
3.10 Systematic Withdrawal Option (SWO).........................................19
3.11 Death Benefit Amount.......................................................21
3.12 Death Benefit Options Available to Beneficiary.............................23
3.13 Liquidation of Surrender Value.............................................24
3.14 Surrender Fee..............................................................25
3.15 Payment of Surrender Value.................................................25
</TABLE>
14
<PAGE>
IV. ANNUITY PROVISIONS
------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
4.01 Choices to be Made.........................................................25
4.02 Terms of Annuity Options...................................................26
4.03 Death of Annuitant/Beneficiary.............................................27
4.04 Fund(s) Annuity Units -- Separate Account..................................28
4.05 Fund(s) Annuity Unit Value -- Separate Account.............................28
4.06 Annuity Net Return Factor(s) -- Separate Account...........................29
4.07 Annuity Options............................................................29
</TABLE>
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<PAGE>
I. GENERAL DEFINITIONS
--------------------------------------------------------------------------------
1.01 ACCOUNT: A record established for each Certificate
Holder to maintain the value of the Net
Purchase Payment held on his/her behalf
during the Accumulation Period.
1.02 ACCUMULATION PERIOD: The period during which the Net Purchase
Payment(s) are applied to a Contract to
provide future Annuity payment(s).
1.03 ADJUSTED CURRENT VALUE: The Current Value of a Contract plus or minus
any aggregate ALIAC Guaranteed Account MVA,
if applicable. (See 1.21)
1.04 ALIAC GUARANTEED An accumulation option where Aetna
ACCOUNT guarantees stipulated rate(s) of interest for
(AG ACCOUNT): specified periods of time. All assets of
Aetna, including amounts in the Nonunitized
Separate Account, are available to meet the
guarantees under the AG Account.
1.05 ANNUITANT: The person whose life is measured for
purposes of the Guaranteed Death Benefit and
the duration of Annuity payments under this
Contract.
1.06 ANNUITY: Payment of an income:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.07 BENEFICIARY: The individual or estate entitled to receive
any payment from the Contract upon the death
of the Annuitant, or if the Certificate
Holder is different from the Annuitant, upon
the death of the Certificate Holder. If the
Account is held by joint Certificate Holders,
the survivor will be deemed the designated
Beneficiary and any other Beneficiary on
record will be treated as the contingent
Beneficiary.
1.08 CERTIFICATE HOLDER: A person who purchases an interest in the
Contract as evidenced by a certificate. Aetna
reserves the right to limit ownership to
natural persons. If more than one Certificate
Holder owns an account, each Certificate
Holder will be a joint Certificate Holder.
Any joint Certificate Holder must be the
spouse of the other joint Certificate Holder.
Joint Certificate Holders have joint
ownership rights and both must authorize
exercising any ownership rights unless Aetna
allows otherwise. If the account is owned by
a nonnatural person, the death benefit will
be paid at the death of the Annuitant.
1.09 CODE: The Internal Revenue Code of 1986, as it may
be amended from time to time.
1.10 CONTRACT: This agreement between Aetna and the Contract
Holder.
1.11 CONTRACT HOLDER: The entity to which a group Contract is
issued.
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1.12 CURRENT VALUE: As of the most recent Valuation Period, the
Net Purchase Payment and any additional
amount deposited pursuant to 3.12 plus any
interest added to the portion allocated to
the ALIAC Guaranteed Account; and plus or
minus the investment experience of the
portion allocated to the Funds since deposit;
less all Maintenance Fees deducted, any
amounts surrendered and any amounts applied
to an Annuity.
1.13 DEPOSIT PERIOD: A calendar week, a calendar month, a calendar
quarter, or any other period of time
specified by Aetna during which the Net
Purchase Payment(s), Transfers or
Reinvestments are accepted into the ALIAC
Guaranteed Account for one or more Guaranteed
Terms. Aetna reserves the right to extend the
Deposit Period.
1.14 DOLLAR COST AVERAGING: A program that permits the Certificate Holder
to systematically transfer amounts from any
of the Funds and the one-year AG Account
Guaranteed Term to any of the Funds by
completing the appropriate section of the
enrollment form or a Dollar Cost Averaging
election form.
1.15 FIXED ANNUITY: An Annuity with payments that do not vary in
amount.
1.16 FUND(S): The open-end management investment companies
(mutual funds) in which the Separate Account
invests (see Contract Schedule I for the
specific fund options).
1.17 GENERAL ACCOUNT: The account holding the assets of Aetna,
other than those assets held in Aetna's
separate accounts.
1.18 GUARANTEED RATE -- Aetna will declare the interest rate
AG ACCOUNT: applicable to a specific Guaranteed Term at
the start of the Deposit Period for that
Guaranteed Term. The rate is guaranteed by
Aetna for that Deposit Period and the ensuing
Guaranteed Term. The Guaranteed Rate is an
annual effective yield. That is, interest is
credited daily at a rate that will produce
the Guaranteed Rate over the period of a
year. No Guaranteed Rate will ever be less
than the Minimum Guaranteed Rate shown on
Contract Schedule I.
1.19 GUARANTEED TERM: The period of time for which the AG Account
Guaranteed Rate is guaranteed on the Net
Purchase Payment, Transfers and Reinvestments
made into a current Deposit Period for the AG
Account. Such period begins on the day
following the close of the Deposit Period and
ends on the designated Maturity Date.
Guaranteed Terms are offered at Aetna's
discretion for various lengths of time
ranging up to and including ten years.
During a Deposit Period, Aetna may make
available any number of Guaranteed Terms. The
Contract Holder may allocate Net Purchase
Payments and Transfers into any or all of the
available Guaranteed Terms.
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<PAGE>
1.20 GUARANTEED TERM(S) All AG Account Guaranteed Term(s) with
GROUPS: the same length of time from the close of the
Deposit Period until the designated Maturity
Date.
1.21 MAINTENANCE FEE: The Maintenance Fee (see Contract Schedule I)
will be deducted during the Accumulation
Period from the Current Value on each
anniversary of the date the Contract is
established and upon the surrender of the
entire Contract.
1.22 MARKET VALUE ADJUSTMENT An adjustment that may apply to an amount
(MVA): withdrawn or transferred from an AG Account
Guaranteed Term prior to the end of that
Guaranteed Term. The adjustment reflects the
change in the value of the investment due to
changes in interest rates since the date of
deposit and is computed using the formula
given in 3.06. The adjustment is expressed as
a percentage of each dollar being withdrawn
or transferred.
1.23 MATURED TERM VALUE: The amount payable on an AG Account
Guaranteed Term's Maturity Date.
1.24 MATURED TERM VALUE During the calendar month following
TRANSFER: an AG Account Maturity Date, the Certificate
Holder may notify Aetna's Home Office in
writing to Transfer or surrender all or part
of the Matured Term Value, plus interest at
the new Guaranteed Rate accrued thereon, from
the AG Account without an MVA. This provision
only applies to the first such written
request received from the Certificate Holder
during this period for any Matured Term
Value.
1.25 MATURITY DATE: The last day of an AG Account Guaranteed
Term.
1.26 NET PURCHASE PAYMENT: The Purchase Payment less premium taxes, as
applicable.
1.27 NONUNITIZED SEPARATE A separate account set up by Aetna under
ACCOUNT: Title 38, Section 38a-433, of the Connecticut
General Statutes, that holds assets for AG
Account Terms. There are no discrete units
for this Account. The Certificate Holder does
not participate in the investment gain or
loss from the assets held in the Nonunitized
Separate Account. Such gain or loss is borne
entirely by Aetna. These assets may be
chargeable with liabilities arising out of
any other business of Aetna.
1.28 PURCHASE PAYMENT(S): Payment(s) accepted by
Aetna at its Home Office. Aetna reserves the
right to refuse to accept any Purchase
Payment at any time for any reason. No
advance notice will be given to the Contract
Holder.
Aetna reserves the right to refuse to accept
any Purchase Payment at any time for any
reason. No advance notice will be given to
the Contract Holder or Certificate Holder.
1.29 REINVESTMENT: Aetna will mail a notice to the Contract
Holder at least 18 calendar days and not more
than 45 days before a Guaranteed Term's
Maturity Date.
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<PAGE>
1.29 REINVESTMENT: This notice will contain the Terms available
(CONT'D) during current Deposit (CONT'D) Periods with
their Guaranteed Rate, and projected Matured
Term Value. If no specific direction is given
by the Certificate Holder prior to the
Maturity Date, each Matured Term Value will
be reinvested in the current Deposit Period
for a Guaranteed Term of the same duration.
If a Guaranteed Term of the same duration is
unavailable, each Matured Term Value will
automatically be reinvested in the current
Deposit Period for the next shortest
Guaranteed Term available. If no shorter
Guaranteed Term is available, the next longer
Guaranteed Term will be used. Aetna will mail
a confirmation statement to the Certificate
Holder the next business day after the
Maturity Date. This notice will sate the
Guaranteed Term and Guaranteed Rate which
will apply to the reinvested Matured Term
Value.
1.30 SEPARATE ACCOUNT: A separate account that buys and holds shares
of the Fund(s). Income, gains or losses,
realized or unrealized, are credited or
charged to the Separate Account without
regard to other income, gains or losses of
Aetna. Aetna owns the assets held in the
Separate Account and is not a trustee as to
such amounts. This Separate Account generally
is not guaranteed and is held at market
value. The assets of the Separate Account, to
the extent of reserves and other contract
liabilities of the Account, shall not be cha
rged with other Aetna liabilities.
1.31 SURRENDER VALUE: The amount payable by Aetna upon the
surrender of any portion of an account.
1.32 TRANSFERS: The movement of invested amounts among the
available Fund(s) and the AG Account under
this Contract during the Accum ulation
Period.
1.33 VALUATION PERIOD (PERIOD): The period of time for which a Fund
determines its net asset value, usually from
4:15 p.m. Eastern time each day the New York
Stock Exchange is open until 4:15 p.m. the
next such day, or such other day that one or
more of the Funds determines its net asset
value.
1.34 VARIABLE ANNUITY: An Annuity with payments that vary with the
net investment results of one or more Funds
held under the Separate Account.
II. GENERAL PROVISIONS
--------------------------------------------------------------------------------
2.01 CHANGE OF CONTRACT: Only an authorized officer of Aetna may
change the terms of the contract. Aetna will
notify the Contract Holder in writing at
least 30 days before the effective date of
any change. Any change will not affect the
amount or terms of any Annuity which begins
before the change.
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<PAGE>
2.01 CHANGE OF CONTRACT Aetna may make any change that affects the AG
(CONT'D): Account Market Value Adjustment (3.06) with
at least 30 days' advance written notice to
the Contract Holder and the Certificate
Holder. Any such change shall become
effective for any new Term and will be
applicable only if it is more favorable to
the Contract Holder and/or the Certificate
Holder.
Any change that affects any of the following
under this Contract will not apply to
Accounts in existence before the effective
date of the change:
(a) Net Purchase Payment (3.01)
(b) AG Account Guaranteed Rate (1.04)
(c) Net Return Factor(s) -- Separate
Account (3.04)
(d) Current Value (1.12)
(e) Surrender Value (1.31)
(f) Fund(s) Annuity Unit Value -- Separate
Account (4.05)
(g) Annuity Options (4.07)
(h) Fixed Annuity Guaranteed Interest
Rates (4.01)
(i) Transfers (1.32)
This Contract may be changed as deemed
necessary by Aetna to comply with federal or
state law. Any such change is subject to the
prior approval of the New York Insurance
Department.
2.02 CHANGE OF FUND(S): Aetna, or the Separate Account, may:
(a) Change the Fund(s) which may be invested
in by the Separate Account; and
(b) Replace the shares of any Fund(s) held
in the Separate Account with shares of
any other Fund(s).
Changes must be:
(a) Approved by a majority vote of the
shares in the Separate Account with
respect to the Fund(s) whose shares are
to be replaced; or
(b) Deemed necessary by Aetna under the
Investment Company Act of 1940; or
(c) Deemed necessary by Aetna to accomplish
the purpose of the Separate Account.
Such changes are subject to the approval of
the Superintendent of the New York Insurance
Department and Aetna will notify the Contract
Holder of such change.
2.03 NONPARTICIPATING CONTRACT: The Contract Holder, Certificate Holders or
Beneficiaries will not have a right to share
in the earnings of Aetna.
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2.04 PAYMENTS AND ELECTIONS: While the Certificate Holder is living, Aetna
will pay the Certificate Holder any Annuity
payments as and when due. After the
Certificate Holder's death, or at the death
of the first Certificate Holder if the
Account is owned jointly, any Annuity
payments required to be made will be paid in
accordance with 4.03. Aetna will determine
other payments and/or elections as of the end
of the Valuation Period in which the request
is received at its Home Office. Such payments
will be made within 7 calendar days of
receipt at its Home Office of a written claim
for payment which is in good order, except as
provided in 3.15.
2.05 STATE LAWS: The Contract and the Certificates comply with
the laws of the state in which they are
delivered. Any surrender, death, or Annuity
payments are equal to or greater than the
minimum required by such laws. Annuity tables
for legal reserve valuation shall be as
required by state law. Such tables may be
different from Annuity tables used to
determine Annuity payments.
2.06 CONTROL OF CONTRACT: This is a Contract between the Contract
Holder and Aetna. The Contract Holder has
title to the Contract. Contract Holder rights
are limited to accepting and rejecting
Contract modifications. The Certificate
Holder has all other rights to amounts held
in his or her Account.
Each Certificate Holder shall own all amounts
held in his or her Account. Each Certificate
Holder may make any choices allowed by this
Contract for his or her Account. Certificate
Holder choices made under the contract must
be in writing. If the Account is owned
jointly, both joint Certificate Holders must
authorize any Certificate Holder change in
writing. Until receipt of such choices at
Aetna's Home Office, Aetna may rely on any
previous choices made.
The Account may not be attached, alienated,
or subject to the claims of creditors of the
Certificate Holder except to the extent
permitted by law.
The Certificate Holder may assign or transfer
his or her rights under the Contract. Aetna
reserves the right not to accept assignment
or transfer to a nonnatural person. Any
assignment or transfer made must be submitted
to Aetna's Home Office in writing and will
not be effective until accepted by Aetna.
2.07 DESIGNATION OF Each Certificate Holder shall name his or her
BENEFICIARY: Beneficiary. If the Account is owned jointly,
both joint Certificate Holders must agree in
writing to the Beneficiary designated. The
Beneficiary may be changed at any time.
Changes to a Beneficiary must be submitted to
Aetna's Home Office in writing and will not
be effective until accepted by Aetna.
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<PAGE>
2.08 MISSTATEMENTS AND If Aetna finds the age or sex of any
ADJUSTMENTS: Annuitant to be misstated, the amount payable
under the Contract shall be adjusted for the
correct age or sex; the amount of any
underpayment or overpayment, with interest at
six per cent per year, shall be credited to,
or changed against, the current or next
succeeding payment or payments to be made by
Aetna under the Contract.
2.09 INCONTESTABILITY: Aetna cannot cancel the Contract because of
any error of fact on the application. Aetna
cannot cancel an Account because of any error
of fact on the enrollment form.
2.10 GRACE PERIOD: This Contract will remain in effect even if
Purchase Payments are not continued.
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
--------------------------------------------------------------------------------
3.01 NET PURCHASE PAYMENT: This amount is the actual Purchase Payment
less any premium tax. Aetna will generally
deduct the premium tax when Annuity benefits
are elected (see Part IV). If Aetna
determines that under applicable state law,
it must pay a premium tax when the Purchase
Payment is received or at any other time, it
will deduct the tax at that time.
The Net Purchase Payment will be credited
among:
(a) The current Deposit Period(s) for
Guaranteed Terms under the AG Account;
and
(b) The Fund(s) in which the Separate
Account invests.
For each Net Purchase Payment, the
Certificate Holder shall tell Aetna the
allocation percentage to be applied to the
current Deposit Period for each of the
available Guaranteed Terms in the AG Account
and/or each Fund. If allocation instructions
are not received along with any subsequent
Net Purchase Payment, the allocation will be
the same as that indicated on the original
application. If the same Guaranteed Term is
no longer available, the Net Purchase Payment
will be allocated to the next shortest
Guaranteed Term available in the current
Deposit Period. If no shorter Guaranteed Term
is available, the next longer Guaranteed Term
will be used.
The minimum acceptable additional Purchase
Payment is shown on Contract Schedule I. The
maximum acceptable Purchase Payment without
Home Office approval is also provided on
Contract Schedule I.
3.02 CERTIFICATE HOLDER'S Aetna will maintain an Account for each
ACCOUNT: Certificate Holder.
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<PAGE>
3.03 FUND(S) RECORD UNITS -- The portion of the Net Purchase Payment(s)
SEPARATE ACCOUNT: applied to each Fund under the Separate
Account will determine the number of Fund
record units for that Fund. This number is
equal to the portion of the Net Purchase
Payment(s) applied to each Fund divided by
the Fund record unit value (see 3.05) for the
Valuation Period in which the Purchase
Payment is received in good order at Aetna's
Home Office.
3.04 NET RETURN FACTOR(S) -- The net return factor(s) are used to compute
SEPARATE ACCOUNT: all Separate Account record units for any
Fund.
The net return factor for each Fund is equal
to 1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held
by the Separate Account at the end of
the Valuation Period; minus
(b) The value of the shares of the Fund held
by the Separate Account at the start of
the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the
Separate Account (if any); divided by
(d) The total value of the Fund record units
and Fund Annuity units of the Separate
Account at the start of the Valuation
Period; minus
(e) A daily Separate Account charge at an
annual rate as shown on Contract
Schedule I for mortality and expense
risks, which may include profit; and a
daily administrative charge.
A net return rate may be more or less than
0%. The value of a share of the Fund is equal
to the net assets of the Fund divided by the
number of shares outstanding.
3.05 FUND RECORD UNIT A Fund record unit value is computed by
VALUE -- SEPARATE ACCOUNT: multiplying the net return factors for the
current Valuation Period by the Fund record
unit value for the previous Period. The
dollar value of Fund record units, Separate
Account assets, and Variable Annuity payments
may go up or down due to investment gain or
loss.
3.06 MARKET VALUE Except as noted below, there will be an MVA
Adjustment: for a withdrawal from the AG Account before
the end of a Guaranteed Term when the
withdrawal is due to:
(a) A Transfer; except for Transfers from
the one-year AG Account Guaranteed Term
under the Dollar Cost Averaging program
or, as specified in 1.24, AG Account
Matured Term Value Transfer;
(b) A full or partial surrender (including a
15% free withdrawal under 3.14), except
for a partial withdrawal under the
Systematic Withdrawal Option (see 3.10);
or
(c) An election of Annuity option 2 (see
4.07).
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<PAGE>
3.06 MARKET VALUE Full and partial surrenders and
ADJUSTMENT Transfers made within six months
(CONT'D): after the date of the Annuitant's death
will be the greater of:
(a) The aggregate MVA amount which is
the sum of all market value
adjusted amounts calculated due to
a withdrawal of amounts. This total
may be greater or less than the
Current Value of those amounts; or
(b) The applicable portion of the
Current Value in the AG Account.
After the six-month period, the
surrender or transfer will be the
aggregate MVA amount, which may be
greater or less than the Current Value
of those amounts.
The greater of the aggregate MVA amount
or the applicable portion of the Current
Value applies to amounts withdrawn from
the AG Account on account of an election
of Annuity options 3 or 4 (see 4.07).
Market value adjusted amounts will be
equal to the amount withdrawn multiplied
by the following ratio:
x
-----
365
(1 + i)
----------------
x
-----
365
(1 + j)
Where:
i is the Deposit
Period Yield
j is the Current Yield
x is the number of days
remaining, (computed
from Wednesday of the
week of withdrawal) in
the Guaranteed Term.
The Deposit Period Yield will be
determined as follows:
(a) At the close of the last business
day of each week of the Deposit
Period, a yield will be computed as
the average of the yields on that
day of U.S. Treasury Notes which
mature in the last three months of
the Guaranteed Term.
(b) The Deposit Period Yield is the
average of those yields for the
Deposit Period. If withdrawal is
made before the close of the
Deposit Period, it is the average
of those yields on each week
preceding withdrawal.
The Current Yield is the average of the
yields on the last business day of the
week preceding withdrawal on the same
U.S. Treasury Notes included in the
Deposit Period Yield.
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<PAGE>
3.06 MARKET VALUE In the event that no U.S. Treasury Notes
ADJUSTMENT which mature in the last three months of
(CONT'D): the Guaranteed Term exist, Aetna
reserves the right to use the U.S.
Treasury Notes that mature in the
following quarter.
If. U.S. Treasury Notes are no longer
available, a suitable replacement index,
subject to approval of the
Superintendent of the New York Insurance
Department, would then be utilized.
A detailed description of the MVA has
been filed with the Superintendent of
the New York Insurance Department.
3.07 TRANSFER OF CURRENT VALUE Before an Annuity option is elected, all
FROM THE FUNDS OR or any portion of the Adjusted Current
AG ACCOUNT: Value may be transferred from any Fund
or Guaranteed Term of the AG Account:
(a) To any other Fund; or
(b) To any Guaranteed Term of the AG
Account available in the current
Deposit Period.
Transfer requests can be submitted as a
percentage or as a dollar amount. The
minimum transfer amount is shown on
Contract Schedule I. Within a Guaranteed
Term Group, the amount to be surrendered
or transferred will be withdrawn first
from the oldest Deposit Period, then
from the next oldest, and so on until
the amount requested is satisfied.
The Certificate Holder may make an
unlimited number of Transfers during the
Accumulation Period. The number of free
Transfers allowed by Aetna is shown on
Contract Schedule I. Additional
Transfers may be subject to a Transfer
fee as shown on Contract Schedule I.
Amounts transferred from the AG Account
under the Dollar Cost Averaging program,
or amounts transferred as a Matured Term
Value on or within the calendar month of
the Term's Maturity Date, do not count
against the annual Transfer limit.
Amounts applied to Guaranteed Terms of
the AG Account may not be transferred to
the Funds or to another Guaranteed Term
during the Deposit Period or for 90 days
after the close of the Deposit Period
except for:
(1) a Matured Term Value(s) during the
calendar month following the Term's
Maturity Date and
(2) amounts transferred from the one-
year AG Account Guaranteed Term
under the Dollar Cost Averaging
program.
Transfers from Guaranteed Terms of the
AG Account are subject to the MVA
provisions in 3.06.
3.08 NOTICE TO THE CONTRACT The Certificate Holder will receive
HOLDER: quarterly statements from Aetna of:
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<PAGE>
(a) The value of any amounts held in:
(1) The AG Account; and
(2) The Fund(s) under the
Separate Account.
(b) The number of any Fund(s) record
units; and
(c) The Fund(s) record unit value.
3.08 NOTICE TO THE CONTRACT Such number or values will be as of a
HOLDER specific date no more than 60 days
(CONT'D): before the date of the notice.
3.09 LOANS: Loans are not available under this
Contract.
3.10 SYSTEMATIC WITHDRAWAL The following distribution options
OPTION (SWO) may be elected by the Certificate Holder
during the Accumulation Period. A
distribution option under which a
portion of the Account's Current Value
will automatically be surrendered and
distributed each year. SWO payments will
be calculated based on the Account's
full Current Value. The distributed
amount will be withdrawn pro rata from
each investment option used under the
Account. A Surrender Fee will not be
deducted from any portion of the Current
Value which is paid as a distribution
under SWO. Certificate Holders should
consult their tax advisers prior to
requesting this distribution option.
Aetna will not be responsible for any
adverse tax consequences due to
receiving SWO payments.
(a) Amount of Distribution: The
Certificate Holder may elect one of
the three payment methods described
below.
(1) Specified Payment: Payment of
a designated dollar amount.
The annual amount may not be
greater than the percentage of
the Account's Current Value on
the date of the SWO election
as shown on Contract Schedule
I. This annual dollar amount
will remain constant. The
minimum SWO payment amount is
shown on Contract Schedule I.
If SWO payments are made more
frequently than annually, the
designated annual amount is
divided by the number of
payments due each year; or
(2) Specified Period: Payments
made over a designated period
of time of at least 10 years.
The annual payment is
calculated by dividing the
Current Value as of December
31 of the year prior to the
payment year by the number of
payment years remaining; or
(3) Specified Percentage: Payments
of a designated percentage
which cannot be greater than
the percentage of the Current
Value at the time of election
as shown on Contract Schedule
I. The percentage may be
changed by written request.
Aetna reserves the right to
limit the number of times the
percentage may be changed. The
annual amount is calculated by
multiplying the Current Value
as of December 31 of the year
prior to the payment year by
the designated percentage.
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Payments upon the Contract Holder's
death will continue to the Beneficiary
in the manner described in 3.11.
3.10 SYSTEMATIC WITHDRAWAL (b) Minimum Initial Current Value:
OPTION (SWO) The Minimum Initial Current Value
(CONT'D): required to begin SWO is shown on
Contract Schedule I. If after
election of this option the Current
Value is insufficient to make a
scheduled SWO payment, Aetna will
distribute the entire balance.
(c) Date of Distribution: The Contract
Holder shall specify the first
payment date. The earliest
allowable first payment date is the
date on which the Contract Holder
attains age 59 1/2. The latest
allowable SWO payment date is the
month of the Contract Holder's 85th
birthday. As elected by the
Contract Holder, SWO payments will
be made on a monthly, quarterly,
semi-annual or annual basis. If SWO
payments are made more frequently
than annually, the designated
annual amount is divided by the
number of payments due each year.
Subsequent payments will be made on
the 15th of the appropriate months
or on such other date as Aetna may
designate or allow.
(d) Election and Revocation: SWO may be
elected by the Certificate Holder
or a spouse beneficiary if elected
after the Certificate Holders death
by submitting a completed and
signed election form to Aetna's
Home Office. Once elected, this
option may be revoked by the
Certificate Holder or spousal
Beneficiary, if elected after the
Certificate Holder's death, by
submitting a written request to
Aetna at its Home Office. Any
revocation will apply only to
amounts not yet paid. SWO may be
elected only once by the
Certificate Holder or by the spouse
Beneficiary.
3.11 DEATH BENEFIT AMOUNT: If the Certificate Holder or Annuitant
dies before Annuity payments start, the
Beneficiary is entitled to a death
benefit under the Account. If the
Account is owned jointly, the death
benefit is paid at the death of the
first joint Certificate Holder to die.
The claim date is the date when proof of
death and the Beneficiary's claim are
received in good order at Aetna's Home
Office. The amount of the death benefit
is determined as follows:
(a) Death of Annuitant less than 85
years of age: The guaranteed death
benefit is the greatest of:
(1) The sum of all Net Purchase
Payment(s) made to the Account
(as of the date of death) minus
the sum of all amounts
surrendered, applied to an
Annuity, or deducted from the
Account;
27
<PAGE>
3.11 DEATH BENEFIT AMOUNT (2) The highest step-up value as
(CONT'D) of the date of death. A step-
up value is determined on each
anniversary of the Effective
Date. Each step-up value is
calculated as the Account's
Current Value on the Effective
Date anniversary, increased by
the amount of any Purchase
Payment(s) made, and decreased
by the sum of all amounts
surrendered, deducted, and/or
applied to an Annuity option
since the Effective Date
anniversary.
(3) The Account's Current Value as
of the date of death.
The excess, if any, of the guaranteed
death benefit value over the Account's
Current Value is determined as of the
date of death. Any excess amount will be
deposited in the Account and allocated
to Aetna Variable Encore Fund as of the
claim date. The Current Value on the
claim date plus any excess amount
deposited becomes the Account's Current
Value.
(b) Death of Annuitant age 85 or
greater: The death benefit is the
greatest of:
(1) The sum of all Net Purchase
Payment(s) made to the account
(as of the date of death)
minus the sum of all amounts
surrendered, applied to an
Annuity, or deducted from the
Account;
(2) The highest step-up value
prior to the Certificate
Holder's 85th birthday.
A step-up value is determined
on each anniversary of the
Effective Date. Each step-up
value is calculated as the
Account's Current Value on the
Effective Date anniversary,
increased by the amount of any
Purchase Payment(s) made, and
decreased by the sum of all
amounts surrendered, deducted,
and/or applied to an Annuity
option since the Effective
Date anniversary.
(3) The Account's Current Value as
of the date of death.
The excess, if any, of the guaranteed
death benefit value over the Account's
Current Value is determined as of the
date of death. Any excess amount will be
deposited in the Account and allocated
to the Aetna Variable Encore Fund as of
the claim date. The Current Value on the
claim date, plus any excess amount
deposited, becomes the Account's Current
Value.
(c) Death of the Certificate Holder if
the Certificate Holder is not the
Annuitant: The death benefit amount
is the Account's Adjusted Current
Value on the Claim Date. A
Surrender Fee may apply to any full
or partial surrender (see 3.14 and
Contract Schedule I).
28
<PAGE>
3.11 DEATH BENEFIT AMOUNT (d) At the death of a surviving spouse
(CONT'D) Beneficiary who continued the
Account in his or her own name, the
death benefit amount is equal to
the Account's Current Value less
any applicable Surrender Fee on the
amount of any Purchase Payment(s)
made since the death of the
Certificate Holder.
3.12 DEATH BENEFIT OPTIONS Prior to any election, or until amounts
AVAILABLE TO BENEFICIARY: must be otherwise distributed under this
section, the Current Value of the
account will be retained in the Account.
The Beneficiary has the right under the
Contract to allocate or reallocate any
amount to any of the available
investment options (subject to an MVA,
as applicable). The following options
are available to the Beneficiary:
(a) When the Contract Holder is the
Annuitant: If the Contract
Holder/Annuitant dies, and:
(1) If the Beneficiary is the
Certificate Holder's surviving
spouse, the surviving spouse
may exercise all rights under
the Contract and continue in
the Accumulation Period, or
may elect (i), (ii), or (iii)
below. Under the Code,
distributions from the Account
are not required until the
Spousal Beneficiary's death.
The Spousal Beneficiary may
elect to:
(i) Apply some or all of the
Adjusted Current Value
of the Account to
Annuity option 2, 3 or 4
(see 4.07);
(ii) Apply some or all of the
Adjusted Current Value
to Annuity option 1 (see
4.07); or
(iii) Receive, at any time, a
lump sum payment equal
to the Adjusted Current
Value of the Account.
(2) If the Beneficiary is other
than the Certificate Holder's
surviving spouse, then options
(i), (ii), or (iii) under (1)
above apply. Any portion of
the Adjusted Current Value of
the Account not applied to
Annuity option 2, 3 or 4
within one year of the
Certificate Holder's death,
must be distributed within
five years of the date of
death.
(3) If no Beneficiary exists, a
lump sum payment equal to the
Adjusted Current Value will be
made to the Certificate
Holder's estate.
(b) When the Certificate Holder is not
the Annuitant and the Certificate
Holder dies, and:
29
<PAGE>
3.12 DEATH BENEFIT OPTIONS (1) If the Beneficiary is the
AVAILABLE TO BENEFICIARY Certificate Holder's surviving
(CONT'D) spouse, the Beneficiary may
exercise all rights under the
Contract and continue in the
Accumulation Period, or may
elect (i), (ii), or (iii)
below. Under the Code,
distributions from the Account
are not required under the
spousal Beneficiary's death.
The spousal Beneficiary may
elect to:
(i) Apply some or all of the
Adjusted Current Value
of the Account to
Annuity option 2, 3 or 4
(see 4.07);
(ii) Apply some or all of the
Adjusted Current Value
to Annuity option 1 (see
4.07); or
(iii) Receive, at any time, a
lump sum payment equal
to the Adjusted Current
Value of the Account.
(2) If the Beneficiary is other
than the Certificate Holder's
surviving spouse, then options
(i), (ii), or (iii) under (1)
above apply. Any portion of
the Adjusted Current Value not
applied to Annuity option 2, 3
or 4 within one year of the
Certificate Holder's death,
must be distributed within
five years of the date of
death.
(3) If no Beneficiary exists, a
lump sum payment equal to the
Surrender Value will be made
to the Certificate Holder's
estate.
(c) When the Certificate Holder is not
the Annuitant and the Annuitant
dies: The Beneficiary must elect
Annuity option 2, 3 or 4 within 60
days of the date of death or the
gain, if any, will be includible in
the Beneficiary's income in the tax
year in which the Annuitant dies.
3.13 LIQUIDATION OF All or any portion of the Account's
SURRENDER VALUE: Current Value may be surrendered at any
time. Surrender requests can be
submitted as a percentage of the
Account's Adjusted Current Value or as a
specific dollar amount. Net Purchase
Payment amounts are withdrawn first, and
then the excess value, if any. For any
partial surrender, amounts are withdrawn
on a pro rata basis from the Fund(s)
and/or the Guaranteed Term(s) Groups of
the AG Account in which the Current
Value is invested. Within a Guaranteed
Term Group, the amount to be surrendered
or transferred will be withdrawn first
from the oldest Deposit Period, then
from the next oldest, and so on until
the amount requested is satisfied.
After deduction of the Maintenance Fee,
if applicable, the surrendered amount
shall be reduced by a Surrender Fee, if
applicable.
An MVA may apply to amounts surrendered
from the AG Account.
30
<PAGE>
3.14 SURRENDER FEE: The Surrender Fee only applies to the
Net Purchase Payment(s) portion
surrendered and varies according to the
elapsed time since deposit (see Contract
Schedule I). Net Purchase Payment
amounts are withdrawn in the same order
they were applied.
No Surrender Fee is deducted from any
portion of the Net Purchase Payment
which is paid:
(a) To a Beneficiary due to the
Annuitant's death before Annuity
payments start, up to a maximum of
the aggregate Net Purchase
Payment(s) minus the total of all
partial surrenders, amounts applied
to an Annuity and deductions made
prior to the Annuitant's date of
death;
(b) As a premium for an Annuity option
2, 3 or 4 under this Contract (see
4.07);
(c) As a distribution under the SWO
provision (see 3.10);
(d) At least 12 months after the date
of the Purchase Payment to the
Account, in an amount equal to or
less than 15% of the Current Value.
This applies to the first surrender
request, partial or full, in a
calendar year. The Current Value is
calculated as of the date the
surrender request is received in
good order at Aetna's Home Office.
This waiver is not available to the
Contract Holder while SWO is in
effect; or
(e) For a full surrender of the Account
where the Current Value of the
Account is $2,500 or less and no
surrenders have been taken from the
Contract within the prior 12
months.
3.15 PAYMENT OF Under certain emergency conditions,
SURRENDER VALUE: Aetna may defer payment:
(a) For a period of up to 6 months
(unless not allowed by state law);
or
(b) As provided by federal law under
the Investment Company Act of 1940.
IV. ANNUITY PROVISIONS
--------------------------------------------------------------------------------
4.01 CHOICES TO BE MADE: The Certificate Holder may tell Aetna to
apply any portion of the Adjusted
Current Value (minus any premium tax)
for an Annuity under option 2, 3, or 4
(see 4.07). The first Annuity payment
may not be earlier than one calendar
year after the Purchase Payment nor
later than the first day of the month
following the Annuitant's 85th birthday.
When an Annuity Option is chosen, Aetna
must also be told if payments are to be
made other than monthly and whether to
pay:
31
<PAGE>
4.01 CHOICES TO BE MADE: (a) A Fixed Annuity using the General
(CONT'D) Account;
(b) A Variable Annuity using any of the
Fund(s) available under this
Contract for Annuity purposes; or
(c) A combination of (a) and (b).
If a Fixed Annuity is chosen, the
Annuity purchase rate for the option
chosen reflects at least the Minimum
Guaranteed Interest Rate (see Contract
Schedule II), but may reflect a higher
interest rate. If a Variable Annuity is
chosen, the initial Annuity payment for
the option chosen reflects the assumed
annual return rate elected. (see
Contract Schedule II).
4.02 TERMS OF ANNUITY (a) When payments start, the age of the
OPTIONS: Annuitant plus the number of years
for which payments are guaranteed
must not exceed 95.
(b) An Annuity option may not be
elected if the first payment would
be less than $50 or if the total
payments in a year would be less
than $250 (less if required by
state law). Aetna reserves the
right to increase the minimum first
Annuity payment amount and the
annual minimum annual Annuity
payment amount based upon increases
reflected in the Consumer Price
Index-Urban, (CPI-U) since July 1,
1993.
(c) If a Fixed Annuity under option 2,
3 or 4 is chosen and a larger
payment would result from applying
the Surrender Value or, if greater,
95% of what the surrender would be
if there were no surrender fee, to
a current Aetna single premium
immediate Annuity, Aetna will make
the larger payment.
(d) For purposes of calculating the
guaranteed first payment of a
Variable Annuity or the payments
for a Fixed Annuity, the
Annuitant's and second Annuitant's
adjusted age will be used. The
Annuitant's and second Annuitant's
adjusted age is his or her age as
of the birthday closest to the
Annuity commencement date reduced
by one year for Annuity
commencement dates occurring during
the period of time from July 1,
1993 through December 31, 1999. The
Annuitant's and second Annuitant's
age will be reduced by two years
for Annuity commencement dates
occurring during the period of time
from January 1, 2000 through
December 31, 2009. The Annuitant's
and second Annuitant's age will be
reduced by one additional year for
Annuity commencement dates
occurring in each succeeding
decade.
The Annuity purchase rates for
options 3 and 4 are based on
mortality from 1983 Table a.
32
<PAGE>
4.02 TERMS OF ANNUITY (e) Assumed Annual Net Return Rate is
OPTIONS (CONT'D) the interest rate used to determine
the amount of the first Annuity
payment under a Variable Annuity as
shown on Contract Schedule II. The
Separate Account must earn this
rate plus enough to cover the
mortality and expense risk charges
(which may include profit) and
administrative charges if future
Variable Annuity Payments are to
remain level, (see Annuity return
factor under Variable Annuity
Assumed Annual Net Return Rate on
Contract Schedule II).
(f) Once elected, Annuity payments
cannot be commuted to a lump sum
except for Variable Annuity
payments under option 2 (see 4.07).
The life expectancy of the
Annuitant and second Annuitant
shall be irrevocable upon the
election of an Annuity option.
4.03 DEATH OF ANNUITANT/ (a) Certificate Holder is Annuitant:
BENEFICIARY: When the Certificate Holder is the
Annuitant and the Annuitant dies
under option 2 or 3, or both the
Annuitant and the second Annuitant
die under option 4(d), the present
value of any remaining guaranteed
payments will be paid in one sum to
the Beneficiary, or upon election
by the Beneficiary, any remaining
payments will continue to the
Beneficiary. If option 4 has been
elected and the Certificate Holder
dies, the remaining payments will
continue to the successor payee. If
no successor payee has been
designated, the Beneficiary will be
treated as the successor payee. If
the Account has joint Certificate
Holders, the surviving joint
Certificate Holder will be deemed
the successor payee.
(b) Certificate Holder is Not
Annuitant: When the Certificate
Holder is not the Annuitant and the
Certificate Holder dies, the
remaining payments under options 2,
3 or 4 will continue to the
successor payee. If no successor
payee has been designated, the
Beneficiary will be treated as the
successor payee. If the Account has
joint Certificate Holders, the
surviving joint Certificate Holder
will be deemed the successor payee.
If the Annuitant dies under option
2 or 3, or if both the Annuitant
and the second Annuitant die under
option 4(d), the present value of
any remaining guaranteed payments
will be paid in one sum to the
Beneficiary, or upon the election
by the Beneficiary, any remaining
payments will continue to the
Beneficiary. If option 4 has been
elected, and the Annuitant dies,
the remaining payments will
continue to the Certificate Holder.
(c) No Beneficiary Named/Surviving: If
there is no Beneficiary under
option 2, 3 or 4, the present value
of any remaining payments will be
paid in one sum to the Certificate
Holder, or if the Certificate
Holder is not living, then to the
Certificate Holder's estate.
33
<PAGE>
4.03 DEATH OF ANNUITANT/ (d) If the Beneficiary designated under
BENEFICIARY option 1 dies, the amount held plus
(CONT'D) accrued interest will be paid in
one sum to a successor Beneficiary,
if any, named by the designated
Beneficiary. If there is no
successor Beneficiary, the lump sum
will be paid to the designated
Beneficiary's estate.
(e) If the Beneficiary or the successor
payee dies while receiving Annuity
payments, the present value of any
remaining guaranteed payments will
be paid in one sum to the successor
Beneficiary/payee, or upon election
by the successor Beneficiary/payee,
any remaining payments will
continue to the successor
Beneficiary/payee. If no successor
Beneficiary/payee has been
designated, the present value of
any remaining guaranteed payments
will be paid in one sum to the
Beneficiary's/payee's estate.
(f) The present value will be
determined as of the Valuation
Period in which proof of death
acceptable to Aetna and a request
for payment is received at Aetna's
Home Office. The interest rate used
to determine the first payment will
be used to calculate the present
value.
4.04 FUND(S) ANNUITY UNITS -- The number of each Fund's Annuity units
SEPARATE ACCOUNT: is based on the amount of the first
Variable Annuity payment which is equal
to:
(a) The portion of the Current Value
applied to pay a Variable Annuity
(minus any premium tax); divided by
(b) 1,000; multiplied by
(c) The payment rate for the option
chosen.
Such amount, or portion, of the variable
payment will be divided by the
appropriate Fund Annuity unit value (see
4.05) on the tenth Valuation Period
before the due date of the first payment
to determine the number of each Fund
Annuity units. The number of each Fund
Annuity units remains fixed. Each future
payment is equal to the sum of the
products of each Fund Annuity unit value
multiplied by the appropriate number of
Units. The Fund Annuity unit value on
the tenth Valuation Period prior to the
due date of the payment is used.
4.05 FUND(S) ANNUITY UNIT For any Valuation Period, a Fund Annuity
VALUE -- SEPARATE unit value is equal to:
ACCOUNT:
(a) The value for the previous Period;
multiplied by
(b) The Annuity net return factor(s)
(see 4.06 below) for the Period;
multiplied by
(c) A factor to reflect the assumed
annual net return rate (see
Contract Schedule II).
The dollar value of a Fund Annuity unit
value and Annuity payments may go up or
down due to investment gain or loss.
34
<PAGE>
4.06 ANNUITY NET RETURN The Annuity net return factor(s) are
FACTOR(S) -- SEPARATE used to compute Annuity payments for any
ACCOUNT: Fund.
The Annuity net return factor(s) for
each Fund is equal to 1.0000000 plus the
net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund
held by the Separate Account at the
end of a Valuation Period; minus
(b) The value of the shares of the Fund
held by the Separate Account at the
start of the Valuation Period; plus
or minus
(c) Taxes (or reserves for taxes) on
the Separate Account (if any);
divided by
(d) The total value of the Fund record
units and the Fund Annuity units of
the Separate Account at the start
of the Valuation Period; minus
(e) A daily charge for Annuity
mortality and expense risks, which
may include profit, and a daily
administrative charge (at the
annual rate as shown on Contract
Schedule II).
A net return rate may be more or less
than 0%.
The value of a share of the Fund is
equal to the net assets of the Fund
divided by the number of shares
outstanding.
Payments shall not be changed due to
changes in the mortality or expense
results or administrative charges.
4.07 ANNUITY OPTIONS: Option 1 -- Payment of Interest on Sum
Left with Aetna -- This option may be
used only by the Beneficiary when the
Certificate Holder dies before Aetna has
started paying an Annuity. A portion or
all of the sum paid upon death may be
held under this option and will be held
in the General Account of Aetna at
interest (see 4.01). The Beneficiary may
later tell Aetna to:
(a) Pay a portion or all of the sum
held by Aetna; or
(b) Apply a portion or all of the sum
held by Aetna to any Annuity option
below.
If a nonspouse Beneficiary elects that
some or all of the Current Value is to
be held under this option, the
Beneficiary must tell Aetna to pay the
full sum held under this option within 5
years of the date of death.
Option 2 -- Payments for a Stated Period
of Time -- An Annuity will be paid for
the number of years chosen. The number
of years must be at least 5 and not more
than 30.
If payments for this option are made
under a Variable Annuity, the present
value of any remaining payments may be
withdrawn
35
<PAGE>
4.07 ANNUITY OPTIONS: at any time. If a withdrawal is
(CONT'D) requested within 3 years after the start
of payments, it will be treated as a
surrender and any applicable Surrender
Fee will be applied (see 3.14).
If a nonspouse Beneficiary elects this
option at the death of the Contract
Holder, the period selected may not
extend beyond the Beneficiary's life
expectancy.
Option 3 -- Life Income -- An Annuity
will be paid for the life of the
Annuitant. If also chosen, Aetna will
guarantee payments for 60, 120, 180, or
240 months.
Option 4 -- Life Income Based upon the
Lives of Two Annuitants -- An Annuity
will be paid during the lives of the
Annuitant and a second Annuitant.
Payments will continue until both
Annuitants have died. When this option
is chosen, a choice must be made of:
(a) 100% of the payment to continue
after the first death;
(b) 66 2/3% of the payment to continue
after the first death;
(c) 50% of the payment to continue
after the first death;
(d) Payments for a minimum of 120
months with 100% of the payment to
continue after the first death; or
(e) 100% of the payment to continue at
the death of the second Annuitant
and 50% of the payment to continue
at the death of the Annuitant.
Other Options -- Aetna may make other
options available as allowed by the laws
of the state in which this Contract and
the Certificate is delivered.
36
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
--------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ----------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.27 $3.90 $4.26 $3.90 $4.22 $3.89 $4.17 $3.86 $4.08 $3.82
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58
63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79
66 6.30 5.51 6.21 5.47 5.93 5.36 5.56 5.16 5.08 4.86
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35
----------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
38
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
ADJUSTED AGES
-----------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.13
55 55 3.88 4.25 4.47 3.87 4.25
55 60 3.06 4.47 4.71 4.06 4.36
60 55 3.99 4.44 4.71 3.98 4.55
60 60 4.24 4.71 4.99 4.23 4.70
60 65 4.49 5.01 5.32 4.48 4.85
65 60 4.38 4.97 5.32 4.38 5.10
65 65 4.72 5.33 5.70 4.71 5.32
65 70 5.07 5.75 6.17 5.05 5.54
70 65 4.93 5.68 6.15 4.91 5.86
70 70 5.40 6.21 6.70 5.36 6.18
70 75 5.89 6.82 7.40 5.81 6.49
75 70 5.69 6.68 7.32 5.62 6.92
75 75 6.37 7.45 8.15 6.23 7.40
75 80 7.07 8.34 9.16 6.78 7.85
-----------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
39
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
ADJUSTED AGES
------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.75 $4.07 $4.26 $3.75 $3.98
55 55 3.88 4.25 4.47 3.87 4.06
55 60 3.99 4.44 4.71 3.98 4.12
60 55 4.06 4.47 4.71 4.06 4.37
60 60 4.24 4.71 4.99 4.23 4.47
60 65 4.38 4.97 5.32 4.38 4.54
65 60 4.49 5.01 5.32 4.48 4.89
65 65 4.72 5.33 5.70 4.71 5.02
65 70 4.93 5.68 6.15 4.91 5.14
70 65 5.07 5.75 6.17 5.05 5.60
70 70 5.40 6.21 6.70 5.36 5.79
70 75 5.69 6.68 7.32 5.62 5.96
75 70 5.89 6.83 7.40 5.81 6.63
75 75 6.37 7.45 8.15 6.23 6.92
75 80 6.78 8.11 8.99 6.54 7.15
--------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
40
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
YEARS GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
RATE PAYMENT PAYMENT PAYMENT PAYMENT
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.95 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
--------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
YEARS GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
RATE PAYMENT PAYMENT PAYMENT PAYMENT
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
--------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ----------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.56 $4.20 $4.55 $4.19 $4.51 $4.18 $4.45 $4.15 $4.36 $4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
----------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
43
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ----------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 6.07 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
----------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
44
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
ADJUSTED AGES
-----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
--------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
45
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
ADJUSTED AGES
-----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.03 $4.36 $4.55 $4.03 $4.41
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.27 4.73 5.00 4.26 4.83
60 55 4.34 4.76 5.00 4.34 4.64
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.66 5.25 5.61 4.65 5.39
65 60 4.76 5.29 5.60 4.75 5.13
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.19 5.97 6.44 5.17 6.14
70 65 5.34 6.03 6.46 5.31 5.81
70 70 5.67 6.49 6.99 5.62 6.47
70 75 5.95 6.96 7.61 5.87 7.20
75 70 6.16 7.10 7.68 6.07 6.77
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.04 8.39 9.29 6.79 8.70
------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
46
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
ADJUSTED AGES
-----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $ 5.48 $4.88 $5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
47
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
ADJUSTED AGES
-----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.93 $5.27 $ 5.46 $4.93 $5.19
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.15 5.63 5.91 5.14 5.73
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.52 6.14 6.51 5.51 6.28
65 60 5.61 6.16 6.49 5.60 6.01
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.04 6.84 7.34 6.00 7.03
70 65 6.17 6.90 7.33 6.13 6.67
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.77 7.84 8.51 6.68 8.08
75 70 6.97 7.96 8.56 6.87 7.62
75 75 7.45 8.60 9.33 7.27 8.55
75 80 7.86 9.28 10.20 7.57 9.59
------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
48
<PAGE>
--------------------------------------------------------------------------------
[LOGO OF AETNA APPEARS HERE]
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
CERTIFICATE OF GROUP ANNUITY COVERAGE
--------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
49
<PAGE>
EXHIBIT EX99.B.4(b)
___________________________________________________
[LOGO APPEARS HERE] AETNA LIFE INSURANCE AND ANNUITY COMPANY
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
Aetna Life Insurance and Annuity Company, herein
called Aetna, agrees to pay the benefits stated in
the Contract.
________________________________________________________________________________
CERTIFICATE OF To the Certificate Holder:
GROUP ANNUITY
COVERAGE Aetna certifies that coverage is in force for you
under the stated Group Annuity Contract and
Certificate numbers. All data shown here is taken
from Aetna records and is based upon information
furnished by you.
This Certificate is a summary of the Group Annuity
Contract provisions. It replaces any and all prior
certificates, riders, or amendments issued to you
under the stated Contract and Certificate numbers.
This Certificate is for information only and is not
a part of the Contract.
THE VARIABLE FEATURES OF THE GROUP CONTRACT ARE
DESCRIBED IN PARTS III AND IV.
________________________________________________________________________________
RIGHT TO You may cancel this Certificate within 10 days of
CANCEL receiving it by returning this Certificate along
with a written notice to Aetna at the above
address or to the agent from whom it was
purchased. Within 7 days after it receives the
notice of cancellation and this Certificate at its
Home Office, Aetna will return the entire
consideration paid plus any increase or minus any
decrease in the current value of any funds
allocated to the Separate Account.
Dan Kearney Lucille M. Nickerson
President Secretary
________________________________________________________________________________
Contract Holder Group Annuity Contract No.
SPECIMEN SPECIMEN
________________________________________________________________________________
Your Name Certificate No.
JOHN DOE SPECIMEN
________________________________________________________________________________
Annuitant Name Type of Plan
JOHN DOE JR. IRA ROLLOVER
________________________________________________________________________________
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE
ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN
EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE
ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS
MATURITY.
1
<PAGE>
SPECIFICATIONS
________________________________________________________________________________
GUARANTEED There are guaranteed interest rates for amounts
INTEREST RATE held in the AG Account (see Contract Schedule I).
________________________________________________________________________________
DEDUCTIONS FROM There will be deductions for mortality and expense
THE SEPARATE risks and administrative fees (see Contract
ACCOUNT Schedule I and II).
________________________________________________________________________________
DEDUCTION FROM Purchase Payment is subject to a deduction for
PURCHASE premium taxes, if any (see 3.01).
PAYMENT(S)
________________________________________________________________________________
SURRENDER There will be a charge deducted upon surrender
FEE (see Contract Schedule I).
2
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
________________________________________________________________________________
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the
ACCOUNT: Current Value allocated to the Separate Account.
The deduction is the daily equivalent of the annual
effective percentage shown in the following chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available
with this Contract are:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
The Alger American Fund - Alger American Balanced
Portfolio
The Alger American Fund - Alger American Income and
Growth Portfolio
The Alger American Fund - Alger American Growth
Portfolio
The Alger American Fund - Alger American Midcap
Growth Portfolio
The Alger American Fund - Alger American Leveraged
Allcap Portfolio
The Alger American Fund - Alger American Small
Capitalization Portfolio
Fidelity Investments Variable Insurance Products
Fund -High Income Portfolio
Fidelity Investments Variable Insurance Products
Fund -Equity-Income Portfolio
Fidelity Investments Variable Insurance Products
Fund -Growth Portfolio
Fidelity Investments Variable Insurance Products
Fund -Overseas Portfolio
Fidelity Investments Variable Insurance Products
Fund II -Investment Grade Bond Portfolio
Fidelity Investments Variable Insurance Products
Fund II -Asset Manager Portfolio
Fidelity Investments Variable Insurance Products
Fund II -Index 500 Portfolio
Fidelity Investments Variable Insurance Products
Fund II -Contrafund Portfolio
3
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT (CONT'D)
________________________________________________________________________________
SEPARATE ACCOUNT FUNDS Insurance Management Series -Equity Growth and
(CONT'D): Income Fund Insurance Management Series -
International Stock Fund
Insurance Management Series -Corporate Bond Fund
Insurance Management Series -U.S. Government Bond
Fund
Insurance Management Series -Utility Fund
Janus Aspen Series -Aggressive Growth Portfolio
Janus Aspen Series - Balanced Portfolio
Janus Aspen Series - Flexible Income Portfolio
Janus Aspen Series - Growth Portfolio
Janus Aspen Series - Short-Term Bond Portfolio
Janus Aspen Series - Worldwide Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust
TCI Portfolios, Inc. - TCI International
TCI Portfolios, Inc. - TCI Growth
TCI Portfolios, Inc. - TCI Balanced
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
________________________________________________________________________________
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
SEPARATE ACCOUNT AND AG ACCOUNT
________________________________________________________________________________
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during
the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna
reserves the right to charge $10 for each
subsequent Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current
Value is $50,000 or more on the date the
Maintenance Fee is to be deducted, the Maintenance
Fee is $0.
4
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CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
<TABLE>
<CAPTION>
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
________________________________________________________________________________
<S> <C>
SURRENDER FEE: For each surrender, the Surrender Fee will be
determined as follows:
Surrender Fee
Length of Time from Deposit of Net (as percentage of
Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may
OPTION (SWO) not be greater than 10% of the Current Value at
PERCENTAGE: time of election.
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
See 1. GENERAL DEFINITIONS for explanations.
</TABLE>
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CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
________________________________________________________________________________
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the
ACCOUNT: Current Value allocated to the Separate Account.
The deduction is the daily equivalent of the annual
effective percentage shown in the following chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available
with this Contract are:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Janus Aspen Series - Aggressive Growth Portfolio
Janus Aspen Series - Flexible Income Portfolio
Janus Aspen Series - Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust
TCI Portfolios, Inc. - TCI International
TCI Portfolios, Inc. - TCI Growth
TCI Portfolios, Inc. - TCI Balanced
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
________________________________________________________________________________
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
6
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CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
<TABLE>
<CAPTION>
SEPARATE ACCOUNT AND AG ACCOUNT
________________________________________________________________________________
<S> <C>
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during
the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna
reserves the right to charge $10 for each
subsequent Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current
Value is $50,000 or more on the date the
Maintenance Fee is to be deducted, the Maintenance
Fee is $0.
SURRENDER FEE: For each surrender, the Surrender Fee will be
determined as follows:
Surrender Fee
Length of Time from Deposit of Net (as percentage of
Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may
OPTION (SWO) not be greater than 10% of the Current Value at
PERCENTAGE: time of election.
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
</TABLE>
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CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
________________________________________________________________________________
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
See 1. GENERAL DEFINITIONS for explanations.
8
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CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
________________________________________________________________________________
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the
ACCOUNT: Current Value allocated to the Separate Account.
The deduction is the daily equivalent of the annual
effective percentage shown in the following chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available
with this Contract are:
Insurance Management Series - Equity Growth and
Income Fund
Insurance Management Series - Utility Fund
Insurance Management Series - Prime Money Fund
Insurance Management Series - U.S. Government Bond
Fund
Insurance Management Series - Corporate Bond Fund
Insurance Management Series - International Stock
Fund
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
________________________________________________________________________________
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
9
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
<TABLE>
<CAPTION>
SEPARATE ACCOUNT AND AG ACCOUNT
________________________________________________________________________________
<S> <C>
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during
the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna
reserves the right to charge $10 for each
subsequent Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current
Value is $50,000 or more on the date the
Maintenance Fee is to be deducted, the Maintenance
Fee is $0.
SURRENDER FEE: For each surrender, the Surrender Fee will be
determined as follows:
Surrender Fee
Length of Time from Deposit of Net (as percentage of
Purchase Payment (Years) Net Purchase Payment)
<S> <C>
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may
OPTION (SWO) not be greater than 10% of the Current Value at
PERCENTAGE: time of election.
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
</TABLE>
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CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
________________________________________________________________________________
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
See 1. GENERAL DEFINITIONS for explanations.
11
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CONTRACT SCHEDULE II
ANNUITY PERIOD
SEPARATE ACCOUNT
________________________________________________________________________________
CHARGES TO SEPARATE A daily charge at an annual effective rate of 1.25%
ACCOUNT: for Annuity mortality and expense risks. The
administrative charge is established upon election
of an Annuity option. This charge will not exceed
0.25%.
VARIABLE ANNUITY ASSUMED If a Variable Annuity is chosen, an assumed annual
ANNUAL NET RETURN RATE: net return rate of 5.0% may be elected. If 5.0% is
not elected, Aetna will use an assumed annual net
return rate of 3.5%.
The assumed annual net return rate factor for 3.5%
per year is 0.9999058.
The assumed annual net return rate factor for 5.0%
per year is 0.9998663.
If the portion of a Variable Annuity payment for
any Fund is not to decrease, the Annuity return
factor under the Separate Account for that Fund
must be:
(a) 4.75% on an annual basis plus an annual return
of up to 0.25% to offset the administrative
charge set at the time Annuity payments
commence if an assumed annual net return rate
of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return
of up to 0.25% to offset the administrative
charge set at the time Annuity payments
commence, if an assumed annual net return rate
of 5% is chosen.
FIXED ANNUITY
________________________________________________________________________________
MINIMUM GUARANTEED 3.0%
INTEREST RATE (effective
annual rate of return):
See 1. GENERAL DEFINITIONS for explanations.
12
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TABLE OF CONTENTS
I. GENERAL DEFINITIONS
________________________________________________________________________________
<TABLE>
<CAPTION>
PAGE
<S> <C>
1.01 Account................................................................10
1.02 Accumulation Period....................................................10
1.03 Adjusted Current Value.................................................10
1.04 ALIAC Guaranteed Account (AG Account)..................................10
1.05 Annuitant..............................................................10
1.06 Annuity................................................................10
1.07 Beneficiary............................................................10
1.08 Certificate Holder.....................................................10
1.09 Code...................................................................10
1.10 Contract...............................................................10
1.11 Contract Holder........................................................10
1.12 Current Value..........................................................10
1.13 Deposit Period.........................................................11
1.14 Dollar Cost Averaging..................................................11
1.15 Fixed Annuity..........................................................11
1.16 Fund(s)................................................................11
1.17 General Account........................................................11
1.18 Guaranteed Rate - AG Account...........................................11
1.19 Guaranteed Term........................................................11
1.20 Guaranteed Term(s) Groups..............................................11
1.21 Maintenance Fee........................................................11
1.22 Market Value Adjustment (MVA)..........................................12
1.23 Matured Term Value.....................................................12
1.24 Matured Term Value Transfer............................................12
1.25 Maturity Date..........................................................12
1.26 Net Purchase Payment...................................................12
1.27 Nonunitized Separate Account...........................................12
1.28 Purchase Payment.......................................................12
1.29 Reinvestment...........................................................13
1.30 Separate Account.......................................................13
1.31 Surrender Value........................................................13
1.32 Transfers..............................................................13
</TABLE>
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<TABLE>
<CAPTION>
PAGE
<S> <C>
1.33 Valuation Period (Period)..............................................13
1.34 Variable Annuity.......................................................13
II. GENERAL PROVISIONS
________________________________________________________________________________
2.01 Change of Contract.....................................................13
2.02 Change of Fund(s)......................................................14
2.03 Nonparticipating Contract..............................................14
2.04 Payments and Elections.................................................15
2.05 State Laws.............................................................15
2.06 Control of Contract....................................................15
2.07 Designation of Beneficiary.............................................15
2.08 Misstatements and Adjustments..........................................15
2.09 Incontestability.......................................................15
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
________________________________________________________________________________
3.01 Net Purchase Payment...................................................16
3.02 Certificate Holder's Account...........................................16
3.03 Fund(s) Record Units -- Separate Account...............................16
3.04 Net Return Factor(s) -- Separate Account...............................16
3.05 Fund Record Unit Value -- Separate Account.............................17
3.06 Market Value Adjustment................................................17
3.07 Transfer of Current Value from the Funds or AG Account.................18
3.08 Reports................................................................19
3.09 Notice to the Certificate Holder.......................................19
3.10 Loans..................................................................19
3.11 Distribution Options...................................................19
3.12 Death Benefit Amount...................................................23
3.13 Death Benefit Options Available to Beneficiary.........................24
3.14 Required Distribution to Certificate Holder/Beneficiary................25
3.15 Liquidation of Surrender Value.........................................26
3.16 Surrender Fee..........................................................26
3.17 Payment of Surrender Value.............................................27
</TABLE>
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<TABLE>
<CAPTION>
IV. ANNUITY PROVISIONS
________________________________________________________________________________
PAGE
<S> <C>
4.01 Choices to be Made.....................................................27
4.02 Annuity Payments to Certificate Holder.................................27
4.03 Annuity Payments to Beneficiary........................................28
4.04 Terms of Annuity Options...............................................28
4.05 Death of Annuitant/Beneficiary.........................................29
4.06 Fund(s) Annuity Units -- Separate Account..............................30
4.07 Fund Annuity Unit Value -- Separate Account............................30
4.08 Annuity Net Return Factor(s) -- Separate Account.......................30
4.09 Annuity Options........................................................31
</TABLE>
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<TABLE>
<CAPTION>
I. GENERAL DEFINITIONS
---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1.01 ACCOUNT: A record established for each Certificate Holder to maintain the value of the Net Purchase
Payment held on his/her behalf during the Accumulation Period.
1.02 ACCUMULATION PERIOD: The period during which the Net Purchase Payment is applied to the Contract to provide future
Annuity payment(s).
1.03 ADJUSTED CURRENT VALUE: The Current Value of a Contract plus or minus any aggregate AG Account MVA, if applicable. (See
1.21)
1.04 ALIAC GUARANTEED An accumulation option where Aetna guarantees stipulated
ACCOUNT rate(s) of interest for specified periods of time. All assets of
(AG ACCOUNT): Aetna, including amounts in the Nonunitized Separate Account, are available to meet the
guarantees under the AG Account.
1.05 ANNUITANT: The person whose life is measured for purposes of the guaranteed death benefit and the duration
of Annuity payments under this Contract. The Contract Holder and Annuitant must be the same
person under this Contract.
1.06 ANNUITY: Payment of an income:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.07 BENEFICIARY: The individual or estate entitled to receive any payment from the Contract upon the death of the
Annuitant.
1.08 CERTIFICATE HOLDER: A person who purchases an interest in this Contract as evidenced by a certificate.
1.09 CODE: The Internal Revenue Code of 1986, as it may be amended from time to time.
1.10 CONTRACT: This agreement between Aetna and the Contract Holder to provide an annuity which qualifies as an
Individual Retirement Annuity under Code Section 408(b) for the exclusive benefit of the
Contract Holder or his or her Beneficiary(ies).
1.11 CONTRACT HOLDER: The entity to which a group Contract is issued.
1.12 CURRENT VALUE: As of the most recent Valuation Period, the Net Purchase Payment and any additional amount
deposited pursuant to 3.12 plus any interest added to the portion allocated to the AG Account;
and plus or minus the investment experience of the portion allocated to the Funds since deposit;
less all Maintenance Fees deducted, any amounts surrendered and any amounts applied to an
Annuity.
</TABLE>
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<S> <C>
1.13 DEPOSIT PERIOD: A calendar week, a calendar month, a calendar quarter, or any other period of time
specified by Aetna during which the Net Purchase Payment, Transfers or Reinvestments
are accepted into the AG Account for one or more Guaranteed Terms. Aetna reserves
the right to extend the Deposit Period.
1.14 DOLLAR COST AVERAGING: A program that permits the Certificate Holder to systematically transfer amounts
from any of the Funds and the one-year AG Account Guaranteed Term to any of the
Funds by completing the appropriate section of the enrollment form or a Dollar Cost
Averaging election form.
1.15 FIXED ANNUITY: An Annuity with payments that do not vary in amount.
1.16 FUND(S): The open-end management investment companies (mutual funds) in which the Separate
Account invests (see Contract Schedule I for the specific fund options).
1.17 GENERAL ACCOUNT: The account holding the assets of Aetna, other than those assets held in Aetna's
separate accounts.
1.18 GUARANTEED RATE -- Aetna will declare the interest rate applicable to a specific
AG ACCOUNT: Guaranteed Term at the start of the Deposit Period for that Guaranteed
Term. The rate is guaranteed by Aetna for that Deposit Period and
the ensuing Guaranteed Term. The Guaranteed Rate is an annual effective
yield. That is, interest is credited daily at a rate that will produce the
Guaranteed Rate over the period of a year. No Guaranteed Rate will ever be less
than the Minimum Guaranteed Rate shown on Contract Schedule I.
1.19 GUARANTEED TERM: The period of time for which the AG Account Guaranteed Rate is guaranteed on the
Net Purchase Payment, Transfers and Reinvestments made into a current Deposit
Period for the AG Account. Such period begins on the day following the close of
the Deposit Period and ends on the designated Maturity Date. Guaranteed Terms are
offered at Aetna's discretion for various lengths of time ranging up to and including
ten years.
During a Deposit Period, Aetna may make available any number of Guaranteed Terms.
The Contract Holder may allocate the Net Purchase Payment and Transfers into any
or all of the available Guaranteed Terms.
1.20 GUARANTEED TERM(S) All AG Account Guaranteed Term(s) with the same length of
GROUPS: time from the close of the Deposit Period until the designated Maturity Date.
1.21 MAINTENANCE FEE: The Maintenance Fee (see Contract Schedule I) will be deducted during the Accumulation
Period from the Current Value on each anniversary of the date the Contract is
established and upon the surrender of the entire Contract.
</TABLE>
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<S> <C>
1.22 MARKET VALUE ADJUSTMENT An adjustment that may apply to an amount withdrawn or transferred from an AG Account
(MVA): Guaranteed Term prior to the end of that Guaranteed Term. The adjustment reflects
the change in the value of the investment due to changes in interest rates since the
date of deposit and is computed using the formula given in 3.06. The adjustment is
expressed as a percentage of each dollar being withdrawn.
1.23 MATURED TERM VALUE: The amount payable on an AG Account Guaranteed Term's Maturity Date.
1.24 MATURED TERM VALUE During the calendar month following an AG Account Maturity
TRANSFER: Date, the Certificate Holder may notify Aetna's Home Office in writing to Transfer or
surrender all or part of the Matured Term Value, plus interest at the new Guaranteed
Rate accrued thereon, from the AG Account without an MVA. This provision only applies
to the first such written request received from the Certificate Holder during this
period for any Matured Term Value.
1.25 MATURITY DATE: The last day of an AG Account Guaranteed Term.
1.26 NET PURCHASE PAYMENT: The Purchase Payment less premium taxes, as applicable.
1.27 NONUNITIZED SEPARATE A separate account set up by Aetna under Title 38, Section
ACCOUNT: 38a-433, of the Connecticut General Statutes, that holds assets for AG Account Terms.
There are no discrete units for this Account. The Certificate Holder does not participate
in the investment gain or loss from the assets held in the Nonunitized Separate Account.
Such gain or loss is borne entirely by Aetna. These assets may be chargeable
with liabilities arising out of any other business of Aetna.
1.28 PURCHASE PAYMENT: The cash payment accepted by Aetna at its Home Office which is a rollover amount under
Code Section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3). Aetna may require verification
that a rollover amount qualifies as such under the Code. Payments to Simplified Employee
Pension plans and annual deductible and nondeductible contributions to Individual Retirement
Annuities are not accepted under this Contract.
Aetna reserves the right to refuse to accept any Purchase Payment at any time for any reason. No
advance notice will be given to the Contract Holder or Certificate Holder.
</TABLE>
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<TABLE>
<S> <C>
1.29 REINVESTMENT: Aetna will mail a notice to the Contract Holder
at least 18 calendar days and not more than 45
days before a Guaranteed Term's Maturity Date.
This notice will contain the Terms available
during current Deposit Periods with their
Guaranteed Rate, and projected Matured Term
Value. If no specific
direction is given by the Certificate Holder
prior to the Maturity Date, each Matured Term
Value will be reinvested in the current Deposit
Period for a Guaranteed Term of the same
duration. If a Guaranteed Term of the same
duration is unavailable, each Matured Term Value
will automatically be reinvested in the current
Deposit Period for the next shortest Guaranteed
Term available. If no shorter Guaranteed Term is
available, the next longer Guaranteed Term will
be used. Aetna will mail a confirmation
statement to the Certificate Holder the next
business day after the Maturity Date. This
notice will sate the Guaranteed Term and
Guaranteed Rate which will apply to the
reinvested Matured Term Value.
1.30 SEPARATE ACCOUNT: A separate account that buys and holds shares of
the Fund(s). Income, gains or losses, realized
or unrealized, are credited or charged to the
Separate Account without regard to other income,
gains or losses of Aetna. Aetna owns the assets
held in the Separate Account and is not a
trustee as to such amounts. This Separate
Account generally is not guaranteed and is held
at market value. The assets of the Separate
Account, to the extent of reserves and other
contract liabilities of the Account, shall not
be charged with other Aetna liabilities.
1.31 SURRENDER VALUE: The amount payable by Aetna upon the surrender
of any portion of an Account.
1.32 TRANSFERS: The movement of invested amounts among the
available Fund(s) and the AG Account under this
Contract during the Accumulation Period.
1.33 VALUATION PERIOD (PERIOD):The period of time for which a Fund determines
its net asset value, usually from 4:15 p.m.
Eastern time each day the New York Stock
Exchange is open until 4:15 p.m. the next such
day, or such other day that one or more of the
Funds determines its net asset value.
1.34 VARIABLE ANNUITY: An Annuity with payments that vary with the net
investment results of one or more Funds held
under the Separate Account.
II. GENERAL PROVISIONS
--------------------------------------------------------------------------------
2.01 CHANGE OF CONTRACT: Only an authorized officer of Aetna may change
the terms of this Contract. Aetna will notify
the Contract Holder in writing at least 30 days
before the effective date of any change. Any
change will not affect the amount or terms of
any Annuity which begins before the change.
</TABLE>
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<CAPTION>
<S> <C>
2.01 CHANGE OF CONTRACT Aetna may make any change that affects the AG Account
(CONT'D): Market Value Adjustment (3.06) with at least 30 days advance written notice to the Contract Holder
and the Certificate Holder. Any such change shall become effective for any new Term and will be
applicable only if it is more favorable to the Contract Holder and/or the Certificate Holder.
Any change that affects any of the following under this Contract will not apply to Accounts in
existence before the effective date of the change:
(a) Net Purchase Payment (1.26)
(b) AG Account Guaranteed Rate (1.04)
(c) Net Return Factor(s) -- Separate Account (3.04)
(d) Current Value (1.12)
(e) Surrender Value (1.31)
(f) Fund(s) Annuity Unit Value -- Separate Account (4.07)
(g) Annuity Options (4.09)
(h) Fixed Annuity Guaranteed Interest Rates (4.01)
(i) Transfers (1.32)
The Contract may be changed as deemed necessary by Aetna to comply with federal or state law. Any
such change is subject to the prior approval of the New York Insurance Department.
2.02 CHANGE OF FUND(S): Aetna, or the Separate Account, may:
(a) Change the Fund(s) which may be invested in by the Separate Account; and
(b) Replace the shares of any Fund(s) held in the Separate Account with shares of
any other Fund(s).
Changes must be:
(a) Approved by a majority vote of the shares in the Separate Account with respect
to the Fund(s) whose shares are to be replaced; or
(b) Deemed necessary by Aetna under the Investment Company Act of 1940; or
(c) Deemed necessary by Aetna to accomplish the purpose of the Separate Account.
Such changes are subject to the approval of the Superintendent of the New York
Insurance Department and Aetna will notify the Contract Holder of such change.
2.03 NONPARTICIPATING CONTRACT: The Contract Holder, Certificate Holders or Beneficiaries will not have a right to share in the
earnings of Aetna.
</TABLE>
20
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<TABLE>
<CAPTION>
<S> <C>
2.04 PAYMENTS AND ELECTIONS: While the Certificate Holder is living, Aetna will pay the Certificate Holder any Annuity payments
as and when due. After the Certificate Holder's death, any Annuity payments required to be made will
be paid in accordance with 4.05. Aetna will determine other payments and/or elections as of the end
of the Valuation Period in which the request is received at its Home Office. Such payments will be
made within 7 calendar days of receipt at its Home Office of a written claim for payment which is in
good order, except as provided in 3.17.
2.05 STATE LAWS: The Contract and the Certificates comply with the laws of the state in which they are delivered. Any
surrender, death, or Annuity payments are equal to or greater than the minimum required by such
laws. Annuity tables for legal reserve valuation shall be as required by state law. Such tables may
be different from Annuity tables used to determine Annuity payments.
2.06 CONTROL OF CONTRACT: This is a Contract between the Contract Holder and Aetna. The Contract Holder has title to the
Contract. Contract Holder rights are limited to accepting and rejecting Contract modifications.
Each Certificate Holder has a nonforfeitable right to all amounts held in his or her Account. Each
Certificate Holder may make any choices allowed by this contract for his or her Account. Choices
made under this Contract must be in writing. Until receipt of such choices at Aetna's Home Office,
Aetna may rely on any previous choices made.
The Contract is not subject to the claims of any creditors of the Contract Holder or the Certificate
Holder except to the extent permitted by law.
The Account may not be attached, alienated, or subject to the claims of creditors of the Certificate
Holder except to the extent permitted by law. This Account is nontransferable by the Certificate
Holder. The Certificate Holder may not assign, transfer, pledge or use as collateral his or her
rights under the Contract.
2.07 DESIGNATION OF Each Certificate Holder shall name his or her Beneficiary. The
BENEFICIARY: Beneficiary may be changed at any time. Changes to a Beneficiary must be submitted to Aetna's Home
Office in writing and will not be effective until accepted by Aetna.
2.08 MISSTATEMENTS AND If Aetna finds the age or sex of any Annuitant to be misstated,
ADJUSTMENTS: the amount payable under the Contract shall be adjusted for the correct age or sex; the amount of
any underpayment or overpayment, with interest at six per cent per year, shall be credited to, or
changed against, the current or next succeeding payment or payments to be made by Aetna under the
Contract.
2.09 INCONTESTABILITY: Aetna cannot cancel the Contract because of any error of fact on the application. Aetna cannot
cancel an account because of any error of fact on the enrollment form.
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III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
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3.01 NET PURCHASE PAYMENT: This amount is the actual Purchase Payment less any premium tax. Aetna will generally deduct the
premium tax when Annuity benefits are elected (see Part IV). If Aetna determines that under
applicable state law, it must pay a premium tax when the Purchase Payment is received or at any
other time, it will deduct the tax at that time.
The Net Purchase Payment will be credited among:
(a) The current Deposit Period(s) for Guaranteed Terms under the AG Account; and
(b) The Fund(s) in which the Separate Account invests.
The Certificate Holder shall tell Aetna the allocation percentage to be applied to the current
Deposit Period for each of the available Guaranteed Terms in the AG Account and/or each Fund.
3.02 CERTIFICATE HOLDER'S Aetna will maintain an Account for each Certificate Holder.
ACCOUNT:
Aetna will declare from time to time the acceptability and the minimum amount for additional
Purchase Payments. Each Account will be subject to the Terms and conditions of the Contract in
effect at the time the first Purchase Payment for such account is applied to the Contract except for
changes made to comply with federal or state law.
3.03 FUND(S) RECORD UNITS -- The portion of the Net Purchase Payment applied to each Fund
SEPARATE ACCOUNT: under the Separate Account will determine the number of Fund record units for that Fund. This number
is equal to the portion of the Net Purchase Payment applied to each Fund divided by the Fund record
unit value (see 3.05) for the Valuation Period in which the Purchase Payment is received in good
order at Aetna's Home Office.
3.04 NET RETURN FACTOR(S) -- The net return factor(s) are used to compute all Separate
SEPARATE ACCOUNT: Account record units for any Fund.
The net return factor for each Fund is equal to 1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held by the Separate Account at the end of the Valuation
Period; minus
(b) The value of the shares of the Fund held by the Separate Account at the start of the Valuation
Period; plus or minus
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3.04 NET RETURN FACTOR(S) -- (c) Taxes (or reserves for taxes) on the Separate Account (if
SEPARATE ACCOUNT any); divided by
(CONT'D): (d) The total value of the Fund(s) record units and Fund(s) Annuity units of the Separate Account
at the start of the Valuation Period; minus
(e) A daily Separate Account charge at an annual rate as shown on Contract Schedule I for mortality
and expense risks, which may include profit; and a daily administrative charge.
A net return rate may be more less than 0%. The value of a share of the Fund is equal to the net
assets of the Fund divided by the number of shares outstanding.
3.05 FUND RECORD UNIT A Fund record unit value is computed by multiplying the net
VALUE -- SEPARATE ACCOUNT:return factors for the current Valuation Period by the Fund record unit value for the previous
Period. The dollar value of Fund record units, Separate Account assets, and Variable Annuity
payments may go up or down due to investment gain or loss.
3.06 MARKET VALUE ADJUSTMENT: Except as noted below, there will be an MVA for a withdrawal from the AG Account before the end of a
Guaranteed Term when the withdrawal is due to:
(a) A Transfer; except for transfers from the one-year AG Account Guaranteed Term under the Dollar
Cost Averaging program or, as specified in 1.24, AG Account Matured Term Value Transfer;
(b) A full or partial surrender (including a 15% free withdrawal under 3.16), except for a partial
withdrawal under the Systematic Withdrawal Option (see 3.11); or
(c) An election of Annuity option 2 (see 4.09).
Full and partial surrenders and Transfers made within six months after the date of the Annuitant's
death will be the greater of:
(a) The aggregate MVA amount which is the sum of all market value adjusted amounts calculated due
to a withdrawal of amounts. This total may be greater or less than the Current Value of those
amounts; or
(b) The applicable portion of the Current Value in the AG Account.
After the six-month period, the surrender or Transfer will be the aggregate MVA amount, which may be
greater or less than the Current Value of those amounts.
The greater of the aggregate MVA amount or the applicable portion of the Current Value applies to
amounts withdrawn from the AG Account on account of an election of Annuity options 3 or 4 (see
4.09).
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3.06 MARKET VALUE ADJUSTMENT Market value adjusted amounts will be equal to the amount
(CONT'D): withdrawn multiplied by the following ratio:
x
---
365
(1 + i)
--------------------
x
---
365
(1 + j)
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days remaining, (computed from Wednesday of the week
of withdrawal) in the Guaranteed Term.
The Deposit Period Yield will be determined as follows:
(a) At the close of the last business day of each week of the Deposit Period, a yield will be
computed as the average of the yields on that day of U.S. Treasury Notes which mature in the
last three months of the Guaranteed Term.
(b) The Deposit Period Yield is the average of those yields for the Deposit Period. If withdrawal
is made before the close of the Deposit Period, it is the average of those yields on each week
preceding withdrawal.
The Current Yield is the average of the yields on the last business day of the week preceding
withdrawal on the same U.S. Treasury Notes included in the Deposit Period Yield.
In the event that no U.S. Treasury Notes which mature in the last three months of the Guaranteed
Term exist, Aetna reserves the right to use the U.S. Treasury Notes that mature in the following
quarter.
If. U.S. Treasury Notes are no longer available, a suitable replacement index, subject to
approval of the Superintendent of the New York Insurance Department, would then be utilized.
A detailed description of the MVA has been filed with the Superintendent of the New York
Insurance Department.
3.07 TRANSFER OF CURRENT VALUE Before an Annuity option is elected, all or any portion of the
FROM THE FUNDS OR Adjusted Current Value of the Contract may be transferred from
AG ACCOUNT: any Fund or Guaranteed Term of the AG Account:
(a) To any other Fund; or
(b) To any Guaranteed Term of the AG Account available in the current Deposit Period.
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3.07 TRANSFER OF CURRENT VALUE Transfer requests can be submitted as a percentage or as a dollar amount. The minimum
FROM THE FUNDS OR transfer amount is shown on Contract Schedule I. Within a Guaranteed Term Group, the
AG ACCOUNT (CONT'D): amount to be surrendered or transferred will be withdrawn first from the oldest Deposit Period,
then from the next oldest, and so on until the amount requested is satisfied.
The Certificate Holder may make an unlimited number of Transfers during the Accumulation
period. The number of free Transfers allowed by Aetna is shown on Contract Schedule I.
Additional Transfers may be subject to a Transfer fee as shown on Contract Schedule I.
Amounts transferred from the AG Account under the Dollar Cost Averaging program, or amounts
transferred as a Matured Term Value on or within the calendar month of the Term's Maturity Date, do
not count against the annual Transfer limit.
Amounts applied to Guaranteed Terms of the AG Account may not be transferred to the Funds or to
another Guaranteed Term during the Deposit Period or for 90 days after the close of the Deposit
Period except for (1) a Matured Term Value(s) during the calendar month following the Term's
Maturity Date and (2) amounts transferred from the one-year AG Account Guaranteed Term under
the Dollar Cost Averaging program.
3.08 REPORTS: Aetna, as issuer of the Contract, will make any reports required of it by federal or state law.
Aetna will furnish annual calendar year reports concerning the status of the annuity.
3.09 NOTICE TO THE CONTRACT The Contract Holder will receive quarterly statements from Aetna of:
HOLDER:
(a) The value of any amounts held in:
(1) The AG Account; and
(2) The Fund(s) under the Separate Account.
(b) The number of any Fund(s) record units; and
(c) The Fund(s) record unit value.
Such number or values will be as of a specific date no more than 60 days before the date of the
notice.
3.10 LOANS: Loans are not available under the Contract.
3.11 DISTRIBUTION OPTIONS: The following distribution options may be elected by the Certificate Holder during the
Accumulation Period.
(A) ESTATE CONSERVATION OPTION (ECO) - A distribution option under which a portion of the
Current Value will automatically be surrendered and distributed each year. ECO payments
will be calculated based on the Account's full Current Value. The distributed amount will
be withdrawn pro rata from each investment option used under the Account. A Surrender Fee
will not be deducted from any portion of the Current Value which is paid as a distribution
under ECO. Certificate Holders should consult their tax advisers prior to requesting this
distribution option. Aetna will not be responsible for any adverse tax consequences due to
receiving ECO payments.
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3.11 DISTRIBUTION OPTIONS (1) Amount of Distribution: Each year that ECO is in effect, Aetna will calculate and
(CONT'D) distribute an amount equal to the minimum required distribution under the Code. The annual
distribution will be determined by dividing the Current Value as of December 31 of the
year prior to the payment year, by a life expectancy factor.
The Certificate Holder, or spouse Beneficiary if ECO is elected after the Certificate
Holder's death, shall elect either single life expectancy or joint life expectancy.
Life expectancy is computed by use of the expected return multiples in Tables V and VI of
section 1.72-9 of the Income Tax Regulations.
Joint life expectancy can only be elected based on the joint life expectancy of the
Certificate Holder and his or her Beneficiary. If the Certificate Holder makes any changes
in the Beneficiary designation under the Certificate, ECO distributions after the change
will be recalculated as required by IRS regulations.
Life expectancies shall be recalculated annually. If the joint life expectancy is elected
with a non-spouse Beneficiary, the life expectancy of the non-spouse Beneficiary must not
be recalculated. Instead, the life expectancy will be calculated using the attained age of
the Beneficiary during the calendar year in which the Certificate Holder attains age 70
1/2, and payments for subsequent years shall be recalculated based on such life expectancy
reduced by one for each calendar year which has elapsed since the calendar year life
expectancy was first calculated.
If joint life expectancy is elected with a spouse Beneficiary, at the death of either, the
payments can continue and will be calculated based solely on the survivor's life
expectancy. If joint life expectancy is elected with a non-spouse Beneficiary and the non-
spouse Beneficiary dies first, payments will continue based on the joint life expectancy.
If a single life expectancy is elected and the Certificate Holder dies, or if a joint life
expectancy is elected and the survivor dies, the death benefits determined under Section
3.12 will be paid to the Beneficiary in a lump sum not later than December 31 following
the year of death.
(2) Minimum Initial Current Value: The ECO Minimum Initial Account Current Value is shown on
Contract Schedule I. If after election of this option, the Current Value is
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3.11 DISTRIBUTION OPTIONS insufficient to make a scheduled ECO payment, Aetna will distribute the
(CONT'D): entire Account balance.
(3) Date of Distribution: Distribution will be made annually on the 15th of any month or such
other date as Aetna may designate or allow. The latest allowable payment date is the month
of the Certificate Holder's 85th birthday. The Certificate Holder shall specify an initial
distribution month, not earlier than the calendar year in which the Certificate Holder
attains age 70 1/2, or such later time when distributions must commence as specified under
the Code, whichever is appropriate. For a spouse Beneficiary, the earliest date is the
date of the Certificate Holder's death.
(4) Election and Revocation: ECO may be elected by the Certificate Holder by submitting a
written request to Aetna at its Home Office.
Once elected, this option may be revoked by the Certificate Holder, or spouse Beneficiary
if elected after the Contract Holder's death, by submitting a written request to Aetna at
its Home Office. Any revocation will apply only to amounts not yet paid. The Certificate
Holder assumes responsibility for compliance with minimum distribution rules under the
Code. ECO may be elected only once by the Certificate Holder or by a spouse Beneficiary.
(B) SYSTEMATIC WITHDRAWAL OPTION (SWO): A distribution option under which a portion of the
Account's Current Value will automatically be surrendered and distributed each year. SWO
payments will be calculated based on the Account's full Current Value. The distributed amount
will be withdrawn pro rata from each investment option used under the Account. A Surrender Fee
will not be deducted from any portion of the Current Value which is paid as a distribution
under SWO. Certificate Holders should consult their tax advisers prior to requesting this
distribution option. Aetna will not be responsible for any adverse tax consequences due to
receiving SWO payments.
(1) Amount of Distribution: The Certificate Holder may elect one of the three payment methods
described below.
(i) Specified Payment: Payments of a designated dollar amount. The annual amount may
not be greater than the percentage of the Account's Current Value at time of
election as shown on Contract Schedule I. This annual dollar amount will remain
constant. The minimum SWO payment amount is shown on Contract Schedule I; or
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3.11 DISTRIBUTION OPTIONS (ii) Specified Period: Payments made over a period of time of at least 10 years.
(CONT'D) The maximum specified period shall be determined under the Code minimum
distribution rules. The annual amount is calculated by dividing the Current Value
as of December 31 of the year prior to the payment year by the number of payment
years remaining; or
(iii) Specified Percentage: Payments of a designated percentage which cannot be greater
than the percentage of the Current Value at the time of election as shown on
Contract Schedule I. The percentage may be changed by written request. Aetna
reserves the right to limit the number of times the percentage may be changed. The
annual amount is calculated by multiplying the Current Value as of December 31 of
the year prior to the payment year by the designated percentage. Payments will be
made until the year the Certificate Holder attains age 70 1/2 or, if elected by the
spouse Beneficiary, the year the Certificate Holder would have attained age 70 1/2.
Under both the Specified Payment and Specified Period payment methods, a higher amount
shall be paid in any year if required under the Code minimum distribution rules. For
purposes of this determination, life expectancy for the initial distribution year shall be
calculated based on single life expectancy Table V of section 1.72-9 of the Income Tax
Regulations. With each subsequent year, the life expectancy will be the life expectancy
for the previous year reduced by one.
Payments upon the Certificate Holder's death will be made to the Beneficiary in the manner
described in 3.13.
(2) Minimum Initial Current Value: The Minimum Initial Current Value required to begin SWO is
shown on Contract Schedule I. If after election of this option the Current Value is
insufficient to make a scheduled SWO payment, Aetna will distribute the entire balance.
(3) Date of Distribution: The Certificate Holder shall specify the initial distribution date.
The earliest date for distribution is the first date on which the Certificate Holder
attains age 59 1/2. The latest allowable SWO payment date is the month of the Certificate
Holder's 85th birthday. As elected by the Certificate Holder, SWO payments will be made on
a monthly, quarterly, semi-annual or annual basis. If SWO payments are made more
frequently than annually, the designated annual amount is divided by the number of
payments due each year.
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3.11 DISTRIBUTION OPTIONS Subsequent distributions will be made on the 15th of any month or such other date
(CONT'D): as Aetna may designate or allow.
(4) Election and Revocation: SWO may be elected by the Certificate Holder or spouse
Beneficiary if elected after the Certificate Holder's death by submitting a completed and
signed election form to Aetna's Home Office.
Once elected, this option may be revoked by the Certificate Holder, or spouse Beneficiary
if elected after the Certificate Holder's death, by submitting a written request to Aetna
at its Home Office. Any revocation will apply only to amounts not yet paid. SWO may be
elected only once by the Certificate Holder or by the spouse Beneficiary.
3.12 DEATH BENEFIT AMOUNT: If the Certificate Holder/Annuitant dies before Annuity payments start, the Beneficiary is
entitled to a death benefit under the Account. The claim date is the date when proof of death
and the Beneficiary's claim are received in good order at Aetna's Home Office. The amount of
the death benefit is determined as follows:
(a) Death of Certificate Holder/Annuitant less than 85 years of age: The guaranteed death
benefit is the greatest of:
(1) The sum of all Net Purchase Payment(s) made to the Account (as of the date of death)
minus the sum of all amounts surrendered, applied to an Annuity, or deducted from the
Account;
(2) The highest step-up value as of the date of death. A step-up value is determined on
each anniversary of the Effective Date. Each step-up value is calculated as the
Account's Current Value on the Effective Date anniversary, increased by the amount of
any Purchase Payment(s) made, and decreased by the sum of all amounts surrendered,
deducted, and/or applied to an Annuity option since the Effective Date anniversary.
(3) The Account's Current Value as of the date of death.
The excess, if any, of the guaranteed death benefit value over the Account's Current Value
is determined as of the date of death. Any excess amount will be deposited to the Account
and allocated to Aetna Variable Encore Fund as of the claim date. The Current Value on the
claim date plus any excess amount deposited becomes the Account's Current Value.
(b) Death of Certificate Holder/Annuitant age 85 or greater: The death benefit is the greatest
of:
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3.12 DEATH BENEFIT AMOUNT (1) The sum of all Net Purchase Payment(s) made to the account (as of the date of death)
(CONT'D): minus the sum of all amounts surrendered, applied to an Annuity, or deducted from
the Account;
(2) The highest step-up value prior to the Certificate Holder's 85th birthday. A step-up
value is determined on each anniversary of the Effective Date. Each step-up value is
calculated as the Account's Current Value on the Effective Date anniversary,
increased by the amount of any Purchase Payment(s) made, and decreased by the sum of
all amounts surrendered, deducted, and/or applied to an Annuity option since the
Effective Date anniversary.
(3) The Certificate Holder's Account Value as of the date of death.
The excess, if any, of the guaranteed death benefit value over the Account's Current Value
is determined as of the date of death. Any excess amount will be deposited in the Account
and allocated to the Aetna Variable Encore Fund as of the claim date. The Current Value on
the claim date, plus any excess amount deposited, becomes the Account's Current Value.
(c) At the death of a surviving spouse Beneficiary who continued the Account in his or her own
name, the death benefit amount is equal to the Account's Current Value less any applicable
Surrender Fee on the amount of any Purchase Payment(s) made since the death of the
Certificate Holder.
3.13 DEATH BENEFIT OPTIONS Prior to any election, or until amounts must be otherwise distributed under this section,
AVAILABLE TO BENEFICIARY: the Current Value of the Account will be retained in the Account. The Beneficiary has the right
under the Contract to allocate or reallocate any amount to any of the available investment
options (subject to an MVA, as applicable). The following options are available to the
Beneficiary:
(a) If the Beneficiary is the Certificate Holder's surviving spouse, the surviving spouse may
exercise all rights under the Contract and continue in the Accumulation Period, or may
elect (1), (2), or (3) below. Under the Code, distributions from the Account are not
required until December 31st of the year in which the original Certificate Holder would
have attained age 70 1/2. The Beneficiary may elect to:
(1) Apply some or all of the Adjusted Current Value of the Account to Annuity option 2, 3
or 4 (see 4.09);
(2) Apply some or all of the Adjusted Current Value to Annuity option 1 (see 4.09); or
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3.13 DEATH BENEFIT OPTIONS (3) Receive, at any time, a lump sum payment
AVAILABLE TO BENEFICIARY equal to the Adjusted Current Value of the Account.
If ECO is in effect on the Certificate Holder's date of death, the surviving spouse can
elect to continue receiving ECO payments if a joint life expectancy was chosen. Otherwise,
the surviving spouse must receive a lump sum payment equal to the Adjusted Current Value
of the Account.
If SWO is in effect and the Certificate Holder dies before the required beginning date for
minimum distributions (see 3.13), SWO payments will cease and the surviving spouse may
claim the death benefit in accordance with the terms of this section.
If SWO is in effect and the Certificate Holder dies after the required beginning date for
minimum distributions, the surviving spouse can elect to continue to receive the SWO
payments. Otherwise, the surviving spouse must elect to receive a lump sum payment equal
to the Adjusted Current Value.
(b) If the Beneficiary is other than the Certificate Holder's surviving spouse, then options
(1), (2), or (3) under (a) above apply. Any portion of the Adjusted Current Value that is
not applied to Annuity option 2, 3 or 4 by December 31st of the year following the year of
the Certificate Holder's death must be distributed by December 31st of the year containing
the fifth anniversary of the Certificate Holder's date of death.
If ECO or SWO is in effect on the Certificate Holder's date of death, the Beneficiary must
receive an automatic and immediate lump sum payment equal to the Adjusted Current Value.
(c) If no Beneficiary exists, a lump sum payment equal to the Adjusted Current Value will be
made to the Certificate Holder's estate.
3.14 REQUIRED DISTRIBUTION (a) Certificate Holder: The entire interest of the Certificate Holder will be distributed
TO CONTRACT HOLDER/ or begin to be distributed no later than April 1 BENEFICIARY: following the calendar year
in which the Certificate Holder attains age 70 1/2 (required beginning date), over (a) the
life of the Contract Holder, or the lives of the Contract Holder and his or her designated
Beneficiary, or (b) a period certain not extending beyond the life expectancy of the
Contract Holder, or the joint and last survivor expectancy of the Contract Holder and his
or her designated Beneficiary. Payments must be made in periodic payments at intervals no
longer than one year. In addition, payments must be either nonincreasing or they may
increase only as provided in Q&A F-3 of section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
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3.14 REQUIRED DISTRIBUTION All distributions made hereunder shall be made in accordance with the requirements
TO CONTRACT HOLDER/ of section 401(a)(9) of the Code, and the regulations thereunder, including
BENEFICIARY (CONT'D): the minimum distribution incidental benefit requirement of section 1.401(a)(9)-2 of the
Proposed Income Tax Regulations.
Distribution may be an Annuity as set forth in Sections 4.01 through 4.04, payments under
ECO or SWO as defined in Section 3.11 or a lump sum payment.
(b) Beneficiary: If the Certificate Holder dies after distribution of his or her interest has
begun, the remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the Certificate Holder's
death.
Distributions are considered to have begun if distributions are made on account of the
Certificate Holder's reaching his or her required beginning date or if prior to the
required beginning date distributions irrevocably commence to the Certificate Holder over
a period permitted and in an Annuity form acceptable under section 1.401(a)(9) of the
Income Tax Regulations.
3.15 LIQUIDATION OF All or any portion of the Account's Current Value may be
SURRENDER VALUE: surrendered at any time. Surrender requests can be submitted as a percentage of the Account
Current Value or as a specific dollar amount. The Net Purchase Payment amount is withdrawn
first, and then the excess value, if any. For any partial surrender amounts are withdrawn on a
pro rata basis from the Fund(s) and/or the Guaranteed Term(s) Groups of the AG Account in which
the Current Value is invested. Within a Guaranteed Term Group, the amount to be surrendered or
transferred will be withdrawn first from the oldest Deposit Period, then from the next oldest,
and so on until the amount requested is satisfied.
After deduction of the Maintenance Fee, if applicable, the surrendered amounts shall be reduced
by a Surrender Fee, if applicable. An MVA may apply to amounts surrendered from the AG Account.
3.16 SURRENDER FEE: The Surrender Fee only applies to the Net Purchase Payment portion surrendered and varies
according to the elapsed time since deposit (see Contract Schedule I). No Surrender Fee is
deducted from any portion of the Current Value which is paid:
(a) To a Beneficiary due to the Certificate Holder's death before Annuity payments start;
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3.16 SURRENDER FEE: (CONT'D) (b) As a premium for an Annuity option 2, 3 or 4 under this Contract (see 4.09);
(c) As a distribution under the ECO or SWO provision (see 3.11);
(d) At least 12 months after the date of the Purchase Payment to the Account, in an amount
equal to or less than 15% of the Current Value. This applies to the first surrender
request, partial or full, in a calendar year. The Current Value is calculated as of the
date the surrender request is received in good order at Aetna's Home Office. This waiver
is not available to the Contract Holder while SWO is in effect; or
(e) For a full surrender of the Account where the Current Value of the Account is $2,500 or
less and no surrenders have been taken from the Contract within the prior 12 months.
3.17 PAYMENT OF Under certain emergency conditions, Aetna may defer payment:
SURRENDER VALUE:
(a) For a period of up to 6 months (unless not allowed by state law); or
(b) As provided by federal law under the Investment Company Act of 1940.
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<CAPTION>
IV. ANNUITY PROVISIONS
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<S> <C>
4.01 CHOICES TO BE MADE: The Certificate Holder may tell Aetna to apply any portion of the Adjusted Current Value (minus
any premium tax) for an Annuity under option 2, 3, or 4 (see 4.09). The first Annuity payment
may not be earlier than one calendar year after the Purchase Payment nor later than the first
day of the month following the Annuitant's 85th birthday.
When an Annuity Option is chosen, Aetna must also be told if payments are to be made other than
monthly and whether to pay:
(a) A Fixed Annuity using the AG Account;
(b) A Variable Annuity using any of the Fund(s) available under this Contract for Annuity
purposes; or
(c) A combination of (a) and (b).
If a Fixed Annuity is chosen, the Annuity purchase rate for the option chosen reflects at least
the Minimum Guaranteed Interest Rate (see Contract Schedule II), but may reflect a higher
interest rate. If a Variable Annuity is chosen, the initial Annuity payment for the option
chosen reflects the assumed annual return rate elected. (see Contract Schedule II).
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4.02 ANNUITY PAYMENTS TO In no event may any payments to the Annuitant under an
CONTRACT HOLDER: Annuity Option extend beyond:
(a) The life of the Certificate Holder;
(b) The lives of the Certificate Holder and Beneficiary;
(c) Any certain period greater than the
Certificate Holder's life expectancy according to regulations under Code Section
401(a)(9), determined as of the date payments are to begin; or
(d) A period greater than the joint and last survivor life expectancies of the Certificate
Holder and the Certificate Holder's Beneficiary according to regulations under Code
Section 401(a)(9), determined as of the date payments are to begin.
4.03 ANNUITY PAYMENTS TO In no event may payments to the Beneficiary under an Annuity option extend beyond:
BENEFICIARY:
(a) The life of the Beneficiary; or
(b) Any certain period greater than the Beneficiary's life expectancy as determined by
regulations under Code Section 401(a)(9).
4.04 TERMS OF ANNUITY (a) When payments start, the age of the Annuitant plus the number of years for which payments
OPTIONS: are guaranteed must not exceed 95.
(b) An Annuity option may not be elected if the first payment would be less than $50 or if the
total payments in a year would be less than $250 (less if required by state law). Aetna
reserves the right to increase the minimum first Annuity payment amount and the annual
minimum annual Annuity payment amount based upon increases reflected in the Consumer Price
Index-Urban, (CPI-U) since July 1, 1993.
(c) If a Fixed Annuity under option 2, 3 or 4 is chosen and a larger payment would result from
applying the Surrender Value or, if greater, 95% of what the surrender would be if there
were no surrender fee, to a current Aetna single premium immediate Annuity, Aetna will
make the larger payment.
(d) For purposes of calculating the guaranteed first payment of a Variable Annuity or the
payments for a Fixed Annuity, the Annuitant's and second Annuitant's adjusted age will be
used. The Annuitant's and second Annuitant's adjusted age is his or her age as of the
birthday closest to the Annuity commencement date reduced by one year for Annuity
commencement dates occurring during the period of time from July 1, 1993 through December
31, 1999. The Annuitant's and second Annuitant's age will be reduced by two years for
Annuity commencement dates occurring during the period of time from January 1, 2000
through December 31, 2009. The Annuitant's and second Annuitant's age will be reduced by
one
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<PAGE>
<TABLE>
<S> <C>
4.04 TERMS OF ANNUITY additional year for Annuity commencement dates occurring in each succeeding
OPTIONS (CONT'D): decade.
The Annuity purchase rates for options 3 and 4 are based on mortality from 1983 Table a.
(e) Assumed Annual Net Return Rate is the interest rate used to determine the amount of the
first Annuity payment under a Variable Annuity as shown on Contract Schedule II. The
Separate Account must earn this rate plus enough to cover the mortality and expense risk
charges (which may include profit) and administrative charges if future Variable Annuity
Payments are to remain level, (see Annuity return factor under Variable Annuity Assumed
Annual Net Return Rate on Contract Schedule II).
(f) Once elected, Annuity payments cannot be commuted to a lump sum except for Variable
Annuity payments under option 2 (see 4.09). The life expectancy of the Certificate Holder
or Certificate Holder and second Annuitant shall be irrevocable upon the election of an
Annuity option.
4.05 DEATH OF ANNUITANT/ (a) When an Annuitant dies under option 2 or 3, or both the Annuitant and the second
BENEFICIARY: Annuitant die under option 4(d), the present value of any remaining guaranteed payments
will be paid in one sum to the Beneficiary, or upon election by the Beneficiary, any
remaining payments will continue to the Beneficiary. If option 4 has been elected and the
Annuitant dies, the remaining payments will continue to the second Annuitant as successor
payee.
(b) If there is no Beneficiary under option 2, 3 or 4, the present value of any remaining
payments will be paid in one sum to the Certificate Holder's estate.
(c) If the Beneficiary designated under option 1 dies, the amount held plus accrued interest
will be paid in one sum to a successor Beneficiary, if any, named by the designated
Beneficiary. If there is no successor Beneficiary, the lump sum will be paid to the
designated Beneficiary's estate.
(d) If the Beneficiary dies while receiving Annuity payments, the present value of any
remaining guaranteed payments will be paid in one sum to the successor Beneficiary, or
upon election by the successor Beneficiary, any remaining payments will continue to the
successor Beneficiary. If no successor Beneficiary has been designated, the present value
of any remaining guaranteed payments will be paid in one sum to the Beneficiary's estate.
(e) The present value will be determined as of the Valuation Period in which proof of death
acceptable to Aetna and a request for payment is received at Aetna's Home Office. The
</TABLE>
35
<PAGE>
<TABLE>
<S> <C>
interest rate used to determine the first payment will be used to calculate the present
value.
4.06 FUND(S) ANNUITY UNITS -- The number of each Fund's Annuity units is based on the amount of the first Variable Annuity
SEPARATE ACCOUNT: payment which is equal to:
(a) The portion of the Current Value applied to pay a Variable Annuity (minus any premium
tax); divided by
(b) 1,000; multiplied by
(c) The payment rate for the option chosen.
Such amount, or portion, of the variable payment will be divided by the appropriate Fund
Annuity unit value (see 4.07) on the tenth Valuation Period before the due date of the first
payment to determine the number of each Fund Annuity units. The number of each Fund Annuity
units remains fixed. Each future payment is equal to the sum of the products of each Fund
Annuity unit value multiplied by the appropriate number of units. The Fund Annuity unit value
on the tenth Valuation Period prior to the due date of the payment is used.
4.07 FUND(S) ANNUITY UNIT For any Valuation Period, a Fund Annuity unit value is equal to:
VALUE -- SEPARATE
ACCOUNT: (a) The Value for the previous Period; multiplied by
(b) The Annuity net return factor(s) (see 4.08 below) for the Period; multiplied by
(c) A factor to reflect the assumed annual net return rate (see Contract Schedule II).
The dollar value of a Fund Annuity unit value and Annuity payments may go up or down due to
investment gain or loss.
4.08 ANNUITY NET RETURN The Annuity net return factor(s) are used to compute Annuity payments for any Fund.
FACTOR(S) -- SEPARATE
ACCOUNT:
The Annuity net return factor(s) for each Fund is equal to 1.0000000 plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held by the Separate Account at the end of a Valuation
Period; minus
(b) The value of the shares of the Fund held by the Separate Account at the start of the
Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if any); divided by
(d) The total value of the Fund record units and the Fund Annuity units of the Separate
Account at the start of the Valuation Period; minus
(e) A daily charge for Annuity mortality and expense risks, which may include profit, and a
daily administrative charge (at the annual rate as shown on Contract Schedule II).
</TABLE>
36
<PAGE>
<TABLE>
<S> <C>
A net return rate may be more or less than 0%.
The value of a share of the Fund is equal to the net assets of the Fund divided by the
number of shares outstanding.
</TABLE>
37
<PAGE>
<TABLE>
<S> <C>
4.08 ANNUITY NET RETURN Payments shall not be changed due to changes in the mortality or expense results or
FACTOR(S) -- SEPARATE administrative charges.
ACCOUNT: (CONT'D)
4.09 ANNUITY OPTIONS: Option 1 -- Payment of Interest on Sum Left with Aetna -- This option may be used only by the
Beneficiary when the Certificate Holder dies before Aetna has started paying an Annuity. A
portion or all of the sum paid upon death may be held under this option and will be held in the
General Account of Aetna at interest (see 3.13 and 4.01). The Beneficiary may later tell Aetna
to:
(a) Pay a portion or all of the sum held by Aetna; or
(b) Apply a portion or all of the sum held by Aetna to any Annuity option below.
If a nonspouse Beneficiary elects that some or all of the Current Value is to be held under
this option, the Beneficiary must tell Aetna to pay the full sum held under this option by
December 31st of the year containing the fifth anniversary of the Contract Holder's date of
death.
Option 2 -- Payments for a Stated Period of Time -- An Annuity will be paid for the number of
years chosen. The number of years must be at least 5 and not more than 30.
If payments for this option are made under a Variable Annuity, the present value of any
remaining payments may be withdrawn at any time. If a withdrawal is requested within 3 years
after the start of payments, it will be treated as a surrender and any applicable Surrender Fee
will be applied (see 3.16).
Option 3 -- Life Income -- An Annuity will be paid for the life of the Annuitant. If also
chosen, Aetna will guarantee payments for 60, 120, 180, or 240 months.
Option 4 -- Life Income Based upon the Lives of Two Annuitants -- An Annuity will be paid
during the lives of the Annuitant and a second Annuitant. Payments will continue until both
Annuitants have died. When this option is chosen, a choice must be made of:
(a) 100% of the payment to continue after the first death;
(b) 66 2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) Payments for a minimum of 120 months with 100% of the payment to continue after the first
death; or
(e) 100% of the payment to continue at the death of the second Annuitant and 50% of the
payment to continue at the death of the Annuitant.
Other Options -- Aetna may make other options available as allowed by the laws of the state in
which this Contract and the Certificate is delivered.
</TABLE>
38
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ------------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.27 $3.90 $4.26 $3.90 $4.22 $3.89 $4.17 $3.86 $4.08 $3.82
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58
63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79
66 6.30 5.51 6.21 5.47 5.93 5.36 5.56 5.16 5.08 4.86
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35
-----------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
40
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
ADJUSTED AGES
-----------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.13
55 55 3.88 4.25 4.47 3.87 4.25
55 60 3.06 4.47 4.71 4.06 4.36
60 55 3.99 4.44 4.71 3.98 4.55
60 60 4.24 4.71 4.99 4.23 4.70
60 65 4.49 5.01 5.32 4.48 4.85
65 60 4.38 4.97 5.32 4.38 5.10
65 65 4.72 5.33 5.70 4.71 5.32
65 70 5.07 5.75 6.17 5.05 5.54
70 65 4.93 5.68 6.15 4.91 5.86
70 70 5.40 6.21 6.70 5.36 6.18
70 75 5.89 6.82 7.40 5.81 6.49
75 70 5.69 6.68 7.32 5.62 6.92
75 75 6.37 7.45 8.15 6.23 7.40
75 80 7.07 8.34 9.16 6.78 7.85
-----------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
41
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
ADJUSTED AGES
-----------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.75 $4.07 $4.26 $3.75 $3.98
55 55 3.88 4.25 4.47 3.87 4.06
55 60 3.99 4.44 4.71 3.98 4.12
60 55 4.06 4.47 4.71 4.06 4.37
60 60 4.24 4.71 4.99 4.23 4.47
60 65 4.38 4.97 5.32 4.38 4.54
65 60 4.49 5.01 5.32 4.48 4.89
65 65 4.72 5.33 5.70 4.71 5.02
65 70 4.93 5.68 6.15 4.91 5.14
70 65 5.07 5.75 6.17 5.05 5.60
70 70 5.40 6.21 6.70 5.36 5.79
70 75 5.69 6.68 7.32 5.62 5.96
75 70 5.89 6.83 7.40 5.81 6.63
75 75 6.37 7.45 8.15 6.23 6.92
75 80 6.78 8.11 8.99 6.54 7.15
----------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
42
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.95 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ------------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.56 $4.20 $4.55 $4.19 $4.51 $4.18 $4.45 $4.15 $4.36 $4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
---------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
45
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ------------------------------------------------------------------------------
ANNUITANT
MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 6.07 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
-----------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
46
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
ADJUSTED AGES
------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
-----------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
47
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
ADJUSTED AGES
------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.03 $4.36 $4.55 $4.03 $4.41
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.27 4.73 5.00 4.26 4.83
60 55 4.34 4.76 5.00 4.34 4.64
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.66 5.25 5.61 4.65 5.39
65 60 4.76 5.29 5.60 4.75 5.13
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.19 5.97 6.44 5.17 6.14
70 65 5.34 6.03 6.46 5.31 5.81
70 70 5.67 6.49 6.99 5.62 6.47
70 75 5.95 6.96 7.61 5.87 7.20
75 70 6.16 7.10 7.68 6.07 6.77
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.04 8.39 9.29 6.79 8.70
----------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
48
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
ADJUSTED AGES
------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $ 5.48 $4.88 $5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
----------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
49
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
ADJUSTED AGES
------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.93 $5.27 $5.46 $4.93 $5.19
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.15 5.63 5.91 5.14 5.73
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.52 6.14 6.51 5.51 6.28
65 60 5.61 6.16 6.49 5.60 6.01
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.04 6.84 7.34 6.00 7.03
70 65 6.17 6.90 7.33 6.13 6.67
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.77 7.84 8.51 6.68 8.08
75 70 6.97 7.96 8.56 6.87 7.62
75 75 7.45 8.60 9.33 7.27 8.55
75 80 7.86 9.28 10.20 7.57 9.59
----------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
50
<PAGE>
-----------------------------------------------------------------------
[LOGO OF AETNA APPEARS HERE]
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
CERTIFICATE OF GROUP ANNUITY COVERAGE
-----------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
51
<PAGE>
Exhibit 99.B.4(C)
------------------------------------------------
[LOGO OF AETNA APPEARS HERE] AETNA LIFE INSURANCE AND ANNUITY COMPANY
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
Aetna Life Insurance and Annuity Company, herein
called Aetna, agrees to pay the benefits stated
in this Contract.
SPECIFICATIONS
--------------------------------------------------------------------------------
Plan
MARATHON PLUS
--------------------------------------------------------------------------------
Type of Plan
INDIVIDUAL RETIREMENT ANNUITY ROLLOVER ACCOUNT
--------------------------------------------------------------------------------
Contract Holder
SPECIMEN
--------------------------------------------------------------------------------
Annuitant
SPECIMEN
--------------------------------------------------------------------------------
Contract No.
SPECIMEN
--------------------------------------------------------------------------------
Effective Date
MAY 1, 1995
--------------------------------------------------------------------------------
This Contract is Delivered in NEW YORK and is Subject to the Laws of that
Jurisdiction
THE VARIABLE FEATURES OF THE CONTRACT ARE DESCRIBED IN PARTS III AND IV.
RIGHT TO CANCEL
--------------------------------------------------------------------------------
The Contract Holder may cancel this Contract within 10 days of receiving it by
returning this Contract along with a written notice to Aetna at the above
address or to the agent from whom it was purchased. Within 7 days after it
receives the notice of cancellation and this Contract at its Home Office, Aetna
will return the entire consideration paid plus any increase or minus any
decrease in the current value of any funds allocated to the Separate Account.
This page, the following pages, and the application make up the entire
Contract.
Signed at the Home Office on the Effective Date.
Dan Kearney Lucille M. Nickerson
----------------------- ------------------------
President Secretary
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE
ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN
EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE
ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS
MATURITY.
1
<PAGE>
<TABLE>
SPECIFICATIONS
<S> <C>
-----------------------------------------------------------------------------------------------------------------------------------
GUARANTEED There is a guaranteed interest rate for Purchase Payment(s) held in the ALIAC Guaranteed Account (see Contract
INTEREST RATE Schedule I).
-----------------------------------------------------------------------------------------------------------------------------------
DEDUCTIONS FROM There will be deductions for mortality and expense risks and administrative fees (see Contract Schedule I and
THE SEPARATE II).
ACCOUNT
-----------------------------------------------------------------------------------------------------------------------------------
DEDUCTION FROM Purchase Payment(s) are subject to a deduction for premium taxes, if any (see 3.01).
PURCHASE
PAYMENT(S)
-----------------------------------------------------------------------------------------------------------------------------------
SURRENDER There will be a charge deducted upon surrender (see Contract Schedule I).
FEE
</TABLE>
This Contract is a legal contract and constitutes the entire legal relationship
between Aetna and the Contract Holder.
READ THIS CONTRACT CAREFULLY. This contract sets forth, in detail, all of the
rights and obligations of both you and Aetna. IT IS THEREFORE IMPORTANT THAT
YOU READ THIS CONTRACT CAREFULLY.
2
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the Current Value allocated to the Separate Account.
ACCOUNT: The deduction is the daily equivalent of the annual effective percentage shown in the following
chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available with this Contract are:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
The Alger American Fund - Alger American Balanced Portfolio
The Alger American Fund - Alger American Income and Growth Portfolio
The Alger American Fund - Alger American Growth Portfolio
The Alger American Fund - Alger American Midcap Growth Portfolio
The Alger American Fund - Alger American Leveraged Allcap Portfolio
The Alger American Fund - Alger American Small Capitalization Portfolio
Fidelity Investments Variable Insurance Products Fund - High Income Portfolio
Fidelity Investments Variable Insurance Products Fund - Equity-Income Portfolio
Fidelity Investments Variable Insurance Products Fund - Growth Portfolio
Fidelity Investments Variable Insurance Products Fund - Overseas Portfolio
Fidelity Investments Variable Insurance Products Fund II - Investment Grade Bond Portfolio
Fidelity Investments Variable Insurance Products Fund II - Asset Manager Portfolio
Fidelity Investments Variable Insurance Products Fund II - Index 500 Portfolio
Fidelity Investments Variable Insurance Products Fund II - Contrafund Portfolio
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Insurance Management Series - Corporate Bond Fund
</TABLE>
4
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT (CONT'D)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SEPARATE ACCOUNT FUNDS Insurance Management Series - Equity Growth and Income Fund
(CONT'D): Insurance Management Series - International Stock Fund
Insurance Management Series - U.S. Government Bond Fund
Insurance Management Series - Utility Fund
Janus Aspen Series - Aggressive Growth Portfolio
Janus Aspen Series - Balanced Portfolio
Janus Aspen Series - Flexible Income Portfolio
Janus Aspen Series - Growth Portfolio
Janus Aspen Series - Short-Term Bond Portfolio
Janus Aspen Series - Worldwide Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust
TCI Portfolios, Inc. - TCI International
TCI Portfolios, Inc. - TCI Growth
TCI Portfolios, Inc. - TCI Balanced
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
--------------------------------------------------------------------------------
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
SEPARATE ACCOUNT AND AG ACCOUNT
--------------------------------------------------------------------------------
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna reserves the right to charge $10 for each
subsequent Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current Value is $50,000 or more on the date the
Maintenance Fee is to be deducted, the Maintenance Fee is $0.
</TABLE>
5
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SURRENDER FEE: For each surrender, the Surrender Fee will be determined as follows:
Surrender Fee
Length of Time from Deposit of Net (as percentage of
Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may not be greater than 10% of the Current Value at
OPTION (SWO) time of election.
PERCENTAGE:
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
</TABLE>
See 1. GENERAL DEFINITIONS for explanations.
6
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the Current Value allocated to the Separate Account.
ACCOUNT: The deduction is the daily equivalent of the annual effective percentage shown in the following
chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available with this Contract are:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Janus Aspen Series - Aggressive Growth Portfolio
Janus Aspen Series - Flexible Income Portfolio
Janus Aspen Series - Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust
TCI Portfolios, Inc. - TCI International
TCI Portfolios, Inc. - TCI Growth
TCI Portfolios, Inc. - TCI Balanced
</TABLE>
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
</TABLE>
7
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna reserves the right to charge $10 for each
subsequent Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current Value is $50,000 or more on the date the
Maintenance Fee is to be deducted, the Maintenance Fee is $0.
SURRENDER FEE: For each surrender, the Surrender Fee will be determined as follows:
Surrender Fee
Length of Time from Deposit of Net (as percentage of
Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may not be greater than 10% of the Current Value at
OPTION (SWO) time ofelection.
PERCENTAGE:
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
</TABLE>
8
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
See 1. GENERAL DEFINITIONS for explanations.
</TABLE>
9
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the Current Value allocated to the Separate Account.
ACCOUNT: The deduction is the daily equivalent of the annual effective percentage shown in the following
chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available with this Contract are:
Insurance Management Series - Equity Growth and Income Fund
Insurance Management Series - Utility Fund
Insurance Management Series - Prime Money Fund
Insurance Management Series - U.S. Government Bond Fund
Insurance Management Series - Corporate Bond Fund
Insurance Management Series - International Stock Fund
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
------------------------------------------------------------------------------------------------------------------------------------
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
</TABLE>
10
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna reserves the right to charge $10 for each
subsequent Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current Value is $50,000 or more on the date the
Maintenance Fee is to be deducted, the Maintenance Fee is $0.
SURRENDER FEE: For each surrender, the Surrender Fee will be determined as follows:
Surrender Fee
Length of Time from Deposit of Net (as percentage of
Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may not be greater than 10% of the Current Value at
OPTION (SWO) time of election.
PERCENTAGE:
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
</TABLE>
11
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
</TABLE>
See 1. GENERAL DEFINITIONS for explanations.
12
<PAGE>
CONTRACT SCHEDULE II
ANNUITY PERIOD
SEPARATE ACCOUNT
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
CHARGES TO SEPARATE A daily charge at an annual effective rate of 1.25% for Annuity mortality and expense risks. The
ACCOUNT: administrative charge is established upon election of an Annuity option. This charge will not exceed
0.25%.
VARIABLE ANNUITY ASSUMED If a Variable Annuity is chosen, an assumed annual net return rate of 5.0% may be elected. If 5.0%
ANNUAL NET RETURN RATE: is not elected, Aetna will use an assumed annual net return rate of 3.5%.
The assumed annual net return rate factor for 3.5% per year is 0.9999058.
The assumed annual net return rate factor for 5.0% per year is 0.9998663.
If the portion of a Variable Annuity payment for any Fund is not to decrease, the Annuity return
factor under the Separate Account for that Fund must be:
(a) 4.75% on an annual basis plus an annual return of up to 0.25% to offset the administrative
charge set at the time Annuity payments commence if an assumed annual net return rate of 3.5% is
chosen; or
(b) 6.25% on an annual basis plus an annual return of up to 0.25% to offset the administrative
charge set at the time Annuity payments commence, if an assumed annual net return rate of 5% is
chosen.
</TABLE>
FIXED ANNUITY
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM GUARANTEED 3.0%
INTEREST RATE (effective
annual rate of return):
</TABLE>
See 1. GENERAL DEFINITIONS for explanations.
13
<PAGE>
TABLE OF CONTENTS
I. GENERAL DEFINITIONS
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
1.01 Account.......................................................................10
1.02 Accumulation Period...........................................................10
1.03 Adjusted Current Value........................................................10
1.04 ALIAC Guaranteed Account (AG Account).........................................10
1.05 Annuitant.....................................................................10
1.06 Annuity.......................................................................10
1.07 Beneficiary...................................................................10
1.08 Certificate Holder............................................................10
1.09 Code..........................................................................10
1.10 Contract......................................................................10
1.11 Contract Holder...............................................................10
1.12 Current Value.................................................................10
1.13 Deposit Period................................................................11
1.14 Dollar Cost Averaging.........................................................11
1.15 Fixed Annuity.................................................................11
1.16 Fund(s).......................................................................11
1.17 General Account...............................................................11
1.18 Guaranteed Rate - AG Account..................................................11
1.19 Guaranteed Term...............................................................11
1.20 Guaranteed Term(s) Groups.....................................................11
1.21 Maintenance Fee...............................................................11
1.22 Market Value Adjustment (MVA).................................................12
1.23 Matured Term Value............................................................12
1.24 Matured Term Value Transfer...................................................12
1.25 Maturity Date.................................................................12
1.26 Net Purchase Payment..........................................................12
1.27 Nonunitized Separate Account..................................................12
1.28 Purchase Payment..............................................................12
1.29 Reinvestment..................................................................13
1.30 Separate Account..............................................................13
1.31 Surrender Value...............................................................13
1.32 Transfers.....................................................................13
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
1.33 Valuation Period (Period).....................................................13
1.34 Variable Annuity..............................................................13
</TABLE>
II. GENERAL PROVISIONS
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
2.01 Change of Contract............................................................13
2.02 Change of Fund(s).............................................................14
2.03 Nonparticipating Contract.....................................................14
2.04 Payments and Elections........................................................15
2.05 State Laws....................................................................15
2.06 Control of Contract...........................................................15
2.07 Designation of Beneficiary....................................................15
2.08 Misstatements and Adjustments.................................................15
2.09 Incontestability..............................................................15
2.10 Individual Certificates.......................................................16
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III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
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3.01 Net Purchase Payment..........................................................16
3.02 Certificate Holder's Account..................................................16
3.03 Fund(s) Record Units -- Separate Account......................................16
3.04 Net Return Factor(s) -- Separate Account......................................16
3.05 Fund Record Unit Value -- Separate Account....................................17
3.06 Market Value Adjustment.......................................................17
3.07 Transfer of Current Value from the Funds or AG Account........................18
3.08 Reports.......................................................................19
3.09 Notice to the Certificate Holder..............................................19
3.10 Loans.........................................................................19
3.11 Distribution Options..........................................................19
3.12 Death Benefit Amount..........................................................23
3.13 Death Benefit Options Available to Beneficiary................................24
3.14 Required Distribution to Certificate Holder/Beneficiary.......................25
3.15 Liquidation of Surrender Value................................................26
3.16 Surrender Fee.................................................................26
3.17 Payment of Surrender Value....................................................27
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IV. ANNUITY PROVISIONS
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4.01 Choices to be Made............................................................27
4.02 Annuity Payments to Certificate Holder........................................27
4.03 Annuity Payments to Beneficiary...............................................28
4.04 Terms of Annuity Options......................................................28
4.05 Death of Annuitant/Beneficiary................................................29
4.06 Fund(s) Annuity Units -- Separate Account.....................................30
4.07 Fund Annuity Unit Value -- Separate Account...................................30
4.08 Annuity Net Return Factor(s) -- Separate Account..............................30
4.09 Annuity Options...............................................................31
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I. GENERAL DEFINITIONS
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1.01 ACCOUNT: A record established for each Certificate Holder to maintain the value of
the Net Purchase Payment held on his/her behalf during the Accumulation
Period.
1.02 ACCUMULATION PERIOD: The period during which the Net Purchase Payment is applied to the Contract
to provide future Annuity payment(s).
1.03 ADJUSTED CURRENT VALUE: The Current Value of a Contract plus or minus any aggregate AG Account MVA,
if applicable. (See 1.21)
1.04 ALIAC GUARANTEED An accumulation option where Aetna guarantees stipulated rate(s) of
ACCOUNT interest for specified periods of time. All assets of Aetna, including
(AG ACCOUNT): amounts in the Nonunitized Separate Account, are available to meet the
guarantees under the AG Account.
1.05 ANNUITANT: The person whose life is measured for purposes of the guaranteed death
benefit and the duration of Annuity payments under this Contract. The
Contract Holder and Annuitant must be the same person under this Contract.
1.06 ANNUITY: Payment of an income:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.07 BENEFICIARY: The individual or estate entitled to receive any payment from the Contract
upon the death of the Annuitant.
1.08 CERTIFICATE HOLDER: A person who purchases an interest in this Contract as evidenced by a
certificate.
1.09 CODE: The Internal Revenue Code of 1986, as it may be amended from time to time.
1.10 CONTRACT: This agreement between Aetna and the Contract Holder to provide an annuity
which qualifies as an Individual Retirement Annuity under Code Section
408(b) for the exclusive benefit of the Contract Holder or his or her
Beneficiary(ies).
1.11 CONTRACT HOLDER: The entity to which a group Contract is issued.
1.12 CURRENT VALUE: As of the most recent Valuation Period, the Net Purchase Payment and any
additional amount deposited pursuant to 3.12 plus any interest added to the
portion allocated to the AG Account; and plus or minus the investment
experience of the portion allocated to the Funds since deposit; less all
Maintenance Fees deducted, any amounts surrendered and any amounts applied
to an Annuity.
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1.13 DEPOSIT PERIOD: A calendar week, a calendar month, a calendar quarter, or any other period
of time specified by Aetna during which the Net Purchase Payment, Transfers
or Reinvestments are accepted into the AG Account for one or more
Guaranteed Terms. Aetna reserves the right to extend the Deposit Period.
1.14 DOLLAR COST AVERAGING: A program that permits the Certificate Holder to systematically transfer
amounts from any of the Funds and the one-year AG Account Guaranteed Term
to any of the Funds by completing the appropriate section of the enrollment
form or a Dollar Cost Averaging election form.
1.15 FIXED ANNUITY: An Annuity with payments that do not vary in amount.
1.16 FUND(S): The open-end management investment companies (mutual funds) in which the
Separate Account invests (see Contract Schedule I for the specific fund
options).
1.17 GENERAL ACCOUNT: The account holding the assets of Aetna, other than those assets held in
Aetna's separate accounts.
1.18 GUARANTEED RATE -- Aetna will declare the interest rate applicable to a specific Guaranteed
AG ACCOUNT: Term at the start of the Deposit Period for that Guaranteed Term. The rate
is guaranteed by Aetna for that Deposit Period and the ensuing Guaranteed
Term. The Guaranteed Rate is an annual effective yield. That is, interest
is credited daily at a rate that will produce the Guaranteed Rate over the
period of a year. No Guaranteed Rate will ever be less than the Minimum
Guaranteed Rate shown on Contract Schedule I.
1.19 GUARANTEED TERM: The period of time for which the AG Account Guaranteed Rate is guaranteed
on the Net Purchase Payment, Transfers and Reinvestments made into a
current Deposit Period for the AG Account. Such period begins on the day
following the close of the Deposit Period and ends on the designated
Maturity Date. Guaranteed Terms are offered at Aetna's discretion for
various lengths of time ranging up to and including ten years.
During a Deposit Period, Aetna may make available any number of Guaranteed
Terms. The Contract Holder may allocate the Net Purchase Payment and
Transfers into any or all of the available Guaranteed Terms.
1.20 GUARANTEED TERM(S) All AG Account Guaranteed Term(s) with the same length of time from the
GROUPS: close of the Deposit Period until the designated Maturity Date.
1.21 MAINTENANCE FEE: The Maintenance Fee (see Contract Schedule I) will be deducted during the
Accumulation Period from the Current Value on each anniversary of the date
the Contract is established and upon the surrender of the entire Contract.
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1.22 MARKET VALUE ADJUSTMENT An adjustment that may apply to an amount withdrawn or transferred from an
(MVA): AG Account Guaranteed Term prior to the end of that Guaranteed Term. The
adjustment reflects the change in the value of the investment due to
changes in interest rates since the date of deposit and is computed using
the formula given in 3.06. The adjustment is expressed as a percentage of
each dollar being withdrawn.
1.23 MATURED TERM VALUE: The amount payable on an AG Account Guaranteed Term's Maturity Date.
1.24 MATURED TERM VALUE During the calendar month following an AG Account Maturity Date, the
TRANSFER: Certificate Holder may notify Aetna's Home Office in writing to Transfer or
surrender all or part of the Matured Term Value, plus interest at the new
Guaranteed Rate accrued thereon, from the AG Account without an MVA. This
provision only applies to the first such written request received from the
Certificate Holder during this period for any Matured Term Value.
1.25 MATURITY DATE: The last day of an AG Account Guaranteed Term.
1.26 NET PURCHASE PAYMENT: The Purchase Payment less premium taxes, as applicable.
1.27 NONUNITIZED SEPARATE A separate account set up by Aetna under Title 38, Section 38a-433, of the
ACCOUNT: Connecticut General Statutes, that holds assets for AG Account Terms. There
are no discrete units for this Account. The Certificate Holder does not
participate in the investment gain or loss from the assets held in the
Nonunitized Separate Account. Such gain or loss is borne entirely by Aetna.
These assets may be chargeable with liabilities arising out of any other
business of Aetna.
1.28 PURCHASE PAYMENT: The cash payment accepted by Aetna at its Home Office which is a rollover
amount under Code Section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3). Aetna
may require verification that a rollover amount qualifies as such under the
Code. Payments to Simplified Employee Pension plans and annual deductible
and nondeductible contributions to Individual Retirement Annuities are not
accepted under this Contract.
Aetna reserves the right to refuse to accept any Purchase Payment at any
time for any reason. No advance notice will be given to the Contract Holder
or Certificate Holder.
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1.29 REINVESTMENT: Aetna will mail a notice to the Contract Holder at least 18 calendar days
and not more than 45 days before a Guaranteed Term's Maturity Date. This
notice will contain the Terms available during current Deposit Periods with
their Guaranteed Rate, and projected Matured Term Value. If no specific
direction is given by the Certificate Holder prior to the Maturity Date,
each Matured Term Value will be reinvested in the current Deposit Period
for a Guaranteed Term of the same duration. If a Guaranteed Term of the
same duration is unavailable, each Matured Term Value will automatically be
reinvested in the current Deposit Period for the next shortest Guaranteed
Term available. If no shorter Guaranteed Term is available, the next longer
Guaranteed Term will be used. Aetna will mail a confirmation statement to
the Certificate Holder the next business day after the Maturity Date. This
notice will sate the Guaranteed Term and Guaranteed Rate which will apply
to the reinvested Matured Term Value.
1.30 SEPARATE ACCOUNT: A separate account that buys and holds shares of the Fund(s). Income, gains
or losses, realized or unrealized, are credited or charged to the Separate
Account without regard to other income, gains or losses of Aetna. Aetna
owns the assets held in the Separate Account and is not a trustee as to
such amounts. This Separate Account generally is not guaranteed and is held
at market value. The assets of the Separate Account, to the extent of
reserves and other contract liabilities of the Account, shall not be
charged with other Aetna liabilities.
1.31 SURRENDER VALUE: The amount payable by Aetna upon the surrender of any portion of an
Account.
1.32 TRANSFERS: The movement of invested amounts among the available Fund(s) and the AG
Account under this Contract during the Accumulation Period.
1.33 VALUATION PERIOD (PERIOD): The period of time for which a Fund determines its net asset value, usually
from 4:15 p.m. Eastern time each day the New York Stock Exchange is open
until 4:15 p.m. the next such day, or such other day that one or more of
the Funds determines its net asset value.
1.34 VARIABLE ANNUITY: An Annuity with payments that vary with the net investment results of one
or more Funds held under the Separate Account.
II. GENERAL PROVISIONS
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2.01 CHANGE OF CONTRACT: Only an authorized officer of Aetna may change the terms of this Contract.
Aetna will notify the Contract Holder in writing at least 30 days before
the effective date of any change. Any change will not affect the amount or
terms of any Annuity which begins before the change.
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2.01 CHANGE OF CONTRACT Aetna may make any change that affects the AG Account Market Value
(CONT'D): Adjustment (3.06) with at least 30 days advance written notice to the
Contract Holder and the Certificate Holder. Any such change shall become
effective for any new Term and will be applicable only if it is more
favorable to the Contract Holder and/or the Certificate Holder.
Any change that affects any of the following under this Contract will not
apply to Accounts in existence before the effective date of the change:
(a) Net Purchase Payment (1.26)
(b) AG Account Guaranteed Rate (1.04)
(c) Net Return Factor(s) -- Separate Account (3.04)
(d) Current Value (1.12)
(e) Surrender Value (1.31)
(f) Fund(s) Annuity Unit Value -- Separate Account (4.07 )
(g) Annuity Options (4.09)
(h) Fixed Annuity Guaranteed Interest Rates (4.01)
(i) Transfers (1.32)
This Contract may be changed as deemed necessary by Aetna to comply with
federal or state law. Any such change is subject to the prior approval of
the New York Insurance Department.
2.02 CHANGE OF FUND(S): Aetna, or the Separate Account, may:
(a) Change the Fund(s) which may be invested in by the Separate Account;
and
(b) Replace the shares of any Fund(s) held in the Separate Account with
shares of any other Fund(s).
Changes must be:
(a) Approved by a majority vote of the shares in the Separate Account with
respect to the Fund(s) whose shares are to be replaced; or
(b) Deemed necessary by Aetna under the Investment Company Act of 1940; or
(c) Deemed necessary by Aetna to accomplish the purpose of the Separate
Account.
Such changes are subject to the approval of the Superintendent of the New
York Insurance Department and Aetna will notify the Contract Holder of such
change.
2.03 NONPARTICIPATING CONTRACT: The Contract Holder, Certificate Holders or Beneficiaries will not have a
right to share in the earnings of Aetna.
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2.04 PAYMENTS AND ELECTIONS: While the Certificate Holder is living, Aetna will pay the Certificate
Holder any Annuity payments as and when due. After the Certificate Holder's
death, any Annuity payments required to be made will be paid in accordance
with 4.05. Aetna will determine other payments and/or elections as of the
end of the Valuation Period in which the request is received at its Home
Office. Such payments will be made within 7 calendar days of receipt at its
Home Office of a written claim for payment which is in good order, except
as provided in 3.17.
2.05 STATE LAWS: The Contract and the Certificates comply with the laws of the state in
which they are delivered. Any surrender, death, or Annuity payments are
equal to or greater than the minimum required by such laws. Annuity tables
for legal reserve valuation shall be as required by state law. Such tables
may be different from Annuity tables used to determine Annuity payments.
2.06 CONTROL OF CONTRACT: This is a Contract between the Contract Holder and Aetna. The Contract
Holder has title to the Contract. Contract Holder rights are limited to
accepting and rejecting Contract modifications.
Each Certificate Holder has a nonforfeitable right to all amounts held in
his or her Account. Each Certificate Holder may make any choices allowed by
this contract for his or her Account. Choices made under this Contract must
be in writing. Until receipt of such choices at Aetna's Home Office, Aetna
may rely on any previous choices made.
The Contract is not subject to the claims of any creditors of the Contract
Holder or the Certificate Holder except to the extent permitted by law.
The Account may not be attached, alienated, or subject to the claims of
creditors of the Certificate Holder except to the extent permitted by law.
This Account is nontransferable by the Certificate Holder. The Certificate
Holder may not assign, transfer, pledge or use as collateral his or her
rights under the Contract.
2.07 DESIGNATION OF Each Certificate Holder shall name his or her Beneficiary. The Beneficiary
BENEFICIARY: may be changed at any time. Changes to a Beneficiary must be submitted to
Aetna's Home Office in writing and will not be effective until accepted by
Aetna.
2.08 MISSTATEMENTS AND If Aetna finds the age or sex of any Annuitant to be misstated, the amount
ADJUSTMENTS: payable under the Contract shall be adjusted for the correct age or sex;
the amount of any underpayment or overpayment, with interest at six per
cent per year, shall be credited to, or changed against, the current or
next succeeding payment or payments to be made by Aetna under the Contract.
2.09 INCONTESTABILITY: Aetna cannot cancel the Contract because of any error of fact on the
application. Aetna cannot cancel an account because of any error of fact on
the enrollment form.
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2.10 INDIVIDUAL CERTIFICATES: Aetna shall issue a certificate to each Certificate Holder. The certificate
will summarize certain provisions of the contract. Certificates are for
information only and are not a part of the Contract.
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
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3.01 NET PURCHASE PAYMENT: This amount is the actual Purchase Payment less any premium tax. Aetna will
generally deduct the premium tax when Annuity benefits are elected (see
Part IV). If Aetna determines that under applicable state law, it must pay
a premium tax when the Purchase Payment is received or at any other time,
it will deduct the tax at that time.
The Net Purchase Payment will be credited among:
(a) The current Deposit Period(s) for Guaranteed Terms under the AG
Account; and
(b) The Fund(s) in which the Separate Account invests.
The Certificate Holder shall tell Aetna the allocation percentage to be
applied to the current Deposit Period for each of the available Guaranteed
Terms in the AG Account and/or each Fund.
3.02 CERTIFICATE HOLDER'S Aetna will maintain an Account for each Certificate Holder.
ACCOUNT:
Aetna will declare from time to time the acceptability and the minimum
amount for additional Purchase Payments. Each Account will be subject to
the Terms and conditions of the Contract in effect at the time the first
Purchase Payment for such account is applied to the Contract except for
changes made to comply with federal or state law.
3.03 FUND(S) RECORD UNITS -- The portion of the Net Purchase Payment applied to each Fund under the
SEPARATE ACCOUNT: Separate Account will determine the number of Fund record units for that
Fund. This number is equal to the portion of the Net Purchase Payment
applied to each Fund divided by the Fund record unit value (see 3.05) for
the Valuation Period in which the Purchase Payment is received in good
order at Aetna's Home Office.
3.04 NET RETURN FACTOR(S) -- The net return factor(s) are used to compute all Separate account record
SEPARATE ACCOUNT: units for any Fund.
The net return factor for each Fund is equal to 1.0000000 plus the net
return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held by the Separate Account at
the end of the Valuation Period; minus
(b) The value of the shares of the Fund held by the Separate Account at
the start of the Valuation Period; plus or minus
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3.04 NET RETURN FACTOR(S) -- (c) Taxes (or reserves for taxes) on the Separate Account (if any); divided by
SEPARATE ACCOUNT (d) The total value of the Fund(s) record units and Fund(s) Annuity units of the Separate
(CONT'D): Account at the start of the Valuation Period; minus
(e) A daily Separate Account charge at an annual rate as shown on Contract Schedule I for
mortality and expense risks, which may include profit; and a daily administrative charge.
A net return rate may be more or less than 0%. The value of a share of the Fund is equal to the
net assets of the Fund divided by the number of shares outstanding.
3.05 FUND RECORD UNIT A Fund record unit value is computed by multiplying the net return factors for the current
VALUE -- SEPARATE ACCOUNT: Valuation Period by the Fund record unit value for the previous Period. The dollar value of Fund
record units, Separate Account assets, and Variable Annuity payments may go up or down due to
investment gain or loss.
3.06 MARKET VALUE ADJUSTMENT: Except as noted below, there will be an MVA for a withdrawal from the AG Account before the end
of a Guaranteed Term when the withdrawal is due to:
(a) A Transfer; except for transfers from the one-year AG Account Guaranteed Term under the
Dollar Cost Averaging program or, as specified in 1.24, AG Account Matured Term Value
Transfer;
(b) A full or partial surrender (including a 15% free withdrawal under 3.16), except for a
partial withdrawal under the Systematic Withdrawal Option (see 3.11); or
(c) An election of Annuity option 2 (see 4.09).
Full and partial surrenders and Transfers made within six months after the date of the
Annuitant's death will be the greater of:
(a) The aggregate MVA amount which is the sum of all market value adjusted amounts calculated
due to a withdrawal of amounts. This total may be greater or less than the Current Value of
those amounts; or
(b) The applicable portion of the Current Value in the AG Account.
After the six-month period, the surrender or Transfer will be the aggregate MVA amount, which may
be greater or less than the Current Value of those amounts.
The greater of the aggregate MVA amount or the applicable portion of the Current Value applies to
amounts withdrawn from the AG Account on account of an election of Annuity options 3 or 4 (see
4.09).
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3.06 MARKET VALUE ADJUSTMENT Market value adjusted amounts will be equal to the amount withdrawn
(CONT'D): multiplied by the following ratio:
x
---
365
(1 + i)
-----------
x
---
365
---
(1 + j)
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days remaining, (computed from Wednesday of
the week of withdrawal) in the Guaranteed Term.
The Deposit Period Yield will be determined as follows:
(a) At the close of the last business day of each week of the Deposit
Period, a yield will be computed as the average of the yields on that
day of U.S. Treasury Notes which mature in the last three months of
the Guaranteed Term.
(b) The Deposit Period Yield is the average of those yields for the
Deposit Period. If withdrawal is made before the close of the Deposit
Period, it is the average of those yields on each week preceding
withdrawal.
The Current Yield is the average of the yields on the last business day of
the week preceding withdrawal on the same U.S. Treasury Notes included in
the Deposit Period Yield.
In the event that no U.S. Treasury Notes which mature in the last three
months of the Guaranteed Term exist, Aetna reserves the right to use the
U.S. Treasury Notes that mature in the following quarter.
If. U.S. Treasury Notes are no longer available, a suitable replacement
index, subject to approval of the Superintendent of the New York Insurance
Department, would then be utilized.
A detailed description of the MVA has been filed with the Superintendent of
the New York Insurance Department.
3.07 TRANSFER OF CURRENT VALUE Before an Annuity option is elected, all or any portion of the Adjusted
FROM THE FUNDS OR Current Value of the Contract may be transferred from any Fund or
AG ACCOUNT: Guaranteed Term of the AG Account:
(a) To any other Fund; or
(b) To any Guaranteed Term of the AG Account available in the current
Deposit Period.
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3.07 TRANSFER OF CURRENT VALUE Transfer requests can be submitted as a percentage or as a dollar amount.
FROM THE FUNDS OR The minimum transfer amount is shown on Contract Schedule I. Within a
AG ACCOUNT: Guaranteed Term Group, the amount to be surrendered or transferred will be
(CONT'D): withdrawn first from the oldest Deposit Period, then from the next oldest,
and so on until the amount requested is satisfied.
The Certificate Holder may make an unlimited number of Transfers during the
Accumulation Period. The number of free Transfers allowed by Aetna is shown
on Contract Schedule I. Additional Transfers may be subject to a Transfer
fee as shown on Contract Schedule I.
Amounts transferred from the AG Account under the Dollar Cost Averaging
program, or amounts transferred as a Matured Term Value on or within the
calendar month of the Term's Maturity Date, do not count against the annual
Transfer limit.
Amounts applied to Guaranteed Terms of the AG Account may not be
transferred to the Funds or to another Guaranteed Term during the Deposit
Period or for 90 days after the close of the Deposit Period except for (1)
a Matured Term Value(s) during the calendar month following the Term's
Maturity Date and (2) amounts transferred from the one-year AG Account
Guaranteed Term under the Dollar Cost Averaging program.
3.08 REPORTS: Aetna, as issuer of the Contract, will make any reports required of it by
federal or state law. Aetna will furnish annual calendar year reports
concerning the status of the annuity.
3.09 NOTICE TO THE CONTRACT The Contract Holder will receive quarterly statements from
HOLDER: Aetna of:
(a) The value of any amounts held in:
(1) The AG Account; and
(2) The Fund(s) under the Separate Account.
(b) The number of any Fund(s) record units; and
(c) The Fund(s) record unit value.
Such number or values will be as of a specific date no more than 60 days
before the date of the notice.
3.10 LOANS: Loans are not available under this Contract.
3.11 DISTRIBUTION OPTIONS: The following distribution options may be elected by the Certificate Holder
during the Accumulation Period.
(A) ESTATE CONSERVATION OPTION (ECO) - A distribution option under which a
portion of the Current Value will automatically be surrendered and
distributed each year. ECO payments will be calculated based on the
Account's full Current Value. The distributed amount will be withdrawn
pro rata from each investment option used under the Account. A
Surrender Fee will not be deducted from any portion of the Current
Value which is paid as a distribution under ECO. Certificate Holders
should consult their tax advisers prior to requesting this
distribution option. Aetna will not be responsible for any adverse tax
consequences due to receiving ECO payments.
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3.11 DISTRIBUTION OPTIONS (1) Amount of Distribution: Each year that ECO is in effect, Aetna
(CONT'D): will calculate and distribute an amount equal to the minimum
required distribution under the Code. The annual distribution
will be determined by dividing the Current Value as of December
31 of the year prior to the payment year, by a life expectancy
factor.
The Certificate Holder, or spouse Beneficiary if ECO is elected
after the Certificate Holder's death, shall elect either single
life expectancy or joint life expectancy.
Life expectancy is computed by use of the expected return
multiples in Tables V and VI of section 1.72-9 of the Income Tax
Regulations.
Joint life expectancy can only be elected based on the joint life
expectancy of the Certificate Holder and his or her Beneficiary.
If the Certificate Holder makes any changes in the Beneficiary
designation under the Certificate, ECO distributions after the
change will be recalculated as required by IRS regulations.
Life expectancies shall be recalculated annually. If the joint
life expectancy is elected with a non-spouse Beneficiary, the
life expectancy of the non-spouse Beneficiary must not be
recalculated. Instead, the life expectancy will be calculated
using the attained age of the Beneficiary during the calendar
year in which the Certificate Holder attains age 70 1/2, and
payments for subsequent years shall be recalculated based on such
life expectancy reduced by one for each calendar year which has
elapsed since the calendar year life expectancy was first
calculated.
If joint life expectancy is elected with a spouse Beneficiary, at
the death of either, the payments can continue and will be
calculated based solely on the survivor's life expectancy. If
joint life expectancy is elected with a non-spouse Beneficiary
and the non-spouse Beneficiary dies first, payments will continue
based on the joint life expectancy.
If a single life expectancy is elected and the Certificate Holder
dies, or if a joint life expectancy is elected and the survivor
dies, the death benefits determined under Section 3.12 will be
paid to the Beneficiary in a lump sum not later than December 31
following the year of death.
(2) Minimum Initial Current Value: The ECO Minimum Initial Account
Current Value is shown on Contract Schedule I. If after election
of this option, the Current Value is
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insufficient to make a scheduled ECO payment, Aetna will
distribute the entire Account balance.
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3.11 DISTRIBUTION OPTIONS (3) Date of Distribution: Distribution will be made annually on the 15th of any month or
(CONT'D) such other date as Aetna may designate or allow. The latest allowable payment date is
the month of the Certificate Holder's 85th birthday. The Certificate Holder shall
specify an initial distribution month, not earlier than the calendar year in which the
Certificate Holder attains age 70 1/2, or such later time when distributions must
commence as specified under the Code, whichever is appropriate. For a spouse
Beneficiary, the earliest date is the date of the Certificate Holder's death.
(4) Election and Revocation: ECO may be elected by the Certificate
Holder by submitting a written request to Aetna at its Home
Office.
Once elected, this option may be revoked by the Certificate
Holder, or spouse Beneficiary if elected after the Contract
Holder's death, by submitting a written request to Aetna at its
Home Office. Any revocation will apply only to amounts not yet
paid. The Certificate Holder assumes responsibility for
compliance with minimum distribution rules under the Code. ECO
may be elected only once by the Certificate Holder or by a spouse
Beneficiary.
(B) SYSTEMATIC WITHDRAWAL OPTION (SWO): A distribution option under which
a portion of the Account's Current Value will automatically be
surrendered and distributed each year. SWO payments will be calculated
based on the Account's full Current Value. The distributed amount will
be withdrawn pro rata from each investment option used under the
Account. A Surrender Fee will not be deducted from any portion of the
Current Value which is paid as a distribution under SWO. Certificate
Holders should consult their tax advisers prior to requesting this
distribution option. Aetna will not be responsible for any adverse tax
consequences due to receiving SWO payments.
(1) Amount of Distribution: The Certificate Holder may elect one of
the three payment methods described below.
(i) Specified Payment: Payments of a designated dollar amount.
The annual amount may not be greater than the percentage of
the Account's Current Value at time of election as shown on
Contract Schedule I. This annual dollar amount will remain
constant. The minimum SWO payment amount is shown on
Contract Schedule I; or
</TABLE>
29
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<TABLE>
<S> <C>
3.11 DISTRIBUTION OPTIONS (ii) Specified Period: Payments made over a period of time of at
(CONT'D) least 10 years. The maximum specified period shall be
determined under the Code minimum distribution rules. The
annual amount is calculated by dividing the Current Value
as of December 31 of the year prior to the payment year by
the number of payment years remaining; or
(iii) Specified Percentage: Payments of a designated percentage
which cannot be greater than the percentage of the Current
Value at the time of election as shown on Contract Schedule
I. The percentage may be changed by written request. Aetna
reserves the right to limit the number of times the
percentage may be changed. The annual amount is calculated
by multiplying the Current Value as of December 31 of the
year prior to the payment year by the designated
percentage. Payments will be made until the year the
Certificate Holder attains age 70 1/2 or, if elected by the
spouse Beneficiary, the year the Certificate Holder would
have attained age 70 1/2.
Under both the Specified Payment and Specified Period payment
methods, a higher amount shall be paid in any year if required
under the Code minimum distribution rules. For purposes of this
determination, life expectancy for the initial distribution year
shall be calculated based on single life expectancy Table V of
section 1.72-9 of the Income Tax Regulations. With each
subsequent year, the life expectancy will be the life expectancy
for the previous year reduced by one.
Payments upon the Certificate Holder's death will be made to the
Beneficiary in the manner described in 3.13.
(2) Minimum Initial Current Value: The Minimum Initial Current Value
required to begin SWO is shown on Contract Schedule I. If after
election of this option the Current Value is insufficient to make
a schedule SWO payment, Aetna will distribute the entire balance.
(3) Date of Distribution: The Certificate Holder shall specify the
initial distribution date. The earliest date for distribution is
the first date on which the Certificate Holder attains age 59
1/2. The latest allowable SWO payment date is the month of the
Certificate Holder's 85th birthday. As elected by the Certificate
Holder, SWO payments will be made on a monthly, quarterly, semi-
annual or annual basis. If SWO payments are made more frequently
than annually, the designated annual amount is divided by the
number of payments due each year.
</TABLE>
30
<PAGE>
<TABLE>
<S> <C>
3.11 DISTRIBUTION OPTIONS Subsequent distributions will be made on the 15th of any month or
(CONT'D): such other date as Aetna may designate or allow.
(4) Election and Revocation: SWO may be elected by the Certificate
Holder or spouse Beneficiary if elected after the Certificate
Holder's death by submitting a completed and signed election form
to Aetna's Home Office.
Once elected, this option may be revoked by the Certificate
Holder, or spouse Beneficiary if elected after the Certificate
Holder's death, by submitting a written request to Aetna at its
Home Office. Any revocation will apply only to amounts not yet
paid. SWO may be elected only once by the Certificate Holder or
by the spouse Beneficiary.
3.12 DEATH BENEFIT AMOUNT: If the Certificate Holder/Annuitant dies before Annuity payments
start, the Beneficiary is entitled to a death benefit under the
Account. The claim date is the date when proof of death and the
Beneficiary's claim are received in good order at Aetna's Home Office.
The amount of the death benefit is determined as follows:
(a) Death of Certificate Holder/Annuitant less than 85 years of age:
The guaranteed death benefit is the greatest of:
(1) The sum of all Net Purchase Payment(s) made to the Account
(as of the date of death) minus the sum of all amounts
surrendered, applied to an Annuity, or deducted from the
Account;
(2) The highest step-up value as of the date of death. A step-up
value is determined on each anniversary of the Effective
Date. Each step-up value is calculated as the Account's
Current Value on the Effective Date anniversary, increased
by the amount of any Purchase Payment(s) made, and decreased
by the sum of all amounts surrendered, deducted, and/or
applied to an Annuity option since the Effective Date
anniversary.
(3) The Account's Current Value as of the date of death.
The excess, if any, of the guaranteed death benefit value over
the Account's Current Value is determined as of the date of
death. Any excess amount will be deposited to the Account and
allocated to Aetna Variable Encore Fund as of the claim date. The
Current Value on the claim date plus any excess amount deposited
becomes the Account's Current Value.
(b) Death of Certificate Holder/Annuitant age 85 or greater: The
death benefit is the greatest of:
</TABLE>
31
<PAGE>
<TABLE>
<S> <C>
3.12 DEATH BENEFIT AMOUNT (1) The sum of all Net Purchase Payment(s) made to the account (as of
(CONT'D): the date of death) minus the sum of all amounts surrendered,
applied to an Annuity, or deducted from the Account;
(2) The highest step-up value prior to the Certificate Holder's 85th
birthday. A step-up value is determined on each anniversary of
the Effective Date. Each step-up value is calculated as the
Account's Current Value on the Effective Date anniversary,
increased by the amount of any Purchase Payment(s) made, and
decreased by the sum of all amounts surrendered, deducted, and/or
applied to an Annuity option since the Effective Date
anniversary.
(3) The Certificate Holder's Account Value as of the date of death.
The excess, if any, of the guaranteed death benefit value over the
Account's Current Value is determined as of the date of death. Any
excess amount will be deposited in the Account and allocated to the
Aetna Variable Encore Fund as of the claim date. The Current Value on
the claim date, plus any excess amount deposited, becomes the
Account's Current Value.
(c) At the death of a surviving spouse Beneficiary who continued the
Account in his or her own name, the death benefit amount is equal to
the Account's Current Value less any applicable Surrender Fee on the
amount of any Purchase Payment(s) made since the death of the
Certificate Holder.
3.13 DEATH BENEFIT OPTIONS Prior to any election, or until amounts must be otherwise distributed under
AVAILABLE TO BENEFICIARY: this section, the Current Value of the Account will be retained in the
Account. The Beneficiary has the right under the Contract to allocate or
reallocate any amount to any of the available investment options (subject
to an MVA, as applicable). The following options are available to the
Beneficiary:
(a) If the Beneficiary is the Certificate Holder's surviving spouse, the
surviving spouse may exercise all rights under the Contract and
continue in the Accumulation Period, or may elect (1), (2), or (3)
below. Under the Code, distributions from the Account are not required
until December 31st of the year in which the original Certificate
Holder would have attained age 70 1/2. The Beneficiary may elect to:
(1) Apply some or all of the Adjusted Current Value of the Account to
Annuity option 2, 3 or 4 (see 4.09);
(2) Apply some or all of the Adjusted Current Value to Annuity option
1 (see 4.09); or
</TABLE>
32
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<TABLE>
<S> <C>
(3) Receive, at any time, a lump sum payment equal to the Adjusted
Current Value of the Account.
</TABLE>
33
<PAGE>
<TABLE>
<S> <C>
3.13 DEATH BENEFIT OPTIONS If ECO is in effect on the Certificate Holder's date of death, the
AVAILABLE TO BENEFICIARY surviving spouse can elect to continue receiving ECO payments if a
(CONT'D): joint life expectancy was chosen. Otherwise, the surviving spouse must
receive a lump sum payment equal to the Adjusted Current Value of the
Account.
If SWO is in effect and the Certificate Holder dies before the
required beginning date for minimum distributions (see 3.13), SWO
payments will cease and the surviving spouse may claim the death
benefit in accordance with the terms of this section.
If SWO is in effect and the Certificate Holder dies after the required
beginning date for minimum distributions, the surviving spouse can
elect to continue to receive the SWO payments. Otherwise, the
surviving spouse must elect to receive a lump sum payment equal to the
Adjusted Current Value.
(b) If the Beneficiary is other than the Certificate Holder's surviving
spouse, then options (1), (2), or (3) under (a) above apply. Any
portion of the Adjusted Current Value that is not applied to Annuity
option 2, 3 or 4 by December 31st of the year following the year of
the Certificate Holder's death must be distributed by December 31st of
the year containing the fifth anniversary of the Certificate Holder's
date of death.
If ECO or SWO is in effect on the Certificate Holder's date of death,
the Beneficiary must receive an automatic and immediate lump sum
payment equal to the Adjusted Current Value.
(c) If no Beneficiary exists, a lump sum payment equal to the Adjusted
Current Value will be made to the Certificate Holder's estate.
3.14 REQUIRED DISTRIBUTION (a) Certificate Holder: The entire interest of the Certificate Holder will
TO CONTRACT HOLDER/ be distributed or begin to be distributed no later than April 1
BENEFICIARY: following the calendar year in which the Certificate Holder attains
age 70 1/2 (required beginning date), over (a) the life of the
Contract Holder, or the lives of the Contract Holder and his or her
designated Beneficiary, or (b) a period certain not extending beyond
the life expectancy of the Contract Holder, or the joint and last
survivor expectancy of the Contract Holder and his or her designated
Beneficiary. Payments must be made in periodic payments at intervals
no longer than one year. In addition, payments must be either
nonincreasing or they may increase only as provided in Q&A F-3 of
section 1.401(a)(9)-1 of the Proposed Income Tax Regulations.
All distributions made hereunder shall be made in accordance with the
requirements of section 401(a)(9) of the Code, and the regulations
thereunder, including the minimum distribution incidental benefit
requirement of section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
</TABLE>
34
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<TABLE>
<S> <C>
3.14 REQUIRED DISTRIBUTION Distribution may be an Annuity as set forth in Sections 4.01 through
TO CONTRACT HOLDER/ 4.04, payments under ECO or SWO as defined in Section 3.11 or a lump
BENEFICIARY sum payment.
(CONT'D):
(b) Beneficiary: If the Certificate Holder dies after distribution of his
or her interest has begun, the remaining portion of such interest will
continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Certificate Holder's death.
Distributions are considered to have begun if distributions are made
on account of the Certificate Holder's reaching his or her required
beginning date or if prior to the required beginning date
distributions irrevocably commence to the Certificate Holder over a
period permitted and in an Annuity form acceptable under section
1.401(a)(9) of the Income Tax Regulations.
3.15 LIQUIDATION OF All or any portion of the Account's Current Value may be surrendered
SURRENDER VALUE: at any time. Surrender requests can be submitted as a percentage of
the Account Current Value or as a specific dollar amount. The Net
Purchase Payment amount is withdrawn first, and then the excess value,
if any. For any partial surrender amounts are withdrawn on a pro rata
basis from the Fund(s) and/or the Guaranteed Term(s) Groups of the AG
Account in which the Current Value is invested. Within a Guaranteed
Term Group, the amount to be surrendered or transferred will be
withdrawn first from the oldest Deposit Period, then from the next
oldest, and so on until the amount requested is satisfied.
After deduction of the Maintenance Fee, if applicable, the surrendered
amounts shall be reduced by a Surrender Fee, if applicable. An MVA may
apply to amounts surrendered from the AG Account.
3.16 SURRENDER FEE: The Surrender Fee only applies to the Net Purchase Payment portion
surrendered and varies according to the elapsed time since deposit
(see Contract Schedule I).
No Surrender Fee is deducted from any portion of the Current Value
which is paid:
(a) To a Beneficiary due to the Certificate Holder's death before
Annuity payments start;
(b) As a premium for an Annuity option 2, 3 or 4 under this Contract
(see 4.09);
(c) As a distribution under the ECO or SWO provision (see 3.11);
</TABLE>
35
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<TABLE>
<S> <C>
3.16 SURRENDER FEE: (CONT'D) (d) At least 12 months after the date of the Purchase Payment to the
Account, in an amount equal to or less than 15% of the Current
Value. This applies to the first surrender request, partial or
full, in a calendar year. The Current Value is calculated as of
the date the surrender request is received in good order at
Aetna's Home Office. This waiver is not available to the Contract
Holder while SWO is in effect; or
(e) For a full surrender of the Account where the Current Value of
the Account is $2,500 or less and no surrenders have been taken
from the Contract within the prior 12 months.
3.17 PAYMENT OF Under certain emergency conditions, Aetna may defer payment:
SURRENDER VALUE:
(a) For a period of up to 6 months (unless not allowed by state law);
or
(b) As provided by federal law under the Investment Company Act of
1940.
IV. ANNUITY PROVISIONS
-------------------------------------------------------------------------------------------------------------
4.01 CHOICES TO BE MADE: The Certificate Holder may tell Aetna to apply any portion of the
Adjusted Current Value (minus any premium tax) for an Annuity under
option 2, 3, or 4 (see 4.09). The first Annuity payment may not be
earlier than one calendar year after the Purchase Payment nor later
than the first day of the month following the Annuitant's 85th
birthday.
When an Annuity Option is chosen, Aetna must also be told if payments
are to be made other than monthly and whether to pay:
(a) A Fixed Annuity using the AG Account;
(b) A Variable Annuity using any of the Fund(s) available under this
Contract for Annuity purposes; or
(c) A combination of (a) and (b).
If a Fixed Annuity is chosen, the Annuity purchase rate for the option
chosen reflects at least the Minimum Guaranteed Interest Rate (see
Contract Schedule II), but may reflect a higher interest rate. If a
Variable Annuity is chosen, the initial Annuity payment for the option
chosen reflects the assumed annual return rate elected. (see Contract
Schedule II).
4.02 ANNUITY PAYMENTS TO In no event may any payments to the Annuitant under an Annuity Option
CONTRACT HOLDER: extend beyond:
(a) The life of the Certificate Holder;
(b) The lives of the Certificate Holder and Beneficiary;
</TABLE>
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<TABLE>
<S> <C>
(c) Any certain period greater than the Certificate Holder's life
expectancy according to regulations under Code Section 401(a)(9),
determined as of the date payments are to begin; or
</TABLE>
37
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<TABLE>
<S> <C>
4.02 ANNUITY PAYMENTS TO (d) A period greater than the joint and last expectancies of the
CONTRACT HOLDER Certificate Holder and the Certificate Holder's Beneficiary
(CONT'D): according to regulations under Code Section 401(a)(9), determined
as of the date payments are to begin.
4.03 ANNUITY PAYMENTS TO In no event may payments to the Beneficiary under an Annuity option
BENEFICIARY: extend beyond:
(a) The life of the Beneficiary; or
(b) Any certain period greater than the Beneficiary's life expectancy
as determined by regulations under Code Section 401(a)(9).
4.04 TERMS OF ANNUITY (a) When payments start, the age of the Annuitant plus the number of
OPTIONS: years for which payments are guaranteed must not exceed 95.
(b) An Annuity option may not be elected if the first payment would
be less than $50 or if the total payments in a year would be less
than $250 (less if required by state law). Aetna reserves the
right to increase the minimum first Annuity payment amount and
the annual minimum annual Annuity payment amount based upon
increases reflected in the Consumer Price Index-Urban, (CPI-U)
since July 1, 1993.
(c) If a Fixed Annuity under option 2, 3 or 4 is chosen and a larger
payment would result from applying the Surrender Value or, if
greater, 95% of what the surrender would be if there were no
surrender fee, to a current Aetna single premium immediate
Annuity, Aetna will make the larger payment.
(d) For purposes of calculating the guaranteed first payment of a
Variable Annuity or the payments for a Fixed Annuity, the
Annuitant's and second Annuitant's adjusted age will be used. The
Annuitant's and second Annuitant's adjusted age is his or her age
as of the birthday closest to the Annuity commencement date
reduced by one year for Annuity commencement dates occurring
during the period of time from July 1, 1993 through December 31,
1999. The Annuitant's and second Annuitant's age will be reduced
by two years for Annuity commencement dates occurring during the
period of time from January 1, 2000 through December 31, 2009.
The Annuitant's and second Annuitant's age will be reduced by one
additional year for Annuity commencement dates occurring in each
succeeding decade.
The Annuity purchase rates for options 3 and 4 are based on
mortality from 1983 Table a.
</TABLE>
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<TABLE>
<S> <C>
4.04 TERMS OF ANNUITY (e) Assumed Annual Net Return Rate is the interest rate used to
OPTIONS (CONT'D): determine the amount of the first Annuity payment under a
Variable Annuity as shown on Contract Schedule II. The Separate
Account must earn this rate plus enough to cover the mortality
and expense risk charges (which may include profit) and
administrative charges if future Variable Annuity Payments are to
remain level, (see Annuity return factor under Variable Annuity
Assumed Annual Net Return Rate on Contract Schedule II).
(f) Once elected, Annuity payments cannot be commuted to a lump sum
except for Variable Annuity payments under option 2 (see 4.09).
The life expectancy of the Certificate Holder or Certificate
Holder and second Annuitant shall be irrevocable upon the
election of an Annuity option.
4.05 DEATH OF ANNUITANT/ (a) When an Annuitant dies under option 2 or 3, or both the Annuitant
BENEFICIARY: and the second Annuitant die under option 4(d), the present value
of any remaining guaranteed payments will be paid in one sum to
the Beneficiary, or upon election by the Beneficiary, any
remaining payments will continue to the Beneficiary. If option 4
has been elected and the Annuitant dies, the remaining payments
will continue to the second Annuitant as successor payee.
(b) If there is no Beneficiary under option 2, 3 or 4, the present
value of any remaining payments will be paid in one sum to the
Certificate Holder's estate.
(c) If the Beneficiary designated under option 1 dies, the amount
held plus accrued interest will be paid in one sum to a successor
Beneficiary, if any, named by the designated Beneficiary. If
there is no successor Beneficiary, the lump sum will be paid to
the designated Beneficiary's estate.
(d) If the Beneficiary dies while receiving Annuity payments, the
present value of any remaining guaranteed payments will be paid
in one sum to the successor Beneficiary, or upon election by the
successor Beneficiary, any remaining payments will continue to
the successor Beneficiary. If no successor Beneficiary has been
designated, the present value of any remaining guaranteed
payments will be paid in one sum to the Beneficiary's estate.
(e) The present value will be determined as of the Valuation Period
in which proof of death acceptable to Aetna and a request for
payment is received at Aetna's Home Office. The interest rate
used to determine the first payment will be used to calculate the
present value.
</TABLE>
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<TABLE>
<S> <C>
4.06 FUND(S) ANNUITY UNITS -- The number of each Fund's Annuity units is based on the amount of the
SEPARATE ACCOUNT: first Variable Annuity payment which is equal to:
(a) The portion of the Current Value applied to pay a Variable
Annuity (minus any premium tax); divided by
(b) 1,000; multiplied by
(c) The payment rate for the option chosen.
Such amount, or portion, of the variable payment will be divided by
the appropriate Fund Annuity unit value (see 4.07) on the tenth
Valuation Period before the due date of the first payment to determine
the number of each Fund Annuity units. The number of each Fund Annuity
units remains fixed. Each future payment is equal to the sum of the
products of each Fund Annuity unit value multiplied by the appropriate
number of units. The Fund Annuity unit value on the tenth Valuation
Period prior to the due date of the payment is used.
4.07 FUND(S) ANNUITY UNIT For any Valuation Period, a Fund Annuity unit value is equal to:
VALUE -- SEPARATE ACCOUNT:
(a) The Value for the previous Period; multiplied by
(b) The Annuity net return factor(s) (see 4.08 below) for the Period;
multiplied by
(c) A factor to reflect the assumed annual net return rate (see
Contract Schedule II).
The dollar value of a Fund Annuity unit value and Annuity payments may
go up or down due to investment gain or loss.
4.08 ANNUITY NET RETURN The Annuity net return factor(s) are used to compute Annuity payments
FACTOR(S) -- SEPARATE for any Fund.
ACCOUNT:
The Annuity net return factor(s) for each Fund is equal to 1.0000000
plus the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held by the Separate Account at
the end of a Valuation Period; minus
(b) The value of the shares of the Fund held by the Separate Account at
the start of the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if any);
divided by
(d) The total value of the Fund record units and the Fund Annuity units of
the Separate Account at the start of the Valuation Period; minus
(e) A daily charge for Annuity mortality and expense risks, which may
include profit, and a daily administrative charge (at the annual rate
as shown on Contract Schedule II).
A net return rate may be more or less than 0%.
</TABLE>
40
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<TABLE>
<S> <C>
The value of a share of the Fund is equal to the net assets of the Fund
divided by the number of shares outstanding.
</TABLE>
41
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<TABLE>
<S> <C>
4.08 ANNUITY NET RETURN Payments shall not be changed due to changes in the mortality or expense
FACTOR(S) -- SEPARATE results or administrative charges.
ACCOUNT: (CONT'D)
4.09 ANNUITY OPTIONS: Option 1 -- Payment of Interest on Sum Left with Aetna -- This option may
be used only by the Beneficiary when the Certificate Holder dies before
Aetna has started paying an Annuity. A portion or all of the sum paid upon
death may be held under this option and will be held in the General Account
of Aetna at interest (see 3.13 and 4.01). The Beneficiary may later tell
Aetna to:
(a) Pay a portion or all of the sum held by Aetna; or
(b) Apply a portion or all of the sum held by Aetna to any Annuity option
below.
If a nonspouse Beneficiary elects that some or all of the Current Value is
to be held under this option, the Beneficiary must tell Aetna to pay the
full sum held under this option by December 31st of the year containing the
fifth anniversary of the Contract Holder's date of death.
Option 2 -- Payments for a Stated Period of Time -- An Annuity will be paid
for the number of years chosen. The number of years must be at least 5 and
not more than 30.
If payments for this option are made under a Variable Annuity, the present
value of any remaining payments may be withdrawn at any time. If a
withdrawal is requested within 3 years after the start of payments, it will
be treated as a surrender and any applicable Surrender Fee will be applied
(see 3.16).
Option 3 -- Life Income -- An Annuity will be paid for the life of the
Annuitant. If also chosen, Aetna will guarantee payments for 60, 120, 180,
or 240 months.
Option 4 -- Life Income Based upon the Lives of Two Annuitants -- An
Annuity will be paid during the lives of the Annuitant and a second
Annuitant. Payments will continue until both Annuitants have died. When
this option is chosen, a choice must be made of:
(a) 100% of the payment to continue after the first death;
(b) 66 2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) Payments for a minimum of 120 months with 100% of the payment to
continue after the first death; or
(e) 100% of the payment to continue at the death of the second Annuitant
and 50% of the payment to continue at the death of the Annuitant.
Other Options -- Aetna may make other options available as allowed by the
laws of the state in which this Contract and the Certificate is delivered.
</TABLE>
42
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
YEARS GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
RATE PAYMENT PAYMENT PAYMENT PAYMENT
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
-----------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
ADJUSTED AGE OF NONE 60 120 180 240
-----------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.27 $3.90 $4.26 $3.90 $4.22 $3.89 $4.17 $3.86 $4.08 $3.82
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58
63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79
66 6.30 5.51 6.21 5.47 5.93 5.36 5.56 5.16 5.08 4.86
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35
----------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
44
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
ADJUSTED AGES
---------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.13
55 55 3.88 4.25 4.47 3.87 4.25
55 60 3.06 4.47 4.71 4.06 4.36
60 55 3.99 4.44 4.71 3.98 4.55
60 60 4.24 4.71 4.99 4.23 4.70
60 65 4.49 5.01 5.32 4.48 4.85
65 60 4.38 4.97 5.32 4.38 5.10
65 65 4.72 5.33 5.70 4.71 5.32
65 70 5.07 5.75 6.17 5.05 5.54
70 65 4.93 5.68 6.15 4.91 5.86
70 70 5.40 6.21 6.70 5.36 6.18
70 75 5.89 6.82 7.40 5.81 6.49
75 70 5.69 6.68 7.32 5.62 6.92
75 75 6.37 7.45 8.15 6.23 7.40
75 80 7.07 8.34 9.16 6.78 7.85
------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
45
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
ADJUSTED AGES
------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.75 $4.07 $4.26 $3.75 $3.98
55 55 3.88 4.25 4.47 3.87 4.06
55 60 3.99 4.44 4.71 3.98 4.12
60 55 4.06 4.47 4.71 4.06 4.37
60 60 4.24 4.71 4.99 4.23 4.47
60 65 4.38 4.97 5.32 4.38 4.54
65 60 4.49 5.01 5.32 4.48 4.89
65 65 4.72 5.33 5.70 4.71 5.02
65 70 4.93 5.68 6.15 4.91 5.14
70 65 5.07 5.75 6.17 5.05 5.60
70 70 5.40 6.21 6.70 5.36 5.79
70 75 5.69 6.68 7.32 5.62 5.96
75 70 5.89 6.83 7.40 5.81 6.63
75 75 6.37 7.45 8.15 6.23 6.92
75 80 6.78 8.11 8.99 6.54 7.15
--------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
46
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
YEARS GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
RATE PAYMENT PAYMENT PAYMENT PAYMENT
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.95 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
--------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
YEARS GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
RATE PAYMENT PAYMENT PAYMENT PAYMENT
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
--------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ----------------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.56 $4.20 $4.55 $4.19 $4.51 $4.18 $4.45 $4.15 $4.36 $4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
--------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
49
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF --------------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 6.07 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
----------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
50
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
ADJUSTED AGES
-----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
-------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
51
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
ADJUSTED AGES
------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.03 $4.36 $4.55 $4.03 $4.41
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.27 4.73 5.00 4.26 4.83
60 55 4.34 4.76 5.00 4.34 4.64
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.66 5.25 5.61 4.65 5.39
65 60 4.76 5.29 5.60 4.75 5.13
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.19 5.97 6.44 5.17 6.14
70 65 5.34 6.03 6.46 5.31 5.81
70 70 5.67 6.49 6.99 5.62 6.47
70 75 5.95 6.96 7.61 5.87 7.20
75 70 6.16 7.10 7.68 6.07 6.77
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.04 8.39 9.29 6.79 8.70
-------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
52
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
ADJUSTED AGES
------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $5.48 $4.88 $5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
--------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
53
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
ADJUSTED AGES
------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.93 $5.27 $ 5.46 $4.93 $5.19
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.15 5.63 5.91 5.14 5.73
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.52 6.14 6.51 5.51 6.28
65 60 5.61 6.16 6.49 5.60 6.01
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.04 6.84 7.34 6.00 7.03
70 65 6.17 6.90 7.33 6.13 6.67
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.77 7.84 8.51 6.68 8.08
75 70 6.97 7.96 8.56 6.87 7.62
75 75 7.45 8.60 9.33 7.27 8.55
75 80 7.86 9.28 10.20 7.57 9.59
------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
54
<PAGE>
--------------------------------------------------------------------------------
[LOGO OF AETNA APPEARS HERE]
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
--------------------------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA.
APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN EITHER AN INCREASE OR
DECREASE IN THE CURRENT VALUE. THE MARKET VALUE ADJUSTMENT FORMULA DOES NOT
APPLY TO A GUARANTEED TERM AT THE TIME OF ITS MATURITY.
55
<PAGE>
EXHIBIT 99B4(d)
----------------------------------------------------------
[LOGO OF AETNA AETNA LIFE INSURANCE AND ANNUITY COMPANY
APPEARS HERE] Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
Aetna Life Insurance and Annuity Company, herein called
Aetna, agrees to pay the benefits stated in this Contract.
SPECIFICATIONS
--------------------------------------------------------------------------------
Plan
MARATHON PLUS
--------------------------------------------------------------------------------
Type of Plan
FLEXIBLE PREMIUM ACCOUNT
--------------------------------------------------------------------------------
Contract Holder
SPECIMEN
--------------------------------------------------------------------------------
Annuitant
SPECIMEN
--------------------------------------------------------------------------------
Contract No.
SPECIMEN
--------------------------------------------------------------------------------
Effective Date
MAY 1, 1995
--------------------------------------------------------------------------------
This Contract is Delivered in NEW YORK and is Subject to the Laws of that
Jurisdiction
THE VARIABLE FEATURES OF THE CONTRACT ARE DESCRIBED IN PARTS III AND IV.
RIGHT TO CANCEL
-------------------------------------------------------------------------------
The Contract Holder may cancel this Contract within 10 days of receiving it by
returning this Contract along with a written notice to Aetna at the above
address or to the agent from whom it was purchased. Within 7 days after it
receives the notice of cancellation and this Contract at its Home Office, Aetna
will return the entire consideration paid plus any increase or minus any
decrease in the current value of any funds allocated to the Separate Account.
This page, the following pages, and the application make up the entire
Contract.
Signed at the Home Office on the Effective Date.
Dan Kearney Lucille M. Nickerson
President Secretary
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE
ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN
EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE
ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS
MATURITY.
1
<PAGE>
SPECIFICATIONS
-------------------------------------------------------------------------------
GUARANTEED There is a guaranteed interest rate for Purchase Payment(s)
INTEREST RATE held in the ALIAC Guaranteed Account (see Contract
Schedule I).
-------------------------------------------------------------------------------
DEDUCTIONS FROM There will be deductions for mortality and expense risks
THE SEPARATE and administrative fees (see Contract Schedule I and II).
ACCOUNT
-------------------------------------------------------------------------------
DEDUCTION FROM Purchase Payment(s) are subject to a deduction for premium
PURCHASE taxes, if any (see 3.01).
PAYMENT(S)
-------------------------------------------------------------------------------
SURRENDER There will be a charge deducted upon surrender (see
FEE Contract Schedule I).
This Contract is a legal contract and constitutes the entire legal relationship
between Aetna and the Contract Holder.
READ THIS CONTRACT CAREFULLY. This contract sets forth, in detail, all of the
rights and obligations of both you and Aetna. IT IS THEREFORE IMPORTANT THAT
YOU READ THIS CONTRACT CAREFULLY.
2
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
-------------------------------------------------------------------------------
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the
ACCOUNT: Current Value allocated to the Separate Account.
The deduction is the daily equivalent of the annual
effective percentage shown in the following chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available
with this Contract are:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
The Alger American Fund - Alger American Balanced
Portfolio
The Alger American Fund - Alger American Income and
Growth Portfolio
The Alger American Fund - Alger American Growth
Portfolio
The Alger American Fund - Alger American Midcap
Growth Portfolio
The Alger American Fund - Alger American Leveraged
Allcap Portfolio
The Alger American Fund - Alger American Small
Capitalization Portfolio
Fidelity Investments Variable Insurance Products
Fund - High Income Portfolio
Fidelity Investments Variable Insurance Products
Fund - Equity - Income Portfolio
Fidelity Investments Variable Insurance Products
Fund - Growth Portfolio
Fidelity Investments Variable Insurance Products
Fund - Overseas Portfolio
Fidelity Investments Variable Insurance Products
Fund II - Investment Grade Bond Portfolio
Fidelity Investments Variable Insurance Products
Fund II - Asset Manager Portfolio
Fidelity Investments Variable Insurance Products
Fund II - Index 500 Portfolio
Fidelity Investments Variable Insurance Products
Fund II - Contrafund Portfolio
3
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT (CONT'D)
-------------------------------------------------------------------------------
SEPARATE ACCOUNT FUNDS Insurance Management Series - Corporate Bond Fund
(CONT'D): Insurance Management Series - Equity Growth and
Income Fund
Insurance Management Series - International Stock
Fund
Insurance Management Series - U.S. Government Bond
Fund
Insurance Management Series - Utility Fund
Janus Aspen Series - Aggressive Growth Portfolio
Janus Aspen Series - Balanced Portfolio
Janus Aspen Series - Flexible Income Portfolio
Janus Aspen Series - Growth Portfolio
Janus Aspen Series - Short-Term Bond Portfolio
Janus Aspen Series - Worldwide Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust
TCI Portfolios, Inc. - TCI International
TCI Portfolios, Inc. - TCI Growth
TCI Portfolios, Inc. - TCI Balanced
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
-------------------------------------------------------------------------------
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
SEPARATE ACCOUNT AND AG ACCOUNT
-------------------------------------------------------------------------------
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during
the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna
reserves the right to charge $10 for each
subsequent Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current
Value is $50,000 or more on the date the
Maintenance Fee is to be deducted, the Maintenance
Fee is $0.
4
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
-------------------------------------------------------------------------------
<TABLE>
<S> <C>
SURRENDER FEE: For each surrender, the Surrender Fee will be
determined as follows:
Surrender Fee
Length of Time from Deposit of Net (as percentage of
Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may
OPTION (SWO) not be greater than 10% of the Current Value at
PERCENTAGE: time of election.
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
See 1. GENERAL DEFINITIONS for explanations.
</TABLE>
5
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CONTRACT SCHEDULE I
ACCUMULATION PERIOD
SEPARATE ACCOUNT
-------------------------------------------------------------------------------
<TABLE>
<S> <C>
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the
ACCOUNT: Current Value allocated to the Separate Account.
The deduction is the daily equivalent of the annual
effective percentage shown in the following chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available
with this Contract are:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Janus Aspen Series - Aggressive Growth Portfolio
Janus Aspen Series - Flexible Income Portfolio
Janus Aspen Series - Growth Portfolio
Lexington Emerging Markets Fund
Lexington Natural Resources Trust
TCI Portfolios, Inc. - TCI International
TCI Portfolios, Inc. - TCI Growth
TCI Portfolios, Inc. - TCI Balanced
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
-------------------------------------------------------------------------------
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
</TABLE>
6
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT
-------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during
the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna
reserves the right to charge $10 for each subsequent
Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current
Value is $50,000 or more on the date the Maintenance
Fee is to be deducted, the Maintenance Fee is $0.
SURRENDER FEE: For each surrender, the Surrender Fee will be
determined as follows:
Surrender Fee
Length of Time from Deposit of Net (as percentage of
Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
</TABLE>
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may
OPTION (SWO) not be greater than 10% of the Current Value at time
PERCENTAGE: of election.
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
7
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
-------------------------------------------------------------------------------
<TABLE>
<S> <C>
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
See 1. GENERAL DEFINITIONS for explanations.
</TABLE>
8
<PAGE>
CONTRACT SCHEDULE I
ACCUMULATION PERIOD
<TABLE>
SEPARATE ACCOUNT
-------------------------------------------------------------------------------
<S> <C>
SEPARATE ACCOUNT: Variable Annuity Account B
CHARGES TO SEPARATE A daily charge is deducted from any portion of the
ACCOUNT: Current Value allocated to the Separate Account.
The deduction is the daily equivalent of the annual
effective percentage shown in the following chart.
Administrative Charge 0.15%
Mortality Risk Charge 0.35%
Expense Risk Charge 0.90%
-----
Total Separate Account
Charges 1.40%
SEPARATE ACCOUNT FUNDS: During the Accumulation Period the Funds available
with this Contract are:
Insurance Management Series - Equity Growth and
Income Fund
Insurance Management Series - Utility Fund
Insurance Management Series - Prime Money Fund
Insurance Management Series - U.S. Government Bond
Fund
Insurance Management Series - Corporate Bond Fund
Insurance Management Series - International Stock
Fund
ALIAC GUARANTEED ACCOUNT (AG ACCOUNT)
-------------------------------------------------------------------------------
MINIMUM GUARANTEED 3.0%.
INTEREST RATE (effective
annual rate of return):
</TABLE>
9
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT
-------------------------------------------------------------------------------
<TABLE>
<S> <C>
MINIMUM INITIAL PURCHASE $5,000
PAYMENT:
MAXIMUM INITIAL PURCHASE $500,000
PAYMENT WITHOUT HOME
OFFICE APPROVAL:
TRANSFERS: An unlimited number of Transfers may be made during
the Accumulation Period. Aetna allows 12 free
Transfers in any calendar year. Thereafter, Aetna
reserves the right to charge $10 for each
subsequent Transfer.
MINIMUM TRANSFER $500
AMOUNT:
MAINTENANCE FEE: The annual Maintenance Fee is $30. If the Current
Value is $50,000 or more on the date the
Maintenance Fee is to be deducted, the Maintenance
Fee is $0.
SURRENDER FEE: For each surrender, the Surrender Fee will be
determined as follows:
Surrender Fee
Length of Time from Deposit of Net (as percentage of
Purchase Payment (Years) Net Purchase Payment)
Less than 1 year 7%
1 or more but less than 2 years 6%
2 or more but less than 3 years 5%
3 or more but less than 4 years 4%
4 or more but less than 5 years 3%
5 or more but less than 6 years 2%
6 or more but less than 7 years 1%
7 years or more 0%
SYSTEMATIC WITHDRAWAL The specified payment or specified percentage may
OPTION (SWO) not be greater than 10% of the Current Value at
PERCENTAGE: time of election.
SWO MINIMUM INITIAL $25,000
CURRENT VALUE:
</TABLE>
10
<PAGE>
CONTRACT SCHEDULE I (CONT'D)
ACCUMULATION PERIOD
SEPARATE ACCOUNT AND AG ACCOUNT (CONT'D)
-------------------------------------------------------------------------------
SWO MINIMUM PAYMENT $500
AMOUNT:
ESTATE CONSERVATION $25,000
OPTION (ECO) MINIMUM
INITIAL CURRENT VALUE:
See 1. GENERAL DEFINITIONS for explanations.
11
<PAGE>
CONTRACT SCHEDULE II
ANNUITY PERIOD
SEPARATE ACCOUNT
-------------------------------------------------------------------------------
<TABLE>
<S> <C>
CHARGES TO SEPARATE A daily charge at an annual effective rate of
ACCOUNT: 1.25% for Annuity mortality and expense risks. The
administrative charge is established upon election
of an Annuity option. This charge will not exceed
0.25%.
VARIABLE ANNUITY ASSUMED If a Variable Annuity is chosen, an assumed annual
ANNUAL NET RETURN RATE: net return rate of 5.0% may be elected. If 5.0% is
not elected, Aetna will use an assumed annual net
return rate of 3.5% .
The assumed annual net return rate factor for 3.5%
per year is 0.9999058.
The assumed annual net return rate factor for 5.0%
per year is 0.9998663.
If the portion of a Variable Annuity payment for
any Fund is not to decrease, the Annuity return
factor under the Separate Account for that Fund
must be:
(a) 4.75% on an annual basis plus an annual return
of up to 0.25% to offset the administrative
charge set at the time Annuity payments
commence if an assumed annual net return rate
of 3.5% is chosen; or
(b) 6.25% on an annual basis plus an annual return
of up to 0.25% to offset the administrative
charge set at the time Annuity payments
commence, if an assumed annual net return rate
of 5% is chosen.
FIXED ANNUITY
-------------------------------------------------------------------------------
MINIMUM GUARANTEED 3.0%
INTEREST RATE (effective
annual rate of return):
See 1. GENERAL DEFINITIONS for explanations.
</TABLE>
12
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
I. GENERAL DEFINITIONS
-------------------------------------------------------------------------------
PAGE
<S> <C>
1.01 Account....................................................................10
1.02 Accumulation Period........................................................10
1.03 Adjusted Current Value.....................................................10
1.04 ALIAC Guaranteed Account (AG Account)......................................10
1.05 Annuitant..................................................................10
1.06 Annuity....................................................................10
1.07 Beneficiary................................................................10
1.08 Certificate Holder.........................................................10
1.09 Code.......................................................................10
1.10 Contract...................................................................10
1.11 Contract Holder............................................................10
1.12 Current Value..............................................................11
1.13 Deposit Period.............................................................11
1.14 Dollar Cost Averaging......................................................11
1.15 Fixed Annuity..............................................................11
1.16 Fund(s)....................................................................11
1.17 General Account............................................................11
1.18 Guaranteed Rate - AG Account...............................................11
1.19 Guaranteed Term............................................................11
1.20 Guaranteed Term(s) Groups..................................................11
1.21 Maintenance Fee............................................................12
1.22 Market Value Adjustment (MVA)..............................................12
1.23 Matured Term Value.........................................................12
1.24 Matured Term Value Transfer................................................12
1.25 Maturity Date..............................................................12
1.26 Net Purchase Payment(s)....................................................12
1.27 Nonunitized Separate Account...............................................12
1.28 Purchase Payment(s)........................................................12
1.29 Reinvestment...............................................................12
1.30 Separate Account...........................................................13
1.31 Surrender Value............................................................13
1.32 Transfers..................................................................13
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
1.33 Valuation Period (Period)..................................................13
1.34 Variable Annuity...........................................................13
<CAPTION>
II. GENERAL PROVISIONS
-------------------------------------------------------------------------------
<S> <C>
2.01 Change of Contract.........................................................13
2.02 Change of Fund(s)..........................................................14
2.03 Nonparticipating Contract..................................................14
2.04 Payments and Elections.....................................................14
2.05 State Laws.................................................................15
2.06 Control of Contract........................................................15
2.07 Designation of Beneficiary.................................................15
2.08 Misstatements and Adjustments..............................................15
2.09 Incontestability...........................................................15
2.10 Grace Period...............................................................15
2.11 Individual Certificate.....................................................15
<CAPTION>
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
-------------------------------------------------------------------------------
<S> <C>
3.01 Net Purchase Payment.......................................................16
3.02 Certificate Holder's Account...............................................16
3.03 Fund(s) Record Units -- Separate Account...................................16
3.04 Net Return Factor(s) -- Separate Account...................................16
3.05 Fund Record Unit Value -- Separate Account.................................17
3.06 Market Value Adjustment....................................................17
3.07 Transfer of Current Value from the Funds or ALIAC Guaranteed Account.......18
3.08 Notice to the Certificate Holder...........................................19
3.09 Loans......................................................................19
3.10 Systematic Withdrawal Option (SWO).........................................19
3.11 Death Benefit Amount.......................................................21
3.12 Death Benefit Options Available to Beneficiary.............................22
3.13 Liquidation of Surrender Value.............................................24
3.14 Surrender Fee..............................................................24
3.15 Payment of Surrender Value.................................................24
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
IV. ANNUITY PROVISIONS
-------------------------------------------------------------------------------
PAGE
<S> <C>
4.01 Choices to be Made.........................................................25
4.02 Terms of Annuity Options...................................................26
4.03 Death of Annuitant/Beneficiary.............................................27
4.04 Fund(s) Annuity Units -- Separate Account..................................27
4.05 Fund Annuity Unit Value -- Separate Account................................28
4.06 Annuity Net Return Factor(s) -- Separate Account...........................28
4.07 Annuity Options............................................................28
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
I. GENERAL DEFINITIONS
-------------------------------------------------------------------------------
<S> <C>
1.01 ACCOUNT: A record established for each Certificate Holder to maintain the value of
the Net Purchase Payment held on his/her behalf during the Accumulation
Period.
1.02 ACCUMULATION PERIOD: The period during which the Net Purchase Payment is applied to the Contract
to provide future Annuity payment(s).
1.03 ADJUSTED CURRENT VALUE: The Current Value of a Contract plus or minus any aggregate ALIAC
Guaranteed Account MVA, if applicable. (See 1.21)
1.04 ALIAC GUARANTEED An accumulation option where Aetna guarantees stipulated
ACCOUNT rate(s) of interest for specified periods of time. All assets of
(AG ACCOUNT): Aetna, including amounts in the Nonunitized Separate Account, are available
to meet the guarantees under the AG Account.
1.05 ANNUITANT: The person whose life is measured for purposes of the Guaranteed Death
Benefit and the duration of Annuity payments under this Contract.
1.06 ANNUITY: Payment of an income:
(a) For the life of one or two persons;
(b) For a stated period; or
(c) For some combination of (a) and (b).
1.07 BENEFICIARY: The individual or estate entitled to receive any payment from the Contract
upon the death of the Annuitant, or if the Certificate Holder is different
from the Annuitant, upon the death of the Certificate Holder. If the
Account is held by joint Certificate Holders, the survivor will be deemed
the designated Beneficiary and any other Beneficiary on record will be
treated as the contingent Beneficiary.
1.08 CERTIFICATE HOLDER: A person who purchases an interest in this Contract as evidenced by a
certificate. Aetna reserves the right to limit ownership to natural
persons. If more than one Certificate Holder owns an account, each
Certificate Holder will be a joint Certificate Holder. Any joint
Certificate Holder must be the spouse of the other joint Certificate
Holder. Joint Certificate Holders have joint ownership rights and both must
authorize exercising any ownership rights unless Aetna allows otherwise. If
the account is owned by a nonnatural person, the death benefit will be paid
at the death of the Annuitant.
1.09 CODE: The Internal Revenue Code of 1986, as it may be amended from time to time.
1.10 CONTRACT: This agreement between Aetna and the Contract Holder.
1.11 CONTRACT HOLDER: The entity to which a group Contract is issued.
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
1.12 CURRENT VALUE: As of the most recent Valuation Period, the Net Purchase Payment and any
additional amount deposited pursuant to 3.11 plus any interest added to the
portion allocated to the ALIAC Guaranteed Account; and plus or minus the
investment experience of the portion allocated to the Funds since deposit;
less all Maintenance Fees deducted, any amounts surrendered and any amounts
applied to an Annuity.
1.13 DEPOSIT PERIOD: A calendar week, a calendar month, a calendar quarter, or any other period
of time specified by Aetna during which Net Purchase Payment(s), Transfers
or Reinvestments are accepted into the ALIAC Guaranteed Account for one or
more Guaranteed Terms. Aetna reserves the right to extend the Deposit
Period.
1.14 DOLLAR COST AVERAGING: A program that permits the Certificate Holder to systematically transfer
amounts from any of the Funds and the one-year AG Account Guaranteed Term
to any of the Funds by completing the appropriate section of the enrollment
form or a Dollar Cost Averaging election form.
1.15 FIXED ANNUITY: An Annuity with payments that do not vary in amount.
1.16 FUND(S): The open-end management investment companies (mutual funds) in which the
Separate Account invests (see Contract Schedule I for specific fund
options).
1.17 GENERAL ACCOUNT: The account holding the assets of Aetna, other than those assets held in
Aetna's separate accounts.
1.18 GUARANTEED RATE -- Aetna will declare the interest rate applicable to a specific Guaranteed
AG ACCOUNT: Term at the start of the Deposit Period for that Guaranteed Term. The rate
is guaranteed by Aetna for that Deposit Period and the ensuing Guaranteed
Term. The Guaranteed Rate is an annual effective yield. That is, interest
is credited daily at a rate that will produce the Guaranteed Rate over the
period of a year. No Guaranteed Rate will ever be less than the Minimum
Guaranteed Rate shown on Contract Schedule I.
1.19 GUARANTEED TERM: The period of time for which the AG Account Guaranteed Rate is guaranteed
on the Net Purchase Payments, Transfers and Reinvestments made into a
current Deposit Period for the AG Account. Such period begins on the day
following the close of the Deposit Period and ends on the designated
Maturity Date. Guaranteed Terms are offered at Aetna's discretion for
various lengths of time ranging up to and including ten years.
During a Deposit Period, Aetna may make available any number of Guaranteed
Terms. The Contract Holder may allocate the Net Purchase Payments and
Transfers into any or all of the available Guaranteed Terms.
1.20 GUARANTEED TERM(S) All AG Account Guaranteed Term(s) with the same length of time from the
GROUPS: close of the Deposit Period until the designated Maturity Date.
</TABLE>
17
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<S> <C>
1.21 MAINTENANCE FEE: The Maintenance Fee (see Contract Schedule I) will be deducted during the
Accumulation Period from the Current Value on each anniversary of the date
the Contract is established and upon the surrender of the entire Contract.
1.22 MARKET VALUE ADJUSTMENT An adjustment that may apply to an amount withdrawn or transferred from an
(MVA): AG Account Guaranteed Term prior to the end of that Guaranteed Term. The
adjustment reflects the change in the value of the investment due to
changes in interest rates since the date of deposit and is computed using
the formula given in 3.06. The adjustment is expressed as a percentage of
each dollar being withdrawn or transferred.
1.23 MATURED TERM VALUE: The amount payable on an AG Account Guaranteed Term's Maturity Date.
1.24 MATURED TERM VALUE: During the calendar month following an AG Account Maturity Date, the
Certificate Holder may notify Aetna's Home Office in writing to Transfer or
surrender all or part of the Matured Term Value, plus interest at the new
Guaranteed Rate accrued thereon, from the AG Account without an MVA. This
provision only applies to the first such written request received from the
Certificate Holder during this period for any Matured Term Value.
1.25 MATURITY DATE: The last day of an AG Account Guaranteed Term.
1.26 NET PURCHASE PAYMENT: The Purchase Payment less premium taxes, if applicable.
1.27 NONUNITIZED SEPARATE A separate account set up by Aetna under Title 38, Section 38a-433, of the
ACCOUNT: Connecticut General Statutes, that holds assets for AG Account Terms. There
are no discrete units for this Account. The Certificate Holder does not
participate in the investment gain or loss from the assets held in the
Nonunitized Separate Account. Such gain or loss is borne entirely by Aetna.
These assets may be chargeable with liabilities arising out of any other
business of Aetna.
1.28 PURCHASE PAYMENT(S): Payment(s) accepted by Aetna at its Home Office. Aetna reserves the right
to refuse to accept any Purchase Payment at any time for any reason. No
advance notice will be given to the Contract Holder.
Aetna reserves the right to refuse to accept any Purchase Payment at any
time for any reason. No advance notice will be given to the Contract Holder
or Certificate Holder.
1.29 REINVESTMENT: Aetna will mail a notice to the Contract Holder at least 18 calendar days
and not more than 45 days before a Guaranteed Term's Maturity Date.
</TABLE>
18
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<TABLE>
<S> <C>
1.29 REINVESTMENT: This notice will contain the Terms available during current Deposit Periods
(CON'T) with their Guaranteed Rate, and projected Matured Term Value. If no
specific direction is given by the Certificate Holder prior to the Maturity
Date, each Matured Term Value will be reinvested in the current Deposit
Period for a Guaranteed Term of the same duration. If a Guaranteed Term of
the same duration is unavailable, each Matured Term Value will
automatically be reinvested in the current Deposit Period for the next
shortest Guaranteed Term available. If no shorter Guaranteed Term is
available, the next longer Guaranteed Term will be used. Aetna will mail a
confirmation statement to the Certificate Holder the next business day
after the Maturity Date. This notice will sate the Guaranteed Term and
Guaranteed Rate which will apply to the reinvested Matured Term Value.
1.30 SEPARATE ACCOUNT: A separate account that buys and holds shares of the Fund(s). Income, gains
or losses, realized or unrealized, are credited or charged to the Separate
Account without regard to other income, gains or losses of Aetna. Aetna
owns the assets held in the Separate Account and is not a trustee as to
such amounts. This Separate Account generally is not guaranteed and is held
at market value. The assets of the Separate Account, to the extent of
reserves and other contract liabilities of the Account, shall not be
charged with other Aetna liabilities.
1.31 SURRENDER VALUE: The amount payable by Aetna upon the surrender of any portion of an
account.
1.32 TRANSFERS: The movement of invested amounts among the available Fund(s) and the AG
Account under this Contract during the Accumulation Period.
1.33 VALUATION PERIOD (PERIOD): The period of time for which a Fund determines its net asset value, usually
from 4:15 p.m. Eastern time each day the New York Stock Exchange is open
until 4:15 p.m. the next such day, or such other day that one or more of
the Funds determines its net asset value.
1.34 VARIABLE ANNUITY: An Annuity with payments that vary with the net investment results of
one or more Funds held under the Separate Account.
</TABLE>
II. GENERAL PROVISIONS
-------------------------------------------------------------------------------
<TABLE>
<S> <C>
2.01 CHANGE OF CONTRACT: Only an authorized officer of Aetna may change the terms of this Contract.
Aetna will notify the Contract Holder in writing at least 30 days before
the effective date of any change. Any change will not affect the amount or
terms of any Annuity which begins before the change.
Aetna may make any change that affects the AG Account Market Value
Adjustment (3.06) with at least 30 days' advance written notice to the
Contract Holder and the Certificate Holder. Any such change shall become
effective for any new Term and will be
</TABLE>
19
<PAGE>
<TABLE>
<S> <C>
applicable only if it is more favorable to the Contract Holder and/or the
Certificate Holder.
2.01 CHANGE OF CONTRACT: Any change that affects any of the following under this Contract will not
(CON'T) apply to Accounts in existence before the effective date of the change:
(a) Net Purchase Payment (3.01 )
(b) AG Account Guaranteed Rate (1.04)
(c) Net Return Factor(s) -- Separate Account (3.04)
(d) Current Value (1.12)
(e) Surrender Value (1.31)
(f) Fund(s) Annuity Unit Value -- Separate Account (4.05)
(g) Annuity Options (4.07)
(h) Fixed Annuity Guaranteed Interest Rates (4.01)
(i) Transfers (1.32).
This Contract may be changed as deemed necessary by Aetna to comply with
federal or state law. Any such change is subject to the prior approval of
the New York Insurance Department.
2.02 CHANGE OF FUND(S): Aetna, or the Separate Account, may:
(a) Change the Fund(s) which may be invested in by the Separate Account;
and
(b) Replace the shares of any Fund(s) held in the Separate Account with
shares of any other Fund(s).
Changes must be:
(a) Approved by a majority vote of the shares in the Separate Account with
respect to the Fund(s) whose shares are to be replaced; or
(b) Deemed necessary by Aetna under the Investment Company Act of 1940; or
(c) Deemed necessary by Aetna to accomplish the purpose of the Separate
Account.
Such changes are subject to the approval of the Superintendent of the New
York Insurance Department and Aetna will notify the Contract Holder of such
change.
2.03 NONPARTICIPATING CONTRACT: The Contract Holder, Certificate Holder's or Beneficiaries will not have a
right to share in the earnings of Aetna.
2.04 PAYMENTS AND ELECTIONS: While the Certificate Holder is living, Aetna will pay the Certificate
Holder any Annuity payments as and when due. After the Certificate Holder's
death, or at the death of the first Certificate Holder if the Account is
owned jointly, any Annuity payments required to be made will be paid in
accordance with 4.03. Aetna will determine other payments and/or elections
as of the end of the Valuation Period in which the request is received at
its Home
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Office. Such payments will be made within 7 calendar days of
receipt at its Home Office of a written claim for payment which is in good
order, except as provided in 3.15.
2.05 STATE LAWS: The Contract and the Certificate's comply with the laws of the state in
which they are delivered. Any surrender, death, or Annuity payments are
equal to or greater than the minimum required by such laws. Annuity tables
for legal reserve valuation shall be as required by state law. Such tables
may be different from Annuity tables used to determine Annuity payments.
2.06 CONTROL OF CONTRACT: This is a Contract between the Contract Holder and Aetna. The Contract
Holder has title to the Contract. Contract Holder rights are limited to
accepting and rejecting Contract modifications. The Certificate Holder has
all other rights to amounts held in his or her Account.
Each Certificate Holder shall own all amounts held in his or her Account.
Each Certificate Holder may make any choices allowed by this Contract for
his or her Account. Certificate Holder choices made under this contract
must be in writing. If the Account is owned jointly, both joint Certificate
Holders must authorize any Certificate Holder change in writing. Until
receipt of such choices at Aetna's Home Office, Aetna may rely on any
previous choices made.
The Account may not be attached, alienated, or subject to the claims of
creditors of the Certificate Holder except to the extent permitted by law.
The Certificate Holder may assign or transfer his or her rights under the
Contract. Aetna reserves the right not to accept assignment or transfer to
a nonnatural person. Any assignment or transfer made must be submitted to
Aetna's Home Office in writing and will not be effective until accepted by
Aetna.
2.07 DESIGNATION OF Each Certificate Holder shall name his or her Beneficiary. If the Account
BENEFICIARY: is owned jointly, both joint Certificate Holders must agree in writing to
the Beneficiary designated. The Beneficiary may be changed at any time.
Changes to a Beneficiary must be submitted to Aetna's Home Office in
writing and will not be effective until accepted by Aetna.
2.08 MISSTATEMENTS AND If Aetna finds the age or sex of any Annuitant to be misstated, the amount
ADJUSTMENTS: payable under the Contract shall be adjusted for the correct age or sex;
the amount of any underpayment or overpayment, with interest at six per
cent per year, shall be credited to, or changed against, the current or
next succeeding payment or payments to be made by Aetna under the Contract.
2.09 INCONTESTABILITY: Aetna cannot cancel the Contract because of any error of fact on the
application. Aetna cannot cancel an Account because of any error of fact on
the enrollment form.
2.10 GRACE PERIOD: This Contract will remain in effect even if Purchase Payments are not
continued.
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2.11 INDIVIDUAL CERTIFICATES: Aetna shall issue a certificate to each Certificate Holder. The certificate
will summarize certain provisions of the contract. Certificates are for
information only and are not a part of the Contract.
III. PURCHASE PAYMENT, CURRENT VALUE, AND SURRENDER PROVISIONS
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3.01 NET PURCHASE PAYMENT: This amount is the actual Purchase Payment less any premium tax. Aetna will
generally deduct the premium tax when Annuity benefits are elected (see
Part IV). If Aetna determines that under applicable state law, it must pay
a premium tax when the Purchase Payment is received or at any other time,
it will deduct the tax at that time.
The Net Purchase Payment will be credited among:
(a) The current Deposit Period(s) for Guaranteed Terms under the AG
Account; and
(b) The Fund(s) in which the Separate Account invests.
For each Net Purchase Payment, the Certificate Holder shall tell Aetna the
allocation percentage to be applied to the current Deposit Period for each
of the available Guaranteed Terms in the AG Account and/or each Fund. If
allocation instructions are not received along with any subsequent Net
Purchase Payment, the allocation will be the same as that indicated on the
original application. If the same Guaranteed Term is no longer available,
the Net Purchase Payment will be allocated to the next shortest Guaranteed
Term available in the current Deposit Period. If no shorter Guaranteed Term
is available, the next longer Guaranteed Term will be used.
The minimum acceptable additional Purchase Payment is shown on Contract
Schedule I. The maximum acceptable Purchase Payment without Home Office
approval is also provided on Contract Schedule I.
3.02 CERTIFICATE HOLDER'S Aetna will maintain an Account for each Certificate Holder.
ACCOUNT:
3.03 FUND(S) RECORD UNITS -- The portion of the Net Purchase Payment(s) applied to each Fund under the
SEPARATE ACCOUNT: Separate Account will determine the number of Fund record units for that
Fund. This number is equal to the portion of the Net Purchase Payment(s)
applied to each Fund divided by the Fund record unit value (see 3.05) for
the Valuation Period in which the Purchase Payment is received in good
order at Aetna's Home Office.
3.04 NET RETURN FACTOR(S) -- The net return factor(s) are used to compute all Separate
SEPARATE ACCOUNT: Account record units for any Fund.
The net return factor for each Fund is equal to 1.0000000 plus the net
return rate.
The net return rate is equal to:
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(a) The value of the shares of the Fund held by the Separate Account at
the end of the Valuation Period; minus
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3.04 NET RETURN FACTOR(S) -- (b) The value of the shares of the Fund held by the Separate Account at
SEPARATE ACCOUNT the start of the Valuation Period; plus or minus
(CON'T): (c) Taxes (or reserves for taxes) on the Separate Account (if any);
divided by
(d) The total value of the Fund record units and Fund Annuity units of the
Separate Account at the start of the Valuation Period; minus
(e) A daily Separate Account charge at an annual rate as shown on Contract
Schedule I for mortality and expense risks, which may include profit;
and a daily administrative charge.
A net return rate may be more or less than 0%. The value of a share of the
Fund is equal to the net assets of the Fund divided by the number of shares
outstanding.
3.05 FUND RECORD UNIT A Fund record unit value is computed by multiplying the net return factors
VALUE -- SEPARATE ACCOUNT: for the current Valuation Period by the Fund record unit value for the
previous Period. The dollar value of Fund record units, Separate Account
assets, and Variable Annuity payments may go up or down due to investment
gain or loss.
3.06 MARKET VALUE Except as noted below, there will be an MVA for a withdrawal
ADJUSTMENT: from the AG Account before the end of a Guaranteed Term when the withdrawal
is due to:
(a) A Transfer; except for Transfers from the one-year AG Account
Guaranteed Term under the Dollar Cost Averaging program or, as
specified in 1.24, AG Account Matured Term Value Transfer;
(b) A full or partial surrender (including a 15% free withdrawal under
3.14), except for a partial withdrawal under the Systematic Withdrawal
Option (see 3.10); or
(c) An election of Annuity option 2 (see 4.07).
Full and partial surrenders and Transfers made within six months after
the date of the Annuitant's death will be the greater of:
(a) The aggregate MVA amount which is the sum of all market value adjusted
amounts calculated due to a withdrawal of amounts. This total may be
greater or less than the Current Value of those amounts; or
(b) The applicable portion of the Current Value in the AG Account. After
the six-month period, the surrender or Transfer will be the aggregate
MVA amount, which may be greater or less than the Current Value of
those amounts.
The greater of the aggregate MVA amount or the applicable portion of
the Current Value applies to amounts withdrawn from the AG Account on
account of an election of Annuity options 3 or 4 (see 4.07).
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3.06 MARKET VALUE Market value adjusted amounts will be equal to the amount
ADJUSTMENT (CON'T): withdrawn multiplied by the following ratio:
x
---
365
(1 + i)
-----------
x
---
365
---
(1 + j)
Where:
i is the Deposit Period Yield
j is the Current Yield
x is the number of days remaining, (computed from
Wednesday of the week of withdrawal) in the Guaranteed Term.
The Deposit Period Yield will be determined as follows:
(a) At the close of the last business day of each week of the Deposit
Period, a yield will be computed as the average of the yields on that
day of U.S. Treasury Notes which mature in the last three months of
the Guaranteed Term.
(b) The Deposit Period Yield is the average of those yields for the
Deposit Period. If withdrawal is made before the close of the Deposit
Period, it is the average of those yields on each week preceding
withdrawal.
The Current Yield is the average of the yields on the last business day of
the week preceding withdrawal on the same U.S. Treasury Notes included in
the Deposit Period Yield.
In the event that no U.S. Treasury Notes which mature in the last three
months of the Guaranteed Term exist, Aetna reserves the right to use the
U.S. Treasury Notes that mature in the following quarter.
If. U.S. Treasury Notes are no longer available, a suitable replacement
index, subject to approval of the Superintendent of the New York Insurance
Department, would then be utilized.
A detailed description of the MVA has been filed with the Superintendent of
the New York Insurance Department.
3.07 TRANSFER OF CURRENT VALUE Before an Annuity option is elected, all or any portion of the Adjusted
FROM THE FUNDS OR Current Value of the Contract may be transferred from any Fund or
AG ACCOUNT: Guaranteed Term of the AG Account:
(a) To any other Fund; or
(b) To any Guaranteed Term of the AG Account available in the current
Deposit Period.
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3.07 TRANSFER OF CURRENT VALUE Transfer requests can be submitted as a percentage or as a dollar amount.
FROM THE FUNDS OR The minimum transfer amount is shown on Contract Schedule I. Within a
AG ACCOUNT (CON'T): Guaranteed Term Group, the amount to be surrendered or transferred will be
withdrawn first from the oldest Deposit Period, then from the next oldest,
and so on until the amount requested is satisfied.
The Certificate Holder may make an unlimited number of Transfers during the
Accumulation Period. The number of free Transfers allowed by Aetna is shown
on Contract Schedule I. Additional Transfers may be subject to a Transfer
fee as shown on Contract Schedule I. Amounts transferred from the AG
Account under the Dollar Cost Averaging program, or amounts transferred as
a Matured Term Value on or within one calendar month of the Term's Maturity
Date, do not count against the annual Transfer limit.
Amounts applied to Guaranteed Terms of the AG Account may not be
transferred to the Funds or to another Guaranteed Term during the Deposit
Period or for 90 days after the close of the Deposit Period except for
(1) a Matured Term Value(s) during the calendar month following the Term's
Maturity Date and
(2) amounts transferred from the one-year AG Account Guaranteed Term under
the Dollar Cost Averaging program.
Transfers from Guaranteed Terms of the AG Account are subject to the MVA
provisions in 3.06.
3.08 NOTICE TO THE The Contract Holder will receive quarterly statements from Aetna of:
CONTRACT HOLDER:
(a) The value of any amounts held in:
(1) The AG Account; and
(2) The Fund(s) under the Separate Account.
(b) The number of any Fund(s) record units; and
(c) The Fund(s) record unit value.
Such number or values will be as of a specific date no more than 60 days
before the date of the notice.
3.09 LOANS: Loans are not available under this Contract.
3.10 SYSTEMATIC WITHDRAWAL: The following distribution options may be elected by the Certificate Holder
OPTION (SWO): during the Accumulation Period. A distribution option under which a portion
of the Accounts' Current Value will automatically be surrendered and
distributed each year. SWO payments will be calculated based on the
Accounts' full Current Value. The distributed amount will be withdrawn pro
rata from each investment option used under the Account. A Surrender Fee
will not be deducted from any portion of the Current Value which is paid as
a distribution under SWO. Certificate Holders should consult their tax
advisers prior to requesting this distribution option. Aetna will not be
responsible for any adverse tax consequences due to receiving SWO payments.
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3.10 SYSTEMATIC WITHDRAWAL (a) Amount of Distribution: The Certificate Holder may
OPTION (SWO) elect one of the three payment methods described below.
(CON'T):
(1) Specified Payment: Payments of a designated dollar amount. The
annual amount may not be greater than the percentage of the
Account's Current Value on the date of the SWO election as shown
on Contract Schedule I. This annual dollar amount will remain
constant. The minimum SWO payment amount is shown on Contract
Schedule I. If SWO payments are made more frequently than
annually, the designated annual amount is divided by the number
of payments due each year; or
(2) Specified Period: Payments made over a designated period of time
of at least 10 years. The annual amount is calculated by dividing
the Current Value as of December 31 of the year prior to the
payment year by the number of payment years remaining; or
(3) Specified Percentage: Payments of a designated percentage which
cannot be greater than the percentage of the Current Value at the
time of election as shown on Contract Schedule I. The percentage
may be changed by written request. Aetna reserves the right to
limit the number of times the percentage may be changed. The
annual amount is calculated by multiplying the Current Value as
of December 31 of the year prior to the payment year by the
designated percentage.
Payments upon the Contract Holder's death will continue to the Beneficiary
in the manner described in 3.11.
(b) Minimum Initial Current Value: The Minimum Initial Current Value
required to begin SWO is shown on Contract Schedule I. If after
election of this option the Current Value is insufficient to make a
scheduled SWO payment, Aetna will distribute the entire balance.
(c) Date of Distribution: The Contract Holder shall specify the first
payment date. The earliest allowable first payment date is the date on
which the Contract Holder attains age 59 1/2. The latest allowable SWO
payment date is the month of the Contract Holder's 85th birthday. As
elected by the Contract Holder, SWO payments will be made on a
monthly, quarterly, semi-annual or annual basis. If SWO payments are
made more frequently than annually, the designated annual amount is
divided by the number of payments due each year. Subsequent payments
will be made on the 15th of the appropriate months or on such other
date as Aetna may designate or allow.
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3.10 SYSTEMATIC WITHDRAWAL (d) Election and Revocation: SWO may be elected by the Certificate Holder
OPTION (SWO) or a spouse beneficiary if elected after the Certificate Holder's
(CON'T): death by submitting a completed and signed election form to Aetna's
Home Office. Once elected, this option may be revoked by the
Certificate Holder or spousal Beneficiary, if elected after the
Certificate Holder's death, by submitting a written request to Aetna
at its Home Office. Any revocation will apply only to amounts not yet
paid. SWO may be elected only once by the Certificate Holder or by the
spouse Beneficiary.
3.11 DEATH BENEFIT AMOUNT: If the Certificate Holder/Annuitant dies before Annuity payments start, the
Beneficiary is entitled to a death benefit under the Account. If the
Account is owned jointly, the death benefit is paid at the death of the
first joint Certificate Holder to die. The claim date is the date when
proof of death and the Beneficiary's claim are received in good order at
Aetna's Home Office. The amount of the death benefit is determined as
follows:
(a) Death of Annuitant less than 85 years of age: The guaranteed death
benefit is the greatest of:
(1) The sum of all Net Purchase Payment(s) made to the Account (as of
the date of death) minus the sum of all amounts surrendered,
applied to an Annuity, or deducted from the Account;
(2) The highest step-up value as of the date of death. A step-up
value is determined on each anniversary of the Effective Date.
Each step-up value is calculated as the Account's Current Value
on the Effective Date anniversary, increased by the amount of any
Purchase Payment(s) made, and decreased by the sum of all amounts
surrendered, deducted, and/or applied to an Annuity option since
the Effective Date anniversary.
(3) The Account's Current Value as of the date of death.
The excess, if any, of the guaranteed death benefit value over the
Account's Current Value is determined as of the date of death. Any
excess amount will be deposited to the Account and allocated to Aetna
Variable Encore Fund as of the claim date. The Current Value on the
claim date plus any excess amount deposited becomes the Account's
Current Value.
(b) Death of Annuitant age 85 or greater: The death benefit is the
greatest of:
(1) The sum of all Net Purchase Payment(s) made to the Account (as of
the date of death) minus the sum of all amounts surrendered,
applied to an Annuity, or deducted from the Account;
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3.11 DEATH BENEFIT (2) The highest step-up value prior to the Certificate Holder's 85th
AMOUNT (CON'T) birthday. A step-up value is determined on each anniversary of
the Effective Date. Each step-up value is calculated as the
Account's Current Value on the Effective Date anniversary,
increased by the amount of any Purchase Payment(s) made, and
decreased by the sum of all amounts surrendered, deducted, and/or
applied to an Annuity option since the Effective Date
anniversary.
(3) The Account's Current Value as of the date of death.
The excess, if any, of the guaranteed death benefit value over the
Account's Current Value is determined as of the date of death. Any
excess amount will be deposited in the Account and allocated to the
Aetna Variable Encore Fund as of the claim date. The Current Value on
the claim date, plus any excess amount deposited, becomes the
Account's Current Value.
(c) Death of the Certificate Holder if the Certificate Holder is not the
Annuitant: The death benefit amount is the Account's Adjusted Current
Value on the Claim Date. A Surrender Fee may apply to any full or
partial surrender (see 3.14 and Contract Schedule I).
(d) At the death of a surviving spouse Beneficiary who continued the
Account in his or her own name, the death benefit amount is equal to
the Account's Current Value less any applicable Surrender Fee on the
amount of any Purchase Payment(s) made since the death of the
Certificate Holder.
3.12 DEATH BENEFIT OPTIONS Prior to any election, or until amounts must be otherwise distributed
AVAILABLE TO BENEFICIARY: under this section, the Current Value of the account will be retained
in the Account. The Beneficiary has the right under the Contract to
allocate or reallocate any amount to any of the available investment
options (subject to an MVA, as applicable). The following options are
available to the Beneficiary:
(a) When the Contract Holder is the Annuitant: If the Contract
Holder/Annuitant dies, and:
(1) If the Beneficiary is the Certificate Holder's surviving
spouse, the Beneficiary may exercise all rights under the
Contract and continue in the Accumulation Period, or may
elect (i), (ii), or (iii) below. Under the Code,
distributions from the Account are not required until the
Spousal Beneficiary's death. The Spousal Beneficiary may
elect to:
(i) Apply some or all of the Adjusted Current Value of the
Account to Annuity option 2, 3 or 4 (see 4.07);
(ii) Apply some or all of the Adjusted Current Value to
Annuity option 1 (see 4.07); or
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3.12 DEATH BENEFIT OPTIONS (iii) Receive, at any time, a lump sum payment equal to the
AVAILABLE TO BENEFICIARY Adjusted Current Value of the Account.
(CON'T):
(2) If the Beneficiary is other than the Certificate Holder's
surviving spouse, then options (i), (ii), or (iii) under (1)
above apply. Any portion of the Adjusted Current Value of
the Account not applied to Annuity option 2, 3 or 4 within
on year of the Certificate Holder's death, must be
distributed within five years of the date of death.
(3) If no Beneficiary exists, a lump sum payment equal to the
Adjusted Current Value will be made to the Certificate
Holder's estate.
(b) When the Certificate Holder is not the Annuitant and the
Certificate Holder dies, and:
(1) If the Beneficiary is the Certificate Holder's surviving
spouse, the Beneficiary may exercise all rights under the
Contract and continue in the Accumulation Period, or may
elect (i), (ii), or (iii) below. Under the Code,
distributions from the Account are not required until the
spousal Beneficiary's death. The spousal Beneficiary may
elect to:
(i) Apply some or all of the Adjusted Current Value of the
Account to Annuity option 2, 3 or 4 (see 4.07);
(ii) Apply some or all of the Surrender Value to Annuity
option 1 (see 4.07); or
(iii) Receive, at any time, a lump sum payment equal to the
Surrender Value.
(2) If the Beneficiary is other than the Certificate Holder's
surviving spouse, then options (i), (ii), or (iii) under (1)
above apply. Any portion of the Adjusted Current Value not
applied to Annuity option 2, 3 or 4 within one year of the
Certificate Holder's death, must be distributed within five
years of the date of death.
(3) If no Beneficiary exists, a lump sum payment equal to the
Surrender Value will be made to the Certificate Holder's
estate.
(c) When the Certificate Holder is not the Annuitant and the
Annuitant dies: The Beneficiary must elect Annuity option 2, 3 or
4 within 60 days of the date of death or the gain, if any, will
be includible in the Beneficiary's income in the tax year in
which the Annuitant dies.
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3.13 LIQUIDATION OF All or any portion of the Account's Current Value may be surrendered at any
SURRENDER VALUE: time. Surrender requests can be submitted as a percentage of the Account's
Adjusted Current Value or as a specific dollar amount. Net Purchase Payment
amounts are withdrawn first, and then the excess value, if any. For any
partial surrender amounts are withdrawn on a pro rata basis from the
Fund(s) and/or the Guaranteed Term(s) Groups of the AG Account in which the
Current Value is invested. Within a Guaranteed Term Group, the amount to be
surrendered or transferred will be withdrawn first from the oldest Deposit
Period, then from the next oldest, and so on until the amount requested is
satisfied.
After deduction of the Maintenance Fee, if applicable, the surrendered
amounts shall be reduced by a Surrender Fee, if applicable.
An MVA may apply to amounts surrendered from the AG Account.
3.14 SURRENDER FEE: The Surrender Fee only applies to the Net Purchase Payment(s) portion
surrendered and varies according to the elapsed time since deposit (see
Contract Schedule I). Net Purchase Payment amounts are withdrawn in the
same order they were applied.
No Surrender Fee is deducted from any portion of the Net Purchase Payment
which is paid:
(a) To a Beneficiary due to the Annuitant's death before Annuity payments
start, up to a maximum of the aggregate Net Purchase Payment(s) minus
the total of all partial surrenders, amounts applied to an Annuity and
deductions made prior to the Annuitant's date of death;
(b) As a premium for an Annuity option 2, 3 or 4 under this Contract (see
4.07);
(c) As a distribution under the SWO provision (see 3.10);
(d) At least 12 months after the date of the Purchase Payment to the
Account, in an amount equal to or less than 15% of the Current Value.
This applies to the first surrender request, partial or full, in a
calendar year. The Current Value is calculated as of the date the
surrender request is received in good order at Aetna's Home Office.
This waiver is not available to the Contract Holder while SWO is in
effect; or
(e) For a full surrender where the Account's Current Value is $2,500 or
less and no surrenders have been taken from the Contract within the
prior 12 months.
3.15 PAYMENT OF Under certain emergency conditions, Aetna may defer payment:
SURRENDER VALUE:
(a) For a period of up to 6 months (unless not allowed by state law); or
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(b) As provided by federal law under the Investment Company Act of 1940.
IV. ANNUITY PROVISIONS
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4.01 CHOICES TO BE MADE: The Certificate Holder may tell Aetna to apply any portion of the Adjusted
Current Value (minus any premium tax) for an Annuity under option 2, 3, or
4 (see 4.07). The first Annuity payment may not be earlier than one
calendar year after the initial Purchase Payment nor later than the first
day of the month following the Annuitant's 85th birthday.
When an Annuity Option is chosen, Aetna must also be told if payments are
to be made other than monthly and whether to pay:
(a) A Fixed Annuity using the General Account;
(b) A Variable Annuity using any of the Fund(s) available under this
Contract for Annuity purposes; or
(c) A combination of (a) and (b).
If a Fixed Annuity is chosen, the Annuity purchase rate for the option
chosen reflects at least the Minimum Guaranteed Interest Rate (see Contract
Schedule II), but may reflect a higher interest rate. If a Variable Annuity
is chosen, the initial Annuity payment for the option chosen reflects the
assumed annual return rate elected. (see Contract Schedule II).
4.02 TERMS OF ANNUITY (a) When payments start, the age of the Annuitant plus the number of years
OPTIONS: for which payments are guaranteed must not exceed 95.
(b) An Annuity option may not be elected if the first payment would be
less than $50 or if the total payments in a year would be less than
$250 (less if required by state law). Aetna reserves the right to
increase the minimum first Annuity payment amount and the annual
minimum annual Annuity payment amount based upon increases reflected
in the Consumer Price Index-Urban, (CPI-U) since July 1, 1993.
(c) If a Fixed Annuity under option 2, 3 or 4 is chosen and a larger
payment would result from applying the Surrender Value or, if greater,
95% of what the surrender would be if there were no surrender fee, to
a current Aetna single premium immediate Annuity, Aetna will make the
larger payment.
(d) For purposes of calculating the guaranteed first payment of a Variable
Annuity or the payments for a Fixed Annuity, the Annuitant's and
second Annuitant's adjusted age will be used. The Annuitant's and
second Annuitant's adjusted age is his or
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her age as of the birthday closest to the Annuity commencement date
reduced by one year for Annuity
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4.02 TERMS OF ANNUITY commencement dates occurring during the period of time from July 1,
OPTIONS (CON'T): 1993 through December 31, 1999. The Annuitant's and second Annuitant's
age will be reduced by two years for Annuity commencement dates
occurring during the period of time from January 1, 2000 through
December 31, 2009. The Annuitant's and second Annuitant's age will be
reduced by one additional year for Annuity commencement dates
occurring in each succeeding decade.
The Annuity purchase rates for options 3 and 4 are based on mortality
from 1983 Table a.
(e) Assumed Annual Net Return Rate is the interest rate used to determine
the amount of the first Annuity payment under a Variable Annuity as
shown on Contract Schedule II. The Separate Account must earn this
rate plus enough to cover the mortality and expense risk charges
(which may include profit) and administrative charges if future
Variable Annuity Payments are to remain level, (see Annuity return
factor under Variable Annuity Assumed Annual Net Return Rate on
Contract Schedule II).
(f) Once elected, Annuity payments cannot be commuted to a lump sum except
for Variable Annuity payments under option 2 (see 4.07). The life
expectancy of the Annuitant and second Annuitant shall be irrevocable
upon the election of an Annuity option.
4.03 DEATH OF ANNUITANT/ (a) Certificate Holder is Annuitant: When the Certificate Holder is the
BENEFICIARY: Annuitant and the Annuitant dies under option 2 or 3, or both the
Annuitant and the second Annuitant die under option 4(d), the present
value of any remaining guaranteed payments will be paid in one sum to
the Beneficiary, or upon election by the Beneficiary, any remaining
payments will continue to the Beneficiary. If option 4 has been
elected and the Certificate Holder dies, the remaining payments will
continue to the second payee. If no successor payee has been
designated, the Beneficiary will be treated as the successor payee. If
the Account has joint Certificate Holders, the surviving joint
Certificate Holder will be deemed the successor payee.
(b) Certificate Holder is Not Annuitant: When the Certificate Holder is
not the Annuitant and the Certificate Holder dies, the remaining
payments under options 2, 3 or 4 will continue to the successor payee.
If no successor payee has been designated, the Beneficiary will be
treated as the successor payee. If the Account has joint Certificate
Holders, the surviving joint Certificate Holder will be deemed the
successor payee.
</TABLE>
34
<PAGE>
<TABLE>
<S> <C>
4.03 DEATH OF ANNUITANT/ If the Annuitant dies under option 2 or 3, or if both the Annuitant
BENEFICIARY (CON'T): and the second Annuitant die under option 4(d), the present value of
any remaining guaranteed payments will be paid in one sum to the
Beneficiary, or upon the election by the Beneficiary, any remaining
payments will continue to the Beneficiary. If option 4 has been
elected, and the Annuitant dies, the remaining payments will continue
to the Certificate Holder.
(c) No Beneficiary Named/Surviving: If there is no Beneficiary under
option 2, 3 or 4, the present value of any remaining payments will be
paid in one sum to the Certificate Holder, or if the Certificate
Holder is not living, then to the Certificate Holder's estate.
(d) If the Beneficiary designated under option 1 dies, the amount held
plus accrued interest will be paid in one sum to a successor
Beneficiary, if any, named by the designated Beneficiary. If there is
no successor Beneficiary, the lump sum will be paid to the designated
Beneficiary's estate.
(e) If the Beneficiary or the successor payee dies while receiving Annuity
payments, the present value of any remaining guaranteed payments will
be paid in one sum to the successor Beneficiary/payee, or upon
election by the successor Beneficiary/payee, any remaining payments
will continue to the successor Beneficiary/payee. If no successor
Beneficiary/payee has been designated, the present value of any
remaining guaranteed payments will be paid in one sum to the
Beneficiary's/payee's estate.
(f) The present value will be determined as of the Valuation Period in
which proof of death acceptable to Aetna and a request for payment is
received at Aetna's Home Office. The interest rate used to determine
the first payment will be used to calculate the present value.
4.04 FUND(S) ANNUITY UNITS -- The number of each Fund's Annuity units is based on the amount of the first
SEPARATE ACCOUNT: Variable Annuity payment which is equal to:
(a) The portion of the Current Value applied to pay a Variable Annuity
(minus any premium tax); divided by
(b) 1,000; multiplied by
(c) The payment rate for the option chosen.
Such amount, or portion, of the variable payment will be divided by the
appropriate Fund Annuity unit value (see 4.05) on the tenth Valuation
Period before the due date of the first payment to determine the number of
each Fund Annuity units. The number of each Fund Annuity units remains
fixed. Each future payment is equal to the sum of the products of each Fund
Annuity unit value multiplied by the
</TABLE>
35
<PAGE>
<TABLE>
<S> <C>
appropriate number of Units. The Fund Annuity unit value on the tenth Valuation
Period prior to the due date of the payment is used.
</TABLE>
36
<PAGE>
<TABLE>
<S> <C>
4.05 FUND(S) ANNUITY UNIT For any Valuation Period, a Fund Annuity unit value is equal to:
VALUE -- SEPARATE
ACCOUNT: (a) The Value for the previous Period; multiplied by
(b) The Annuity net return factor(s) (see 4.06 below) for the Period;
multiplied by
(c) A factor to reflect the assumed annual net return rate (see Contract
Schedule II).
The dollar value of a Fund Annuity unit value and Annuity payments may go
up or down due to investment gain or loss.
4.06 ANNUITY NET RETURN The Annuity net return factor(s) are used to compute Annuity payments for
FACTOR(S) -- SEPARATE any Fund.
ACCOUNT:
The Annuity net return factor(s) for each Fund is equal to 1.0000000 plus
the net return rate.
The net return rate is equal to:
(a) The value of the shares of the Fund held by the Separate Account at
the end of a Valuation Period; minus
(b) The value of the shares of the Fund held by the Separate Account at
the start of the Valuation Period; plus or minus
(c) Taxes (or reserves for taxes) on the Separate Account (if any);
divided by
(d) The total value of the Fund record units and the Fund Annuity units of
the Separate Account at the start of the Valuation Period; minus
(e) A daily charge for Annuity mortality and expense risks, which may
include profit, and a daily administrative charge (at the annual rate
as shown on Contract Schedule II).
A net return rate may be more or less than 0%.
The value of a share of the Fund is equal to the net assets of the Fund
divided by the number of shares outstanding.
Payments shall not be changed due to changes in the mortality or expense
results or administrative charges.
4.07 ANNUITY OPTIONS: Option 1 -- Payment of Interest on Sum Left with Aetna -- This option may
be used only by the Beneficiary when the Certificate Holder dies before
Aetna has started paying an Annuity. A portion or all of the sum paid upon
death may be held under this option and will be held in the General Account
of Aetna at interest (see 4.01). The Beneficiary may later tell Aetna to:
(a) Pay a portion or all of the sum held by Aetna; or
(b) Apply a portion or all of the sum held by Aetna to any Annuity Option
below.
</TABLE>
37
<PAGE>
<TABLE>
<S> <C>
4.07 ANNUITY OPTIONS If a nonspouse Beneficiary elects that some or all of the Current Value is
(CON'T): to be held under this option, the Beneficiary must tell Aetna to pay the
full sum held under this option within 5 years of the date of death.
Option 2 -- Payments for a Stated Period of Time -- An Annuity will be paid
for the number of years chosen. The number of years must be at least 5 and
not more than 30.
If payments for this option are made under a Variable Annuity, the present
value of any remaining payments may be withdrawn at any time. If a
withdrawal is requested within 3 years after the start of payments, it will
be treated as a surrender and any applicable Surrender Fee will be applied
(see 3.14).
If a nonspouse Beneficiary elects this option at the death of the Contract
Holder, the period selected may not extend beyond the Beneficiary's life
expectancy.
Option 3 -- Life Income -- An Annuity will be paid for the life of the
Annuitant. If also chosen, Aetna will guarantee payments for 60, 120, 180,
or 240 months.
Option 4 -- Life Income Based upon the Lives of Two Annuitants -- An
Annuity will be paid during the lives of the Annuitant and a second
Annuitant. Payments will continue until both Annuitants have died. When
this option is chosen, a choice must be made of:
(a) 100% of the payment to continue after the first death;
(b) 66 2/3% of the payment to continue after the first death;
(c) 50% of the payment to continue after the first death;
(d) Payments for a minimum of 120 months with 100% of the payment to
continue after the first death; or
(e) 100% of the payment to continue at the death of the second Annuitant
and 50% of the payment to continue at the death of the Annuitant.
Other Options -- Aetna may make other options available as allowed by the
laws of the state in which this Contract and the Certificate is delivered.
</TABLE>
38
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
YEARS GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
RATE PAYMENT PAYMENT PAYMENT PAYMENT
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.00% 17.91 53.59 106.78 211.99
6 3.00% 15.14 45.30 90.27 179.22
7 3.00% 13.16 39.39 78.49 155.83
8 3.00% 11.68 34.96 69.66 138.31
9 3.00% 10.53 31.52 62.81 124.69
10 3.00% 9.61 28.77 57.33 113.82
11 3.00% 8.86 26.52 52.85 104.93
12 3.00% 8.24 24.65 49.13 97.54
13 3.00% 7.71 23.08 45.98 91.29
14 3.00% 7.26 21.73 43.29 85.95
15 3.00% 6.87 20.56 40.96 81.33
16 3.00% 6.53 19.54 38.93 77.29
17 3.00% 6.23 18.64 37.14 73.74
18 3.00% 5.96 17.84 35.56 70.59
19 3.00% 5.73 17.13 34.14 67.78
20 3.00% 5.51 16.50 32.87 65.26
21 3.00% 5.32 15.92 31.72 62.98
22 3.00% 5.15 15.40 30.68 60.92
23 3.00% 4.99 14.92 29.74 59.04
24 3.00% 4.84 14.49 28.88 57.33
25 3.00% 4.71 14.09 28.08 55.76
26 3.00% 4.59 13.73 27.36 54.31
27 3.00% 4.47 13.39 26.68 52.97
28 3.00% 4.37 13.08 26.06 51.74
29 3.00% 4.27 12.79 25.49 50.60
30 3.00% 4.18 12.52 24.95 49.53
--------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ---------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.27 $3.90 $4.26 $3.90 $4.22 $3.89 $4.17 $3.86 $4.08 $3.82
51 4.34 3.97 4.33 3.96 4.30 3.95 4.23 3.92 4.14 3.88
52 4.43 4.03 4.41 4.03 4.37 4.01 4.30 3.98 4.20 3.93
53 4.51 4.10 4.50 4.10 4.45 4.08 4.37 4.04 4.26 3.99
54 4.60 4.18 4.59 4.17 4.54 4.15 4.45 4.11 4.32 4.04
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11
56 4.80 4.34 4.78 4.33 4.72 4.30 4.61 4.25 4.45 4.17
57 4.91 4.42 4.89 4.41 4.82 4.38 4.69 4.32 4.51 4.23
58 5.03 4.52 5.00 4.51 4.92 4.47 4.78 4.40 4.58 4.30
59 5.15 4.61 5.12 4.60 5.03 4.56 4.87 4.48 4.65 4.37
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44
61 5.43 4.83 5.39 4.81 5.27 4.76 5.06 4.66 4.78 4.51
62 5.58 4.95 5.53 4.93 5.39 4.87 5.16 4.75 4.84 4.58
63 5.74 5.08 5.69 5.05 5.53 4.99 5.26 4.85 4.90 4.65
64 5.91 5.21 5.85 5.18 5.66 5.10 5.36 4.95 4.96 4.72
65 6.10 5.36 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79
66 6.30 5.51 6.21 5.47 5.93 5.36 5.56 5.16 5.08 4.86
67 6.51 5.67 6.41 5.63 6.12 5.50 5.66 5.26 5.13 4.93
68 6.73 5.85 6.62 5.80 6.28 5.65 5.77 5.37 5.18 5.00
69 6.97 6.04 6.84 5.98 6.44 5.80 5.86 5.49 5.23 5.06
70 7.23 6.25 7.07 6.18 6.61 5.97 5.96 5.60 5.27 5.12
71 7.51 6.47 7.32 6.39 6.79 6.14 6.05 5.71 5.31 5.18
72 7.80 6.71 7.58 6.62 6.96 6.32 6.14 5.83 5.34 5.23
73 8.12 6.98 7.85 6.86 7.14 6.50 6.23 5.94 5.37 5.28
74 8.46 7.26 8.14 7.12 7.32 6.69 6.31 6.04 5.40 5.32
75 8.82 7.57 8.45 7.40 7.50 6.89 6.38 6.14 5.42 5.35
--------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
40
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
ADJUSTED AGES
---------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.13
55 55 3.88 4.25 4.47 3.87 4.25
55 60 3.06 4.47 4.71 4.06 4.36
60 55 3.99 4.44 4.71 3.98 4.55
60 60 4.24 4.71 4.99 4.23 4.70
60 65 4.49 5.01 5.32 4.48 4.85
65 60 4.38 4.97 5.32 4.38 5.10
65 65 4.72 5.33 5.70 4.71 5.32
65 70 5.07 5.75 6.17 5.05 5.54
70 65 4.93 5.68 6.15 4.91 5.86
70 70 5.40 6.21 6.70 5.36 6.18
70 75 5.89 6.82 7.40 5.81 6.49
75 70 5.69 6.68 7.32 5.62 6.92
75 75 6.37 7.45 8.15 6.23 7.40
75 80 7.07 8.34 9.16 6.78 7.85
-----------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
41
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
ADJUSTED AGES
---------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.75 $4.07 $4.26 $3.75 $3.98
55 55 3.88 4.25 4.47 3.87 4.06
55 60 3.99 4.44 4.71 3.98 4.12
60 55 4.06 4.47 4.71 4.06 4.37
60 60 4.24 4.71 4.99 4.23 4.47
60 65 4.38 4.97 5.32 4.38 4.54
65 60 4.49 5.01 5.32 4.48 4.89
65 65 4.72 5.33 5.70 4.71 5.02
65 70 4.93 5.68 6.15 4.91 5.14
70 65 5.07 5.75 6.17 5.05 5.60
70 70 5.40 6.21 6.70 5.36 5.79
70 75 5.69 6.68 7.32 5.62 5.96
75 70 5.89 6.83 7.40 5.81 6.63
75 75 6.37 7.45 8.15 6.23 6.92
75 80 6.78 8.11 8.99 6.54 7.15
---------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
42
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
------------------------------------------------------------------
GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
YEARS RATE PAYMENT PAYMENT PAYMENT PAYMENT
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 3.50% 18.12 54.19 107.92 213.99
6 3.50% 15.35 45.92 91.44 181.32
7 3.50% 13.38 40.01 79.69 158.01
8 3.50% 11.90 35.59 70.88 140.56
9 3.50% 10.75 32.16 64.05 127.00
10 3.50% 9.83 29.42 58.59 116.18
11 3.50% 9.09 27.18 54.13 107.34
12 3.50% 8.46 25.32 50.42 99.98
13 3.50% 7.94 23.75 47.29 93.78
14 3.50% 7.49 22.40 44.62 88.47
15 3.50% 7.10 21.24 42.31 83.89
16 3.50% 6.76 20.23 40.29 79.89
17 3.50% 6.47 19.34 38.51 76.37
18 3.50% 6.20 18.55 36.94 73.25
19 3.50% 5.97 17.85 35.54 70.47
20 3.50% 5.75 17.22 34.28 67.98
21 3.50% 5.56 16.65 33.15 65.74
22 3.50% 5.39 16.13 32.13 63.70
23 3.50% 5.24 15.66 31.19 61.85
24 3.50% 5.09 15.24 30.34 60.17
25 3.50% 4.96 14.85 29.56 58.62
26 3.50% 4.84 14.49 28.95 57.20
27 3.50% 4.73 14.15 28.19 55.90
28 3.50% 4.63 13.85 27.58 54.69
29 3.50% 4.53 13.57 27.02 53.57
30 3.50% 4.45 13.30 26.49 52.53
------------------------------------------------------------------
</TABLE>
43
<PAGE>
OPTION 2
PAYMENTS FOR A STATED PERIOD OF TIME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
----------------------------------------------------------------------
YEARS GUARANTEED MONTHLY QUARTERLY SEMI-ANNUAL ANNUAL
RATE PAYMENT PAYMENT PAYMENT PAYMENT
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 5.00% 18.74 56.00 111.33 219.98
6 5.00% 15.99 47.77 94.96 187.64
7 5.00% 14.02 41.90 83.30 164.59
8 5.00% 12.56 37.52 74.58 147.35
9 5.00% 11.42 34.11 67.81 133.99
10 5.00% 10.51 31.40 62.42 123.34
11 5.00% 9.77 29.19 58.03 114.66
12 5.00% 9.16 27.36 54.38 107.45
13 5.00% 8.64 25.81 51.31 101.39
14 5.00% 8.20 24.50 48.69 96.21
15 5.00% 7.82 23.36 46.44 91.75
16 5.00% 7.49 22.37 44.47 87.88
17 5.00% 7.20 21.51 42.75 84.48
18 5.00% 6.94 20.74 41.23 81.47
19 5.00% 6.71 20.06 39.88 78.80
20 5.00% 6.51 19.46 38.68 76.42
21 5.00% 6.33 18.91 37.59 74.28
22 5.00% 6.17 18.42 36.62 72.35
23 5.00% 6.02 17.98 35.73 70.61
24 5.00% 5.88 17.57 34.93 69.02
25 5.00% 5.76 17.20 34.20 67.57
26 5.00% 5.65 16.87 33.53 66.25
27 5.00% 5.54 16.56 32.92 65.04
28 5.00% 5.45 16.28 32.35 63.93
29 5.00% 5.36 16.01 31.83 62.90
30 5.00% 5.28 15.77 31.35 61.95
----------------------------------------------------------------------
</TABLE>
44
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ---------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.56 $4.20 $4.55 $4.19 $4.51 $4.18 $4.45 $4.15 $4.36 $4.11
51 4.64 4.26 4.62 4.25 4.58 4.24 4.51 4.21 4.42 4.16
52 4.72 4.32 4.70 4.32 4.66 4.30 4.58 4.26 4.48 4.21
53 4.80 4.39 4.79 4.38 4.74 4.36 4.65 4.32 4.53 4.27
54 4.89 4.46 4.87 4.46 4.82 4.43 4.73 4.39 4.59 4.32
55 4.99 4.54 4.97 4.53 4.91 4.50 4.80 4.46 4.65 4.38
56 5.09 4.62 5.07 4.61 5.00 4.58 4.88 4.53 4.72 4.44
57 5.20 4.71 5.17 4.70 5.10 4.66 4.96 4.60 4.78 4.50
58 5.32 4.80 5.29 4.79 5.20 4.75 5.05 4.68 4.84 4.57
59 5.44 4.90 5.41 4.88 5.31 4.84 5.14 4.76 4.91 4.63
60 5.57 5.00 5.53 4.99 5.42 4.93 5.23 4.84 4.97 4.70
61 5.71 5.11 5.67 5.09 5.54 5.03 5.32 4.93 5.03 4.77
62 5.86 5.23 5.81 5.21 5.66 5.14 5.42 5.02 5.09 4.84
63 6.02 5.36 5.97 5.33 5.79 5.25 5.51 5.11 5.16 4.91
64 6.20 5.49 6.13 5.46 5.93 5.37 5.61 5.21 5.21 4.98
65 6.38 5.64 6.31 5.60 6.07 5.49 5.71 5.31 5.27 5.05
66 6.58 5.79 6.49 5.75 6.22 5.63 5.81 5.41 5.32 5.12
67 6.79 5.95 6.69 5.91 6.38 5.76 5.91 5.52 5.38 5.18
68 7.02 6.13 6.89 6.08 6.53 5.91 6.01 5.63 5.42 5.25
69 7.26 6.32 7.11 6.26 6.70 6.06 6.11 5.74 5.47 5.31
70 7.52 6.53 7.35 6.45 6.86 6.23 6.20 5.85 5.51 5.37
71 7.80 6.75 7.59 6.66 7.03 6.39 6.29 5.96 5.54 5.42
72 8.09 6.99 7.85 6.89 7.21 6.57 6.38 6.07 5.57 5.47
73 8.41 7.26 8.12 7.13 7.38 6.75 6.46 6.17 5.60 5.51
74 8.75 7.54 8.41 7.39 7.55 6.94 6.53 6.28 5.63 5.55
75 9.12 7.85 8.71 7.66 7.73 7.13 6.61 6.38 5.65 5.59
--------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
45
<PAGE>
OPTION 3
LIFE INCOME
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
PAYMENTS GUARANTEED FOR A STATED PERIOD OF MONTHS
-------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
ADJUSTED NONE 60 120 180 240
AGE OF ----------------------------------------------------------------------------
ANNUITANT MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 $ 5.48 $5.12 $5.46 $5.11 $5.41 $5.09 $5.34 $5.06 $5.24 $5.01
51 5.55 5.17 5.53 5.17 5.48 5.14 5.40 5.11 5.29 5.05
52 5.63 5.23 5.61 5.23 5.55 5.20 5.46 5.16 5.34 5.10
53 5.71 5.30 5.69 5.29 5.62 5.26 5.53 5.22 5.40 5.15
54 5.80 5.37 5.77 5.36 5.70 5.33 5.60 5.27 5.45 5.20
55 5.89 5.44 5.86 5.43 5.79 5.39 5.67 5.34 5.51 5.25
56 5.99 5.52 5.96 5.51 5.87 5.47 5.74 5.40 5.56 5.31
57 6.10 5.60 6.06 5.59 5.97 5.54 5.82 5.47 5.62 5.37
58 6.21 5.69 6.17 5.67 6.06 5.62 5.90 5.54 5.68 5.42
59 6.33 5.79 6.29 5.77 6.17 5.71 5.98 5.61 5.74 5.48
60 6.46 5.89 6.41 5.87 6.28 5.80 6.06 5.69 5.79 5.55
61 6.60 6.00 6.55 6.07 6.39 5.90 6.15 5.77 5.85 5.61
62 6.75 6.11 6.69 6.08 6.51 6.00 6.24 5.86 5.91 5.67
63 6.91 6.23 6.84 6.20 6.64 6.10 6.33 5.95 5.96 5.73
64 7.09 6.37 7.00 6.33 6.77 6.22 6.42 6.04 6.02 5.80
65 7.27 6.51 7.18 6.46 6.91 6.34 6.52 6.13 6.07 5.86
66 7.47 6.66 7.36 6.61 7.05 6.46 6.61 6.23 6.12 5.92
67 7.68 6.82 7.55 6.76 7.20 6.60 6.70 6.33 6.16 5.99
68 7.91 7.00 7.76 6.93 7.35 6.74 6.80 6.43 6.21 6.04
69 8.15 7.19 7.98 7.11 7.51 6.89 6.89 6.54 6.25 6.10
70 8.41 7.39 8.21 7.30 7.67 7.04 6.97 6.64 6.28 6.15
71 8.69 7.62 8.45 7.51 7.83 7.21 7.06 6.74 6.32 6.20
72 8.99 7.86 8.70 7.73 8.00 7.38 7.14 6.85 6.35 6.25
73 9.31 8.12 8.97 7.97 8.16 7.55 7.21 6.95 6.37 6.29
74 9.65 8.41 9.26 8.23 8.33 7.73 7.29 7.04 6.39 6.33
75 10.02 8.72 9.55 8.50 8.50 7.92 7.35 7.14 6.41 6.36
---------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
46
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
ADJUSTED AGES
----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.42
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.34 4.76 5.00 4.34 4.64
60 55 4.27 4.73 5.00 4.26 4.83
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.76 5.29 5.60 4.75 5.13
65 60 4.66 5.25 5.61 4.65 5.39
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.34 6.03 6.46 5.31 5.81
70 65 5.19 5.97 6.44 5.17 6.14
70 70 5.67 6.49 6.99 5.62 6.47
70 75 6.16 7.10 7.68 6.07 6.77
75 70 5.95 6.96 7.61 5.87 7.20
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.33 8.62 9.45 7.02 8.13
----------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
47
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
ADJUSTED AGES
-----------------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.03 $4.36 $4.55 $4.03 $4.41
55 55 4.16 4.54 4.76 4.15 4.54
55 60 4.27 4.73 5.00 4.26 4.83
60 55 4.34 4.76 5.00 4.34 4.64
60 60 4.51 4.99 5.27 4.50 4.98
60 65 4.66 5.25 5.61 4.65 5.39
65 60 4.76 5.29 5.60 4.75 5.13
65 65 4.99 5.61 5.99 4.98 5.60
65 70 5.19 5.97 6.44 5.17 6.14
70 65 5.34 6.03 6.46 5.31 5.81
70 70 5.67 6.49 6.99 5.62 6.47
70 75 5.95 6.96 7.61 5.87 7.20
75 70 6.16 7.10 7.68 6.07 6.77
75 75 6.64 7.73 8.43 6.48 7.68
75 80 7.04 8.39 9.29 6.79 8.70
-----------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
48
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS MALE AND SECOND ANNUITANT IS FEMALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
ADJUSTED AGES
---------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $ 5.48 $4.88 $5.34
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.21 5.65 5.89 5.21 5.53
60 55 5.15 5.63 5.91 5.14 5.73
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.61 6.16 6.49 5.60 6.01
65 60 5.52 6.14 6.51 5.51 6.28
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.17 6.90 7.33 6.13 6.67
70 65 6.04 6.84 7.34 6.00 7.03
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.97 7.96 8.56 6.87 7.62
75 70 6.77 7.84 8.51 6.68 8.08
75 75 7.45 8.60 9.33 7.27 8.55
75 80 8.14 9.49 10.35 7.80 8.98
-----------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Male and the Second Annuitant is Female.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
49
<PAGE>
OPTION 4
LIFE INCOME FOR TWO PAYEES
AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,000
AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES
(ANNUITANT IS FEMALE AND SECOND ANNUITANT IS MALE)
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
ADJUSTED AGES
----------------------
SECOND
ANNUITANT ANNUITANT OPTION 4A OPTION 4B OPTION 4C OPTION 4D OPTION 4E
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.93 $5.27 $ 5.46 $4.93 $5.19
55 55 5.04 5.44 5.66 5.04 5.43
55 60 5.15 5.63 5.91 5.14 5.73
60 55 5.21 5.65 5.89 5.21 5.53
60 60 5.37 5.87 6.16 5.37 5.86
60 65 5.52 6.14 6.51 5.51 6.28
65 60 5.61 6.16 6.49 5.60 6.01
65 65 5.83 6.49 6.87 5.82 6.47
65 70 6.04 6.84 7.34 6.00 7.03
70 65 6.17 6.90 7.33 6.13 6.67
70 70 6.49 7.35 7.87 6.44 7.33
70 75 6.77 7.84 8.51 6.68 8.08
75 70 6.97 7.96 8.56 6.87 7.62
75 75 7.45 8.60 9.33 7.27 8.55
75 80 7.86 9.28 10.20 7.57 9.59
-----------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a.
The rates assume the Annuitant is Female and the Second Annuitant is Male.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
50
<PAGE>
---------------------------------------------------------------
[LOGO OF AETNA GOES HERE]
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Home Office: 151 Farmington Avenue
Hartford, Connecticut 06156
(800) 525-4225
Group Variable, Fixed, or Combination Annuity Contract
Nonparticipating
---------------------------------------------------------------
ALL PAYMENTS AND VALUES PROVIDED BY THE GROUP CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT. THIS CONTRACT CONTAINS A MARKET VALUE
ADJUSTMENT FORMULA. APPLICATION OF A MARKET VALUE ADJUSTMENT MAY RESULT IN
EITHER AN INCREASE OR DECREASE IN THE CURRENT VALUE. THE MARKET VALUE
ADJUSTMENT FORMULA DOES NOT APPLY TO A GUARANTEED TERM AT THE TIME OF ITS
MATURITY.
51
<PAGE>
EXHIBIT 99-B.10.1
Consent of Independent Auditors
The Board of Directors of Aetna Life Insurance and Annuity Company
and Contract Owners of Aetna Variable Annuity Account B:
We consent to the use of our reports dated January 31, 1995 and February 7, 1995
included herein and to the references to our Firm under the captions "CONDENSED
FINANCIAL INFORMATION" in the Prospectus and "INDEPENDENT AUDITORS" in the
Statement of Additional Information.
Our report dated February 7, 1995 refers to a change in 1993 in the Company's
methods of accounting for certain investments in debt and equity securities and
reinsurance contracts, and a change in 1992 in the Company's methods of
accounting for income taxes and post retirement benefits other than pensions.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Hartford, Connecticut
September 18, 1995
<PAGE>
[LOGO OF AETNA Aetna Life Insurance and Susan E. Bryant
APPEARS HERE] Annuity Company Counsel
151 Farmington Avenue Law & Regulatory Affairs, RE4C
Hartford, CT 06156 (203) 273-7834
Fax: (203) 273-8340
EXHIBIT 99-B.10.2
September 18, 1995
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
Dear Sir or Madam:
As Counsel of Aetna Life Insurance and Annuity Company (the "Company"), I
hereby consent to the use of my opinion dated February 27, 1995 (incorporated
herein by reference to the 24f-2 Notice for the fiscal year ended December 31,
1994 filed on behalf of Variable Annuity Account B of Aetna Life Insurance and
Annuity Company on February 28, 1995) as an exhibit to this Post-Effective
Amendment No. 1 to Registration Statement on Form N-4 (File No. 33-87932) and
to my being named under the caption "Legal Matters" therein.
Sincerely,
/s/ Susan E. Bryant
Susan E. Bryant
Counsel
Aetna Life Insurance and Annuity Company
<PAGE>
Exhibit 99.B.13
<TABLE>
<CAPTION>
Aetna Variable Fund (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
VARMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 976.32 -2.37% -2.43%
3 0.0% 1081.06 2.63% 2.57%
5 0.0% 1371.96 6.53% 6.47%
10 0.0% 3267.34 12.57% 12.51%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
VARMTH
VARMTH.UV
12-99-84 3.286219
12-99-89 7.826182
12-99-91 9.932096
12-99-93 10.997616
12-99-94 10.737184
</TABLE>
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Aetna Income Shares (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
AISMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 948.65 -5.14% -5.19%
3 0.0% 1086.99 2.82% 2.76%
5 0.0% 1377.16 6.61% 6.55%
10 0.0% 2296.69 8.67% 8.61%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
AISMTH
AISMTH.UV
12-99-84 4.495147
12-99-89 7.496521
12-99-91 9.497741
12-99-93 10.882773
12-99-94 10.323944
</TABLE>
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Aetna Encore Fund (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ENCMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1026.35 2.64% 2.58%
3 0.0% 1067.55 2.20% 2.14%
5 0.0% 1198.96 3.70% 3.64%
10 0.0% 1631.13 5.01% 4.96%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
ENCMTH
ENCMTH.UV
12-99-84 6.430484
12-99-89 8.748390
12-99-91 9.825225
12-99-93 10.219646
12-99-94 10.488958
</TABLE>
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
AIAF (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
AIAMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 982.39 -1.76% -1.82%
3 0.0% 1116.79 3.75% 3.69%
5 0.0% 1358.32 6.32% 6.26%
From 06-23-89 0.0% 1414.54 6.48% 6.42%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
AIAMTH
AIAMTH.UV
06-23-89 7.664971 i
12-99-89 7.982223
12-99-91 9.708561
12-99-93 11.036731
12-99-94 10.842404 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Alger Balanced (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGBLMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 943.99 -5.60% -5.66%
3 0.0% 1082.96 2.69% 2.63%
5 0.0% 1174.68 3.27% 3.21%
From 09-05-89 0.0% 1200.40 3.49% 3.43%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
ALGBLMTH
ALGBLMTH.UV
09-05-89 8.268394 i
12-99-89 8.449437
12-99-91 9.165009
12-99-93 10.514274
12-99-94 9.925345 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Alger Income and Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGIGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 904.34 -9.57% -9.62%
3 0.0% 1053.94 1.77% 1.71%
5 0.0% 1269.11 4.88% 4.82%
From 11-14-88 0.0% 1354.27 5.07% 5.01%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
ALGIGMTH
ALGIGMTH.UV
11-14-88 5.967675 i
12-99-89 6.368130
12-99-91 7.668245
12-99-93 8.936722
12-99-94 8.081864 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Alger Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1000.26 0.03% -0.03%
3 0.0% 1338.36 10.20% 10.14%
5 0.0% 1902.23 13.72% 13.67%
From 01-08-89 0.0% 2328.37 15.19% 15.13%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
ALGGMTH
ALGGMTH.UV
01-08-89 4.173216 i
12-99-89 5.108121
12-99-91 7.260203
12-99-93 9.714274
12-99-94 9.716797 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Alger MidCap (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGMCMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 970.80 -2.92% -2.98%
From 04-99-93 0.0% 1333.65 18.80% 18.74%
From 04-99-93 0.0% 1333.65 18.80% 18.74%
From 04-99-93 0.0% 1333.65 18.80% 18.74%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
ALGMCMTH
ALGMCMTH.UV
04-99-93 7.356424 i
12-99-93 10.106022
12-99-94 9.810919 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Alger Small Cap (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGSCMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 942.85 -5.72% -5.77%
3 0.0% 1075.26 2.45% 2.39%
5 0.0% 1790.47 12.36% 12.30%
From 09-20-88 0.0% 2795.49 17.79% 17.73%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
ALGSCMTH
ALGSCMTH.UV
09-20-88 3.342177 i
12-99-89 5.218194
12-99-91 8.689096
12-99-93 9.909388
12-99-94 9.343028 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Asset Manager (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FIDAMMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 926.24 -7.38% -7.43%
3 0.0% 1219.79 6.85% 6.79%
5 0.0% 1550.89 9.17% 9.12%
From 09-06-89 0.0% 1556.49 8.68% 8.62%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FIDAMMTH
FIDAMMTH.UV
09-06-89 6.498087 i
12-99-89 6.521551
12-99-91 8.291758
12-99-93 10.919704
12-99-94 10.114227 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Equity-Income (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FIDEIMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1055.67 5.57% 5.51%
3 0.0% 1419.11 12.38% 12.32%
5 0.0% 1536.15 8.96% 8.91%
From 10-22-86 0.0% 2094.88 9.45% 9.39%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FIDEIMTH
FIDEIMTH.UV
10-22-86 4.774624 i
12-99-89 6.511267
12-99-91 7.048258
12-99-93 9.474806
12-99-94 10.002271 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FIDEGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 986.01 -1.40% -1.46%
3 0.0% 1250.50 7.74% 7.68%
5 0.0% 1561.62 9.32% 9.27%
From 11-07-86 0.0% 2361.38 11.12% 11.06%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FIDEGMTH
FIDEGMTH.UV
11-07-86 4.414141 i
12-99-89 6.674788
12-99-91 8.335422
12-99-93 10.571333
12-99-94 10.423485 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity High Income (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FIDHIMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 969.86 -3.01% -3.07%
3 0.0% 1398.23 11.82% 11.76%
5 0.0% 1795.19 12.41% 12.36%
From 10-11-85 0.0% 2287.75 9.39% 9.33%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FIDHIMTH
FIDHIMTH.UV
10-11-85 3.929683 i
12-99-89 5.007911
12-99-91 6.429659
12-99-93 9.269555
12-99-94 8.990133 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Index 500 (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FD500MTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 996.26 -0.37% -0.43%
From 08-27-92 0.0% 1140.41 5.76% 5.71%
From 08-27-92 0.0% 1140.41 5.76% 5.71%
From 08-27-92 0.0% 1140.41 5.76% 5.71%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
FD500MTH
FD500MTH.UV
<S> <C>
08-27-92 7.348010 i
12-99-93 8.411191
12-99-94 8.379747 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Investment Grade Bond (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FDIGMTHT
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 948.96 -5.10% -5.16%
3 0.0% 1091.84 2.97% 2.91%
5 0.0% 1311.57 5.57% 5.52%
From 12-05-88 0.0% 1431.83 6.09% 6.03%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FDIGMTHT
FDIGMTHT.UV
12-05-88 6.984075 i
12-99-89 7.624440
12-99-91 9.158839
12-99-93 10.537887
12-99-94 10.000000 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Overseas (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FIDOSMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1003.11 0.31% 0.25%
3 0.0% 1195.96 6.15% 6.09%
5 0.0% 1235.06 4.31% 4.25%
From 02-13-87 0.0% 1532.57 5.57% 5.51%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FIDOSMTH
FIDOSMTH.UV
02-13-87 6.722974 i
12-99-89 8.342462
12-99-91 8.615182
12-99-93 10.271516
12-99-94 10.303449 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
IMS Corporate Bond (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FEDCBMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 03-01-94 0.0% 954.05 -4.60% -4.65%
From 03-01-94 0.0% 954.05 -4.60% -4.65%
From 03-01-94 0.0% 954.05 -4.60% -4.65%
From 03-01-94 0.0% 954.05 -4.60% -4.65%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FEDCBMTH
FEDCBMTH.UV
03-01-94 10.286665 i
12-99-94 9.814011 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
IMS Equity Growth & Income (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FEDGIMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 02-10-94 0.0% 980.98 -1.90% -1.96%
From 02-10-94 0.0% 980.98 -1.90% -1.96%
From 02-10-94 0.0% 980.98 -1.90% -1.96%
From 02-10-94 0.0% 980.98 -1.90% -1.96%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FEDGIMTH
FEDGIMTH.UV
02-10-94 10.028900 i
12-99-94 9.838122 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
IMS Prime Money (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FEDPMMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 11-14-94 0.0% 1003.34 0.33% 0.28%
From 11-14-94 0.0% 1003.34 0.33% 0.28%
From 11-14-94 0.0% 1003.34 0.33% 0.28%
From 11-14-94 0.0% 1003.34 0.33% 0.28%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
FEDPMMTH
FEDPMMTH.UV
<S> <C>
11-14-94 10.000000 i
12-99-94 10.033362 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
IMS U.S. Government Bond (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FEDGBMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 03-28-94 0.0% 1014.72 1.47% 1.41%
From 03-28-94 0.0% 1014.72 1.47% 1.41%
From 03-28-94 0.0% 1014.72 1.47% 1.41%
From 03-28-94 0.0% 1014.72 1.47% 1.41%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
FEDGBMTH
FEDGBMTH.UV
<S> <C>
03-28-94 9.927313 i
12-99-94 10.073476 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
IMS Utlity (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FEDUMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 02-10-94 0.0% 949.46 -5.05% -5.11%
From 02-10-94 0.0% 949.46 -5.05% -5.11%
From 02-10-94 0.0% 949.46 -5.05% -5.11%
From 02-10-94 0.0% 949.46 -5.05% -5.11%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
FEDUMTH
FEDUMTH.UV
<S> <C>
02-10-94 10.407302 i
12-99-94 9.881346 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Aggressive Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JAGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1149.91 14.99% 14.93%
From 09-13-93 0.0% 1352.78 26.20% 26.14%
From 09-13-93 0.0% 1352.78 26.20% 26.14%
From 09-13-93 0.0% 1352.78 26.20% 26.14%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
JAGMTH
JAGMTH.UV
09-13-93 7.668394 i
12-99-93 9.021260
12-99-94 10.373656 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Balanced (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JBALMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 994.23 -0.58% -0.64%
From 09-13-93 0.0% 1061.28 4.69% 4.63%
From 09-13-93 0.0% 1061.28 4.69% 4.63%
From 09-13-93 0.0% 1061.28 4.69% 4.63%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
JBALMTH
JBALMTH.UV
09-13-93 9.267979 i
12-99-93 9.892989
12-99-94 9.835912 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Flexible Income (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JFIMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 979.02 -2.10% -2.16%
From 09-13-93 0.0% 981.79 -1.41% -1.46%
From 09-13-93 0.0% 981.79 -1.41% -1.46%
From 09-13-93 0.0% 981.79 -1.41% -1.46%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
JFIMTH
JFIMTH.UV
09-13-93 10.066883 i
12-99-93 10.095320
12-99-94 9.883519 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1014.54 1.45% 1.40%
From 09-13-93 0.0% 1045.65 3.50% 3.44%
From 09-13-93 0.0% 1045.65 3.50% 3.44%
From 09-13-93 0.0% 1045.65 3.50% 3.44%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
JGMTH
JGMTH.UV
09-13-93 9.667554 i
12-99-93 9.964019
12-99-94 10.108882 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Short-Term Bond (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JSTBMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 995.13 -0.49% -0.55%
From 09-13-93 0.0% 993.92 -0.47% -0.53%
From 09-13-93 0.0% 993.92 -0.47% -0.53%
From 09-13-93 0.0% 993.92 -0.47% -0.53%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
JSTBMTH
JSTBMTH.UV
09-13-93 10.027677 i
12-99-93 10.015473
12-99-94 9.966712 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Worldwide (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JWWMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1001.15 0.12% 0.06%
From 09-13-93 0.0% 1187.37 14.14% 14.08%
From 09-13-93 0.0% 1187.37 14.14% 14.08%
From 09-13-93 0.0% 1187.37 14.14% 14.08%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
JWWMTH
JWWMTH.UV
09-13-93 8.275945 i
12-99-93 9.815304
12-99-94 9.826635 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Lexington Emerging Markets (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
LEXEMMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 03-99-94 0.0% 986.40 -1.36% -1.42%
From 03-99-94 0.0% 986.40 -1.36% -1.42%
From 03-99-94 0.0% 986.40 -1.36% -1.42%
From 03-99-94 0.0% 986.40 -1.36% -1.42%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
LEXEMMTH
LEXEMMTH.UV
03-99-94 9.929607 i
12-99-94 9.794605 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Lexington Natural Resources (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
LEXNMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 932.99 -6.70% -6.76%
3 0.0% 1034.79 1.15% 1.09%
5 0.0% 813.03 -4.06% -4.11%
From 05-31-89 0.0% 929.34 -1.30% -1.36%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
LEXNMTH
LEXNMTH.UV
05-31-89 9.744811 i
12-99-89 11.138797
12-99-91 8.751727
12-99-93 9.706659
12-99-94 9.056214 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
TCI Balanced (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
TCIBMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 993.17 -0.68% -0.74%
3 0.0% 976.43 -0.79% -0.85%
From 05-00-91 0.0% 1215.20 5.46% 5.40%
From 05-00-91 0.0% 1215.20 5.46% 5.40%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
TCIBMTH
TCIBMTH.UV
05-00-91 8.354158 i
12-99-91 10.397068
12-99-93 10.221738
12-99-94 10.151972 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
TCI Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
TCIGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 973.70 -2.63% -2.69%
3 0.0% 1035.64 1.17% 1.12%
5 0.0% 1417.76 7.23% 7.17%
From 11-20-87 0.0% 1864.91 9.16% 9.10%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
TCIGMTH
TCIGMTH.UV
11-20-87 5.816299 i
12-99-89 7.650708
12-99-91 10.473611
12-99-93 11.139901
12-99-94 10.846873 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
TCI International (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
TCIIMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 05-00-94 0.0% 948.96 -5.10% -5.16%
From 05-00-94 0.0% 948.96 -5.10% -5.16%
From 05-00-94 0.0% 948.96 -5.10% -5.16%
From 05-00-94 0.0% 948.96 -5.10% -5.16%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
TCIIMTH
TCIIMTH.UV
05-00-94 9.948573 i
12-99-94 9.440766 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Aetna Variable Fund (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
VARMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 922.18 -7.78% -7.84%
3 4.0% 1045.38 1.49% 1.43%
5 2.0% 1354.70 6.26% 6.20%
10 0.0% 3267.34 12.57% 12.51%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
VARMTH
VARMTH.UV
12-99-84 3.286219
12-99-89 7.826182
12-99-91 9.932096
12-99-93 10.997616
12-99-94 10.737184
</TABLE>
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Aetna Income Shares (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
AISMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 894.34 -10.57% -10.62%
3 4.0% 1051.34 1.68% 1.62%
5 2.0% 1359.91 6.34% 6.28%
10 0.0% 2296.69 8.67% 8.61%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
AISMTH
AISMTH.UV
<S> <C>
12-99-84 4.495147
12-99-89 7.496521
12-99-91 9.497741
12-99-93 10.882773
12-99-94 10.323944
</TABLE>
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Aetna Encore Fund (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ENCMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 972.51 -2.75% -2.81%
3 4.0% 1031.82 1.05% 0.99%
5 2.0% 1181.36 3.39% 3.33%
10 0.0% 1631.13 5.01% 4.96%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
ENCMTH
ENCMTH.UV
<S> <C>
12-99-84 6.430484
12-99-89 8.748390
12-99-91 9.825225
12-99-93 10.219646
12-99-94 10.488958
</TABLE>
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
AIAF (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
AIAMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 928.28 -7.17% -7.23%
3 4.0% 1081.26 2.64% 2.58%
5 2.0% 1341.04 6.04% 5.99%
From 06-23-89 2.0% 1397.37 6.25% 6.19%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
AIAMTH
AIAMTH.UV
<S> <C>
06-23-89 7.664971 i
12-99-89 7.982223
12-99-91 9.708561
12-99-93 11.036731
12-99-94 10.842404 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Alger Balanced (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGBLMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 889.65 -11.04% -11.09%
3 4.0% 1047.29 1.55% 1.49%
5 2.0% 1157.03 2.96% 2.90%
From 09-05-89 2.0% 1182.80 3.21% 3.15%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
ALGBLMTH
ALGBLMTH.UV
<S> <C>
09-05-89 8.268394 i
12-99-89 8.449437
12-99-91 9.165009
12-99-93 10.514274
12-99-94 9.925345 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Alger Income and Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGIGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 849.77 -15.02% -15.08%
3 4.0% 1018.16 0.60% 0.54%
5 2.0% 1251.65 4.59% 4.53%
From 11-14-88 1.0% 1345.62 4.96% 4.91%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
ALGIGMTH
ALGIGMTH.UV
<S> <C>
11-14-88 5.967675 i
12-99-89 6.368130
12-99-91 7.668245
12-99-93 8.936722
12-99-94 8.081864 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Alger Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 946.26 -5.37% -5.43%
3 4.0% 1303.71 9.24% 9.19%
5 2.0% 1886.03 13.53% 13.47%
From 01-08-89 2.0% 2313.03 15.06% 15.00%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
ALGGMTH
ALGGMTH.UV
<S> <C>
01-08-89 4.173216 i
12-99-89 5.108121
12-99-91 7.260203
12-99-93 9.714274
12-99-94 9.716797 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Alger MidCap (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGMCMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 916.62 -8.34% -8.40%
From 04-99-93 6.0% 1281.65 16.01% 15.95%
From 04-99-93 6.0% 1281.65 16.01% 15.95%
From 04-99-93 6.0% 1281.65 16.01% 15.95%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
ALGMCMTH
ALGMCMTH.UV
04-99-93 7.356424 i
12-99-93 10.106022
12-99-94 9.810919 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Alger Small Cap (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGSCMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 888.51 -11.15% -11.21%
3 4.0% 1039.56 1.30% 1.24%
5 2.0% 1774.05 12.15% 12.09%
From 09-20-88 1.0% 2788.29 17.74% 17.68%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
ALGSCMTH
ALGSCMTH.UV
09-20-88 3.342177 i
12-99-89 5.218194
12-99-91 8.689096
12-99-93 9.909388
12-99-94 9.343028 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Asset Manager (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FIDAMMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 871.80 -12.82% -12.88%
3 4.0% 1184.67 5.81% 5.75%
5 2.0% 1533.99 8.93% 8.88%
From 09-06-89 2.0% 1539.60 8.45% 8.39%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FIDAMMTH
FIDAMMTH.UV
09-06-89 6.498087 i
12-99-89 6.521551
12-99-91 8.291758
12-99-93 10.919704
12-99-94 10.114227 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Equity-Income (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FIDEIMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 1002.00 0.20% 0.14%
3 4.0% 1384.79 11.46% 11.40%
5 2.0% 1519.22 8.72% 8.67%
From 10-22-86 0.0% 2094.88 9.45% 9.39%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FIDEIMTH
FIDEIMTH.UV
10-22-86 4.774624 i
12-99-89 6.511267
12-99-91 7.048258
12-99-93 9.474806
12-99-94 10.002271 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FIDEGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 931.93 -6.81% -6.87%
3 4.0% 1215.50 6.72% 6.66%
5 2.0% 1544.74 9.09% 9.03%
From 11-07-86 0.0% 2361.38 11.12% 11.06%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FIDEGMTH
FIDEGMTH.UV
11-07-86 4.414141 i
12-99-89 6.674788
12-99-91 8.335422
12-99-93 10.571333
12-99-94 10.423485 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity High Income (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FIDHIMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 915.68 -8.43% -8.49%
3 4.0% 1363.82 10.90% 10.84%
5 2.0% 1778.78 12.21% 12.15%
From 10-11-85 0.0% 2287.75 9.39% 9.33%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FIDHIMTH
FIDHIMTH.UV
10-11-85 3.929683 i
12-99-89 5.007911
12-99-91 6.429659
12-99-93 9.269555
12-99-94 8.990133 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Index 500 (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FD500MTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 942.24 -5.78% -5.83%
From 08-27-92 5.0% 1096.11 3.99% 3.93%
From 08-27-92 5.0% 1096.11 3.99% 3.93%
From 08-27-92 5.0% 1096.11 3.99% 3.93%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FD500MTH
FD500MTH.UV
08-27-92 7.348010 i
12-99-93 8.411191
12-99-94 8.379747 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Investment Grade Bond (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FDIGMTHT
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 894.65 -10.54% -10.59%
3 4.0% 1056.21 1.84% 1.78%
5 2.0% 1294.19 5.29% 5.24%
From 12-05-88 1.0% 1423.26 5.99% 5.93%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FDIGMTHT
FDIGMTHT.UV
12-05-88 6.984075 i
12-99-89 7.624440
12-99-91 9.158839
12-99-93 10.537887
12-99-94 10.000000 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Fidelity Overseas (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FIDOSMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 949.13 -5.09% -5.15%
3 4.0% 1160.74 5.09% 5.04%
5 2.0% 1217.53 4.01% 3.96%
From 02-13-87 0.0% 1532.57 5.57% 5.51%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
FIDOSMTH
FIDOSMTH.UV
<S> <C>
02-13-87 6.722974 i
12-99-89 8.342462
12-99-91 8.615182
12-99-93 10.271516
12-99-94 10.303449 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
IMS Corporate Bond (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FEDCBMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 03-01-94 7.0% 890.73 -10.93% -10.99%
From 03-01-94 7.0% 890.73 -10.93% -10.99%
From 03-01-94 7.0% 890.73 -10.93% -10.99%
From 03-01-94 7.0% 890.73 -10.93% -10.99%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FEDCBMTH
FEDCBMTH.UV
03-01-94 10.286665 i
12-99-94 9.814011 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
IMS Equity Growth & Income (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FEDGIMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 02-10-94 7.0% 917.85 -8.22% -8.27%
From 02-10-94 7.0% 917.85 -8.22% -8.27%
From 02-10-94 7.0% 917.85 -8.22% -8.27%
From 02-10-94 7.0% 917.85 -8.22% -8.27%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FEDGIMTH
FEDGIMTH.UV
02-10-94 10.028900 i
12-99-94 9.838122 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
IMS Prime Money (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FEDPMMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 11-14-94 7.0% 940.36 -5.96% -6.02%
From 11-14-94 7.0% 940.36 -5.96% -6.02%
From 11-14-94 7.0% 940.36 -5.96% -6.02%
From 11-14-94 7.0% 940.36 -5.96% -6.02%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FEDPMMTH
FEDPMMTH.UV
11-14-94 10.000000 i
12-99-94 10.033362 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
IMS U.S. Government Bond (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FEDGBMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 03-28-94 7.0% 951.82 -4.82% -4.88%
From 03-28-94 7.0% 951.82 -4.82% -4.88%
From 03-28-94 7.0% 951.82 -4.82% -4.88%
From 03-28-94 7.0% 951.82 -4.82% -4.88%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FEDGBMTH
FEDGBMTH.UV
03-28-94 9.927313 i
12-99-94 10.073476 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
IMS Utlity (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FEDUMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 02-10-94 7.0% 886.11 -11.39% -11.45%
From 02-10-94 7.0% 886.11 -11.39% -11.45%
From 02-10-94 7.0% 886.11 -11.39% -11.45%
From 02-10-94 7.0% 886.11 -11.39% -11.45%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
FEDUMTH
FEDUMTH.UV
02-10-94 10.407302 i
12-99-94 9.881346 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Aggressive Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JAGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 1096.81 9.68% 9.62%
From 09-13-93 6.0% 1300.90 22.45% 22.40%
From 09-13-93 6.0% 1300.90 22.45% 22.40%
From 09-13-93 6.0% 1300.90 22.45% 22.40%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
JAGMTH
JAGMTH.UV
<S> <C>
09-13-93 7.668394 i
12-99-93 9.021260
12-99-94 10.373656 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Balanced (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JBALMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 940.20 -5.98% -6.04%
From 09-13-93 6.0% 1007.65 0.59% 0.53%
From 09-13-93 6.0% 1007.65 0.59% 0.53%
From 09-13-93 6.0% 1007.65 0.59% 0.53%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
JBALMTH
JBALMTH.UV
<S> <C>
09-13-93 9.267979 i
12-99-93 9.892989
12-99-94 9.835912 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Flexible Income (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JFIMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 924.89 -7.51% -7.57%
From 09-13-93 6.0% 927.68 -5.62% -5.67%
From 09-13-93 6.0% 927.68 -5.62% -5.67%
From 09-13-93 6.0% 927.68 -5.62% -5.67%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
JFIMTH
JFIMTH.UV
<S> <C>
09-13-93 10.066883 i
12-99-93 10.095320
12-99-94 9.883519 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 960.63 -3.94% -4.00%
From 09-13-93 6.0% 991.92 -0.62% -0.68%
From 09-13-93 6.0% 991.92 -0.62% -0.68%
From 09-13-93 6.0% 991.92 -0.62% -0.68%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
JGMTH
JGMTH.UV
<S> <C>
09-13-93 9.667554 i
12-99-93 9.964019
12-99-94 10.108882 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Short-Term Bond (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JSTBMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 941.10 -5.89% -5.95%
From 09-13-93 6.0% 939.88 -4.66% -4.72%
From 09-13-93 6.0% 939.88 -4.66% -4.72%
From 09-13-93 6.0% 939.88 -4.66% -4.72%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
JSTBMTH
JSTBMTH.UV
<S> <C>
09-13-93 10.027677 i
12-99-93 10.015473
12-99-94 9.966712 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Janus Aspen Worldwide (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JWWMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 947.16 -5.28% -5.34%
From 09-13-93 6.0% 1134.49 10.20% 10.15%
From 09-13-93 6.0% 1134.49 10.20% 10.15%
From 09-13-93 6.0% 1134.49 10.20% 10.15%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
JWWMTH
JWWMTH.UV
<S> <C>
09-13-93 8.275945 i
12-99-93 9.815304
12-99-94 9.826635 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Lexington Emerging Markets (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
LEXEMMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 03-99-94 7.0% 923.30 -7.67% -7.73%
From 03-99-94 7.0% 923.30 -7.67% -7.73%
From 03-99-94 7.0% 923.30 -7.67% -7.73%
From 03-99-94 7.0% 923.30 -7.67% -7.73%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
LEXEMMTH
LEXEMMTH.UV
<S> <C>
03-99-94 9.929607 i
12-99-94 9.794605 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
Lexington Natural Resources (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
LEXNMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 878.59 -12.14% -12.20%
3 4.0% 998.93 -0.04% -0.09%
5 2.0% 794.66 -4.49% -4.55%
From 05-31-89 2.0% 911.20 -1.65% -1.71%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
LEXNMTH
LEXNMTH.UV
05-31-89 9.744811 i
12-99-89 11.138797
12-99-91 8.751727
12-99-93 9.706659
12-99-94 9.056214 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
TCI Balanced (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
TCIBMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 939.13 -6.09% -6.15%
3 4.0% 940.34 -2.03% -2.09%
From 05-00-91 4.0% 1180.06 4.62% 4.56%
From 05-00-91 4.0% 1180.06 4.62% 4.56%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
TCIBMTH
TCIBMTH.UV
05-00-91 8.354158 i
12-99-91 10.397068
12-99-93 10.221738
12-99-94 10.151972 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
TCI Growth (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
TCIGMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 6.0% 919.54 -8.05% -8.10%
3 4.0% 999.78 -0.01% -0.07%
5 2.0% 1400.60 6.97% 6.91%
From 11-20-87 0.0% 1864.91 9.16% 9.10%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
TCIGMTH
TCIGMTH.UV
11-20-87 5.816299 i
12-99-89 7.650708
12-99-91 10.473611
12-99-93 11.139901
12-99-94 10.846873 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
<CAPTION>
TCI International (Marathon) MTHNY.WWO
------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
TCIIMTH
Nom. 30.00 M.F. (0.058%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 05-00-94 7.0% 885.60 -11.44% -11.50%
From 05-00-94 7.0% 885.60 -11.44% -11.50%
From 05-00-94 7.0% 885.60 -11.44% -11.50%
From 05-00-94 7.0% 885.60 -11.44% -11.50%
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
<S> <C>
TCIIMTH
TCIIMTH.UV
05-00-94 9.948573 i
12-99-94 9.440766 i
</TABLE>
(Unit values marked 'i' are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
EXHIBIT 99-B.15.1
Power of Attorney
I, David E. Bushong, Acting Chief Financial Officer of Aetna Life Insurance and
Annuity Company, do hereby constitute and appoint Susan E. Bryant, Steven J.
Lauwers, and Julie E. Rockmore and each of them individually, my true and lawful
attorneys, with full power to them and each of them to sign for me, and in my
name and in the capacity indicated below, any and all amendments to the
Registration Statements listed below filed with the Securities and Exchange
Commission by Aetna Life Insurance and Annuity Company under the Securities Act
of 1933, as amended, and/or the Investment Company Act of 1940, including but
not limited to pre-effective amendments and post-effective amendments to such
filings:
Registration Statements filed under the Securities Act of 1933, as amended:
<TABLE>
<S> <C> <C>
2-52448 33-75966 33-75998
2-52449 33-75968 33-76000
33-2339 33-75970 33-76002
33-34370 33-75972 33-76004
33-34583 33-75974 33-76018
33-42555 33-75976 33-76024
33-60477 33-75978 33-76026
33-61897 33-75980 33-79118
33-62473 33-75982 33-79122
33-75248 33-75984 33-81216
33-75954 33-75986 33-87642
33-75956 33-75988 33-87932
33-75958 33-75990 33-88720
33-75960 33-75992 33-88722
33-75962 33-75994 33-88724
33-75964 33-75996 33-91846
</TABLE>
Registration Statements filed under the Investment Company Act of 1940:
811-2512
811-2513
811-4536
811-5906
hereby ratifying and confirming on this 13th day of September, 1995 my signature
as it may be signed by my said attorneys to any such registration statements,
applications and any and all amendments thereto:
/s/ David E. Bushong
-----------------------------------------------
David E. Bushong
Acting Chief Financial Officer
(Principal Accounting and Financial Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
VARIABLE ANNUITY ACCOUNT B AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 840,160,688
<INVESTMENTS-AT-VALUE> 795,804,636
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 795,804,636
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 795,804,636
<DIVIDEND-INCOME> 83,432,946
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (8,918,042)
<NET-INVESTMENT-INCOME> 74,514,904
<REALIZED-GAINS-CURRENT> 57,000,536
<APPREC-INCREASE-CURRENT> (146,425,376)
<NET-CHANGE-FROM-OPS> (14,909,936)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 109,360,004
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
